Registration No. 33-34720
File No. 811-06105
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 25 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ ]
Amendment No. 28 [X]
Oppenheimer Quest Global Value Fund, Inc.
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(Exact Name of Registrant as Specified in Charter)
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6801 South Tucson Way, Englewood, Colorado 80112
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(Address of Principal Executive Offices) (Zip Code)
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(303) 768-3200
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(Registrant's Telephone Number, including Area Code)
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Andrew J. Donohue, Esq.
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OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On _________________ pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] On February 12, 20001 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On _______________ pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Oppenheimer
Quest Global Value Fund, Inc.
Prospectus dated February 12, 2001
CONTENTS
ABOUT THE FUND
The Fund's Investment Objective and Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
Fees and Expenses of the Fund
About the Fund's Investments
How the Fund is Managed
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Class N Shares
Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Web Site
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Financial Highlights
ABOUT THE FUND
The Fund's Investment Objective and Strategies
WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks long-term capital
appreciation.
WHAT DOES THE FUND MAINLY INVEST IN? The Fund invests mainly in common
stocks, and can also buy other equity securities such as preferred stocks and
securities convertible into common stock, of issuers that the portfolio
managers believe are undervalued in the marketplace. Under normal market
conditions, the Fund invests at least 65% of its total assets in equity
securities in at least three countries, one of which may be the U.S. The Fund
is not required to invest a set percentage of its assets in any one country
or region.
The Fund does not seek current income as part of its objective and may
hold debt securities for their appreciation possibilities. These investments
are more fully explained in "About the Fund's Investments," below.
HOW DO THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL? In
selecting securities for purchase or sale by the Fund, the Fund's portfolio
managers, who are employed by the Sub-Advisor, OpCap Advisors, use a "value"
approach to investing. They search for securities of companies believed to be
undervalued in the marketplace, in relation to factors such as a company's
assets, earnings, growth potential and cash flows. This process and the
inter-relationship of the factors used may change over time and its
implementation may vary in particular cases. Currently, the selection
process includes the following techniques:
o A "bottom up" analytical approach, focusing on the performance of
individual stocks before considering overall economic or industry
trends, evaluating each issuer's characteristics, financial results and
management.
o A search for securities of established companies believed to be
undervalued and having a high return on capital, strong management
committed to shareholder value, and strong competitive positions within
their industries.
o Ongoing monitoring of issuers for fundamental changes in the company
that might alter the portfolio managers' initial expectations about the
security and might result in a decision to sell the security.
WHO IS THE FUND DESIGNED FOR? The Fund is designed for investors seeking
capital appreciation over the long term. Those investors should be willing to
assume the risk of short-term share price fluctuations that are typical for a
fund emphasizing investments in equity securities. Since the Fund's income
level will fluctuate, it is not designed for investors needing current
income. Because of its focus on long-term growth, the Fund may be appropriate
for a portion of an investor's retirement plan. The Fund is not a complete
investment program.
Main Risks of Investing in the Fund
All investments have risks to some degree. The Fund's investments are
subject to changes in their value from a number of factors described below.
There is also the risk that poor security selection by the Sub-Advisor will
cause the Fund to underperform other funds having a similar objective. As an
example, the portfolio managers' "value" approach to investing could result
in fewer Fund investments in stocks that become highly valued by the
marketplace during times of rapid market advances. This could cause the Fund
to underperform other funds that seek capital appreciation but that employ a
growth or non-value approach to investing.
The risks described collectively form the overall risk profile of the
Fund and can affect the value of the Fund's investments, its investment
performance and its prices per share. Particular investments and investment
strategies also have risks. These risks mean that you can lose money by
investing in the Fund. When you redeem your shares, they may be worth more or
less than what you paid for them. There is no assurance that the Fund will
achieve its investment objective.
RISKS OF INVESTING IN STOCKS. Stocks fluctuate in price, and their
short-term volatility at times may be great. Because the Fund currently
emphasizes investments in stocks and other equity securities, the value of
the Fund's portfolio will be affected by changes in the stock markets in
which it invests. Market risk will affect the Fund's net asset values per
share, which will fluctuate as the values of the Fund's portfolio securities
change. A variety of factors can affect the price of a particular stock and
the prices of individual stocks do not all move in the same direction
uniformly or at the same time. Different stock markets may behave differently
from each other. In particular, because the Fund can buy both foreign stocks
and stocks of U.S. issuers, it will be affected by changes in domestic and
foreign stock markets.
Other factors can affect a particular stock's price, such as poor
earnings reports by the issuer, loss of major customers, major litigation
against the issuer, or changes in government regulations affecting the
issuer. The Fund invests mainly in securities of large capitalization
companies but it can also invest in stocks of small and medium-size
companies, which may have more volatile prices than stocks of larger
companies.
RISKS OF FOREIGN INVESTING. The Fund can buy securities of companies in
developed and emerging markets. The Fund can invest as much as 100% of its
assets in foreign securities, although normally it expects to invest in
domestic securities as well.
While foreign securities offer special investment opportunities, there
are also special risks. The change in value of a foreign currency against the
U.S. dollar will result in a change in the U.S. dollar value of foreign
securities. Foreign issuers are not subject to the same accounting and
disclosure requirements that U.S. companies are subject to. The value of
foreign investments may be affected by exchange control regulations,
expropriation or nationalization of a company's assets, foreign taxes, delays
in settlement of transactions, changes in governmental economic or monetary
policy in the U.S. or abroad, or other political and economic factors.
HOW RISKY IS THE FUND OVERALL? In the short term, the stock markets can be
volatile, particularly in emerging markets, and the prices of the Fund's
shares will go up and down. The Fund's investments in foreign securities
subject it to risks that funds that focus on domestic securities do not
have. In the OppenheimerFunds spectrum, the Fund may be less volatile than
funds that emphasize investments in emerging markets or small-cap stocks but
has greater risks than funds that invest in both stocks and
investment grade bonds.
An investment in the Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the risks of investing in
the Fund, by showing changes in the Fund's performance (for its Class A
shares) from year to year for the full calendar years since the Fund's
inception and by showing how the average annual total returns of the Fund's
shares compare to those of a broad-based market index. The Fund's past
investment performance is not necessarily an indication of how the Fund will
perform in the future.
Annual Total Returns (Class A) (as of 12/31 each year)
Sales charges are not included in the calculations of return in this bar
chart, and if those charges were included, the returns would be less than
those shown.
During the period shown in the bar chart, the highest return (not annualized)
for a calendar quarter was ___%
(__ Q' __) and the lowest return (not annualized) for a calendar quarter was
____% (__ Q' __).
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Average Annual Total 1 Year 5 Years Life of class
Returns for the periods
ended December 31, 2000
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Class A Shares (inception: % % %
7/2/90)
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Morgan Stanley World Index % % %(1)
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Class B Shares (inception: % % %
9/1/93)
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Class C Shares (inception % % %
9/1/93)
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1. From 6/30/90.
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The Fund's average annual total returns in the table include the applicable
sales charge for Classes A, B and C shares: for Class A, the current maximum
initial sales charge of 5.75%; for Class B, the contingent deferred sales
charges of 5% (1-year), 2% (5 years) and none (life of the class); and for
Class C, the 1% contingent deferred sales charge for the 1-year period.
Because Class N shares were not offered for sale during the Fund's fiscal
year ended November 30, 2000, no performance information is included in the
table above for Class N shares.
The returns measure the performance of a hypothetical account and assume that
all dividends and capital gains distributions have been reinvested in
additional shares. Because the Fund invests primarily in foreign and domestic
stocks, the Fund's Class A shares are compared to the Morgan Stanley World
Index, an unmanaged index of issuers listed on the stock exchanges of 22
foreign countries and the United States, which is widely recognized as a
measure of global stock market performance. However, the index performance
does not reflect transaction costs. The Fund's investments vary from those in
the index.
Fees and Expenses of the Fund
The Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services. Those expenses
are subtracted from the Fund's assets to calculate the Fund's net asset
values 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 meant to help you understand
the fees and expenses you may pay if you buy and hold shares of the Fund. The
numbers below are based on the Fund's expenses during its fiscal year ended
November 30, 2000, except that the numbers for Class N shares, which is a new
class of shares, are based on the Fund's anticipated expenses for Class N
shares during the coming year.
<TABLE>
<CAPTION>
Shareholder Fees (charges paid directly from your investment):
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<S> <C> <C> <C> <C>
Class A Shares Class B Shares Class C Shares Class N Shares
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Maximum Sales Charge
(Load) on purchases 5.75% None None None
(as % of offering price)
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Maximum Deferred Sales
Charge (Load) (as % of
the lower of the None1 5%2 1%3 1%4
original offering price
or redemption proceeds)
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</TABLE>
1. A contingent deferred sales charge may apply to redemptions of
investments of $1 million or more ($500,000 for retirement plan accounts)
of Class A shares. See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase. The contingent
deferred sales charge declines to 1% in the sixth year and is eliminated
after that.
3. Applies to shares redeemed within 12 months of purchase.
4. Applies to shares redeemed within eighteen (18) months of first
purchase.
<TABLE>
<CAPTION>
Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
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<S> <C> <C> <C> <C>
Class A Shares Class B Shares Class C Shares Class N Shares
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Management Fees % % % %
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Distribution and/or Service % % % %
(12b-1) Fees
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Other Expenses % % % %
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Total Annual Operating % % % %
Expenses
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</TABLE>
The asset-based sales charge rate for Class A shares has been voluntarily
reduced from 0.25% to 0.20% of average annual net assets representing Class A
shares effective January 1, 2000, to 0.15% effective January 1, 2001, and to
0.10% effective January 1, 2002. The Board of Directors can set the rate up
to 0.25% of average annual net assets under the Distribution and Service Plan
for Class A shares. Expenses may vary in future years. "Other expenses"
include transfer agent fees, custodial expenses, and accounting and legal
expenses the Fund pays. Class N shares were not offered for sale during the
Fund's last fiscal year. The expenses above for Class N shares are based on
the expected expenses for that class of shares for the current fiscal year.
EXAMPLES. The following examples are intended to help you compare the cost
of investing in the Fund with the cost of investing in other mutual funds.
The examples assume that you invest $10,000 in a class of shares of the Fund
for the time periods indicated and reinvest your dividends and distributions.
The first example assumes that you redeem all of your shares at the end
of those periods. The second example assumes that you keep your shares. Both
examples also assume that your investment has a 5% return each year and that
the class's operating expenses remain the same. Your actual costs may be
higher or lower because expenses will vary over time. Based on these
assumptions your expenses would be as follows:
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If shares are redeemed: 1 Year 3 Years 5 Years 10 Years1
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Class A Shares $ $ $ $
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Class B Shares $ $ $ $
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Class C Shares $ $ $ $
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Class N Shares $ $ $ $
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If shares are not 1 Year 3 Years 5 Years 10 Years1
redeemed:
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Class A Shares $ $ $ $
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Class B Shares $ $ $ $
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Class C Shares $ $ $ $
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Class N Shares $ $ $ $
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In the first example, expenses include the initial sales charge for Class A
and the applicable Class B, Class C or Class N contingent deferred sales
charges. In the second example, the Class A expenses include the sales
charge, but Class B, Class C and Class N expenses do not include the
contingent deferred sales charges.
1. Class B expenses for years 7 through 10 are based on Class A expenses,
since Class B shares automatically convert to Class A after 6 years.
About the Fund's Investments
THE FUND'S PRINCIPAL INVESTMENT POLICIES. The allocation of the Fund's
portfolio among different investments will vary over time based upon the
evaluation of individual issuers and economic and market trends by the
Sub-Advisor. The Fund's portfolio might not always include all of the
different types of investments described below. The Statement of Additional
Information contains more detailed information about the Fund's investment
policies and risks.
The Manager has engaged the Sub-Advisor, OpCap Advisors, to select
securities for the Fund's portfolio. The Sub-Advisor tries to reduce risks by
carefully researching securities before they are purchased and by
diversifying the Fund's investments. That means the Fund does not hold a
substantial percentage of the stock of any one company and does not invest
too great a percentage of its assets in any one company. Also, the Fund does
not concentrate 25% or more of its investments in any one industry.
However, changes in the overall market prices of securities and the
income they pay can occur at any time. The share price of the Fund will
change daily based on changes in market prices of securities and market
conditions, and in response to other economic events.
Stock and Other Equity Investments. The Fund invests primarily in a
diversified portfolio of common stocks and other equity securities of U.S.
and foreign issuers. There is no requirement that the Fund invest in
securities of issuers of a particular market capitalization range.
At times, the Fund may increase the relative emphasis of its holdings
of the securities of issuers in a particular industry, or of a particular
capitalization or a range of capitalizations, depending on the Sub-Advisor's
judgment about market and economic conditions. While some convertible
securities are debt securities, the Sub-Advisor considers some of them to be
"equity equivalents" because of the conversion feature. Therefore, their
rating has less impact on the investment decision than in the case of other
debt securities. The ratings criteria the Fund applies to its investments in
debt securities, described below, apply to the convertible securities it buys.
CAN THE FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? The Fund's Board of
Directors can change non-fundamental investment policies without shareholder
approval, although significant changes will be described in amendments to
this Prospectus. Fundamental policies cannot be changed without the approval
of a majority of the Fund's outstanding voting shares. The Fund's investment
objective is a fundamental policy. Other investment restrictions that are
fundamental policies are listed in the Statement of Additional Information.
An investment policy is not fundamental unless this Prospectus or the
Statement of Additional Information says that it is.
OTHER INVESTMENT STRATEGIES. To seek its investment objective, the Fund can
also use the investment techniques and strategies described below. These
techniques have certain risks, although some are designed to help reduce
overall investment or market risks. The Sub-Advisor might not always use all
of the different types of techniques and investments described below.
Industry Focus. At times the Fund may increase the relative emphasis of its
investments in stocks of companies in a single industry. Stocks of
issuers in a particular industry may be affected by changes in economic
conditions or by changes in government regulations, availability of
basic resources or supplies, or other events that affect that industry
more than others. To the extent that the Fund is emphasizing
investments in a particular industry, its share values may fluctuate in
response to events affecting that industry.
Debt Securities. The debt securities the Fund buys may be rated by nationally
recognized rating organizations or they may be unrated securities
assigned an equivalent rating by the Sub-Advisor. The Fund's
investments may be rated investment grade or below investment grade in
credit quality. "Investment grade" securities are rated "Baa " or
higher by Moody's Investors Service or "BBB" by Standard & Poor's
Rating Service, or which have comparable ratings by other ratings
organizations. The Sub-Advisor may assign a rating to unrated
securities, in categories comparable to those of a rating organization.
U.S. Government Securities. The Fund can invest in U.S. Government
securities that are U.S. Treasury securities and securities issued or
guaranteed by U.S. Government agencies or federally-chartered corporate
entities referred to as instrumentalities of the U.S. Government, such
as collateralized mortgage obligations (CMOs) and other
mortgage-related securities. U.S. Treasury securities are backed by the
full faith and credit of the U.S. Government and are subject to little
credit risk. Government agency securities have relatively little
credit risk.
Money Market Instruments. For liquidity and defensive purposes, the Fund can
also invest in "money market instruments." These are U.S. Government
securities and high-quality corporate debt securities having a
remaining maturity of one year or less. They also include commercial
paper, other short-term corporate debt obligations, certificates of
deposit, bankers' acceptances and repurchase agreements.
Investing in Small, Unseasoned Companies. The Fund can invest up to 5% of its
total assets in securities of small, unseasoned companies. These are
companies that have been in continuous operation for less than three
years, counting the operations of any predecessors. These securities
may have limited liquidity, so that the Fund could have difficulty
selling them at an acceptable price when it wants to. The prices of
these securities may be very volatile.
Investing in Other Investment Companies. The Fund can invest up to 10% of its
total assets in shares of other investment companies. It can invest up
to 5% of its total assets in any one investment company (but cannot own
more than 3% of the outstanding voting stock of that company). These
limits do not apply to shares acquired in a merger, consolidation,
reorganization or acquisition of another investment company. Because
the Fund would be subject to its ratable share of the other investment
company's expenses, the Fund will not make these investments unless the
Sub-Advisor believes that the potential investment benefits justify the
added costs and expenses.
Illiquid and Restricted Securities. Investments may be illiquid because they
do not have an active trading market, making it difficult to value them
or dispose of them promptly at an acceptable price. A restricted
security has a contractual restriction on its resale or cannot be sold
publicly until it is registered under the Securities Act of 1933. The
Fund cannot invest more than 15% of its net assets in illiquid or
restricted securities. Certain restricted securities that are eligible
for resale to qualified institutional purchasers may not be subject to
that limit. The Manager and Sub-Advisor monitor holdings of illiquid
securities on an ongoing basis to determine whether to sell any
holdings to maintain adequate liquidity.
Portfolio Turnover. A change in the securities held by the Fund is known as
"portfolio turnover". The Fund does not expect to engage frequently in
short-term trading to try to achieve its objective. Portfolio turnover
affects brokerage costs the Fund pays. If the Fund realizes capital gains
when it sells its portfolio investments, it must generally pay those gains
out to shareholders, increasing their taxable distributions. The Financial
Highlights table shows the Fund's portfolio turnover rates during prior
fiscal years.
Loans of Portfolio Securities. The Fund can lend its portfolio securities to
certain types of brokers, dealers and institutional borrowers under
lending guidelines approved by the Fund's Board of Directors. Loans
must be fully collateralized and are subject to regulatory limitations.
The value of securities loaned must not exceed one third of the Fund's
total assets. There are risks in lending securities, such as delays in
receiving additional collateral to secure a loan or in recovering the
loaned securities.
Hedging. The Fund can buy and sell certain kinds of futures contracts and
put and call options, and can enter into forward contracts. These are all
referred to as "hedging instruments." The Fund is not required to use
hedging instruments to seek its goal. While it does use forward contracts
to attempt to hedge foreign currency risks, it does not make extensive use
of other hedging instruments. It does not use hedging instruments for
speculative purposes, and has limits on its use of them.
Some of these strategies would hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call
options, would tend to increase the Fund's exposure to the securities
market. Forward contracts are used to try to manage foreign currency
risks on the Fund's foreign investments. Foreign currency options could
be used to try to protect against declines in the dollar value of foreign
securities the Fund owns, or to protect against an increase in the dollar
cost of buying foreign securities. Option trading involves the payment of
premiums and has special tax effects on the Fund. There are special risks
in particular hedging strategies.
Hedging involves risks. If the Sub-Advisor used a hedging instrument at
the wrong time or judged market conditions incorrectly, the hedge might be
unsuccessful and the strategy could reduce the Fund's return. The Fund
could also experience losses if the prices of its futures and options
positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market.
Temporary Defensive Investments. In times of adverse or unstable market or
economic conditions, the Fund can invest up to 100% of its assets in
temporary defensive investments. Generally they would be short-term
U.S. Government securities and the types of money market instruments
described above. To the extent the Fund invests defensively in these
securities, it might not achieve its investment objective of capital
appreciation.
How the Fund Is Managed
THE MANAGER. The Manager 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 Fund's Board of Directors, under an
investment advisory agreement that states the Manager's responsibilities.
The agreement sets the fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its business. The
Manager became the Fund's investment advisor on November 22, 1995.
The Manager has been an investment advisor since January 1960. The
Manager (including subsidiaries) managed more than $125 billion of assets as
of December 31, 2000 with more than 5 million shareholder accounts. The
Manager is located at Two World Trade Center, 34th Floor, New York, New York
10048-0203.
The Manager's Fees. Under the investment advisory agreement, the Fund pays
the Manager an advisory fee at an annual rate that declines as the
Fund's assets grow: 0.75% of the first $400 million of average annual
net assets of the Fund, 0.70% of the next $400 million, and 0.65% of
average annual net assets in excess of $800 million. The Fund's
management fee for its last fiscal year ended November 30, 2000 was
___% of average annual net assets for each class of shares.
Under a separate administration agreement, the Manager provides
administrative services to the Fund and handles its business affairs at
a fee of 0.25% of the Fund's average daily net assets.
The Sub-Advisor. On November 22, 1995, the Manager retained the Sub-Advisor
to provide day-to-day portfolio management for the Fund. Prior to that
date, and from the inception of the Fund, the Sub-Advisor (or its
parent) had been the Fund's investment advisor. The Sub-Advisor has
operated as an investment advisor to investment companies and other
investors since its organization in 1987. As of December 31, 1999, the
Sub-Advisor or its parent Oppenheimer Capital advised accounts having
assets in excess of $52.2 billion. The Sub-Advisor is located at 1345
Avenue of the Americas, 49th Floor, New York, New York 10105-4800.
The Manager, not the Fund, pays the Sub-Advisor an annual fee under the
Sub-Advisory Agreement between the Manager and the Sub-Advisor. The fee
is calculated as a percentage of the fees the Fund pays the Manager.
The rate is 40% of the advisory and administrative fees collected by
the Manager based on the net assets of the Fund as of November 22,
1995, and 30% of the fees collected by the Manager on assets in excess
of that amount.
The Sub-Advisor is a majority-owned subsidiary of Oppenheimer Capital.
Oppenheimer Capital is an indirect wholly-owned subsidiary of PIMCO
Advisors L.P. The general partners of PIMCO Advisors are PIMCO
Partners, G.P and PIMCO Advisors Holdings L.P. On October 31, 1999,
PIMCO Advisors, PIMCO Advisors Holdings and Allianz AG announced that
they had entered into an agreement in which Allianz will acquire
majority ownership of PIMCO Advisors and its subsidiaries, including
Oppenheimer Capital and OpCap Advisors. That transaction is currently
expected to be completed by the end of the first quarter of 2000.
Under the Investment Company Act, the acquisition of PIMCO Advisors and
its subsidiaries by Allianz could be deemed to be an "assignment" of
the Sub-Advisory Agreement between OpCap Advisors and the Manager. In
that case, approval of the Fund's shareholders is needed to continue
the Sub-Advisory Agreement. Proxy solicitation materials with respect
to that matter have been distributed to Fund shareholders of record as
of December 22, 1999. The consummation of the Allianz acquisition is
subject to customary closing conditions and regulatory and client
consents.
Portfolio Managers. The portfolio managers of the Fund, Richard J.
Glasebrook, II and Elisa Mazen, are employed by the Sub-Advisor. Mr.
Glasebrook is responsible for the day-to-day management of the Fund's
domestic portfolio and Ms. Mazen is responsible for its foreign
portfolio. Mr. Glasebrook is a Managing Director of Oppenheimer
Capital, the immediate parent company of the Sub-Advisor, and has been
a portfolio manager for the Fund since 1991. Ms. Mazen, a Senior Vice
President of Oppenheimer Capital, was recently named a portfolio
manager of the Fund. Ms. Mazen has been a portfolio manager at
Oppenheimer Capital since 1994.
ABOUT YOUR ACCOUNT
How to Buy Shares
HOW DO YOU BUY SHARES? You can buy shares several ways, as described below.
The Fund's Distributor, OppenheimerFunds Distributor, Inc., may appoint
certain servicing agents to accept purchase (and redemption) orders. The
Distributor, in its sole discretion, may reject any purchase order for the
Fund's shares.
Buying Shares Through Your Dealer. You can buy shares through any dealer,
broker, or financial institution that has a sales agreement with the
Distributor. 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
"OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270, Denver,
Colorado 80217. If you don't list a dealer on the application, the
Distributor will act as your agent in buying the shares. However, we
recommend that you discuss your investment with a financial advisor
before you make a purchase to be sure that the Fund is appropriate for
you.
o Paying by Federal Funds Wire. Shares purchased through the Distributor
may be paid for by Federal Funds wire. The minimum investment is
$2,500. Before sending a wire, call the Distributor's Wire Department
at 1.800.525.7048 to notify the Distributor of the wire, and to receive
further instructions.
o Buying Shares Through OppenheimerFunds AccountLink. With AccountLink,
shares are purchased for your account by electronic fund transfer from
your bank account through the Automated Clearing House (ACH) system.
You can provide those instructions automatically, under an Asset
Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. Please refer to
"AccountLink," below for more details.
o Buying Shares Through Asset Builder Plans. You may purchase shares of
the Fund (and up to four other Oppenheimer funds) automatically each
month from your account at a bank or other financial institution under
an Asset Builder Plan with AccountLink. Details are in the Asset
Builder Application and the Statement of Additional Information.
HOW MUCH MUST YOU INVEST? You can buy Fund shares with a minimum initial
investment of $1,000. You can make additional investments at any time with
as little as $25. There are reduced minimum investments under special
investment plans.
o With Asset Builder Plans, 403(b) plans, Automatic Exchange Plans
and military allotment plans, you can make initial and subsequent
investments for as little as $25. You can make additional purchases of
at least $25 through AccountLink.
o Under retirement plans, such as IRAs, pension and profit-sharing
plans and 401(k) plans, you can start your account with as little as
$250. If your IRA is started under an Asset Builder Plan, the $25
minimum applies. Additional purchases may be as little as $25.
o The minimum investment requirement does not apply to reinvesting
dividends from the Fund or other Oppenheimer funds (a list of them
appears in the Statement of Additional Information, or you can ask your
dealer or call the Transfer Agent), or reinvesting distributions from
unit investment trusts that have made arrangements with the Distributor.
AT WHAT PRICE ARE SHARES SOLD? Shares are sold at their offering price,
which is the net asset value per share plus any initial sales charge that
applies. The offering price that applies to a purchase order is based on the
next calculation of the net asset value per share that is made after the
Distributor receives the purchase order at its offices in Denver, Colorado,
or after any agent appointed by the Distributor receives the order and sends
it to the Distributor.
Net asset value. The Fund calculates the net asset value of each class of
shares as of the close of The New York Stock Exchange, on each day the
Exchange is open for trading (referred to in this Prospectus as a
"regular business day"). The Exchange normally closes at 4:00 P.M., New
York time, but may close earlier on some days. All references to time
in this Prospectus mean "New York time".
The net asset value per share is determined 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. To determine net asset value, the
Fund's Board of Directors has established procedures to value the
Fund's securities, in general based on market value. The Board has
adopted special procedures for valuing illiquid and restricted
securities and obligations for which market values cannot be readily
obtained.
Because some foreign securities may trade in markets and on exchanges
that operate on U.S. holidays and weekends, the values of some of the
Fund's foreign investments may change significantly on days when
investors cannot buy or redeem shares.
The offering price. To receive the offering price for a particular day, in
most cases the Distributor or its designated agent must receive your
order by the time of day The New York Stock Exchange closes that day.
If your order is received on a day when the Exchange is closed or after
it has closed, the order will receive the next offering price that is
determined after your order is received.
Buying through a dealer. If you buy shares through a dealer, your dealer
must receive the order by the close of The New York Stock Exchange and
transmit it to the Distributor so that it is received before the
Distributor's close of business on a regular business day (normally
5:00 P.M.) to receive that day's offering price. Otherwise, the order
will receive the next offering price that is determined.
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WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund offers investors four
(4) different classes of shares. The different classes of shares represent
investments in the same portfolio of securities, but the classes are subject
to different expenses and will likely have different share prices. When you
buy shares, be sure to specify the class of shares. If you do not choose a
class, your investment will be made in Class A shares.
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Class A Shares. If you buy Class A shares, you pay an initial sales charge
(on investments up to $1 million for regular accounts or $500,000 for
certain retirement plans). The amount of that initial sales charge
will vary depending on the amount you invest. The sales charge rates
are listed in "How Can You Buy Class A Shares?" below. There is also
an asset-based sales charge on Class A shares.
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Class B Shares. If you buy Class B shares, you pay no sales charge at the
time of purchase, but you will pay an annual asset-based sales charge.
If you sell your shares within six years of buying them, you will
normally pay a contingent deferred sales charge. That contingent
deferred sales charge varies depending on how long you own your shares,
as described in "How Can You Buy Class B Shares?" below.
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Class C Shares. If you buy Class C shares, you pay no sales charge at the
time of purchase, but you will pay an annual asset-based sales charge.
If you sell your shares within 12 months of buying them, you will
normally pay a contingent deferred sales charge of 1%, as described in
"How Can You Buy Class C Shares?" below.
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Class N Shares. Class N shares are offered only through retirement plans.
If a retirement plan buys Class N shares, it will pay no sales charge
at the time of purchase, but it will pay an annual asset-based sales
charge. If the retirement plan is terminated or the Oppenheimer funds
are terminated as an investment option of the plan and Class N shares
are redeemed within eighteen (18) months of the plan's first purchase
of Class N shares of any Oppenheimer fund, it will normally pay a
contingent deferred sales charge of 1%, as described in "How Can I Buy
Class N Shares?" below.
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
best suited to your needs depends on a number of factors that you should
discuss with your financial advisor. Some factors to consider are how much
you plan to invest and how long you plan to hold your investment. If your
goals and objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should consider
another class of shares. 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 discussion below is not intended to be investment advice or a
recommendation, because each investor's financial considerations are
different. Of course, these examples are based on approximations of the
effect of current sales charges and expenses projected over time, and do not
detail all of the considerations in selecting a class of shares. You should
analyze your options carefully with your financial advisor before making that
choice. The discussion below 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, compared to the effect over time of higher class-based
expenses on shares of Class B, Class C or Class N.
o Investing for the Shorter Term. While the Fund is meant to be a
long-term investment, if you have a relatively 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. That is because of the effect of the
Class B contingent deferred sales charge if you redeem within six
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 as 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.
And for investors who invest $1 million or more, in most cases Class A
shares will be the most advantageous choice, no matter how long you
intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or more of Class B shares
or $1 million or more of Class C shares from a single investor.
o Investing for the Longer Term. If you are investing less than $100,000
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 appropriate.
Are There Differences in Account Features That Matter to You? Some account
features may not be available to Class B, Class C or Class N
shareholders. Other features (such as Automatic Withdrawal Plans) may
not be advisable (because of the effect of the contingent deferred
sales charge) for Class B, Class C or Class N shareholders. Therefore,
you should carefully review how you plan to use your investment account
before deciding which class of shares to buy.
Additionally, the dividends payable to Class B, Class C and Class N
shareholders will be reduced by the additional expenses borne by those
classes that are not borne by Class A shares, such as the Class B,
Class C and Class N asset-based sales charge described below and in the
Statement of Additional Information. Share certificates are not
available for Class B, Class C and Class N shares, and if you are
considering using your shares as collateral for a loan, that may be a
factor to consider.
How Do Share Classes Affect Payments to my Broker? A financial advisor may
receive different compensation for selling one class of shares than for
selling another class. It is important to remember that Class B, Class
C and Class N contingent deferred sales charges and asset-based sales
charges have the same purpose as the front-end sales charge on sales of
Class A shares: to compensate the Distributor for commissions and
expenses it pays to dealers and financial institutions for selling
shares. The Distributor may pay additional compensation from its own
resources to securities dealers or financial institutions based upon
the value of shares of the Fund owned by the dealer or financial
institution for its own account or for its customers.
SPECIAL SALES CHARGE ARRANGEMENTS AND WAIVERS. Appendix C to the Statement
of Additional Information details the conditions for the waiver of sales
charges that apply in certain cases, and the special sales charge rates that
apply to purchases of shares of the Fund by certain groups, or under
specified retirement plan arrangements or in other special types of
transactions. To receive a waiver or special sales charge rate, you must
advise the Distributor when purchasing shares or the Transfer Agent when
redeeming shares that the special conditions apply.
HOW CAN YOU BUY CLASS A SHARES? Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales charge.
However, in some cases, described below, purchases are not subject to an
initial sales charge, and the offering price will be the net asset value. In
other cases, reduced sales charges may be available, as described below or in
the Statement of Additional Information. 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 or allocated
to your dealer as commission. The Distributor reserves the right to reallow
the entire commission to dealers. The current sales charge rates and
commissions paid to dealers and brokers are as follows:
--------------------------------------------------------------------------------
Front-End Front-End
Sales Charge Sales Charge Commission As
As a As a Percentage of
Amount of Purchase Percentage of Percentage of Offering Price
Offering Price Net Amount
Invested
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$25,000 or more but less than 5.50% 5.82% 4.75%
$50,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$50,000 or more but less than 4.75% 4.99% 4.00%
$100,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$100,000 or more but less than 3.75% 3.90% 3.00%
$250,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$250,000 or more but less than 2.50% 2.56% 2.00%
$500,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$500,000 or more but less than 2.00% 2.04% 1.60%
$1 million
--------------------------------------------------------------------------------
Class A Contingent Deferred Sales Charge. There is no initial sales charge
on purchases of Class A shares of any one or more of the Oppenheimer
funds aggregating $1 million or more or for certain purchases by
particular types of retirement plans described in Appendix C to the
Statement of Additional Information. The Distributor pays dealers of
record commissions in an amount equal to 1.0% of purchases of $1
million or more (other than purchases by those retirement accounts,
which are not permitted in the Fund). For those retirement plan
accounts, the commission is 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,
based on the cumulative purchases during the prior 12 months ending
with the current purchase. In either case, the commission will be paid
only on purchases that were not previously subject to a front-end sales
charge and dealer commission.1 That commission will not be paid on
purchases of shares of $1 million or more (including any right of
accumulation) by a retirement plan that pays for the purchase with the
redemption of Class C shares of one or more Oppenheimer funds.
If you redeem any of those shares within an 18-month "holding period"
measured from the end of the calendar month of their purchase, a
contingent deferred sales charge (called the "Class A contingent
deferred sales charge") may be deducted from the redemption proceeds.
That sales charge will be equal to 1.0% of the lesser of (1) the
aggregate net asset value of the redeemed shares at the time of
redemption (excluding shares purchased by reinvestment of dividends or
capital gain distributions) or (2) the original net asset value of the
redeemed shares. However, the Class A contingent deferred sales charge
will not exceed the aggregate amount of the commissions the Distributor
paid to your dealer on all purchases of Class A shares of all
Oppenheimer funds you made that were subject to the Class A contingent
deferred sales charge.
Can You Reduce Class A Sales Charges? You may be eligible to buy Class A
shares at reduced sales charge rates under the Fund's "Right of Accumulation"
or a Letter of Intent, as described in "Reduced Sales Charges" in the
Statement of Additional Information. The Class A initial and contingent
deferred sales charges are not imposed in the circumstances described in
"Reduced Sales Charges" in Appendix C to the Statement of Additional
Information.
HOW CAN YOU BUY 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 the end of the calendar month of their purchase,
a contingent deferred sales charge will be deducted from the redemption
proceeds. The Class B contingent deferred sales charge is paid to compensate
the Distributor for its expenses of providing distribution-related services
to the Fund in connection with the sale of Class B shares.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule for the Class B contingent deferred sales
charge holding period:
--------------------------------------------------------------------------------
Contingent Deferred Sales Charge on
Redemptions in That Year
(As % of Amount Subject to Charge)
Years Since Beginning of Month in Which
Purchase Order was Accepted
--------------------------------------------------------------------------------
0 - 1 5.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 - 2 4.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2 - 3 3.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3 - 4 3.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4 - 5 2.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5 - 6 1.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
6 and following None
--------------------------------------------------------------------------------
In the table, a "year" is a 12-month period. In applying the sales charge,
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. Class B shares automatically convert
to Class A shares 72 months after you purchase them. This conversion
feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution and
Service Plan, described below. The conversion is based on the relative
net asset value of the two classes, and no sales load or other charge
is imposed. When any Class B shares you hold 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. For further information on the conversion feature and its tax
implications, see "Class B Conversion" in the Statement of Additional
Information.
HOW CAN YOU BUY 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 a holding period of 12 months from the end of the calendar
month of their purchase, a contingent deferred sales charge of 1.0% will be
deducted from the redemption proceeds. The Class C contingent deferred sales
charge is paid to compensate the Distributor for its expenses of providing
distribution-related services to the Fund in connection with the sale of
Class C shares.
WHO CAN BUY CLASS N SHARES? As discussed above, Class N shares are offered
only through retirement plans that purchase Class N shares of one or more
Oppenheimer funds totaling $500,000 or more, or that have assets of $500,000
or more, or 100 or more eligible plan participants. Non-retirement plan
investors cannot buy Class N shares directly. Class N shares are sold at net
asset value per share without an initial sales charge. However, a contingent
deferred sales chare of 1.00% will be imposed if the retirement plan is
terminated or Class N shares of all Oppenheimer funds are terminated as an
investment option of the plan and Class N shares are redeemed within eighteen
(18) months after the plan's first purchase of Class N shares of any
Oppenheimer fund. See the Statement of Additional Information for when the
contingent deferred sales charge is waived. The Class N contingent deferred
sales charge is paid to compensate the Distributor for its expenses of
providing distribution-related services to the Fund in connection with the
sale of Class N shares.
DISTRIBUTION AND SERVICE (12b-1) PLANS.
Distribution and Service Plan for Class A Shares. The Fund has adopted a
Distribution and Service Plan for Class A shares. Under the plan the
Fund currently pays an asset-based sales charge to the Distributor at
an annual rate of 0.20% of average annual net assets of Class A shares
the Fund (the Board of Directors can set this rate up to 0.25%). The
Fund also pays a service fee to the Distributor of 0.20% of the average
annual net assets of Class A shares. The Distributor currently uses all
of the service fee and a portion of the asset-based sales charge to pay
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 pays out the
portion of the asset-based sales charge equal to 0.15% of average
annual net assets representing Class A shares purchased before
September 1, 1993, and 0.10% of average annual net assets representing
Class A shares purchased on or after that date.
Distribution and Service Plans for Class B, Class C and Class N Shares. The
Fund has adopted Distribution and Service Plans for Class B, Class C
and Class N shares to pay the Distributor for its services and costs in
distributing Class B, Class C and Class N shares and servicing
accounts. Under the plans, the Fund pays the Distributor an annual
asset-based sales charge of 0.75% per year on Class B shares and on
Class C shares and 0.25% per year on Class N shares. The Distributor
also receives a service fee of 0.25% per year under each of the plans.
The asset-based sales charge and service fees increase Class B and
Class C expenses by 1.00% and Class N expenses by up to 0.50% of the
net assets per year. Because these fees are paid out of the Fund's
assets on an on-going basis, over time these fees will increase the
cost of your investment and may cost you more than other types of sales
charges.
The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or Class C
shares. The Distributor pays the 0.25% service fees to dealers in
advance for the first year after the shares are sold by the dealer.
After the shares have been held for a year, the Distributor pays the
service fees to dealers on a quarterly basis.
The Distributor currently pays sales concessions of 3.75% of the
purchase price of Class B shares to dealers from its own resources at
the time of sale. Including the advance of the service fee, the total
amount paid by the Distributor to the dealer at the time of sales of
Class B shares is therefore 4.00% of the purchase price. The
Distributor retains the Class B asset-based sales charge.
The Distributor currently pays sales concessions of 0.75% of the
purchase price of Class C shares to dealers from its own resources at
the time of sale. Including the advance of the service fee, the total
amount paid by the Distributor to the dealer at the time of sale of
Class C shares is therefore 1.00% of the purchase price. The
Distributor pays the asset-based sales charge as an ongoing commission
to the dealer on Class C shares that have been outstanding for a year
or more.
The Distributor currently pays sales concessions of 0.75% of the
purchase price of Class N shares to dealers from its own resources at
the time of sale. Including the advance of the service fee, the total
amount paid by the Distributor to the dealer at the time of sale of
Class N shares is therefore 1.00% of the purchase price. The
Distributor retains the asset-based sales charge on Class N shares.
Special Investor Services
ACCOUNTLINK. You can use our AccountLink feature to link your Fund account
with an account at a U.S. bank or other financial institution. It must be an
Automated Clearing House (ACH) member. AccountLink lets you:
o transmit funds electronically to purchase shares by telephone (through
a service representative or by PhoneLink) or automatically under Asset
Builder Plans, or
o have the Transfer Agent send redemption proceeds or transmit dividends
and distributions directly to your bank account. Please call the
Transfer Agent for more information.
You may purchase shares 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.
AccountLink privileges should be requested on your Application or your
dealer's settlement instructions if you buy your shares through a dealer.
After your account is established, you can request AccountLink privileges by
sending signature-guaranteed instructions to the Transfer Agent. AccountLink
privileges will apply to each shareholder listed in the registration on your
account as well as to your dealer representative of record unless and until
the Transfer Agent receives written instructions terminating or changing
those privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-guaranteed
instructions to the Transfer Agent signed by all shareholders who own the
account.
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 OppenheimerFunds account after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number,
1.800.533.3310.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by
phone, by calling 1.800.533.3310. You must have established
AccountLink privileges to link your bank account with the Fund to pay
for these purchases.
Exchanging Shares. With the OppenheimerFunds Exchange Privilege, described
below, you can exchange shares automatically by phone from your Fund
account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number.
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.
CAN YOU SUBMIT TRANSACTION REQUESTS BY FAX? You may send requests for
certain types of account transactions to the Transfer Agent by fax
(telecopier). Please call 1.800.525.7048 for information about which
transactions may be handled this way. Transaction requests submitted by fax
are subject to the same rules and restrictions as written and telephone
requests described in this Prospectus.
OPPENHEIMERFUNDS INTERNET WEB SITE. You can obtain information about the
Fund, as well as your account balance, on the OppenheimerFunds Internet web
site, at http://www.oppenheimerfunds.com. Additionally, shareholders listed
in the account registration (and the dealer of record) may request certain
account transactions through a special section of that web site. To perform
account transactions, you must first obtain a personal identification number
(PIN) by calling the Transfer Agent at 1.800.533.3310. If you do not want to
have Internet account transaction capability for your account, please call
the Transfer Agent at 1.800.525.7048. At times, the web site may be
inaccessible or its transaction features may be unavailable.
AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis. Please call the Transfer Agent
or consult the Statement of Additional Information for details.
REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A or Class B
shares of the Fund, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies only to Class A shares
that you purchased subject to an initial sales charge and to Class A or Class
B shares on which you paid a contingent deferred sales charge when you
redeemed them. This privilege does not apply to Class C or Class N shares.
You must be sure to ask the Distributor for this privilege when you send your
payment.
RETIREMENT PLANS. You may buy shares of the Fund for your retirement plan
account. If you participate in a plan sponsored by your employer, the plan
trustee or administrator must buy the shares for your plan account. The
Distributor also offers a number of different retirement plans that
individuals and employers can use:
Individual Retirement Accounts (IRAs). These include regular IRAs, Roth
IRAs, SIMPLE IRAs, rollover IRAs and Education IRAs.
SEP-IRAs. These are Simplified Employee Pensions Plan IRAs for small
business owners or self-employed individuals.
403(b)(7) Custodial Plans. These are tax deferred plans for employees of
eligible tax-exempt organizations, such as schools, hospitals and
charitable organizations.
401(k) Plans. These are special retirement plans for businesses.
Pension and Profit-Sharing Plans. These plans are designed for businesses
and self-employed individuals.
Please call the Distributor for OppenheimerFunds retirement plan
documents, which include applications and important plan information.
How to Sell Shares
You can sell (redeem) some or all of your shares on any regular business
day. Your shares will be sold at the next net asset value calculated after
your order is received in proper form (which means that it must comply with
the procedures described below) and is accepted by the Transfer Agent. The
Fund lets you sell your shares by writing a letter or by using the Fund's
checkwriting privilege or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis. 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 account, please call the Transfer Agent first, at
1.800.525.7048, for assistance.
Certain Requests Require a Signature Guarantee. To protect you and the Fund
from fraud, the following redemption requests must be in writing and
must include a signature guarantee (although there may be other
situations that also require a signature guarantee):
o You wish to redeem $100,000 or more and receive a check
o The redemption check is not payable to all shareholders listed on the
account statement
o The redemption check is not sent to the address of record on your
account statement
o Shares are being transferred to a Fund account with a different owner
or name
o Shares are being redeemed by someone (such as an Executor) other than
the owners
Where Can You Have Your Signature Guaranteed? The Transfer Agent will accept
a guarantee of your signature by a number of financial institutions,
including:
o a U.S. bank, trust company, credit union or savings association,
o a foreign bank that has a U.S. correspondent bank,
o a U.S. registered dealer or broker in securities, municipal securities
or government securities, or
o a U.S. national securities exchange, a registered securities
association or a clearing agency.
If you are signing on behalf of a corporation, partnership or other
business or as a fiduciary, you must also include your title in the signature.
Retirement Plan Accounts. There are special procedures to sell shares in an
OppenheimerFunds retirement plan account. Call the Transfer Agent for a
distribution request form. Special income tax withholding requirements
apply to distributions from retirement plans. You must submit a
withholding form with your redemption request to avoid delay in getting
your money and if you do not want tax withheld. If your employer holds
your retirement plan account for you in the name of the plan, you must
ask the plan trustee or administrator to request the sale of the Fund
shares in your plan account.
Sending Redemption Proceeds by Wire. While the Fund normally sends your money
by check, you can arrange to have the proceeds of the shares you sell
sent by Federal Funds wire to a bank account you designate. It must be
a commercial bank that is a member of the Federal Reserve wire system.
The minimum redemption you can have sent by wire is $2,500. There is a
$10 fee for each wire. To find out how to set up this feature on your
account or to arrange a wire, call the Transfer Agent at 1.800.852.8457.
HOW DO YOU SELL SHARES BY MAIL? Write a letter of instructions that
includes:
o Your name
o The Fund's name
o Your Fund account number (from your account statement)
o The dollar amount or number of shares to be redeemed
o Any special payment instructions
o Any share certificates for the shares you are selling
o The signatures of all registered owners exactly as the account is
registered, and
o Any special documents requested by the Transfer Agent to assure
proper authorization of the person asking to sell the shares.
Use the following address for Send courier or express mail
requests by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217-5270 Denver, Colorado 80231
HOW DO YOU SELL SHARES BY TELEPHONE? You and your dealer representative of
record may also sell your shares by telephone. To receive the redemption
price calculated on a particular regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock Exchange
that day, which is normally 4:00 P.M., but may be earlier on some days. You
may not redeem shares held in an OppenheimerFunds retirement plan account or
under a share certificate by telephone.
o To redeem shares through a service representative, call 1.800.852.8457
o To redeem shares automatically on PhoneLink, call 1.800.533.3310
Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds sent to that bank account.
Are There Limits on Amounts Redeemed by Telephone?
Telephone Redemptions Paid by Check. Up to $100,000 may be redeemed by
telephone in any 7-day period. The check must be payable to all owners
of record of the shares and must be sent to the address on the account
statement. This service is not available within 30 days of changing
the address on an account.
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 transfer to your bank is
initiated on the business day after the redemption. You do not receive
dividends on the proceeds of the shares you redeemed while they are
waiting to be transferred.
CAN YOU SELL 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. If your shares are held in the name of your dealer, you must
redeem them through your dealer.
HOW CONTINGENT DEFERRED SALES CHARGES AFFECT REDEMPTIONS. If you purchase
shares subject to a Class A, Class B, Class C or Class N contingent deferred
sales charge and redeem any Class A, Class B or Class C shares or all Class N
shares during the applicable holding period for the class of shares, the
contingent deferred sales charge will be deducted from the redemption
proceeds (unless you are eligible for a waiver of that sales charge based on
the categories listed in Appendix C to the Statement of Additional
Information) and you advise the Transfer Agent of your eligibility for the
waiver when you place your redemption request.
A contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or the
original net asset value. A contingent deferred sales charge is not imposed
on:
o the amount of your account value represented by an increase in net
asset value over the initial purchase price,
o shares purchased by the reinvestment of dividends or capital gains
distributions, or
o shares redeemed in the special circumstances described in Appendix C to
the Statement of Additional Information.
To determine whether a 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 the holding period that applies to the class, and
3. shares held the longest during the holding period.
Contingent deferred sales charges are not charged when you exchange
shares of the Fund for shares of other Oppenheimer funds. However, if you
exchange them within the applicable contingent deferred sales charge holding
period, the holding period will carry over to the fund whose shares you
acquire. Similarly, if you acquire shares of this Fund by exchanging shares
of another Oppenheimer fund that are still subject to a contingent deferred
sales charge holding period, that holding period will carry over to this Fund.
How to Exchange Shares
Shares of the Fund can be purchased by exchanging shares of other Oppenheimer
funds on the same basis. To exchange shares, you must meet several
conditions:
o Shares of the fund selected for exchange must be available for sale
in your state of residence.
o The prospectuses of both funds must offer the exchange privilege.
o You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them. After the account is open 7
days, you can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund whose
shares you purchase by exchange.
o Before exchanging into a fund, you must obtain and read its prospectus.
Shares of a particular class of the Fund may be exchanged only for
shares of the same class in the other Oppenheimer funds. For example, you
can exchange Class A shares of this Fund only for Class A shares of another
fund. In some cases, sales charges may be imposed on exchange transactions.
For tax purposes, exchanges of shares involve a sale of the shares of the
fund you own and a purchase of the shares of the other fund, which may result
in a capital gain or loss. Please refer to "How to Exchange Shares" in the
Statement of Additional Information for more details.
HOW DO YOU SUBMIT EXCHANGE REQUESTS? 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 address on the back cover. Exchanges of shares held under
certificates cannot be processed unless the Transfer Agent receives the
certificates with the request.
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.
ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies you
should be aware of:
o Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange request
that conforms to the policies described above. It must be received by
the close of The New York Stock Exchange that day, which is normally
4:00 P.M. but may be earlier on some days. However, either fund may
delay the purchase of shares of the fund you are exchanging into up to
seven days if it determines it would be disadvantaged by a same-day
exchange. For example, the receipt of multiple exchange requests from a
"market timer" might require the Fund to sell securities at a
disadvantageous time and/or price.
o Because excessive trading can hurt fund performance and
harm shareholders, the Fund reserves the right to refuse any exchange
request that it believes will disadvantage it, or to refuse multiple
exchange requests submitted by a shareholder or dealer.
o The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide you
notice whenever it is required by applicable law to do so, it may
impose these changes at any time for emergency purposes.
o If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares eligible
for exchange will be exchanged.
Shareholder Account Rules and Policies
More information about the Fund's policies and procedures for buying, selling
and exchanging shares is contained 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 Fund at any time. If an
account has more than one owner, the Fund and the Transfer Agent may
rely on the instructions of any one owner. Telephone privileges apply
to each owner of the account and the dealer representative of record
for the account unless 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. The Transfer Agent and the
Fund will not be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements
for redemptions stated in this Prospectus.
Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions, and are responsible to their clients who
are shareholders of the Fund if the dealer performs any transaction
erroneously or improperly.
The redemption price for shares will vary from day to day because the value
of the securities in the Fund's portfolio fluctuates. The redemption
price, which is the net asset value per share, will normally differ for
each class of shares. The redemption value of your shares may be more
or less than their original cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by
check or by AccountLink (as elected by the shareholder) within seven
days after the Transfer Agent receives redemption instructions in
proper form. However, under unusual circumstances determined by the
Securities and Exchange Commission, payment may be delayed or
suspended. For accounts registered in the name of a broker-dealer,
payment will normally be forwarded within three business days after
redemption.
The Transfer Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the purchase
payment has cleared. That delay may be as much as 10 days from the
date the shares were purchased. That delay may be avoided if you
purchase shares by Federal Funds wire or 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. In some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
Shares may be "redeemed in kind" under unusual circumstances (such as a lack
of liquidity in the Fund's portfolio to meet redemptions). This means
that the redemption proceeds will be paid with liquid securities from
the Fund's portfolio.
"Backup withholding" of federal income tax may be applied against taxable
dividends, distributions and redemption proceeds (including exchanges)
if you fail to furnish the Fund your correct, certified Social Security
or Employer Identification Number when you sign your application, or if
you under-report your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, the Fund will
mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's
records. However, each shareholder may call the Transfer Agent at
1.800.525.7048 to ask that copies of those materials be sent personally
to that shareholder.
Dividends, Capital Gains and Taxes
DIVIDENDS. The Fund intends to declare dividends separately for each class of
shares from net investment income on an annual basis and to pay them to
shareholders in December, on a date selected by the Board of Directors.
Dividends and distributions paid on Class A shares will generally be higher
than dividends for Class B, Class C and Class N shares, which normally have
higher expenses than Class A. The Fund has no fixed dividend rate and cannot
guarantee that it will pay any dividends or distributions.
CAPITAL GAINS. The Fund may realize capital gains on the sale of portfolio
securities. If it does, it may make distributions out of any net short-term
or long-term capital gains in December of each year. The Fund may make
supplemental distributions of dividends and capital gains following the end
of its fiscal year. There can be no assurance that the Fund will pay any
capital gains distributions in a particular year.
WHAT ARE YOUR CHOICES FOR RECEIVING DISTRIBUTIONS? When you open your
account, specify on your application how you want to receive your dividends
and distributions. You have four options:
Reinvest All Distributions in the Fund. You can elect to reinvest all
dividends and capital gains distributions in additional shares of the
Fund.
Reinvest Dividends or Capital Gains Only. You can elect to reinvest some
distributions (dividends, short-term capital gains or long-term capital
gains distributions) in the Fund while receiving other types of
distributions by check or having them sent to your bank account through
AccountLink.
Receive All Distributions in Cash. You can elect to receive a check for all
dividends and capital gains distributions or have them sent to your
bank through AccountLink.
Reinvest Your Distributions in Another OppenheimerFunds Account. You can
reinvest all distributions in the same class of shares of another
OppenheimerFunds account you have established.
TAXES. If your shares are not held in a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the Fund.
Distributions are subject to federal income tax and may be subject to state
or local taxes. Dividends paid from short-term capital gains and net
investment income are taxable as ordinary income. Long-term capital gains
are taxable as long-term capital gains when distributed to shareholders. It
does not matter how long you have held your shares. Whether you reinvest your
distributions in additional shares or take them in cash, the tax treatment is
the same.
If more than 50% of the Fund's assets are invested in foreign
securities at the end of any fiscal year, the Fund may elect under the
Internal Revenue Code to permit shareholders to take a credit or deduction on
their federal income tax return for foreign taxes paid by the Fund.
Every year the Fund will send you and the IRS a statement showing the
amount of any taxable distribution you received in the previous year. Any
long-term capital gains will be separately identified in the tax information
the Fund sends you after the end of the calendar year.
Avoid "Buying a Dividend". If you buy shares on or just before the
ex-dividend date or just before the Fund declares a capital gain
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.
Remember, There May be Taxes on Transactions. Because the Fund's share price
fluctuates, you may have a capital gain or loss when you sell or
exchange your shares. 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. Any capital gain is subject to capital gains tax.
Returns of Capital Can Occur. 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.
This information is only a summary of certain federal personal income
tax information about your investment. You should consult with your tax
advisor about the effect of an investment in the Fund on your particular tax
situation.
<PAGE>
Financial Highlights
The Financial Highlights Table is presented to help you understand the Fund's
financial performance for the past 5 fiscal years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). For the fiscal year ended December 31, 2000, the information
was audited by KPMG LLP, the Fund's independent accountants, whose report,
along with the Fund's financial statements, is included in the Statement of
Additional Information, which is available on request. For the previous
years, the information was audited by PricewaterhouseCoopers, LLP.
<PAGE>
INFORMATION AND SERVICES
For More Information About Oppenheimer Quest Global Value Fund, Inc.:
The following additional information about the Fund is available without
charge upon request:
STATEMENT OF ADDITIONAL INFORMATION This document includes additional
information about the Fund's investment policies, risks, and operations. It
is incorporated by reference into this Prospectus (which means it is legally
part of this Prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS Additional information about the Fund's
investments and performance is available in the Fund's Annual and
Semi-Annual Reports to shareholders. The Annual Report includes a
discussion of market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
How to Get More Information
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, and other information about the Fund or your account:
--------------------------------------------------------------------------------
By Telephone: Call OppenheimerFunds Services
toll-free: 1.800.525.7048
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
By Mail: Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
On the Internet: You can send us a request by e-mail or
read or download documents on the
OppenheimerFunds web site:
http://www.oppenheimerfunds.com
--------------------------------------------------------------------------------
You can also obtain copies of the Statement of Additional Information and
other Fund documents and reports by visiting the SEC's Public Reference Room
in Washington, D.C. (Phone 1.202.942.8090) or the EDGAR database on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained after
payment of a duplicating fee by electronic request at the SEC's e-mail
address: [email protected] or by writing to the SEC's Public Reference
Section, Washington, D.C. 20549-0102.
No one has been authorized to provide any information about the Fund or to
make any representations about the Fund other than what is contained in this
Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a
solicitation of an offer to buy shares of the Fund, to any person in any
state or other jurisdiction where it is unlawful to make such an offer.
The Fund's shares are distributed by:
OppenheimerFunds Distributor, Inc.
SEC File No. 811-06105
PR0254.001.0201 Printed on recycled paper.
<PAGE>
Appendix to Prospectus of
Oppenheimer Quest Global Value Fund, Inc.
Graphic Material included in the Prospectus of Oppenheimer Quest Global
Value Fund, Inc. (the "Fund") under the heading "Annual Total Returns (Class
A) (as of 12/31 each year)":
A bar chart will be included in the Prospectus of the Fund depicting
the annual total returns of a hypothetical investment in Class A shares of
the Fund since December 31, 1991 without deducting sales charges. Set forth
below are the relevant data points that will appear on the bar chart.
Calendar Annual
Year Total
Ended Returns
----- -------
12/31/00 %
12/31/99 24.99%
12/31/98 12.31%
12/31/97 14.61%
12/31/96 16.29%
12/31/95 20.75%
12/31/94 3.41%
12/31/93 25.42%
12/31/92 1.79%
12/31/91 15.84%
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<PAGE>
Oppenheimer Quest Global Value Fund, Inc.
------------------------------------------------------------------------------
6801 South Tucson Way, Englewood, Colorado 80112
1-800-525-7048
Statement of Additional Information dated February 12, 2001
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated February 12, 2000. It should be read
together with the Prospectus, which may be obtained by writing to the Fund's
Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado
80217, or by calling the Transfer Agent at the toll-free number shown above,
or by downloading it from the OppenheimerFunds Internet web site at
www.oppenheimerfunds.com.
Contents
Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks.. 2
The Fund's Investment Policies..................................... 2
Other Investment Techniques and Strategies......................... 6
Investment Restrictions............................................ 25
How the Fund is Managed ............................................... 27
Organization and History........................................... 27
Directors and Officers............................................. 28
The Manager........................................................ 33
Brokerage Policies of the Fund......................................... 36
Distribution and Service Plans......................................... 39
Performance of the Fund................................................ 42
About Your Account
How To Buy Shares...................................................... 46
How To Sell Shares..................................................... 54
How To Exchange Shares................................................. 59
Dividends, Capital Gains and Taxes..................................... 62
Additional Information About the Fund.................................. 63
Financial Information About the Fund
Reports of Independent Accountants..................................... 65
Financial Statements................................................... 66
Appendix A: Ratings Definitions........................................ A-1
Appendix B: Corporate Industry Classifications......................... B-1
Appendix C: Special Sales Charge Arrangements and Waivers.............. C-1
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<PAGE>
A B O U T T H E F U N D
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Additional Information About the Fund's Investment Policies and Risks
The investment objective, the principal investment policies and the
main risks of the Fund are described in the Prospectus. This Statement of
Additional Information contains supplemental information about those policies
and risks and the types of securities that the Fund invests in. Additional
information is also provided about the Fund's investment Manager,
OppenheimerFunds, Inc., and the strategies that the Fund may use to try to
achieve its objective.
The Fund's Investment Policies. The composition of the Fund's portfolio and
the techniques and strategies that the Fund's Sub-Advisor, OpCap Advisors,
may use in selecting portfolio securities will vary over time. The Fund is
not required to use all of the investment techniques and strategies described
below in seeking its goal. It may use some of the special investment
techniques and strategies at some times or not at all.
In selecting securities for the Fund's portfolio, the Sub-Advisor
evaluates the merits of particular securities primarily through the exercise
of its own investment analysis. In the case of corporate issuers, that
process may include, among other things, evaluation of the issuer's
historical operations, prospects for the industry of which the issuer is
part, the issuer's financial condition, its pending product developments and
business (and those of competitors), the effect of general market and
economic conditions on the issuer's business, and legislative proposals that
might affect the issuer. In the case of foreign securities, the Sub-Advisor
may also consider the conditions of a particular country's economy in
relation to the U.S. economy or other foreign economies, special political
conditions in a country or region, the effect of taxes, the efficiencies and
costs of particular markets and other factors when evaluating the securities
of issuers in a particular country.
|X| Investments in Equity Securities. The Fund does not limit its
investments in equity securities to issuers having a market capitalization of
a specified size or range, and while it emphasizes securities of medium and
large-capitalization issuers, the Fund can also invest in securities of
small-capitalization issuers. At times, the Fund may increase the relative
emphasis of its equity investments in securities of one or more
capitalization ranges, based upon the Sub-Advisor's judgment of where the
best market opportunities are to seek the Fund's objective. At times, the
market may favor or disfavor securities of issuers of a particular
capitalization range. Securities of small-capitalization issuers may be
subject to greater price volatility in general than securities of larger
companies. Therefore, if the Fund has substantial investments in
smaller-capitalization companies at times of market volatility, the Fund's
share price could fluctuate more than that of funds focusing on
larger-capitalization issuers.
|_| Value Investing. In selecting equity investments for the Fund's
portfolio, the portfolio managers currently use a value investing style. In
using a value approach, the portfolio managers seek stock and other equity
securities that appear to be temporarily undervalued, by various measures,
such as price/earnings ratios. This approach is subject to change and may not
necessarily be used in all cases. Value investing seeks stocks having prices
that are low in relation to their real worth or future prospects, in the hope
that the Fund will realize appreciation in the value of its holdings when
other investors realize the intrinsic value of the stock.
Using value investing requires research as to the issuer's underlying
financial condition and prospects. Some of the measures used to identify
these securities include, among others:
o Price/Earnings ratio, which is the stock's price divided by its
earnings per share. A stock having a price/earnings ratio lower than
its historical range, or the market as a whole or that of similar
companies may offer attractive investment opportunities.
o Price/book value ratio, which is the stock price divided by the book
value of the company per share, which measures the company's stock
price in relation to its asset value.
o Discounted Future Value Analysis, which involves two steps:
determining the probable value of the stock at a specific point in
the future by researching the current and future prospects of the
company; and then comparing the probable value to the current stock
price to determine if the stock is sufficiently undervalued and if
it offers an attractive return over the investment horizon.
o Valuation of Assets which compares the stock price to the value of
the company's underlying assets, including their projected value in
the marketplace and liquidation value.
|_| Preferred Stocks. Preferred stock, unlike common stock, has a
stated dividend rate payable from the corporation's earnings. Preferred
stock dividends can be cumulative or non-cumulative, participating, or
auction rate. "Cumulative" dividend provisions require all or a portion of
prior unpaid dividends to be paid before dividends can be paid on the issuers
of common stock. Preferred stock may be "participating" stock, which means
that it may be entitled to a dividend exceeding the stated dividend in
certain cases.
If interest rates rise, the fixed dividend on preferred stocks may be
less attractive, causing the price of preferred stocks to decline. Preferred
stock may have mandatory sinking fund provisions, as well as provisions
allowing calls or redemptions prior to maturity, which can also have a
negative impact on prices when interest rates decline.
The rights of preferred stock on distribution of a corporation's assets
in the event of its liquidation are generally subordinate to the rights
associated with a corporation's debt securities. Preferred stock generally
has a preference over common stock on the distribution of a corporation's
assets in the event of liquidation of the corporation.
|_| Rights and Warrants. Warrants basically are options to purchase
equity securities at specific prices valid for a specific period of time.
Their prices do not necessarily move parallel to the prices of the underlying
securities. The Fund cannot invest more than 5% of its total assets in
warrants. Rights are similar to warrants, but normally have a short duration
and are distributed directly by the issuer to its shareholders. Rights and
warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer.
|_| Convertible Securities. Convertible securities are securities
that are convertible into an issuer's common stock. Convertible securities
rank senior to common stock in a corporation's capital structure and
therefore are subject to less risk than common stock in case of the issuer's
bankruptcy or liquidation. They are subject to credit risk and interest rate
risk.
The value of a convertible security is a function of its "investment
value" and its "conversion value." If the investment value exceeds the
conversion value, the security will behave more like a debt security, and the
security's price will likely increase when interest rates fall and decrease
when interest rates rise. If the conversion value exceeds the investment
value, the security will behave more like an equity security: it will likely
sell at a premium over its conversion value, and its price will tend to
fluctuate directly with the price of the underlying security.
While some convertible securities are a form of debt security in many
cases, their conversion feature (allowing conversion into equity securities)
causes them to be regarded by the Sub-Advisor more as "equity equivalents."
As a result, the rating assigned to the security has less impact on the
Sub-Advisor's investment decision with respect to convertible debt securities
than in the case of non-convertible fixed income securities. To determine
whether convertible securities should be regarded as "equity equivalents,"
the Sub-Advisor examines the following factors:
(1) whether, at the option of the investor, the convertible security can be
exchanged for a fixed number of shares of common stock of the
issuer,
(2) whether the issuer of the convertible securities has restated its
earnings per share of common stock on a fully diluted basis
(considering the effect of conversion of the convertible
securities), and
(3) the extent to which the convertible security may be a defensive "equity
substitute," providing the ability to participate in any
appreciation in the price of the issuer's common stock.
|X| Foreign Securities. The Fund can purchase equity and debt
securities issued or guaranteed by foreign companies or foreign governments
and their agencies and instrumentalities. They may be traded on foreign
securities exchanges or in the foreign over-the-counter markets.
"Foreign securities" include equity and debt securities of companies
organized under the laws of countries other than the United States and debt
securities of foreign governments. Securities of foreign issuers that are
represented by American Depository Receipts, European Depository Receipts,
Global Depository Receipts or similar depository arrangements or that are
listed on a U.S. securities exchange or traded in the U.S. over-the-counter
markets are considered "foreign securities" for the purpose of the Fund's
investment allocations. They are subject to some of the special
considerations and risks, discussed below, that apply to foreign securities
traded and held abroad.
Because the Fund can purchase securities denominated in foreign
currencies, a change in the value of a foreign currency against the U.S.
dollar could result in a change in the amount of income the Fund has
available for distribution. Because a portion of the Fund's investment
income may be received in foreign currencies, the Fund will be required to
compute its income in U.S. dollars for distribution to shareholders, and
therefore the Fund will absorb the cost of currency fluctuations. After the
Fund has distributed income, subsequent foreign currency losses may result in
the Fund's having distributed more income in a particular fiscal period than
was available from investment income, which could result in a return of
capital to shareholders.
Investing in foreign securities offers potential benefits not available
from investing solely in securities of domestic issuers. They include the
opportunity to invest in foreign issuers that appear to offer growth
potential, or in foreign countries with economic policies or business cycles
different from those of the U.S., or to reduce fluctuations in portfolio
value by taking advantage of foreign stock markets that do not move in a
manner parallel to U.S. markets. The Fund will hold foreign currency only in
connection with the purchase or sale of foreign securities.
|_| Foreign Debt Obligations. The debt obligations of foreign
governments and their agencies and instrumentalities may or may not be
supported by the full faith and credit of the foreign government. The Fund
can buy securities issued by certain "supra-national" entities, which include
entities designated or supported by governments to promote economic
reconstruction or development, international banking organizations and
related government agencies. Examples are the International Bank for
Reconstruction and Development (commonly called the "World Bank"), the Asian
Development Bank and the Inter-American Development Bank.
The governmental members of these supra-national entities are
"stockholders" that typically make capital contributions and may be committed
to make additional capital contributions if the entity is unable to repay its
borrowings. A supra-national entity's lending activities may be limited to a
percentage of its total capital, reserves and net income. There can be no
assurance that the constituent foreign governments will continue to be able
or willing to honor their capitalization commitments for those entities.
|_| Risks of Foreign Investing. Investments in foreign securities
may offer special opportunities for investing but also present special
additional risks and considerations not typically associated with investments
in domestic securities. Some of these additional risks are:
o reduction of income by foreign taxes;
o fluctuation in value of foreign investments due to changes in currency
rates or currency control regulations (for example, currency
blockage);
o transaction charges for currency exchange;
o lack of public information about foreign issuers;
o lack of uniform accounting, auditing and financial reporting standards
in foreign countries comparable to those applicable to domestic
issuers;
o less volume on foreign exchanges than on U.S. exchanges;
o greater volatility and less liquidity on foreign markets than in the
U.S.;
o less governmental regulation of foreign issuers, stock exchanges and
brokers than in the U.S.;
o greater difficulties in commencing lawsuits;
o higher brokerage commission rates than in the U.S.;
o increased risks of delays in settlement of portfolio transactions or
loss of certificates for portfolio securities;
o possibilities in some countries of expropriation, confiscatory
taxation, political, financial or social instability or adverse
diplomatic developments; and
o unfavorable differences between the U.S. economy and foreign
economies.
In the past, U.S. Government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other restrictions,
and it is possible that such restrictions could be re-imposed.
|_| Special Risks of Emerging Markets. Emerging and developing
markets abroad may also offer special opportunities for growth investing but
have greater risks than more developed foreign markets, such as those in
Europe, Canada, Australia, New Zealand and Japan. There may be even less
liquidity in their securities markets, and settlements of purchases and sales
of securities may be subject to additional delays. They are subject to
greater risks of limitations on the repatriation of income and profits
because of currency restrictions imposed by local governments. Those
countries may also be subject to the risk of greater political and economic
instability, which can greatly affect the volatility of prices of securities
in those countries. The Sub-Advisor will consider these factors when
evaluating securities in these markets.
|X| Portfolio Turnover. "Portfolio turnover" describes the rate at
which the Fund traded its portfolio securities during its last fiscal year.
For example, if a fund sold all of its securities during the year, its
portfolio turnover rate would have been 100%. The Fund's portfolio turnover
rate will fluctuate from year to year, but the Fund does not expect to have a
portfolio turnover rate of 100% or more annually. Increased portfolio
turnover creates higher brokerage and transaction costs for the Fund, which
may reduce its overall performance. Additionally, the realization of capital
gains from selling portfolio securities may result in distributions of
taxable long-term capital gains to shareholders, since the Fund will normally
distribute all of its capital gains realized each year, to avoid excise taxes
under the Internal Revenue Code.
Other Investment Techniques and Strategies. In seeking its objective, the
Fund may from time to time use the types of investment strategies and
investments described below. It is not required to use all of these
strategies at all times and at times may not use them.
|X| Investments in Debt Securities. The Fund can invest in
convertible securities, bonds, debentures and other debt securities. It can
invest in them for capital appreciation possibilities as well as for
liquidity or defensive purposes. Because the Fund currently emphasizes
investments in equity securities, such as stocks, it does not anticipate that
under normal market conditions it will invest in debt securities to the
extent of the full 35% of its total assets permitted to be invested in debt
securities.
|_| Credit Risk. The Fund's debt investments can include
investment-grade and non-investment-grade bonds (commonly referred to as
"junk bonds"). Investment-grade bonds are bonds rated at least "Baa" by
Moody's Investors Service, Inc., at least "BBB" by Standard & Poor's Rating
Service or by Duff & Phelps, Inc., or bonds that have comparable ratings by
another nationally recognized statistical rating organization. The debt
securities ratings definitions of the principal ratings organizations are
included in Appendix A to the Statement of Additional Information.
In making investments in debt securities, the Sub-Advisor may rely to some
extent on the ratings of ratings organizations or it may use its own
research to evaluate a security's credit-worthiness. If the securities
are unrated, to be considered part of the Fund's holdings of
investment-grade securities, they must be judged by the Sub-Advisor to
be of comparable quality to bonds rated as investment grade by a rating
organization. Ratings definitions of the principal national ratings
organizations are in Appendix A to this Statement of Additional
Information.
|_| Interest Rate Risk. Interest rate risk refers to the
fluctuations in value of debt securities resulting from the inverse
relationship between price and yield. For example, an increase in general
interest rates will tend to reduce the market value of already-issued
fixed-income investments, and a decline in general interest rates will tend
to increase their value. In addition, debt securities with longer maturities,
which tend to have higher yields, are subject to potentially greater
fluctuations in value from changes in interest rates than obligations with
shorter maturities.
Fluctuations in the market value of fixed-income securities after the
Fund buys them will not affect the interest income payable on those
securities (unless the security pays interest at a variable rate pegged to
interest rate changes). However, those price fluctuations will be reflected
in the valuations of the securities, and therefore the Fund's net asset
values will be affected by those fluctuations.
|_| Mortgage-Related Securities. Mortgage-related securities are a
form of derivative investment collateralized by pools of commercial or
residential mortgages. Pools of mortgage loans are assembled as securities
for sale to investors by government agencies or entities or by private
issuers. These securities include collateralized mortgage obligations
("CMOs"), mortgage pass-through securities, stripped mortgage pass-through
securities, interests in real estate mortgage investment conduits ("REMICs")
and other real-estate related securities.
Mortgage-related securities that are issued or guaranteed by agencies
or instrumentalities of the U.S. Government have relatively little credit
risk (depending on the nature of the issuer) but are subject to interest rate
risks and prepayment risks.
As with other debt securities, the prices of mortgage-related
securities tend to move inversely to changes in interest rates. The Fund can
buy mortgage-related securities that have interest rates that move inversely
to changes in general interest rates, based on a multiple of a specific
index. Although the value of a mortgage-related security may decline when
interest rates rise, the converse is not always the case.
In periods of declining interest rates, mortgages are more likely to be
prepaid. Therefore, a mortgage-related security's maturity can be shortened
by unscheduled prepayments on the underlying mortgages. Therefore, it is not
possible to predict accurately the security's yield. The principal that is
returned earlier than expected may have to be reinvested in other investments
having a lower yield than the prepaid security. Therefore, these securities
may be less effective as a means of "locking in" attractive long-term
interest rates, and they may have less potential for appreciation during
periods of declining interest rates than conventional bonds with comparable
stated maturities.
Prepayment risks can lead to substantial fluctuations in the value of a
mortgage-related security. In turn, this can affect the value of the Fund's
shares. If a mortgage-related security has been purchased at a premium, all
or part of the premium the Fund paid may be lost if there is a decline in the
market value of the security, whether that results from interest rate changes
or prepayments on the underlying mortgages. In the case of stripped
mortgage-related securities, if they experience greater rates of prepayment
than were anticipated, the Fund may fail to recoup its initial investment on
the security.
During periods of rapidly rising interest rates, prepayments of
mortgage-related securities may occur at slower than expected rates. Slower
prepayments effectively may lengthen a mortgage-related security's expected
maturity. Generally, that would cause the value of the security to fluctuate
more widely in response to changes in interest rates. If the prepayments on
the Fund's mortgage-related securities were to decrease broadly, the Fund's
effective duration, and therefore its sensitivity to interest rate changes,
would increase.
As with other debt securities, the values of mortgage-related
securities may be affected by changes in the market's perception of the
creditworthiness of the entity issuing the securities or guaranteeing them.
Their values may also be affected by changes in government regulations and
tax policies.
|_| Collateralized Mortgage Obligations. CMOs are multi-class bonds
that are backed by pools of mortgage loans or mortgage pass-through
certificates. They may be collateralized by:
(1) pass-through certificates issued or guaranteed by Ginnie Mae, Fannie
Mae, or Freddie Mac,
(2) unsecuritized mortgage loans insured by the Federal Housing
Administration or guaranteed by the Department of Veterans'
Affairs,
(3) unsecuritized conventional mortgages,
(4) other mortgage-related securities, or
(5) any combination of these.
Each class of CMO, referred to as a "tranche," is issued at a specific
coupon rate and has a stated maturity or final distribution date. Principal
prepayments on the underlying mortgages may cause the CMO to be retired much
earlier than the stated maturity or final distribution date. The principal
and interest on the underlying mortgages may be allocated among the several
classes of a series of a CMO in different ways. One or more tranches may have
coupon rates that reset periodically at a specified increase over an index.
These are floating rate CMOs, and typically have a cap on the coupon rate.
Inverse floating rate CMOs have a coupon rate that moves in the reverse
direction to an applicable index. The coupon rate on these CMOs will increase
as general interest rates decrease. These are usually much more volatile than
fixed rate CMOs or floating rate CMOs.
|_| U.S. Government Securities. Obligations of U.S. Government
agencies or instrumentalities (including mortgage-backed securities) may or
may not be guaranteed or supported by the "full faith and credit" of the
United States. Some are backed by the right of the issuer to borrow from the
U.S. Treasury; others, by discretionary authority of the U.S. Government to
purchase the agencies' obligations; while others are supported only by the
credit of the instrumentality.
All U.S. Treasury obligations are backed by the full faith and credit
of the United States. If the securities are not backed by the full faith and
credit of the United States, the owner of the securities must look
principally to the agency issuing the obligation for repayment and may not be
able to assert a claim against the United States in the event that the agency
or instrumentality does not meet its commitment. The Fund will invest in
U.S. Government securities of such agencies and instrumentalities only when
the Sub-Advisor is satisfied that the credit risk with respect to such
instrumentality is minimal.
|_| Obligations Issued or Guaranteed by U.S. Government Agencies or
Instrumentalities. These include direct obligations and mortgage related
securities that have different levels of credit support from the government.
Some are supported by the full faith and credit of the U.S. Government, such
as Government National Mortgage Association pass-through mortgage
certificates (called "Ginnie Maes"). Some are supported by the right of the
issuer to borrow from the U.S. Treasury under certain circumstances, such as
Federal National Mortgage Association bonds ("Fannie Maes"). Others are
supported only by the credit of the entity that issued them, such as Federal
Home Loan Mortgage Corporation obligations ("Freddie Macs").
|_| U.S. Government Mortgage Related Securities. The Fund can
invest in a variety of mortgage-related securities that are issued by U.S.
Government agencies or instrumentalities, some of which are described below.
|_| GNMA Certificates. The Government National Mortgage
Association ("GNMA") is a wholly-owned corporate instrumentality of the
United States within the U.S. Department of Housing and Urban Development.
GNMA's principal programs involve its guarantees of privately-issued
securities backed by pools of mortgages. GNMA Certificates are debt
securities representing an interest in one or a pool of mortgages that are
insured by the Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veterans Administration.
The GNMA Certificates in which the Fund invests are of the "fully
modified pass-through" type. They provide that the registered holders of the
Certificates will receive timely monthly payments of the pro-rata share of
the scheduled principal payments on the underlying mortgages, whether or not
those amounts are collected by the issuers. Amounts paid include, on a pro
rata basis, any prepayment of principal of such mortgages and interest (net
of servicing and other charges) on the aggregate unpaid principal balance of
the GNMA Certificates, whether or not the interest on the underlying
mortgages has been collected by the issuers.
The GNMA Certificates purchased by the Fund are guaranteed as to timely
payment of principal and interest by GNMA. It is expected that payments
received by the issuers of GNMA Certificates on account of the mortgages
backing the Certificates will be sufficient to make the required payments of
principal of and interest on those GNMA Certificates. However, if those
payments are insufficient, the guaranty agreements between the issuers of the
Certificates and GNMA require the issuers to make advances sufficient for the
payments. If the issuers fail to make those payments, GNMA will do so.
Under Federal law, the full faith and credit of the United States is
pledged to the payment of all amounts that may be required to be paid under
any guaranty issued by GNMA as to such mortgage pools. An opinion of an
Assistant Attorney General of the United States, dated December 9, 1969,
states that such guaranties "constitute general obligations of the United
States backed by its full faith and credit." GNMA is empowered to borrow
from the United States Treasury to the extent necessary to make any payments
of principal and interest required under those guaranties.
GNMA Certificates are backed by the aggregate indebtedness secured by
the underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages. Except
to the extent of payments received by the issuers on account of such
mortgages, GNMA Certificates do not constitute a liability of those issuers,
nor do they evidence any recourse against those issuers. Recourse is solely
against GNMA. Holders of GNMA Certificates (such as the Fund) have no
security interest in or lien on the underlying mortgages.
Monthly payments of principal will be made, and additional prepayments of
principal may be made, to the Fund with respect to the mortgages
underlying the GNMA Certificates held by the Fund. All of the mortgages
in the pools relating to the GNMA Certificates in the Fund are subject
to prepayment without any significant premium or penalty, at the option
of the mortgagors. While the mortgages on 1-to-4-family dwellings
underlying certain GNMA Certificates have a stated maturity of up to 30
years, it has been the experience of the mortgage industry that the
average life of comparable mortgages, as a result of prepayments,
refinancing and payments from foreclosures, is considerably less.
|_| Federal Home Loan Mortgage Corporation Certificates. FHLMC, a
corporate instrumentality of the United States, issues FHLMC Certificates
representing interests in mortgage loans. FHLMC guarantees to each
registered holder of a FHLMC Certificate timely payment of the amounts
representing a holder's proportionate share in:
(i) interest payments less servicing and guarantee fees,
(ii) principal prepayments, and
(iii) the ultimate collection of amounts representing the holder's
proportionate interest in principal payments on the mortgage
loans in the pool represented by the FHLMC Certificate, in each
case whether or not such amounts are actually received.
The obligations of FHLMC under its guarantees are obligations solely of
FHLMC and are not backed by the full faith and credit of the United States.
|_| Federal National Mortgage Association (Fannie Mae)
Certificates. Fannie Mae, a federally-chartered and privately-owned
corporation, issues Fannie Mae Certificates which are backed by a pool of
mortgage loans. Fannie Mae guarantees to each registered holder of a Fannie
Mae Certificate that the holder will receive amounts representing the
holder's proportionate interest in scheduled principal and interest payments,
and any principal prepayments, on the mortgage loans in the pool represented
by such Certificate, less servicing and guarantee fees, and the holder's
proportionate interest in the full principal amount of any foreclosed or
other liquidated mortgage loan. In each case the guarantee applies whether or
not those amounts are actually received. The obligations of Fannie Mae under
its guarantees are obligations solely of Fannie Mae and are not backed by the
full faith and credit of the United States or any of its agencies or
instrumentalities other than Fannie Mae.
|_| Brady Bonds. The Fund can invest in U.S. dollar-denominated
"Brady Bonds." These foreign debt obligations may be fixed-rate par bonds or
floating-rate discount bonds. They are generally collateralized in full as to
repayment of principal at maturity by U.S. Treasury zero coupon obligations
that have the same maturity as the Brady Bonds. Brady Bonds can be viewed as
having three or four valuation components: (i) the collateralized repayment
of principal at final maturity; (ii) the collateralized interest payments;
(iii) the uncollateralized interest payments; and (iv) any uncollateralized
repayment of principal at maturity. Those uncollateralized amounts constitute
what is called the "residual risk" of the bonds.
If there is a default on collateralized Brady Bonds resulting in
acceleration of the payment obligations of the issuer, the zero coupon U.S.
Treasury securities held as collateral for the payment of principal will not
be distributed to investors, nor will those obligations be sold to distribute
the proceeds. The collateral will be held by the collateral agent to the
scheduled maturity of the defaulted Brady Bonds. The defaulted bonds will
continue to remain outstanding, and the face amount of the collateral will
equal the principal payments that would have then been due on the Brady Bonds
in the normal course. Because of the residual risk of Brady Bonds and the
history of defaults with respect to commercial bank loans by public and
private entities of countries issuing Brady Bonds, they are considered
speculative investments.
|_| Special Risks of Lower-Grade Securities. While the Fund
currently can invest a portion of its assets in lower-grade debt securities,
the Fund currently does not intend to invest more than 5% of its total assets
in these securities. Because lower-rated securities tend to offer higher
yields than investment grade securities, the Fund may invest in lower-grade
securities if the Sub-Advisor is trying to achieve greater income (and, in
some cases, the appreciation possibilities of lower-grade securities might be
a reason they are selected for the Fund's portfolio).
"Lower-grade" debt securities are those rated below "investment grade"
which means they have a rating lower than "Baa" by Moody's or lower than
"BBB" by Standard & Poor's or Duff & Phelps, or similar ratings by other
rating organizations. If they are unrated, and are determined by the
Sub-Advisor to be of comparable quality to debt securities rated below
investment grade, they are included in the limitation on the percentage of
the Fund's assets that can be invested in lower-grade securities. The Fund
can invest in securities rated as low as "C" or "D" although the Fund does
not intend to invest in securities that are in default at the time the Fund
buys them.
Some of the special credit risks of lower-grade securities are
discussed in the Prospectus. There is a greater risk that the issuer may
default on its obligation to pay interest or to repay principal than in the
case of investment grade securities. The issuer's low creditworthiness may
increase the potential for its insolvency. An overall decline in values in
the high yield bond market is also more likely during a period of a general
economic downturn. An economic downturn or an increase in interest rates
could severely disrupt the market for high yield bonds, adversely affecting
the values of outstanding bonds as well as the ability of issuers to pay
interest or repay principal. In the case of foreign high yield bonds, these
risks are in addition to the special risks of foreign investing discussed in
the Prospectus and in this Statement of Additional Information.
However, the Fund's limitations on these investments may reduce some of
the risks to the Fund, as will the Fund's policy of diversifying its
investments. Additionally, to the extent they can be converted into stock,
convertible securities may present less of these risks than non-convertible
high yield bonds, since stock may be more liquid and less affected by some of
these risk factors.
While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's
or Duff & Phelps are investment grade and are not regarded as junk bonds,
those securities may be subject to special risks, and have some speculative
characteristics.
|X| Money Market Instruments. The following is a brief description of
the types of money market securities the Fund can invest in. Those money
market securities are high-quality, short-term debt instruments that are
issued by the U.S. Government, foreign governments, domestic or foreign
corporations, banks or other entities. The Fund can buy money market
instruments denominated in U.S. dollars or foreign currency. They have a
maturity of one year or less and may have fixed, variable or floating
interest rates.
|_| U.S. Government Securities. These include obligations issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities.
|_| Bank Obligations. The Fund may buy time deposits, certificates
of deposit and bankers' acceptances. Time deposits, other than overnight
deposits, may be subject to withdrawal notices and penalties and, if so, they
are deemed to be "illiquid" investments.
The Fund can purchase bank obligations that are fully insured by the
Federal Deposit Insurance Corporation ("FDIC"). The FDIC insures the deposits
of member banks up to $100,000 per account. Insured bank obligations may have
a limited market and a particular investment of this type may be deemed
"illiquid" unless the Board of Directors of the Fund determines that a
readily-available market exists for that particular obligation, or unless the
obligation is payable at principal amount plus accrued interest on demand or
within seven days after demand.
|_| Commercial Paper. The Fund can invest in commercial paper, if
it is rated within the top two rating categories of Standard & Poor's and
Moody's. If the paper is not rated, it may be purchased if issued by a
company having a credit rating of at least "AA" by Standard & Poor's or "Aa"
by Moody's.
The Fund can buy commercial paper, including U.S. dollar-denominated
securities of foreign branches of U.S. banks, issued by other entities if the
commercial paper is guaranteed as to principal and interest by a bank,
government or corporation whose certificates of deposit or commercial paper
may otherwise be purchased by the Fund.
|_| Variable Amount Master Demand Notes. Master demand notes are
corporate obligations that permit the investment of fluctuating amounts by
the Fund at varying rates of interest under direct arrangements between the
Fund, as lender, and the borrower. They permit daily changes in the amounts
borrowed. The Fund has the right to increase the amount under the note at
any time up to the full amount provided by the note agreement, or to decrease
the amount. The borrower may prepay up to the full amount of the note without
penalty. These notes may or may not be backed by bank letters of credit.
Because these notes are direct lending arrangements between the lender
and borrower, it is not expected that there will be a trading market for
them. There is no secondary market for these notes, although they are
redeemable (and thus are immediately repayable by the borrower) at principal
amount, plus accrued interest, at any time. Accordingly, the Fund's right to
redeem such notes is dependent upon the ability of the borrower to pay
principal and interest on demand.
The Fund has no limitations on the type of issuer from whom these notes
will be purchased. However, in connection with such purchases and on an
ongoing basis, the Sub-Advisor will consider the earning power, cash flow and
other liquidity ratios of the issuer, and its ability to pay principal and
interest on demand, including a situation in which all holders of such notes
made demand simultaneously. Investments in master demand notes are subject
to the limitation on investments by the Fund in illiquid securities,
described in the Prospectus. The Fund does not intend that its investments in
variable amount master demand notes will exceed 5% of its total assets.
|X| Investing in Small, Unseasoned Companies. The Fund can invest in
securities of small, unseasoned companies. These are companies that have
been in operation for less than three years, including the operations of any
predecessors. Securities of these companies may be subject to volatility in
their prices. They may have a limited trading market, which may adversely
affect the Fund's ability to dispose of them and can reduce the price the
Fund might be able to obtain for them. Other investors that own a security
issued by a small, unseasoned issuer for which there is limited liquidity
might trade the security when the Fund is attempting to dispose of its
holdings of that security. In that case the Fund might receive a lower price
for its holdings than might otherwise be obtained.
|X| "When-Issued" and "Delayed-Delivery" Transactions. The Fund can
invest in securities on a "when-issued" basis and can purchase or sell
securities on a "delayed-delivery" or "forward commitment" basis.
When-issued and delayed-delivery are terms that refer to securities whose
terms and indenture are available and for which a market exists, but which
are not available for immediate delivery.
When such transactions are negotiated, the price (which is generally
expressed in yield terms) is fixed at the time the commitment is made.
Delivery and payment for the securities take place at a later date (generally
within 45 days of the date the offer is accepted). The securities are
subject to change in value from market fluctuations during the period until
settlement. The value at delivery may be less than the purchase price. For
example, changes in interest rates in a direction other than that expected by
the Sub-Advisor before settlement will affect the value of such securities
and may cause a loss to the Fund. During the period between purchase and
settlement, no payment is made by the Fund to the issuer. No income begins
to accrue to the Fund on a when-issued security until the Fund receives the
security at settlement of the trade.
The Fund will engage in when-issued transactions to secure what the
Sub-Advisor considers to be an advantageous price and yield at the time
of entering into the obligation. When the Fund enters into a
when-issued or delayed-delivery transaction, it relies on the other
party to complete the transaction. Its failure to do so may cause the
Fund to lose the opportunity to obtain the security at a price and
yield the Sub-Advisor considers to be advantageous.
When the Fund engages in when-issued and delayed-delivery transactions,
it does so for the purpose of acquiring or selling securities consistent with
its investment objective and policies for delivery pursuant to options
contracts it has entered into, and not for the purpose of investment
leverage. Although the Fund will enter into delayed-delivery or when-issued
purchase transactions to acquire securities, it may dispose of a commitment
prior to settlement. If the Fund chooses to dispose of the right to acquire a
when-issued security prior to its acquisition or to dispose of its right to
delivery or receive against a forward commitment, it may incur a gain or loss.
At the time the Fund makes the commitment to purchase or sell a
security on a when-issued or delayed-delivery basis, it records the
transaction on its books and reflects the value of the security purchased in
determining the Fund's net asset value. In a sale transaction, it records
the proceeds to be received. The Fund will identify on its books liquid
assets at least equal in value to the value of the Fund's purchase
commitments until the Fund pays for the investment.
When-issued and delayed-delivery transactions can be used by the Fund
as a defensive technique to hedge against anticipated changes in interest
rates and prices. For instance, in periods of rising interest rates and
falling prices, the Fund might sell securities in its portfolio on a forward
commitment basis to attempt to limit its exposure to anticipated falling
prices. In periods of falling interest rates and rising prices, the Fund
might sell portfolio securities and purchase the same or similar securities
on a when-issued or delayed-delivery basis to obtain the benefit of currently
higher cash yields.
|X| Repurchase Agreements. The Fund can acquire securities subject to
repurchase agreements. It may do so for liquidity purposes to meet
anticipated redemptions of Fund shares, or pending the investment of the
proceeds from sales of Fund shares, or pending the settlement of portfolio
securities transactions, or for temporary defensive purposes.
In a repurchase transaction, the Fund buys a security from, and
simultaneously resells it to, an approved vendor for delivery on an
agreed-upon future date. The resale price exceeds the purchase price by an
amount that reflects an agreed-upon interest rate effective for the period
during which the repurchase agreement is in effect. Approved vendors include
U.S. commercial banks, U.S. branches of foreign banks, or broker-dealers that
have been designated as primary dealers in government securities. They must
meet credit requirements set by the Fund's Board of Directors from time to
time.
The majority of these transactions run from day to day, and delivery
pursuant to the resale typically occurs within one to five days of the
purchase. Repurchase agreements having a maturity beyond seven days are
subject to the Fund's limits on holding illiquid investments. There is no
limit on the amount of the Fund's net assets that may be subject to
repurchase agreements having maturities of seven days or less.
Repurchase agreements, considered "loans" under the Investment Company
Act, are collateralized by the underlying security. The Fund's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the value of the collateral must equal or exceed the repurchase price
to fully collateralize the repayment obligation. However, if the vendor fails
to pay the resale price on the delivery date, the Fund may incur costs in
disposing of the collateral and may experience losses if there is any delay
in its ability to do so. The Sub-Advisor will monitor the vendor's
creditworthiness to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
|X| Illiquid and Restricted Securities. To enable the Fund to sell
its holdings of a restricted security not registered under the Securities Act
of 1933, the Fund may have to cause those securities to be registered. The
expenses of registering restricted securities may be negotiated by the Fund
with the issuer at the time the Fund buys the securities. When the Fund must
arrange registration because the Fund wishes to sell the security, a
considerable period may elapse between the time the decision is made to sell
the security and the time the security is registered so that the Fund could
sell it. The Fund would bear the risks of any downward price fluctuation
during that period.
The Fund can also acquire restricted securities through private
placements. Those securities have contractual restrictions on their public
resale. Those restrictions might limit the Fund's ability to dispose of the
securities and might lower the amount the Fund could realize upon the sale.
The Fund has limitations that apply to purchases of restricted
securities, as stated in the Prospectus. Those percentage restrictions do not
limit purchases of restricted securities that are eligible for sale to
qualified institutional purchasers under Rule 144A of the Securities Act of
1933, if those securities have been determined to be liquid by the Manager
under Board-approved guidelines. Those guidelines take into account the
trading activity for such securities and the availability of reliable pricing
information, among other factors. If there is a lack of trading interest in
a particular Rule 144A security, the Fund's holdings of that security may be
considered to be illiquid.
|X| Loans of Portfolio Securities. The Fund can lend its portfolio
securities to certain types of eligible borrowers approved by the Board of
Directors. It may do so to try to provide income or to raise cash for
liquidity purposes. There are some risks in connection with securities
lending. The Fund might experience a delay in receiving additional collateral
to secure a loan, or a delay in recovery of the loaned securities.
The Fund must receive collateral for a loan. Under current applicable
regulatory requirements (which are subject to change), on each business day
the loan collateral must be at least equal to the value of the loaned
securities. It must consist of cash, bank letters of credit, securities of
the U.S. Government or its agencies or instrumentalities, or other cash
equivalents in which the Fund is permitted to invest. To be acceptable as
collateral, letters of credit must obligate a bank to pay amounts demanded by
the Fund if the demand meets the terms of the letter. The terms of the
letter of credit and the issuing bank both must be satisfactory to the Fund.
When it lends securities, the Fund receives amounts equal to the
dividends or interest on loaned securities. It also receives one or more of
(a) negotiated loan fees, (b) interest on securities used as collateral, and
(c) interest on any short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower. The
Fund may also pay reasonable finder's, custodian and administrative fees in
connection with these loans. The terms of the Fund's loans must meet
applicable tests under the Internal Revenue Code and must permit the Fund to
reacquire loaned securities on five days' notice or in time to vote on any
important matter.
|X| Hedging. Although the Fund can use hedging instruments, it is not
obligated to use them in seeking its objective. While the Fund uses forward
contracts to hedge its exposure to foreign currency fluctuations, it does not
currently contemplate using other hedging techniques to any significant
degree. The Fund can use hedging to attempt to protect against declines in
the market value of the Fund's portfolio, to permit the Fund to retain
unrealized gains in the value of portfolio securities which have appreciated,
or to facilitate selling securities for investment reasons. To do so, the
Fund could:
o sell futures contracts,
o buy puts on futures or on securities, or
o write covered calls on securities or futures.
The Fund can use hedging to establish a position in the securities
market as a temporary substitute for purchasing particular securities. In
that case the Fund would normally seek to purchase the securities and then
terminate that hedging position. The Fund might also use this type of hedge
to attempt to protect against the possibility that its portfolio securities
would not be fully included in a rise in value of the market. To do so, the
Fund could:
o buy futures, or
o buy calls on futures or on securities.
The Fund's strategy of hedging with futures and options on futures will
be incidental to the Fund's activities in the underlying cash market. The
particular hedging instruments the Fund can use are described below. The
Fund may employ new hedging instruments and strategies when they are
developed, if those investment methods are consistent with the Fund's
investment objective and are permissible under applicable regulations
governing the Fund.
|_| Futures. The Fund can buy and sell futures contracts that
relate to (1) broadly-based securities indices (these are referred to as
"financial futures"), (2) debt securities (these are referred to as "interest
rate futures") and (3) foreign currencies (these are referred to as "forward
contracts").
A broadly-based stock index is used as the basis for trading stock
index futures. In some cases these indices may be based on stocks of issuers
in a particular industry or group of industries. A stock index assigns
relative values to the common stocks included in the index and its value
fluctuates in response to the changes in value of the underlying stocks. A
stock index cannot be purchased or sold directly. These contracts obligate
the seller to deliver, and the purchaser to take, cash to settle the futures
transaction. There is no delivery made of the underlying securities to settle
the futures obligation. Either party may also settle the transaction by
entering into an offsetting contract.
An interest rate future obligates the seller to deliver (and the
purchaser to take) cash or a specified type of debt security to settle the
futures transaction. Either party could also enter into an offsetting
contract to close out the position.
No money is paid or received by the Fund on the purchase or sale of a
future. Upon entering into a futures transaction, the Fund will be required
to deposit an initial margin payment with the futures commission merchant
(the "futures broker"). Initial margin payments will be deposited with the
Fund's custodian bank in an account registered in the futures broker's name.
However, the futures broker can gain access to that account only under
specified conditions. As the future is marked-to-market (that is, its value
on the Fund's books is changed) to reflect changes in its market value,
subsequent margin payments, called variation margin, will be paid to or by
the futures broker daily.
At any time prior to expiration of the future, the Fund may elect to
close out its position by taking an opposite position, at which time a final
determination of variation margin is made and any additional cash must be
paid by or released to the Fund. Any loss or gain on the future is then
realized by the Fund for tax purposes. All futures transactions are effected
through a clearinghouse associated with the exchange on which the contracts
are traded.
|_| Put and Call Options. The Fund can buy and sell certain kinds
of put options ("puts") and call options ("calls"). The Fund can buy and sell
exchange-traded and over-the-counter put and call options including index
options, securities options, currency options and options on futures
contracts.
|_| Writing Covered Call Options. The Fund can write (that is,
sell) covered calls. If the Fund sells a call option, it must be covered. For
a call on a security, that means the Fund must own the security subject to
the call while the call is outstanding. For calls on futures or stock
indices, that means the call must be covered by segregating liquid assets to
enable the Fund to satisfy its obligations if the call is exercised.
When the Fund writes a call, it receives cash (a premium). The Fund
agrees to sell the underlying security to a purchaser of a corresponding call
on the same security during the call period at a fixed exercise price
regardless of market price changes during the call period. The call period is
usually not more than nine months. The exercise price may differ from the
market price of the underlying security. The Fund has the risk of loss that
the price of the underlying security may decline during the call period. That
risk may be offset to some extent by the premium the Fund receives. If the
value of the investment does not rise above the call price, it is likely that
the call will lapse without being exercised. In that case the Fund would keep
the cash premium and the investment.
When the Fund writes a call on an index, it receives cash (a premium).
If the buyer of the call exercises it, the Fund will pay an amount of cash
equal to the difference between the closing price of the call and the
exercise price, multiplied by a specified multiple that determines the total
value of the call for each point of difference. If the value of the
underlying investment does not rise above the call price, it is likely that
the call will lapse without being exercised. In that case the Fund would keep
the cash premium. Settlement for puts and calls on broadly-based stock
indices is in cash. Gain or loss depends on changes in the index in question
(and thus on price movements in the stock market generally).
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." The Fund
will then realize a profit or loss, depending upon whether the net of the
amount of the option transaction costs and the premium received on the call
the Fund wrote is more or less than the price of the call the Fund purchases
to close out the transaction. The Fund may realize a profit if the call
expires unexercised, because the Fund will retain the premium it received
when it wrote the call. Any such profits are considered short-term capital
gains for federal income tax purposes, as are the premiums on lapsed calls.
When distributed by the Fund they are taxable as ordinary income. If the
Fund cannot effect a closing purchase transaction due to the lack of a
market, it will have to hold the escrowed assets in escrow until the call
expires or is exercised.
The Fund's custodian bank, or a securities depository acting for the
custodian, will act as the Fund's escrow agent, through the facilities of the
Options Clearing Corporation ("OCC"), as to the investments on which the Fund
has written calls traded on exchanges or as to other acceptable escrow
securities. In that way, no margin will be required for such transactions.
OCC will release the securities on the expiration of the option or when the
Fund enters into a closing transaction.
When the Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a primary U.S. Government securities dealer which
will establish a formula price at which the Fund will have the absolute right
to repurchase that OTC option. The formula price will generally be based on
a multiple of the premium received for the option, plus the amount by which
the option is exercisable below the market price of the underlying security
(that is, the option is "in the money"). When the Fund writes an OTC option,
it will treat as illiquid (for purposes of its restriction on holding
illiquid securities) the mark-to-market value of any OTC option it holds,
unless the option is subject to a buy-back agreement by the executing broker.
|_| Writing Put Options. The Fund can sell put options. A put
option on securities gives the purchaser the right to sell, and the writer
the right to buy, the underlying security at the exercise price during the
option period. The Fund will not write puts that require more than 50% of its
net assets to be segregated to cover the put options the Fund has written.
If the Fund writes a put, the put must be covered by segregated liquid
assets. The premium the Fund receives from writing a put represents a profit,
as long as the price of the underlying investment remains equal to or above
the exercise price of the put. However, the Fund also assumes the obligation
during the option period to settle the transaction in cash with the buyer of
the put at the exercise price, even if the value of the underlying investment
falls below the exercise price.
If a put the Fund has written expires unexercised, the Fund realizes a
gain in the amount of the premium less the transaction costs incurred. If
the put is exercised, the Fund must fulfill its obligation to settle in cash
at the exercise price. That price will usually exceed the market value of
the investment at that time. In that case, the Fund might incur a loss if it
sells the underlying investment. That loss will be equal to the sum of the
sale price of the underlying investment and the premium received less the sum
of the exercise price and any transaction costs the Fund incurred.
As long as the Fund's obligation as the put writer continues, it may be
assigned an exercise notice by the broker-dealer through which the put was
sold. That notice will require the Fund to settle the transaction in cash at
the exercise price. The Fund has no control over when it may be required to
settle the transaction, since it may be assigned an exercise notice at any
time prior to the termination of its obligation as the writer of the put.
That obligation terminates upon expiration of the put. It may also terminate
if, before it receives an exercise notice, the Fund effects a closing
purchase transaction by purchasing a put of the same series as it sold. Once
the Fund has been assigned an exercise notice, it cannot effect a closing
purchase transaction.
The Fund may decide to effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent the
underlying security from being put. Effecting a closing transaction will also
permit the Fund to write another put option on the security or to sell the
security and use the proceeds from the sale for other investments. The Fund
will realize a profit or loss from a closing purchase transaction depending
on whether the cost of the transaction is less or more than the premium
received from writing the put option. Any profits from writing puts are
considered short-term capital gains for federal tax purposes, and when
distributed by the Fund, are taxable as ordinary income.
|_| Purchasing Calls and Puts. The Fund can purchase calls to
protect against the possibility that the Fund's portfolio will not
participate in an anticipated rise in the securities market. When the Fund
buys a call (other than in a closing purchase transaction), it pays a
premium. The Fund then has the right to buy the underlying investment from a
seller of a corresponding call on the same investment during the call period
at a fixed exercise price. The Fund benefits only if it sells the call at a
profit or if, during the call period, the market price of the underlying
investment is above the sum of the call price plus the transaction costs and
the premium paid for the call and the Fund exercises the call. If the Fund
does not exercise the call or sell it (whether or not at a profit), the call
will become worthless at its expiration date. In that case the Fund will
have paid the premium but lost the right to buy the underlying investment.
The Fund can buy puts whether or not it holds the underlying investment
in its portfolio. When the Fund purchases a put, it pays a premium and,
except as to puts on indices, has the right to sell the underlying investment
to a seller of a put on a corresponding investment during the put period at a
fixed exercise price.
Buying a put on an investment the Fund does not own (such as an index
or future) permits the Fund either to resell the put or to buy the underlying
investment and sell it at the exercise price. The resale price will vary
inversely to the price of the underlying investment. If the market price of
the underlying investment is above the exercise price and, as a result, the
put is not exercised, the put will become worthless on its expiration date.
Buying a put on securities or futures the Fund owns enables the Fund to
attempt to protect itself during the put period against a decline in the
value of the underlying investment below the exercise price by selling the
underlying investment at the exercise price to a seller of a corresponding
put. If the market price of the underlying investment is equal to or above
the exercise price and, as a result, the put is not exercised or resold, the
put will become worthless at its expiration date. In that case the Fund will
have paid the premium but lost the right to sell the underlying investment.
However, the Fund may sell the put prior to its expiration. That sale may or
may not be at a profit.
If the Fund exercises a call on an index during the call period, a
seller of a corresponding call on the same investment will pay the Fund an
amount of cash to settle the call if the closing level of the stock index
upon which the call is based is greater than the exercise price of the call.
That cash payment is equal to the difference between the closing price of the
call and the exercise price of the call times a specified multiple (the
"multiplier") which determines the total dollar value for each point of
difference.
When the Fund buys a put on a stock index or future, it pays a premium.
It has the right during the put period to require a seller of a corresponding
put, upon the Fund's exercise of its put, to deliver cash to the Fund to
settle the put if the closing level of the stock index upon which the put is
based is less than the exercise price of the put. That cash payment is
determined by the multiplier, in the same manner as described above as to
calls.
When the Fund purchases a put on a stock index, the put protects the
Fund to the extent that the index moves in a similar pattern to the
securities the Fund holds. The Fund can resell the put. The resale price of
the put will vary inversely with the price of the underlying investment. If
the market price of the underlying investment is above the exercise price,
and as a result the put is not exercised, the put will become worthless on
the expiration date. In the event of a decline in price of the underlying
investment, the Fund could exercise or sell the put at a profit to attempt to
offset some or all of its loss on its portfolio securities.
The Fund may buy a call or put only if, after the purchase, the value of all
call and put options held by the Fund will not exceed 5% of the Fund's
total assets.
|_| Buying and Selling Options on Foreign Currencies. The Fund can
buy and sell calls and puts on foreign currencies. They include puts and
calls that trade on a securities or commodities exchange or in the
over-the-counter markets or are quoted by major recognized dealers in such
options. The Fund could use these calls and puts to try to protect against
declines in the dollar value of foreign securities and increases in the
dollar cost of foreign securities the Fund wants to acquire.
If the Manager anticipates a rise in the dollar value of a foreign
currency in which securities to be acquired are denominated, the increased
cost of those securities might be partially offset by purchasing calls or
writing puts on that foreign currency. If the Sub-Advisor anticipates a
decline in the dollar value of a foreign currency, the decline in the dollar
value of portfolio securities denominated in that currency may be partially
offset by writing calls or purchasing puts on that foreign currency. However,
the currency rates could fluctuate in a direction adverse to the Fund's
position. The Fund will then have incurred option premium payments and
transaction costs without a corresponding benefit.
A call the Fund writes on a foreign currency is "covered" if the Fund
owns the underlying foreign currency covered by the call or has an absolute
and immediate right to acquire that foreign currency without additional cash
consideration (or it can do so for additional cash consideration held in a
segregated account by its custodian bank) upon conversion or exchange of
other foreign currency held in its portfolio.
The Fund could write a call on a foreign currency to provide a hedge
against a decline in the U.S. dollar value of a security which the Fund owns
or has the right to acquire and which is denominated in the currency
underlying the option. That decline might be one that occurs due to an
expected adverse change in the exchange rate. This is known as a
"cross-hedging" strategy. In those circumstances, the Fund covers the option
by maintaining cash, U.S. Government securities or other liquid, high grade
debt securities in an amount equal to the exercise price of the option, in a
segregated account with the Fund's custodian bank.
|_| Risks of Hedging with Options and Futures. The use of hedging
instruments requires special skills and knowledge of investment techniques
that are different than what is required for normal portfolio management. If
the Sub-Advisor uses a hedging instrument at the wrong time or judges market
conditions incorrectly, hedging strategies may reduce the Fund's return. The
Fund could also experience losses if the prices of its futures and options
positions were not correlated with its other investments. The Fund's option
activities may affect its costs.
The Fund's option activities could affect its portfolio turnover rate
and brokerage commissions. The exercise of calls written by the Fund might
cause the Fund to sell related portfolio securities, thus increasing its
turnover rate. The exercise by the Fund of puts on securities will cause the
sale of underlying investments, increasing portfolio turnover. Although the
decision whether to exercise a put it holds is within the Fund's control,
holding a put might cause the Fund to sell the related investments for
reasons that would not exist in the absence of the put.
The Fund might have to pay a brokerage commission each time it buys a
call or put, sells a call or put, or buys or sells an underlying investment
in connection with the exercise of a call or put. Those commissions could be
higher on a relative basis than the commissions for direct purchases or sales
of the underlying investments. Premiums paid for options are small in
relation to the market value of the underlying investments. Consequently, put
and call options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being more
sensitive to changes in the value of the underlying investment.
If a covered call written by the Fund is exercised on an investment
that has increased in value, the Fund will be required to sell the investment
at the call price. It will not be able to realize any profit if the
investment has increased in value above the call price.
An option position may be closed out only on a market that 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 might experience losses if it could not close out a position because of
an illiquid market for the future or option.
There is a risk in using short hedging by selling futures or purchasing
puts on broadly-based indices or futures to attempt to protect against
declines in the value of the Fund's portfolio securities. The risk is that
the prices of the futures or the applicable index will correlate imperfectly
with the behavior of the cash prices of the Fund's securities. For example,
it is possible that while the Fund has used hedging instruments in a short
hedge, the market might advance and the value of the securities held in the
Fund's portfolio might decline. If that occurred, the Fund would lose money
on the hedging instruments and also experience a decline in the value of its
portfolio securities. However, while this could occur for a very brief period
or to a very small degree, over time the value of a diversified portfolio of
securities will tend to move in the same direction as the indices upon which
the hedging instruments are based.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the price
of the portfolio securities being hedged and movements in the price of the
hedging instruments, the Fund might use hedging instruments in a greater
dollar amount than the dollar amount of portfolio securities being hedged. It
might do so if the historical volatility of the prices of the portfolio
securities being hedged is more than the historical volatility of the
applicable index.
The ordinary spreads between prices in the cash and futures markets are
subject to distortions, due to differences in the nature 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 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
markets. Therefore, increased participation by speculators in the futures
market may cause temporary price distortions.
The Fund can use hedging instruments to establish a position in the
securities markets as a temporary substitute for the purchase of individual
securities (long hedging) by buying futures or calls on broadly-based
indices or on securities. It is possible that when the Fund does so the
market might decline. If the Fund then concludes not to invest in securities
because of concerns that the market might decline further or for other
reasons, the Fund will realize a loss on the hedging instruments that is not
offset by a reduction in the price of the securities purchased.
|_| Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency for future
delivery at a fixed price. The Fund uses them to "lock in" the U.S. dollar
price of a security denominated in a foreign currency that the Fund has
bought or sold, or to protect against possible losses from changes in the
relative values of the U.S. dollar and a foreign currency. The Fund limits
its exposure in foreign currency exchange contracts in a particular foreign
currency to the amount of its assets denominated in that currency or a
closely-correlated currency. The Fund may also use "cross-hedging" where the
Fund hedges against changes in currencies other than the currency in which a
security it holds is denominated.
Under a forward contract, one party agrees to purchase, and another
party agrees to sell, a specific currency at a future date. That date may be
any fixed number of days from the date of the contract agreed upon by the
parties. The transaction price is set at the time the contract is entered
into. These contracts are traded in the inter-bank market conducted directly
among currency traders (usually large commercial banks) and their customers.
The Fund may use forward contracts to protect against uncertainty in
the level of future exchange rates. The use of forward contracts does not
eliminate the risk of fluctuations in the prices of the underlying securities
the Fund owns or intends to acquire, but it does fix a rate of exchange in
advance. Although forward contracts may reduce the risk of loss from a
decline in the value of the hedged currency, at the same time they limit any
potential gain if the value of the hedged currency increases.
When the Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, or when it anticipates receiving
dividend payments in a foreign currency, the Fund might desire to "lock-in"
the U.S. dollar price of the security or the U.S. dollar equivalent of the
dividend payments. To do so, the Fund could enter into a forward contract
for the purchase or sale of the amount of foreign currency involved in the
underlying transaction, in a fixed amount of U.S. dollars per unit of the
foreign currency. This is called a "transaction hedge." The transaction hedge
will protect the Fund against a loss from an adverse change in the currency
exchange rates during the period between the date on which the security is
purchased or sold or on which the payment is declared, and the date on which
the payments are made or received.
The Fund could also use forward contracts to lock in the U.S. dollar
value of portfolio positions. This is called a "position hedge." When the
Fund believes that foreign currency might suffer a substantial decline
against the U.S. dollar, it could enter into a forward contract to sell an
amount of that foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in that foreign currency. When the
Fund believes that the U.S. dollar might suffer a substantial decline against
a foreign currency, it could enter into a forward contract to buy that
foreign currency for a fixed dollar amount. Alternatively, the Fund could
enter into a forward contract to sell a different foreign currency for a
fixed U.S. dollar amount if the Fund believes that the U.S. dollar value of
the foreign currency to be sold pursuant to its forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in which
portfolio securities of the Fund are denominated. That is referred to as a
"cross hedge."
The Fund will cover its short positions in these cases by identifying
to its custodian bank assets having a value equal to the aggregate amount of
the Fund's commitment under forward contracts. The Fund will not enter into
forward contracts or maintain a net exposure to such contracts if the
consummation of the contracts would obligate the Fund to deliver an amount of
foreign currency in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency or another currency that is the
subject of the hedge. However, to avoid excess transactions and transaction
costs, the Fund may maintain a net exposure to forward contracts in excess of
the value of the Fund's portfolio securities or other assets denominated in
foreign currencies if the excess amount is "covered" by liquid securities
denominated in any currency. The cover must be at least equal at all times to
the amount of that excess.
As one alternative, the Fund may purchase a call option permitting the
Fund to purchase the amount of foreign currency being hedged by a forward
sale contract at a price no higher than the forward contract price. As
another alternative, the Fund may purchase a put option permitting the Fund
to sell the amount of foreign currency subject to a forward purchase contract
at a price as high or higher than the forward contract price.
The precise matching of the amounts under forward contracts and the value of
the securities involved generally will not be possible because the
future value of securities denominated in foreign currencies will
change as a consequence of market movements between the date the
forward contract is entered into and the date it is sold. In some
cases, the Sub-Advisor might decide to sell the security and deliver
foreign currency to settle the original purchase obligation. If the
market value of the security is less than the amount of foreign
currency the Fund is obligated to deliver, the Fund might have to
purchase additional foreign currency on the "spot" (that is, cash)
market to settle the security trade. If the market value of the
security instead exceeds the amount of foreign currency the Fund is
obligated to deliver to settle the trade, the Fund might have to sell
on the spot market some of the foreign currency received upon the sale
of the security. There will be additional transaction costs on the spot
market in those cases.
The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing the Fund to
sustain losses on these contracts and to pay additional transactions costs.
The use of forward contracts in this manner might reduce the Fund's
performance if there are unanticipated changes in currency prices to a
greater degree than if the Fund had not entered into such contracts.
At or before the maturity of a forward contract requiring the Fund to
sell a currency, the Fund might sell a portfolio security and use the sale
proceeds to make delivery of the currency. In the alternative the Fund might
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract. Under that contract the Fund will
obtain, on the same maturity date, the same amount of the currency that it is
obligated to deliver. Similarly, the Fund might close out a forward contract
requiring it to purchase a specified currency by entering into a second
contract entitling it to sell the same amount of the same currency on the
maturity date of the first contract. The Fund would realize a gain or loss
as a result of entering into such an offsetting forward contract under either
circumstance. The gain or loss will depend on the extent to which the
exchange rate or rates between the currencies involved moved between the
execution dates of the first contract and offsetting contract.
The costs to the Fund of engaging in forward contracts varies with
factors such as the currencies involved, the length of the contract period
and the market conditions then prevailing. Because forward contracts are
usually entered into on a principal basis, no brokerage fees or commissions
are involved. Because these contracts are not traded on an exchange, the
Fund must evaluate the credit and performance risk of the counterparty under
each forward contract.
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. The Fund may convert foreign currency from time to
time, and will incur costs in doing so. Foreign exchange dealers do not
charge a fee for conversion, but they do seek to realize a profit based on
the difference between the prices at which they buy and sell various
currencies. Thus, a dealer might offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange if the Fund
desires to resell that currency to the dealer.
|_| Regulatory Aspects of Hedging Instruments. When using futures
and options on futures, the Fund is required to operate within certain
guidelines and restrictions with respect to the use of futures as established
by the Commodities Futures Trading Commission (the "CFTC"). In particular,
the Fund is exempted from registration with the CFTC as a "commodity pool
operator" if the Fund complies with the requirements of Rule 4.5 adopted by
the CFTC. The Rule does not limit the percentage of the Fund's assets that
may be used for futures margin and related options premiums for a bona fide
hedging position. However, under the Rule, the Fund must limit its aggregate
initial futures margin and related options premiums to not more than 5% of
the Fund's net assets for hedging strategies that are not considered bona
fide hedging strategies under the Rule. Under the Rule, the Fund must also
use short futures and options on futures solely for bona fide hedging
purposes within the meaning and intent of the applicable provisions of the
Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by the option exchanges. The exchanges limit the maximum number
of options that may be written or held by a single investor or group of
investors acting in concert. Those limits apply 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 that the Fund may
write or hold may be affected by options written or held by other entities,
including other investment companies having the same advisor as the Fund (or
an advisor that is an affiliate of the Fund's advisor or Sub-Advisor). The
exchanges also impose position limits on futures transactions. An exchange
may order the liquidation of positions found to be in violation of those
limits and may impose certain other sanctions.
Under the Investment Company Act, when the Fund purchases a future, it
must maintain liquid assets in an amount equal to the market value of the
securities underlying the future, less the margin deposit applicable to it.
|_| Tax Aspects of Certain Hedging Instruments. Certain foreign
currency exchange contracts in which the Fund may invest are treated as
"Section 1256 contracts" under the Internal Revenue Code. In general, gains
or losses relating to Section 1256 contracts are characterized as 60%
long-term and 40% short-term capital gains or losses under the Code.
However, foreign currency gains or losses arising from Section 1256 contracts
that are forward contracts generally are treated as ordinary income or loss.
In addition, Section 1256 contracts held by the Fund at the end of each
taxable year are "marked-to-market," and unrealized gains or losses are
treated as though they were realized. These contracts also may be
marked-to-market for purposes of determining the excise tax applicable to
investment company distributions and for other purposes under rules
prescribed pursuant to the Internal Revenue Code. An election can be made by
the Fund to exempt those transactions from this marked-to-market treatment.
Certain forward contracts the Fund enters into may result in
"straddles" for federal income tax purposes. The straddle rules may affect
the character and timing of gains (or losses) recognized by the Fund on
straddle positions. Generally, a loss sustained on the disposition of a
position making up a straddle is allowed only to the extent that the loss
exceeds any unrecognized gain in the offsetting positions making up the
straddle. Disallowed loss is generally allowed at the point where there is
no unrecognized gain in the offsetting positions making up the straddle, or
the offsetting position is disposed of.
Under the Internal Revenue Code, the following gains or losses are
treated as ordinary income or loss:
(1) gains or losses attributable to fluctuations in exchange rates that
occur between the time the Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated
in a foreign currency and the time the Fund actually collects such
receivables or pays such liabilities, and
(2) gains or losses attributable to fluctuations in the value of a foreign
currency between the date of acquisition of a debt security
denominated in a foreign currency or foreign currency forward
contracts and the date of disposition.
Currency gains and losses are offset against market gains and losses on
each trade before determining a net "Section 988" gain or loss under the
Internal Revenue Code for that trade, which may increase or decrease the
amount of the Fund's investment income available for distribution to its
shareholders.
Investment Restrictions
|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Fund has adopted to govern its investments that can be
changed only by the vote of a "majority" of the Fund's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is defined
as the vote of the holders of the lesser of:
o 67% or more of the shares present or represented by proxy
at a shareholder meeting, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or
o more than 50% of the outstanding shares.
The Fund's investment objective is a fundamental policy. Other policies
described in the Prospectus or this Statement of Additional Information are
"fundamental" only if they are identified as such. The Fund's Board of
Directors can change non-fundamental policies without shareholder approval.
However, significant changes to investment policies will be described in
supplements or updates to the Prospectus or this Statement of Additional
Information, as appropriate. The Fund's most significant investment policies
are described in the Prospectus.
|X| Does the Fund Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Fund.
o The Fund cannot invest more than 5% of the value of its total
assets in securities of any one issuer. This limitation applies to 75%
of the Fund's total assets.
o The Fund cannot purchase more than 10% of the voting securities of
any one issuer. This limitation applies to 75% of the Fund's total
assets. The limit does not apply to securities issued by the U.S.
Government or any of its agencies or instrumentalities.
o The Fund cannot lend money. However the Fund can invest in
all or a portion of an issue of bonds, debentures, commercial paper or other
similar corporate obligations. The Fund may also engage in repurchase
agreements and may make loans of portfolio securities, subject to the
restrictions stated under "Loans of Portfolio Securities."
o The Fund cannot concentrate its investments. That means it cannot
invest 25% or more of its total assets in any industry. For the
purposes of this restriction a foreign government is considered to be
an "industry." However, there is no limitation on investments in U.S.
Government securities. Moreover, if deemed appropriate for seeking its
investment objective, the Fund may invest up to 25% of its total assets
in any one industry classification used by the Fund for investment
purposes.
o The Fund cannot invest in real estate. However, the Fund can
purchase securities of issuers that engage in real estate operations
and securities that are secured by real estate or interests in real
estate.
o The Fund cannot invest in companies for the purpose of acquiring
control or management of those companies.
o The Fund cannot underwrite securities of other companies. A
permitted exception is in the case it is deemed to be an underwriter under
the Securities Act of 1933 when reselling any securities held in its own
portfolio.
o The Fund cannot invest or hold securities of any issuer if
officers and directors of the Fund or its Manager or Sub-Advisor
individually beneficially own more than 1/2 of 1% of the securities of
that issuer and together own more than 5% of the securities of that
issuer.
o The Fund cannot invest in physical commodities or physical
commodity contracts. However, the Fund may buy and sell hedging
instruments to the extent specified in its Prospectus and Statement of
Additional Information from time to time. The Fund can also buy and
sell options, futures, securities or other instruments backed by
physical commodities or whose investment return is linked to changes in
the price of physical commodities.
o The Fund cannot borrow money in excess of one third of the
value of the Fund's total assets. The Fund can borrow only from banks and
only as a temporary measure for extraordinary or emergency purposes. It will
make no additional investments while borrowings exceed 5% of its total
assets. The Fund can borrow only if it maintains a 300% ratio of assets to
borrowings at all times in the manner set forth in the Investment Company Act
of 1940.
o The Fund cannot pledge its assets or assign or otherwise encumber
its assets in excess of one-third of its net assets. It can do so only to
secure borrowings made within the limitations set forth in the Prospectus or
this Statement of Additional Information.
o The Fund cannot issue senior securities (as defined in the
Investment Company Act of 1940). However, the Fund can enter into repurchase
agreements, borrow money in accordance with the restrictions set forth in the
Prospectus or this Statement of Additional Information and lend portfolio
securities, even if those activities are deemed to involve the issuance of a
senior security.
|X| Does the Fund Have Any Restrictions That Are Not Fundamental? The
Fund has a number of other investment restrictions that are not fundamental
policies, which means that they can be changed by the Board of Directors
without shareholder approval.
o The Fund cannot invest in oil, gas or other mineral exploration
or development programs.
o The Fund cannot purchase securities on margin (except for
short-term loans that are necessary for the clearance of purchases of
portfolio securities) or make short sales. Collateral arrangements in
connection with transactions in futures and options are not deemed to be
margin transactions.
o The Fund cannot invest in real estate limited partnership
programs.
o The Fund cannot invest more than 5% of its assets in
unseasoned issuers.
o The Fund cannot purchase warrants if more than 5% of its
total assets would be invested in warrants.
Unless the Prospectus or this Statement of Additional Information
states that a percentage restriction applies on an ongoing basis, it applies
only at the time the Fund makes an investment. The Fund need not sell
securities to meet the percentage limits if the value of the investment
increases in proportion to the size of the Fund.
For purposes of the Fund's policy not to concentrate its investments as
described above, the Fund has adopted the industry classifications set forth
in Appendix B to this Statement of Additional Information. That is not a
fundamental policy.
How the Fund is Managed
Organization and History. The Fund is an open-end, diversified management
investment company organized as a Maryland corporation in April 1990.
The Fund is governed by a Board of Directors, which is responsible for
protecting the interests of shareholders under Maryland law. The Directors
meet periodically throughout the year to oversee the Fund's activities,
review its performance, and review the actions of the Manager.
|X| Classes of Shares. The Board of Directors has the power, without
shareholder approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has four classes of
shares: Class A, Class B, Class C and Class N. All classes invest in the
same investment portfolio. Only retirement plans may purchase Class N
shares. Each class of shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o may have a different net asset value,
o may have separate voting rights on matters in which interests of one
class are different from interests of another class, and
o votes as a class on matters that affect that class alone.
Shares are freely transferable, and each share of each class has one
vote at shareholder meetings, with fractional shares voting proportionally on
matters submitted to the vote of shareholders. Each share of the Fund
represents an interest in the Fund proportionately equal to the interest of
each other share of the same class.
The Directors are authorized to create new series and classes of
shares. The Directors may reclassify unissued shares of the Fund or its
series or classes into additional series or classes of shares. The Directors
also may divide or combine the shares of a class into a greater or lesser
number of shares without changing the proportionate beneficial interest of a
shareholder in the Fund. Shares do not have cumulative voting rights or
preemptive or subscription rights. Shares may be voted in person or by proxy
at shareholder meetings.
|X| Meetings of Shareholders. Although the Fund is not required by
Maryland law to hold annual meetings, it may hold shareholder meetings from
time to time on important matters. The Fund's shareholders have the right to
call a meeting to remove a Director or to take certain other action described
in the Articles of Incorporation of the Fund.
The Fund will hold meetings when required to do so by the Investment
Company Act or other applicable law. The Fund will hold a meeting when the
Directors call a meeting or upon proper request of shareholders. If the Fund
receives a written request of the record holders of at least 25% of the
outstanding shares eligible to be voted at a meeting to call a meeting for a
specified purpose (which might include the removal of a Director), the Fund
will call a meeting of shareholders for that specified purpose.
Shareholders of the different classes of the Fund vote together in the
aggregate on certain matters at shareholders' meetings. Those matters include
the election of Directors and ratification of appointment of the independent
auditors. Shareholders of a particular series or class vote separately on
proposals that affect that series or class. Shareholders of a series or class
that is not affected by a proposal are not entitled to vote on the proposal.
For example, only shareholders of a particular series vote on any material
amendment to the investment advisory agreement for that series. Only
shareholders of a particular class of a series vote on certain amendments to
the Distribution and/or Service Plans if the amendments affect only that
class.
Directors and Officers of the Fund. The Fund's Directors and officers and
their principal occupations and business affiliations during the past five
years are listed below. Directors denoted with an asterisk (*) below are
deemed to be "interested persons" of the Fund under the Investment Company
Act. All of the Directors are also trustees or directors of the following
Oppenheimer funds:
Oppenheimer Quest For Value Funds, a Rochester Portfolio Series, a series fund
series fund having the following having one series: series: Limited-Term New
York Municipal Fund Oppenheimer Quest Small Cap Fund, Bond Fund Series, a series
fund having one series: Oppenheimer Quest Balanced Value Fund Oppenheimer
Convertible Securities Fund and Oppenheimer Quest Opportunity Value Rochester
Fund Municipals Fund Oppenheimer Quest Global Value Fund, Oppenheimer MidCap
Fund Inc. Oppenheimer Quest Capital Value Fund, Inc. Oppenheimer Quest Value
Fund, Inc.
Ms. Macaskill and Messrs. Bishop, Donohue, Farrar, Wixted and Zack, who are
officers of the Fund, respectively hold the same offices of the Oppenheimer
funds listed above. Mr. Darling, an officer of the Fund, holds the same office
with the Oppenheimer funds sub-advised by the Sub-Advisor. As of January __,
2001, the Directors and officers of the Fund as a group owned less than 1% of
the outstanding shares of the Fund. The foregoing statement does not reflect
shares held of record by an employee benefit plan for employees of the Manager
other than shares beneficially owned under that plan by the officers of the Fund
listed below. Ms. Macaskill and Mr. Donohue, are trustees of that plan.
Bridget A. Macaskill*, President and Managing General Partner; Age: 52.
Two World Trade Center, New York, New York 10048-0203
Chairman (since August 2000), Chief Executive Officer (since September 1995)
and a director (since December 1994) of the Manager; President (since
September 1995) and a director (since October 1990) of Oppenheimer
Acquisition Corp., the Manager's parent holding company; President, Chief
Executive Officer and a director (since March 2000) of OFI Private
Investments, Inc., an investment adviser subsidiary of the Manager; Chairman
and a director of Shareholder Services, Inc. (since August 1994) and
Shareholder Financial Services, Inc. (since September 1995), transfer agent
subsidiaries of the Manager; President (since September 1995) and a director
(since November 1989) of Oppenheimer Partnership Holdings, Inc., a holding
company subsidiary of the Manager; President and a director (since October
1997) of OppenheimerFunds International Ltd., an offshore fund management
subsidiary of the Manager and of Oppenheimer Millennium Funds plc; a director
of HarbourView Asset Management Corporation (since July 1991) and of
Oppenheimer Real Asset Management, Inc. (since July 1996), investment adviser
subsidiaries of the Manager; a director (since April 2000) of
OppenheimerFunds Legacy Program, a charitable trust program established by
the Manager; a director of Prudential Corporation plc (a U.K. financial
service company); President and a trustee of other Oppenheimer funds;
formerly President of the Manager (June 1991 - August 2000).
Paul Y. Clinton, Director, Age: 70.
39 Blossom Avenue, Osterville, Massachusetts 02655
Principal of Clinton Management Associates, a financial and venture capital
consulting firm; Trustee of Capital Cash Management Trust, a money-market
fund and Narragansett Tax-Free Fund, a tax-exempt bond fund; Director of OCC
Cash Reserves, Inc. and Trustee of OCC Accumulation Trust, both of which are
open-end investment companies. Formerly: Director, External Affairs, Kravco
Corporation, a national real estate owner and property management
corporation; President of Essex Management Corporation, a management
consulting company; a general partner of Capital Growth Fund, a venture
capital partnership; a general partner of Essex Limited Partnership, an
investment partnership; President of Geneve Corp., a venture capital fund;
Chairman of Woodland Capital Corp., a small business investment company; and
Vice President of W.R. Grace & Co.
Thomas W. Courtney, Director, Age: 67.
833 Wyndemere Way, Naples, Florida 34105
Principal of Courtney Associates, Inc. (venture capital firm); former General
Partner of Trivest Venture Fund (private venture capital fund); former
President of Investment Counseling Federated Investors, Inc.; Trustee of Cash
Assets Trust, a money market fund; Director of OCC Cash Reserves, Inc., and
Trustee of OCC Accumulation Trust, both 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.
Robert G. Galli, Director, Age: 67.
19750 Beach Road, Jupiter, FL 33469
A Trustee or Director of other Oppenheimer funds. Formerly he held the
following positions: Vice Chairman (October 1995 - December 1997) and
Executive Vice President (December 1977 - October 1995) of the Manager;
Executive Vice President and a director (April 1986 - October 1995) of
HarbourView Asset Management Corporation.
Lacy B. Herrmann, Director, Age: 71.
380 Madison Avenue, Suite 2300, New York, New York 10017
Chairman and Chief Executive Officer of Aquila Management Corporation, the
sponsoring organization and manager, administrator and/or sub-Adviser to the
following open-end investment companies, and Chairman of the Board of
Trustees and President of each: Churchill Cash Reserves Trust, Aquila -
Cascadia Equity Fund, Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Treasuries Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust,
Prime Cash Fund, Narragansett Insured Tax-Free Income Fund, Tax-Free Fund For
Utah, Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado,
Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian Tax-Free Trust,
and Aquila Rocky Mountain Equity Fund; Vice President, Director, Secretary,
and formerly Treasurer of Aquila Distributors, Inc., distributor of the above
funds; President and Chairman of the Board of Trustees of Capital Cash
Management Trust ("CCMT"), and an Officer and Trustee/Director of its
predecessors; President and Director of STCM Management Company, Inc.,
sponsor and adviser to CCMT; Chairman, President and a Director of InCap
Management Corporation, formerly sub-adviser and administrator of Prime Cash
Fund and Short Term Asset Reserves; Director of OCC Cash Reserves, Inc., and
Trustee of OCC Accumulation Trust, both of which are open-end investment
companies; Trustee Emeritus of Brown University.
George Loft, Director, Age: 85.
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; formerly Director of OCC Cash Reserves, Inc., and Trustee
of OCC Accumulation Trust, both of which are open-end investment companies.
O. Leonard Darling, Vice President, Age: 58.
Two World Trade Center, New York, New York 10048-0203
Vice Chairman (since August 2000) and Chief Investment Officer (since June
1999) of OppenheimerFunds, Inc.; Chairman of the Board and a director (since
June 1999) and Senior Managing Director (since December 1998) of HarbourView
Asset Management Corporation; a director (since March 2000) of OFI Private
Investments, Inc.; Trustee (since 1993) of Awhtolia College - Greece;
formerly Executive Vice President of the Manager (June 1993 - December 1998);
and Chief Executive Officer of HarbourView Asset Management Corporation
(December 1998 - June 1999).
Andrew J. Donohue, Secretary Age: 50.
Two World Trade Center, New York, New York 10048-0203
Executive Vice President (since January 1993), General Counsel (since October
1991) and a director (since September 1995) of the Manager; Executive Vice
President and General Counsel (since September 1993) and a director (since
January 1992) of OppenheimerFunds Distributor, Inc.; Executive Vice
President, General Counsel and a director (since September 1995) of
HarbourView Asset Management Corporation, Shareholder Services, Inc.,
Shareholder Financial Services, Inc. and Oppenheimer Partnership Holdings,
Inc., of OFI Private Investments, Inc. (since March 2000), and of PIMCO Trust
Company (since May 2000); President and a director of Centennial Asset
Management Corporation (since September 1995) and of Oppenheimer Real Asset
Management, Inc. (since July 1996); Vice President and a director (since
September 1997) of OppenheimerFunds International Ltd. and Oppenheimer
Millennium Funds plc; a director (since April 2000) of OppenheimerFunds
Legacy Program; General Counsel (since May 1996) and Secretary (since April
1997) of Oppenheimer Acquisition Corp.; an officer of other Oppenheimer funds.
Brian W. Wixted, Treasurer and Principal Financial and Accounting Officer,
Age: 41.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (since March 1999) of the Manager;
Treasurer (since March 1999) of HarbourView Asset Management Corporation,
Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation,
Shareholder Financial Services, Inc. and Oppenheimer Partnership Holdings,
Inc., of OFI Private Investments, Inc. (since March 2000) and of
OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc
(since May 2000); Treasurer and Chief Financial Officer (since May 2000) of
PIMCO Trust Company; Assistant Treasurer (since March 1999) of Oppenheimer
Acquisition Corp. and of Centennial Asset Management Corporation; an officer
of other Oppenheimer funds; formerly Principal and Chief Operating Officer,
Bankers Trust Company - Mutual Fund Services Division (March 1995 - March
1999); Vice President and Chief Financial Officer of CS First Boston
Investment Management Corp. (September 1991 - March 1995).
Robert G. Zack, Assistant Secretary, Age: 52.
Two World Trade Center, New York, New York 10048-0203
Senior Vice President (since May 1985) and Associate General Counsel (since
May 1981) of the Manager of OppenheimerFunds, Inc.; Assistant Secretary of
Shareholder Services, Inc. (since May 1985), Shareholder Financial Services,
Inc. (since November 1989); OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since October 1997); an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer, Age: 42.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of
the Manager/Mutual Fund Accounting (April 1994 - May 1996) and a Fund
Controller of the Manager.
Scott T. Farrar, Assistant Treasurer, Age: 35.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996);
Assistant Treasurer of Oppenheimer Millennium Funds plc (since October 1997);
an officer of other Oppenheimer Funds; formerly an Assistant Vice President
of the Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund
Controller of the Manager.
|X| Remuneration of Directors. The officers of the Fund and one Director,
Ms. Macaskill, are affiliated with the Manager and receive no salary or fee
from the Fund. The remaining Directors of the Fund received the compensation
shown below. The compensation from the Fund was paid during its fiscal year
ended November 30, 2000. The table below also shows the total compensation
from all of the Oppenheimer funds listed above, including the compensation
from the Fund and from two other funds that are not Oppenheimer funds but for
which the Sub-Advisor acts as investment advisor. That amount represents
compensation received as a director, trustee, or member of a committee of the
Board during the calendar year 2000.
<PAGE>
--------------------------------------------------------------------------------
Aggregate Retirement Total Compensation
Director's Name Compensation Benefits Accrued From all Oppenheimer
From the Fund 1 as Part of Fund Quest/Rochester
Expenses Funds
(10 Funds)2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Paul Y. Clinton $ $ $(3)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Thomas W. Courtney $ $ $(3)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Robert G. Galli $ $ $4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Lacy B. Herrmann $ $ $(3)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
George Loft $ $ $(3)
--------------------------------------------------------------------------------
1. Aggregate compensation from the Fund includes fees, deferred
compensation, if any and any retirement plan benefits accrued for a
Director.
2. For the 2000 calendar year.
3. Includes compensation paid by two funds for which the Sub-Advisor acts
as investment advisor.
4. Total compensation for the 2000 calendar year includes compensation
received for serving as Trustee or Director of 24 other Oppenheimer funds.
|X| Retirement Plan for Directors. The Fund has adopted a retirement
plan that provides for payments to retired Directors. Payments are up to 80%
of the average compensation paid during a Director's five years of service in
which the highest compensation was received. A Director must serve as
Director for any of the Oppenheimer Quest/Rochester/MidCap funds listed above
for at least 15 years to be eligible for the maximum payment. Each Director's
retirement benefits will depend on the amount of the Director's future
compensation and length of service. Therefore the amount of those benefits
cannot be determined at this time, nor can we estimate the number of years of
credited service that will be used to determine those benefits.
|X| Deferred Compensation Plan for Directors. The Board of Directors
has adopted a Deferred Compensation Plan for disinterested directors that
enables them to elect to defer receipt of all or a portion of the annual fees
they are entitled to receive from the Fund. Under the plan, the compensation
deferred by a Director is periodically adjusted as though an equivalent
amount had been invested in shares of one or more Oppenheimer funds selected
by the Director. The amount paid to the Director under the plan will be
determined based upon the performance of the selected funds.
Deferral of Directors' fees under the plan will not materially affect the
Fund' assets, liabilities and net income per share. The plan will not
obligate the fund to retain the services of any Director or to pay any
particular level of compensation to any Director. Pursuant to an Order
issued by the Securities and Exchange Commission, the Fund may invest in the
funds selected by the Director under the plan without shareholder approval
for the limited purpose of determining the value of the Director's deferred
fee account.
|X| Major Shareholders. As of January __,2001 the only person who owned of
record or was known by the Fund to own beneficially 5% or more of any class
of the Fund's outstanding shares was:
Unified Fund Services, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204-1806, which owned 5,156,768.609 Class A shares
(representing 26.46% of the Class A shares then outstanding); and
Merrill Lynch Pierce Fenner & Smith, Inc., 4800 Deer Lake Drive East,
Floor 3, Jacksonville, Florida 32246-6484, which owned 264,139.550 Class C
shares (representing 8.00% of the Class C shares then outstanding).
The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a
holding company controlled by Massachusetts Mutual Life Insurance Company.
The Manager and the Fund have 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
enforced by the Manager.
|X| Code of Ethics. The Fund, the Manager and the Distributor have 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. Covered
persons include persons with knowledge of the investments and investment
intentions of the Fund and other funds advised by the Manager. The Code of
Ethics does permit personnel subject to the Code to invest in securities,
including securities that may be purchased or held by the Fund, subject to a
number of restrictions and controls. Compliance with the Code of Ethics is
carefully monitored and enforced by the Manager.
|X| The Investment Advisory Agreement. The Manager provides
investment advisory and management services to the Fund under an investment
advisory agreement between the Manager and the Fund. The Manager handles the
Fund's day-to-day business and the agreement permits the Manager to enter
into sub-advisory agreements with other registered investment advisors to
obtain specialized services for the Fund, as long as the Fund is not
obligated to pay any additional fees for those services. The Manager has
retained the Sub-Advisor pursuant to a separate Sub-Advisory Agreement,
described below, under which the Sub-Advisor buys and sells portfolio
securities for the Fund. The portfolio managers of the Fund are employed by
the Sub-Advisor and are the persons who are principally responsible for the
day-to-day management of the Fund's portfolio, as described below.
The investment advisory agreement between the Fund and the Manager
requires the Manager, at its expense, to provide the Fund with adequate
office space, facilities and equipment. It also requires the Manager to
provide and supervise the activities of all administrative and clerical
personnel required to provide effective administration for the Fund to the
extent that those services are not provided under the Administration
Agreement described below.
The Fund pays expenses not expressly assumed by the Manager under the
advisory agreement. The investment advisory agreement lists examples of
expenses paid by the Fund. The major categories relate to calculation of the
Fund's net asset values per share, interest, taxes, brokerage commissions,
fees to certain Directors, legal and audit expenses, custodian and transfer
agent expenses, share issuance costs, certain printing and registration costs
and non-recurring expenses, including litigation costs. The management fees
paid by the Fund to the Manager are calculated at the rates described in the
Prospectus, which are applied to the assets of the Fund as a whole. The fees
are allocated to each class of shares based upon the relative proportion of
the Fund's net assets represented by that class.
The investment advisory agreement states that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under the investment
advisory agreement, the Manager is not liable for any loss resulting from a
good faith error or omission on its part with respect to any of its duties
under the agreement.
The agreement permits the Manager to act as investment advisor for any
other person, firm or corporation and to use the names "Oppenheimer" and
"Quest for Value" in connection with other investment companies for which it
may act as investment advisor or general distributor. If the Manager shall no
longer act as investment advisor to the Fund, the Manager may withdraw the
right of the Fund to use the names "Oppenheimer" or "Quest for Value" as part
of its name.
|X| The Administration Agreement. Under an Administration Agreement
between the Fund and the Manager, the Manager performs certain administrative
services to the Fund not covered by the investment advisory agreement. Those
services include the determination of the Fund's net assets values, the
compilation and maintenance of books and records, preparation of proxy
materials, annual and semi-annual reports, and the preparation of financial
information and other data required for the Fund's reports to the Securities
and Exchange Commission. Additionally, the Manager must respond to
shareholder inquiries relating to the Fund or refer them to the Fund's
officers or transfer agents. Under the Agreement, the Manager furnishes the
Fund with office space, facilities and equipment, and arranges for its
employees to serve as officers of the Fund.
The Administration Agreement has been approved by the Fund's Board of
Directors and a vote of shareholders of the Fund and remains in effect after
its initial two-year term as long as it is annually approved by the
disinterested Directors of the Fund. Prior to November 22, 1995, the
Sub-Advisor served as administrator to the Fund.
--------------------------------------------------------------------------------
Management Fees Paid to Administrative Fees Paid
Fiscal Year ended 11/30: OppenheimerFunds, Inc. to the Manager Under the
under Investment Advisory Administrative Agreement
Agreement
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1998
$3,400,966 $1,143,238
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1999
$3,738,803 $1,263,857
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2000 $ $
--------------------------------------------------------------------------------
The Sub-Advisor. The Sub-Advisor is a majority-owned subsidiary of
Oppenheimer Capital, a registered investment advisor. From the Fund's
inception on April 30, 1980, until November 22, 1995, the Sub-Advisor (which
was then named Quest for Value Advisors) or the Sub-Advisor's parent served
as the Fund's investment advisor. The Sub-Advisor acts as investment advisor
to other investment companies and to individual investors.
On November 4, 1997, PIMCO Advisors L.P., a registered investment
advisor with $125 billion in assets under management through various
subsidiaries and affiliates, acquired control of Oppenheimer Capital and the
Sub-Advisor. On November 30, 1997, Oppenheimer Capital merged with a
subsidiary of PIMCO Advisors. As a result, Oppenheimer Capital and the
Sub-Advisor became indirect wholly-owned subsidiaries of PIMCO Advisors.
PIMCO Advisors has two general partners: PIMCO Partners, G.P., a California
general partnership, and PIMCO Advisors Holdings L.P. (formerly Oppenheimer
Capital, L.P.), an New York Stock Exchange-listed Delaware limited
partnership of which PIMCO Partners, G.P. is the sole general partner.
PIMCO Partners, G.P. beneficially owns or controls (through its general
partner interest in Oppenheimer Capital, L.P.) more than 80% of the units of
limited partnership of PIMCO Advisors. PIMCO Partners, G.P. has two general
partners. The first of these is Pacific Investment Management Company, a
wholly-owned subsidiary of Pacific Financial Asset Management Company, a
direct subsidiary of Pacific Life Insurance Company ("Pacific Life").
The managing general partner of PIMCO Partners, G.P. is PIMCO Partners
L.L.C. ("PPLLC"), a California limited liability company. PPLLC's members
are the Managing Directors (the "PIMCO Managers") of Pacific Investment
Management Company, a subsidiary of PIMCO Advisors (the "PIMCO
Subpartnership"). The PIMCO Managers are: William H. Gross, Dean S.
Meiling, James F. Muzzy, William F. Podlich, III, Brent R. Harris, John L.
Hague, William S. Thompson Jr., William C. Powers, David H. Edington,
Benjamin Trosky, William R. Benz, II and Lee R. Thomas, III.
PIMCO Advisors is governed by a Management Board, which consists of
sixteen members, pursuant to a delegation by its general partners. PIMCO
Partners G.P. has the power to designate up to nine members of the Management
Board and the PIMCO Subpartnership, of which the PIMCO Managers are the
Managing Directors, has the power to designate up to two members. In
addition, PIMCO Partners, G.P., as the controlling general partner of PIMCO
Advisors, has the power to revoke the delegation to the Management Board and
exercise control of PIMCO Advisors. As a result, Pacific Life and/or the
PIMCO Managers may be deemed to control PIMCO Advisors. Pacific Life and the
PIMCO Managers disclaim such control.
As described in the Prospectus, on October 31, 1999, PIMCO Advisors,
PIMCO Advisors Holdings L.P. and Allianz AG announced that they had entered
into an agreement in which Allianz will acquire majority ownership of PIMCO
Advisors and its subsidiaries, including Oppenheimer Capital and the
Sub-Advisor. That transaction is currently expected to be completed by the
end of the first quarter of 2000.
|X| The Sub-Advisory Agreement. Under the Sub-Advisory Agreement
between the Manager and the Sub-Advisor, the Sub-Advisor 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 Sub-Advisory Agreement, the Sub-Advisor agrees not to change the
portfolio manager of the Fund without the written approval of the Manager.
The Sub-Advisor also agrees to provide assistance in the distribution and
marketing of the Fund.
Under the Sub-Advisory Agreement, the Manager pays the Sub-Advisor an
annual fee in monthly installments, based on the average daily net assets of
the Fund. The fee paid to the Sub-Advisor under the Sub-Advisory agreement is
paid by the Manager, not by the Fund. The fee is equal to 40% of the
aggregate of the investment advisory and administrative fees collected by the
Manager from the Fund based on the total net assets of the Fund as of
November 22, 1995 (the "Base Amount") plus 30% of the aggregate of the
investment advisory and administrative fees collected by the Manager based on
the total net assets of the Fund that exceed the Base Amount.
The Sub-Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, negligence or reckless disregard of its duties or
obligations, the Sub-Advisor shall not be liable to the Manager for any act
or omission in the course of or connected with rendering services under the
Sub-Advisory Agreement or for any losses that may be sustained in the
purchase, holding or sale of any security.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement and the
Sub-Advisory Agreement. One of the duties of the Sub-Advisor under the
Sub-Advisory Agreement is to arrange the portfolio transactions for the
Fund. The Fund's investment advisory agreement with the Manager and the
Sub-Advisory Agreement contain provisions relating to the employment of
broker-dealers to effect the Fund's portfolio transactions. The Manager and
the Sub-Advisor are authorized to employ broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company Act.
They may employ broker-dealers that they think, in their best judgment based
on all relevant factors, will implement the policy of the Fund to obtain, at
reasonable expense, the "best execution" of the Fund's portfolio
transactions. "Best execution" means prompt and reliable execution at the
most favorable price obtainable.
The Manager and the Sub-Advisor need not seek competitive commission bidding.
However, they are expected to be aware of the current rates of eligible brokers
and to minimize the commissions paid to the extent consistent with the interests
and policies of the Fund as established by its Board of Directors.
The Manager and the Sub-Advisor may select brokers (other than
affiliates) that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager, the Sub-Advisor or their
respective affiliates have investment discretion. The commissions paid to
such brokers may be higher than another qualified broker would charge, if the
Manager or Sub-Advisor, as applicable, makes a good faith determination that
the commission is fair and reasonable in relation to the services provided.
Subject to those considerations, as a factor in selecting brokers for the
Fund's portfolio transactions, the Manager and the Sub-Advisor may also
consider sales of shares of the Fund and other investment companies for which
the Manager or an affiliate serves as investment advisor.
The Sub-Advisory Agreement permits the Sub-Advisor to enter into
"soft-dollar" arrangements through the agency of third parties to obtain
services for the Fund. Pursuant to these arrangements, the Sub-Advisor 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 in
compliance with applicable law.
Brokerage Practices. Brokerage for the Fund is allocated subject to the
provisions of the investment advisory agreement and the sub-advisory
agreement and the procedures and rules described above. Generally, the
Sub-Advisor's portfolio traders allocate brokerage based upon recommendations
from the Fund's portfolio manager. In certain instances, portfolio managers
may directly place trades and allocate brokerage. In either case, the
Sub-Advisor's executive officers supervise the allocation of brokerage.
Transactions in securities other than those for which an exchange is the primary
market are generally done with principals or market makers. In transactions
on foreign exchanges, the Fund may be required to pay fixed brokerage
commissions and therefore would not have the benefit of negotiated
commissions available in U.S. markets. Brokerage commissions are paid
primarily for transactions in listed securities or for certain fixed-income
agency transactions in the secondary market. Otherwise brokerage commissions
are paid only if it appears likely that a better price or execution can be
obtained by doing so.
The Sub-Advisor serves as investment manager to a number of clients,
including other investment companies, and may in the future act as investment
manager or advisor to others. It is the practice of the Sub-Advisor to
allocate purchase or sale transactions among the Fund and other clients whose
assets it manages in a manner it deems equitable. In making those
allocations, the Sub-Advisor considers several main factors, including the
respective investment objectives, the relative size of portfolio holdings of
the same or comparable securities, the availability of cash for investment,
the size of investment commitments generally held and the opinions of the
persons responsible for managing the portfolios of the Fund and each other
client's accounts.
When orders to purchase or sell the same security on
identical terms are placed by more than one of the funds and/or other
advisory accounts managed by the Sub-Advisor 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 (these are called
"free trades") usually will have its order executed first. 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. Purchases are
combined where possible for the purpose of negotiating brokerage commissions.
In some cases that practice might have a detrimental effect on the price or
volume of the security in a particular transaction for the Fund.
Most purchases of debt obligations are principal transactions at net
prices. Instead of using a broker for those transactions, the Fund normally
deals directly with the selling or purchasing principal or market maker
unless the Sub-Advisor determines that a better price or execution can be
obtained by using the services of a broker. Purchases of portfolio
securities from underwriters include a commission or concession paid by the
issuer to the underwriter. Purchases from dealers include a spread between
the bid and asked prices. The Fund seeks to obtain prompt execution of these
orders at the most favorable net price.
The investment advisory agreement and the Sub-Advisory agreement permit
the Manager and the Sub-Advisor to allocate brokerage for research services.
The research services provided by a particular broker may be useful only to
one or more of the advisory accounts of the Sub-Advisor and its affiliates.
The investment research received for the commissions of those other accounts
may be useful both to the Fund and one or more of the Sub-Advisor's other
accounts. Investment research may be supplied to the Sub-Advisor by a third
party at the instance of a broker through which trades are placed.
Investment research services include information and analysis on
particular companies and industries as well as market or economic trends and
portfolio strategy, market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If a research
service also assists the Sub-Advisor in a non-research capacity (such as
bookkeeping or other administrative functions), then only the percentage or
component that provides assistance to the Sub-Advisor in the investment
decision-making process may be paid in commission dollars.
The research services provided by brokers broadens the scope and
supplements the research activities of the Sub-Advisor. That research
provides additional views and comparisons for consideration, and helps the
Sub-Advisor to obtain market information for the valuation of securities that
are either held in the Fund's portfolio or are being considered for
purchase. The Sub-Advisor provides information to the Manager and the Board
about the commissions paid to brokers furnishing such services, together with
the Sub-Advisor's representation that the amount of such commissions was
reasonably related to the value or benefit of such services.
........................................................................
--------------------------------------------------------------------------------
Fiscal Year Ended 11/30 Total Brokerage Commissions Paid1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1998 $1,135,827
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1999 $ 296,065
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2000 $2
--------------------------------------------------------------------------------
1. Amounts do not include spreads or concessions on principal transactions
on a net trade basis.
2. In the fiscal year ended 11/30/00, the amount of transactions directed
to brokers for research services was $______ and the amount of the
commissions paid to broker-dealers for those services was $_______.
Distribution and Service Plans
The Distributor. Under its General Distributor's Agreement with the Fund,
the Distributor acts as the Fund's principal underwriter in the continuous
public offering of shares of the Fund's classes of shares. The Distributor is
not obligated to sell a specific number of shares. Expenses normally
attributable to sales are borne by the Distributor.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares during the Fund's three most recent fiscal
years is shown in the table below.
--------------------------------------------------------------------------------
Fiscal Aggregate Class A Commissions Commissions Commissions
Year Front-End Front-End on Class A on Class B on Class C
Ended Sales Sales Shares Shares Shares
11/30: Charges on Charges Advanced by Advanced by Advanced by
Class A Retained by Distributor1 Distributor1 Distributor1
Shares Distributor
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1998 $ $219,844 $1,297,914 $167,136
771,228 $117,276
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1999 $ $107,903 $135,081 $ $ 99,471
460,274 542,206
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2000 $ $ $ $ $
--------------------------------------------------------------------------------
1. The Distributor advances commission payments to dealers for certain
sales of Class A shares and for sales of Class B and Class C shares from
its own resources at the time of sale.
--------------------------------------------------------------------------------
Class A Contingent Class B Contingent Class C Contingent
Fiscal Deferred Sales Deferred Sales Deferred Sales Charges
Year Ended Charges Retained by Charges Retained by Retained by Distributor
11/30 Distributor Distributor
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2000 $ $ $
--------------------------------------------------------------------------------
Distribution and Service Plans. The Fund has adopted Distribution and
Service Plans for Class A, Class B, Class C and Class N shares under Rule
12b-1 of the Investment Company Act. Under those plans the Fund compensates
the Distributor for all or a portion of its costs incurred in connection with
the distribution and/or servicing of the shares of the particular class.
Under the plans, the Manager and the Distributor may make payments to
affiliates and, in their sole discretion, from time to time, may use
their own resources (at no direct cost to the Fund) to make payments to
brokers, dealers or other financial institutions for distribution and
administrative services they perform. The Manager may use its profits
from the advisory fee it receives from the Fund. In their sole
discretion, the Distributor and the Manager may increase or decrease
the amount of payments they make from their own resources to plan
recipients.
Unless a plan is terminated as described below, the plan continues in effect
from year to year but only if the Fund's Board of Directors and its
Independent Directors specifically vote annually to approve its
continuance. Approval must be by a vote cast in person at a meeting
called for the purpose of voting on continuing the plan. A plan may be
terminated at any time by the vote of a majority of the Independent
Directors or by the vote of the holders of a "majority" (as defined in
the Investment Company Act) of the outstanding shares of that class.
The Board of Directors and the Independent Directors must approve all
material amendments to a plan. An amendment to materially increase the
amount of payments to be made under a plan must be approved by
shareholders of the class affected by the amendment. Because Class B
shares of the Fund automatically convert into Class A shares after six
years, the Fund must obtain the approval of both Class A and Class B
shareholders for a proposed material amendment to the Class A plan that
would materially increase payments under the plan. That approval must
be by a "majority" (as defined in the Investment Company Act) of the
shares of each Class, voting separately by class.
While the plans are in effect, the Treasurer of the Fund shall provide
separate written reports on the plans to the Board of Directors at least
quarterly for its review. The reports shall detail the amount of all payments
made under a plan, and the purpose for which the payments were made. Those
reports are subject to the review and approval of the Independent Directors.
Each plan states 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 the selection and nomination
process as long as the final decision as to selection or nomination is
approved by a majority of the Independent Directors.
Under the plan for a class, no payment will be made to any recipient in
any quarter in which the aggregate net asset value of all Fund shares of that
class held by the recipient for itself and its customers does not exceed a
minimum amount, if any, that may be set from time to time by a majority of
the Independent Directors. The Board of Directors has set no minimum amount
of assets to qualify for payments under the plans.
|X| Service Plans. Under the service plans, the Distributor currently
uses the fees it receives from the Fund to pay brokers, dealers and other
financial institutions (they are referred to as "recipients") for personal
services and account maintenance services they provide for their customers
who hold shares of a particular Class, A, B, C or N. The services 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 service plans permit compensation to the Distributor at a rate of
up to 0.25% of average annual net assets of the applicable class. The Board
has set the rate at that level. While the plans permit the Board to authorize
payments to the Distributor to reimburse itself for services under the plan,
the Board has not yet done so. The Distributor makes service fee payments to
plan recipients quarterly at an annual rate not to exceed 0.25% of the
average annual net assets consisting of shares of the applicable class held
in the accounts of the recipients or their customers.
|X| Service and Distribution Plan Fees. Under each plan, service fees
and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The plans compensate the Distributor at a
flat rate for its services and costs in distributing shares and servicing
accounts, whether the Distributor's expenses are more or less than the
amounts paid by the Fund under the plans during the period for which the fee
is paid. The types of services that recipients provide are similar to the
services provided under the service plans described above.
The plans permit the Distributor to retain both the asset-based sales
charges and the service fees or to pay recipients the service fee on a
quarterly basis, without payment in advance. However, the Distributor
currently intends to pay the service fee to recipients in advance for the
first year after the shares are purchased. After the first year shares are
outstanding, the Distributor makes service fee payments quarterly on those
shares. The advance payment is based on the net asset value of shares sold.
Shares purchased by exchange do not qualify for the advance service fee
payment. If shares are redeemed during the first year after their purchase,
the recipient of the service fees on those shares will be obligated to repay
the Distributor a pro rata portion of the advance payment of the service fee
made on those shares.
Under the Class A plan, the Distributor pays a portion of the asset-based sales
charge to brokers, dealers and financial institutions and retains the
balance. As described in the Prospectus, a voluntary reduction with respect
to the asset-based sales charge became effective on January 1, 2000, and
commencing January 1, 2002 the Distributor will not retain any portion of the
Class A asset-based sales charge. The Distributor retains the asset-based
sales charge on Class B and Class N shares. The Distributor retains the
asset-based sales charge on Class C shares during the first year the shares
are outstanding. It pays the asset-based sales charge it receives on Class C
shares as an ongoing commission to the recipient on Class C shares
outstanding for a year or more. If a dealer has a special agreement with the
Distributor, the Distributor will pay the Class B and/or Class C service fee
and the asset-based sales charge to the dealer quarterly in lieu of paying
the sales commissions and service fee in advance at the time of purchase.
The asset-based sales charges on Class B, Class C and Class N shares
allow investors to buy shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares. The Fund pays
the asset-based sales charges to the Distributor for its services rendered in
distributing Class A, Class B, Class C and Class N shares. The payments are
made to the Distributor in recognition that the Distributor:
o pays sales commissions to authorized brokers and dealers at the time of
sale and pays service fees as described above,
o may finance payment of sales commissions and/or the advance of the
service fee payment to recipients under the plans, or may provide such
financing from its own resources or from the resources of an
affiliate,
o employs personnel to support distribution of shares, and
o bears the costs of sales literature, advertising and prospectuses
(other than those furnished to current shareholders) and state "blue
sky" registration fees and certain other distribution expenses.
The Distributor's actual expenses in selling Class B, Class C and Class
N shares may be more than the payments it receives from the contingent
deferred sales charges collected on redeemed shares and from the Fund under
the plans. If either the Class B, Class C or Class N shares is terminated by
the Fund, the Board of Directors may allow the Fund to continue payments of
the asset-based sales charge to the Distributor for distributing shares
before the plan was terminated.
--------------------------------------------------------------------------------
Distribution Fees Paid to the Distributor in the Fiscal Year Ended 11/30/00*
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Distributor's Distributor's
Aggregate Unreimbursed
Total Amount Unreimbursed Expenses as % of
Class: Payments Retained by Expenses Under Net Assets of
Under Plan Distributor Plan Class
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class A Plan $ $ N/A N/A
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B Plan $ $ $ %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C Plan $ $ $ %
--------------------------------------------------------------------------------
*Class N shares were not offered for sale during the Fund's fiscal year ended
November 30, 2000.
All payments under the plans are subject to the limitations imposed by
the Conduct Rules of the National Association of Securities Dealers, Inc. on
payments of asset-based sales charges and service fees.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses a variety of terms to
illustrate its investment performance. Those terms include "cumulative total
return," "average annual total return," "average annual total return at net
asset value" and "total return at net asset value." An explanation of how
total returns are calculated is set forth below. The charts below show the
Fund's performance as of the Fund's most recent fiscal year end. You can
obtain current performance information by calling the Fund's Transfer Agent
at 1-800-525-7048 or by visiting the OppenheimerFunds Internet web site at
http://www.oppenheimerfunds.com.
The Fund's illustrations of its performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those rules
describe the types of performance data that may be used and how it is to be
calculated. In general, any advertisement by the Fund of its performance data
must include the average annual total returns for the advertised class of
shares of the Fund. Those returns must be shown for the 1-, 5-, and 10-year
periods (or the life of the class, if less) ending as of the most recently
ended calendar quarter prior to the publication of the advertisement (or its
submission for publication).
Use of standardized performance calculations enables an investor to
compare the Fund's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using the
Fund's performance information as a basis for comparison with other
investments:
o Total returns measure the performance of a hypothetical account in
the Fund over various periods and do not show the performance of
each shareholder's account. Your account's performance will vary
from the model performance data if your dividends are received in
cash, or you buy or sell shares during the period, or you bought
your shares at a different time and price than the shares used in
the model.
o The Fund's performance returns do not reflect the effect of taxes on
dividends and capital gains distributions.
o An investment in the Fund is not insured by the FDIC or any other
government agency.
o The principal value of the Fund's shares and total returns are not
guaranteed and normally will fluctuate on a daily basis.
o When an investor's shares are redeemed, they may be worth more or
less than their original cost.
o Total returns for any given past period represent historical
performance information and are not, and should not be considered, a
prediction of future returns.
The performance of each class of shares is shown separately, because
the performance of each class of shares will usually be different. That is
because of the different kinds of expenses each class bears. The total
returns of each class of shares of the Fund are affected by market
conditions, the quality of the Fund's investments, the maturity of debt
investments, the types of investments the Fund holds, and its operating
expenses that are allocated to the particular class.
|X| Total Return Information. There are different types of "total
returns" to measure the Fund's performance. Total return is the change in
value of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares and that the investment is redeemed at the end of the
period. Because of differences in expenses for each class of shares, the
total returns for each class are separately measured. The cumulative total
return measures the change in value over the entire period (for example, ten
years). An average annual total return shows the average rate of return for
each year in a period that would produce the cumulative total return over the
entire period. However, average annual total returns do not show actual
year-by-year performance. The Fund uses standardized calculations for its
total returns as prescribed by the SEC. The methodology is discussed below.
In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown without sales
charge, as described below). For Class B shares, payment of the applicable
contingent deferred sales charge is applied, depending on the period for
which the return is shown: 5.0% in the first year, 4.0% in the second year,
3.0% in the third and fourth years, 2.0% in the fifth year, 1.0% in the sixth
year and none thereafter. For Class C shares, the 1% contingent deferred
sales charge is deducted for returns for the 1-year period.
|_| Average Annual Total Return. The "average annual total
return" of each class is an average annual compounded rate of return for each
year in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n" in the formula) to achieve an
Ending Redeemable Value ("ERV" in the formula) of that investment, according
to the following formula:
------------------------------------------------------------------------------
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
------------------------------------------------------------------------------
|_| Cumulative Total Return. The "cumulative total return"
calculation measures the change in value of a hypothetical investment of
$1,000 over an entire period of years. Its calculation uses some of the same
factors as average annual total return, but it does not average the rate of
return on an annual basis. Cumulative total return is determined as follows:
------------------------------------------------------------------------------
ERV - P
------- = Total Return
P
[OBJECT OMITTED]
------------------------------------------------------------------------------
|_| Total Returns at Net Asset Value. From time to time the Fund may also
quote a cumulative or an average annual total return "at net asset value"
(without deducting sales charges) for Class A, Class B or Class C shares.
Each is based on the difference in net asset value per share at the beginning
and the end of the period for a hypothetical investment in that class of
shares (without considering front-end or contingent deferred sales charges)
and takes into consideration the reinvestment of dividends and capital gains
distributions.
--------------------------------------------------------------------------------
The Fund's Total Returns for the Periods Ended 11/30/00*
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cumulative Total Average Annual Total Returns
Returns (10
years or Life of
Class)
Class of
Shares
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5-Year 10-Year
1-Year (or (or
life-of-class) life-of-class)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
After Without After Without After Without After Without
Sales Sales Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge Charge Charge
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class A %(1) %(1) % % % % %(1) %(1)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B %(2) %(2) % % % % %(2) %(2)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C %(3) %(3) % % % % %(3) %(3)
--------------------------------------------------------------------------------
* Class N shares were not offered for sale during the Fund's fiscal year
ended November 30, 2000.
1. Inception of Class A: 7/2/90
2. Inception of Class B: 9/1/93
3. Inception of Class C: 9/1/93
Other Performance Comparisons. The Fund compares its performance annually to
that of an appropriate broadly-based market index in its Annual Report to
shareholders. You can obtain that information by contacting the Transfer
Agent at the addresses or telephone numbers shown on the cover of this
Statement of Additional Information. The Fund may also compare its
performance to that of other investments, including other mutual funds, or
use rankings of its performance by independent ranking entities. Examples of
these performance comparisons are set forth below.
|X| Lipper Rankings. From time to time the Fund may publish the ranking
of the performance of its classes of shares by Lipper, Inc. Lipper is a
widely-recognized independent mutual fund monitoring service. Lipper
monitors the performance of regulated investment companies, including the
Fund, and ranks their performance for various periods based on stated fund
classifications. Lipper currently ranks the Fund's performance against all
other global funds. The Lipper performance rankings are based on total
returns that include the reinvestment of capital gain distributions and
income dividends but do not take sales charges or taxes into consideration.
|X| Morningstar Ratings and Rankings. From time to time the Fund may
publish the ranking and/or star rating of the performance of its classes of
shares by Morningstar, Inc., an independent mutual fund monitoring service.
Morningstar rates and ranks mutual funds in broad investment categories:
domestic stock funds, international stock funds, taxable bond funds and
municipal bond funds. The Fund is included in the international stock funds
category.
Morningstar proprietary star ratings reflect historical risk-adjusted total
investment return. Investment return measures a fund's (or class's)
one-, three-, five- and ten-year average annual total returns
(depending on the inception of the fund or class) in excess of 90-day
U.S. Treasury bill returns after considering the fund's sales charges
and expenses. Risk is measured by a fund's (or class's) performance
below 90-day U.S. Treasury bill returns. Risk and investment return are
combined to produce star ratings reflecting performance relative to the
average fund in a fund's category. Five stars is the "highest" rating
(top 10% of funds in a category), four stars is "above average" (next
22.5%), three stars is "average" (next 35%), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%). The
current star rating is the fund's (or class's) 3-year rating or its
combined 3- and 5-year rating (weighted 60%/40% respectively), or its
combined 3-, 5-, and 10-year ranking (weighted 40%, 30% and 30%,
respectively), depending on the inception date of the fund (or class).
Ratings are subject to change monthly.
The Fund may also compare its total return ranking to that of other
funds in its Morningstar category, in addition to its star ratings. Those
total return rankings are percentages from one percent to one hundred percent
and are not risk adjusted. For example, if a fund is in the 94th percentile,
that means that 94% of the funds in the same category performed better than
it did.
|X| Performance Rankings and Comparisons by Other Entities and
Publications. From time to time the Fund may include in its advertisements
and sales literature performance information about the Fund cited in
newspapers and other periodicals such as The New York Times, The Wall Street
Journal, Barron's, or similar publications. That information may include
performance quotations from other sources, including Lipper and Morningstar.
The performance of the Fund's classes of shares may be compared in
publications to the performance of various market indices or other
investments, and averages, performance rankings or other benchmarks prepared
by recognized mutual fund statistical services.
Investors may also wish to compare the returns on the Fund's share
classes to the return on fixed-income investments available from banks and
thrift institutions. Those include certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed or
variable time deposits, and various other instruments such as Treasury bills.
However, the Fund's returns and share price are not guaranteed or insured by
the FDIC or any other agency and will fluctuate daily, while bank depository
obligations may be insured by the FDIC and may provide fixed rates of return.
Repayment of principal and payment of interest on Treasury securities is
backed by the full faith and credit of the U.S. Government.
From time to time, the Fund may publish rankings or ratings of the
Manager or Transfer Agent, and of the investor services provided by them to
shareholders of the Oppenheimer funds, other than performance rankings of the
Oppenheimer funds themselves. Those ratings or rankings of shareholder and
investor services by third parties may include comparisons of their services
to those provided by other mutual fund families selected by the rating or
ranking services. They may be based upon the opinions of the rating or
ranking service itself, using its research or judgment, or based upon surveys
of investors, brokers, shareholders or others.
------------------------------------------------------------------------------
A B O U T Y O U R A C C O U N T
------------------------------------------------------------------------------
How to Buy Shares
Additional information is presented below about the methods that can be
used to buy shares of the Fund. Appendix C contains more information about
the special sales charge arrangements offered by the Fund, and the
circumstances in which sales charges may be reduced or waived for certain
classes of investors.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25. Shares will be purchased two regular business days
following the regular business day you instruct the Distributor to initiate
the Automated Clearing House ("ACH") transfer to buy the shares. That
instruction must be received prior to the close of The New York Stock
Exchange that day. Dividends will begin to accrue on shares purchased with
the proceeds of ACH transfers on the business day after the shares are
purchased. The Exchange normally closes at 4:00 P.M., but may close earlier
on certain days. The proceeds of ACH transfers are normally received by the
Fund 3 days after the transfers are initiated. If the proceeds of the ACH
transfer are not received on a timely basis, the Distributor reserves the
right to cancel the purchase order. The Distributor and the Fund are not
responsible for any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation
and Letters of Intent because of the economies of sales efforts and reduction
in expenses realized by the Distributor, dealers and brokers making such
sales. No sales charge is imposed in certain other circumstances described
in Appendix C to this Statement of Additional Information because the
Distributor or dealer or broker incurs little or no selling expenses.
|X| 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:
o Class A and Class B shares you purchase for your individual
accounts, or for your joint accounts, or for trust or custodial
accounts on behalf of your children who are minors, and
o 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, and
o Class A and Class B shares of Oppenheimer funds you previously
purchased subject to an initial or contingent deferred sales
charge to reduce the sales charge rate for current purchases of
Class A shares, provided that you still hold your investment in
one of the Oppenheimer funds.
A fiduciary can count all shares purchased for a trust, estate or other
fiduciary account (including one or more employee benefit plans of the same
employer) that has multiple accounts. The Distributor will add the value, at
current offering price, of the shares you previously purchased and currently
own to the value of current purchases to determine the sales charge rate that
applies. The reduced sales charge will apply only to current purchases. You
must request it when you buy shares.
|X| The Oppenheimer Funds. The Oppenheimer funds are those mutual
funds for which the Distributor acts as the distributor or the
sub-distributor and currently include the following:
Oppenheimer Bond Fund Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street California
Oppenheimer California Municipal Fund Municipal Fund
Oppenheimer Main Street Growth & Income
Oppenheimer Capital Appreciation Fund Fund
Oppenheimer Capital Preservation Fund Oppenheimer Main Street Opportunity Fund
Oppenheimer Capital Income Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer Champion Income Fund Oppenheimer MidCap Fund
Oppenheimer Convertible Securities Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Developing Markets Fund Oppenheimer Municipal Bond Fund
Oppenheimer Disciplined Allocation Fund Oppenheimer New York Municipal Fund
Oppenheimer Disciplined Value Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Discovery Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Emerging Growth Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Emerging Technologies Fund Inc.
Oppenheimer Quest Global Value Fund,
Oppenheimer Enterprise Fund Inc.
Oppenheimer Europe Fund Oppenheimer Quest Opportunity Value Fund
Oppenheimer Florida Municipal Fund Oppenheimer Quest Small Cap Fund
Oppenheimer Global Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Global Growth & Income Fund Oppenheimer Real Asset Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Growth Fund Oppenheimer Strategic Income Fund
Oppenheimer High Yield Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer Insured Municipal Fund Oppenheimer Trinity Core Fund
Oppenheimer Intermediate Municipal Fund Oppenheimer Trinity Growth Fund
Oppenheimer International Bond Fund Oppenheimer Trinity Value Fund
Oppenheimer International Growth Fund Oppenheimer U.S. Government Trust
Oppenheimer International Small Company
Fund Oppenheimer World Bond Fund
Oppenheimer Large Cap Growth Fund Limited-Term New York Municipal Fund
Rochester Fund Municipals
and the following money market funds:
Centennial America Fund, L. P. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust
Centennial Government Trust Oppenheimer Cash Reserves
Centennial Money Market Trust Oppenheimer Money Market Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of
each of the Oppenheimer funds except the money market funds. Under certain
circumstances described in this Statement of Additional Information,
redemption proceeds of certain money market fund shares may be subject to a
contingent deferred sales charge.
|X| Letters 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. You can
include purchases made up to 90 days before the date of the Letter.
A Letter of Intent is an investor's statement in writing to the
Distributor of the intention to purchase Class A shares or Class A and Class
B shares of the Fund (and other Oppenheimer funds) during a 13-month period
(the "Letter of Intent period"). At the investor's request, this may include
purchases made up to 90 days prior to the date of the Letter. The Letter
states the investor's intention to make the aggregate amount of purchases of
shares which, when added to the investor's holdings of shares of those funds,
will equal or exceed the amount specified in the Letter. Purchases made by
reinvestment of dividends or distributions of capital gains and purchases
made at net asset value without sales charge do not count toward satisfying
the amount of the Letter.
A Letter enables an investor to count the Class A and Class B shares
purchased under the Letter to obtain the reduced sales charge rate on
purchases of Class A shares of the Fund (and other Oppenheimer funds) that
applies under the Right of Accumulation to current purchases of Class A
shares. Each purchase of Class A shares under the Letter will be made at the
offering price (including the sales charge) that applies to a single lump-sum
purchase of shares in the amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares. However, if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the investor's
holdings of shares on the last day of that period, do not equal or exceed the
intended purchase amount, the investor agrees to pay the additional amount of
sales charge applicable to such purchases. That amount is described in "Terms
of Escrow," below (those terms may be amended by the Distributor from time to
time). The investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent subject to the
Terms of Escrow. Also, the investor agrees to be bound by the terms of the
Prospectus, this Statement of Additional Information and the Application used
for a Letter of Intent. If those terms are amended, as they may be from time
to time by the Fund, the investor agrees to be bound by the amended terms and
that those amendments will apply automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent period
do not equal or exceed the intended purchase amount, the commissions
previously paid to the dealer of record for the account and the amount of
sales charge retained by the Distributor will be adjusted to the rates
applicable to actual total purchases. If total eligible purchases during the
Letter of Intent period exceed the intended purchase amount and exceed the
amount needed to qualify for the next sales charge rate reduction set forth
in the Prospectus, the sales charges paid will be adjusted to the lower rate.
That adjustment will be made only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid to the
dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be used
to purchase additional shares for the investor's account at the net asset
value per share in effect on the date of such purchase, promptly after the
Distributor's receipt thereof.
The Transfer Agent will not hold shares in escrow for purchases of
shares of the Fund and other Oppenheimer funds by OppenheimerFunds prototype
401(k) plans under a Letter of Intent. If the intended purchase amount under
a Letter of Intent entered into by an OppenheimerFunds prototype 401(k) plan
is not purchased by the plan by the end of the Letter of Intent period, there
will be no adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer of
record and/or the investor to advise the Distributor about the Letter in
placing any purchase orders for the investor during the Letter of Intent
period. All of such purchases must be made through the Distributor.
|_| Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in value up to
5% of the intended purchase amount specified in the Letter shall be held in
escrow by the Transfer Agent. For example, if the intended purchase amount
is $50,000, the escrow shall be shares valued in the amount of $2,500
(computed at the offering price adjusted for a $50,000 purchase). Any
dividends and capital gains distributions on the escrowed shares will be
credited to the investor's account.
2. If the total minimum investment specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor an
amount equal to the difference between the dollar amount of sales charges
actually paid and the amount of sales charges which would have been paid if
the total amount purchased had been made at a single time. That sales charge
adjustment will apply to any shares redeemed prior to the completion of the
Letter. If the difference in sales charges is not paid within twenty days
after a request from the Distributor or the dealer, the Distributor will,
within sixty days of the expiration of the Letter, redeem the number of
escrowed shares necessary to realize such difference in sales charges. Full
and fractional shares remaining after such redemption will be released from
escrow. If a request is received to redeem escrowed shares prior to the
payment of such additional sales charge, the sales charge will be withheld
from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for redemption
any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of a Letter) include:
(a) Class A shares sold with a front-end sales charge or subject to a Class
A contingent deferred sales charge,
(b) Class B shares of other Oppenheimer funds acquired subject to a
contingent deferred sales charge, and
(c) Class A or Class B shares acquired by exchange of either (1) Class A
shares of one of the other Oppenheimer funds that were
acquired subject to a Class A initial or contingent deferred
sales charge or (2) Class B shares of one of the other
Oppenheimer funds that were acquired subject to a contingent
deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as described in
the section of the Prospectus entitled "How to Exchange Shares" and the
escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan to buy shares
directly from a bank account, you must enclose a check (the minimum is $25)
for the initial purchase with your application. Shares purchased by Asset
Builder Plan payments from bank accounts are subject to the redemption
restrictions for recent purchases described in the Prospectus. Asset Builder
Plans are available only if your bank is an ACH member. Asset Builder Plans
may not be used to buy shares for OppenheimerFunds-sponsored qualified
retirement accounts offered by employers to their employees. Asset Builder
Plans also enable shareholders of Oppenheimer Cash Reserves to use their
account in that fund to make monthly automatic purchases of shares of up to
four other Oppenheimer funds.
To make automatic payments to purchase shares of the Fund, your bank
account normally will be debited two business days prior to the investment
dates you selected on your Application. Neither the Distributor, the
Transfer Agent nor the Fund shall be responsible for any delays in purchasing
shares that result from delays in ACH transmissions.
Before you establish Asset Builder payments, you should obtain a
prospectus of the selected fund(s) from your financial advisor (or the
Distributor) and request an application from the Distributor. Complete the
application and return it. You may change the amount of your Asset Builder
payment or your can terminate these automatic investments at any time by
writing to the Transfer Agent. The Transfer Agent requires a reasonable
period (approximately 10 days) after receipt of your instructions to
implement them. The Fund reserves the right to amend, suspend, or
discontinue offering Asset Builder plans at any time without prior notice.
Retirement Plans. Certain types of retirement plans are entitled to purchase
shares of the Fund without sales charge or at reduced sales charge rates, as
described in Appendix C to this Statement of Additional Information. Certain
special sales charge arrangements described in that Appendix apply to
retirement plans whose records are maintained on a daily valuation basis by
Merrill Lynch Pierce Fenner & Smith, Inc. or an independent record keeper
that has a contract or special arrangement with Merrill Lynch. If on the date
the plan sponsor signed the Merrill Lynch record keeping service agreement
the plan has less than $3 million in assets (other than assets invested in
money market funds) invested in applicable investments, then the retirement
plan may purchase only Class B shares of the Oppenheimer funds. Any
retirement plans in that category that currently invest in Class B shares of
the Fund will have their Class B shares converted to Class A shares of the
Fund when the plan's applicable investments reach $5 million.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the Fund's
shares on the cancellation date is less than on the purchase date. That loss
is equal to the amount of the decline in the net asset value per share
multiplied by the number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the Fund for
the loss, the Distributor will do so. The Fund may reimburse the Distributor
for that amount by redeeming shares from any account registered in that
investor's name, or the Fund or the Distributor may seek other redress.
Classes of Shares. Each class of shares of the Fund represents an interest in
the same portfolio of investments of the Fund. However, each class has
different shareholder privileges and features. The net income attributable
to a class of shares and the dividends payable on a class of shares will be
reduced by incremental expenses borne solely by that class. Those expenses
include the asset-based sales charges to which Class A, Class B, Class C and
Class N shares are subject.
The availability of different classes of shares permits an investor to
choose the method of purchasing shares that is more appropriate for the
investor. That may depend on the amount of the purchase, the length of time
the investor expects to hold shares, and other relevant circumstances. Class
A shares normally are sold subject to an initial sales charge. While Class
B, Class C and Class N shares have no initial sales charge, the purpose of
the deferred sales charge and asset-based sales charge on Class B, Class C
and Class N shares is the same as that of the initial sales charge on Class A
shares - to compensate the Distributor and brokers, dealers and financial
institutions that sell shares of the Fund. A salesperson who is entitled to
receive compensation from his or her firm for selling Fund shares may receive
different levels of compensation for selling one class of shares rather than
another.
The Distributor will not accept any order in the amount of $500,000 or
more for Class B shares or $1 million or more for Class C shares on behalf of
a single investor (not including dealer "street name" or omnibus accounts).
That is because generally it will be more advantageous for that investor to
purchase Class A shares of the Fund.
|X| Class B Conversion. Under current interpretations of applicable
federal income tax law by the Internal Revenue Service, the conversion of
Class B shares to Class A shares after six years is not treated as a taxable
event for the shareholder. If those laws or the IRS interpretation of those
laws should change, the automatic conversion feature may be suspended. In
that event, no further conversions of Class B shares would occur while that
suspension remained in effect.
|X| Allocation of Expenses. The Fund pays expenses related to its
daily operations, such as custodian fees, Directors' fees, transfer agency
fees, legal fees and auditing costs. Those expenses are paid out of the
Fund's assets and are not paid directly by shareholders. However, those
expenses reduce the net asset value of shares, and therefore are indirectly
borne by shareholders through their investment.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are
allocated pro rata to the shares of all classes. The allocation is based on
the percentage of the Fund's total assets that is represented by the assets
of each class, and then equally to each outstanding share within a given
class. Such general expenses include management fees, legal, bookkeeping and
audit fees, printing and mailing costs of shareholder reports, Prospectuses,
Statements of Additional Information and other materials for current
shareholders, fees to unaffiliated Directors, custodian expenses, share
issuance costs, organization and start-up costs, interest, taxes and
brokerage commissions, and non-recurring expenses, such as litigation costs.
Other expenses that are directly attributable to a particular class are
allocated equally to each outstanding share within that class. Examples of
such expenses include distribution and service plan (12b-1) fees, transfer
and shareholder servicing agent fees and expenses, and shareholder meeting
expenses (to the extent that such expenses pertain only to a specific class).
Determination of Net Asset Values Per Share. The net asset values per share
of each class of shares of the Fund are determined as of the close of
business of The New York Stock Exchange on each day that the Exchange is
open. The calculation is done 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 Exchange normally closes at 4:00 P.M., New York time, but
may close earlier on some other days (for example, in case of weather
emergencies or on days falling before a U.S. holiday). The Exchange's most
recent annual announcement (which is subject to change) states that it will
close on New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days.
Dealers other than Exchange members may conduct trading in certain
securities on days on which the Exchange is closed (including weekends and
U.S. holidays) or after 4:00 P.M. on a regular business day. The Fund's net
asset values will not be calculated on those days and the values of some of
the Fund's portfolio securities may change significantly on those days, when
shareholders may not purchase or redeem shares. Additionally, trading on
European and Asian stock exchanges and over-the-counter markets normally is
completed before the close of The New York Stock Exchange.
Changes in the values of securities traded on foreign exchanges or
markets as a result of events that occur after the prices of those securities
are determined, but before the close of The New York Stock Exchange, will not
be reflected in the Fund's calculation of its net asset values that day
unless the Board of Directors determines that the event is likely to effect a
material change in the value of the security. The Manager may make that
determination, under procedures established by the Board.
|X| Securities Valuation. The Fund's Board of Directors has
established procedures for the valuation of the Fund's securities. In general
those procedures are as follows:
|_| Equity securities traded on a U.S. securities exchange or on NASDAQ are
valued as follows:
(1) if last sale information is regularly reported, they are valued at the
last reported sale price on the principal exchange on which
they are traded or on NASDAQ, as applicable, on that day, or
(2) if last sale information is not available on a valuation date, they are
valued at the last reported sale price preceding the
valuation date if it is within the spread of the closing
"bid" and "asked" prices on the valuation date or, if not,
at the closing "bid" price on the valuation date.
|_| Equity securities traded on a foreign securities exchange generally are
valued in one of the following ways:
(1) at the last sale price available to the pricing service approved by the
Board of Directors, or
(2) at the last sale price obtained by the Manager from the report of the
principal exchange on which the security is traded at its
last trading session on or immediately before the valuation
date, or
(3) at the mean between the "bid" and "asked" prices obtained from the
principal exchange on which the security is traded or, on
the basis of reasonable inquiry, from two market makers in
the security.
|_| Long-term debt securities having a remaining maturity in excess
of 60 days are valued based on the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Fund's Board of
Directors or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry.
|_| The following securities are valued at the mean between the "bid" and
"asked" prices determined by a pricing service approved by the
Fund's Board of Directors or obtained by the Manager from two
active market makers in the security on the basis of reasonable
inquiry:
(1) debt instruments that have a maturity of more than 397 days when
issued,
(2) debt instruments that had a maturity of 397 days or less when issued
and have a remaining maturity of more than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days or
less when issued and which have a remaining maturity of 60
days or less.
|_| The following securities are valued at cost, adjusted for amortization
of premiums and accretion of discounts:
(1) money market debt securities held by a non-money market fund that had a
maturity of less than 397 days when issued that have a
remaining maturity of 60 days or less, and
(2) debt instruments held by a money market fund that have a remaining
maturity of 397 days or less.
|_| Securities (including restricted securities) not having
readily-available market quotations are valued at fair value determined under
the Board's procedures. If the Manager is unable to locate two market makers
willing to give quotes, a security may be priced at the mean between the
"bid" and "asked" prices provided by a single active market maker (which in
certain cases may be the "bid" price if no "asked" price is available).
In the case of U.S. Government securities, mortgage-backed securities,
corporate bonds and foreign government securities, when last sale information
is not generally available, the Manager may use pricing services approved by
the Board of Directors. The pricing service may use "matrix" comparisons to
the prices for comparable instruments on the basis of quality, yield, and
maturity. Other special factors may be involved (such as the tax-exempt
status of the interest paid by municipal securities). The Manager will
monitor the accuracy of the pricing services. That monitoring may include
comparing prices used for portfolio valuation to actual sales prices of
selected securities.
The closing prices in the London foreign exchange market on a
particular business day that are provided to the Manager by a bank, dealer or
pricing service that the Manager has determined to be reliable are used to
value foreign currency, including forward contracts, and to convert to U.S.
dollar securities that are denominated in foreign currency.
Puts, calls, and futures are valued at the last sale price on the
principal exchange on which they are traded or on NASDAQ, as applicable, as
determined by a pricing service approved by the Board of Directors or by the
Manager. If there were no sales that day, they shall be valued at the last
sale price on the preceding trading day if it is within the spread of the
closing "bid" and "asked" prices on the principal exchange or on NASDAQ on
the valuation date. If not, the value shall be the closing bid price on the
principal exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be valued by the
mean between "bid" and "asked" prices obtained by the Manager from two active
market makers. In certain cases that may be at the "bid" price if no "asked"
price is available.
When the Fund writes an option, an amount equal to the premium received is
included in the Fund's Statement of Assets and Liabilities as an asset.
An equivalent credit is included in the liability section. The credit
is adjusted ("marked-to-market") to reflect the current market value of
the option. In determining the Fund's gain on investments, if a call or
put written by the Fund is exercised, the proceeds are increased by the
premium received. If a call or put written by the Fund expires, the
Fund has a gain in the amount of the premium. If the Fund enters into a
closing purchase transaction, it will have a gain or loss, depending on
whether the premium received was more or less than the cost of the
closing transaction. If the Fund exercises a put it holds, the amount
the Fund receives on its sale of the underlying investment is reduced
by the amount of premium paid by the Fund.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below provides additional information about the
procedures and conditions for redeeming shares.
Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of:
o Class A shares purchased subject to an initial sales charge or Class
A shares on which a contingent deferred sales charge was paid, or
o Class B shares that were subject to the Class B contingent deferred
sales charge when redeemed.
The reinvestment may be made without sales charge only in Class A
shares of the Fund or any of the other Oppenheimer funds into which shares of
the Fund are exchangeable as described in "How to Exchange Shares" below.
Reinvestment will be at the net asset value next computed after the Transfer
Agent receives the reinvestment order. The shareholder must ask the Transfer
Agent for that privilege at the time of reinvestment. This privilege does not
apply to Class C or Class N shares. The Fund may amend, suspend or cease
offering this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Any capital gain that was realized when the shares were redeemed is
taxable, and reinvestment will not alter any capital gains tax payable on
that gain. If there has been a capital loss on the redemption, some or all
of the loss may not be tax deductible, depending on the timing and amount of
the reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are reinvested in
shares of the Fund or another of the Oppenheimer funds within 90 days of
payment of the sales charge, the shareholder's basis in the shares of the
Fund that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added to the
basis of the shares acquired by the reinvestment of the redemption proceeds.
Payments "In Kind". The Prospectus states that payment for shares tendered
for redemption is ordinarily made in cash. However, the Board of Directors
of the Fund may determine that it would be detrimental to the best interests
of the remaining shareholders of the Fund to make payment of a redemption
order wholly or partly in cash. In that case, the Fund may pay the
redemption proceeds in whole or in part by a distribution "in kind" of liquid
securities from the portfolio of the Fund, in lieu of cash.
The Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act. Under that rule, the Fund is obligated to redeem shares solely
in cash up to the lesser of $250,000 or 1% of the net assets of the Fund
during any 90-day period for any one shareholder. If shares are redeemed in
kind, the redeeming shareholder might incur brokerage or other costs in
selling the securities for cash. The Fund will value securities used to pay
redemptions in kind using the same method the Fund uses to value its
portfolio securities described above under "Determination of Net Asset Values
Per Share." That valuation will be made as of the time the redemption price
is determined.
Involuntary Redemptions. The Fund's Board of Directors has the right to cause
the involuntary redemption of the shares held in any account if the aggregate
net asset value of those shares is less than $500 or such lesser amount as
the Board may fix. The Board will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of such shares has
fallen below the stated minimum solely as a result of market fluctuations.
If the Board exercises this right, it may also fix the requirements for any
notice to be given to the shareholders in question (not less than 30 days).
The Board may alternatively set requirements for the shareholder to increase
the investment, or set other terms and conditions so that the shares would
not be involuntarily redeemed.
Transfers of Shares. A transfer of shares to a different registration is not
an event that triggers the payment of sales charges. Therefore, shares are
not subject to the payment of a contingent deferred sales charge of any class
at the time of transfer to the name of another person or entity. It does not
matter whether the transfer occurs by absolute assignment, gift or bequest,
as long as it does not involve, directly or indirectly, a public sale of the
shares. When shares subject to a contingent deferred sales charge are
transferred, the transferred shares will remain subject to the contingent
deferred sales charge. It will be calculated as if the transferee shareholder
had acquired the transferred shares in the same manner and at the same time
as the transferring shareholder.
If less than all shares held in an account are transferred, and some
but not all shares in the account would be subject to a contingent deferred
sales charge if redeemed at the time of transfer, the priorities described in
the Prospectus under "How to Buy Shares" for the imposition of the Class B,
Class C or Class N contingent deferred sales charge will be followed in
determining the order in which shares are transferred.
Selling Shares by Wire. The wire of redemptions proceeds may be delayed if
the Fund's custodian bank is not open for business on a day when the Fund
would normally authorize the wire to be made, which is usually the Fund's
next regular business day following the redemption. In those circumstances,
the wire will not be transmitted until the next bank business day on which
the Fund is open for business. No dividends will be paid on the proceeds of
redeemed shares awaiting transfer by wire.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address
listed in "How To Sell Shares" in the Prospectus or on the back cover of this
Statement of Additional Information. The request must:
(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is
premature; and
(3) conform to the requirements of the plan and the Fund's other redemption
requirements.
Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Fund held in the name of the plan or its fiduciary may not directly request
redemption of their accounts. The plan administrator or fiduciary must sign
the request.
Distributions from pension and profit sharing plans are subject to
special requirements under the Internal Revenue Code and certain documents
(available from the Transfer Agent) must be completed and submitted to the
Transfer Agent before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the Internal
Revenue Code, and IRS Form W-4P (available from the Transfer Agent) must be
submitted to the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided the
Transfer Agent with a certified tax identification number, the Internal
Revenue Code requires that tax be withheld from any distribution even if the
shareholder elects not to have tax withheld. The Fund, the Manager, the
Distributor, and the Transfer Agent assume no responsibility to determine
whether a distribution satisfies the conditions of applicable tax laws and
will not be responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers. The
Distributor is the Fund's agent to repurchase its shares from authorized
dealers or brokers on behalf of their customers. Shareholders should contact
their broker or dealer to arrange this type of redemption. The repurchase
price per share will be the net asset value next computed after the
Distributor receives an order placed by the dealer or broker. However, if the
Distributor receives a repurchase order from a dealer or broker after the
close of The New York Stock Exchange on a regular business day, it will be
processed at that day's net asset value if the order was received by the
dealer or broker from its customers prior to the time the Exchange closes.
Normally, the Exchange closes at 4:00 P.M., but may do so earlier on some
days. Additionally, the order must have been transmitted to and received by
the Distributor prior to its close of business that day (normally 5:00
P.M.).
Ordinarily, for accounts redeemed by a broker-dealer under this
procedure, payment will be made within three business days after the shares
have been redeemed upon the Distributor's receipt of the required redemption
documents in proper form. The signature(s) of the registered owners on the
redemption documents must be guaranteed as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(having a value of at least $50) automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Withdrawal Plan. Shares will
be redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made by
check payable to all shareholders of record. Payments must also be sent to
the address of record for the account and the address must not have been
changed within the prior 30 days. Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this
basis.
Payments are normally made by check, but shareholders having
AccountLink privileges (see "How To Buy Shares") may arrange to have
Automatic Withdrawal Plan payments transferred to the bank account designated
on the Account Application or by signature-guaranteed instructions sent to
the Transfer Agent. Shares are normally redeemed pursuant to an Automatic
Withdrawal Plan three business days before the payment transmittal date you
select in the Account Application. If a contingent deferred sales charge
applies to the redemption, the amount of the check or payment will be reduced
accordingly.
The Fund cannot guarantee receipt of a payment on the date requested.
The Fund reserves the right to amend, suspend or discontinue offering these
plans at any time without prior notice. Because of the sales charge assessed
on Class A share purchases, shareholders should not make regular additional
Class A share purchases while participating in an Automatic Withdrawal Plan.
Class B, Class C and Class N shares shareholders should not establish
withdrawal plans, because of the imposition of the contingent deferred sales
charge on such withdrawals (except where the contingent deferred sales charge
is waived as described in Appendix C to this Statement of Additional
Information).
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions that apply to such plans, as stated
below. These provisions may be amended from time to time by the Fund and/or
the Distributor. When adopted, any amendments will automatically apply to
existing Plans.
|X| Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent to exchange a pre-determined amount of shares of the Fund for shares
(of the same class) of other Oppenheimer funds automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is $25.
Instructions should be provided on the OppenheimerFunds Application or
signature-guaranteed instructions. Exchanges made under these plans are
subject to the restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of Additional
Information.
|X| Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first. Shares acquired with reinvested dividends and
capital gains distributions will be redeemed next, followed by shares
acquired with a sales charge, to the extent necessary to make withdrawal
payments. Depending upon the amount withdrawn, the investor's principal may
be depleted. Payments made under these plans should not be considered as a
yield or income on your investment.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan as agent for the shareholder(s) (the "Planholder") who executed the Plan
authorization and application submitted to the Transfer Agent. Neither the
Fund nor the Transfer Agent shall incur any liability to the Planholder for
any action taken or not taken by the Transfer Agent in good faith to
administer the Plan. Share certificates will not be issued for shares of the
Fund purchased for and held under the Plan, but the Transfer Agent will
credit all such shares to the account of the Planholder on the records of the
Fund. Any share certificates held by a Planholder may be surrendered
unendorsed to the Transfer Agent with the Plan application so that the shares
represented by the certificate may be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done at
net asset value without a sales charge. Dividends on shares held in the
account may be paid in cash or reinvested.
Shares will be redeemed to make withdrawal payments at the net asset
value per share determined on the redemption date. Checks or AccountLink
payments representing the proceeds of Plan withdrawals will normally be
transmitted three business days prior to the date selected for receipt of the
payment, according to the choice specified in writing by the Planholder.
Receipt of payment on the date selected cannot be guaranteed.
The amount and the interval of disbursement payments and the address to
which checks are to be mailed or AccountLink payments are to be sent may be
changed at any time by the Planholder by writing to the Transfer Agent. The
Planholder should allow at least two weeks' time after mailing such
notification for the requested change to be put in effect. The Planholder
may, at any time, instruct the Transfer Agent by written notice to redeem
all, or any part of, the shares held under the Plan. That notice must be in
proper form in accordance with the requirements of the then-current
Prospectus of the Fund. In that case, the Transfer Agent will redeem the
number of shares requested at the net asset value per share in effect and
will mail a check for the proceeds to the Planholder.
The Planholder may terminate a Plan at any time by writing to the
Transfer Agent. The Fund may also give directions to the Transfer Agent to
terminate a Plan. The Transfer Agent will also terminate a Plan upon its
receipt of evidence satisfactory to it that the Planholder has died or is
legally incapacitated. Upon termination of a Plan by the Transfer Agent or
the Fund, shares that have not been redeemed will be held in uncertificated
form in the name of the Planholder. The account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder, his or her executor or
guardian, or another authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued without
causing the withdrawal checks to stop. However, should such uncertificated
shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent to
act as agent in administering the Plan.
How to Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be exchanged only
for shares of the same class of other Oppenheimer funds. Shares of
Oppenheimer funds that have a single class without a class designation are
deemed "Class A" shares for this purpose. You can obtain a current list
showing which funds offer which classes by calling the Distributor at
1-800-525-7048.
o All of the Oppenheimer funds currently offer Class A, B and C shares
except Oppenheimer Money Market Fund, Inc., Centennial Money Market Trust,
Centennial Tax Exempt Trust, Centennial Government Trust, Centennial New
York Tax Exempt Trust, Centennial California Tax Exempt Trust, and
Centennial America Fund, L.P., which only offer Class A shares.
Oppenheimer Main Street California Municipal Fund currently offers only
Class A and Class B shares.
o Class B and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other
Oppenheimer funds or through OppenheimerFunds-sponsored 401 (k) plans.
o Only certain Oppenheimer Funds currently offer Class Y shares. Class Y
shares of Oppenheimer Real Asset Fund may not be exchanged for shares of
any other Fund.
o Class M Shares of Oppenheimer Convertible Securities Fund may be
exchanged only for Class A shares of other Oppenheimer funds. They may
not be acquired by exchange of shares of any class of any other
Oppenheimer funds except Class A shares of Oppenheimer Money Market Fund
or Oppenheimer Cash Reserves acquired by exchange of Class M shares.
o Class A shares of Senior Floating Rate Fund are not available by
exchange of Class A shares of shares of Oppenheimer Money Market Fund or
Class A shares of Oppenheimer Cash Reserves. If any Class A shares of
another Oppenheimer fund that are exchanged for Class A shares of
Oppenheimer Senior Floating Rate Fund are subject to the Class A
contingent deferred sales charge of the other Oppenheimer fund at the time
of exchange, the holding period for that Class A contingent deferred sales
charge will carry over to the Class A shares of Oppenheimer Senior
Floating Rate Fund acquired in the exchange. The Class A shares of
Oppenheimer Senior Floating Rate Fund acquired in that exchange will be
subject to the Class A Early Withdrawal Charge of Oppenheimer Senior
Floating Rate Fund if they are repurchased before the expiration of the
holding period.
o Class X shares of Limited Term New York Municipal Fund can be exchanged
only for Class B shares of other Oppenheimer funds and no exchanges may be
made to Class X shares.
o Shares of Oppenheimer Capital Preservation Fund may not be exchanged
for shares of Oppenheimer Money Market Fund, Inc., Oppenheimer Cash
Reserves or Oppenheimer Limited-Term Government Fund. Only participants
in certain retirement plans may purchase shares of Oppenheimer Capital
Preservation Fund, and only those participants may exchange shares of
other Oppenheimer funds for shares of Oppenheimer Capital Preservation
Fund.
Class A shares of Oppenheimer funds may be exchanged at net asset value for
shares of any money market fund offered by the Distributor. Shares of
any money market fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge. They may also be used to purchase shares
of Oppenheimer funds subject to an early withdrawal charge or
contingent deferred sales charge.
Shares of Oppenheimer Money Market Fund, Inc. purchased with the
redemption proceeds of shares of other mutual funds (other than funds managed
by the Manager or its subsidiaries) redeemed within the 30 days prior to that
purchase may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial sales charge or contingent deferred sales
charge. To qualify for that privilege, the investor or the investor's dealer
must notify the Distributor of eligibility for this privilege at the time the
shares of Oppenheimer Money Market Fund, Inc. are purchased. If requested,
they must supply proof of entitlement to this privilege.
Shares of the Fund acquired by reinvestment of dividends or distributions
from any of the other Oppenheimer funds or from any unit investment
trust for which reinvestment arrangements have been made with the
Distributor may be exchanged at net asset value for shares of any of
the Oppenheimer funds.
|X| How Exchanges Affect Contingent Deferred Sales Charges. No
contingent deferred sales charge is imposed on exchanges of shares of any
class purchased subject to a contingent deferred sales charge. However, when
Class A shares acquired by exchange of Class A shares of other Oppenheimer
funds purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A contingent deferred
sales charge is imposed on the redeemed shares. The Class B contingent
deferred sales charge is imposed on Class B shares acquired by exchange if
they are redeemed within 6 years of the initial purchase of the exchanged
Class B shares. The Class C contingent deferred sales charge is imposed on
Class C shares acquired by exchange if they are redeemed within 12 months of
the initial purchase of the exchanged Class C shares. The Class N contingent
deferred sales charge is imposed on Class N shares acquired by exchange if
they are redeemed within eighteen (18) months of the initial purchase of the
exchanged Class N shares.
When Class B, Class C or Class N shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the Prospectus
for the imposition of the Class B, Class C or the Class N contingent deferred
sales charge will be followed in determining the order in which the shares
are exchanged. Before exchanging shares, shareholders should take into
account how the exchange may affect any contingent deferred sales charge that
might be imposed in the subsequent redemption of remaining shares.
If Class B shares of an Oppenheimer fund are exchanged for Class B
shares of Oppenheimer Limited-Term Government Fund or Limited-Term New York
Municipal Fund and those shares acquired by exchange are subsequently
redeemed, they will be subject to the contingent deferred sales charge of the
Oppenheimer fund from which they were exchanged. The contingent deferred
sales charge rates of Class B shares of other Oppenheimer funds are typically
higher for the same holding period than for Class B shares of Oppenheimer
Limited-Term Government Fund and Limited-Term New York Municipal Fund. They
will not be subject to the contingent deferred sales charge of Oppenheimer
Limited-Term Government Fund or Limited-Term New York Municipal Fund.
Shareholders owning shares of more
than one class must specify which class of shares they wish to exchange.
|X| Limits on Multiple Exchange Orders. The Fund reserves the right
to reject telephone or written exchange requests submitted in bulk by anyone
on behalf of more than one account. The Fund may accept requests for
exchanges of up to 50 accounts per day from representatives of authorized
dealers that qualify for this privilege.
|X| Telephone Exchange Requests. When exchanging shares by telephone,
a shareholder must have an existing account in the fund to which the exchange
is to be made. Otherwise, the investors must obtain a Prospectus of that fund
before the exchange request may be submitted. When you exchange some or all
of your shares from one fund to another, any special account features such as
an Asset Builder Plan or Automatic Withdrawal Plan, will be switched to the
new fund account unless you tell the Transfer Agent not to do so. However,
special redemption and exchange features such as Automatic Exchange Plans and
Automatic Withdrawal Plans cannot be switched to an account in Oppenheimer
Senior Floating Rate Fund. If all telephone lines are busy (which might
occur, for example, during periods of substantial market fluctuations),
shareholders might not be able to request exchanges by telephone and would
have to submit written exchange requests.
|X| Processing Exchange Requests. Shares to be exchanged are redeemed
on the regular business day the Transfer Agent receives an exchange request
in proper form (the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases may be
delayed by either fund up to five business days if it determines that it
would be disadvantaged by an immediate transfer of the redemption proceeds.
The Fund reserves the right, in its discretion, to refuse any exchange
request that may disadvantage it. For example, if the receipt of multiple
exchange requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the Fund,
the Fund may refuse the request. For full or partial exchanges of an account
made by telephone, any special account features such as Asset Builder Plans
and Automatic Withdrawal Plans will be switched to the new account unless the
Transfer Agent is instructed otherwise.
In connection with any exchange request, the number of shares exchanged
may be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information, or would include shares covered by a
share certificate that is not tendered with the request. In those cases,
only the shares available for exchange without restriction will be exchanged.
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks. A shareholder should assure
that the fund selected is appropriate for his or her investment and
should be aware of the tax consequences of an exchange. For federal
income tax purposes, an exchange transaction is treated as a redemption
of shares of one fund and a purchase of shares of another.
"Reinvestment Privilege," above, discusses some of the tax consequences
of reinvestment of redemption proceeds in such cases. The Fund, the
Distributor, and the Transfer Agent are unable to provide investment,
tax or legal advice to a shareholder in connection with an exchange
request or any other investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. The Fund has no fixed dividend rate and there
can be no assurance as to the payment of any dividends or the realization of
any capital gains. The dividends and distributions paid by a class of shares
will vary from time to time depending on market conditions, the composition
of the Fund's portfolio, and expenses borne by the Fund or borne separately
by a class. Dividends are calculated in the same manner, at the same time,
and on the same day for each class of shares. However, dividends on Class B,
Class C and Class N shares are expected to be lower than dividends on Class A
shares. That is because of the effect of the higher asset-based sales charge
on Class B, Class C and Class N shares. Those dividends will also differ in
amount as a consequence of any difference in the net asset values of each
class of shares.
Dividends, distributions and proceeds of the redemption of Fund shares
represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of Oppenheimer
Money Market Fund, Inc. Reinvestment will be made as promptly as
possible after the return of such checks to the Transfer Agent, to
enable the investor to earn a return on otherwise idle funds. Unclaimed
accounts may be subject to state escheatment laws, and the Fund and the
Transfer Agent will not be liable to shareholders or their
representatives for compliance with those laws in good faith.
Tax Status of the Fund's Dividends and Distributions. The federal tax
treatment of the Fund's dividends and capital gains distributions is briefly
highlighted in the Prospectus.
Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received deduction for
corporate shareholders. Long-term capital gains distributions are not
eligible for the deduction. The amount of dividends paid by the Fund that
may qualify for the deduction is limited to the aggregate amount of
qualifying dividends that the Fund derives from portfolio investments that
the Fund has held for a minimum period, usually 46 days. A corporate
shareholder will not be eligible for the deduction on dividends paid on Fund
shares held for 45 days or less. To the extent the Fund's dividends are
derived from gross income from option premiums, interest income or short-term
gains from the sale of securities or dividends from foreign corporations,
those dividends will not qualify for the deduction.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute 98% of its taxable investment income earned from
January 1 through December 31 of that year and 98% of its capital gains
realized in the period from November 1 of the prior year through
October 31 of the current year. If it does not, the Fund must pay an
excise tax on the amounts not distributed. It is presently anticipated
that the Fund will meet those requirements. However, the Board of
Directors and the Manager might determine in a particular year that it
would be in the best interests of shareholders for the Fund not to make
such distributions at the required levels and to pay the excise tax on
the undistributed amounts. That would reduce the amount of income or
capital gains available for distribution to shareholders.
The Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code (although it reserves the right not to qualify).
That qualification enables the Fund to "pass through" its income and realized
capital gains to shareholders without having to pay tax on them. This avoids
a double tax on that income and capital gains, since shareholders normally
will be taxed on the dividends and capital gains they receive from the Fund
(unless the Fund's shares are held in a retirement account or the shareholder
is otherwise exempt from tax). If the Fund qualifies as a "regulated
investment company" under the Internal Revenue Code, it will not be liable
for federal income taxes on amounts paid by it as dividends and
distributions. The Fund qualified as a regulated investment company in its
last fiscal year. The Internal Revenue Code contains a number of complex
tests relating to qualification which the Fund might not meet in any
particular year. If it did not so qualify, the Fund would be treated for tax
purposes as an ordinary corporation and receive no tax deduction for payments
made to shareholders.
If prior distributions made by the Fund must be re-characterized as a
non-taxable return of capital at the end of the fiscal year as a result of
the effect of the Fund's investment policies, they will be identified as such
in notices sent to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the
same class of any of the other Oppenheimer funds listed above. Reinvestment
will be made without sales charge at the net asset value per share in effect
at the close of business on the payable date of the dividend or distribution.
To elect this option, the shareholder must notify the Transfer Agent in
writing and must have an existing account in the fund selected for
reinvestment. Otherwise the shareholder first must obtain a prospectus for
that fund and an application from the Distributor to establish an account.
Dividends and/or distributions from shares of certain other Oppenheimer funds
(other than Oppenheimer Cash Reserves) may be invested in shares of this Fund
on the same basis.
Additional Information About the Fund
The Distributor. The Fund's shares are sold through dealers, brokers and
other financial institutions that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager that acts as
the Fund's Distributor. The Distributor also distributes shares of the other
Oppenheimer funds and is sub-distributor for funds managed by a subsidiary of
the Manager.
The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent, is
a division of the Manager. It is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for paying
dividends and distributions to shareholders. It also handles shareholder
servicing and administrative functions. It is paid an annual maintenance fee
by the Fund. It also acts as shareholder servicing agent for the other
Oppenheimer funds. Shareholders should direct inquiries about their accounts
to the Transfer Agent at the address and toll-free numbers shown on the back
cover.
|X| Shareholder Servicing Agent for Certain Shareholders. Unified
Management Corporation (1-800-346-4601) is the shareholder servicing agent
for shareholders of the Fund who were former shareholders of the AMA Family
of Funds and clients of AMA Investment Advisors, Inc. (which had been the
investment advisor of AMA Family of Funds). It is also the servicing agent
for Fund shareholders who are:
(i) former shareholders of the Unified Funds and Liquid Green Trusts,
(ii) accounts that participated or participate in a retirement plan for
which Unified Investment Advisors, Inc. or an affiliate acts as
custodian or trustee,
(iii) accounts that have a Money Manager brokerage account, and
(iv) other accounts for which Unified Management Corporation is the dealer
of record.
The Custodian. Citibank, N.A. is the custodian of the Fund's assets. The
custodian's responsibilities include safeguarding and controlling the Fund's
portfolio securities and handling the delivery of such securities to and from
the Fund. It will be the practice of the Fund to deal with the custodian in
a manner uninfluenced by any banking relationship the custodian may have with
the Manager and its affiliates. The Fund's cash balances with the custodian
in excess of $100,000 are not protected by federal deposit insurance. Those
uninsured balances at times may be substantial.
Independent Accountants. KPMG LLP are the independent accountants of the
Fund. They audit the Fund's financial statements and perform other related
audit services. They also act as independent accountants for certain other
funds advised by the Manager and its affiliates.
<PAGE>
A-5
Appendix A
RATINGS DEFINITIONS
Below are summaries of the rating definitions used by the
nationally-recognized rating agencies listed below. Those ratings represent
the opinion of the agency as to the credit quality of issues that they rate.
The summaries below are based upon publicly-available information provided by
the rating organizations.
Moody's Investors Service, Inc.
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Long-Term (Taxable) Bond Ratings
Aaa: Bonds rated "Aaa" are judged to be the best quality. They carry the
smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, the changes that can be
expected are most unlikely to impair the fundamentally strong position of
such issues.
Aa: Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as with "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat larger than
that of "Aaa" securities.
A: Bonds rated "A" possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa: Bonds rated "Baa" are considered medium-grade obligations; that is, they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment characteristics
and have speculative characteristics as well.
Ba: Bonds rated "Ba" are judged to have speculative elements. Their future
cannot be considered well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds rated "B" generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds rated "Caa" are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or
interest.
Ca: Bonds rated "Ca" represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C: Bonds rated "C" are the lowest class of rated bonds and can be regarded
as having extremely poor prospects of ever attaining any real investment
standing.
Con. (...): Bonds for which the security depends on the completion of some act
or the fulfillment of some condition are rated conditionally. These bonds are
secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals that begin when
facilities are completed, or (d) payments to which some other limiting
condition attaches. The parenthetical rating denotes probable credit stature
upon completion of construction or elimination of the basis of the condition.
Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from "Aa" through "Caa." The modifier "1" indicates that the
obligation ranks in the higher end of its generic rating category; the
modifier "2" indicates a mid-range ranking; and the modifier "3" indicates a
ranking in the lower end of that generic rating category. Advanced refunded
issues that are secured by certain assets are identified with a # symbol.
Short-Term Ratings - Taxable Debt
These ratings apply to the ability of issuers to honor senior debt
obligations having an original maturity not exceeding one year:
Prime-1: Issuer has a superior ability for repayment of senior short-term
debt obligations.
Prime-2: Issuer has a strong ability for repayment of senior short-term debt
obligations. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while appropriate, may
be more affected by external conditions. Ample alternate liquidity is
maintained.
Prime-3: Issuer has an acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market compositions
may be more pronounced. Variability in earnings and profitability may result
in changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate alternate liquidity is
maintained.
Not Prime: Issuer does not fall within any Prime rating category.
Standard & Poor's Rating Services
------------------------------------------------------------------------------
Long-Term Credit Ratings
AAA: Bonds rated "AAA" have the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA: Bonds rated "AA" differ from the highest rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: Bonds rated "A" are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
BBB: Bonds rated "BBB" exhibit adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity of the obligor to meet its financial commitment on the
obligation.
BB, B, CCC, CC, and C
Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded as having significant
speculative characteristics. "BB" indicates the least degree of speculation,
and "C" the highest. While such obligations will likely have some quality and
protective characteristics, these may be outweighed by large uncertainties or
major exposures to adverse conditions.
BB: Bonds rated "BB" are less vulnerable to nonpayment than other
speculative issues. However, these face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment on
the obligation.
B: Bonds rated "B" are more vulnerable to nonpayment than obligations rated
"BB", but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet
its financial commitment on the obligation.
CCC: Bonds rated "CCC" are currently vulnerable to nonpayment, and are
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC: Bonds rated "CC" are currently highly vulnerable to nonpayment.
C: A subordinated debt or preferred stock obligation rated "C" is currently
highly vulnerable to nonpayment. The "C" rating may be used to cover a
situation where a bankruptcy petition has been filed or similar action has
been taken, but payments on this obligation are being continued. A "C" also
will be assigned to a preferred stock issue in arrears on dividends or
sinking fund payments, but that is currently paying.
D: Bonds rated "D" are in default. Payments on the obligation are not being
made on the date due even if the applicable grace period has not expired,
unless Standard and Poor's believes that such payments will be made during
such grace period. The "D" rating will also be used upon the filing of a
bankruptcy petition or the taking of a similar action if payments on an
obligation are jeopardized.
The ratings from "AA" to "CCC" may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within the major rating
categories. The "r" symbol is attached to the ratings of instruments with
significant noncredit risks.
Short-Term Issue Credit Ratings
A-1: Obligation is rated in the highest category. The obligor's capacity to
meet its financial commitment on the obligation is strong. Within this
category, a plus (+) sign designation indicates the obligor's capacity to
meet its financial obligation is extremely strong.
A-2: Obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
A-3: Obligation exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation.
B: Obligation is regarded as having significant speculative characteristics.
The obligor currently has the capacity to meet its financial commitment on
the obligation. However, it faces major ongoing uncertainties which could
lead to the obligor's inadequate capacity to meet its financial commitment on
the obligation.
C: Obligation is currently vulnerable to nonpayment and is dependent upon
favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation.
D: Obligation is in payment default. Payments on the obligation have not been
made on the due date even if the applicable grace period has not expired,
unless Standard and Poor's believes that such payments will be made during
such grace period. The "D" rating will also be used upon the filing of a
bankruptcy petition or the taking of a similar action if payments on an
obligation are jeopardized.
Fitch, Inc.
------------------------------------------------------------------------------
International Long-Term Credit Ratings
Investment Grade:
AAA: Highest Credit Quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in the case of exceptionally strong
capacity for timely payment of financial commitments. This capacity is highly
unlikely to be adversely affected by foreseeable events.
AA: Very High Credit Quality. "AA" ratings denote a very low expectation of
credit risk. They indicate a very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.
A: High Credit Quality. "A" ratings denote a low expectation of credit risk.
The capacity for timely payment of financial commitments is considered
strong. This capacity may, nevertheless, be more vulnerable to changes in
circumstances or in economic conditions than is the case for higher ratings.
BBB: Good Credit Quality. "BBB" ratings indicate that there is currently a
low expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and
in economic conditions are more likely to impair this capacity. This is the
lowest investment-grade category.
Speculative Grade:
BB: Speculative. "BB" ratings indicate that there is a possibility of credit
risk developing, particularly as the result of adverse economic change over
time. However, business or financial alternatives may be available to allow
financial commitments to be met. Securities rated in this category are not
investment grade.
B: Highly Speculative. "B" ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met. However, capacity for continued payment is contingent
upon a sustained, favorable business and economic environment.
CCC, CC C: High Default Risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A "CC" rating indicates that default of
some kind appears probable. "C" ratings signal imminent default.
DDD, DD, and D: Default. The ratings of obligations in this category are
based on their prospects for achieving partial or full recovery in a
reorganization or liquidation of the obligor. While expected recovery values
are highly speculative and cannot be estimated with any precision, the
following serve as general guidelines. "DDD" obligations have the highest
potential for recovery, around 90%-100% of outstanding amounts and accrued
interest. "DD" indicates potential recoveries in the range of 50%-90%, and
"D" the lowest recovery potential, i.e., below 50%.
Entities rated in this category have defaulted on some or all of their
obligations. Entities rated "DDD" have the highest prospect for resumption of
performance or continued operation with or without a formal reorganization
process. Entities rated "DD" and "D" are generally undergoing a formal
reorganization or liquidation process; those rated "DD" are likely to satisfy
a higher portion of their outstanding obligations, while entities rated "D"
have a poor prospect for repaying all obligations.
Plus (+) and minus (-) signs may be appended to a rating symbol to denote
relative status within the major rating categories. Plus and minus signs are
not added to the "AAA" category or to categories below "CCC," nor to
short-term ratings other than "F1" (see below).
International Short-Term Credit Ratings
F1: Highest credit quality. Strongest capacity for timely payment of
financial commitments. May have an added "+" to denote any exceptionally
strong credit feature.
F2: Good credit quality. A satisfactory capacity for timely payment of
financial commitments, but the margin of safety is not as great as in the
case of higher ratings.
F3: Fair credit quality. Capacity for timely payment of financial
commitments is adequate. However, near-term adverse changes could result in a
reduction to non-investment grade.
B: Speculative. Minimal capacity for timely payment of financial
commitments, plus vulnerability to near-term adverse changes in financial and
economic conditions.
C: High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon a sustained, favorable
business and economic environment.
D: Default. Denotes actual or imminent payment default.
<PAGE>
B-1
Appendix B
------------------------------------------------------------------------------
Industry Classifications
------------------------------------------------------------------------------
Aerospace/Defense Food and Drug Retailers
Air Transportation Gas Utilities
Asset-Backed Health Care/Drugs
Auto Parts and Equipment Health Care/Supplies & Services
Automotive Homebuilders/Real Estate
Bank Holding Companies Hotel/Gaming
Banks Industrial Services
Beverages Information Technology
Broadcasting Insurance
Broker-Dealers Leasing & Factoring
Building Materials Leisure
Cable Television Manufacturing
Chemicals Metals/Mining
Commercial Finance Nondurable Household Goods
Communication Equipment Office Equipment
Computer Hardware Oil - Domestic
Computer Software Oil - International
Conglomerates Paper
Consumer Finance Photography
Consumer Services Publishing
Containers Railroads & Truckers
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Wholesalers Specialty Printing
Durable Household Goods Specialty Retailing
Education Steel
Electric Utilities Telecommunications - Long Distance
Electrical Equipment Telephone - Utility
Electronics Textile, Apparel & Home Furnishings
Energy Services Tobacco
Entertainment/Film Trucks and Parts
Environmental Wireless Services
Food
<PAGE>
C-65
Appendix C
OppenheimerFunds Special Sales Charge Arrangements and Waivers
In certain cases, the initial sales charge that applies to purchases of Class
A shares1 of the Oppenheimer funds or the contingent deferred sales charge
that may apply to Class A, Class B or Class C shares may be waived.2 That is
because of the economies of sales efforts realized by OppenheimerFunds
Distributor, Inc., (referred to in this document as the "Distributor"), or by
dealers or other financial institutions that offer those shares to certain
classes of investors.
Not all waivers apply to all funds. For example, waivers relating to
Retirement Plans do not apply to Oppenheimer municipal funds, because shares
of those funds are not available for purchase by or on behalf of retirement
plans. Other waivers apply only to shareholders of certain funds.
For the purposes of some of the waivers described below and in the Prospectus
and Statement of Additional Information of the applicable Oppenheimer funds,
the term "Retirement Plan" refers to the following types of plans:
(1) plans qualified under Sections 401(a) or 401(k) of the Internal Revenue
Code,
(2) non-qualified deferred compensation plans,
(3) employee benefit plans3
(4) Group Retirement Plans4
(5) 403(b)(7) custodial plan accounts
(6) Individual Retirement Accounts ("IRAs"), including traditional IRAs,
Roth IRAs, SEP-IRAs, SARSEPs or SIMPLE plans
The interpretation of these provisions as to the applicability of a special
arrangement or waiver in a particular case is in the sole discretion of the
Distributor or the transfer agent (referred to in this document as the
"Transfer Agent") of the particular Oppenheimer fund. These waivers and
special arrangements may be amended or terminated at any time by a particular
fund, the Distributor, and/or OppenheimerFunds, Inc. (referred to in this
document as the "Manager").
Waivers that apply at the time shares are redeemed must be requested by the
shareholder and/or dealer in the redemption request.
--------------
1. Certain waivers also apply to Class M shares of Oppenheimer Convertible
Securities Fund.
2. In the case of Oppenheimer Senior Floating Rate Fund, a
continuously-offered closed-end fund, references to contingent deferred
sales charges mean the Fund's Early Withdrawal Charges and references to
"redemptions" mean "repurchases" of shares.
3. An "employee benefit plan" means any plan or arrangement, whether or
not it is "qualified" under the Internal Revenue Code, under which Class A
shares of an Oppenheimer fund or funds are purchased by a fiduciary or
other administrator for the account of participants who are employees of a
single employer or of affiliated employers. These may include, for
example, medical savings accounts, payroll deduction plans or similar
plans. The fund accounts must be registered in the name of the fiduciary
or administrator purchasing the shares for the benefit of participants in
the plan.
4. The term "Group Retirement Plan" means any qualified or non-qualified
retirement plan for employees of a corporation or sole proprietorship,
members and employees of a partnership or association or other organized
group of persons (the members of which may include other groups), if the
group has made special arrangements with the Distributor and all members
of the group participating in (or who are eligible to participate in) the
plan purchase Class A shares of an Oppenheimer fund or funds through a
single investment dealer, broker or other financial institution designated
by the group. Such plans include 457 plans, SEP-IRAs, SARSEPs, SIMPLE
plans and 403(b) plans other than plans for public school employees. The
term "Group Retirement Plan" also includes qualified retirement plans and
non-qualified deferred compensation plans and IRAs that purchase Class A
shares of an Oppenheimer fund or funds through a single investment dealer,
broker or other financial institution that has made special arrangements
with the Distributor enabling those plans to purchase Class A shares at
net asset value but subject to the Class A contingent deferred sales
charge.
I. Applicability of Class A Contingent Deferred Sales Charges in Certain Cases
Purchases of Class A Shares of Oppenheimer Funds That Are Not Subject to
Initial Sales Charge but May Be Subject to the Class A Contingent Deferred
Sales Charge (unless a waiver applies).
There is no initial sales charge on purchases of Class A shares of any
of the Oppenheimer funds in the cases listed below. However, these purchases
may be subject to the Class A contingent deferred sales charge if redeemed
within 18 months of the end of the calendar month of their purchase, as
described in the Prospectus (unless a waiver described elsewhere in this
Appendix applies to the redemption). Additionally, on shares purchased under
these waivers that are subject to the Class A contingent deferred sales
charge, the Distributor will pay the applicable commission described in the
Prospectus under "Class A Contingent Deferred Sales Charge."2 This waiver
provision applies to:
|_| Purchases of Class A shares aggregating $1 million or more.
|_| Purchases by a Retirement Plan (other than an IRA or 403(b)(7)
custodial plan) that:
(1) buys shares costing $500,000 or more, or
(2) has, at the time of purchase, 100 or more eligible employees or total
plan assets of $500,000 or more, or
(3) certifies to the Distributor that it projects to have annual plan
purchases of $200,000 or more.
|_| Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the
purchases are made:
(1) through a broker, dealer, bank or registered investment adviser that
has made special arrangements with the Distributor for those
purchases, or
(2) by a direct rollover of a distribution from a qualified Retirement Plan
if the administrator of that Plan has made special arrangements
with the Distributor for those purchases.
|_| Purchases of Class A shares by Retirement Plans that have any of the
following record-keeping arrangements:
(1) The record keeping is performed by Merrill Lynch Pierce Fenner & Smith,
Inc. ("Merrill Lynch") on a daily valuation basis for the
Retirement Plan. On the date the plan sponsor signs the
record-keeping service agreement with Merrill Lynch, the Plan
must have $3 million or more of its assets invested in (a)
mutual funds, other than those advised or managed by Merrill
Lynch Asset Management, L.P. ("MLAM"), that are made available
under a Service Agreement between Merrill Lynch and the mutual
fund's principal underwriter or distributor, and (b) funds
advised or managed by MLAM (the funds described in (a) and (b)
are referred to as "Applicable Investments").
(2) The record keeping for the Retirement Plan is performed on a daily
valuation basis by a record keeper whose services are provided
under a contract or arrangement between the Retirement Plan and
Merrill Lynch. On the date the plan sponsor signs the record
keeping service agreement with Merrill Lynch, the Plan must
have $3 million or more of its assets (excluding assets
invested in money market funds) invested in Applicable
Investments.
(3) The record keeping for a Retirement Plan is handled under a service
agreement with Merrill Lynch and on the date the plan sponsor
signs that agreement, the Plan has 500 or more eligible
employees (as determined by the Merrill Lynch plan conversion
manager).
|_| Purchases by a Retirement Plan whose record keeper had a
cost-allocation agreement with the Transfer Agent on or before May
1, 1999.
<PAGE>
II. Waivers of Class A Sales Charges of Oppenheimer Funds
A. 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 (and no commissions are paid by the Distributor on such
purchases):
|_| The Manager or its affiliates.
|_| Present or former officers, directors, trustees and employees (and
their "immediate families") of the Fund, the Manager and its
affiliates, and retirement plans established by them for their
employees. The term "immediate family" refers to one's spouse,
children, grandchildren, grandparents, parents, parents-in-law,
brothers and sisters, sons- and daughters-in-law, a sibling's
spouse, a spouse's siblings, aunts, uncles, nieces and nephews;
relatives by virtue of a remarriage (step-children, step-parents,
etc.) are included.
|_| 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
which are identified as such 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, banks or registered investment advisors that have
entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients. Those clients
may be charged a transaction fee by their dealer, broker, bank or
advisor for the purchase or sale of Fund shares.
|_| Investment advisors and financial planners who have entered into an
agreement for this purpose with the Distributor and who charge an
advisory, consulting or other fee for their services and buy shares
for their own accounts or the accounts of their clients.
|_| "Rabbi trusts" that buy shares for their own accounts, if the purchases
are made through a broker or agent or other financial intermediary
that has made special arrangements with the Distributor for those
purchases.
|_| Clients of investment advisors or financial planners (that have entered
into an agreement for this purpose with the Distributor) who buy
shares for their own accounts may also purchase shares without sales
charge but only if their accounts are linked to a master account of
their investment advisor or financial planner on the books and
records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements . Each of these
investors may be charged a fee by the broker, agent or financial
intermediary for purchasing shares.
|_| Directors, trustees, officers or full-time employees of OpCap Advisors
or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for
those persons.
|_| Accounts for which Oppenheimer Capital (or its successor) is the
investment advisor (the Distributor must be advised of this
arrangement) and persons who are directors or trustees of the
company or trust which is the beneficial owner of such accounts.
|_| A unit investment trust that has entered into an appropriate agreement
with the Distributor.
|_| Dealers, brokers, banks, or registered investment advisers that have
entered into an agreement with the Distributor to sell shares to
defined contribution employee retirement plans for which the dealer,
broker or investment adviser provides administration services.
|-|
<PAGE>
Retirement Plans and deferred compensation plans and trusts used to
fund those plans (including, for example, plans qualified or created
under sections 401(a), 401(k), 403(b) or 457 of the Internal Revenue
Code), in each case if those purchases are made through a broker,
agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases.
|_| A TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for
Value Fund were exchanged for Class A shares of that Fund due to the
termination of the Class B and Class C TRAC-2000 program on November
24, 1995.
|_| A qualified Retirement Plan that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for
Value Funds at net asset value, with such shares to be held through
DCXchange, a sub-transfer agency mutual fund clearinghouse, if that
arrangement was consummated and share purchases commenced by
December 31, 1996.
B. 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 sales charges (and no commissions are paid by the Distributor on
such purchases):
|_| 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 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.
|_| Shares purchased through a broker-dealer that has entered into a
special agreement with the Distributor to allow the broker's
customers to purchase and pay for shares of Oppenheimer funds using
the proceeds of shares redeemed in the prior 30 days from a mutual
fund (other than a fund managed by the Manager or any of its
subsidiaries) on which an initial sales charge or contingent
deferred sales charge was paid. This waiver also applies to shares
purchased by exchange of shares of Oppenheimer Money Market Fund,
Inc. that were purchased and paid for in this manner. This waiver
must be requested when the purchase order is placed for shares of
the Fund, and the Distributor may require evidence of qualification
for this waiver.
|_| Shares purchased with the proceeds of maturing principal units of any
Qualified Unit Investment Liquid Trust Series.
|_| Shares purchased by the reinvestment of loan repayments by a
participant in a Retirement Plan for which the Manager or an
affiliate acts as sponsor.
C. Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions.
The Class A contingent deferred sales charge is also waived if shares that
would otherwise be subject to the contingent deferred sales charge are
redeemed in the following cases:
|_| To make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the account value adjusted annually.
|_| Involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (please refer to "Shareholder Account
Rules and Policies," in the applicable fund Prospectus).
|_| For distributions from Retirement Plans, deferred compensation plans or
other employee benefit plans for any of the following purposes:
(1) Following the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was
established.
(2) To return excess contributions.
(3)
<PAGE>
To return contributions made due to a mistake of fact.
(4) Hardship withdrawals, as defined in the plan.3
(5) Under a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code, or, in the case of an IRA, a divorce or
separation agreement described in Section 71(b) of the Internal
Revenue Code.
(6) To meet the minimum distribution requirements of the Internal Revenue
Code.
(7) To make "substantially equal periodic payments" as described in Section
72(t) of the Internal Revenue Code.
(8) For loans to participants or beneficiaries.
(9) Separation from service.4
(10) Participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or a subsidiary
of the Manager) if the plan has made special arrangements with
the Distributor.
(11) Plan termination or "in-service distributions," if the
redemption proceeds are rolled over directly to an
OppenheimerFunds-sponsored IRA.
|_| For distributions from Retirement Plans having 500 or more eligible
employees, except distributions due to termination of all of the
Oppenheimer funds as an investment option under the Plan.
|_| For distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing
this waiver.
III. Waivers of Class B and Class C Sales Charges of Oppenheimer Funds
The Class B and Class C contingent deferred sales charges will not be applied
to shares purchased in certain types of transactions or redeemed in certain
circumstances described below.
A. 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:
|_| Shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," in the applicable Prospectus.
|_| Redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder, including a
trustee of a grantor trust or revocable living trust for which the
trustee is also the sole beneficiary. The death or disability must
have occurred after the account was established, and for disability
you must provide evidence of a determination of disability by the
Social Security Administration.
|_| Distributions from accounts for which the broker-dealer of record has
entered into a special agreement with the Distributor allowing this
waiver.
|_| Redemptions of Class B shares held by Retirement Plans whose records
are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch.
|_| Redemptions of Class C shares of Oppenheimer U.S. Government Trust from
accounts of clients of financial institutions that have entered into
a special arrangement with the Distributor for this purpose.
|_| Redemptions requested in writing by a Retirement Plan sponsor of Class
C shares of an Oppenheimer fund in amounts of $1 million or more
held by the Retirement Plan for more than one year, if the
redemption proceeds are invested in Class A shares of one or more
Oppenheimer funds.
|-|
<PAGE>
Distributions from Retirement Plans or other employee benefit plans for
any of the following purposes:
(1) Following the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was
established in an Oppenheimer fund.
(2) To return excess contributions made to a participant's account.
(3) To return contributions made due to a mistake of fact.
(4) To make hardship withdrawals, as defined in the plan.5
(5) To make distributions required under a Qualified Domestic Relations
Order or, in the case of an IRA, a divorce or separation
agreement described in Section 71(b) of the Internal Revenue
Code.
(6) To meet the minimum distribution requirements of the Internal Revenue
Code.
(7) To make "substantially equal periodic payments" as described in Section
72(t) of the Internal Revenue Code.
(8) For loans to participants or beneficiaries.6
(9) On account of the participant's separation from service.7
(10) Participant-directed redemptions to purchase shares of a mutual fund
(other than a fund managed by the Manager or a subsidiary of the
Manager) offered as an investment option in a Retirement Plan if
the plan has made special arrangements with the Distributor.
(11) Distributions made on account of a plan termination or "in-service"
distributions, if the redemption proceeds are rolled over
directly to an OppenheimerFunds-sponsored IRA.
(12) Distributions from Retirement Plans having 500 or more eligible
employees, but excluding distributions made because of the
Plan's elimination as investment options under the Plan of all
of the Oppenheimer funds that had been offered.
(13) For distributions from a participant's account under an Automatic
Withdrawal Plan after the participant reaches age 59 1/2 , as long
as the aggregate value of the distributions does not exceed 10%
of the account's value, adjusted annually.
(14) Redemptions of Class B shares under an Automatic Withdrawal Plan for an
account other than a Retirement Plan, if the aggregate value of
the redeemed shares does not exceed 10% of the account's value,
adjusted annually.
|_| Redemptions of Class B shares or Class C shares under an
Automatic Withdrawal Plan from an account other than a Retirement
Plan if the aggregate value of the redeemed shares does not exceed
10% of the account's value annually.
B. 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.
|_| Shares issued in plans of reorganization to which the Fund is a party.
|_| Shares sold to present or former officers, directors, trustees or
employees (and their "immediate families" as defined above in
Section I.A.) of the Fund, the Manager and its affiliates and
retirement plans established by them for their employees.
<PAGE>
IV. Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer
Funds Who Were Shareholders of Former
Quest for Value Funds
The initial and contingent deferred sales charge rates and waivers for Class
A, Class B and Class C shares described in the Prospectus or Statement of
Additional Information of the Oppenheimer funds are modified as described
below for certain persons who were shareholders of the former Quest for Value
Funds. To be eligible, those persons must have been shareholders on November
24, 1995, when OppenheimerFunds, Inc. became the investment advisor to those
former Quest for Value Funds. Those funds include:
<PAGE>
Oppenheimer Quest Value Fund, Inc. Oppenheimer Quest Small Cap
Value Fund
Oppenheimer Quest Balanced Value Fund Oppenheimer Quest Global Value
Fund
Oppenheimer Quest Opportunity Value
Fund
These arrangements also apply to shareholders of the following funds
when they merged (were reorganized) into various Oppenheimer funds on
November 24, 1995:
Quest for Value U.S. Government Quest for Value New York Tax-Exempt
Income Fund Fund
Quest for Value Investment Quality Quest for Value National Tax-Exempt
Income Fund Fund
Quest for Value Global Income Fund Quest for Value California Tax-Exempt
Fund
All of the funds listed above are referred to in this Appendix as the
"Former Quest for Value Funds." The waivers of initial and contingent
deferred sales charges described in this Appendix apply to shares of an
Oppenheimer fund that are either:
|_| acquired by such shareholder pursuant to an exchange of shares of an
Oppenheimer fund that was one of the Former Quest for Value Funds,
or
|_| purchased by such shareholder by exchange of shares of another
Oppenheimer fund that were acquired pursuant to the merger of any of
the Former Quest for Value Funds into that other Oppenheimer fund on
November 24, 1995.
A. Reductions or Waivers of Class A Sales Charges.
|X| Reduced Class A Initial Sales Charge Rates for Certain
Former Quest for Value Funds Shareholders.
Purchases by Groups and Associations. The following table sets forth the
initial sales charge rates for Class A shares purchased by members of
"Associations" formed for any purpose other than the purchase of securities.
The rates in the table apply if that Association purchased shares of any of
the Former Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995.
--------------------------------------------------------------------------------
Initial Sales Initial Sales
Number of Eligible Charge as a % of Charge as a % of Commission as %
Employees or Members Offering Price Net Amount Invested of Offering Price
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
9 or Fewer 2.50% 2.56% 2.00%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
At least 10 but not 2.00% 2.04% 1.60%
more than 49
--------------------------------------------------------------------------------
<PAGE>
For purchases by Associations having 50 or more eligible employees or
members, there is no initial sales charge on purchases of Class A shares, but
those shares are subject to the Class A contingent deferred sales charge
described in the applicable fund's Prospectus.
Purchases made under this arrangement qualify for the lower of either
the sales charge rate in the table based on the number of members of an
Association, or the sales charge rate that applies under the Right of
Accumulation described in the applicable fund's Prospectus and Statement of
Additional Information. Individuals who qualify under this arrangement for
reduced sales charge rates as members of Associations also may purchase
shares for their individual or custodial accounts at these reduced sales
charge rates, upon request to the Distributor.
|X| Waiver of Class A Sales Charges for Certain Shareholders. Class
A shares purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:
|_| Shareholders who were shareholders of the AMA Family of Funds on
February 28, 1991 and who acquired shares of any of the Former
Quest for Value Funds by merger of a portfolio of the AMA Family
of Funds.
|_| Shareholders who acquired shares of any Former Quest for Value Fund by
merger of any of the portfolios of the Unified Funds.
|X| Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions. The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares purchased by the following investors who were
shareholders of any Former Quest for Value Fund:
Investors who purchased Class A shares from a dealer that is or was not
permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship, under the Employee
Retirement Income Security Act of 1974 and regulations adopted under that law.
B. Class A, Class B and Class C Contingent Deferred Sales Charge Waivers.
|X| Waivers for Redemptions of Shares Purchased Prior to March 6,
1995. In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, Class B or Class C shares of an
Oppenheimer fund. The shares must have been acquired by the merger of a
Former Quest for Value Fund into the fund or by exchange from an Oppenheimer
fund that was a Former Quest for Value Fund or into which such fund merged.
Those shares must have been purchased prior to March 6, 1995 in connection
with:
|_| withdrawals under an automatic withdrawal plan holding only either
Class B or Class C shares if the annual withdrawal does not
exceed 10% of the initial value of the account value, adjusted
annually, and
|_| liquidation of a shareholder's account if the aggregate net asset value
of shares held in the account is less than the required minimum
value of such accounts.
|X| Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995. In the following cases, the contingent
deferred sales charge will be waived for redemptions of Class A, Class B or
Class C shares of an Oppenheimer fund. The shares must have been acquired by
the merger of a Former Quest for Value Fund into the fund or by exchange from
an Oppenheimer fund that was a Former Quest For Value Fund or into which such
Former Quest for Value Fund merged. Those shares must have been purchased on
or after March 6, 1995, but prior to November 24, 1995:
|_| redemptions following the death or disability of the shareholder(s) (as
evidenced by a determination of total disability by the U.S.
Social Security Administration);
|_| withdrawals under an automatic withdrawal plan (but only for Class B or
Class C shares) where the annual withdrawals do not exceed 10% of
the initial value of the account value; adjusted annually, and
|_| liquidation of a shareholder's account if the aggregate net asset value
of shares held in the account is less than the required minimum
account value.
A shareholder's account will be credited with the amount of any
contingent deferred sales charge paid on the redemption of any Class A, Class
B or Class C shares of the Oppenheimer fund described in this section if the
proceeds are invested in the same Class of shares in that fund or another
Oppenheimer fund within 90 days after redemption.
V. Special Sales Charge Arrangements for Shareholders of Certain
Oppenheimer Funds Who Were Shareholders of Connecticut Mutual Investment
Accounts, Inc.
The initial and contingent deferred sale charge rates and waivers for Class A
and Class B shares described in the respective Prospectus (or this Appendix)
of the following Oppenheimer funds (each is referred to as a "Fund" in this
section):
o Oppenheimer U. S. Government Trust,
o Oppenheimer Bond Fund,
o Oppenheimer Disciplined Value Fund and
o Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were
shareholders of the following funds (referred to as the "Former Connecticut
Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the
investment adviser to the Former Connecticut Mutual Funds:
Connecticut Mutual Liquid Account Connecticut Mutual Total Return
Account
Connecticut Mutual Government Securities CMIA LifeSpan Capital Appreciation
Account Account
Connecticut Mutual Income Account CMIA LifeSpan Balanced Account
Connecticut Mutual Growth Account CMIA Diversified Income Account
A. Prior Class A CDSC and Class A Sales Charge Waivers.
|_| Class A Contingent Deferred Sales Charge. Certain shareholders of
a Fund and the other Former Connecticut Mutual Funds are entitled to continue
to make additional purchases of Class A shares at net asset value without a
Class A initial sales charge, but subject to the Class A contingent deferred
sales charge that was in effect prior to March 18, 1996 (the "prior Class A
CDSC"). Under the prior Class A CDSC, if any of those shares are redeemed
within one year of purchase, they will be assessed a 1% contingent deferred
sales charge on an amount equal to the current market value or the original
purchase price of the shares sold, whichever is smaller (in such redemptions,
any shares not subject to the prior Class A CDSC will be redeemed first).
Those shareholders who are eligible for the prior Class A CDSC are:
(1) persons whose purchases of Class A shares of a Fund and other Former
Connecticut Mutual Funds were $500,000 prior to March 18, 1996, as
a result of direct purchases or purchases pursuant to the Fund's
policies on Combined Purchases or Rights of Accumulation, who
still hold those shares in that Fund or other Former Connecticut
Mutual Funds, and
(2) persons whose intended purchases under a Statement of Intention entered
into prior to March 18, 1996, with the former general distributor
of the Former Connecticut Mutual Funds to purchase shares valued
at $500,000 or more over a 13-month period entitled those persons
to purchase shares at net asset value without being subject to the
Class A initial sales charge.
Any of the Class A shares of a Fund and the other Former Connecticut
Mutual Funds that were purchased at net asset value prior to March 18, 1996,
remain subject to the prior Class A CDSC, or if any additional shares are
purchased by those shareholders at net asset value pursuant to this
arrangement they will be subject to the prior Class A CDSC.
|_| Class A Sales Charge Waivers. Additional Class A shares of a Fund
may be purchased without a sales charge, by a person who was in one (or more)
of the categories below and acquired Class A shares prior to March 18, 1996,
and still holds Class A shares:
(1) any purchaser, provided the total initial amount invested in the Fund
or any one or more of the Former Connecticut Mutual Funds
totaled $500,000 or more, including investments made pursuant
to the Combined Purchases, Statement of Intention and Rights of
Accumulation features available at the time of the initial
purchase and such investment is still held in one or more of
the Former Connecticut Mutual Funds or a Fund into which such
Fund merged;
(2) any participant in a qualified plan, provided that the total initial
amount invested by the plan in the Fund or any one or more of
the Former Connecticut Mutual Funds totaled $500,000 or more;
(3) Directors of the Fund or any one or more of the Former Connecticut
Mutual Funds and members of their immediate families;
(4) employee benefit plans sponsored by Connecticut Mutual Financial
Services, L.L.C. ("CMFS"), the prior distributor of the Former
Connecticut Mutual Funds, and its affiliated companies;
(5) one or more members of a group of at least 1,000 persons (and persons
who are retirees from such group) engaged in a common business,
profession, civic or charitable endeavor or other activity, and
the spouses and minor dependent children of such persons,
pursuant to a marketing program between CMFS and such group;
and
(6) an institution acting as a fiduciary on behalf of an individual or
individuals, if such institution was directly compensated by
the individual(s) for recommending the purchase of the shares
of the Fund or any one or more of the Former Connecticut Mutual
Funds, provided the institution had an agreement with CMFS.
Purchases of Class A shares made pursuant to (1) and (2) above may be
subject to the Class A CDSC of the Former Connecticut Mutual Funds described
above.
Additionally, Class A shares of a Fund may be purchased without a sales
charge by any holder of a variable annuity contract issued in New York State
by Connecticut Mutual Life Insurance Company through the Panorama Separate
Account which is beyond the applicable surrender charge period and which was
used to fund a qualified plan, if that holder exchanges the variable annuity
contract proceeds to buy Class A shares of the Fund.
B. Class A and Class B Contingent Deferred Sales Charge Waivers.
In addition to the waivers set forth in the Prospectus and in this Appendix,
above, the contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of a Fund and exchanges of Class A or Class B
shares of a Fund into Class A or Class B shares of a Former Connecticut
Mutual Fund provided that the Class A or Class B shares of the Fund to be
redeemed or exchanged were (i) acquired prior to March 18, 1996 or (ii) were
acquired by exchange from an Oppenheimer fund that was a Former Connecticut
Mutual Fund. Additionally, the shares of such Former Connecticut Mutual Fund
must have been purchased prior to March 18, 1996:
(1) by the estate of a deceased shareholder;
(2) upon the disability of a shareholder, as defined in Section 72(m)(7) of
the Internal Revenue Code;
(3) for retirement distributions (or loans) to participants or
beneficiaries from retirement plans qualified under Sections 401(a)
or 403(b)(7)of the Code, or from IRAs, deferred compensation plans
created under Section 457 of the Code, or other employee benefit
plans;
(4) as tax-free returns of excess contributions to such retirement or
employee benefit plans;
(5) in whole or in part, in connection with shares sold to any state,
county, or city, or any instrumentality, department, authority, or
agency thereof, that is prohibited by applicable investment laws
from paying a sales charge or commission in connection with the
purchase of shares of any registered investment management
company;
(6) in connection with the redemption of shares of the Fund due to a
combination with another investment company by virtue of a merger,
acquisition or similar reorganization transaction;
(7) in connection with the Fund's right to involuntarily redeem or
liquidate the Fund;
(8) in connection with automatic redemptions of Class A shares and Class B
shares in certain retirement plan accounts pursuant to an
Automatic Withdrawal Plan but limited to no more than 12% of the
original value annually; or
(9) as involuntary redemptions of shares by operation of law, or under
procedures set forth in the Fund's Articles of Incorporation, or
as adopted by the Board of Directors of the Fund.
VI. Special Reduced Sales Charge for Former Shareholders of
Advance America Funds, Inc.
Shareholders of Oppenheimer Municipal Bond Fund, Oppenheimer U.S. Government
Trust, Oppenheimer Strategic Income Fund and Oppenheimer Equity Income Fund
who acquired (and still hold) shares of those funds as a result of the
reorganization of series of Advance America Funds, Inc. into those
Oppenheimer funds on October 18, 1991, and who held shares of Advance America
Funds, Inc. on March 30, 1990, may purchase Class A shares of those four
Oppenheimer funds at a maximum sales charge rate of 4.50%.
VII. Sales Charge Waivers on Purchases of Class M Shares of
Oppenheimer Convertible Securities Fund
Oppenheimer Convertible Securities Fund (referred to as the "Fund" in this
section) may sell Class M shares at net asset value without any initial sales
charge to the classes of investors listed below who, prior to March 11, 1996,
owned shares of the Fund's then-existing Class A and were permitted to
purchase those shares at net asset value without sales charge:
|_| the Manager and its affiliates,
|_| present or former officers, directors, trustees and employees (and
their "immediate families" as defined in the Fund's Statement of
Additional Information) of the Fund, the Manager and its affiliates,
and retirement plans established by them or the prior investment
advisor of the Fund for their employees,
|_| registered management investment companies or separate accounts of
insurance companies that had an agreement with the Fund's prior
investment advisor or 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 in the preceding section or financial
institutions that have entered into sales arrangements with those
dealers or brokers (and whose identity is made known to the
Distributor) or with the Distributor, but only if the purchaser
certifies to the Distributor at the time of purchase that the
purchaser meets these qualifications,
|_| dealers, brokers, or registered investment advisors that had entered
into an agreement with the Distributor or the prior distributor of
the Fund specifically providing for the use of Class M shares of the
Fund in specific investment products made available to their
clients, and
|_| dealers, brokers or registered investment advisors that had entered
into an agreement with the Distributor or prior distributor of the
Fund's shares to sell shares to defined contribution employee
retirement plans for which the dealer, broker, or investment advisor
provides administrative services.
<PAGE>
Oppenheimer Quest Global Value Fund, Inc.
Internet Web Site:
www.oppenheimerfunds.com
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Advisor
OpCap Advisors
1345 Avenue of the Americas, 49th Floor
New York, New York 10105-4800
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian Bank
Citibank, N.A.
111 Wall Street
New York, New York 10005
Independent Accountants
KPMG LLP
707 Seventeenth Street
Suite 2300
Denver, Colorado 80202
Legal Counsel
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019-5820
PX254.0201
<PAGE>
Registration No. 33-34720
File No. 811-06105
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 25 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ ]
Amendment No. 28 [X]
Oppenheimer Quest Global Value Fund, Inc.
------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
------------------------------------------------------------------------------
6801 South Tucson Way, Englewood, Colorado 80112
------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
------------------------------------------------------------------------------
(303) 768-3200
------------------------------------------------------------------------------
(Registrant's Telephone Number, including Area Code)
------------------------------------------------------------------------------
Andrew J. Donohue, Esq.
------------------------------------------------------------------------------
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
------------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On ____________ pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] On February 12, 2001 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On _______________ pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment
designates a new effective date for a previously filed post-effective
amendment.
--------
1 No commission will be paid on sales of Class A shares purchased with the
redemption proceeds of shares of another mutual fund offered as an investment
option in a retirement plan in which Oppenheimer funds are also offered as
investment options under a special arrangement with the Distributor, if the
purchase occurs more than 30 days after the Oppenheimer funds are added as an
investment option under that plan.
2 However, that commission will not be paid on purchases of shares in amounts
of $1 million or more (including any right of accumulation) by a Retirement
Plan that pays for the purchase with the redemption proceeds of Class C
shares of one or more Oppenheimer funds held by the Plan for more than one
year.
3 This provision does not apply to IRAs.
4 This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.
5 This provision does not apply to IRAs.
6 This provision does not apply to loans from 403(b)(7) custodial plans.
7 This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.
OPPENHEIMER QUEST GLOBAL VALUE FUND, INC.
FORM N-1A
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) (i) Articles of Incorporation dated 4/4/90: Previously filed with
Registrant's initial Registration Statement on Form N-1A, 5/4/90, and refiled
with Registrant's Post-Effective Amendment No. 18, 3/11/96, pursuant to
Regulation S-T and incorporated herein by reference.
(ii) Articles of Amendment to Articles of Incorporation dated 11/1/95:
Previously filed with Registrant's Post-Effective Amendment No. 22, 1/28/99,
and incorporated herein by reference.
(iii) Articles of Amendment to Articles of Incorporation dated
11/22/95: Previously filed with Registrant's Post-Effective Amendment No. 18,
3/11/96, and incorporated herein by reference.
(b) (i) By-Laws: Previously filed with Registrant's initial Registration
Statement on Form N-1A, 5/4/90, and refiled with Registrant's Post-Effective
Amendment No. 18, 3/11/96, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(ii) Amendment No. 1 to By-Laws dated 2/4/97: Previously filed with
Registrant's Post-Effective Amendment No. 20, 1/20/98, and incorporated
herein by reference.
(iii) Amendment No. 2 to By-Laws dated 7/22/98: Previously filed with
Registrant's Post-Effective Amendment No. 22, 1/28/99, and incorporated
herein by reference.
(c) (i) Specimen Class A Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 19, 3/19/97, and incorporated
herein by reference.
(ii) Specimen Class B Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 19, 3/19/97, and incorporated
herein by reference.
(iii) Specimen Class C Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 19, 3/19/97, and incorporated
herein by reference.
(iv) Specimen Class N Share Certificate: Filed herewith.
(d) (i) Investment Advisory Agreement dated 5/29/97: Previously filed
with Registrant's Post-Effective Amendment No. 20, 1/20/98, and incorporated
herein by reference.
(ii) Subadvisory Agreement dated 11/5/97: Previously filed with
Registrant's Post-Effective Amendment No. 20, 1/20/98, and incorporated
herein by reference.
(iii) Administration Agreement dated 5/29/97: Previously filed with
Registrant's Post-Effective Amendment No. 20, 1/20/98, and incorporated
herein by reference.
(e) (i) General Distributor's Agreement dated 11/22/95: Previously filed
with Registrant's Post-Effective Amendment No. 18, 3/11/96, and
incorporated herein by reference.
(ii) Form of Dealer Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Pre-Effective Amendment No. 2 to the Registration
Statement of Oppenheimer Trinity Value Fund (Reg. No. 333-79707),
8/25/99, and incorporated herein by reference.
(iii) Form of Agency Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Pre-Effective Amendment No. 2 to the Registration
Statement of Oppenheimer Trinity Value Fund (Reg. No. 333-79707),
8/25/99, and incorporated herein by reference.
(iv) Form of Broker Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Pre-Effective Amendment No. 2 to the Registration
Statement of Oppenheimer Trinity Value Fund (Reg. No. 333-79707),
8/25/99, and incorporated herein by reference.
(v) Broker Agreement between OppenheimerFunds Distributor, Inc. and
Newbridge Securities dated 10/1/86: Previously filed with
Post-Effective Amendment No. 25 of Oppenheimer Special Fund (Reg. No.
2-45272), 11/1/86, refiled with Post-Effective Amendment No. 45 of
Oppenheimer Special Fund (Reg. No. 2-45272), 8/22/94, pursuant to Item
102 of Regulation S-T, and incorporated herein by reference.
(f) (i) Form of Deferred Compensation Plan for Disinterested
Trustees/Directors: Filed with Post-Effective Amendment No. 43 to the
Registration Statement of Oppenheimer Quest For Value Funds (Reg. No.
33-15489), 12/21/98, and incorporated herein by reference.
(ii) Retirement Plan for Non-Interested Trustees or Directors:
Previously filed with Post-Effective Amendment No. 43 to the
Registration Statement of Oppenheimer Quest For Value Funds (Reg. No.
33-15489), 12/21/98, and incorporated herein by reference.
(iii) Form of Individual Retirement Account Trust Agreement: Filed as
Exhibit 14 of Post-Effective Amendment No. 21 of Oppenheimer U.S.
Government Trust (Reg. No. 2-76645), 8/25/93, and incorporated herein
by reference.
(iv) Form of prototype Standardized and Non-Standardized
Profit-Sharing Plan and Money Purchase Pension Plan for self-employed
persons and corporations: Filed with Post-Effective Amendment No. 3 of
Oppenheimer Global Growth & Income Fund (File No. 33-33799), 1/31/92,
and refiled with Post-Effective Amendment No. 7 to the Registration
Statement of Oppenheimer Global Growth & Income Fund (Reg. No.
33-33799), 12/1/94, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(v) Form of Tax-Sheltered Retirement Plan and Custody Agreement for
employees of public schools and tax-exempt organizations: Filed with
Post-Effective Amendment No. 47 to the Registration Statement of
Oppenheimer Growth Fund (Reg. No. 2-45272), 10/21/94, and incorporated
herein by reference.
(vi) Form of Simplified Employee Pension IRA: Filed with
Post-Effective Amendment No. 42 to the Registration Statement of
Oppenheimer Equity Income Fund (Reg. No. 2-33043), 10/28/94, and
incorporated herein by reference.
(vii) Form of SAR-SEP Simplified Employee Pension IRA: Filed with
Post-Effective Amendment No. 15 to the Registration Statement of
Oppenheimer Mortgage Income Fund, (File No. 33-6614), 2/20/94, and
incorporated herein by reference.
(viii) Form of Prototype 401(k) plan: Filed with Post-Effective
Amendment No. 7 to the Registration Statement of Oppenheimer Strategic
Income & Growth Fund (33-47378), 9/28/95, and incorporated herein by
reference.
(g) Foreign Custody Agreement between Citibank, N.A. and OppenheimerFunds,
Inc. dated 9/14/98: Previously filed with Registrant's Post-Effective
Amendment No. 22, 1/28/99, and incorporated herein by reference.
(h) Not applicable.
(i) Opinion and Consent of Counsel dated 6/21/90: Previously filed with
Registrant's Registration Statement on Form N-14, 7/19/91, and
incorporated herein by reference.
(j) Independent Auditors Consent: To be filed by post effective amendment.
(k) Not applicable.
(l) Investment Letter from OppenheimerFunds, Inc. to Registrant: Previously
filed with Registrant's Registration Statement on Form N-14, 7/19/91,
and incorporated herein by reference.
(m) (i) Amended and Restated Distribution and Service Plan and Agreement
for Class A shares dated 2/3/98: Previously filed with Registrant's
Post-Effective Amendment No. 21, 3/26/98, and incorporated herein by
reference.
(ii) Amended and Restated Distribution and Service Plan and Agreement
for Class B shares dated 2/3/98: Previously filed with Registrant's
Post-Effective Amendment No. 21, 3/26/98, and incorporated herein by
reference.
(iii) Amended and Restated Distribution and Service Plan and Agreement for Class
C shares dated 2/3/98: Previously filed with Registrant's Post-Effective
Amendment No. 21, 3/26/98, and incorporated herein by reference.
(iv) Form of Distribution and Service Plan and Agreement for Class N
shares: Filed herewith.
(n) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 updated through
8/24/99: Previously filed with Pre-Effective Amendment No. 1 to the
Registration Statement of Oppenheimer Senior Floating Rate Fund (Reg.
No. 333-82579), 8/27/99, and incorporated herein by reference.
(o) -- Powers of Attorney (including Certified Board resolutions):
Previously filed with Registrant's Post-Effective Amendment No. 17, 11/24/95,
and incorporated herein by reference.
-- Power of Attorney (including Certified Board resolution) for
Robert G. Galli: Previously filed with Post-Effective Amendment No. 43 to the
Registration Statement of Oppenheimer Quest For Value Funds (Reg. No.
33-15489), 12/21/98, and incorporated herein by reference.
-- Power of Attorney (including Certified Board resolution) for
Brian W. Wixted: Previously filed with Post-Effective Amendment No. 5 to the
Registration Statement of Oppenheimer Quest Capital Value Fund, Inc.
(Registration No. 333-16881), 2/22/00 and incorporated herein by reference.
(p) Amended and Restated Code of Ethics of the Oppenheimer Funds dated
March 1, 2000 under Rule 17j-1 of the Investment Company Act of 1940:
Previously filed with the Initial Registration Statement of Oppenheimer
Emerging Growth Fund (Reg. No. 333-44176), 8/21/00, and incorporated herein
by reference.
Item 24. Persons Controlled by or Under Common Control with the Fund
---------------------------------------------------------------------
None.
Item 25. - Indemnification
Reference is made to the provisions of Article Seven of Registrant's Amended
and Restated Declaration of Trust filed as Exhibit 23(a) to this Registration
Statement, and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.
Item 26. - Business and Other Connections of the Investment Adviser
(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant; it
and certain subsidiaries and affiliates act in the same capacity to other
investment companies, including without limitation those described in Parts A
and B hereof and listed in Item 26(b) below.
(a)(i) The directors and executive officers of OpCap Advisors, their
positions and their other business affiliations and business experience for
the past two years are listed in Item 26(b) below.
(b) There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
officer and director of OppenheimerFunds, Inc. is, or at any time during the
past two fiscal years has been, engaged for his/her own account or in the
capacity of director, officer, employee, partner or trustee.
Name and Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
Amy Adamshick,
Vice President Scudder Kemper Investments (July 1998 -
May 2000)
Charles E. Albers,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds (since April
1998); a Chartered Financial Analyst.
Edward Amberger,
Assistant Vice President None.
Janette Aprilante,
Assistant Vice President None.
Victor Babin,
Senior Vice President None.
Bruce L. Bartlett,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
George Batejan,
Executive Vice President/
Chief Information Officer Formerly Senior Vice President (until May
1998).
Kevin Baum,
Assistant Vice President None.
Connie Bechtolt,
Assistant Vice President None.
Kathleen Beichert,
Vice President None.
Rajeev Bhaman,
Vice President None.
Mark Binning
Assistant Vice President None.
Robert J. Bishop,
Vice President Vice President of Mutual Fund Accounting
(since May 1996); an officer of other
Oppenheimer funds.
John R. Blomfield,
Vice President None.
Chad Boll,
Assistant Vice President None
Scott Brooks,
Vice President None.
Bruce Burroughs,
Vice President
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly, Assistant Vice President of
Rochester Fund Services, Inc.
Michael A. Carbuto,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial Asset Management
Corporation.
John Cardillo,
Assistant Vice President None.
Elisa Chrysanthis
Assistant Vice President None.
H.C. Digby Clements,
Vice President: Rochester Division None.
O. Leonard Darling,
Vice Chairman, Executive Vice
President and Chief Investment
Officer and Director Chairman of the Board and a director
(since June 1999) and Senior Managing
Director (since December 1998) of
HarbourView Asset Management Corporation;
a director (since March 2000) of OFI
Private Investments, Inc.; Trustee (1993)
of Awhtolia College - Greece; formerly
Chief Executive Officer of HarbourView
Asset Management Corporation (December
1998 - June 1999).
John Davis
Assistant Vice President EAB Financial (April 1998-February 1999).
Robert A. Densen,
Senior Vice President None.
Ruggero de'Rossi
Vice President Formerly, Chief Strategist at ING Barings
(July
1998 - March 2000).
Sheri Devereux,
Vice President None.
Max Dietshe
Vice President Deloitte & Touche LLP (1989-1999).
Craig P. Dinsell
Executive Vice President None.
Steven Dombrower
Vice President
John Doney,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Executive Vice President (since September
1993) and a director (since January 1992)
of the Distributor; Executive Vice
President, General Counsel (since
September 1995) and a director (since
August 1994) of HarbourView Asset
Management Corporation, Shareholder
Services, Inc., Shareholder Financial
Services, Inc. and Oppenheimer
Partnership Holdings, Inc., of OFI
Private Investments, Inc. (since March
2000), and of PIMCO Trust Company (since
May 2000); President and a director of
Centennial Asset Management Corporation
(since September 1995) and of Oppenheimer
Real Asset Management, Inc. (since July
1996); Vice President and a director
(since September 1997) of
OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc; a
director (since April 2000) of
OppenheimerFunds Legacy Program, a
charitable trust program established by
the Manager; General Counsel (since May
1996) and Secretary (since April 1997) of
Oppenheimer Acquisition Corp.; an officer
of other Oppenheimer funds.
Bruce Dunbar,
Vice President None.
John Eiler
Vice President None.
Daniel Engstrom,
Assistant Vice President None.
Armond Erpf
Assistant Vice President None.
George Evans,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Edward N. Everett,
Assistant Vice President None.
George Fahey,
Vice President None.
Leslie A. Falconio,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds (since 6/99).
Scott Farrar,
Vice President Assistant Treasurer of Oppenheimer
Millennium Funds plc (since October
1997); an officer of other Oppenheimer
funds.
Katherine P. Feld,
Vice President, Senior Counsel
and Secretary Vice President and Secretary of the
Distributor; Secretary and Director of
Centennial Asset Management Corporation;
Vice President and Secretary of
Oppenheimer Real Asset Management, Inc.;
Secretary of HarbourView Asset Management
Corporation, Oppenheimer Partnership
Holdings, Inc., Shareholder Financial
Services, Inc. and Shareholder Services,
Inc.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or portfolio
manager of certain Oppenheimer funds;
presently he holds the following other
positions: Director (since 1995) of ICI
Mutual Insurance Company; Governor (since
1994) of St. John's College; Director
(since 1994 - present) of International
Museum of Photography at George Eastman
House..
David Foxhoven,
Assistant Vice President Formerly Manager, Banking Operations
Department (July 1996 - November 1998).
Colleen Franca,
Assistant Vice President None.
Crystal French
Vice President None.
Dan Gangemi,
Vice President None.
Subrata Ghose
Assistant Vice President Formerly, Equity Analyst at Fidelity
Investments (1995 - March 2000).
Charles Gilbert,
Assistant Vice President None.
Alan Gilston,
Vice President None.
Jill Glazerman,
Vice President None.
Paul Goldenberg,
Vice President Formerly, President of Advantageware
(September 1992 - September 1999).
Mikhail Goldverg
Assistant Vice President None.
Laura Granger,
Vice President Formerly, Portfolio Manager at Fortis
Advisors (July 1998-October 2000).
Jeremy Griffiths,
Executive Vice President,
Chief Financial Officer and
Director Chief Financial Officer, Treasurer and
director of Oppenheimer Acquisition
Corp.; Executive Vice President of
HarbourView Asset Management Corporation;
President. Chief Executive Officer and
director of PIMCO Trust Company; director
of OppenheimerFunds, Legacy Program
(charitable trust program); Vice
President of OFI Private Investments,
Inc. and a Member and Fellow of the
Institute of Chartered Accountants.
Robert Grill,
Senior Vice President None.
Robert Guy,
Senior Vice President None.
Robert Haley,
Assistant Vice President None.
Kelly Haney,
Assistant Vice President None.
Thomas B. Hayes,
Vice President None.
Dennis Hess,
Assistant Vice President None.
Dorothy Hirshman,
Assistant Vice President None
Merryl Hoffman,
Vice President and
Senior Counsel None
Merrell Hora,
Assistant Vice President None.
Scott T. Huebl,
Vice President None.
Margaret Hui
Assistant Vice President Formerly Vice President - Syndications of
Sanwa Bank California (January 1998 -
September 1999).
James Hyland,
Assistant Vice President Formerly Manager of Customer Research for
Prudential Investments (February 1998 -
July 1999).
David Hyun,
Vice President Formerly portfolio manager, technology
analyst and research associate at Fred
Alger Management, Inc. (August 1993 -
June 2000).
Steve Ilnitzki,
Senior Vice President Formerly Vice President of Product
Management at Ameritrade (until March
2000).
Kathleen T. Ives,
Vice President None.
William Jaume,
Vice President Senior Vice President (since April 2000)
of HarbourView Asset Management
Corporation.
Frank Jennings,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Andrew Jordan,
Assistant Vice President None.
Deborah Kaback,
Vice President and
Senior Counsel Senior Vice President and Deputy General
Counsel of Oppenheimer Capital (April
1989-November 1999).
Lewis Kamman
Vice President Senior Consultant for Bell Atlantic
Network Integration, Inc. (June
1997-December 1998).
Jennifer Kane
Assistant Vice President None.
Lynn Oberist Keeshan
Senior Vice President Formerly (until March 1999) Vice
President, Business Development and
Treasury at Liz Claiborne, Inc.
Thomas W. Keffer,
Senior Vice President None.
Erica Klein,
Assistant Vice President None.
Walter Konops,
Assistant Vice President None.
Avram Kornberg,
Senior Vice President None.
Jimmy Kourkoulakos,
Assistant Vice President. None.
John Kowalik,
Senior Vice President An officer and/or portfolio manager for
certain OppenheimerFunds.
Joseph Krist,
Assistant Vice President None.
Christopher Leavy
Senior Vice President Vice President and Portfolio Manager at
Morgan Stanley Investment Management
(1997-September 2000) and an Analyst and
Portfolio Manager at Crestar Asset
Management (1995-1997).
Michael Levine,
Vice President None.
Shanquan Li,
Vice President None.
Mitchell J. Lindauer,
Vice President and Assistant
General Counsel None.
Malissa Lischin
Assistant Vice President Formerly Associate Manager, Investment
Management Analyst at Prudential (1996 -
March 2000).
David Mabry,
Vice President None.
Bridget Macaskill,
Chairman, Chief Executive Officer
and Director President, Chief Executive Officer and a
director (since March 2000) of OFI
Private Investments, Inc., an investment
adviser subsidiary of the Manager;
Chairman and a director of Shareholder
Services, Inc. (since August 1994) and
Shareholder Financial Services, Inc.
(since September 1995), transfer agent
subsidiaries of the Manager; President
(since September 1995) and a director
(since October 1990) of Oppenheimer
Acquisition Corp., the Manager's parent
holding company; President (since
September 1995) and a director (since
November 1989) of Oppenheimer Partnership
Holdings, Inc., a holding company
subsidiary of the Manager; President and
a director (since October 1997) of
OppenheimerFunds International Ltd., an
offshore fund management subsidiary of
the Manager and of Oppenheimer Millennium
Funds plc; a director of HarbourView
Asset Management Corporation (since July
1991) and of Oppenheimer Real Asset
Management, Inc. (since July 1996),
investment adviser subsidiaries of the
Manager; a director (since April 2000) of
OppenheimerFunds Legacy Program, a
charitable trust program established by
the Manager; a director of Prudential
Corporation plc (a U.K. financial service
company); President and a trustee of
other Oppenheimer funds; formerly
President of the Manager (June 1991 -
August 2000).
Steve Macchia,
Vice President None.
Marianne Manzolillo,
Assistant Vice President Formerly, Vice President for DLJ High
Yield Research Department (February 1993
- July 2000).
Luann Mascia,
Vice President None.
Philip T. Masterson,
Vice President None.
Loretta McCarthy,
Executive Vice President None.
Lisa Migan,
Assistant Vice President None.
Andrew J. Mika
Senior Vice President Formerly a Second Vice President for
Guardian Investments (June 1990 - October
1999).
Joy Milan
Assistant Vice President None.
Denis R. Molleur,
Vice President and
Senior Counsel None.
Nikolaos Monoyios,
Vice President A Vice President and/or portfolio manager
of certain Oppenheimer funds.
John Murphy,
President, Chief Operating
Officer and Director President of MassMutual Institutional
Funds and the MML Series Funds until
September 2000.
Kenneth Nadler,
Vice President None.
David Negri,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Ray Olson,
Assistant Vice President None.
Gina M. Palmieri,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds (since June
1999).
Frank Pavlak,
Vice President Formerly. Branch Chief of Investment
Company Examinations at U.S. Securities
and Exchange Commission (January 1981 -
December 1998).
James Phillips
Assistant Vice President None.
David Pellegrino
Vice President None.
Jane Putnam,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Michael Quinn,
Assistant Vice President None.
Heather Rabinowitz,
Assistant Vice President None.
Julie Radtke,
Vice President None.
Thomas Reedy,
Vice President Vice President (since April 1999) of
HarbourView Asset Management Corporation;
an officer and/or portfolio manager of
certain Oppenheimer funds.
John Reinhardt,
Vice President: Rochester Division None
David Robertson,
Senior Vice President Formerly, Director of Sales and Marketing
for Schroder Investment Management of
North America (March 1998 - March 2000).
Jeffrey Rosen,
Vice President None.
Marci Rossell,
Vice President and Corporate Economist Economist with
Federal Reserve Bank of Dallas (April
1996 - March 1999).
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Lawrence Rudnick,
Assistant Vice President None.
James Ruff,
Executive Vice President President and director of the
Distributor; Vice President (since March
2000) of OFI Private Investments, Inc.
Andrew Ruotolo
Executive Vice President President and director of Shareholder
Services, Inc.; formerly Chief Operations
Officer for American International Group
(August 1997-September 1999).
Rohit Sah,
Assistant Vice President None.
Valerie Sanders,
Vice President None.
Kenneth Schlupp
Assistant Vice President Assistant Vice President (since March
2000) of OFI Private Investments, Inc.
Jeff Schneider,
Vice President Formerly (until May 1999) Director,
Personal Decisions International.
Ellen Schoenfeld,
Vice President None.
Brooke Schulte,
Assistant Vice President None.
Allan Sedmak
Assistant Vice President None.
Jennifer Sexton,
Vice President None.
Martha Shapiro,
Assistant Vice President None.
Connie Song,
Assistant Vice President None.
Richard Soper,
Vice President None.
Keith Spencer,
Vice President None.
Cathleen Stahl,
Vice President Assistant Vice President & Manager of
Women & Investing Program
Richard A. Stein,
Vice President: Rochester Division Assistant Vice President (since 1995) of
Rochester Capitol Advisors, L.P.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Jayne Stevlingson,
Vice President None.
Gregg Stitt,
Assistant Vice President None.
John Stoma,
Senior Vice President None.
Deborah Sullivan,
Assistant Vice President,
Assistant Counsel Formerly, Associate General Counsel,
Chief Compliance Officer, Corporate
Secretary and Vice President of Winmill &
Co. Inc. (formerly Bull & Bear Group,
Inc.), CEF Advisers, Inc. (formerly Bull
& Bear Advisers, Inc.), Investor Service
Center, Inc. and Midas Management
Corporation (November 1997 - March 2000).
Kevin Surrett,
Assistant Vice President Assistant Vice President of Product
Development
At Evergreen Investor Services, Inc.
(June 1995 -
May 1999).
Michael Sussman,
Assistant Vice President None.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director or
Managing Partner of the Denver-based
Oppenheimer Funds; formerly, President
and Director of Centennial Asset
Management Corporation and Chairman of
the Board of Shareholder Services, Inc.
Susan Switzer,
Assistant Vice President None.
Anthony A. Tanner,
Vice President: Rochester Division None.
James Taylor,
Assistant Vice President None.
Paul Temple,
Vice President Formerly (until May 2000) Director of
Product Development at Prudential.
Angela Uttaro,
Assistant Vice President None.
Mark Vandehey,
Vice President None.
Maureen VanNorstrand,
Assistant Vice President None.
Annette Von Brandis,
Assistant Vice President None.
Phillip Vottiero,
Vice President Chief Financial officer for the Sovlink
Group (April 1996 - June 1999).
Sloan Walker
Vice President
Teresa Ward,
Vice President None.
Jerry Webman,
Senior Vice President Senior Investment Officer, Director of
Fixed Income.
Barry Weiss,
Assistant Vice President Fitch IBCA (1996 - January 2000)
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Catherine White,
Assistant Vice President Formerly, Assistant Vice President with
Gruntal & Co. LLC (September 1998 -
October 2000); member of the American
Society of Pension Actuaries (ASPA) since
1995.
William L. Wilby,
Senior Vice President Senior Investment Officer, Director of
International Equities; Senior Vice
President of HarbourView Asset Management
Corporation.
Donna Winn,
Senior Vice President Vice President (since March 2000) of OFI
Private Investments, Inc.
Philip Witkower,
Senior Vice President Formerly Vice President of Prudential
Investments (1993 - November 2000)
Brian W. Wixted,
Senior Vice President and
Treasurer Treasurer (since March 1999) of
HarbourView Asset Management Corporation,
Shareholder Services, Inc., Oppenheimer
Real Asset Management Corporation,
Shareholder Financial Services, Inc. and
Oppenheimer Partnership Holdings, Inc.,
of OFI Private Investments, Inc. (since
March 2000) and of OppenheimerFunds
International Ltd. and Oppenheimer
Millennium Funds plc (since May 2000);
Treasurer and Chief Financial Officer
(since May 2000) of PIMCO Trust Company;
Assistant Treasurer (since March 1999) of
Oppenheimer Acquisition Corp. and of
Centennial Asset Management Corporation;
an officer of other Oppenheimer funds;
formerly Principal and Chief Operating
Officer, Bankers Trust Company - Mutual
Fund Services Division (March 1995 -
March 1999).
Carol Wolf,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; serves on the
Board of Chinese Children Adoption
International Parents Council, Supporters
of Children, and the Advisory Board of
Denver Children's Hospital Oncology
Department.
Kurt Wolfgruber
Senior Vice President Senior Investment Officer, Director of
Domestic Equities; member of the
Investment Product Review Committee and
the Executive Committee of HarbourView
Asset Management Corporation; formerly
(until April 2000) a Managing Director
and Portfolio Manager at J.P. Morgan
Investment Management, Inc.
Caleb Wong,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds (since June
1999) .
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of Shareholder
Services, Inc. (since May 1985),
Shareholder Financial Services, Inc.
(since November 1989), OppenheimerFunds
International Ltd. and Oppenheimer
Millennium Funds plc (since October
1997); an officer of other Oppenheimer
funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Neal Zamore,
Vice President Director e-Commerce; formerly (until May
2000) Vice President at GE Capital.
Mark Zavanelli,
Assistant Vice President None.
Arthur J. Zimmer,
Senior Vice President Senior Vice President (since April 1999)
of HarbourView Asset Management
Corporation; Vice President of Centennial
Asset Management Corporation; an officer
and/or portfolio manager of certain
Oppenheimer funds.
Susan Zimmerman,
Vice President None.
The Oppenheimer Funds include the New York-based Oppenheimer Funds, the
Denver-based Oppenheimer Funds and the Oppenheimer Quest /Rochester Funds, as
set forth below:
New York-based Oppenheimer Funds
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Capital Preservation Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Emerging Growth Fund
Oppenheimer Emerging Technologies Fund
Oppenheimer Enterprise Fund
Oppenheimer Europe Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer Large Cap Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Trinity Core Fund
Oppenheimer Trinity Growth Fund
Oppenheimer Trinity Value Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Quest/Rochester Funds
Limited Term New York Municipal Fund
Oppenheimer Convertible Securities Fund
Oppenheimer MidCap Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
Denver-based Oppenheimer Funds
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Capital Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Opportunity Fund
Oppenheimer Main Street Small Cap Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Senior Floating Rate Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The address of OppenheimerFunds, Inc., OppenheimerFunds Distributor, Inc.,
HarbourView Asset Management Corp., Oppenheimer Partnership Holdings, Inc.,
Oppenheimer Acquisition Corp. and OFI Private Investments, Inc. is Two World
Trade Center, New York, New York 10048-0203.
The address of the New York-based Oppenheimer Funds, the Quest Funds, the
Rochester-based funds, the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., OppenheimerFunds
Services, Centennial Asset Management Corporation, Centennial Capital Corp.,
and Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way,
Englewood, Colorado 80112.
Name & Current Position Other Business and Connections
with OpCap Advisors During the Past Two Years
Gavin Albert,
Vice President and
Portfolio Manager Vice President of Oppenheimer Capital.
Lawrence K. Becker,
Treasurer and Chief
Financial Officer Managing Director/Treasurer/Chief
Financial Officer of Oppenheimer Capital;
Director of Oppenheimer Capital Trust
Company.
Robert J. Bluestone,
Vice President Managing Director of Oppenheimer Capital;
Director of Oppenheimer Capital Trust
Company.
Linda S. Ferrante,
Portfolio Manager Managing Director of Oppenheimer Capital.
John Giusio,
Vice President and
Portfolio Manager Vice President of Oppenheimer Capital.
Richard J. Glasebrook, II,
Vice President and
Portfolio Manager Managing Director of Oppenheimer Capital.
Colin Glinsman,
Vice President and
Portfolio Manager Managing Director of Oppenheimer Capital.
Louis Goldstein,
Vice President and
Portfolio Manager Senior Vice President of Oppenheimer
Capital.
Matthew Greenwald,
Portfolio Manager Senior Vice President of Oppenheimer
Capital.
Alan Gutmann,
Vice President and
Portfolio Manager Senior Vice President of Oppenheimer
Capital.
Benjamin Gutstein,
Vice President and
Portfolio Manager Assistant Vice President of Oppenheimer
Capital.
Vikki Y. Hanges,
Vice President and
Portfolio Manager Senior Vice President of Oppenheimer
Capital.
Richard Kent,
Vice President Managing Director of Oppenheimer Capital.
Francis A. LeCates, Jr.,
Director of Research Managing Director of Oppenheimer Capital.
Elisa A. Mazen,
Vice President and
Portfolio Manager Senior Vice President of Oppenheimer
Capital International Division.
Timothy McCormack,
Vice President and
Portfolio Manager Senior Vice President of Oppenheimer
Capital; formerly Assistant Vice
President of Oppenheimer Capital.
Susan Murphy,
President of an affiliate President of OCC Cash Management Services
Division and Oppenheimer Capital Trust
Company; Managing Director of Oppenheimer
Capital.
Eric Retzlaff,
Senior Vice President Senior Vice President of Oppenheimer
Capital.
Elliot Weiss
Vice President Vice President of Oppenheimer Capital.
Jeffrey Whittington,
Portfolio Manager Senior Vice President of Oppenheimer
Capital.
The address of OpCap Advisors is 1345 Avenue of the Americas, 49th Floor, New
York, New York 10105-4800.
For information as to the business, profession, vocation or employment of a
substantial nature of the officers of Oppenheimer Capital, reference is made
to Form ADV filed by OpCap Advisors, under the Investment Advisers Act of
1940, which is incorporated herein by reference.
Item 27. Principal Underwriter
(a) OppenheimerFunds Distributor, Inc. is the Distributor of the
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which OppenheimerFunds, Inc. is
the investment adviser, as described in Part A and B of this Registration
Statement and listed in Item 26(b) above (except Oppenheimer Multi-Sector
Income Trust and Panorama Series Fund, Inc.) and for MassMutual Institutional
Funds.
(b) The directors and officers of the Registrant's principal underwriter
are:
Name & Principal Positions & Offices Positions &
Offices
Business Address with Underwriter with Registrant
Jason Bach Vice President None
31 Raquel Drive
Marietta, GA 30064
William Beardsley (2) Vice President None
Peter Beebe Vice President None
876 Foxdale Avenue
Winnetka, IL 60093
Douglas S. Blankenship Vice President None
17011 Woodbank
Spring, TX 77379
Kevin Brosmith Senior Vice President None.
856 West Fullerton
Chicago, IL 60614
Susan Burton(2) Vice President None
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
William Coughlin Vice President None
1730 N. Clark Street
#3203
Chicago, IL 60614
Jeff Damia(2) Vice President None
Stephen Demetrovits(2) Vice President None
Christopher DeSimone Vice President None
5105 Aldrich Avenue South
Minneapolis, MN 55419
Michael Dickson Vice President None
21 Trinity Avenue
Glastonburg, CT 06033
Joseph DiMauro Vice President None
244 McKinley Avenue
Grosse Pointe Farms, MI 48236
Steven Dombrowser Vice President None
Andrew John Donohue(2) Executive Vice Secretary
President and Director
G. Patrick Dougherty (2) Vice President None
Cliff Dunteman Vice President None
940 Wedgewood Drive
Crystal Lake, IL 60014
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
35 Crown Terrace
Yardley, PA 19067
George Fahey Vice President None
9 Townview Ct.
Flemington, NJ 08822
Eric Fallon Vice President None
10 Worth Circle
Newton, MA 02158
Katherine P. Feld(2) Vice President and None
Corporate Secretary
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding(3) Vice President None
Brian Flahive Assistant Vice President None
John ("J") Fortuna(2) Vice President None
Ronald R. Foster Senior Vice President None
11339 Avant Lane
Cincinnati, OH 45249
Victoria Friece(1) Assistant Vice President None
Luiggino Galleto Vice President None
10302 Riesling Court
Charlotte, NC 28277
Michelle Gans Vice President None
18771 The Pines
Eden Prairie, MN 55347
L. Daniel Garrity Vice President None
27 Covington Road
Avondale Estates, GA 30002
Lucio Giliberti Vice President None
6 Cyndi Court
Flemington, NJ 08822
Ralph Grant(2) Senior Vice President/ None
National Sales Manager
Michael Guman Vice President None
3913 Pleasent Avenue
Allentown, PA 18103
Tonya Hammet Assistant Vice President None
Webb Heidinger Vice President None
90 Gates Street
Portsmouth, NH 03801
Phillip Hemery Vice President None
184 Park Avenue
Rochester, NY 14607
Edward Hrybenko (2) Vice President None
Brian Husch(2) Vice President None
Richard L. Hymes(2) Assistant Vice President None
Byron Ingram(1) Assistant Vice President None
Kathleen T. Ives(1) Vice President None
Eric K. Johnson Vice President None
28 Oxford Avenue
Mill Valley, CA 94941
Mark D. Johnson Vice President None
409 Sundowner Ridge Court
Wildwood, MO 63011
Elyse Jurman Vice President None
1194 Hillsboro Mile, #51
Hillsboro Beach, FL 33062
John Kavanaugh Vice President None
2 Cervantes Blvd., Apt. #301
San Francisco, CA 94123
Brian G. Kelly Vice President None
60 Larkspur Road
Fairfield, CT 06430
Michael Keogh(2) Vice President None
Lisa Klassen(1) Assistant Vice President None
Richard Klein Senior Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Brent Krantz Vice President None
2609 SW 149th Place
Seattle, WA 98166
Oren Lane Vice President None
5286 Timber Bend Drive
Brighton, MI 48116
Dawn Lind Vice President None
21 Meadow Lane
Rockville Centre, NY 11570
James Loehle Vice President None
30 Wesley Hill Lane
Warwick, NY 10990
John Lynch (2) Vice President None
Michael Magee(2) Vice President None
Steve Manns Vice President None
1941 W. Wolfram Street
Chicago, IL 60657
Todd Marion Vice President None
3 St. Marks Place
Cold Spring Harbor, NY 11724
LuAnn Mascia(2) Assistant Vice President None
Theresa-Marie Maynier Vice President None
2421 Charlotte Drive
Charlotte, NC 28203
Anthony Mazzariello Vice President None
704 Beaver Road
Leetsdale, PA 15056
John McDonough Vice President None
3812 Leland Street
Chevy Chase, MD 20815
Kent McGowan Vice President None
18424 12th Avenue West
Lynnwood, WA 98037
Laura Mulhall(2) Senior Vice President None
Charles Murray Vice President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice President None
32 Carolin Road
Upper Montclair, NJ 07043
Denise-Marie Nakamura Vice President None
4111 Colony Plaza
Newport Beach, CA 92660
John Nesnay Vice President None
9511 S. Hackberry Street
Highlands Ranch, CO 80126
Kevin Neznek(2) Vice President None
Chad V. Noel Vice President None
2408 Eagleridge Drive
Henderson, NV 89014
Raymond Olson(1) Assistant Vice President None
& Treasurer
Alan Panzer Assistant Vice President None
925 Canterbury Road, Apt. #848
Atlanta, GA 30324
Kevin Parchinski Vice President None
8409 West 116th Terrace
Overland Park, KS 66210
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Brian Perkes Vice President None
8734 Shady Shore Drive
Frisco, TX 75034
Charles K. Pettit Vice President None
22 Fall Meadow Drive
Pittsford, NY 14534
Bill Presutti(2) Vice President None
Steve Puckett Vice President None
5297 Soledad Mountain Road
San Diego, CA 92109
Elaine Puleo(2) Senior Vice President None
Christopher Quinson Vice President None
Minnie Ra Vice President None
100 Dolores Street, #203
Carmel, CA 93923
Dustin Raring Vice President None
184 South Ulster
Denver, CO 80220
Michael Raso Vice President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
Douglas Rentschler Vice President None
677 Middlesex Road
Grosse Pointe Park, MI 48230
Michelle Simone Richter(2) Assistant Vice President None
Ruxandra Risko(2) Vice President None
David Robertson(2) Senior Vice President, None
Director of Variable
Accounts
Kenneth Rosenson Vice President None
26966 W. Malibu
Cove Colony Drive
Malibu, CA 90265
James Ruff(2) President & Director None
William Rylander (2) Vice President None
Alfredo Scalzo Vice President None
9616 Lale Chase Island Way
Tampa, FL 33626
Michael Sciortino Vice President None
785 Beau Chene Drive
Mandeville, LA 70471
Eric Sharp Vice President None
862 McNeill Circle
Woodland, CA 95695
Kristen Sims (2) Vice President None
Douglas Smith Vice President None
808 South 194th Street
Seattle,WA 98148
David Sturgis Vice President None
81 Surrey Lane
Boxford, MA 01921
Brian Summe Vice President None
239 N. Colony Drive
Edgewood, KY 41017
Michael Sussman(2) Vice President None
Andrew Sweeny Vice President None
5967 Bayberry Drive
Cincinnati, OH 45242
George Sweeney Senior Vice President None
5 Smokehouse Lane
Hummelstown, PA 17036
Scott McGregor Tatum Vice President None
704 Inwood
Southlake, TX 76092
Martin Telles(2) Senior Vice President None
David G. Thomas Vice President None
2200 North Wilson Blvd.
Suite 102-176
Arlington, VA 22201
Tanya Valency (2) Assistant Vice President None
Mark Vandehey(1) Vice President None
Brian Villec (2) Vice President None
Andrea Walsh(1) Vice President None
Suzanne Walters(1) Assistant Vice President None
Michael Weigner Vice President None
5722 Harborside Drive
Tampa, FL 33615
Donn Weise Vice President None
3249 Earlmar Drive
Los Angeles, CA 90064
Marjorie Williams Vice President None
6930 East Ranch Road
Cave Creek, AZ 85331
Philip Witkower Senior Vice President None
Cary Wozniak Vice President None
18808 Bravata Court
San Diego, CA 92128
Gregor Yuska(2) Vice President None
(1)6803 South Tucson Way, Englewood, CO 80112
(2)Two World Trade Center, New York, NY 10048
(3)350 Linden Oaks, Rochester, NY 14623
(c) Not applicable.
Item 28. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and rules promulgated thereunder are in the possession of OppenheimerFunds,
Inc. at its offices at 6803 South Tucson Way, Englewood, Colorado 80112.
Item 29. Management Services
Not applicable
Item 30. Undertakings
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on
the 12th day of December, 2000.
OPPENHEIMER QUEST GLOBAL VALUE FUND, INC.
By: /s/ Bridget A. Macaskill*
-------------------------------------------
Bridget A. Macaskill, President and
Chairman of the Board of Trustees
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the dates indicated:
Signatures Title Date
/s/ Bridget A Macaskill* Chairman of the Board,
------------------------------ President (Chief
December 12, 2000
Bridget A. Macaskill Executive Officer)
and Trustee
/s/ Brian W. Wixted* Treasurer and Principal December 12, 2000
-------------------------- Financial and
Brian W. Wixted Accounting Officer
/s/ Paul Y. Clinton* Trustee December 12, 2000
-----------------------
Paul Y. Clinton
/s/ Thomas W. Courtney* Trustee December 12, 2000
------------------------------
Thomas W. Courtney
/s/ Robert G. Galli*
------------------------ Trustee December 12, 2000
Robert G. Galli
/s/ Lacy B. Herrmann* Trustee December 12, 2000
---------------------------
Lacy B. Herrmann
/s/ George Loft* Trustee December 12, 2000
--------------------
George Loft
*By: /s/ Robert G. Zack
-----------------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER QUEST GLOBAL VALUE FUND, INC.
EXHIBIT INDEX
Exhibit No. Description
23(c)(iv) Specimen Class N Share Certificate
23(m)(iv) Form of Distribution and Service Plan and Agreement for
Class N Shares
