2
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant(s) / X /
Filed by a party other than the registrant / /
Check the appropriate box:
/ X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
BOND FUND SERIES
OPPENHEIMER MIDCAP FUND
OPENHEIMER QUEST CAPITAL VALUE FUND, INC.
OPPENHEIMER QUEST FOR VALUE FUNDS
OPPENHEIMER QUEST INTERNATIONAL VALUE FUND, INC.
OPPENHEIMER QUEST VALUE FUND, INC.
ROCHESTER FUND MUNICIPALS
ROCHESTER PORTFOLIO SERIES
- ------------------------------------------------------------
(Name of Registrant(s) as Specified in Its Charter)
SAME AS ABOVE
- ------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ X / No Fee Requred
/ / Fee Computed on table below per Exchange Act Rules 14a
-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange
Act Rule 0-11: 1
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or the
form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing Party:
(4) Date Filed:
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1
BOND FUND SERIES on behalf of
-Oppenheimer Convertible Securities Fund
OPPENHEIMER MIDCAP FUND
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
OPPENHEIMER QUEST FOR VALUE FUNDS on behalf of
-Oppenheimer Quest Balanced Fund
-Oppenheimer Quest Opportunity Value Fund
-Oppenheimer Small- & Mid-Cap Value Fund
OPPENHEIMER QUEST INTERNATIONAL VALUE FUND, INC.
OPPENHEIMER QUEST VALUE FUND, INC.
ROCHESTER FUND MUNICIPALS
ROCHESTER PORTFOLIO SERIES on behalf of
-Limited Term New York Municipal Fund
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD December 5, 2005
The Oppenheimer funds listed above (each a "Fund" and collectively the
"Funds") will host a joint Special Meeting of Shareholders on December 5, 2005 at
1:00 p.m., Mountain Time, as may be adjourned from time-to-time. The Special
Meeting will be held at the Funds' offices located at 6803 South Tucson Way,
Centennial, Colorado 80112. At the Special Meeting, shareholders will be asked
to vote on the following:
1. A proposal to elect the Board of Trustees for each Fund;
2. Proposals to change or eliminate certain fundamental investment
policies.
Any shareholder who owned shares of a Fund at the close of business on
September 14, 2005 (the "Record Date") will receive notice of the Meeting and
will be entitled to vote at the Meeting or any adjournment or postponement of
the Meeting. Please read the full text of the enclosed Proxy Statement for a
complete understanding of the proposals.
YOU CAN VOTE ON THE INTERNET, BY TELEPHONE OR BY MAIL.
WE URGE YOU TO VOTE PROMPTLY.
YOUR VOTE IS IMPORTANT.
Dated: September 23, 2005
By Order of the Board of Trustees/Directors
Robert G. Zack, Secretary
PLEASE HELP YOUR FUND AVOID THE EXPENSES OF ADDITIONAL SOLICITATIONS BY VOTING
TODAY
BOND FUND SERIES on behalf of
-Oppenheimer Convertible Securities Fund
OPPENHEIMER MIDCAP FUND
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
OPPENHEIMER QUEST FOR VALUE FUNDS on behalf of
-Oppenheimer Quest Balanced Fund
-Oppenheimer Quest Opportunity Value Fund
-Oppenheimer Small- & Mid-Cap Value Fund
OPPENHEIMER QUEST INTERNATIONAL VALUE FUND, INC.
OPPENHEIMER QUEST VALUE FUND, INC.
ROCHESTER FUND MUNICIPALS
ROCHESTER PORTFOLIO SERIES on behalf of
-Limited Term New York Municipal Fund
JOINT SPECIAL MEETING OF SHAREHOLDERS
December 5, 2005
This is a Proxy Statement for the above listed Oppenheimer funds (each a
"Fund" and collectively the "Funds"). The Board of Trustees or Board of
Directors ("Board") of each of the Funds is soliciting proxies for a joint
Special Meeting of Shareholders of each Fund to approve proposals that have
already been approved by the Board. (For purposes of this Proxy Statement, a
member of the Board is referred to as a "Trustee" and collectively referred to
as the "Trustees".)
The Board has sent you this Proxy Statement to ask for your vote on
several proposals affecting your Fund. The Funds will hold a Special Meeting of
Shareholders on December 5, 2005 at 1:00 p.m., Mountain Time, as may be
adjourned from time to time. The Special Meeting will be held at the Funds'
offices located at 6803 South Tucson Way, Centennial, Colorado 80112 in order
to consider the proposals described in this Proxy Statement.
Any shareholder who owned shares of a Fund on September 14, 2005 (the
"Record Date") will receive notice of the Meeting and will be entitled to vote at
the meeting or any adjournment or postponement of the meeting. Shareholders are
entitled to cast one vote for each full share and fractional vote for each
fractional share they owned on the Record Date.
You should read the entire Proxy Statement before voting. If you have any
questions, please call 1-800-225-5677 (1-800-CALL-OPP). The Funds expect to
mail the Notice of Special Meeting, this Proxy Statement and proxy ballot to
shareholders on or about September 23, 2005.
The Funds are required by federal law to file reports, proxy statements
and other information with the Securities and Exchange Commission (the "SEC").
The SEC maintains a website that contains information about the Funds
(www.sec.gov). You can inspect and copy the proxy material, reports and other
information at the public reference facilities of the SEC, 450 Fifth Street,
N.W., Washington, D.C. 20549. You can also obtain copies of these materials
from the Public Reference Branch, Office of Consumer Affairs and Information
Services of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
The Annual Report to Shareholders of each Fund, including financial
statements of the Fund, has previously been sent to shareholders. Upon request,
each Fund's most recent annual and subsequent semi-annual report (if available)
is available at no cost. To request a report please call the Funds toll-free at
1-800-CALL OPP (1-800-225-5677), or write to the Funds at OppenheimerFunds
Services, P.O. Box 5270, Denver, Colorado 80217-5270.
QUESTIONS AND ANSWERS:
What proposals am I being asked to vote on?
You are being asked to vote on the following proposals:
PROPOSAL 1: Depending on your Fund(s) and as indicated below, to elect six or
seven Trustees to the Fund(s).
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Funds with Six Nominees Nominees
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- ---------------------------------------------------------
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MidCap Fund Paul Y. Clinton
Quest Balanced Fund Thomas W. Courtney
Quest Capital Value Fund Robert G. Galli
Quest International Value Fund Lacy B. Herrmann
Quest Opportunity Value Fund John W. Murphy
Quest Value Fund Brian F. Wruble
Small- & Mid-Cap Value Fund
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Funds with Seven Nominees Nominees
- ------------------------- --------
- ---------------------------------------------------------
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Convertible Securities Fund John Cannon
Limited Term New York Municipal Fund Paul Y. Clinton
Rochester Fund Municipals Thomas W. Courtney
Robert G. Galli
Lacy B. Herrmann
John W. Murphy
Brian F. Wruble
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For the election of Trustees, shareholders of Quest Balanced Fund, Quest
Opportunity Value Fund, and Small- & Mid-Cap Value Fund (each a series of
Oppenheimer Quest For Value Funds) will vote together. Shareholders of all
other Funds will vote separately.
PROPOSAL 2: To approve changes in, or elimination of, certain fundamental
investment policies.
The following key provides a brief description of each sub-proposal in
Proposal 2. Following the key is a table showing which proposals apply to your
Fund(s).
Shareholders of each Fund vote separately on each sub-proposal in Proposal
2 as indicated in the table.
2a: Borrowing 2i: Pledging, Mortgaging or
2b: Concentration of Investments Hypothecating of
Assets
2c: Diversification of Investments 2j: Real Estate and Commodities
2d: Puts and Calls 2k: Senior Securities
2e: Trustee Ownership 2l: Underwriting
2f: Investing in Other Investment 2m: Investing in Unseasoned Issuers
Companies
2g: Lending 2n: Miscellaneous Investment
2h: Margin and Short Sales Percentage
Restrictions
2o: Investing to Exercise Control
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Name of Oppenheimer 2a 2b 2c 2d 2e 2f 2g 2h 2i 2j 2k 2l 2m 2n 2o
Fund
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Convertible X X X X X X X X X X X X X
Securities Fund
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Limited Term New York X X X X X X X X X X X X X
Municipal Fund
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MidCap Fund X X X X X X
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Quest Balanced Fund X X X X X X X X X X
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Quest Capital Value X X X X X X X X X X
Fund
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Quest International X X X X X X X X X X X
Value Fund
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Quest Opportunity X X X X X X X X X X X
Value Fund
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Quest Value Fund X X X X X X X X X X X X
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Rochester Fund X X X X X X X X X X X
Municipals
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Small- & Mid-Cap X X X X X X X X X X
Value Fund
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Has my Fund's Board approved the Proposals?
Yes. The Board unanimously approved these proposals and recommends that
you vote to approve each proposal.
Why am I being asked to elect Trustees?
The Board of the seven Funds listed in the first row below is currently
comprised of the five Trustees listed under "Current Trustees", each of whom is
being nominated to serve as a Trustee for those seven Funds. The Board of the
three Funds listed in the second row below is comprised of the same five
Trustees and John Cannon, each of whom is being nominated to serve as a
Trustee. Additionally, John W. Murphy is being nominated to serve as a Trustee
on all ten Funds so that the Funds would have six (or seven) Trustees, as
shown under "Nominees" in the third column. Each Trustee, other than Mr.
Murphy, is an "Independent Trustee" meaning that he is not an "interested
person" of the Funds (as that term is defined in the Investment Company Act of
1940 (the "Investment Company Act")).
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Funds Current Trustees Nominees
- ----- ---------------- --------
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MidCap Fund Paul Y. Clinton Paul Y. Clinton
Quest Balanced Fund Thomas W. Courtney Thomas W.
Quest Capital Value Fund Robert G. Galli Courtney
Quest International Value Fund Lacy B. Herrmann Robert G. Galli
Quest Opportunity Value Fund Brian F. Wruble Lacy B. Herrmann
Quest Value Fund John W. Murphy
Small- & Mid-Cap Value Fund Brian F. Wruble
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Convertible Securities Fund John Cannon John Cannon
Limited Term New York Municipal Fund Paul Y. Clinton Paul Y. Clinton
Rochester Fund Municipals Thomas W. Courtney Thomas W.
Robert G. Galli Courtney
Lacy B. Herrmann Robert G. Galli
Brian F. Wruble Lacy B. Herrmann
John W. Murphy
Brian F. Wruble
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Section 16(a) of the Investment Company Act requires that at least a
majority of the Trustees be elected by the shareholders. Furthermore, in the
event of a retirement or resignation of a Trustee or if the Board desires to
increase the membership of the Board, new or additional Trustees cannot be
appointed by the existing Trustees to fill such vacancies unless, after those
appointments, at least 66.67% of the Trustees have been elected by shareholders.
Currently, the seven Funds with five Trustees have 60% of their Trustees elected
by shareholders and the three Funds with six Trustees have 66.67% of their
Trustees elected by shareholders. This means that in order to change the
composition of the Board members and satisfy the requirement that 66.67% of the
Trustees be elected by the shareholders, a shareholder vote is necessary to
elect Trustees. The election of all the Trustees by shareholders will
facilitate the appointment by the Board of future Trustees in the event of a
retirement, resignation or expansion of the Board.
Why is the Board recommending changes to or elimination of, certain
investment policies for the Funds, and why must the changes be submitted to
shareholders?
In some cases the changes to, or elimination of, a policy is in response
to changes in regulatory requirements since the Funds implemented their current
policies. Changes are also recommended in an effort to modernize the policies,
provide the Funds additional flexibility, and/or achieve consistency among the
Funds and other funds in the Oppenheimer family of funds. The Proxy Statement
explains each of the proposed changes to, or elimination of, a policy.
Shareholders are only being asked to approve the changes in investment policies
that are "fundamental" and that apply to their respective Fund(s). A
"fundamental" investment policy can be changed only with the approval of
shareholders.
Will the proposed changes in the fundamental investment policies change
the investment objective or operations of my Fund?
No. Each Fund will continue to be managed according to its current
investment objective. Although the proposed changes in the fundamental
investment policies will allow the Funds greater flexibility to respond to
future investment opportunities, the Board does not anticipate that the changes,
individually or in the aggregate, will result in a material change in the level
of investment risk associated with investment in any Fund or the manner in which
any Fund is managed at the present time. In addition, the Board does not
anticipate that the proposed changes will materially affect the manner in which
the Funds are managed. In the future, if the Board determines to change
materially the manner in which any Fund is managed, that Fund's prospectus will
be amended to reflect such a change.
When will the Shareholder Meeting be held?
The Meeting will be held on December 5, 2005, unless it is adjourned.
How do I vote my shares?
You can vote your shares by completing and signing the enclosed proxy
ballot(s), and mailing the proxy ballot(s) in the enclosed postage paid
envelope. You also may vote your shares by telephone or via the internet by
following the instructions on the attached proxy ballot(s) and accompanying
materials. If you need assistance, or have any questions regarding the
proposals or how to vote your shares, please call 1-800-225-5677
(1-800-CALL-OPP).
PROPOSAL 1
ELECTION OF TRUSTEES
At the Meeting, the Nominees listed below are to be elected as Trustees
for each Fund as indicated in the table below. Each Nominee is an Independent
Trustee.
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Funds Nominees
- ----- --------
- ----------------------------------------------------------------------
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MidCap Fund Paul Y. Clinton
Quest Balanced Fund Thomas W. Courtney
Quest Capital Value Fund Robert G. Galli
Quest International Value Fund Lacy B. Herrmann
Quest Opportunity Value Fund John W. Murphy
Quest Value Fund Brian F. Wruble
Small- & Mid-Cap Value Fund
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- ----------------------------------------------------------------------
Convertible Securities Fund John Cannon
Limited Term New York Municipal Paul Y. Clinton
Fund Thomas W. Courtney
Rochester Fund Municipals Robert G. Galli
Lacy B. Herrmann
John W. Murphy
Brian F. Wruble
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If elected, the Trustees will serve indefinite terms until their
respective successors are duly elected and qualified. The persons named as
attorneys-in-fact in the enclosed proxy have advised the Funds that, unless a
proxy ballot instructs them to withhold authority to vote for all listed
nominees or any individual nominee, all validly executed proxies will be voted
for the election of all the nominees named as Trustees of the Funds. Persons
nominated as Trustees must receive a plurality of the votes cast, which means
that the six (6) or seven (7) nominees receiving the highest number of
affirmative votes for each Fund cast at the Meeting will be elected.
If a nominee should be unable to accept election, serve his or her term
or resign, the Board may, subject to the Investment Company Act, in its
discretion, select another person to fill the vacant position. Each of the
nominees has consented to be named as such in this Proxy Statement and to serve
as Trustee if elected.
The Funds are not required, and do not intend, to hold annual shareholder
meetings for the purpose of electing Trustees. Although the Funds will not
normally hold annual meetings of their shareholders, the Funds may do so from
time to time on important matters.
Shareholders also have the right to call a meeting to remove a Trustee
or to take other action as described in the Funds' organizing documents. Also,
if at any time, less than a majority of the Trustees holding office has been
elected by the shareholders of a Fund, the Trustees then in office will promptly
call a shareholders' meeting for the purpose of electing Trustees to that Fund.
The Trustees are not required to attend nor do they plan to attend this
Special Meeting of Shareholders.
What Factors Did The Board Consider In Selecting The Nominees?
The Audit Committee of the Funds serves as the nominating committee for
the Funds' Board. The members of the Audit Committee, each of whom is an
Independent Trustee, recommended and nominated each Nominee listed below to the
Board. After due consideration, the Board recommended to shareholders the
election of those Nominees. In making the recommendation, the Board and the
Audit Committee took into consideration a number of factors, including the
knowledge, background, and experience of each of the Nominees.
Except for John Cannon, each Trustee currently serves as a Trustee for all
Funds included in this Proxy Statement. Mr. Cannon serves as a Trustee for
three (3) Funds included in this Proxy Statement: Convertible Securities Fund,
Limited Term New York Municipal Fund, and Rochester Fund Municipals.
The Nominees and the Funds' officers (including the portfolio managers),
their positions with the Funds and length of service in such positions as well
as their principal occupations and business affiliations during the past five
years are listed below. The address of each Trustee in the chart below is 6803
S. Tucson Way, Centennial, CO 80112-3924. Each Trustee will serve for an
indefinite term, until his resignation, retirement, death or removal.
Nominees for Independent Trustees
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Name, Principal Occupation(s) During At Least the Past 5
Position(s) Held with Years;
Funds, Other Trusteeships/Directorships Held by Trustee;
Length of Service, Number of Portfolios in Fund Complex Overseen by
Age Trustee if elected at the Meeting
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- ----------------------------------------------------------------------------
Thomas W. Courtney, Principal of Courtney Associates, Inc.
Independent Chairman (1982-Present) (venture capital firm); former
of the Board of General Partner of Trivest Venture Fund (private
Trustees venture capital fund); President of Investment
Trustee Since: 1985 Counseling Federated Investors, Inc. (1973-1982);
Age: 72 Trustee of the following open-end investment
companies: Chairman of the Board of Cash Assets
Trust, PIMCO Advisors VIT, Tax Free Trust of
Arizona and four funds for the Hawaiian Tax Free
Trust. If elected at the meeting, the Trustee
would oversee 10 portfolios in the
OppenheimerFunds complex.
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- ----------------------------------------------------------------------------
John Cannon, Director, Neuberger Berman Income Managers Trust,
Trustee of 3 Funds Neuberger & Berman Income Funds and Neuberger
(Convertible Berman Trust, (1995-present); Neuberger Berman
Securities Fund, Equity Funds (November 2000-present); Trustee,
Rochester Fund Neuberger Berman Mutual Funds (October
Municipals, and 1994-present); formerly held the following
Limited Term New York positions at CDC Investment Advisors (a registered
Municipal Fund) Since: investment adviser): Chairman and Treasurer
1992 (December 1993-February 1996), and Independent
Age: 75 Consultant, Chief Investment Officer (1996-June
2000); formerly President of AMA Investment
Advisers, Inc.(July 1986-December1992) a financial
service affiliate of the American Medical
Association. If elected at the meeting, the
Trustee would oversee 3 portfolios in the
OppenheimerFunds complex.
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Paul Y. Clinton, Principal of Clinton Management Associates (a
Trustee Since: 1983 financial and venture capital consulting firm)
Age: 74 (1996-present); Trustee of PIMCO Advisors VIT
(open-end investment company); former director or
trustee of the following open-end investment
companies: OCC Cash Reserves, Inc. (1989-December
2002), Capital Cash Management Trust
(1979-December 2004), Prime Cash Fund and
Narragansett Insured Tax-Free Income Fund
(1996-December 2004). If elected at the meeting,
the Trustee would oversee 10 portfolios in the
OppenheimerFunds complex.
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Robert G. Galli, A trustee or director of other Oppenheimer funds.
Trustee Since: 1998 If elected at the meeting, the Trustee would
Age: 72 oversee 33 portfolios in the OppenheimerFunds
complex.
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Lacy B. Herrmann, Chairman of the Board of Aquila Management
Trustee Since: 1984 Corporation, the sponsoring organization and
Age: 76 parent of the manager, administrator, adviser
and/or sub-adviser and Chairman or Chairman
Emeritus of the Board of Trustees and President of
11 funds in the Aquila fund complex; Chairman of
Aquila Investment Management (since 2004) and
Chief Executive Officer (1986-2004) (sub-adviser
and administrator of funds in the Aquila fund
complex; Director of Aquila Distributors, Inc.,
(since 1981) and formerly President and Secretary
(distributor of the above funds); Trustee PIMCO
Advisors VIT; Trustee Emeritus of Brown University
and the Hopkins School. If elected at the meeting,
the Trustee would oversee 10 portfolios in the
OppenheimerFunds complex.
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- ----------------------------------------------------------------------------
Brian F. Wruble, General Partner of Odyssey Partners, L.P. (since
Trustee since: 2001 September 1996) (hedge funds in distribution since
Age: 62 January 1997); Director of Special Value
Opportunities Fund, LLC (since September 2004);
Investment Advisory Board of Zurich Financial
Services (since October 2004); Board of Governing
Trustees of The Jackson Laboratory (since August
1990) (non profit); Trustee of Institute for
Advanced Study (since May 1992) (educational
institute). Formerly Special Limited Partner
(January 1999-September 2004) and Managing
Principal (through December 1998) of Odyssey
Investment Partners, LLC (private equity
investment); Trustee of Research Foundation of
AIMR (2000-2002) (investment research,
non-profit); Governor, Jerome Levy Economics
Institute of Bard College (August 1990-September
2001) (economics research); Governor, Association
of Investment Management & Research
(1992-1998); Trustee, Institute of Chartered
Financial Analysts (1992-1998); Chairman,
Institute of Chartered Financial Analysts
(1994-1995). If elected at the meeting, the
Trustee would oversee 10 portfolios in the
OppenheimerFunds complex
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Nominee for Interested Trustee
The address of Mr. Murphy in the chart below is Two World Financial
Center, 225 Liberty Street, New York, NY 10281-1008. Mr. Murphy will serve for
an indefinite term, until his resignation, retirement, death or removal.
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Name, Principal Occupation(s) During Past 5 Years;
Position(s) Held with Other Trusteeships/Directorships Held by Trustee;
Fund, Number of Portfolios in Fund Complex Currently
Length of Service Overseen by Trustee
Age
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John V. Murphy, Chairman, Chief Executive Officer and director
President since 2001 (since June 2001) and President (since September
Age: 56 2000) of OppenheimerFunds, Inc. (the "Manager");
President and a director or trustee of other
Oppenheimer funds; President and a director (since
July 2001) of Oppenheimer Acquisition Corp. (the
Manager's parent holding company) and of
Oppenheimer Partnership Holdings, Inc. (a holding
company subsidiary of the Manager); a director
(since November 2001) of OppenheimerFunds
Distributor, Inc. (a subsidiary of the Manager);
Chairman and a director (since July 2001) of
Shareholder Services, Inc. and of Shareholder
Financial Services, Inc. (transfer agent
subsidiaries of the Manager); President and a
director (since July 2001) of OppenheimerFunds
Legacy Program (a charitable trust program
established by the Manager); a director of the
investment advisory subsidiaries of the Manager:
OFI Institutional Asset Management, Inc. and
Centennial Asset Management Corporation (since
November 2001), HarbourView Asset Management
Corporation and OFI Private Investments, Inc.
(since July 2001); President (since November 1,
2001) and a director (since July 2001) of
Oppenheimer Real Asset Management, Inc.; a director
(since November 2001) of Trinity Investment
Management Corp. and Tremont Advisers, Inc.
(investment advisory affiliates of the Manager);
Executive Vice President (since February 1997) of
Massachusetts Mutual Life Insurance Company (the
Manager's parent company); a director (since June
1995) of DLB Acquisition Corporation (a holding
company that owns the shares of David L. Babson &
Company, Inc.); formerly, Chief Operating Officer
(September 2000-June 2001) of the Manager;
President and trustee (November 1999-November 2001)
of MML Series Investment Fund and MassMutual
Institutional Funds (open-end investment
companies); a director (September 1999-August 2000)
of C.M. Life Insurance Company; President, Chief
Executive Officer and director (September
1999-August 2000) of MML Bay State Life Insurance
Company. If elected at the meeting, the Trustee
would oversee 76 portfolios as Trustee/Director.
An officer for 83 portfolios in the
OppenheimerFunds complex.
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Share Ownership of Independent Trustees
The dollar ranges of securities beneficially owned by the Independent
Trustees in the Funds and in the Oppenheimer family of funds as of December 31,
2004 are as follows:
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Name of Dollar Range of Equity Securities Owned Aggregate Dollar
Independent in the Funds Range of Equity
Trustee Securities in All
Funds Overseen or
to be Overseen by
Trustee or Nominee
in Oppenheimer
Family of
Investment Companies
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Mr. Cannon Convertible Securities Fund $10,001-$50,000
($10,001-$50,000)
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Mr. Clinton Quest Opportunity Value Fund Over $100,000
($10,001-$50,000)
Quest Value Fund (Over $100,000)
Small- & Mid-Cap Value Fund
($50,001-$100,000)
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Mr. Courtney Convertible Securities Fund $10,001-$50,000
($10,001-$50,000)
Quest Value Fund ($10,001-$50,000)
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Mr. Galli MidCap Fund (Over $100,000) Over $100,000
Small- & Mid-Cap Value Fund (Over
$100,000)
Convertible Securities Fund (Over
$100,000)
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Mr. Herrmann Quest Value Fund ($10,001-$50,000) $10,001-$50,000
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Mr. Wruble Limited Term New York Municipal Fund Over $100,000
($1-$10,000)
Convertible Securities Fund
($10,001-$50,000)
MidCap Fund ($1-$10,000)
Quest Balanced Fund ($10,001-$50,000)
Quest Capital Value Fund
($10,001-$50,000)
Quest International Value Fund
($10,001-$50,000)
Quest Opportunity Value Fund
($10,001-$50,000)
Quest Value Fund ($10,001-$50,000)
Small- and Mid-Cap Value Fund
($50,001-$100,000)
Rochester Fund Municipals ($1-$10,000)
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General Information Regarding the Board
The Funds are governed by the Board, which is responsible for protecting
the interests of shareholders. The Trustees meet periodically throughout the
year to oversee the Funds' activities, review their performance and review the
actions of OppenheimerFunds, Inc. (the "Manager") (and any investment
sub-adviser, if applicable) which is responsible for the Funds' day-to-day
operations. Six meetings of the Funds' current Board were held during the
calendar year ended December 31, 2004. Each Trustee nominee was present for at
least 75% of the aggregate number of meetings and all committees on which that
Trustee served that were held during the period.
Committees of the Board
The Board has an Audit Committee which is comprised solely of Independent
Trustees. The members of the Audit Committee are Messrs. Clinton (Chairman),
Courtney, Galli, Hermann, and Wruble. The Audit Committee met six times during
the calendar year ended December 31, 2004.
The Audit Committee furnishes the Board with recommendations regarding the
selection of the Fund's independent registered public accounting firm. The Audit
Committee also reviews the scope and results of audits and the audit fees
charged, reviews reports from the Fund's independent registered public
accounting firm concerning the Fund's internal accounting procedures and
controls, and reviews reports by the Manager's internal auditor among other
duties as set forth in the Audit Committee's charter which is attached as
Appendix A to this Proxy Statement.
The Audit Committee's functions include selecting and nominating, to the
full Board, nominees for election as Trustees and selecting and nominating
Independent Trustees for election. The Audit Committee may, but need not,
consider the advice and recommendation of the Manager and its affiliates in
selecting nominees. The full Board elects new Trustees except when a
shareholder vote is required.
If the Board determines that a vacancy exists or is likely to exist on the
Board, the Audit Committee will consider candidates for Board membership
including any nominees recommended by Independent Board members, any other Board
members including board members affiliated with the Funds' investment advisors,
or the Funds' shareholders. The Audit Committee may consider such persons at
such time as it meets to consider possible nominees. The Audit Committee,
however, reserves sole discretion to determine the candidates to present to the
Board and/or shareholders when it meets for the purpose of considering potential
nominees.
To date, the Audit Committee has been able to identify from its own
resources an ample number of qualified candidates. Nonetheless, shareholders
may submit names of individuals, accompanied by complete and properly supported
resumes, for the Audit Committee's consideration by mailing such information to
the Audit Committee Shareholders wishing to submit a nominee for election to the
Board may do so by mailing their submission to the offices of OppenheimerFunds,
Inc., Two World Financial Center, 225 Liberty Street, 11th Floor, New York, NY
10281-1008, to the attention of the Board of Trustees of [name of Fund], c/o the
Secretary of the Fund. Submissions should, at a minimum, be accompanied by the
following: (1) the name, address, and business, educational, and/or other
pertinent background of the person being recommended; (2) a statement concerning
whether the person is an "interested person" as defined in the Investment
Company Act; (3) any other information that the Fund would be required to
include in a proxy statement concerning the person if he or she was nominated;
and (4) the name and address of the person submitting the recommendation and, if
that person is a shareholder, the period for which that person held Fund
shares. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company ("MassMutual") (the parent company
of the Manager) would be deemed an "interested person" under the Investment
Company Act. In addition, certain other relationships with MassMutual or its
subsidiaries, with registered broker-dealers, or with the Funds' outside legal
counsel may cause a person to be deemed an "interested person."
Although candidates are expected to provide a mix of attributes,
experience, perspective and skills necessary to effectively advance the
interests of shareholders, the Audit Committee has not established specific
qualifications that must be met by a trustee nominee. In evaluating trustee
nominees, the Audit Committee considers, among other things, an individual's
background, skills, and experience; whether the individual is an "interested
person" as defined in the Investment Company Act; and whether the individual
would be deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Audit Committee also considers whether the
individual's background, skills, and experience will complement the background,
skills, and experience of other nominees. The Audit Committee may, upon Board
approval, retain an executive search firm or use the services of legal,
financial, or other external counsel to assist in screening potential
candidates.
There are no differences in the manner in which the Audit Committee evaluates
nominees for trustees based on whether the nominee is recommended by a
shareholder.
Compensation of Trustees
The officers of the Funds, who are employed by the Manager, receive no
salary or fee from the Funds. The Board's Independent Trustees received the
compensation shown below from each Fund for the Fund's most recently completely
fiscal year. The compensation in the fourth column below represents compensation
received for serving as a director or trustee and member of a board committee
(if applicable) during the calendar year ended December 31, 2004.
------------------------------------------------------------------------
Independent Aggregate Compensation Estimated Total
Annual Compensation
Retirement From All
Benefits Oppenheimer
Trustee Name and to be Paid Funds For Which
Other Board Upon Individual
Position(s) Retirement(1) Serves As
(as applicable) From the Fund Trustee/Director
------------------------------------------------------------------------
------------------------------------------------------------------------
Thomas W. LT NY Municipal: $88,728 $121,000
$16,585
Convertible
Securities: $6,929
MidCap: $7,994
Quest Balanced: $27,901
Quest Capital Value:
Courtney, $5,908
Chairman of the Quest Int'l Value:
Board, Audit $6,011
Committee Member Quest Opp'ty Value:
$12,078
Quest Value: $8,140
Small-& Mid-Cap Value:
$7,307
Rochester Fund Munis:
$25,147
------------------------------------------------------------------------
------------------------------------------------------------------------
John Cannon, LT NY Municipal: $27,963 $36,054
$12,335
Convertible
Securities: $3,950
Rochester Fund Munis:
$19,769
------------------------------------------------------------------------
------------------------------------------------------------------------
Paul Y. Clinton, LT NY Municipal: $85,662 $116,000
$15,811
Convertible
Securities: $6,789
MidCap: $7,784
Quest Balanced: $26,380
Quest Capital Value:
$5,835
Audit Committee Quest Int'l Value:
Member $5,932
Quest Opp'ty Value:
$11,599
Quest Value: $7,920
Small-& Mid- Cap
Value: $7,143
Rochester Fund Munis:
$23,807
------------------------------------------------------------------------
------------------------------------------------------------------------
Robert G. Galli, LT NY Municipal: $90,023(2) $237,312(3)
$14,735
Convertible
Securities: $6,350
MidCap: $7,273
Quest Balanced: $24,562
Quest Capital Value:
$5,462
Audit Committee Quest Int'l Value:
Member $5,552
Quest Opp'ty Value:
$10,820
Quest Value: $7,400
Small-& Mid-Cap Value:
$6,678
Rochester Fund Munis:
$22,168
------------------------------------------------------------------------
------------------------------------------------------------------------
Lacy B. Herrmann, LT NY Municipal: $81,676 $111,000
$15,035
Convertible
Securities: $6,650
MidCap: $7,573
Quest Balanced: $24,862
Quest Capital Value:
$5,762
Audit Committee Quest Int'l Value:
Member $5,852
Quest Opp'ty Value:
$11,120
Quest Value: $7,700
Small-& Mid-Cap Value:
$6,978
Rochester Fund Munis:
$22,468
------------------------------------------------------------------------
------------------------------------------------------------------------
Brian F. Wruble, LT NY Municipal: $24,369 $111,000
$15,035
Convertible
Securities: $6,650
MidCap: $7,573
Quest Balanced: $24,862
Quest Capital Value:
$5,762
Audit Committee Quest Int'l Value:
Member $5,852
Quest Opp'ty Value:
$11,120
Quest Value: $7,700
Small-& Mid-Cap Value:
$6,978
Rochester Fund Munis:
$22,468
------------------------------------------------------------------------
1. Under the Current Retirement Plan for the Board, Estimated Annual Retirement
Benefits to be Paid Upon Retirement is based on a straight life payment plan
election with the assumption that a Trustee will retire at the age of 75 and is
eligible (after 7 years of service) to receive retirement plan benefits as
described below under "Retirement Plan for Trustees".
3. Includes $49,230 estimated to be paid to Mr. Galli for serving as trustee or
director of 23 other Oppenheimer funds (at June 30, 2005) that are not included
in this Proxy Statement.
4. Includes $129,312 paid to Mr. Galli for serving as trustee or director of 23
other Oppenheimer funds that are not included in this Proxy Statement.
Retirement Plan for Trustees
The Funds have adopted a retirement plan that provides for payments to
retired Trustees. Payments are up to 80% of the average compensation paid during
a Trustee's five years of service in which the highest compensation was
received. A Trustee must serve as Trustee for any of the Funds for at least
seven years in order to be eligible for retirement plan benefits and must serve
for at least 15 years to be eligible for the maximum payment. Each Trustee's
retirement benefits will depend on the amount of the Trustee's future
compensation and length of service.
Deferred Compensation Plan for Trustees
The Board has adopted a Deferred Compensation Plan for Independent
Trustees that enables them to elect to defer receipt of all or a portion of the
annual fees they are entitled to receive from the Funds. Under the plan, the
compensation deferred by a Trustee is periodically adjusted as though an
equivalent amount had been invested in shares of one or more Oppenheimer funds
selected by the Trustee. The amount paid to the Trustee under the plan will be
determined based upon the performance of the selected funds.
Deferral of Trustee's fees under the plan will not materially affect the
Funds' assets, liabilities and net income per share. The plan will not obligate
the Funds to retain the services of any Trustee or to pay any particular level
of compensation to any Trustee. Pursuant to an Order issued by the SEC, the
Funds may invest in the funds selected by the Trustee under the plan without
shareholder approval for the limited purpose of determining the value of the
Trustee's deferred fee account.
Officers
Information is given below about the officers of the Funds, including
their business experience during the past five years. Messrs. Gillespie,
Petersen, Vandehey, Vottiero, Wixted and Zack and Mses. Bloomberg and Ives,
respectively, hold the same offices with the other Oppenheimer funds in the
OppenheimerFunds family of funds. The address of the officers in the chart below
is as follows: for Messrs. Gillespie, Zack and Ms. Bloomberg, Two World
Financial Center, 225 Liberty Street, New York, NY 10281-1008, for Messrs.
Petersen, Vandehey, Vottiero, Wixted and Ms. Ives, 6803 S. Tucson Way,
Centennial, CO 80112-3924. All officers serve at the pleasure of the Board.
Each officer serves for an indefinite term or until his earlier resignation,
retirement, death or removal.
- -------------------------------------------------------------------------------------
Officers of the Funds
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Years
Position(s) Held with
Funds, Length of
Service,
Age
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of
Treasurer since 1999 the Manager; Treasurer of HarbourView Asset Management
Age: 45 Corporation, Shareholder Services, Inc., Oppenheimer Real
Asset Management, Inc., Shareholder Financial Services,
Inc., Oppenheimer Partnership Holdings, Inc. (since March
1999), of OFI Private Investments, Inc. (since March 2000),
OppenheimerFunds International Ltd. and OppenheimerFunds
plc (since May 2000) of OFI Institutional Asset Management,
Inc. (since November 2000), and of OppenheimerFunds Legacy
Program (a Colorado non-profit corporation) (since June
2003); Treasurer and Chief Financial Officer (since May
2000) of OFI Trust Company (a trust company subsidiary of
the Manager); Assistant Treasurer (since March 1999) of
Oppenheimer Acquisition Corp. Formerly Assistant Treasurer
of Centennial Asset Management Corporation (March
1999-October 2003) and OppenheimerFunds Legacy Program
(April 2000-June 2003). An officer of 83 portfolios in the
OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Mark S. Vandehey, Senior Vice President and Chief Compliance Officer (since
Vice President and March 2004) of the Manager; Vice President (since June
Chief Compliance 1983) of OppenheimerFunds Distributor, Inc., Centennial
Officer since 2004 Asset Management Corporation and Shareholder Services,
Age: 54 Inc. Formerly (until February 2004) Vice President and
Director of Internal Audit of the Manager. An officer of
83 Portfolios in the Oppenheimer funds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Philip Vottiero, Vice President/Fund Accounting of the Manager since March
Assistant Treasurer of 2002. Formerly Vice President/Corporate Accounting of
since 2002 the Manager (July 1999-March 2002). An officer of 83
Age: 41 portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Brian Petersen, Assistant Vice President of the Manager since August 2002;
Assistant Treasurer formerly Manager/Financial Product Accounting (November
since 2004 1998-July 2002) of the Manager. An officer of 83
Age: 34 portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert G. Zack, Executive Vice President (since January 2004) and General
Secretary Counsel (since February 2002) of the Manager; General
since 2001 Counsel and a director (since November 2001) of the
Age: 56 Distributor; General Counsel (since November 2001) of
Centennial Asset Management Corporation; Senior Vice
President and General Counsel (since November 2001) of
HarbourView Asset Management Corporation; Secretary and
General Counsel (since November 2001) of Oppenheimer
Acquisition Corp.; Assistant Secretary and a director
(since October 1997) of OppenheimerFunds International Ltd.
and OppenheimerFunds plc; Vice President and a director
(since November 2001) of Oppenheimer PartnershipHoldings,
Inc.; a director (since November 2001) of Oppenheimer Real
Asset Management, Inc.; Senior Vice President, General
Counsel and a director (since November 2001)Shareholder
Financial Services, Inc. and OFI Trust Company; Vice
President (since November 2001) of Oppenheimer Funds Legacy
Program; Senior Vice President and General Counsel (since
November 2001) of OFI Institutional Asset Management, Inc.;
a director (since June 2003) of OppenheimerFunds (Asia)
Limited. Formerly Senior Vice President (May 1985-December
2003), Acting General Counsel (November 2001-February 2002)
and associate General Counsel (May 1981-October 2001) of
the Manager; Assistant Secretary of Shareholder Services,
Inc. (May 1985-November 2001), Shareholder Financial
Services, Inc. (November 1989-November 2001); and
OppenheimerFunds International Ltd. (October 1997-November
2001). An Officer of 83 portfolios in the OppenheimerFunds
complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Phillip S. Gillespie, Senior Vice President and Deputy General Counsel of the
Assistant Secretary Manager since September 2004. Formerly Mr. Gillespie held
since 2004 the following positions at Merrill Lynch Investment
Age: 40 Management: First Vice President (2001-September 2004);
Director (from 2000) and Vice President (1998-2000). An
officer of 74 portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Kathleen T. Ives, Vice President (since June 1998) and Senior Counsel and
Assistant Secretary Assistant Secretary (since October 2003) of the Manager;
since 2001 Vice President (since 1999) and Assistant secretary (since
Age: 39 October 2003) of the Distributor; Assistant Secretary
(since October 2003) of Centennial Asset Management
Corporation; Vice President and Assistant Secretary (since
1999) of Shareholder Services, Inc.; Assistant Secretary
(since December 2001) of OppenheimerFunds Legacy Program
and of Shareholder Financial Services, Inc. Formerly an
Assistant Counsel (August 1994-October 2003). An officer of
83 portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Lisa I. Bloomberg, Vice President and Associate Counsel of the Manager since
Assistant Secretary May 2004; formerly First Vice President and Associate
since 2004 General Counsel of UBS Financial Services Inc. (formerly
Age: 36 PaineWebber Incorporated) (May 1999-April 2004). An
officer of 83 portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
Officers/Portfolio Managers of the Funds
- ------------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Years
Position(s) Held with Fund,
Length of Service,
Age
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
John Damian, Vice President of the Manager since September 2001;
Vice President and an officer of 2 portfolios in the OppenheimerFunds
Portfolio Manager complex; formerly Senior Analyst/Director for
Small- & Mid-Cap Value Fund Citigroup Asset Management (November 1999 - September
since 2004 2001).
Age: 37
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Edward Everett, Vice President of the Manager since January 2000; an
Vice President and officer of 1 portfolio in the OppenheimerFunds
Portfolio Manager complex; formerly Assistant Vice President of the
Convertible Securities Fund Manager and of the Fund (January 1996 - January 2000).
since 1997
Age: 39
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Emmanuel Ferreira, Vice President of the Manager since January 2003. An
Vice President and officer of 5 portfolios in the OppenheimerFunds
Portfolio Manager complex. Formerly, Portfolio Manager at Lashire
Quest Opportunity Value Investments (July 1999-December 2002).
Fund since 2005
Age: 38
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Ronald H. Fielding, Senior Vice President of the Manager since January
Vice President and 1996; Chairman of the Rochester Division of the
Portfolio Manager Rochester Manager since January 1996; an officer of 10
Fund Municipals and Limited portfolios in the OppenheimerFunds complex.
Term New York Municipal
Fund since 2004
Age: 56
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Dominic Freud, Vice President of the Manager since April 2003. An
Vice President and officer of 2 portfolios in the OppenheimerFunds
Portfolio Manager Quest complex. Formerly, a Partner and European Equity
International Value Fund Portfolio manager at SLS Management (January 2002 -
since 2003 February 2003) prior to which he was head of the
Age: 46 European equities desk and managing director at SG
Cowen (May 1994 - January 2002).
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Christopher Leavy, Senior Vice President of the Manager since September
Vice President and 2000; an officer of 8 portfolios in the
Portfolio Manager OppenheimerFunds complex. Formerly a portfolio
Small- & Mid-Cap Value manager of Morgan Stanley Dean Witter Investment
since 2001 and Quest Value Management (1997 - September 2000).
Fund since 2005
Age: 34
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
John O'Hare, Vice President of the Manager since September 2003;
Vice President and an officer of 2 portfolios in the OppenheimerFunds
Portfolio Manager complex. Formerly Executive Vice President and
MidCap Fund since 2003 Portfolio Manager (June 2000 - August 2003) and
Age: 47 Portfolio Manager and Senior Vice President (August
1997 - June 2000) at Geneva Capital Management, Ltd.
(an investment advisor).
- ------------------------------------------------------------------------------------
As of September 14, 2005, the Trustees, nominees for Trustee and officers,
individually and as a group, beneficially owned less than 1% of the outstanding
shares of any Fund. The foregoing statement does not reflect ownership of
shares of any Fund held of record by an employee benefit plan for employees of
the Manager, other than the shares beneficially owned under the plan by the
officers of the Fund listed above. In addition, each Independent Trustee
(including his family members) does not own securities of either the Manager or
OppenheimerFunds Distributor, Inc. (the "Distributor" of the Funds) or any
person directly or indirectly controlling, controlled by or under common control
with the Manager or Distributor.
Independent Registered Public Accounting Firm Fees and Services
Each of the Funds selected KPMG LLP as its Independent Registered Public
Accounting Firm ("Principal Accountant" or "KPMG") for each of the Funds' 2004
and 2003 fiscal years as well as the current fiscal year.
Audit Fees. KPMG billed the Funds the following amounts in each Fund's fiscal
- ----------
2004 or 2003 for professional services that are normally provided by KPMG in
connection with statutory and regulatory filings or engagements for those fiscal
years.
---------------------------------------------------------------
Fund 2004 2003
---------------------------------------------------------------
---------------------------------------------------------------
Convertible Securities Fund $20,000 $20,000
---------------------------------------------------------------
---------------------------------------------------------------
Limited Term New York Municipal Fund $35,000 $30,000
---------------------------------------------------------------
---------------------------------------------------------------
MidCap Fund $15,000 $15,000
---------------------------------------------------------------
---------------------------------------------------------------
Quest Balanced Fund $35,000 $30,000
---------------------------------------------------------------
---------------------------------------------------------------
Quest Capital Value Fund $10,000 $10,000
---------------------------------------------------------------
---------------------------------------------------------------
Quest International Value Fund $15,000 $15,000
---------------------------------------------------------------
---------------------------------------------------------------
Quest Opportunity Value Fund $25,000 $25,000
---------------------------------------------------------------
---------------------------------------------------------------
Quest Value Fund $15,000 $15,000
---------------------------------------------------------------
---------------------------------------------------------------
Rochester Fund Municipals $50,000 $45,000
---------------------------------------------------------------
---------------------------------------------------------------
Small- & Mid-Cap Value Fund $10,000 $10,000
---------------------------------------------------------------
Audit-Related Fees. Audit-related fees are for assurance and related services
- ------------------
by KPMG that are reasonably related to the performance of the auditor's review
of the Funds' financial statements and are not reported under the prior
category. Audit-related fees would include, among others: due diligence
related to mergers and acquisitions, accounting consultations and audits in
connection with acquisitions, internal control reviews and consultation
concerning financial accounting and reporting standards. Except for MidCap
Fund, KPMG did not bill any such audit-related fees in each Fund's fiscal 2004
or 2003 to the Funds, or to the Fund's investment adviser or any entity
controlling, controlled by, or under common control with the adviser that
provides ongoing services to the Funds. KPMG billed $6,500 in Audit Related
Fees to MidCap Fund in 2003.
Tax Fees. Tax Fees would include tax compliance, tax planning and tax advice.
- --------
Tax compliance generally involves preparation of original and amended tax
returns, claims for a refund and tax payment-planning services. Tax planning
and tax advice includes assistance with tax audits and appeals, tax advice
related to mergers and acquisitions and requests for rulings or technical advice
from taxing authorities. KPMG did not bill any such amounts in the Funds'
fiscal 2004 or 2003 to the Funds or to the Fund's investment adviser or any
entity controlling, controlled by, or under common control with the adviser that
provides ongoing services to the Fund.
All Other Fees. All other fees would include products and services provided by
- --------------
KPMG other than the services reported under the prior three categories. Such
fees would include the cost to KPMG of attending audit committee meetings.
---------------------------------------------------------------
Fund 2004 2003
---------------------------------------------------------------
---------------------------------------------------------------
Convertible Securities Fund $74 $90
---------------------------------------------------------------
---------------------------------------------------------------
Limited Term New York Municipal Fund $408 $550
---------------------------------------------------------------
---------------------------------------------------------------
MidCap Fund $103 $121
---------------------------------------------------------------
---------------------------------------------------------------
Quest Balanced Fund $791 $795
---------------------------------------------------------------
---------------------------------------------------------------
Quest Capital Value Fund $37 $38
---------------------------------------------------------------
---------------------------------------------------------------
Quest International Value Fund $42 $45
---------------------------------------------------------------
---------------------------------------------------------------
Quest Opportunity Value Fund $248 $328
---------------------------------------------------------------
---------------------------------------------------------------
Quest Value Fund $114 $132
---------------------------------------------------------------
---------------------------------------------------------------
Rochester Fund Municipals $714 $692
---------------------------------------------------------------
---------------------------------------------------------------
Small- & Mid-Cap Value Fund $86 $69
---------------------------------------------------------------
During its regularly scheduled periodic meetings, the Funds' Audit
Committee will pre-approve all audit, audit-related, tax and other services to
be provided by the principal accountants of the Funds.
The Audit Committee has delegated pre-approval authority to its Chairman
for any subsequent new engagements that arise between regularly scheduled
meeting dates provided that any fees so pre-approved are presented to the Audit
Committee at its next regularly scheduled meeting.
Pre-approval of non-audit services may be waived provided that: 1) the
aggregate amount of all such services provided constitutes no more than five
percent of the total amount of fees paid by the Fund to its principal accountant
during the Fund's fiscal year in which services are provided; 2) such services
were not recognized by the Fund at the time of engagement as non-audit services;
and 3) such services are promptly brought to the attention of the Audit
Committee of the Fund and approved prior to the completion of the audit. All
services described in "Audit-Related Fees", "Tax Fees" and "All Other Fees" were
pre-approved by the Funds' current Audit Committee.
KPMG billed the following aggregate non-audit amounts in each Fund's
fiscal 2004 and/or 2003 to the Fund and each Fund's investment adviser or any
entity controlling, controlled by, or under common control with the adviser that
provides ongoing services to the Fund. Those billings did not include any
prohibited non-audit services as defined by the Securities Exchange Act of 1934.
- ----------------------------------------------------------------
Fund 2004 2003
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Convertible Securities Fund $45,574 $5,090
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Limited Term New York Municipal Fund $45,908 $5,550
- ----------------------------------------------------------------
- ----------------------------------------------------------------
MidCap Fund $45,603 $11,621
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Quest Balanced Fund $46,291 $5,795
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Quest Capital Value Fund $45,537 $5,038
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Quest International Value Fund $45,583 $5,045
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Quest Opportunity Value Fund $45,748 $5,328
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Quest Value Fund $45,728 $11,632
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Rochester Fund Municipals $46,214 $5,962
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Small- & Mid-Cap Value Fund $45,586 $5,069
- ----------------------------------------------------------------
The Funds' current Audit Committee has considered whether the provision of
non-audit services that were rendered to the Funds' investment adviser, and any
entity controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the Funds that were not pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X was compatible
with maintaining the principal accountant's independence. No such services were
rendered. Representatives of KMPG are not expected to be present at the Meeting
but will be available should any matter arise requiring their presence.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE
AS TRUSTEE OF THE FUNDS.
PROPOSAL 2 -
TO APPROVE CHANGES IN, OR THE ELIMINATION OF, CERTAIN FUNDAMENTAL INVESTMENT
POLICIES OF THE FUNDS
Proposal 2 is a series of sub-proposals to change or eliminate certain
fundamental investment restrictions currently applicable to the different Funds.
Each sub-proposal contained within Proposal 2 is described separately within
this section. The table at the front of this Proxy Statement will assist you in
determining which proposals apply to your Fund and which investment policy or
restriction changes are proposed for each Fund.
Each sub-proposal item contained in Proposal 2 requires the approval of a
"majority of the outstanding voting securities" of each Fund voting separately.
(See also "Voting Information" on page __.)A "majority of the outstanding voting
securities" means the lesser of one more than half of the number of shares that
are issued and outstanding as of the Record Date or 67% of the voting shares of
the Fund present at the Special Meeting if more than 50% of the voting shares of
the Fund are present at the Special Meeting in person or by proxy. Abstentions
will have the effect of a "no" vote on obtaining approval for the sub-proposals
in Proposal 2.
Each Fund operates in accordance with its investment objective, policies
and restrictions, which are described in its prospectus and statement of
additional information (together, the "prospectus"). Each Fund's policies
generally are classified as either "fundamental" or "non-fundamental." The
Investment Company Act requires that certain policies of the Funds be classified
as fundamental. Fundamental policies can be changed only by a shareholder
vote. The Funds' current fundamental investment policies are included in each
Fund's statement of additional information. Non-fundamental policies may be
changed by the Trustees without shareholder approval, although significant
changes will be described in amendments to the Fund's prospectus.
Proposal 2 is intended to modernize and standardize the description of the
Funds' investment policies by amending or eliminating fundamental policies or
reclassifying as non-fundamental any fundamental policies not required to be
fundamental. The proposals are designed to provide the Funds with maximum
flexibility to pursue their investment objective and respond to an ever-changing
investment environment. The Funds, however, have no current intention of
significantly changing their actual investment strategies should shareholders
approve the proposed changes.
In light of the opportunity afforded by this Special Meeting of
Shareholders to review the fundamental investment policies of each Fund, the
Manager reviewed all of the fundamental policies and restrictions with the
following goals: (i) to simplify, streamline and modernize the Funds' policies
that are required to be fundamental, (ii) to standardize or make consistent the
fundamental policies and restrictions for all of the Funds to the extent
possible, and (iii) to reclassify as non-fundamental those policies previously
required to be fundamental that are no longer required to be so classified, or
eliminate fundamental policies that are no longer required or that are not
appropriate for the operation of the Fund.
Since the organization of many of the Funds, many of the legal and
regulatory requirements applicable to mutual funds have changed. For example,
certain restrictions imposed by state laws and regulations were preempted by the
National Securities Markets Improvement Act of 1996 ("NSMIA") and are no longer
applicable to mutual funds. As a result, some of the Funds continue to be
subject to several fundamental investment policies that are either more
restrictive than required under current regulations or no longer required at all.
The proposed standardized fundamental investment policies cover those
areas for which the Investment Company Act requires the Funds to have a
fundamental policy. The proposed policies satisfy current regulatory
requirements but are written to provide flexibility to respond to future legal,
regulatory, market or technical changes. The proposed changes will not affect
each Fund's current investment objectives.
These proposals seek shareholder approval of changes that are intended to
accomplish the foregoing goals. By making the fundamental policies of all Funds
consistent when it is possible to do so, monitoring compliance with the stated
policies would be streamlined and more efficient. Clarifying and modernizing
investment restrictions generally would allow the Funds to operate more
efficiently within the limits of the Investment Company Act. These revisions
should give the Funds greater flexibility to take advantage of, and react to,
changes in financial markets and new investment vehicles. In addition, by
reducing to a minimum those policies that can be changed only by shareholder
vote, the Funds in the future may be able to avoid the costs and delay
associated with holding future shareholder meetings to revise fundamental
investment policies that become unnecessary, outdated or inappropriate.
The Board believes that the Manager's ability to manage the Funds'
portfolios in a changing regulatory or investment environment will be enhanced
and that investment management opportunities will be increased by the proposed
changes. As a result, the Board has concluded that, to the extent possible, it
would be in the best interests of all of the Funds to have uniform and
consistent fundamental policies. Therefore, the Board has authorized the
submission to each Fund's shareholders for their approval, and the Board
recommends that shareholders approve the amendment, elimination or
reclassification, as the case may be, of certain of the Funds' fundamental
policies.
Although the proposed changes in the fundamental investment policies will
allow the Funds greater flexibility to respond to future investment
opportunities, the Board does not anticipate that the changes, individually or
in the aggregate, will result in a material change in the level of investment
risk associated with investment in any Fund or the manner in which any Fund is
managed at the present time.
Set forth below is a discussion of the proposed changes to each Fund's
fundamental investment policies and the significance of the proposed change to
the Funds. Following the discussion, each Fund's proposed fundamental
investment policy is shown (if any) followed by each Fund's current fundamental
investment policies.
Each sub-proposal in this Proposal 2 will be voted on separately by
shareholders of each Fund. If approved by a Fund's shareholders at the
Special Meeting, the proposed changes to the Fund's fundamental investment
policies will be adopted by the Fund, but the effective date of the
sub-proposals will be delayed until the Fund's prospectus or statement of
additional information can be updated to reflect the changes. If the
shareholders of the Fund fail to approve any sub-proposal in Proposal 2, the
current policy or policies covered in that sub-proposal will remain in effect.
Proposal 2a: Amend the Policy on Borrowing.
The Investment Company Act imposes certain restrictions on the borrowing
activities of mutual funds. A fund's borrowing policy must be a fundamental
investment policy.
The restrictions on borrowing are designed to protect mutual fund
shareholders and their investments in a fund by limiting a fund's ability to
leverage its assets. Leverage exists when a fund has the right to a return on an
investment that exceeds the amount the fund contributed to the investment.
Borrowing money to make an investment is an example of how a fund may leverage
its assets.
The Funds may have the need to borrow money for a number of reasons. They
may borrow for leverage, as described immediately above. They also may need to
borrow temporarily to pay redeeming shareholders when the number or amount of
redemptions exceeds available cash, and market condition are not favorable to
sell portfolio securities to meet those redemptions. Other times, a Fund must
borrow money to pay redeeming shareholders because the Fund has not yet received
payment for securities it has sold, or to pay for securities because it does not
have available cash. In addition, certain types of securities transactions, such
as delayed-delivery, when-issued, reverse repurchase agreements and dollar roll
transactions might be construed as borrowing transactions. (These types of
transactions are described in the Funds' statement of additional information.)
There are risks associated with borrowing. Borrowing exposes shareholders
and their investments in a fund to a greater risk of loss. For example,
borrowing may cause the value of a fund's shares to be more volatile than if the
fund did not borrow. In addition, to the extent a fund borrows, it will pay
interest on the money that it borrows, and that interest expense will raise the
overall expenses of the fund and reduce its returns. The interest payable on
the borrowed amount may be more (or less) than the return the fund receives from
the securities purchased with the borrowed amount.
Currently, the Funds listed below are subject to a number of different
fundamental investment policies concerning borrowing that generally are more
restrictive than required by the Investment Company Act. The proposed amendment
modernizes and standardizes the restriction on borrowing. This change would
give each Fund the flexibility to engage in certain securities transactions that
might be construed as "borrowing" transactions, and would permit each Fund to
borrow money up to the limits permitted by the Investment Company Act. Changing
this restriction also would permit greater consistency in managing each Fund's
portfolio when such borrowings are necessary for the efficient management of any
Fund's assets.
Currently, a mutual fund (referred to under the Investment Company Act as
an open-end fund) may borrow only from banks and only to the extent the value of
the Fund's assets less its liabilities other than borrowings, is equal to at
least 300% of all borrowings (including the proposed borrowing).
Notwithstanding the preceding sentence, an open-end fund also may borrow up to
5% of its total assets for temporary purposes from any person. Under the
Investment Company Act, there is a rebuttable presumption that a loan is
temporary if it is repaid within 60 days and not extended or renewed. If
shareholders approve this sub-proposal, each Fund's current fundamental policy
will be replaced by the proposed fundamental policy, and each Fund's prospectus
will be updated to describe the current restrictions regarding borrowing under
the Investment Company Act, the rules and regulations thereunder and any
exemptions applicable to the Funds.
The proposed changes also would allow a Fund to borrow from another
Oppenheimer fund pursuant to an exemptive order received from the SEC.
Borrowing from another Oppenheimer fund could reduce certain borrowing and
transaction costs. Implementation of such interfund borrowing arrangements,
however, must be accomplished consistent with applicable regulatory
requirements, including the provisions of the SEC order. The Funds do not
currently intend to engage in such borrowing. In the future, if a Fund were to
engage in such borrowing, the Fund's prospectus or statement of additional
information would be revised accordingly.
The Trustees propose that the current policy be amended to permit the Fund
to borrow as permitted under the Investment Company Act. As amended, each
Fund's policy on borrowing would remain a fundamental policy changeable only by
the vote of a majority of the outstanding voting securities of the Funds as
defined in the Investment Company Act. The Funds' proposed and current
fundamental investment policies are set forth below.
Proposed Fundamental Policy
- ---------------------------------------------------------------------------
The Fund may not borrow money, except to the extent permitted under the
Investment Company Act, the rules or regulations thereunder or any
exemption therefrom that is applicable to the Fund, as such statute,
rules or regulations may be amended or interpreted from time to time.
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- ------------------------------------------------------------------------------
Fund Current Fundamental Policy
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Convertible Securities Fund The Fund may not purchase securities on
margin. However, the Fund can obtain
unsecured loans to purchase securities. The
aggregate of all unsecured loans, however,
may not exceed 50% of the Fund's total
assets. It can also borrow amounts
equivalent to up to 5% of the Fund's net
assets for temporary, extraordinary or
emergency purposes. (See also sub-proposal
2(g) and 2(h).)
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- ------------------------------------------------------------------------------
Limited Term New York The Fund cannot mortgage or pledge any of
Municipal Fund its assets, and the Fund can borrow money
only from a bank for temporary or emergency
purposes or for investment purposes in
amounts not exceeding 10% of its total
assets. When borrowings are made for
investment purposes, the Fund must comply
with the provisions of the Investment
Company Act that require the Fund to
maintain asset coverage of at least 300% of
all such borrowings. If asset coverage
should fall below 300%, the Fund will be
required to reduce its borrowings within
three days to the extent needed to meet the
300% asset coverage requirement. (See also
sub-proposal 2(i).)
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Quest Balanced Fund The Fund cannot borrow money in excess of
33-1/3% of the value of the Fund's total
assets. The Fund may borrow only from banks
and only as a temporary measure for
extraordinary or emergency purposes. The
Fund will make no additional investments
while borrowings exceed 5% of the Fund's
total assets. With respect to this
fundamental policy, 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.
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- ------------------------------------------------------------------------------
Quest Capital Value Fund As a fundamental policy, the Fund cannot
borrow money except as a temporary measure
for extraordinary or emergency purposes, and
loans may not exceed one third of the lower
of the market value or cost of its total
assets. Additionally, as part of that
fundamental policy, the Fund will not
purchase securities at times when loans
exceed 5% of its total assets.
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- ------------------------------------------------------------------------------
Quest International Value Fund 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 (the
Fund) will make no additional investments
while borrowings exceed 5% of its (the
Fund's) 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.
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- ------------------------------------------------------------------------------
Quest Opportunity Value Fund The Fund cannot borrow money in excess of
one third of the value of its total assets.
The Fund can borrow only from banks and only
as a temporary measure for extraordinary or
emergency purposes. The Fund will make no
additional investments while borrowings
exceed 5% of the Fund's 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.
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- ------------------------------------------------------------------------------
Quest Value Fund The Fund cannot borrow money in excess of
one third of the value of the Fund's 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.
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- ------------------------------------------------------------------------------
Rochester Fund Municipals The Fund cannot borrow money or mortgage or
pledge any of its assets, except that the
Fund may borrow from a bank for temporary or
emergency purposes or for investment
purposes in amounts not exceeding 5% of its
total assets. Where borrowings are made for
a purpose other than temporary or emergency
purposes, the Investment Company Act
requires that the Fund maintain asset
coverage of at least 300% for all such
borrowings. Should such asset coverage at
any time fall below 300%, the Fund will be
required to reduce its borrowings within
three days to the extent necessary to meet
that asset coverage requirement. To reduce
its borrowings, the Fund might have to sell
investments at a time when it would be
disadvantageous to do so. Additionally,
interest paid by the Fund on its borrowings
will decrease the net earnings of the Fund.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Small- and Mid-Cap Value Fund The Fund cannot borrow money in excess of 33
1/3% of the value of the Fund's total
assets. The Fund may borrow only from banks
and only as a temporary measure for
extraordinary or emergency purposes. The
Fund will make no additional investments
while borrowings exceed 5% of the Fund's
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.
- ------------------------------------------------------------------------------
Proposal 2b: Amend the Policy on Concentration of Investments.
The proposed amendments modernize and clarify the restrictions concerning
concentration by interpreting concentration as the term is used in the
Investment Company Act and as interpreted or modified by the SEC. A fund's
policy on the concentration of investments must be fundamental under the
Investment Company Act. These amendments would give the Funds more flexibility
to enter into other types of investments at future times in response to changing
regulatory interpretations and financial markets. In addition, the proposed
changes would make the concentration policies for all the Funds consistent with
those of the other Oppenheimer funds, enhancing portfolio management
capabilities. These changes do not change how any Fund will concentrate its
investments. Rather, these changes will ensure that in cases where Fund assets
are managed the same way with respect to concentration, the policy will be
stated the same way to avoid the possibility of inconsistent administration.
The Funds' proposed and current policies are stated below.
------------------------------------------------------------------------------
Fund Proposed Fundamental Policy
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Convertible Securities Fund The Fund cannot invest 25% or more of its
MidCap Fund total assets in any one industry. That limit
Quest Balanced Fund does not apply to securities issued or
Quest Capital Value Fund guaranteed by the U.S. government or its
Quest International Value Fund agencies and instrumentalities or securities
Quest Opportunity Value Fund issued by investment companies.
Quest Value Fund
Small- & Mid-Cap Value Fund
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Limited Term New York The Fund cannot invest 25% or more of its
Municipal Fund total assets in any one industry. That limit
Rochester Fund Municipals does not apply to securities issued or
guaranteed by the U.S. government or its
agencies and instrumentalities or securities
issued by investment companies. Nor does
that limit apply to municipal securities in
general or to New York municipal securities.
------------------------------------------------------------------------------
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Fund Current Fundamental Policy
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Convertible Securities The Fund may not invest more than 25% of the
Fund value of the Fund's total assets in the
securities of any one issuer or any group of
issuers in the same industry. However, this
restriction does not prevent the Fund from
investing more than 25% of its total assets in
securities of the United States government, or
its agencies or instrumentalities.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Limited Term New York The Fund cannot invest more than 25% of its
Municipal Fund assets in any industry or industries. However,
the Fund can invest more than 25% of its assets
in obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities.
Industrial revenue bonds whose interest and
principal payments are the responsibility of
companies within the same industry are grouped
together as an "industry" for the purpose of this
restriction.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
MidCap Fund The Fund cannot concentrate investments. That
Quest Capital Value Fund means it cannot invest 25% or more of its total
assets in companies in any one industry.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Quest Balanced Fund The Fund cannot concentrate its investments in
any particular industry. However, if it is deemed
appropriate to help the Fund attain its
investment objective, the Fund may invest up to
but less than 25% of its total assets (valued at
the time of investment) in any one industry
classification used by the Fund for investment
purposes. For this purpose, a foreign government
is considered to be an industry.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Quest International Value The Fund cannot concentrate its investments. That
Fund 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.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Quest Opportunity Value The Fund cannot concentrate its investments. That
Fund means it cannot invest 25% or more of its total
assets in any 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 less than 25% of its total assets (valued
at the time of investment) in any one industry
classification used by the Fund for investment
purposes. Under this restriction, a foreign
government is considered an "industry."
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Quest Value Fund The Fund cannot concentrate its investments. That
means it cannot invest 25% or more of its total
assets in any 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 less than (but up to) 25% of its total
assets (valued at the time of investment) in any
one industry classification used by the Fund for
investment purposes.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Rochester Fund Municipals The Fund cannot invest more than 25% of its total
assets in securities of issuers of a particular
industry. For the purposes of this limitation,
tax-exempt securities and United States
government obligations are not considered to be
part of an industry. However, with respect to
industrial development bonds and other revenue
obligations for which the underlying credit is a
business or charitable entity, the industry of
that entity will be considered for purposes of
this 25% limitation.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Small- &Mid-Cap Value Fund The Fund cannot concentrate its investments. That
means it cannot invest 25% or more of its total
assets in any industry. If deemed appropriate for
attaining its investment objective, the Fund may
invest less than but up to 25% of its total
assets in any one industry classification used by
the Fund for investment purposes. For this
purpose, a foreign government is considered an
industry.
------------------------------------------------------------------------------
Proposal 2c: Amend the Policy on Diversification of Investments.
Under the Investment Company Act, a fund's policy regarding
diversification may not be changed without shareholder approval. Currently,
with respect to 75% of each Fund's total assets, the Fund cannot buy securities
of any one issuer if more than 5% of its total assets would be invested in
securities of that issuer or if it would then own more than 10% of that issuer's
voting securities. The limit does not apply to securities issued by the U.S.
government or any of its agencies or instrumentalities.
The Trustees propose that the Funds' policies with respect to
diversification be amended to clarify that the policy does not apply to
securities of other investment companies.
The proposed amendments would not affect the Funds' status as
"diversified" funds and are not expected to materially affect management of any
of the Funds. Accordingly, amending the Funds' diversification policy as
proposed would increase the Funds' investment opportunities without materially
increasing the risk of an investment in any of the Funds.
In addition, the proposed change would be consistent with the requirements
of the Investment Company Act and would promote the standardization of
fundamental investment policies among the funds in the Oppenheimer funds
complex. As amended, the policy on diversification for each Fund would remain a
fundamental policy changeable by the vote of a majority of the outstanding
voting securities as defined in the Investment Company Act. The Funds' proposed
and current fundamental investment policies are set forth below.
- --------------------------------------------------------------------------
Proposed Fundamental Policy
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
The Fund cannot buy securities or other instruments issued or guaranteed
by any one issuer if more than 5% of its total assets would be invested
in securities or other instruments of that issuer or if it would then
own more than 10% of that issuer's voting securities. This limitation
applies to 75% of the Fund's total assets. The limit does not apply to
securities issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities or securities of other investment
companies.
- --------------------------------------------------------------------------
---------------------------------------------------------------------------
Fund Current Fundamental Policy
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Convertible Securities With respect to 50% of its total assets, the Fund
Fund must limit its investments to cash, cash items,
U.S. government securities and securities of
issuers in which its investments are limited to
not more than 5% of the value of its total assets
in the securities of any one issuer and not more
than 10% of its total assets in the outstanding
voting securities of any one issuer.
With respect to 75% of its total assets, the Fund
cannot buy securities issued or guaranteed by any
one issuer if more than 5% of the Fund's total
assets would be invested in securities of that
issuer or if the Fund would then own more than
10% of that issuer's voting securities. That
restriction does not apply to cash or cash items
or securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Limited Term New York With respect to 75% of its assets, the Fund
Municipal Fund cannot purchase securities issued or guaranteed
by any one issuer (other than the U.S. government
or its agencies or instrumentalities), if more
than 5% of the Fund's total assets would be
invested in securities of that issuer.
The Fund cannot purchase the securities of any
issuer if the Fund would then own more than 10%
of the voting securities of that issuer.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
MidCap Fund The Fund cannot buy securities issued or
guaranteed by any one issuer if more than 5% of
its total assets would be invested in securities
of that issuer or if it would then own more than
10% of that issuer's voting securities. That
restriction 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.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Balanced Fund The Fund cannot invest more than 5% of the value
of its total assets in the securities of any one
issuer. This restriction applies to 75% of its
total assets.
The Fund cannot purchase more than 10% of the
voting securities of any one issuer (other than
the U.S. government or any of its agencies or
instrumentalities). This restriction applies to
75% of the Fund's total assets.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Capital Value The Fund cannot buy securities issued or
Fund guaranteed by any one issuer if more than 5% of
its total assets would be invested in securities
of that issuer or if it would own more than 10%
of that issuer's voting securities. 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.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest International The Fund cannot purchase more than 10% of the
Value Fund 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.
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.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Opportunity The Fund cannot buy securities issued or
Value Fund guaranteed by any one issuer if more than 5% of
its total assets would be invested in securities
of that issuer. This limitation applies to 75% of
the Fund's total assets.
The Fund cannot purchase more than 10% of any
class of security of any issuer. All outstanding
debt securities and all preferred stock of an
issuer is considered as one class. This
restriction does not apply to securities issued
by the U.S. government or any of its agencies or
instrumentalities.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Value Fund The Fund cannot buy securities issued or
guaranteed by any one issuer if more than 5% of
its total assets would be invested in securities
of that issuer. This limitation applies to 75% of
the Fund's total assets.
The Fund cannot purchase more than 10% of the
voting securities of any one issuer. The limit
does not apply to securities issued by the U.S.
Government or any of its agencies or
instrumentalities.
The Fund cannot purchase more than 10% of any
class of security of any issuer. All outstanding
debt securities and all preferred stock of an
issuer are considered to be one class. This
restriction does not apply to securities issued
by the U.S. Government or any of its agencies or
instrumentalities.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Rochester Fund The Fund cannot purchase the securities of any
Municipals issuer that would result in the Fund owning more
than 10% of the voting securities of that issuer.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Small- & Mid-Cap Value The Fund cannot invest more than 5% of the value
Fund of its total assets in the securities of any one
issuer. This restriction applies to 75% of its
total assets.
The Fund cannot purchase more than 10% of the
voting securities of any one issuer. All
outstanding debt securities and all preferred
stock of an issuer are considered as one class.
This restriction does not apply to securities
issued by the U.S. government or any of its
agencies or instrumentalities.
---------------------------------------------------------------------------
Proposal 2d: Eliminate Policy on Put and Call Options.
The Funds listed below are currently subject to a fundamental investment
policy prohibiting them from writing, purchasing or selling put and call
options. The existing policy is not required to be a fundamental investment
policy under the Investment Company Act. Therefore, it is proposed that this
current fundamental policy be eliminated for each Fund.
A put option gives the purchaser (holder) of the option the rights to sell
(put) a security or other instrument to a third party at a stated price for a
stated period or on a stated date. A call option gives the purchaser (holder)
of the option the right to purchase (call) a security or other instrument from a
third party at a stated price for a stated period or on a stated date. A person
who sells (writes) a put option gives a third party the right to require the
writer to purchase a security or other instrument at a stated price for a stated
period or on a stated date, while a person who sells (writes) a call option
gives a third party the right to require the writer to sell a security or other
instrument at a stated price for a stated period or on a stated date.
Put and call options may be used for a variety of purposes. For example,
if a portfolio manager wishes to hedge a security owned against a decline in
price, the manager may purchase a put option on the underlying security, i.e.,
purchase the right to sell the security to a third party at a stated price. If
the underlying security then declines in price, the manager can exercise the put
option, thus limiting the amount of loss resulting from the decline in price.
Similarly, if the manager intends to purchase a security at some date in the
future, the manager may purchase a call option on the security today in order to
hedge against an increase in its price before the intended purchase date. On
the other hand, put and call options also can be used for speculative purposes.
For example, if a portfolio manager believes that the price of stocks generally
is going to rise, the manager may purchase a call option on a stock index, the
components of which are unrelated to the stocks held or intended to be
purchased. Finally, a portfolio manager may write covered call options on
securities owned in order to realize additional income with respect to the
managed portfolio, or the manager may write put options for the similar
income-producing purposes. If the options expire unexercised, the manager has
increased the portfolio's income by the amount of the price (premium) received
upon the sale of the option. On the other hand, if a covered call option is
exercised and the underlying security is "called" away, the manager has limited
the amount of gain to the exercise price of the options plus the premium.
Similarly, if a put option is exercised, the manager may be required to purchase
a security at an unfavorable price.
Section 18(f)(1) of the Investment Company Act prohibits the Funds
from issuing "senior securities" except under limited, specified circumstances.
The definition of "senior securities" includes most forms of borrowing by a
fund. In addition, certain options transactions which may obligate a fund to pay
money to a third party at some time in the future also could be deemed to result
in a prohibited issuance of "senior securities" under the Investment Company
Act. For example, when a fund writes a put option, it will be obligated to
purchase the security covered by the option if the counterparty exercises the
option. However, the SEC staff takes the position that a fund may engage in
such options transactions without being deemed to violate the Investment Company
Act through the issuance of "senior securities" if it takes certain steps
designed to limit the risk to the fund. These steps typically involve either
the "covering" of the transaction with an offsetting transaction or the
segregation of cash or other liquid securities with the fund's custodian in an
amount sufficient to cover the fund's exposure if a third party exercises its
rights under the option transaction in question. Although these steps do not
protect a fund from loss on such transactions, they assure that the fund will
have the required securities or liquid assets sufficient to meet its obligations
thereunder, and they prevent the fund from effectively "leveraging" its
portfolio in a manner not contemplated by the Investment Company Act.
Given these SEC staff positions, the fundamental investment policies
below are not necessary. The elimination of this fundamental policy would
provide the Board with the flexibility to determine, without a future
shareholder vote, what limitations in addition to these Staff positions, if any,
are appropriate with respect to options transactions by the Funds.
The Trustees recommend that shareholders eliminate this fundamental
investment policy to conform the Fund's policy in this area to other Oppenheimer
funds. In addition, the Trustees believe that its elimination could increase
the Fund's flexibility when choosing investments in the future. Each Fund's
current fundamental investment policy is set forth below.
- ---------------------------------------------------------------------------
Fund Current Fundamental Policy
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Convertible Securities Fund The Fund may not purchase or sell
put and call options nor write put
or call options, except as set
forth in the Prospectus or this
Statement of Additional Information.
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Limited Term New York Municipal The Fund cannot sell securities
Fund short, purchase securities on
margin, or write put options. The
Fund can purchase securities that
have puts attached. (See also
sub-proposal 2(h).)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Quest Value Fund The Fund cannot write, purchase or
sell puts, calls or combinations of
puts and calls on individual
stocks. However, the Fund may
purchase or sell exchange-traded
put and call options on stock
indices to protect the Fund's
assets.
- ---------------------------------------------------------------------------
Proposal 2e: Eliminate the Policy on Investment in Issuers of Whose Shares are
Owned by the Fund's Trustees or Officers.
The Funds listed below are currently subject to a fundamental investment
policy prohibiting them from purchasing or holding the securities of an issuer
if the officers and Trustees of the Funds or the Manager individually
beneficially own 1/2 of 1% of such securities and together own more than 5% of
such securities. It is proposed that the current fundamental policy be
eliminated.
This outdated policy was originally adopted to address then existing state
requirements in connection with the registration of shares of the Funds for sale
in a particular state or states. As a result of NSMIA, the state restriction is
no longer applicable. In addition, maintaining the restriction is not necessary
because the conflict of interest that the restriction was probably meant to
prevent is already adequately covered under the Investment Company Act. The
restriction could impose limitations on the operation of the portfolio and is
difficult to administer. Elimination of this fundamental policy is unlikely to
affect management of the Funds and is not expected to materially increase the
risk of an investment in the Funds.
The Trustees recommend that shareholders eliminate this fundamental
investment policy to conform the Fund's policy in this area to other Oppenheimer
funds. In addition, the Trustees believe that its elimination could increase
the Fund's flexibility when choosing investments in the future. The Funds'
current fundamental investment policy is set forth below.
---------------------------------------------------------------------------
Fund Current Fundamental Policy
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Convertible Securities The Fund may not purchase or retain securities
Fund of any issuer if any of its officers and
trustees, or any of the officers and directors
of the Manager or the Distributor own
individually beneficially more than 0.5% of the
outstanding securities of that issuer, or if all
of those persons together own more than 5% of
that issuer's securities.
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Quest Balanced Fund The Fund cannot invest in securities of any
issuer if, to the knowledge of the Trust, any
officer or trustee of the Trust or any officer
or director of the Manager or Sub-Advisor owns
more than 1/2 of 1% of the outstanding
securities of that issuer, and who together own
more 5% of the outstanding securities of that
issuer.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Limited Term New York The Fund cannot invest in or hold securities of
Municipal Fund any issuer if Trustees of the Fund 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.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Capital Value Fund 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.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest International The Fund cannot invest in or hold securities of
Value Fund any issuer if officers and directors of the Fund
Quest Value Fund or its Manager 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.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Opportunity Value The Fund cannot invest in or hold securities of
Fund any issuer if officers and Trustees of the Fund
or officers and directors of its Manager
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.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Rochester Fund The Fund cannot purchase securities from or sell
Municipals them to its officers and trustees, or any firm
of which any officer or trustee is a member, as
principal. However, the Fund may deal with such
persons or firms as brokers and pay a customary
brokerage commission. The Fund cannot retain
securities of any issuer, if to the knowledge of
the Fund, one or more of its officers, trustees
or investment advisor, own beneficially more
than1/2of 1% of the securities of such issuer
and all such officers and trustees together own
beneficially more than 5% of those securities.
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---------------------------------------------------------------------------
Small- & Mid-Cap Value The Fund cannot invest in securities of any
Fund issuer if, to the knowledge of the Trust,
officers, directors or trustees of the Trust, or
the Manager who owns more than 1/2 of 1% of the
outstanding securities of such issuer together
own more than 5% of the outstanding securities
of such issuer.
---------------------------------------------------------------------------
Proposal 2f: Reclassify as Non-Fundamental the Policy on Investing in Other
Investment Companies.
Certain Funds are currently subject to a fundamental investment policy
limiting their investment in securities of other investment companies. It is
proposed that each Fund's current fundamental policy be re-classified as a
non-fundamental policy that can be changed in the future without shareholder
approval. The purpose of this proposal is to provide the Funds with the maximum
flexibility permitted by law to pursue their investment objectives.
The Investment Company Act does not require that policies on investing in
other investment companies be fundamental. This policy is non-fundamental for
many of the other Oppenheimer funds. Making the policy on investing in other
investment companies non-fundamental would give the Board the opportunity to
reconsider the Funds' arrangements without having to have the Funds incur the
cost of obtaining shareholder approval should regulatory requirements change or
should it become advantageous for the Funds to invest in other investment
companies to an extent different from what is currently permitted by their
fundamental policies.
The ability of the Funds to invest in other mutual funds is restricted by
Section 12(d)(1) of the Investment Company Act. NSMIA amended Section 12 to
permit mutual funds to enter into so-called fund-of-funds or master/feeder
arrangements with other mutual funds in a fund complex, and granted the SEC
broad powers to provide exemptive relief for these purposes. The Funds are
parties to an exemptive order from the SEC permitting them to enter into
fund-of-funds arrangements with other affiliated funds. However, the Funds
listed below do not currently anticipate investing in other funds in a
fund-of-funds arrangement. Although they may do so in the future if
shareholders approve this proposal, each Fund's prospectus would have to be
updated to reflect such a change in policy.
An investment in another mutual fund may result in duplicative of
expenses. Should the Trustees determine in the future that a Fund's investment
in other funds in a fund-of-funds arrangement is in the best interests of the
Fund, the Trustees would consider and take steps to mitigate the potential for
duplicative of fees in determining whether any Fund's participation in such an
arrangement is suitable for the Fund and its shareholders.
In this regard, several of the Funds may participate as underlying funds
in a fund of funds arrangement in which another Oppenheimer fund would invest
its assets in the Fund. As a result, Section 12(d)(1)(A) of the Investment
Company Act generally prohibits a mutual fund from investing more than 5% of its
total assets in another investment company. The "fund-of-funds" amendments to
Section 12(d)(1) in 1996 permit those funds to acquire shares of underlying
funds in excess of the 5% limit if, among other conditions, the acquired fund
has an investment policy limiting its investment in other investment companies
(in other words, so that a fund-of-funds cannot invest in another
fund-of-funds). That Investment Company Act restriction stems from Congress's
concern over the control of investment companies being unduly concentrated
through pyramiding. Therefore, it is necessary for any such Fund, as the
underlying fund, to adopt a policy (which may be non-fundamental) preventing
them from investing more than the Investment Company Act statutory limits in
other investment companies in order that the investing fund of funds may invest
more than 5% of its assets in the underlying Fund.
The existing policy is not required to be fundamental under the Investment
Company Act. The purpose of this proposal is to provide the Fund with the
maximum flexibility permitted by law to pursue its investment objective.
The Funds' current fundamental investment policies, which would be
reclassified as non-fundamental, are set forth below. Even as a non-fundamental
policy, the Funds still would have to adhere to the policies.
---------------------------------------------------------------------------
Fund Current Fundamental Policy
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Convertible Securities The Fund may not acquire securities of any other
Fund investment company, if as a result of that
acquisition, the Fund would own in the aggregate:
(1) more than 3% of the voting stock of that
investment company; (2) securities of that
investment company having an aggregate value in
excess of 5% of the value of the total assets of
the Fund; or (3) securities of that investment
company and of any other investment companies
(but excluding treasury stock of those funds)
having an aggregate value in excess of 10% of the
total assets of the Fund. However, none of these
limitations applies to a security received as a
dividend or as a result of an offer of exchange,
a merger or plan of reorganization.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest International The Fund cannot invest in the securities of other
Value Fund registered investment companies or registered
unit investment trusts in reliance on
sub-paragraph (F) or (G) of section 12(d)(1) of
the Investment Company Act.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Value Fund The Fund may also invest all of its investable
assets in an open-end management investment
company with substantially the same investment
objective and restrictions as the Fund.
---------------------------------------------------------------------------
Proposal 2g: Amend the Policy on Lending.
Under the Investment Company Act, a fund's policy regarding lending must
be fundamental. It is proposed that certain Funds' current fundamental policies
be replaced by a revised fundamental policy that permits the Funds to engage in
lending to the extent their lending is consistent with the Investment Company
Act, the rules thereunder or any exemption from the Investment Company Act that
is applicable to the Funds.
Currently, SEC staff positions permit (a) lending of securities by a fund
of no more than one-third of its total asset value, (b) purchasing debt
instruments or similar evidences of indebtedness, and (c) investing in
repurchase agreements.
If shareholders approve the proposed change in each Fund's policy, the
Trustees do not anticipate that it will affect the management of the Funds. In
general, the Funds lend their assets primarily in three different ways. They
may lend their portfolio securities, they may engage in certain types of
securities transactions that could be construed as "lending" transactions and
they may engage in "interfund" lending of cash to another Oppenheimer fund
pursuant to an exemptive order received from the SEC. Lending money to an
affiliated fund may allow a Fund to obtain a higher rate of return than it could
from interest rates on alternative short-term investments. Implementation of
such interfund lending arrangements, however, must be accomplished consistent
with applicable regulatory requirements, including the provisions of the SEC
order. The Funds do not currently intend to engage in such lending. In the
future, if the Fund were to engage in such lending, the Fund's prospectus or
statement of additional information would be revised accordingly.
Some Funds are currently lending their portfolio securities as part of a
securities lending program. Funds can generate income from lending portfolio
securities, although there are risks involved. The Funds might experience a
delay in receiving additional collateral to secure a loan, or a delay in
recovery of the loaned securities if the borrower defaults. However, procedures
are in place to ensure that borrowers of securities are creditworthy and that
the loans are fully collateralized.
This change would give the Funds the greatest amount of flexibility to
lend their portfolio securities to generate income within the limits of the
Investment Company Act where desirable and appropriate in accordance with their
investment objectives.
In addition, the Funds would have greater ability to engage in
transactions which could be considered lending, but which could be beneficial to
the management of the portfolio. The Funds' proposed and current fundamental
investment policies are set forth below.
Proposed Fundamental Policy
- --------------------------------------------------------------------------
The Fund cannot make loans, except to the extent permitted under the
Investment Company Act, the rules or regulations thereunder or any
exemption therefrom that is applicable to the Fund, as such statute,
rules or regulations may be amended or interpreted from time to time.
- --------------------------------------------------------------------------
------------------------------------------------------------------------------
Fund Current Fundamental Policy
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Convertible Securities Fund The Fund may not make loans. However, this
policy does not prohibit the Fund from (1)
making loans of its portfolio securities, (2)
purchasing notes, bonds or other evidences of
indebtedness, (3) making deposits with banks
and other financial institutions, or (4)
entering into repurchase agreements.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Limited Term New York The Fund cannot make loans to others except
Municipal Fund in accordance with the Fund's investment
objective and policies. The Fund can also
enter into contracts that compensate service
providers by means of compensating balances.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
MidCap Fund The Fund cannot lend money. However, it can
invest in all or a portion of an issue of
bonds, debentures, commercial paper or other
similar corporate obligations. The Fund may
also lend its portfolio securities subject to
the restrictions stated in the Prospectus and
this Statement of Additional Information and
can enter into repurchase transactions.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Quest Balanced Fund The Fund cannot make loans to any person or
Quest Opportunity Value Fund individual. However, portfolio securities may
be loaned by the Fund within the limits set
forth in the Prospectus and Statement of
Additional Information.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Quest Capital Value Fund The Fund cannot lend money or property to any
person. However, the Fund can purchase fixed
income securities consistent with the Fund's
investment objective and policies. The Fund
may also make loans of portfolio securities,
in an amount that does not exceed one-third
of the Fund's total assets. Additionally, the
Fund can enter into repurchase agreements.
For the purpose of this restriction,
collateral arrangements with respect to stock
options, options on securities and stock
indices, stock index futures and options on
such futures are not deemed to be loans of
assets.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Quest International Value Fund 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."
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Quest Value Fund The Fund cannot lend money except in
connection with the acquisition of debt
securities which the Fund's investment
policies and restrictions permit it to
purchase. The Fund may also make loans of
portfolio securities, subject to the
restrictions stated under "Loans of Portfolio
Securities."
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Rochester Fund Municipals The Fund cannot lend any of its funds or
other assets, except by the purchase of a
portion of an issue of publicly distributed
bonds, debentures, notes or other debt
securities.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Small- & Mid-Cap Value Fund The Fund cannot make loans to any person or
individual. However, portfolio securities may
be loaned by the Fund within the limits set
forth in the Prospectus.
------------------------------------------------------------------------------
Proposal 2h: Eliminate the Policy on Margin and Short Sales.
The Funds listed below are currently subject to a fundamental investment
policy prohibiting them from purchasing securities on margin and engaging in
short sales. The existing policy is not required to be a fundamental investment
policy under the Investment Company Act. It is proposed that this current
fundamental policy prohibiting purchases of securities on margin and engaging in
short sales be eliminated for each Fund.
Margin purchases involve the purchase of securities with borrowed money,
and the Investment Company Act imposes certain restrictions on borrowing as
discussed in detail below under proposals 2(a): "Borrowing" and 2(i):
"Pledging, Mortgaging or Hypothecating Assets," respectively. "Margin" is the
cash or securities that the borrower places with a broker as collateral against
the loan. Although each Fund listed below has a current fundamental investment
policy that prohibits it from purchasing securities on margin, the Investment
Company Act permits the Funds to obtain such short-term credits as may be
necessary for the clearance of transactions. In addition, SEC staff
interpretations permit mutual funds to make margin payments in connection with
the purchase and sale of futures contracts and options on futures contracts.
In a short sale, an investor sells a borrowed security with a
corresponding obligation to the lender to return the identical security. In an
investment technique known as a short sale "against-the-box," an investor sells
short while owning the same securities in the same amount, or having the right
to obtain equivalent securities. The investor could have the right to obtain
equivalent securities, for example, through ownership of options or convertible
securities.
A short sale is a form of leverage. Leverage exists when a fund has the
right to a return on an investment that exceeds the amount the fund contributed
to the investment. The use of leverage exposes shareholders and their
investments in a fund to a greater risk of loss. For example, engaging in short
sales may cause the value of a fund's shares to be more volatile than if the
fund did not engage in short selling. In addition, in a short sale, there is a
risk that the investor may have to buy the security later at a price higher than
the sales price and incur a loss as a result.
As a result of NSMIA, the state restrictions regarding margin purchases
and short sales no longer apply to the Funds. The Trustees recommend that
shareholders eliminate this fundamental investment policy to conform each Fund's
policy to other Oppenheimer funds. Elimination of this fundamental investment
policy is unlikely to affect management of the Funds and is not expected to
materially increase the risk of an investment in any Fund.
Although the Funds would be permitted to sell securities short if
shareholders approved this proposal, the Funds would have to segregate liquid
assets to cover their obligation under any short sale. If the Trustees and
Manager believed that it was in the best interests of a Fund to engage in short
sales to a significant degree, the Fund's prospectus would have to be updated to
reflect such a change in policy unless the prospectus already contained such a
policy. Among other things, the prospectus would be updated to describe in
detail the risks associated with short sales, which are outlined above. The
Board proposes to eliminate the restrictions relating to purchasing on margin.
The practices of purchasing securities on margin and selling securities
short when a Fund does not own the security create the issuance of a senior
security. Open-end investment portfolios such as the Funds are by law not
permitted to issue senior securities except under very limited circumstances.
Therefore, there is no need for the Funds to have a restriction on purchasing on
margin or selling short since these activities are controlled by statutory
requirements and other restrictions adopted by the Funds. Eliminating this
restriction would not affect any Fund's present investment strategies. Each
Fund's current fundamental investment policy is set forth below.
---------------------------------------------------------------------------
Fund Current Fundamental Policy
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Convertible The Fund may not purchase securities on margin.
Securities Fund However, the Fund can obtain unsecured loans to
purchase securities. The aggregate of all
unsecured loans, however, may not exceed 50% of
the Fund's total assets. It can also borrow
amounts equivalent to up to 5% of the Fund's net
assets for temporary, extraordinary or emergency
purposes. (See also sub-proposals 2(a), (g) &
(k).)
The Fund may not make short sales on securities or
maintain a short position. An exception the Fund
can do so if at all times when a short position is
open, the Fund owns an equal amount of the
securities sold short or the Fund owns securities
that are convertible into or exchangeable for
securities of the same issue as, and equal in
amount to, the securities sold short, without
payment of further consideration. Not more than
10% of the Fund's total assets may be held as
collateral for these short sales at any one time.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Limited Term New The Fund cannot sell securities short, purchase
York Municipal Fund securities on margin, or write put options. The
Fund can purchase securities that have puts
attached. (See also sub-proposal 2(d).)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Rochester Fund The Fund cannot buy any securities on margin or
Municipals sell any securities short.
---------------------------------------------------------------------------
Proposal 2i: Eliminate the Policy on Pledging, Mortgaging or Hypothecating of
Assets.
Certain Funds are currently subject to a fundamental investment policy
concerning the pledging, mortgaging or hypothecating of their respective
assets. It is proposed that this current fundamental investment policy be
eliminated.
The existing policy concerning pledging, mortgaging or hypothecating of
assets is not required to be fundamental under the Investment Company Act, and
the Funds should be provided with the maximum flexibility permitted by law to
pursue their investment objectives. The Trustees recommend that the policy
regarding pledging, mortgaging or hypothecating be eliminated so that the Funds
may enter into collateral arrangements in connection with their borrowing
requirements consistent with their other investment policies, including their
policies regarding borrowing and issuing senior securities. The risks
associated with borrowing are discussed in detail under proposal 2(a)
("Borrowing").
The restriction on pledging and hypothecating assets was based on state
law requirements that are no longer applicable. Removing this restriction would
give the Fund greater flexibility by permitting the Board to make changes in
investment policy regarding pledging or mortgaging assets without seeking
shareholder approval. In addition, removing this restriction would afford the
Fund greater flexibility in permitted borrowing transactions because bank
lenders often require a pledge of assets as security for loans. Eliminating
this restriction would not affect the Fund's present investment practices.
---------------------------------------------------------------------------
Fund Current Fundamental Policy
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Limited Term New York The Fund cannot mortgage or pledge any of its
Municipal Fund assets, and the Fund can borrow money only from
a bank for temporary or emergency purposes or
for investment purposes in amounts not exceeding
10% of its total assets. (See also sub-proposal
2(b).)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Balanced Fund The Fund cannot pledge its assets, or assign or
Quest Opportunity Value otherwise encumber its assets in an amount in
Fund excess of 10% of the value of its net assets. It
can pledge, assign or encumber its assets only
to secure borrowings that comply with the limits
set forth in the Fund's Prospectus and Statement
of Additional Information.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Capital Value Fund The Fund cannot pledge, mortgage or hypothecate
any of its assets. However, the Fund can pledge
assets to secure permitted borrowings and in
connection with collateral arrangements with
respect to options and futures.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest International The Fund cannot pledge its assets or assign or
Value Fund 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.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Value Fund The Fund cannot pledge, mortgage or hypothecate
any of its assets.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Rochester Fund The Fund cannot borrow money or mortgage or
Municipals pledge any of its assets, except that the Fund
may borrow from a bank for temporary or
emergency purposes or for investment purposes in
amounts not exceeding 5% of its total assets.
(See also sub-proposal 2(b).)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Small- & Mid-Cap Value The Fund cannot pledge its assets or assign or
Fund otherwise encumber its assets in excess of 10%
of its net assets. It can pledge, assign or
encumber its assets only to secure borrowings
effected within the limitations set forth in the
Prospectus.
---------------------------------------------------------------------------
Proposal 2j: Amend the Policies on Real Estate and Commodities.
The Investment Company Act requires a fund to have fundamental investment
policies governing investments in real estate and commodities. The Funds are
currently subject to fundamental investment policies prohibiting them from
investing in real estate or commodities.
It is proposed that the current fundamental policies regarding real estate
and commodities be amended. The amendments would make the Funds' policies
consistent with the other Oppenheimer funds and assist the Fund and the Manager
in maintaining compliance with the various investment restrictions governing the
Funds. The proposed policy would permit the Funds to: (1) invest in debt
securities secured by real estate or interests in real estate, or issued by
companies, including real estate investment trusts, that invest in real estate
or interests in real estate; (2) invest in hedging instruments permitted by any
of its other investment policies; and (3) buy and sell options, futures,
securities or other instruments backed by, or the investment return of which is
linked to changes in the price of physical commodities or currencies.
Many of the Funds listed below already have this flexibility under their
existing policies. Therefore, amending the existing policy as proposed is not
expected to increase the risk of an investment in a Fund nor affect the
management of the Fund. The Board believes that the proposed fundamental
policies on investing in real estate and commodities will provide the Funds with
the maximum flexibility consistent with the current legal requirements.
The proposed policy also would provide each Fund the flexibility to deal
with a physical commodity if necessary as a result of the Fund's ownership of
another security. In addition, the amended policy would clarify a Fund's ability
to purchase and sell options and futures contracts and to purchase instruments
that are backed by physical commodities.
The proposed change conforms the restriction on investing in real estate
to that of other Oppenheimer funds and to current interpretations of the
Investment Company Act. This change modernizes the present restriction by
allowing a Fund to invest in certain newer financial instruments that may have
been precluded under the prior restriction, when that type of investment is
consistent with the Fund's investment objectives and policies. The proposed
policy combines real estate with commodities and commodity contracts. The
Funds' proposed and current fundamental policies are set forth below.
Proposed Fundamental Policy
-------------------------------------------------------------------------
The Fund cannot invest in real estate, physical commodities or
commodity contracts, except to the extent permitted under the
Investment Company Act, the rules or regulations thereunder or any
exemption therefrom, as such statute, rules or regulations may be
amended or interpreted from time to time.
-------------------------------------------------------------------------
---------------------------------------------------------------------------
Fund Current Fundamental Policy
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Convertible Securities Fund The Fund may not purchase or sell real
estate or real estate mortgage loans.
However, the Fund may invest not more
than 5% of its total assets in marketable
securities of real estate investment
trusts.
The Fund may not deal in commodities or
commodities contracts.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Limited Term New York The Fund cannot purchase or sell real
Municipal Fund estate, real estate investment trust
securities, commodities, commodity
contracts, or oil or gas interests.
However, the Fund can invest in municipal
securities that are secured by real
estate or interests in real estate.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
MidCap Fund The Fund cannot invest in real estate or
in interests in real estate. However, the
Fund can purchase readily-marketable
securities of companies holding real
estate or interests in real estate.
The Fund cannot invest in physical
commodities or physical commodity
contracts. However, the Fund can buy and
sell hedging instruments to the extent
specified in its Prospectus and this
Statement of Additional Information from
time to time. The Fund can also buy and
sell options, futures, securities or
other instruments backed by, or the
investment return from which, is linked
to changes in the price of, physical
commodities.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Balanced Fund The Fund cannot invest in real estate or
real estate limited partnerships (direct
Quest Opportunity Value Fund participation programs). 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.
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, and securities or other
instruments backed by physical
commodities or whose investment return is
linked to changes in the price of
physical commodities.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Capital Value Fund The Fund cannot purchase real estate or
interests in real estate. However, the
Fund can purchase or sell securities of
companies that deal in real estate or
interests in real estate.
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 and securities or other
instruments backed by physical
commodities or whose investment return is
linked to changes in the price of
physical commodities.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest International Value Fund 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.
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.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Value Fund The Fund cannot invest in real estate or
in interests in real estate (including
limited partnership interests). However,
the Fund can purchase readily-marketable
securities of companies holding real
estate or interests in real estate.
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 (subject to the restrictions in
its other fundamental policies), futures,
and securities or other instruments
backed by physical commodities or whose
investment return is linked to changes in
the price of physical commodities.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Rochester Fund Municipals The Fund cannot acquire, lease or hold
real estate, except as may be necessary
or advisable for the maintenance of its
offices or to enable the Fund to take
appropriate such action in the event of
financial difficulties, default or
bankruptcy of either the issuer of or the
underlying source of funds for debt
service for any obligations in the Fund's
portfolio.
The Fund cannot invest in commodities and
commodity contracts, puts, calls,
straddles, spreads or any combination
thereof, or interests in oil, gas or
other mineral exploration or development
programs. The Fund may, however, write
covered call options (or purchase put
options) listed for trading on a national
securities exchange. The Fund can also
purchase call options (and sell put
options) to the extent necessary to close
out call options it previously wrote or
put options it previously purchased.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Small- & Mid-Cap Value Fund The Fund cannot invest in real estate or
real estate limited partnerships (direct
participation programs). However, the
Fund may purchase securities of issuers
that engage in real estate operations and
securities which are secured by real
estate or interests in real estate.
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 or Statement
of Additional Information from time to
time. The Fund can also buy and sell
options, futures, securities or other
instruments backed by, or the investment
return from which is linked to, changes
in the price of physical commodities.
---------------------------------------------------------------------------
Proposal 2k: Amend the Policy on Senior Securities.
The Funds are currently subject to a fundamental investment policy
limiting their investments in senior securities. Under the Investment Company
Act, an investment company is not permitted to issue senior securities, except
under certain limited conditions. The proposed amendment would not change the
policy but would modernize and make consistent the language concerning senior
securities. This change would have no immediate impact on any Funds' investment
strategies and would give the Funds the maximum amount of flexibility to invest
when such an investment could be construed as a senior security but is
nonetheless permitted under the law or by interpretations of the SEC.
It is proposed that each Fund's current fundamental policy on issuing
senior securities, applicable to the Funds listed below, be amended to read as
follows:
Proposed Fundamental Policy
- --------------------------------------------------------------------------
The Fund cannot issue senior securities, except to the extent permitted
under the Investment Company Act, the rules or regulations thereunder or
any exemption therefrom, as such statute, rules or regulations may be
amended or interpreted from time to time.
- --------------------------------------------------------------------------
---------------------------------------------------------------------------
Fund Current Fundamental Policy
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Convertible Securities Fund The Fund may not issue any securities
that are senior to shares of the Fund.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Limited Term New York The Fund cannot issue "senior securities."
Municipal Fund
---------------------------------------------------------------------------
---------------------------------------------------------------------------
MidCap Fund The Fund cannot issue "senior
securities." However, that restriction
does not prohibit the Fund from borrowing
money subject to the provisions set forth
in this Statement of Additional
Information, or from entering into
margin, collateral or escrow arrangements
permitted by its other investment
policies.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Balanced Fund The Fund cannot issue senior securities
Quest Opportunity Value Fund (as defined in the Investment Company Act
Small- & Mid-Cap Value Fund of 1940). However, the Fund can enter
into repurchase agreements, borrow money
in accordance with the restrictions set
forth in its other fundamental policies
and lend its portfolio securities.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Capital Value Fund The Fund cannot issue senior securities,
as defined in the Investment Company Act
of 1940. However, the Fund can enter into
repurchase agreements, lend its portfolio
securities and borrow money from banks
for temporary or emergency purposes.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest International Value Fund 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.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Quest Value Fund The Fund cannot issue "senior
securities," but this does not prohibit
certain investment activities for which
assets of the Fund are designated as
segregated, or margin collateral or
escrow arrangements are established, to
cover the related obligations. Examples
of those activities include borrowing
money, reverse repurchase agreements,
delayed-delivery and when-issued
arrangements for portfolio securities
transactions, and contracts to buy or
sell derivatives, hedging instruments,
options or futures.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Rochester Fund Municipals The Fund cannot issue "senior
securities," but this does not prohibit
certain investment activities for which
assets of the Fund are designated as
segregated, or margin, collateral or
escrow arrangements are established, to
cover the related obligations. Examples
of those activities include borrowing
money, reverse repurchase agreements,
delayed-delivery and when-issued
arrangements for portfolio securities
transactions, and contracts to buy or
sell derivatives, hedging instruments,
options or futures.
---------------------------------------------------------------------------
Proposal 2l: Amend the Policy on Underwriting.
The Funds listed below are currently subject to the fundamental investment
policy listed below concerning underwriting. The proposed amendment would
modernize the language concerning underwriting. In addition, the revised
restriction would conform it to the underwriting policies of other Oppenheimer
funds. Under the proposed policy, a Fund would not be prohibited from selling
any security in its portfolio merely because the selling Fund might technically
be deemed to be an underwriter under the Securities Act of 1933. Making this
restriction consistent with that of the other Oppenheimer funds would simplify
portfolio management and assist the Manager in maintaining compliance with the
investment policies of the Funds.
The proposed change in this investment restriction would not alter any
Fund's investment strategy and would not have any immediate impact on any Fund's
investment strategies. It is proposed that each Fund's current fundamental
policy on underwriting, applicable to the Funds listed below, be amended to read
as follows:
Proposed Fundamental Policy
-------------------------------------------------------------------------
The Fund may not underwrite securities issued by others, except to the
extent that a Fund may be considered an underwriter within the meaning
of the Securities Act of 1933, as amended, when reselling securities
held in its own portfolio.
-------------------------------------------------------------------------
---------------------------------------------------------------------------
Fund Current Fundamental Policy
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Convertible Securities Fund The Fund may not underwrite securities
of other issuers.
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Limited Term New York Municipal The Fund cannot underwrite securities of
Fund other issuers. A permitted exception is
in case the purchase of municipal
obligations in accordance with the
Fund's investment objective and policies
is deemed to be an underwriting, whether
the Fund buys the securities directly
from the issuer or from an underwriter
for an issuer.
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MidCap Fund The Fund cannot underwrite securities of
Quest Balanced Fund other companies. A permitted exception
Quest Capital Value Fund is in case it is deemed to be an
Quest International Value Fund underwriter under the Securities Act of
Quest Opportunity Value Fund 1933 when reselling any securities held
Quest Value Fund in its own portfolio.
Small- & Mid-Cap Value Fund
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Rochester Fund Municipals The Fund cannot act as underwriter of
securities issued by other persons. A
permitted exception is if the Fund
technically is deemed to be an
underwriter under the federal securities
laws in connection with the disposition
of its portfolio securities.
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Proposal 2m: Eliminate Policy on Investments in Unseasoned Issuers.
The Board proposes to eliminate the fundamental restriction that the
Convertible Securities Fund cannot deviate from its percentage restrictions that
apply to its investments in small, unseasoned companies.
This is another restriction that was imposed by state laws and is no
longer applicable nor is it required under the Investment Company Act. Without
these legal requirements, there is no reason to specifically limit the
portfolio, particularly as a fundamental policy.
Although the Fund has no intention of investing beyond any of its current
percentage restrictions, the policy below is not required to be fundamental and
elimination of it will conform the Fund's policy to other Oppenheimer funds.
Eliminating the restriction as a fundamental policy also allows flexibility by
providing the Fund's Board the ability to change a percentage restriction in the
future without having to seek shareholder approval. The Funds' current
fundamental investment policy is set forth below.
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Fund Current Fundamental Policy
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Convertible Securities Fund The Fund may not invest more than 5% of the
value of its total assets in securities of
any company (including its predecessors) that
has not been in business for at least three
consecutive years.
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Proposal 2n: Eliminate Policies on Miscellaneous Investment Restrictions
(Warrants and Other Equity Securities).
Convertible Securities Fund and Quest Opportunity Value Fund are currently
subject to certain fundamental investment policies concerning various percentage
limitations on investments in warrants. Limited Term New York Municipal Fund
has a fundamental policy prohibiting it from investing in common stocks,
preferred stocks, warrants or other equity securities. None of these existing
policies is required, much less required to be fundamental, under the Investment
Company Act. It is proposed that these current fundamental investment policies
be eliminated.
Although neither Convertible Securities Fund nor Quest Opportunity Value
Fund have any intention of investing in warrants beyond their current percentage
restrictions, the fundamental policies below are unnecessary and elimination of
these policies will help conform each Fund's policy to other Oppenheimer funds.
In addition, the elimination of each policy could increase that Fund's
flexibility when choosing investments in the future.
Limited Term New York Municipal Fund is a tax-exempt fund that seeks to
provide income exempt from federal income tax and New York Stated and New York
City personal income tax by investing in investment-grade municipal securities.
The Fund has no intention of investing in common stocks, preferred stocks,
warrants or other equity securities, nor would it be able to achieve its
investment objective by investing in equity securities. Therefore, the
fundamental policy below is unnecessary and elimination of the fundamental
policy will help conform the Fund's policy to other Oppenheimer funds.
The portfolio managers would still have to comply with any other
investment percentage restriction applicable to the Fund, whether fundamental or
non-fundamental. Therefore, elimination of these policies is unlikely to affect
management of the Funds and is not expected to materially increase the risk of
an investment in the Funds.
The fundamental investment policies proposed to be eliminated by the Funds
named below are set forth below.
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Fund Current Fundamental Policy
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Convertible Securities The Fund may not invest in warrants in amounts
Fund in excess of 15% of the value of its net
assets. The valuation of warrants for the
purpose of that limitation shall be determined
at the lower of cost or market value. Warrants
acquired by the Fund as part of a unit or
attached to securities at the time of purchase
do not count against that percentage
limitation. Not more than 5% of the Fund's net
assets may be invested in warrants that are
not listed on The New York Stock Exchange or
The American Stock Exchange.
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Limited Term New York The Fund cannot invest in common stocks,
Municipal Fund preferred stocks, warrants or other equity
securities.
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Quest Opportunity Value The Fund cannot purchase warrants that would
Fund cause more than 5% of the Fund's total assets
to be invested in warrants, or more than 2% of
its total assets to be invested in warrants
that are not listed on The New York Stock
Exchange or The American Stock Exchange.
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Proposal 2o: Eliminate the Policy on Investing to Exercise Control.
Certain Funds are currently subject to a fundamental investment policy
prohibiting them from investing in portfolio companies for the purpose of
exercising control. It is proposed that the current fundamental investment
policy be eliminated. Although these Funds have no intention of investing for
the purpose of exercising control of a company, the existing policy is
unnecessary and may reduce possible investment opportunities as well as
undermine the ability of the Funds to realize the full value of portfolio
investments under certain circumstances.
Elimination of this fundamental investment policy is not expected to have
a significant impact on any Fund's investment practices or management because
the Funds have no intention of investing in companies for the purpose of
obtaining or exercising management or control. This policy was originally
adopted to address then-existing state requirements in connection with the
registration of shares of the Funds for sale in a particular state or states. As
a result of NSMIA, the state restriction no longer applies to the Funds.
In addition, the existing policy may unnecessarily restrict the investment
flexibility of the Funds because the Funds might be considered to be investing
for control if they purchase a large percentage of the securities of a single
issuer for investment purposes. The existing policy also may undermine a Fund's
ability to realize the full value of portfolio investments under certain
circumstances. For example, if an issuer in which one of the Funds has invested
subsequently seeks to reorganize under the protection of the bankruptcy laws, it
may be in the Fund's best interest to be represented on the creditors' committee
appointed during the bankruptcy proceedings. The existing policy may prevent
the Funds from securing representation on that committee.
The Trustees therefore recommend that shareholders approve elimination of
this fundamental investment policy in order to increase each Fund's flexibility
when choosing investments and investment strategies in the future. As noted
above, elimination of this fundamental policy is unlikely to affect management
of the Funds and is not expected to materially increase the risk of an
investment in any Fund.
The Funds' current fundamental investment policies are set forth below.
---------------------------------------------------------------------------
Fund Current Fundamental Policy
---------------------------------------------------------------------------
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Quest Balanced Fund. The Fund cannot invest for the purpose
Quest Opportunity Value Fund of exercising control or management of
Small- & Mid-Cap Value Fund any company.
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Quest Capital Value Fund The Fund cannot invest for the purpose
of exercising control over management
of any company.
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Quest International Value Fund The Fund cannot invest in companies
for the purpose of acquiring control
or management of those companies.
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Quest Value Fund The Fund cannot invest in companies
for the primary purpose of acquiring
control or management of those
companies. However, the Fund may
invest all of its investable assets in
an open-end management investment
company with substantially the same
investment objective and restrictions
as the Fund.
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Rochester Fund Municipals The Fund cannot invest in companies
Limited Term New York Municipal for the purpose of exercising control
Fund or management.
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THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS
THAT YOU APPROVE EACH SUB-PROPOSAL DESCRIBED ABOVE
INFORMATION REGARDING THE FUNDS
As of the close of business on the Record Date (September 14, 2005), each
Fund had the following numbers of shares outstanding. Each share has voting
rights as stated in this Proxy Statement and is entitled to one vote for each
share (and a fractional vote for a fractional vote).
- -----------------------------------------------------------------------
Fund Shares Outstanding
as of September 14,
2005
(All Classes)
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Convertible Securities Fund
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Limited Term New York Municipal Fund
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
MidCap Fund
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Quest Balanced Fund
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Quest Capital Value Fund
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Quest International Value Fund
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Quest Opportunity Value Fund
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Quest Value Fund
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Rochester Fund Municipals
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Small- & Mid-Cap Value Fund
- -----------------------------------------------------------------------
Beneficial Owners. Occasionally, the number of shares of a Fund held in
"street name" accounts of various securities dealers for the benefit of their
clients as well as the number of shares held by other shareholders of record may
exceed 5% of the total shares outstanding. As of the Record Date, to the best
of the knowledge of each Fund, the following shareholders owned of record or
beneficially owned 5% or more of any class the outstanding voting shares of such
Fund:
Convertible Securities Fund
Limited Term New York Municipal Fund
MidCap Fund
Quest Balanced Fund
Quest Capital Value Fund
Quest International Value Fund
Quest Opportunity Value Fund
Quest Value Fund
Rochester Fund Municipals
Small- & Mid-Cap Value Fund
The Manager, Distributor, and Transfer Agent. Subject to the authority of
the Board, the Manager is responsible for the day-to-day management of the
Funds' business pursuant to its investment advisory agreement with each Fund.
OppenheimerFunds Distributor, Inc. (the "Distributor"), a wholly owned
subsidiary of the Manager, is the general distributor of the Funds' shares. The
Manager and the Distributor are located at Two World Financial Center, 225
Liberty Street, 11th Floor, New York, NY 10281-1008. OppenheimerFunds Services,
a division of the Manager, located at 6803 South Tucson Way, Centennial, CO
80112, serves as the transfer and shareholder servicing agent (the "Transfer
Agent") for the Funds.
The Manager (including affiliates and subsidiaries) managed assets of more
than $180 billion as of June 30, 2005, including more than 80 funds with more
than seven million shareholder accounts. The Manager is a wholly-owned
subsidiary of Oppenheimer Acquisition Corp. ("OAC"), a holding company
controlled by Massachusetts Mutual Life Insurance Company ("MassMutual"). The
Manager and OAC are located at Two World Financial Center, 225 Liberty Street,
New York, NY 10281-1008. MassMutual is located at 1295 State Street,
Springfield, Massachusetts 01111. OAC acquired the Manager on October 22, 1990.
As indicated below, the common stock of OAC is owned by (i) certain officers
and/or directors of the Manager, (ii) MassMutual and (iii) another investor. No
institution or person holds 5% or more of OAC's outstanding common stock except
MassMutual. MassMutual has engaged in the life insurance business since 1851.
The common stock of OAC is divided into three classes. At December 31,
2004, MassMutual held (i) all of the 21,600,000 shares of Class A voting stock,
(ii) 12,642,025 shares of Class B voting stock, and (iii) 21,178,801 shares of
Class C non-voting stock in OAC. This collectively represented 96.808% of the
outstanding common stock and 97.889% of the voting power of OAC as of that date.
Certain officers and/or directors of the Manager held (i) 366,486 shares of the
Class B voting stock, representing 0.64% of the outstanding common stock and
1.5% of the voting power, (ii) 183,039 shares of Class C non-voting stock, and
(iii) options acquired without cash payment which, when they become exercisable,
allow the holders to purchase up to 10,641,501 shares of Class C non-voting
stock. That group includes persons who serve as officers of the Funds and John
V. Murphy, who serves as an officer of the Funds and is being nominated as a
Trustee for each Fund.
Holders of OAC Class B and Class C common stock may put (sell) their
shares and vested options to OAC or MassMutual at a formula price (based on,
among other things, the revenue, income, working capital, and excess cash of the
Manager). MassMutual may exercise call (purchase) options on all outstanding
shares of both such classes of common stock and vested options at the same
formula price.
The names and principal occupations of the executive officers and
directors of the Manager are as follows: John V. Murphy, Chairman, President,
Chief Executive Officer and a director; Michael Baldwin, Executive Vice
President; Kurt Wolfgruber, Executive Vice President, Chief Investment Officer
and a director; Robert G. Zack, Executive Vice President and General Counsel;
Craig Dinsell and James Ruff, Executive Vice Presidents; Brian W. Wixted, Senior
Vice President and Treasurer; Mark Vandehey, Senior Vice President and Chief
Compliance Officer, and Bruce Dunbar, George Evans, Ronald H. Fielding, John
Forrest, Phillip S. Gillespie, Robert B. Grill, Steve Ilnitzki, Lynn Oberist
Keeshan, Thomas W. Keffer, Martin S.Korn, Chris Leavy, Angelo Manioudakis,
Charles McKenzie, Andrew J. Mika, Nikolaos D. Monoyios, David Pfeffer, David
Poiesz, David Robertson, Keith Spencer, Arthur Steinmetz, John Stoma, Martin
Telles, Jerry A. Webman, Diederick Werdmolder, William L. Wilby, Donna Winn,
Philip Witkower, Carol Wolf and Arthur J. Zimmer, Senior Vice Presidents. These
officers are located at one of the four offices of the Manager: Two World
Financial Center, 225 Liberty Street, 11th Floor, New York, NY 10281-1008; 6803
South Tucson Way, Centennial, CO 80112; 350 Linden Oaks, Rochester, NY
14625-2807; or 10 St. James Avenue, Boston, MA 02116.
MORE ON PROXY VOTING AND THE MEETING
General information about Proxy Voting
Solicitation of Proxies. The cost of preparing, printing and mailing the proxy
ballot, notice of meeting, and this Proxy Statement and all other costs incurred
with the solicitation of proxies, including any additional solicitation by
letter, telephone or otherwise, will be shared equally by the Manager and the
Funds. Costs paid by the Funds will be allocated among the Funds on the basis
of relative net assets. In addition to solicitations by mail, officers of the
Fund or officers and employees of the Transfer Agent, without extra
compensation, may conduct additional solicitations personally, by telephone or
by any other electronic means available.
Proxies also may be solicited by a proxy solicitation firm hired at the
Funds' expense to assist in the solicitation of proxies. It is estimated the
cost of engaging a proxy solicitation firm may be approximately $_____.
Brokers, banks and other fiduciaries may be required to forward soliciting
material to their principals on behalf of the Funds and to obtain authorization
for the execution of proxies. For those services, they will reimbursed by the
Funds for their expenses to the extent the Funds would have directly borne those
expenses.
Currently, if any Fund determines to retain the services of a proxy
solicitation firm, the Fund anticipates retaining Alamo Direct Mail Services,
Inc. Any proxy solicitation firm engaged by a Fund, among other things, will
be: (i) required to maintain the confidentiality of all shareholder information;
(ii) prohibited from selling or otherwise disclosing shareholder information to
any third party; and (iii) required to comply with applicable telemarketing laws.
If a Fund does engage a proxy solicitation firm, as the Meeting date
approaches, certain shareholders may receive telephone calls from a
representative of the solicitation firm if their vote has not yet been
received. Authorization to permit the solicitation firm to execute proxies may
be obtained by telephonic instructions from shareholders of the Funds. Proxies
that are obtained telephonically will be recorded in accordance with the
procedures set forth below. These procedures have been designed to reasonably
ensure that the identity of the shareholder providing voting instructions is
accurately determined and that the voting instructions of the shareholder are
accurately recorded.
In all cases where a telephonic proxy is solicited, the solicitation firm
representative is required to ask for each shareholder's full name, address,
title (if the shareholder is authorized to act on behalf of an entity, such as a
corporation) and to confirm that the shareholder has received the Proxy
Statement and ballot in the mail. If the information solicited agrees with the
information provided to the solicitation firm, the solicitation firm
representative has the responsibility to explain the process, read the proposals
listed on the proxy ballot, and ask for the shareholder's instructions on such
proposals. The solicitation firm representative, although he or she is
permitted to answer questions about the process, is not permitted to recommend
to the shareholder how to vote. The solicitation firm representative may read
any recommendation set forth in the Proxy Statement. The solicitation firm
representative will record the shareholder's instructions. Within 72 hours, the
shareholder will be sent a confirmation of his or her vote asking the
shareholder to call the solicitation firm immediately if his or her instructions
are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting, but does not wish
to give his or her proxy telephonically, the shareholder may still submit the
proxy ballot originally sent with the Proxy Statement in the postage paid
envelope provided, via the internet or attend in person. Should shareholders
require additional information regarding the proxy ballot or a replacement proxy
ballot, they may contact us toll-free at 1-800-225-5677 (1-800-CALL-OPP). Any
proxy given by a shareholder, whether in writing, by telephone or via the
internet, is revocable as described below under the paragraph titled "Revoking a
Proxy."
Please take a few moments to complete your proxy ballot promptly. You may
vote your shares by completing and signing the enclosed proxy ballot(s) and
mailing the proxy ballot in the postage paid envelope provided. You also may
vote your shares by telephone or via the internet by following the instructions
on the attached proxy ballot(s) and accompanying materials. You also may cast
your vote by attending the Meeting in person if you are a record owner.
Telephone Voting. The Funds have arranged to have votes recorded by telephone.
Please have the proxy ballot in hand and call the number on the enclosed
materials and follow the instructions. After a shareholder provides his or her
voting instructions, those instructions are read back to the shareholder and the
shareholder must confirm his or her voting instructions before disconnecting the
telephone call. The voting procedures used in connection with telephone voting
are designed to reasonably authenticate the identity of shareholders, to permit
shareholders to authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been properly recorded.
Internet Voting. You may also vote over the internet by following the
instructions in the enclosed materials. You will be prompted to enter the
control number on the enclosed proxy ballot. Follow the instructions on the
screen, using your proxy ballot as a guide.
Voting By Broker-Dealers. Shares owned of record by a broker-dealer for the
benefit of its customers ("street account shares") will be voted by the
broker-dealer based on instructions received from its customers. If no
instructions are received, the broker-dealer may (if permitted by applicable
stock exchange rules) give or authorize the giving of a proxy, as record holder
of such shares, to vote such shares in connection with the proposals.
Beneficial owners of street account shares cannot vote at the meeting. Only
record owners may vote at the meeting.
A "broker non-vote" is deemed to exist when a proxy received from a broker
indicates that the broker does not have discretionary authority to vote the
shares on that matter. Abstentions (but not broker non-votes) will have the
same effect as a vote against the relevant proposal.
Voting by the Trustee for OppenheimerFunds-Sponsored Retirement Plans. Shares
held in OppenheimerFunds-sponsored retirement accounts for which votes are not
received as of the last business day before the Meeting Date, will be voted by
the trustee for such accounts in the same proportion as Shares for which voting
instructions from the Funds' other shareholders have been timely received.
Quorum.
Proposal 1: Electing Trustees:
(a) Shareholders of Quest Balanced Fund, Quest Opportunity Value Fund and
Small- & Mid-Cap Value Fund will vote together. The presence in
person or by proxy of the holders of record of 50% of the three
Funds' aggregate shares outstanding and entitled to vote
constitutes a quorum.
(b) Shareholder of all other Funds will vote separately. Except for MidCap
Fund, the presence of a majority of each Fund's shares outstanding
and entitled to vote constitutes a quorum. For MidCap Fund, the
presence in person or by proxy of the holders of record of
one-third of the Fund's aggregate total shares outstanding and
entitled to vote constitutes a quorum.
Shares over which broker-dealers have discretionary voting power and
shares whose proxies reflect an abstention on the proposal are all counted as
shares present and entitled to vote for purposes of determining whether the
required quorum of shares exists for the proposal.
Proposal 2: Changes to, or Elimination of, Fundamental Investment Policies.
Shareholders of each Fund will vote separately on each applicable sub-proposal
in Proposal 2. The presence in person or by proxy of the holders of record of
more than 50% of each Fund's shares outstanding and entitled to vote constitutes
a quorum for the sub-proposals in Proposal 2.
Shares that represent broker non-votes cannot be voted for any
sub-proposal and are not counted as shares present. Shares whose proxies
reflect an abstention on any sub-proposal are counted as shares present and
entitled to vote for purposes of determining whether the required quorum of
shares exists for each sub-proposal.
Required Vote
Proposal 1: Electing Trustees. Persons nominated as Trustees must receive a
plurality of the votes cast, which means that the six (6) (or seven (7))
nominees receiving the highest number of affirmative votes for each Fund cast at
the Meeting will be elected.
Proposal 2: Changes to, or Elimination of, Fundamental Investment Policies.
Each sub-proposal item contained in Proposal 2 requires the approval of a
"majority of the outstanding voting securities" of each Fund voting separately.
A "majority of the outstanding voting securities" means the lesser of one more
than half of the number of shares that are issued and outstanding as of the
Record Date or 67% of the voting shares of the Fund present at the Special
Meeting if more than 50% of the voting shares of the Fund are present at the
Special Meeting in person or by proxy. Abstentions will have the effect of a
"no" vote of obtaining requisite approval for the sub-proposals in Proposal 2.
In the event a quorum is not present or sufficient votes in favor of one
of the proposals set forth in the Notice of Meeting of Shareholders or is not
received by the date of the Meeting, the persons named in the enclosed proxy (or
their substitutes) may propose and approve one or more adjournments of the
Meeting to permit further solicitation of proxies. All such adjournments will
require the affirmative vote of a majority of the shares present in person or by
proxy at the session of the Meeting to be adjourned. The persons named as
proxies on the proxy ballots (or their substitutes) will vote the Shares present
in person or by proxy (including broker non-votes and abstentions) in favor of
such an adjournment if they determine additional solicitation is warranted and
in the interests of the Funds' shareholders. A vote may be taken on a proposal
in this proxy statement prior to any such adjournment if a quorum is present,
sufficient votes for its approval have been received and it is otherwise
appropriate.
How are votes counted? The individuals named as proxies on the proxy
ballots (or their substitutes) will vote according to your directions if your
proxy ballot is received and properly executed, or in accordance with the
instructions you provide if you vote by telephone, internet or mail.
With respect to nominees for Trustees, you may direct the proxy holders to
vote your shares "FOR ALL" Trustees or "FOR ALL EXCEPT" certain Trustees for
whom you choose to withhold authority to vote, or you may direct the proxy
holders to "WITHHOLD AUTHORITY FOR ALL" Trustees, in each case by checking the
appropriate boxes. With respect to each sub-proposal in Proposal 2, you may
direct the proxy holders to vote your shares on the sub-proposal by checking the
appropriate box "FOR" or "AGAINST", or instruct them not to vote those shares on
the sub-proposal by checking the "ABSTAIN" box.
If you properly execute and return a proxy ballot but fail to indicate how
the votes should be cast, the proxy ballot will be voted in favor of the
election of each of the nominees named in this Proxy Statement for Trustee and
in favor of each sub-proposal in Proposal 2.
Revoking a Proxy. You may revoke a previously granted proxy at any time
before it is exercised by (1) delivering a written notice to the Fund expressly
revoking your proxy, (2) signing and forwarding to the Funds a later-dated
proxy, or (3) telephone or internet or (4) attending the Meeting and casting
your votes in person if you are a record owner. Granted proxies typically will
be voted at the final meeting, but may be voted at an adjourned meeting if
appropriate. Please be advised that the deadline for revoking your proxy by
telephone or the internet is 3:00 p.m., Eastern Time, on the last business day
before the Meeting.
Shareholder Proposals. The Funds are not required and do not intend to
hold shareholder meetings on a regular basis. Special meetings of shareholders
may be called from time to time by either a Fund or the shareholders (for
certain matters and under special conditions described in the Funds' Statements
of Additional Information). Under the proxy rules of the SEC, shareholder
proposals that meet certain conditions may be included in a fund's proxy
statement for a particular meeting. Those rules currently require that for
future meetings, the shareholder must be a record or beneficial owner of Fund
shares either (i) with a value of at least $2,000 or (ii) in an amount
representing at least 1% of the Fund's securities to be voted, at the time the
proposal is submitted and for one year prior thereto, and must continue to own
such shares through the date on which the meeting is held. Another requirement
relates to the timely receipt by a Fund of any such proposal. Under those rules,
a proposal must have been submitted a reasonable time before the Fund began to
print and mail this Proxy Statement in order to be included in this Proxy
Statement. A proposal submitted for inclusion in a Fund's proxy material for
the next special meeting after the meeting to which this Proxy Statement relates
must be received by the Fund a reasonable time before the Fund begins to print
and mail the proxy materials for that meeting. Notice of shareholder proposals
to be presented at the Meeting must have been received within a reasonable time
before the Fund began to mail this Proxy Statement. The fact that the Fund
receives a proposal from a qualified shareholder in a timely manner does not
ensure its inclusion in the proxy material because there are other requirements
under the proxy rules for such inclusion.
Shareholder Communications to the Board
Shareholders who desire to communicate generally with the Board should
address their correspondence to the Board of Trustees of the applicable Fund and
may submit their correspondence by mail to the Fund at 6803 South Tucson Way,
Centennial, CO 80112, attention Secretary of the Fund; and if the correspondence
is intended for a particular Trustee, the shareholder should so indicate.
Reports to Shareholders and Financial Statements
The Annual Report to Shareholders of each Fund, including financial
statements of the Fund, has previously been sent to shareholders. Upon request,
each Fund's most recent annual and subsequent semi-annual report (if available)
is available at no cost. To request a report, please call the Funds toll-free
at 1-800-CALL OPP (1-800-225-5677), or write to the Funds at OppenheimerFunds
Services, P.O. Box 5270, Denver, Colorado 80217-5270.
To avoid sending duplicate copies of materials to households, the Funds
mail only one copy of each report to shareholders having the same last name and
address on the Funds' records. The consolidation of these mailings, called
householding, benefits the Funds through reduced mailing expenses.
If you want to receive multiple copies of these materials or request
householding in the future, you may call the transfer agent at 1.800.647.7374.
You may also notify the transfer agent in writing at 6803 South Tucson Way,
Centennial, Colorado 80112. Individual copies of prospectuses and reports will
be sent to you within 30 days after the transfer agent receives your request to
stop householding.
OTHER MATTERS
The Trustees do not intend to bring any matters before the Meeting other
than the Proposals described in this Proxy Statement, and the Trustees and the
Manager are not aware of any other matters to be brought before the Meeting by
others. Because matters not known at the time of the solicitation may come
before the Meeting, the proxy as solicited confers discretionary authority with
respect to such matters as properly come before the Meeting, including any
adjournment or adjournments thereof, and it is the intention of the persons
named as attorneys-in-fact in the proxy (or their substitutes) to vote the proxy
in accordance with their judgment on such matters.
By Order of the Board of Trustees/Directors
Robert G. Zack, Secretary
September 23, 2005
APPENDIX A
AMENDED AND RESTATED CHARTER OF THE
AUDIT COMMITTEE
OF THE
Board III Oppenheimer Funds
(Adopted June 17, 2004)
The Audit Committee shall assist the Boards of the "Board III Oppenheimer
funds" (each, a "Fund" and collectively, the "Funds") in connection with the
Boards' oversight of the integrity of each Fund's semi-annual and annual
financial statements, its compliance with legal and regulatory requirements, the
qualifications and independence of its independent auditors and the performance
of its independent auditors and the internal audit function. The Committee shall
oversee the accounting and financial reporting processes and audits of the
financial statements of the Funds, and shall assist the Boards of
Trustees/Directors of the Funds in carrying out other functions assigned to it
by the Boards.
In carrying out its functions, the Committee shall have the following
responsibilities, functions and authority:
1. The Committee shall be responsible for the appointment, subject, if
applicable, to shareholder ratification, (or decision to terminate),
compensation and oversight of the work of the independent certified public
accountants and auditors of each Fund (the "Auditors") for the purpose of
preparing or issuing audit reports or related work. The Auditors shall
report directly to the Committee.
1.01 As a condition on retaining the Auditors or continuing their engagement,
the Committee shall require the Auditors to rotate the lead or
concurring audit partner for a Fund at least every five fiscal years.
1.02 As a condition of engaging the Auditors or continuing their engagement,
the Committee shall ascertain that the Fund's Chief Executive
Officer, Controller (if any), Chief Financial Officer, Chief
Accounting Officer (if any) or any person serving in an equivalent
position was not employed by the Auditors and did not participate in
any capacity on behalf of the Auditors in the audit of the Fund
during the one-year preceding the date of the initiation of the
audit for which the Auditors are engaged.
1.03 Upon the request of the Auditors or fund management, the Committee shall
have the authority to pre-approve the performance by the Auditors of
any non-audit service, including tax services, for a Fund, if such
service is not a prohibited service under Section 201 of the
Sarbanes-Oxley Act of 2002, and such pre-approval shall be required
before any such service may be performed for a Fund. The Committee
shall timely advise the Chief Executive Officer and Chief Financial
Officer of the Fund (or whoever shall be responsible for preparing
and filing a Fund's reports under Section 13(a) of the Securities
Exchange Act of 1934) of the approval of such non-audit service and
shall direct that such service be disclosed in such reports.
2. The Committee shall maintain a direct line of communication and meet with
the Auditors for each Fund to review at least annually based upon
information provided by the Auditors:
2.01 The scope of audits and audit reports;
2.02 The personnel, staffing, qualifications and experience of the Auditors;
2.03 The independence of the Auditors, including certification by the Auditors
of their independence and assurances by the Auditors that they have
not provided to such Fund any non-audit services that are prohibited
by the Sarbanes-Oxley Act of 2002, including:
(a) bookkeeping or other services related to the accounting records or
financial statements of the Fund;
(b) financial information systems design and implementation;
(c) appraisal or valuation services, fairness opinions or contribution-in-kind
reports;
(d) actuarial services;
(e) internal audit outsourcing services;
(f) management functions or human resources;
(g) broker or dealer, investment adviser, or investment banking services;
(h) legal services or expert services unrelated to audit; and
(i) any other service that the Public Company Accounting Oversight Board
determines is impermissible.
2.04 The Auditor's internal quality-control procedures and any material
issues raised by the most recent internal quality-control review, or
peer review, of the firm, or by any inquiry or investigation by
governmental or professional authorities, within the preceding five
years, respecting one or more independent audits carried out by the
firm, and any steps taken to deal with any such issues;
2.05 The compensation of the Auditors;
2.06 The audited financial statements and other financial information
submitted by the Auditors;
2.07 All material written communications between the officers of the Fund and
officers of its investment manager, and the Auditors, including
(without limitation) any management letters submitted by the
Auditors in connection with audits of financial statements of such
Fund and the responses of the Fund's management;
2.08 All recommendations and comments submitted to the Boards of the Funds
or the
Committee by the Auditors, either written or verbal;
2.09 All critical accounting policies and practices to be used; all
alternative treatments of financial information within generally
accepted accounting principles that have been discussed with
management of a Fund, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
Auditors; changes in accounting and auditing procedures, principals,
practices, standards and reporting;
2.10 Determination of areas of substantial risk in accurate reporting of
financial results and operations of the Fund;
2.11 Any problems or difficulties encountered in the course of the audit
of the Fund, and management's response,
2.12 The qualifications of the principal financial officer of the Funds;
2.13 Matters required to be discussed pursuant to Statement of Auditing
Standards No. 61; and
2.14 Tax matters affecting the Fund, including:
(a) Compliance with the provisions of the Internal Revenue Code and
regulations, including annual reviews for such Fund concerning
qualification as a regulated investment company under the
Internal Revenue Code; and
(b) Tax legislation and rulings.
3. The Committee shall also receive and review reports and materials
submitted by any certified public accounting or auditing firm concerning
the following matters:
3.01 Reports concerning the policies, procedures, operating effectiveness and
internal controls of the investment manager's Accounting Department,
3.02 Reports concerning portfolio accounting system software used by the
investment manager and its Accounting Department's use and
implementation thereof;
3.03 Reports concerning the internal controls and performance of the Funds'
Transfer Agent under and compliance with shareholder servicing and
transfer agency agreements which relate to Fund accounting matters
or a Fund's financial statements; and
3.04 Reports and materials concerning the classes of shares of the Funds,
including the Manager's operations and control policies and
procedures, net asset value per share calculations, dividend and
distribution determinations and allocations of income and expenses.
4. The Committee shall also consider and review the following matters:
4.01 Reports from the Internal Auditing Department of the Funds' investment
manager and the Committee shall from time to time meet with the
investment manager's internal audit staff to discuss the reports;
4.02 Annual and semi-annual reports for the Funds, and the Committee shall from
time to time meet with appropriate personnel of the investment
manager's Accounting Department for this purpose;
4.03 Matters relating to a Fund's Custodian(s) that relate to audit issues;
4.04 Valuation of portfolio investments, including determinations of fair
value or the procedures for the determination of the fair value of
any such investments as do not have a readily ascertainable market
value;
4.05 Reports concerning allocations of fidelity blanket bond and D&O/E&O
insurance premiums and coverages;
4.06 Reports concerning multi-peril property and casualty insurance;
4.07 Reports concerning undistributed income and capital gains, and other
items pertaining to Fund dividends and their accruals;
4.08 Review of periodic reports from each Fund's Chief Executive Officer and
Chief
Financial Officer (or any disclosure committee of the
investment manager of the
Fund or whoever is responsible for the preparation and filing
of the Fund's
periodic reports under the Securities Exchange Act of 1934) on
disclosure
controls and procedures required under Rules 13a-15 and 15d-15
(as they may be
amended from time to time) of the Securities Exchange Act of
1934, and the
evaluation of the effectiveness of the design and operation of
such disclosure
controls and procedures and the identification of significant
changes thereto;
4.09 Reports from the investment manager concerning compliance with Fund
policies
as well as applicable regulations and laws;
4.10 Reports from the Chief Executive Officer and Chief Financial Officer of
the
Funds as to the certification of periodic reports filed under
the Securities
Exchange Act of 1934; and
4.11 Any other matters referred to it by the Board or Chief Executive
Officer of any Fund.
5. The Committee shall recommend to the Board of each Fund whether its
audited and semi-annual financial statements should be published and
included in any filing with the Securities and Exchange Commission,
including, without limitation, the annual report to shareholders required
by Rule 30d-1 under the Investment Company Act of 1940 (the "1940 Act").
6. The Committee shall evaluate and make recommendations regarding the
compensation and expenses paid and other benefits provided by the Funds to
the independent and interested Board members.
7. The Committee shall select and nominate for approval by the Board nominees
for new independent Board members. The Committee may, but need not,
consider the advice and recommendation of the Funds' investment manager
and its affiliates in making the selection.
8. The Committee shall render reports to the Boards with respect to the
results of its reviews and its recommendations, if any.
9. The Committee shall consider and make recommendations to the Board
regarding adoption of fund governance policies and practices, including
consideration of legal requirements and "best practices" recommended or
adopted by investment company trade associations, auditing firms or other
professional organizations.
10. The Committee shall receive and review reports to be provided by the
investment manager of the Funds, or the investment manager's affiliates,
legal counsel, and/or auditors, disclosing in a timely manner any material
impairment of the investment manager's ability to provide effective
investment management, shareholder servicing, or distribution services to
a Fund or the Funds, including without limitation any material financial
impairment, material accounting irregularities, material adverse
litigation or regulatory proceeding or investigation, or material adverse
public relations matter affecting the investment manager, the general
distributor, and/or the transfer agent and/or its or their key management
personnel.
11. The Committee shall establish and periodically review procedures for: (A)
the receipt, retention and treatment of complaints received by the Funds
regarding accounting, internal accounting controls, or auditing matters;
and (B) the confidential, anonymous submission by employees of the Funds,
investment manager, transfer agent, general distributor, or any other
provider of accounting related services for the Funds of concerns
regarding accounting or auditing matters related to the Funds.
12. The Committee shall serve as the Fund's Qualified Legal Compliance
Committee ("QLCC") pursuant to the Securities and Exchange Commission's
"Standards of Professional Conduct for Attorneys Appearing and Practicing
Before the Commission in the Representation of an Issuer" as set forth in
17 CFR, Part 205.2 of Title 17, Chapter II of the Code of Federal
Regulations ("SEC Attorney Reporting Regulations") and the Funds'
compliance procedures implementing those standards for the attorneys who
represent the Funds before the Securities and Exchange Commission ("Fund's
Attorney Reporting Procedures"). The QLCC shall establish procedures for
the confidential receipt, retention and consideration of any report of
Evidence of a Material Violation" (as that term is defined in the SEC
Attorney Reporting Regulations.
12.01 The QLCC shall have the authority and responsibility to (i) notify the
Fund's Chief Legal Officer and Principal Executive Officer (or the
equivalents thereof) of any Evidence of a Material Violation (ii) to
determine if an investigation is warranted, and if so, to direct the
Chief Legal Officer or Outside Counsel (as that term is defined in
the Fund's Attorney Reporting Procedures) to conduct such an
investigation, notify the Board of such investigation, and retain
expert personnel; (iii) at the conclusion of the investigation, to
recommend, by majority vote, that the Fund implement an appropriate
response to Evidence of a Material Violation, and inform the Chief
Legal Officer, Principal Executive Officer (or the equivalents
thereof) and the Board of the result of the investigation and
appropriate remedial measures.
12.02 The QLCC shall have the authority and responsibility, acting by majority
vote, to take "all other appropriate action," including the
authority to notify the Securities and Exchange Commission of the
Fund's failure to take appropriate action.
13. The Committee shall meet upon the call of the Chairman and the Committee
may set its agendas and the places and times of Committee meetings. The
Committee may request reports and other information from the Funds'
investment manager, general distributor, and Transfer Agent and may
request officers and personnel of such entities to meet with the Committee
from time to time. The Committee shall periodically meet, assisted at its
discretion by outside legal counsel or other advisors, alone and outside
the presence of personnel of such entities, and separately with the
Auditors or with internal auditors. The Committee may employ and meet
with any experts and other persons as it deems necessary to perform its
functions. The Committee shall keep minutes and records of its meetings
and shall report to the Board.
14. The Committee shall be composed of at least three members, all of whom are
independent Board members (those who are not "interested persons" of the
Fund as defined by section 2(a)(19) of the 1940 Act).
15. The Board shall determine whether any of the Audit Committee's members is
a "financial expert" (as defined by the Securities and Exchange Commission
pursuant to the Sarbanes-Oxley Act of 2002).
16. Committee members shall not accept any consulting, advisory or other
compensatory fee from a Fund except in their capacity as a member of the
Committee, the Board of Trustees/Directors, or any other committee of the
Board.
17. The term of the Chairman of the Committee shall be one year. The Chairman
and the Members of the Committee shall be appointed by the Chairman of the
Board of the Funds, provided that the Chairman of the Board of the Funds
is an independent Board member, otherwise by the full Board.
18. The Committee shall have the authority to engage independent legal counsel
(which may be the same counsel as counsel to the independent
Trustees/Directors of the Board) and other advisers as it deems necessary
to carry out its duties.
19. The Committee shall evaluate and make recommendations to the Board
regarding any retirement plan, deferred compensation plan and other
benefits provided by the Fund to independent and interested Board Members.
20. The Committee shall review this Charter and its own performance annually
and recommend to the Boards any changes to the Charter that the Committee
deems appropriate. This Charter may be amended or modified from time to
time by the Board of any Fund with respect to that Fund.
Amended and approved by the Boards of the Board
III Oppenheimer Funds on June 17, 2004
-------------------------------
Robert G. Zack, Secretary of the Funds
PROXY CARD OPPENHEIMER FUNDS PROXY CARD
PROXY FOR A JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 5, 2005
The undersigned, revoking prior proxies, hereby appoints Brian Wixted,
Philip Vottiero, and Kathleen Ives, and each of them, as attorneys-in-fact
and proxies of the undersigned, with full power of substitution, to vote
shares held in the name of the undersigned on the record date at the Joint
Special Meeting of Shareholders to be held at 6803 South Tucson Way,
Centennial, Colorado, 80112, on December 5, 2005, at 1:00 P.M. Mountain
time, or at any adjournment thereof, upon the proposal described in the
Notice of Meeting and accompanying Proxy Statement, which have been received
by the undersigned.
This proxy is solicited on behalf of each Fund's Board of
Trustees/Directors, and the proposals (set forth on this proxy card) have
been proposed by the Board of Trustees/Directors.
When properly executed, this proxy will be voted as indicated or "FOR" the
proposals if no choice is indicated. The proxy will be voted in accordance
with the proxy holders' best judgment as to any other matters that may arise
at the Meeting.
VOTE VIA THE INTERNET:
https://vote.proxy-direct.com
VOTE VIA THE TELEPHONE:
1-866-241-6192
999 9999 9999 999
FUNDS FUNDS FUNDS FUNDS
- ----- ----- ----- -----
Convertible Securities MidCap Quest Capital Value Quest
Balanced
Quest Opportunity Value Quest Small- & Mid- Cap Value Quest
International Value Quest Value
Rochester Fund Municipals Limited Term NY Municipal
PLEASE MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example:
1. To elect a Board of Trustees
01 Paul Y. Clinton 02 Thomas W. Courtney03 Robert G. Galli
04 Lacy B. Hermann 05 John W. Murphy 06 Brian F. Wruble
For Withhold Authority For All
For Withhold Authority For All For Withhold
Authority For All
For All Except For
All
Except For
All Except
MidCap Quest Balanced Quest Capital Value
Quest International Value Quest Opportunity Value Quest Value
Small- & Mid- Cap Value
If you wish to withhold authority to vote your shares "FOR" a particular
nominee, mark the "FOR ALL EXCEPT" box and write the nominee's number(s) on
the line provided. Your shares will be voted "FOR" any remaining
nominee(s).
- -------------------------------------------------------------------
1. To elect a Board of Trustees
01 Paul Y. Clinton 02 Thomas W. Courtney03 Robert G. Galli
04 Lacy B. Hermann 05 John W. Murphy 06 Brian F. Wruble
07 John Cannon
For Withhold Authority For All
For Withhold Authority For All For Withhold
Authority For All
For All Except For
All
Except For
All Except
Convertible Securities Limited Term NY Municipal Rochester Fund
Municipals
If you wish to withhold authority to vote your shares "FOR" a particular
nominee, mark the "FOR ALL EXCEPT" box and write the nominee's number(s) on
the line provided. Your shares will be voted "FOR" any remaining nominee(s).
2. To approve changes to, or the elimination of certain fundamental investment
policies of the Funds
2.a. To Approve Changes to the Funds' Policies on Borrowing
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Convertible Securities Limited Term NY Municipal Quest Balanced
Quest Capital Value Quest International Value Quest Opportunity
Value
Quest Value Rochester Fund Municipals Small- & Mid- Cap
Value
2.b. To Approve Changes to the Funds' Fundamental Investment Policies Regarding
Concentration of Investments in an Industry
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Convertible Securities Limited Term NY Municipal MidCap
Quest Balanced Quest Capital Value Quest International
Value
Quest Opportunity Value Quest Value Rochester Fund
Municipals
Small- & Mid- Cap Value
2.c. To Amend the Policy on Diversification of Investments
FOR AGAINST ABSTAIN FOR AGAINST
ABSTAIN FOR AGAINST ABSTAIN
Convertible Securities Limited Term NY Municipal MidCap
Quest Balanced Quest Capital Value Quest International
Value
Quest Opportunity Value Quest Value Rochester Fund
Municipals
Small- & Mid- Cap Value
2.d. To Eliminate Policy on Put and Call Options
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Convertible Securities Limited Term NY Municipal Quest Value
2.e. To Eliminate the Policy on Investment in Issuers of Whose Shares are Owned
by the Fund's Trustees or Officers
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Convertible Securities Limited Term NY Municipal Quest Balanced
Quest Capital Value Quest International Value Quest Opportunity
Value
Quest Value Rochester Fund Municipals Small- & Mid- Cap
Value
2.f. To Reclassify, as Non-Fundamental, the Policy on
Investing in Other Investment Companies
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Convertible Securities Quest International Value Quest Value
2.g. To Approve Changes to the Funds' Fundamental Investment Policies Regarding
Making Loans
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Convertible Securities Limited Term NY Municipal MidCap
Quest Balanced Quest Capital Value Quest International
Value
Quest Opportunity Value Quest Value Rochester Fund
Municipals
Small- & Mid- Cap Value
2.h. To Eliminate the Policy on Margin and Short Sales
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Convertible Securities Limited Term NY Municipal
Rochester Fund Municipals
2.i. To Eliminate the Policy on Pledging, Mortgaging or Hypothecating of Assets
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Limited Term NY Municipal Quest Balanced Fund Quest Capital Value
Fund
Quest International Value Quest Opportunity Value Quest Value
Rochester Fund Municipals Small- & Mid-Cap Value
2.j. To Amend the Policies on Real Estate and Commodities
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Convertible Securities Limited Term NY Municipal MidCap
Quest Balanced Quest Capital Value Quest International
Value
Quest Opportunity Value Quest Value Rochester Fund
Municipals
Small- & Mid- Cap Value
2.k. To Amend the Policy on Senior Securities
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Convertible Securities Limited Term NY Municipal MidCap
Quest Balanced Quest Capital Value Quest International
Value
Quest Opportunity Value Quest Value Rochester Fund
Municipals
Small- & Mid- Cap Value
2.l. To Amend the Policy on Underwriting
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Convertible Securities Limited Term NY Municipal MidCap
Quest Balanced Quest Capital Value Quest International
Value
Quest Opportunity Value Quest Value Rochester Fund
Municipals
Small- & Mid- Cap Value
2.m. To Eliminate Policy on Investments in Unseasoned Issuers
FOR AGAINST ABSTAIN
Convertible Securities
2.n. To Eliminate Policies on Miscellaneous Investment Restrictions (Warrants
and Other Equity Securities)
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Convertible Securities Limited Term NY Municipal Quest Opportunity
Value
2.o. To Eliminate the Policy on Investing to Exercise Control
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Limited Term NY Municipal Quest Balanced Quest
Capital Value
Quest International Value Quest Opportunity Value Quest Value
Rochester Fund Municipal Small- & Mid- Cap Value
