OppenheimerFunds, Inc.
498 Seventh Avenue
New York, New York 10018
June 19, 2003
VIA EDGAR
- ---------
Securities and Exchange Commission
SEC Filer Support
Mail Stop 0-7; Securities Operations Center
6432 General Green Way
Alexandria, VA 22312
Re: Form N-14 Registration Statement/Proxy Oppenheimer
Select Managers QM Active Balanced Fund/Oppenheimer Multiple
Strategies Fund
Dear Madam/Sir:
Enclosed for filing with the Securities and Exchange
Commission (the "Commission") under the Securities Act of
1933, as amended (the "1933 Act"), is a Registration
Statement on Form N-14 (the "Registration Statement") of
Oppenheimer Multiple Strategies Fund (the "Registrant"), an
open-end investment company. The Registration Statement
includes the prospectus of the Registrant and the proxy
statement of Oppenheimer Select Managers QM Active Balanced
Fund, a separate open-end investment company. The
prospectus/proxy statement included in this filing had
previously been filed with the Commission (Registration No.
333-105374, referred to as the "Previous Filing") on May
19, 2003, which filing was withdrawn on June 19, 2003.
The prospectus and proxy statement included in this
filing incorporates the comments given by the Commission
with respect to the Previous Filing. We plan to file a
pre-effective amendment to this registration statement to
file the remaining items not included in this filing.
We also will file separately, a request to accelerate
the effectiveness of this registration/proxy statement
pursuant to Rule 461 of the 1933 Act, seeking effectiveness
on June 30, 2003. The solicitation of Oppenheimer Select
Managers QM Active Balanced Fund shareholders is expected
to commence promptly thereafter.
Thank you for your attention to this matter. Please
contact me if you have any questions or comments.
Sincerely,
/s/ Peter E.Pisapia
-------------------------------
Assistant Vice President and
Assistant Counsel
T:(212) 323-0248
Fax: (212)323-4071
ppisapia@oppenheimerfunds.com
Registration No.
As filed with the Securities and Exchange Commission on June 20, 2003
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO.__ / /
OPPENHEIMER MULTIPLE STRATEGIES FUND
(Exact Name of Registrant as Specified in Charter)
6803 South Tucson Way, Centennial, Colorado 80112
(Address of Principal Executive Offices)
303-768-3200
(Registrant's Telephone Number)
Robert G. Zack, Esq.
Senior Vice President & General Counsel
OppenheimerFunds, Inc.
498 Seventh Avenue, New York, New York 10018
(212) 323-0250
(Name and Address of Agent for Service)
As soon as practicable after the Registration Statement becomes effective.
(Approximate Date of Proposed Public Offering)
Title of Securities Being Registered: Class A, Class B, Class C and Class N
shares of Oppenheimer Multiple Strategies Fund.
No filing fee is due because of reliance on Section 24(f) of the Investment
Company Act of 1940.
- ------------------------------------------------------------------------------
The Registrant hereby amends the Registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with section 8(a)
of the Securities Act of 1933 or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to Section
8(a), shall determine.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Part A
Proxy Statement for Oppenheimer Select Managers QM Active Balanced Fund and
Prospectus for Oppenheimer Multiple Strategies Fund
Exhibit A - Agreement and Plan of Reorganization between Oppenheimer Select
Mangers QM Active Balanced Fund and Oppenheimer Multiple Strategies Fund
Exhibit B - Principal Shareholders
Part B
Statement of Additional Information
Part C
Other Information
Signatures
Exhibits
OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND
6803 South Tucson Way, Centennial CO 80112
1.800.708.7780
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 29, 2003
To the Shareholders of Oppenheimer Select Managers QM Active Balanced Fund:
Notice is hereby given that a Special Meeting of the Shareholders of
Oppenheimer Select Managers QM Active Balanced Fund ("QMAB Fund"), a
registered investment management company, will be held at 6803 South Tucson
Way, Centennial, CO 80112 at 1:00 p.m., Mountain time, on August 29, 2003, or
any adjournments thereof (the "Meeting"), for the following purposes:
1. To approve an Agreement and Plan of Reorganization between Oppenheimer
Select Managers QM Active Balanced Fund ("QMAB Fund") and Oppenheimer
Multiple Strategies Fund ("MS Fund'), and the transactions contemplated
thereby, including (a) the transfer of all the assets of QMAB Fund to MS Fund
in exchange for Class A, Class B, Class C and Class N shares of MS Fund, (b)
the distribution of these shares of MS Fund to the corresponding Class A,
Class B, Class C and Class N shareholders of QMAB Fund in complete
liquidation of QMAB Fund, (c) the cancellation of the outstanding class
shares of QMAB Fund and (d) the liquidation of outstanding Class Y shares of
QMAB Fund (all of the foregoing being referred to as the "Proposal").
2. To act upon such other matters as may properly come before the
Meeting.
Shareholders of record at the close of business on June 18, 2003 are entitled
to notice of, and to vote at, the Meeting. The Proposal is more fully
discussed in the Proxy Statement and Prospectus. Please read it carefully
before telling us, through your proxy or in person, how you wish your shares
to be voted. The Board of Trustees of QMAB Fund recommends a vote in favor
of the Proposal. WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY
PROMPTLY.
By Order of the Board of Trustees,
Robert G. Zack, Secretary
July 7, 2003
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Shareholders who do not expect to attend the Meeting are requested to
indicate voting instructions on the enclosed proxy and to date, sign and
return it in the accompanying postage-paid envelope. To avoid unnecessary
duplicate mailings, we ask your cooperation in promptly mailing your proxy no
matter how large or small your holdings may be.
OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND
6803 South Tucson Way, Centennial CO 80112
1.800.708.7780
COMBINED PROSPECTUS AND PROXY STATEMENT
DATED JULY 7, 2003
Acquisition of the Assets of OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED
FUND
By and in exchange for Class A, Class B, Class C, and Class N shares of
OPPENHEIMER MULTIPLE STRATEGIES FUND
This combined Prospectus and Proxy Statement solicits proxies from the
shareholders of Oppenheimer Select Managers QM Active Balanced Fund ("QMAB
Fund") to be voted at a Special Meeting of Shareholders (the "Meeting") to
approve the Agreement and Plan of Reorganization (the "Reorganization
Agreement") and the transactions contemplated thereby (the "Reorganization")
between QMAB Fund and Oppenheimer Multiple Strategies Fund ("MS Fund"). This
combined Prospectus and Proxy Statement constitutes the Prospectus of MS Fund
and the Proxy Statement of QMAB Fund filed on Form N-14 with the Securities
and Exchange Commission ("SEC"). If shareholders vote to approve the
Reorganization Agreement and the Reorganization, the net assets of QMAB Fund
will be acquired by and in exchange for shares of MS Fund. The Meeting will
be held at the offices of OppenheimerFunds, Inc. at 6803 South Tucson Way,
Centennial, CO 80112 at 1:00 p.m., Mountain time, on August 29, 2003 or any
adjournment thereof. The Board of Trustees of QMAB Fund is soliciting these
proxies on behalf of QMAB Fund. This Prospectus and Proxy Statement will
first be sent to shareholders on or about July 14, 2003.
If the shareholders vote to approve the Reorganization Agreement, you
will receive Class A shares of MS Fund equal in value to the value as of the
Valuation Date (as defined in the Agreement and Plan of Reorganization: the
business day preceding the Closing Date of the Reorganization) of your Class
A shares of QMAB Fund; Class B shares of MS Fund equal in value to the value
as of the Valuation Date of your Class B shares of QMAB Fund; Class C shares
of MS Fund equal in value to the value as of the Valuation Date of your Class
C shares of QMAB Fund; and Class N shares of MS Fund equal in value to the
value as of the Valuation Date of your Class N shares of QMAB Fund. Class Y
shares of QMAB Fund have been liquidated. QMAB Fund will then be liquidated
and de-registered under the Investment Company Act of 1940 (the "Investment
Company Act").
MS Fund's investment objective is to seek high total investment return
consistent with preservation of principal. MS Fund invests in equity
securities, such as common stocks of U.S and foreign companies. It invests
in debt securities, including bonds and notes issued by domestic and foreign
companies (which can include lower-grade, high-yield securities), securities
issued or guaranteed by the U.S. Government and its agencies and
instrumentalities, including mortgage-related securities (these are referred
to as "U.S. Government securities"), and debt obligations of foreign
governments. MS Fund also invests in money market instruments, which are
obligations that have a maturity of 13 months or less, including short-term
U.S. Government securities, corporate and bank debt obligations and
commercial paper.
This Prospectus and Proxy Statement gives information about Class A,
Class B, Class C and Class N shares of MS Fund that you should know before
investing. You should retain it for future reference. A Statement of
Additional Information relating to the Reorganization described in this
Prospectus and Proxy Statement, dated July 7, 2003 (the "Proxy Statement of
Additional Information") has been filed with the SEC as part of the
Registration Statement on Form N-14 (the "Registration Statement") and is
incorporated herein by reference. You may receive a copy by written request
to OppenheimerFunds Services free of charge (the "Transfer Agent") or by
calling the toll-free number 1.800.708.7780. The Proxy Statement of
Additional Information includes the following documents: (i) audited
financial statements for the 12-month period ended September 30, 2002, and
financial statements for the six-month period ended March 31, 2003,
respectively, of MS Fund; (ii) audited financial statements for the 12-month
period ended November 30, 2002, and financial statements for the six-month
period ended May 31, 2003 (to be filed upon availability), respectively, of
QMAB Fund; (iii) MS Fund Statement of Additional Information, dated November
22, 2002, as supplemented February 12, 2003; and (iv) QMAB Fund Statement of
Additional Information.
The Prospectus of MS Fund, dated November 22, 2002, as supplemented
January 13, 2003, is attached to and considered a part of this Prospectus and
Proxy Statement and is intended to provide you with information about MS Fund.
Mutual fund shares are not deposits or obligations of any bank, and are not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other U.S. government agency. Mutual fund shares involve investment risks
including the possible loss of principal.
As with all mutual funds, the SEC has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus and Proxy
Statement. Any representation to the contrary is a criminal offense.
This Prospectus and Proxy Statement is dated July 7, 2003.
TABLE OF CONTENTS
COMBINED PROSPECTUS AND PROXY STATEMENT
Page
----
Synopsis
What am I being asked to vote on?............................................6
What are the general tax consequences of the Reorganization?....................7
Comparisons of Some Important Features
How do the investment objectives and policies of the Funds compare?.............7
Who manages the Funds?..........................................................7
What are the fees and expenses of each Fund and those expected after the
Reorganization?...........................................................8
Where can I find more financial information about the Funds?.................12
What are the capitalizations of the Funds and what would the
capitalizations be after the
Reorganization?...........................................................12
How have the Funds performed?................................................13
What are other Key Features of the Funds?....................................20
Investment Management and Fees.........................................20
Transfer Agency and Custody Services...................................20
Distribution Services..................................................21
Purchases, Redemptions, Exchanges and other Shareholder
Services..................... 21
Dividends and Distributions............................................21
What are the Principal Risks of an Investment in QMAB Fund and MS Fund?.........21
Reasons for the Reorganization
Information about the Reorganization
How will the Reorganization be carried out?..................................23
Who will pay the Expenses of the Reorganization?.............................24
What are the Tax Consequences of the Reorganization?.........................25
What should I know about Class A, Class B, Class C and Class N shares of
MS Fund?........................................................................25
Comparison of Investment Objectives and Policies
Are there any significant differences between the investment objectives
and strategies of
the Funds?................................................................26
What are the main risks associated with an investment in the
Funds?.............................. 26
How do the investment policies of the Funds compare?.........................26
What are the fundamental investment restrictions of the Funds?...............31
How do the Account Features and Shareholder Services for the Funds
Compare?............... 32
Investment Management..................................................32
Distribution...........................................................33
Purchases and Redemptions..............................................34
Shareholder Services...................................................34
Dividends and Distributions............................................34
Voting Information
How many votes are necessary to approve the Reorganization
Agreement?....................... 35
How do I ensure my vote is accurately recorded?..............................35
Can I revoke my proxy?.......................................................36
What other matters will be voted upon at the Meeting?....................... 36
Who is entitled to vote?.....................................................36
What other solicitations will be made?.......................................36
Are there any appraisal rights?..............................................37
Information about MS Fund.......................................................37
Information about QMAB Fund.....................................................37
Principal Shareholders..........................................................38
Exhibit A - Agreement and Plan of Reorganization by and between Oppenheimer
Select
Managers QM Active Balanced Fund and Oppenheimer Multiple Strategies Fund
Exhibit B - Principal Shareholders
Enclosures:
Prospectus of Oppenheimer Multiple Strategies Fund dated November 22, 2002,
as supplemented January 13, 2003
Semi-Annual Report of Oppenheimer Multiple Strategies Fund dated March 31,
2003 (available without charge upon request, by calling 1.800.708.7780).
SYNOPSIS
This is only a summary and is qualified in its entirety by the more
detailed information contained in or incorporated by reference in this
Prospectus and Proxy Statement and by the Reorganization Agreement which is
attached as Exhibit A. Shareholders should carefully review this Prospectus
and Proxy Statement and the Reorganization Agreement in their entirety and,
in particular, the current Prospectus of MS Fund which accompanies this
Prospectus and Proxy Statement and is incorporated herein by reference.
If shareholders of QMAB Fund approve the Reorganization,
the net assets of QMAB Fund will be transferred to MS Fund, in
exchange for an equal value of shares of MS Fund. The shares of
MS Fund will then be distributed to QMAB Fund shareholders and
QMAB Fund will be liquidated. As a result of the Reorganization,
you will cease to be a shareholder of QMAB Fund and will become a
shareholder of MS Fund. For federal income tax purposes, the
holding period of your QMAB shares will be carried over to the
holding period for shares you receive in connection with the
Reorganization. This exchange will occur on the Closing Date (as
such term is defined in the Agreement and Plan of Reorganization
attached hereto as Exhibit A) of the Reorganization."
What am I being asked to vote on?
Your Fund's investment manager, OppenheimerFunds, Inc. (the "Manager"),
proposed to the Board of Trustees a reorganization of your Fund, QMAB Fund,
with and into MS Fund so that shareholders of QMAB Fund may become
shareholders of a substantially larger fund advised by the same investment
advisor with generally more favorable long-term performance, and investment
objectives and policies similar to those of their current Fund. The Board
considered the differences in investment focus, discussed below. The Board
also considered the fact that the surviving fund has the potential for lower
overall operating expenses. In addition, the Board considered that both
Funds have Class A, Class B, Class C and Class N shares offered under
identical sales charge arrangements. The Board considered that Class Y
shares of QMAB Fund would be redeemed by the record date and will no longer
be offered for sale. The Board also considered that the Reorganization is
expected to be a tax-free reorganization, and there would be no sales charge
imposed in effecting the Reorganization. In addition, due to the relatively
moderate costs of the reorganization, the Boards of both Funds concluded that
neither Fund would experience dilution as a result of the Reorganization.
A reorganization of QMAB Fund with and into MS Fund is recommended by
the Manager based on the fact that both funds have similar investment
practices and industry sector weightings.
At a meeting held on April 28, 2003, the Board of Trustees of QMAB Fund
approved a reorganization transaction that will, if approved by shareholders,
result in the transfer of the net assets of QMAB Fund to MS Fund, in exchange
for an equal value of shares of MS Fund. The shares of MS Fund will then be
distributed to QMAB Fund shareholders and QMAB Fund will subsequently be
liquidated. As a result of the Reorganization, you will cease to be a
shareholder of QMAB Fund and will become a shareholder of MS Fund. This
exchange will occur on the Closing Date (as such term is defined in the
Agreement and Plan of Reorganization attached hereto as Exhibit A) of the
Reorganization.
Approval of the Reorganization means you will receive Class A shares of
MS Fund equal in value to the value as of the Valuation Date of your Class A
shares of QMAB Fund; Class B shares of MS Fund equal in value to the value as
of the Valuation Date of your Class B shares of QMAB Fund; Class C shares of
MS Fund equal in value to the value as of the Valuation Date of your Class C
shares of QMAB Fund; and Class N shares of MS Fund equal in value to the
value as of the Valuation Date of your Class N shares of QMAB Fund. All Class
Y shares of QMAB Fund will be redeemed by the record date and will no longer
be offered for sale. The shares you receive will be issued at net asset
value without a sales charge or the payment of a contingent deferred sales
charge ("CDSC"), although if your shares of QMAB Fund are subject to a CDSC,
your MS Fund shares will continue to be subject to the same CDSC applicable
to your shares, and the period during which you held your QMAB Fund shares
will carryover to your MS Fund shares for purposes of determining the CDSC
holding period.
For the reasons set forth in the "Reasons for the Reorganization"
section, the Board of QMAB Fund has determined that the Reorganization is in
the best interests of the shareholders of QMAB Fund.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION
What are the general tax consequences of the Reorganization?
It is expected that shareholders of QMAB Fund who are U.S. citizens
will not recognize any gain or loss for federal income tax purposes, as a
result of the exchange of their shares for shares of MS Fund. You should,
however, consult your tax advisor regarding the effect, if any, of the
Reorganization in light of your individual circumstances. You should also
consult your tax advisor about state and local tax consequences. For further
information about the tax consequences of the Reorganization, please see the
"Information About the Reorganization--What are the Tax Consequences of the
Reorganization?"
Comparisons of Some Important Features
How do the investment objectives and policies of the Funds compare?
QMAB Fund seeks income and long-term growth of capital and MS Fund
seeks high total investment return consistent with preservation of principal.
QMAB Fund is a balanced fund which means its investments normally are
allocated among equity and debt securities and money market instruments.
In seeking their investment objectives, QMAB Fund and MS Fund utilize a
similar investing strategy. Both Funds invest primarily in a wide variety of
equity securities, debt securities and money market instruments.
Please refer to the Annual Reports of both Funds for a complete listing
of the investments for each Fund.
Who Manages the Funds?
The day-to-day management of the business and affairs of each Fund is the
responsibility of the Manager, however QMAB Fund also utilizes sub-advisers to
manage the investment and reinvestment of the assets. MS Fund is an open-end,
diversified management investment company with an unlimited number of authorized
shares of beneficial interest, organized as a Massachusetts business trust. Its
predecessor fund, OMC Growth & Income Trust, was organized on September 29,
1983. OMC Growth & Income Trust commenced operations in September 1983. QMAB
Fund is an open-end, management investment company with an unlimited number of
authorized shares of beneficial interest organized as a Massachusetts business
trust on November 10, 2000. It commenced operations on February 16, 2001. Both
Funds are governed by a Board of Trustees, which is responsible for protecting
the interests of shareholders under Massachusetts law. Both Funds are located at
6803 South Tucson Way, Centennial, CO 80112.
The Manager, located at 498 Seventh Avenue, New York, New York 10018,
acts as investment advisor to both Funds. QMAB Fund's assets are managed by
a sudadviser.
MS Fund is managed by a team of individuals from the Manager's growth,
value, global, high grade and high yield investment departments. The
portfolio management team is primarily responsible for the selection of the
Fund's portfolio securities.
The portfolio managers for QMAB Fund are Michael Lenarcic and John Van
Belle. Both Mr. Lenarcic and Mr. Van Belle are employed by Prudential
Investment Management, the Fund's sub-advisor. They have been the Fund's
portfolio managers since February 8, 2002.
Additional information about the Funds and the Manager is set forth
below in "Comparison of Investment Objectives and Policies."
What are the Fees and Expenses of each Fund and those expected after the
Reorganization?
QMAB Fund and MS Fund each pay a variety of expenses directly for
management of their assets, administration, distribution of their shares and
other services. Those expenses are subtracted from each Fund's assets to
calculate the Fund's net asset value per share. Shareholders pay these
expenses indirectly. Shareholders for both Funds pay other expenses
directly, such as sales charges.
The following tables are provided to help you understand and compare
the fees and expenses of investing in shares of QMAB Fund with the fees and
expenses of investing in shares of MS Fund. The pro forma expenses of the
surviving MS Fund show what the fees and expenses are expected to be after
giving effect to the Reorganization. All amounts shown are a percentage of
each class of shares of the Funds.
PRO FORMA FEE TABLE
For the 12 month period ended 3/31/03
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Pro Forma
QMAB Fund MS Fund Surviving MS Fund
Class A shares Class A Shares Class A shares
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- ------------------------------------------------------------------------------------
Shareholder Transaction Expenses (charges paid directly from a shareholder's
investment)
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- ------------------------------------------------------------------------------------
Maximum Sales Charge
(Load) on purchases 5.75% 5.75% 5.75%
(as a
% of offering price)
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- ------------------------------------------------------------------------------------
Maximum Deferred
Sales Charge (Load) None1 None1 None1
(as a % of the lower
of the original
offering price or
redemption proceeds)
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- ------------------------------------------------------------------------------------
Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of
average daily net assets)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Management Fees 0.95% 0.72% 0.72%
- ------------------------------------------------------------------------------------
Distribution and/or
Service (12b-1) Fees 0.02% 0.20% 0.20%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Other Expenses5 0.64% 0.20% 0.20%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Total Fund Operating
Expenses 1.61% 1.12% 1.12%
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- ------------------------------------------------------------------------------------
Pro Forma
QMAB Fund MS Fund Surviving MS Fund
Class B shares Class B Shares Class B shares
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Shareholder Transaction Expenses (charges paid directly from a shareholder's
investment)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Maximum Sales Charge
(Load) on purchases None None None
(as a % of offering
price)
- ------------------------------------------------------------------------------------
Maximum Deferred
Sales Charge (Load) 5%2 5%2 5%2
(as a % of the lower
of the original
offering price or
redemption proceeds)
- ------------------------------------------------------------------------------------
Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of
average daily net assets)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Management Fees 0.95% 0.72% 0.72%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Distribution and/or
Service (12b-1) Fees 1.00% 1.00% 1.00%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Other Expenses5 0.56% 0.31% 0.31%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Total Fund Operating
Expenses 2.51% 2.03% 2.03%
- ------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Pro Forma
QMAB Fund MS Fund Surviving MS Fund
Class C Shares Class C Shares Class C Shares
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Shareholder Transaction Expenses (charges paid directly from a shareholder's
investment)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Maximum Sales Charge
(Load) on purchases None None None
(as a % of offering
price)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Maximum Deferred
Sales Charge (Load) 1%3 1%3 1%3
(as a % of the lower
of the original
offering price or
redemption proceeds)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of
average daily net assets)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Management Fees 0.95% 0.72% 0.72%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Distribution and/or
Service (12b-1) Fees 1.00% 1.00% 1.00%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Other Expenses5 0.36% 0.25% 0.25%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Total Fund Operating
Expenses 2.31% 1.97% 1.97%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Pro Forma
QMAB Fund MS Fund Surviving MS Fund
Class N shares Class N Shares Class N shares
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Shareholder Transaction Expenses (charges paid directly from a shareholder's
investment)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Maximum Sales Charge
(Load) on purchases None None None
(as a % of offering
price)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Maximum Deferred
Sales Charge (Load) 1%4 1%4 1%4
(as a % of the lower
of the original
offering price or
redemption proceeds)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of
average daily net assets)
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Management Fees 0.95% 0.72% 0.72%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Distribution and/or
Service (12b-1) Fees 0.50% 0.50% 0.50%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Other Expenses5 0.35% 0.36% 0.36%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Total Fund Operating
Expenses 1.80% 1.58% 1.58%
- -----------------------------------------------------------------------------------
Note: Expenses may vary in future years.
1. A contingent deferred sales charge may apply to redemptions of investments
of $1 million or more ($500,000 for retirement plan accounts) of Class A
shares. See "How to Buy Shares" in each Fund's Prospectus.
2. Applies to redemptions within the first year after purchase. The
contingent deferred sales charge declines to 1% in the sixth year and is
eliminated after that.
3. Applies to shares redeemed within 12 months of purchase.
4. Applies to shares redeemed within 18 months of retirement plan's first
purchase of Class N shares.
3. "Other Expenses" include transfer agent fees and custodial, accounting
and legal expenses. The Transfer Agent has voluntarily undertaken to the
Funds to limit the transfer agent fees to 0.25% of average daily net
assets per fiscal year for Class Y shares and 0.35% of average daily net
assets per fiscal year for all other classes. With that expense
assumption and the transfer agent waiver, 5. "Total Annual Operating
Expenses" for QMAB Fund were 2.25% for Class B, 2.25% for Class C, 1.75%
for Class N and 1.19% for Class Y. Class A is unchanged. After the
waiver, the actual "Other Expenses" and "Total Annual Operating Expenses"
for MS Fund as percentages of average daily net assets were unchanged for
all classes. With that expense assumption and the transfer agent waiver,
"Total Annual Operating Expenses" for the combined funds were 1.96% for
Class Y. Class A, B, C and N are unchanged.
Examples
The examples below are intended to help you compare the cost of
investing in each Fund and the proposed surviving MS Fund. These examples
assume that you invest $10,000 for the time periods indicated, an annual
return for each class of 5%, the operating expenses described above and
reinvestment of your dividends and distributions.
Your actual costs may be higher or lower because expenses will vary
over time. For each $10,000 investment, you would pay the following
projected expenses if you sold your shares after the number of years shown or
held your shares for the number of years shown without redeeming, according
to the following examples.
12 Months Ended 3/31/03
-----------------------
QMAB Fund
- --------------------------------------------------------------------------------
If shares are redeemed: 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A $729 $1,054 $1,401 $2,376
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B $754 $1,082 $1,535 $2,4211
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C $334 $721 $1,235 $2,646
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N $283 $566 $975 $2,116
- --------------------------------------------------------------------------------
QMAB Fund
- --------------------------------------------------------------------------------
If shares are not 1 year 3 years 5 years 10 years
redeemed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A $729 $1,054 $1,401 $2,376
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B $254 $782 $1,335 $2,4211
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C $234 $721 $1,235 $2,646
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N $183 $566 $975 $2,116
- --------------------------------------------------------------------------------
MS Fund
- --------------------------------------------------------------------------------
If shares are redeemed: 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A $683 $911 $1,156 $1,860
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B $706 $937 $1,293 $1,9081
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C $300 $618 $1,062 $2,296
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N $261 $499 $860 $1,878
- --------------------------------------------------------------------------------
MS Fund
- --------------------------------------------------------------------------------
If shares are not 1 year 3 years 5 years 10 years
redeemed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A $683 $911 $1,156 $1,860
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B $206 $637 $1,093 $1,9081
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C $200 $618 $1,062 $2,296
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N $161 $499 $860 $1,878
- --------------------------------------------------------------------------------
Pro Forma Surviving MS Fund
- --------------------------------------------------------------------------------
If shares are redeemed: 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A $683 $911 $1,156 $1,860
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B $706 $937 $1,293 $1,9081
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C $300 $618 $1,062 $2,296
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N $261 $499 $860 $1,878
- --------------------------------------------------------------------------------
Pro Forma Surviving MS Fund
- --------------------------------------------------------------------------------
If shares are not 1 year 3 years 5 years 10 years
redeemed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A $683 $911 $1,156 $1,860
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B $206 $637 $1,093 $1,9081
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C $200 $618 $1,062 $2,296
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class N $161 $499 $860 $1,878
- --------------------------------------------------------------------------------
In the "If shares are redeemed" example, expenses include the initial
sales charge for Class A and the applicable Class B, Class C or Class N
contingent deferred sales charge. In the "If shares are not redeemed"
example, the Class A expenses include the initial sales charge, but Class
B, Class C and Class N expenses do not include the contingent deferred
sales charge.
1 Class B expenses for years 7 through 10 are based on Class A expenses,
since Class B shares automatically convert to Class A after 6 years.
Where can I find more financial information about the Funds?
Performance information for both MS Fund and QMAB Fund is
set forth in each Fund's Prospectus under the section "The Fund's
Past Performance." MS Fund's Prospectus accompanies this
Prospectus and Proxy Statement and is incorporated by reference.
The financial statements of MS Fund and additional
information with respect to its performance during its fiscal
year ended September 30, 2002, including a discussion of factors
that materially affected its performance and relevant market
conditions during that fiscal year, is set forth in MS Fund's
audited financial statements dated as of September 30, 2002, that
are included in the Proxy Statement of Additional Information and
incorporated herein by reference. These documents are available
upon request. See section entitled "Information About MS Fund."
The financial statements of QMAB Fund and additional
information with respect to the Fund's performance during its
fiscal year ended November 30, 2002, including a discussion of
factors that materially affected its performance and relevant
market conditions during that fiscal year, is set forth in QMAB
Fund's Annual Report dated as of November 30, 2002, that is
included in the Proxy Statement of Additional Information and
incorporated herein by reference. These documents are available
upon request. See section entitled "Information About QMAB Fund."
What are the capitalizations of the Funds and what would the capitalization
be after the Reorganization?
The following table sets forth the capitalizations (unaudited) of QMAB
Fund and MS Fund and indicates the pro forma combined capitalization as of
March 31, 2003 as if the Reorganization had occurred on that date.
As of April 30, 2003 the value of the assets of QMAB Fund was less than 10%
of the value of the assets of MS Fund.
Net Asset
Shares Value
Net Assets Outstanding Per Share
QMAB Fund
Class A $4,787,027 594,325 $8.05
Class B $ 545,378 68,232 $7.99
Class C $ 593,823 74,093 $8.01
Class N $ 456,131 56,669 $8.05
Class Y $ 812 100 $8.12
TOTAL $6,383,171 793,419
MS Fund
Class A $494,484,889 45,083,558 $10.97
Class B $ 54,404,880 5,019,843 $10.84
Class C $ 36,047,450 3,313,615 $10.88
Class N $ 1,378,267 126,175 $10.92
TOTAL $586,315,486 53,543,191
MS Fund
(Pro Forma Surviving Fund)
Class A $499,271,916 45,520,005 $10.97
Class B $ 54,950,258 5,070,164 $10.84
Class C $ 36,641,273 3,368,201 $10.88
Class N $ 1,834,398 167,932 $10.92
TOTAL $592,697,845 54,126,302
*Reflects the issuance of 436,447 Class A shares, 50,321
Class B shares, 54,586 Class C shares and 41,757 Class N shares
of MS Fund in a tax-free exchange for the net assets of QMAB
Fund, aggregating $6,383,171.
How have the Funds performed?
The following past performance information for each Fund is
set forth below, and for earlier periods, in its respective
Prospectus: (i) a bar chart detailing annual total returns of
Class A shares of each Fund as of December 31st for each of the
ten most recent full calendar years (for QMAB Fund, since that
Fund's inception); and (ii) a table showing how the average
annual total returns of the Funds' shares, both before and after
taxes, compare to those of broad-based market indices. The
after-tax returns are shown for Class A shares only and are
calculated using the historical highest individual federal
marginal income tax rates in effect during the periods shown, and
do not reflect the impact of state or local taxes. In certain
cases, the figure representing "Return After Taxes on
Distributions and Sale of Fund Shares" may be higher than the
other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and
translates into an assumed tax deduction that benefits the
shareholder. The after-tax returns are calculated based on
certain assumptions mandated by regulation and your actual
after-tax returns may differ from those shown, depending on your
individual tax situation. The after-tax returns set forth below
are not relevant to investors who hold their Fund shares through
tax-deferred arrangements such as 401(k) plans or IRAs or to
institutional investors not subject to tax. Each Funds' past
investment performance, before and after taxes, is not
necessarily an indication of how each Fund will perform in the
future.
Calendar year average annual total returns for the Funds
for the periods ended December 31, 2002, are as follows:
[See appendix to Prospectus and Proxy statement for data in bar chart showing
annual total returns for Oppenheimer Select Managers QM Active Balanced Fund.]
Sales charges and taxes are not included in the calculations of return in
this bar chart, and if those charges and taxes were included, the returns may
be less than those shown.
For the period from 1/1/03 through 3/31/03, the cumulative return for QMAB
Fund (not annualized) before taxes for Class A shares was -1.35%. During the
period shown in the bar chart, the highest return for Oppenheimer Select
Managers QM Active Balanced Fund (not annualized) before taxes for a calendar
quarter was 5.21% (4th Qtr'02) and the lowest return (not annualized) before
taxes for a calendar quarter was -11.11% (3rdQtr'02).
[See appendix to Prospectus and Proxy statement for data in bar chart showing
annual total returns for Oppenheimer Multiple Strategies Fund.]
Sales charges and taxes are not included in the calculations of return in
this bar chart, and if those charges and taxes were included, the returns may
be less than those shown.
For the period from 1/1/03 through 3/31/03, the cumulative return for MS Fund
(not annualized) before taxes for Class A shares was -1.12%. During the
period shown in the bar chart, the highest return for Oppenheimer Multiple
Strategies Fund (not annualized) before taxes for a calendar quarter was
11.15% (4thQtr'98) and the lowest return (not annualized) before taxes for a
calendar quarter was -11.03% (3rdQtr'01).
Average annual total returns for the Funds for the periods ended
December 31, 2002 are as follows:
- ----------------------------------------------------------------------------------
QMAB Fund 1 Year 5 Years
(or life of
class, if less)
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Class A Shares (inception 2/16/01) -17.47%
Return Before Taxes
Return After Taxes on Distributions -12.08%
Return After Taxes on Distributions -17.82% -12.47%
And Sale of Fund Shares -10.64% -9.73%
- ----------------------------------------------------------------------------------
S&P 500 Index (reflects no deduction
for fees, expenses or taxes) (from
2/28/01) -22.09% -15.80%
- ----------------------------------------------------------------------------------
Lehman Brothers Government/Credit Bond
Index (reflects no deduction for fees,
expenses or taxes) (from 2/28/01) 9.84% 8.76%
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Class B Shares (inception 2/16/01) -17.46% -11.93%
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Class C Shares (inception 2/16/01) -14.01% -9.98%
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Class N Shares (inception 3/1/01) -13.49% -8.46%
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Class Y Shares (inception 2/16/01) -12.32% -9.09%
- ---------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
MS Fund 1 Year 5 Years 10 Years (or
life of
class, if
less)
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Class A Shares (inception -15.75% 1.57%
4/24/87)
Return Before Taxes
Return After Taxes on
Distributions
Return After Taxes on 7.69%
Distributions -16.57% -0.69% 4.99%
And Sale of Fund Shares -9.57% 0.63% 5.30%
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
S&P 500 Index (from 12/31/92) -22.09% -0.58% 9.34%
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond 10.25% 7.55% 7.51%
Index (reflects no deduction for
fees, expenses or taxes)(from
12/31/92)
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Class B Shares (inception -15.73% 1.65% 6.39%
8/29/95)
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Class C Shares (inception12/1/93) -12.22% 1.93% 6.76%
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Class N Shares (inception 3/1/01) -11.83% -6.78% N/A
- ----------------------------------------------------------------------------------
Average annual total returns for the Funds for the periods ended March 31, 2003
are as follows:
- ---------------------------------------------------------------------------------
QMAB Fund 1 Year 5 Years
(or life of
class, if
less)1
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Class A Shares (inception 2/16/01) -19.18% -11.31%
Return Before Taxes
Return After Taxes on Distributions
Return After Taxes on
Distributions And Sale of Fund -19.52% -11.65%
Shares -11.77% -9.07%
- ---------------------------------------------------------------------------------
S&P 500 Index (reflects no deduction
for fees, expenses or taxes) (from
2/28/01 -24.75% -3.76%
- ---------------------------------------------------------------------------------
Lehman Brothers Government/Credit
Bond Index (reflects no deduction
for fees, expenses or taxes) (from
2/28/01) 11.74% 8.45%
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Class B Shares (inception 2/16/01) -19.03% -10.80%
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Class C Shares (inception 2/16/01) -15.64% -9.49%
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Class N Shares (inception 3/1/01) -15.10% -8.08%
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Class Y Shares (inception 2/16/01) -13.83% -8.54%
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
MS Fund 1 Year 5 Years 2 10 Years
(or life of
class, if
less)
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Class A Shares (inception -17.15% -0.06% 7.07%
4/24/87)
Return Before Taxes
Return After Taxes on
Distributions
Return After Taxes on -2.25%
Distributions -17.88% -0.64% 4.40%
And Sale of Fund Shares -10.52% 4.79%
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
S&P 500 Index (from 3/31/93) -24.75% -3.76% 8.53%
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Lehman Brothers Aggregate 11.69% 7.51% 7.23%
Bond Index (reflects no
deduction for fees, expenses
or taxes) (from 3/31/93)
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Class B Shares (inception -17.19% 0.00% 6.02%
8/29/95)
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Class C Shares -13.71% 0.30% 6.43%
(inception12/1/93)
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Class N Shares (inception -13.46% -6.58% N/A
3/1/01)
- ---------------------------------------------------------------------------------
QMAB Fund's average annual total returns include applicable sales charges:
for Class A, the current maximum initial sales charge of 5.75%; for Class B,
the contingent deferred sales charge of 5% (1-year) and 4% (life of class);
and for Class C and Class N, the 1% contingent deferred sales charge for the
1-year period. There is no sales charge for Class Y. The returns measure the
performance of a hypothetical account and assume that all dividends and
capital gains distributions have been reinvested in additional shares. The
performance of the Fund's Class A shares is compared to the S&P 500(R)Index
and the Lehman Brothers Government/Credit Bond Index. The S&P 500(R)Index is
an unmanaged index of equity securities and the Lehman Brothers Government
/Credit Bond Index is an unmanaged index of intermediate and long-term
government and investment grade corporate debt securities. The indices'
performance includes reinvestment of income but does not reflect transaction
costs, expenses or taxes. The Fund will have investments that vary from those
in the indices.
MS Fund's average annual total returns include applicable sales charges: for
Class A, the current maximum initial sales charge of 5.75%; for Class B, the
contingent deferred sales charge of 5% (1-year) and 2% (5 years); and for
Class C, the 1% contingent deferred sales charge for the 1-year period.
Because Class B shares convert to Class A shares 72 months after purchase,
Class B "life-of-class" performance does not include any contingent deferred
sales charge and uses Class A performance for the period after conversion.
The returns measure the performance of a hypothetical account and assume that
all dividends and capital gains distributions have been reinvested in
additional shares. The performance of the Fund's Class A shares is compared
to the S&P 500(R)Index, an unmanaged index of U.S. equity securities, and to
the Lehman Brothers Aggregate Bond Index, an unmanaged index of U.S.
corporate, government and mortgage-backed securities. The performance of the
indices includes reinvestment of income but does not reflect transaction
costs, expenses, or taxes. The Fund's investments vary from the securities in
the indices.
How has Multiple Strategies Fund Performed? - Below is a discussion, by
OppenheimerFunds, Inc., of Multiple Strategies Fund's performance during its
fiscal year ended September 30, 2002, followed by a graphical comparison of
Multiple Strategies Fund's performance to an appropriate broad-based market
indices.
Management's Discussion of Performance - During Multiple Strategies Fund's
fiscal year that ended September 30, 2002, Oppenheimer Multiple Strategies
Fund's Class A performance (-13.83% after taking sales charges into account) was
strongly influenced by changing economic and market conditions. Prices of
interest rate-sensitive bonds rallied in the low interest rate-environment,
offsetting losses among high yield fixed-income securities and emerging market
bonds. In the stock portfolio, Multiple Strategies Fund benefited from its
holdings of small- and mid-cap stocks, which generally performed better than
their large-cap counterparts. Multiple Strategies also benefited from the
portfolio manager's decision to emphasize the value style of investing over
other investment approaches. Multiple Strategies Fund's portfolio holdings and
allocations are subject to change.
1 The Average annual total returns for QMAB Fund for a 2 Year period ended March
31, 2003 were as follows: Class A Shares (inception 2/16.01) Return Before Taxes
was -8.82%, Class A Shares Return After Taxes on Distributions was -9.19%, Class
A Shares Return After Taxes on Distribution and Sale of Fund Shares was -7.15%,
S&P 500 Index (from 2/28/01) was -13.15%, Lehman Brothers Government/Credit
Bond Index (from 2/28/01) was 8.40%, Class B Shares (inception 2/16/01) was
- -8.68%, Class C Shares (inception 2/16/01) was -6.78%, Class N Shares (inception
3/1/01) was -6.32%, and Class Y Shares (inception 2/16/01) was -5.85%.
2 The Average annual total returns for MS Fund for a 2 Year period ended March
31, 2003 were as follows: Class A Shares (inception 4/24/87) Return Before Taxes
was -7.46%, Class A Shares Return After Taxes on Distributions was -8.63%, Class
A Shares Return After Taxes on Distribution and Sale of Fund Shares was -6.29%,
S&P 500 Index (from 3/31/93) was -13.15%, Lehman Brothers Aggregate Bond
Index (from 3/31/93) was 8.47%, Class B Shares (inception 8/29/95) was -7.28%,
Class C Shares (inception 12/1/93) was -5.47%, and Class N Shares (inception
3/1/01) was -5.12%.
Comparing Multiple Strategies Fund's Performance to the Market - The graphs
that follow show the performance of a hypothetical $10,000 investment in Class
A, Class B, Class C and Class N shares of Multiple Strategies Fund held until
September 30, 2002. In the case of Class A shares, performance is measured over
a ten-year period. In the case of Class B shares, performance is measured from
inception of the class on August 29, 1995. In the case of Class C shares,
performance is measured from inception of the class on December 1, 1993. In the
case of Class N shares, performance is measured from inception of the class on
March 1, 2001. Multiple Strategies Fund's performance reflects the deduction of
the 5.75% maximum initial sales charge on Class A shares, the 5% (1-year) and 2%
(5-year) applicable contingent deferred sales charge for Class B, and the 1%
(1-year) contingent deferred sales charge for Class C and Class N shares. The
graphs assume that all dividends and capital gains distributions were reinvested
in additional shares.
Because Multiple Strategies Fund invests in a variety of equity and
fixed-income securities, Multiple Strategies Fund's performance is compared
to the performance of two indices: (i) the Standard & Poor's (S&P)
500 Index, a broad-based index of equity securities widely regarded as a
general measure of the performance of the U.S. equity securities market;
and (ii) the Lehman Brothers Aggregate Bond Index, an unmanaged index of
U.S. Government Treasury and agency issues, investment grade corporate bond
issues and fixed-rate mortgage-backed securities. That index is widely
regarded as a measure of the performance of the domestic debt securities
market.
Index performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none of the
data in the graphs that follow shoes the effect of taxes. Multiple
Strategies Fund's performance reflects the effects of Fund business and
operating expenses. While index comparisons may be useful to provide a
benchmark for Multiple Strategies Fund's performance, it must be noted that
Multiple Strategies Fund's investments are not limited to the securities or
countries in the indices.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Multiple Strategies Fund (Class A), S&P 500 Index and Lehman Brothers
Aggregate Bond Index.
[Line Graph]
- ---------------------------------------------------------------------------------
Date Value of Investment in S&P 500 Index Lehman Brothers
Aggregate Bond
Fund Index
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1993 $9,425 $10,000 $10,000
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1993 $9,690 $10,048 $10,265
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1993 $10,092 $10,307 $10,533
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1993 $10,465 $10,545 $10,539
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1994 $10,133 $10,146 $10,237
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1994 $10,036 $10,189 $10,132
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1994 $10,492 $10,686 $10,193
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1994 $10,299 $10,684 $10,232
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1995 $10,988 $11,723 $10,748
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1995 $11,699 $12,841 $11,403
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1995 $12,371 $13,860 $11,627
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1995 $12,646 $14,694 $12,122
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1996 $13,159 $15,483 $11,907
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1996 $13,541 $16,177 $11,975
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1996 $14,065 $16,677 $12,196
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1996 $14,825 $18,066 $12,562
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1997 $14,929 $18,551 $12,492
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1997 $16,280 $21,787 $12,951
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1997 $17,647 $23,418 $13,381
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1997 $17,459 $24,091 $13,775
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1998 $18,719 $27,449 $13,989
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1998 $18,765 $28,360 $14,316
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1998 $16,816 $25,545 $14,921
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1998 $18,690 $30,980 $14,972
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1999 $18,921 $32,523 $14,897
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1999 $20,335 $34,812 $14,767
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1999 $19,555 $32,643 $14,867
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1999 $20,671 $37,497 $14,849
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2000 $21,848 $38,355 $15,176
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/2000 $22,002 $37,337 $15,441
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/2000 $22,157 $36,975 $15,906
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/2000 $22,030 $34,084 $16,575
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2001 $21,792 $30,045 $17,078
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/2001 $23,096 $31,803 $17,174
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/2001 $20,547 $27,136 $17,966
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/2001 $22,401 $30,036 $17,975
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2002 $22,525 $30,119 $17,991
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/2002 $20,864 $26,086 $18,656
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/2002 $18,785 $21,582 $19,511
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/2002 $20,025 $23,400 $19,818
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2003 $19,801 $22,663 $20,094
- ---------------------------------------------------------------------------------
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Multiple Strategies Fund (Class B), S&P 500 Index and Lehman
Brothers Aggregate Bond Index.
[Line Graph]
- ---------------------------------------------------------------------------------
Date Value of Investment in S&P 500 Index Lehman Brothers
Aggregate Bond
Fund Index
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
08/29/1995 $10,000 $10,000 $10,000
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1995 $10,241 $10,422 $10,097
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1995 $10,444 $11,049 $10,528
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1996 $10,825 $11,642 $10,341
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1996 $11,113 $12,163 $10,400
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1996 $11,526 $12,540 $10,592
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1996 $12,121 $13,584 $10,910
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1997 $12,176 $13,949 $10,849
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1997 $13,246 $16,382 $11,247
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1997 $14,332 $17,609 $11,621
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1997 $14,143 $18,114 $11,963
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1998 $15,144 $20,639 $12,149
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1998 $15,140 $21,324 $12,433
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1998 $13,544 $19,208 $12,959
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1998 $15,020 $23,295 $13,002
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1999 $15,176 $24,455 $12,938
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1999 $16,275 $26,175 $12,824
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1999 $15,623 $24,545 $12,911
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1999 $16,482 $28,194 $12,895
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2000 $17,379 $28,840 $13,180
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/2000 $17,468 $28,074 $13,409
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/2000 $17,545 $27,802 $13,814
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/2000 $17,426 $25,628 $14,395
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2001 $17,195 $22,592 $14,831
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/2001 $18,187 $23,913 $14,915
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/2001 $16,166 $20,404 $15,603
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/2001 17,624 $22,584 $15,610
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2002 17,722 $22,647 $15,625
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/2002 16,415 $19,614 $16,202
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/2002 14,780 $16,228 $15,944
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/2002 15,755 $17,595 $17,211
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2003 15,579 $17,041 $17,450
- ---------------------------------------------------------------------------------
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Multiple Strategies Fund (Class C), S&P 500 Index and Lehman
Brothers Aggregate Bond Index.
[Line Graph]
- ---------------------------------------------------------------------------------
Date Value of Investment in S&P 500 Index Lehman Brothers
Aggregate Bond
Fund Index
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/01/1993 $10,000 $10,000 $10,000
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1993 $10,219 $10,121 $10,054
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1994 $9,865 $9,738 $9,766
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1994 $9,746 $9,778 $9,665
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1994 $10,171 $10,256 $9,724
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1994 $9,963 $10,254 $9,761
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1995 $10,604 $11,251 $10,253
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1995 $11,261 $12,324 $10,878
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1995 $11,892 $13,302 $11,092
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1995 $12,124 $14,103 $11,564
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1996 $12,591 $14,859 $11,359
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1996 $12,925 $15,525 $11,424
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1996 $13,403 $16,005 $11,635
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1996 $14,101 $17,338 $11,984
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1997 $14,164 $17,804 $11,917
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1997 $15,415 $20,910 $12,355
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1997 $16,676 $22,476 $12,765
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1997 $16,468 $23,121 $13,141
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1998 $17,618 $26,344 $13,345
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1998 $17,625 $27,218 $13,657
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1998 $15,771 $24,517 $14,235
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1998 $17,481 $29,733 $14,283
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/1999 $17,662 $31,214 $14,212
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/1999 $18,951 $33,410 $14,087
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/1999 $18,180 $31,329 $14,183
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/1999 $19,176 $35,987 $14,165
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2000 $20,231 $36,811 $14,478
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/2000 $20,320 $35,833 $14,730
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/2000 $20,424 $35,486 15,174
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/2000 $20,271 $32,712 15,812
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2001 $20,018 $28,836 16,292
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/2001 $21,168 $30,522 16,384
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/2001 $18,790 $26,044 17,139
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/2001 $20,441 $28,827 17,147
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2002 $20,525 $28,906 17,163
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/2002 $18,976 $25,036 17,797
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/2002 $17,036 $20,713 18,613
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/2002 $18,122 $22,458 18,906
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2003 $17,888 $21,751 19,169
- ---------------------------------------------------------------------------------
Class N Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Multiple Strategies Fund (Class N), S&P 500 Index and Lehman
Brothers Aggregate Bond Index.
[Line Graph]
- ---------------------------------------------------------------------------------
Date Value of Investment in S&P 500 Index Lehman Brothers
Aggregate Bond
Fund Index
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/01/2001 $10,000 $10,000 $10,000
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2001 $9,640 $9,367 $10,050
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/2001 $10,197 $9,915 $10,107
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/2001 $9,070 $8,460 $10,573
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/2001 $9,876 $9,364 $10,578
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2002 $9,930 $9,390 $10,588
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
06/30/2002 $9,190 $8,132 $10,979
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
09/30/2002 $8,266 $6,728 $11,482
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
12/31/2002 $8,793 $7,295 $11,663
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
03/31/2003 $8,678 $7,065 $11,825
- ---------------------------------------------------------------------------------
What are other Key Features of the Funds?
The description of certain key features of the Funds below
is supplemented by each Fund's Prospectus and Statement of
Additional Information, which are incorporated by reference.
Investment Management and Fees - Under each Fund's investment advisory
agreement, the Fund pays the Manager an advisory fee at an annual rate that
declines on additional assets as the Fund grows.
- ---------------------------------------------------------------------------------------
QMAB Fund MS Fund
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
0.95% of the first $300 million of average 0.75% of the first $200 million of
annual net assets, average annual net assets,
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
0.90% of average annual net assets in 0.72% of the next $200 million,
excess of $300 million.
- ---------------------------------------------------------------------------------------
-------------------------------------------
0.69% of the next $200 million,
-------------------------------------------
-------------------------------------------
0.66% of the next $200 million,
-------------------------------------------
-------------------------------------------
0.60% of the next $700 million, and
-------------------------------------------
-------------------------------------------
0.58% of the average annual net assets in
excess of $1.5 billion.
-------------------------------------------
Based on average annual net assets of the respective Fund.
The management fee for QMAB Fund for the twelve months ended March 31,
2003 was 0.95% of the average annual net assets for each class of shares.
The management fee for MS Fund for the twelve months ended March 31, 2003 was
0.72% of the average annual net assets for each class of shares. The 12b-1
distribution plans for both Funds were substantially similar.
- --------------------------------------------------------------------------
QMAB MS Fund Combined Pro Forma
03/31/03 Class A Class A Class A
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Management Fee 0.95% 0.72% 0.72%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
12b-1 Fees 0.02%1 0.20% 0.20%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Other Expenses 0.64% 0.20% 0.20%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Expenses 1.61% 1.12% 1.12%
- --------------------------------------------------------------------------
"Other Expenses" include transfer agent fees and custodial, accounting and
legal expenses the Funds pay. This chart is for illustrative purposes only.
1. Class A shares 12b-1 fee is not the full 25 basis points due to monies
invested by OppenheimerFunds, Inc.
The net assets under management for MS Fund on March 31, 2003 were
$586,315,488, as compared to $6,383,174 for QMAB Fund. Effective upon the
Closing of the Reorganization, the management fee rate for MS Fund is
expected to be 0.72% of average annual net assets based on combined assets of
the Funds as of March 31, 2003. Additionally, the "Other Expenses" of the
surviving Fund are expected to be less than the "Other Expenses" of QMAB
Fund.
For a detailed description of each Fund's investment management
agreement, see the section below entitled "Comparison of Investment
Objectives and Policies - How do the Account Features and Shareholder
Services for the Funds Compare?"
Transfer Agency and Custody Services - Both Funds receive shareholder
accounting and other clerical services from OppenheimerFunds Services in its
capacity as transfer agent and dividend paying agent. It acts on an annual
per account fee basis for both Funds. The terms of the transfer agency
agreement for both Funds are substantially similar.
Citibank, N.A., located at 111 Wall Street, New York, NY 10005, acts as
custodian of the securities and other assets of QMAB Fund. JP Morgan Chase
Bank, located at 4 Chase Metro Tech Center, Brooklyn, NY 11245, acts as
custodian of the securities and other assets of MS Fund.
Distribution Services - OppenheimerFunds Distributor, Inc. (the
"Distributor") acts as the principal underwriter in a continuous public
offering of shares of both Funds, but is not obligated to sell a specific
number of shares. Both Funds have adopted distribution and service plans
under Rule 12b-1 of the Investment Company Act for their Class A shares. The
12b-1 fees for Class A shares of both QMAB Fund and MS Fund are service plan
fees which are a maximum of 0.25% of average annual net assets of Class A
shares. The 12b-1 fees for Class B, Class C and Class N shares of both Funds
are Distribution and Service plan fees which include a service fee of 0.25%
of average annual net assets and an asset-based sales charge for Class B and
Class C shares of 0.75% and an asset-based sales charge of 0.25% for Class N
shares of the average annual net assets.
For a detailed description of each Fund's distribution-related
services, see the section below titled "Comparison of Investment Objectives
and Policies - How do the Account Features and Shareholder Services for the
Funds Compare?"
Purchases, Redemptions, Exchanges and other Shareholder Services - Both
Funds have nearly the same requirements and restrictions in connection with
purchases, redemptions and exchanges, except that QMAB Fund is only offered
for sale to retirement plans. In addition, each Fund also offers the same
types of shareholder services. More detailed information regarding
purchases, redemptions, exchanges and shareholder services can be found below
in the section below titled "Comparison of Investment Objectives and Policies
- - How do the Account Features and Shareholder Services for the Funds
Compare?"
Dividends and Distributions - QMAB Fund declares dividends separately
for each class of shares from net investment income annually and pays those
dividends to shareholders in December on a date selected by the Board of the
Fund. MS Fund declares dividends separately for each class of shares from
net investment income on a quarterly basis in March, June, September and
December on a date selected by the Board of the Fund. Both Funds may realize
capital gains on the sale of portfolio securities. If they do, they will
make distributions out of any short-term or long-term capital gains in
December of each year.
For a detailed description of each Fund's policy on dividends and
distributions, see the section entitled "Comparison of Investment Objectives
and Policies - How do the Account Features and Shareholder Services for the
Funds Compare?"
WHAT ARE THE PRINCIPAL RISKS OF AN INVESTMENT IN QMAB FUND AND MS FUND?
As with most investments, investments in MS Fund and QMAB Fund involve
risks. There can be no guarantee against loss resulting from an investment
in either Fund, nor can there be any assurance that either Fund will achieve
its investment objective. The risks associated with an investment in each
Fund are similar. Because both Funds invest in stocks, the value of each
Fund's portfolio will be affected by changes in the stock markets in which
they invest. The prices of individual stocks do not all move in the same
direction uniformly at the same time and the volatility of their prices at
times may be great. A particular company's stock price can be affected by,
among other things, a poor earnings report, loss of major customers, major
litigation against the company, or changes in government regulations
affecting the company or its industry. Both Funds also invest in foreign
securities which may be subject to special risks. The change in value of a
foreign currency against the U.S. dollar will affect the U.S. dollar value of
securities denominated in that foreign currency. The value of foreign
investments may be affected by change in control regulations, currency
devaluation, expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in governmental economic
or monetary policy in the U.S. or abroad, or other political and economic
factors.
In addition, both Funds invest in debt securities whose values are
subject to change when prevailing interest rates change. The change in
values may cause the Funds' share prices to go up or down. Debt securities
are also subject to credit risk. Credit risk is the risk that the issuer of
a security might not make interest and principal payments on the security as
they become due. If the issuer fails to pay interest, the Funds' income may
be reduced, and if the issuer fails to repay principal, the value of that
security and of the Funds' shares might fall.
For more information about the risks of the Funds, see "What are the
Main Risks Associated with Investments in the Funds?" under the heading
"Comparison of Investment Objectives and Policies."
REASONS FOR THE REORGANIZATION
At a meeting of the Board of Trustees of QMAB Fund held April 28, 2003,
the Board considered whether to approve the proposed Reorganization and
reviewed and discussed with the Manager and independent legal counsel the
materials provided by the Manager relevant to the proposed Reorganization.
Included in the materials was information with respect to the Funds'
respective investment objectives and policies, management fees, distribution
fees and other operating expenses, historical performance and asset size.
The Board reviewed information demonstrating that QMAB Fund is a
relatively smaller fund with approximately $6,383,174 in net assets as of
March 31, 2003. The Board anticipates that QMAB Fund's assets will not
increase substantially in size in the near future. In comparison, MS Fund
had approximately $586.3 million in net assets as of March 31, 2003. After
the Reorganization, the shareholders of QMAB Fund would become shareholders
of a larger fund that is anticipated to have lower overall operating expenses
than QMAB Fund. There can be no assurances that lower operating expenses
will continue into the future. Economies of scale may benefit shareholders of
QMAB Fund.
The Board reviewed the investment objective of both Funds. QMAB Fund
seeks income and long-term growth of capital, while MS Fund seeks high total
investment return consistent with preservation of principal. Additionally,
the Board considered that both Funds invest in a variety of equity
securities, debt securities and money market instruments. The Board noted
that each Fund is designed for long-term investors and each generally invests
in a mix of stocks, debt securities and money market securities. The
investment strategies and policies are in general similar, though there are
some differences noted below under "How do the investment policies of the
Funds compare."
The Board noted that MS Fund's management fee is currently lower than
that of QMAB Fund. The Board also considered that MS Fund's performance has
been better than that of QMAB Fund.
The Board also considered that the procedures for purchases, exchanges
and redemptions of shares of both Funds are very similar and that both Funds
offer the same investor services and options.
The Board also considered the terms and conditions of the
Reorganization, including that there would be no sales charge imposed in
effecting the Reorganization and that the Reorganization is expected to be a
tax-free reorganization. The Board concluded that QMAB Fund's participation
in the transaction is in the best interests of the Fund and its shareholders,
notwithstanding that the lower pro forma expenses of the combined funds
(relative to QMAB Fund) and the historically better performance of MS Fund is
subject to change, and that the Reorganization would not result in a dilution
of the interests of existing shareholders of QMAB Fund.
After consideration of the above factors, and such other factors and
information as the Board of QMAB Fund deemed relevant, the Board, including
the Trustees who are not "interested persons" (as defined in the Investment
Company Act) of either QMAB Fund or the Manager (the "Independent Trustees"),
unanimously approved the Reorganization and the Reorganization Agreement and
voted to recommend its approval to the shareholders of QMAB Fund.
The Board of MS Fund also determined that the Reorganization was in the
best interests of MS Fund and its shareholders and that no dilution would
result to those shareholders. MS Fund shareholders do not vote on the
Reorganization. The Board of MS Fund, including the Independent Trustees,
unanimously approved the Reorganization and the Reorganization Agreement.
For the reasons discussed above, the Board, on behalf of QMAB Fund,
recommends that you vote FOR the Reorganization Agreement. If shareholders
of QMAB Fund do not approve the Reorganization Agreement, the Reorganization
will not take place.
INFORMATION ABOUT THE REORGANIZATION
This is only a summary of the material terms of the
Reorganization Agreement. You should read the actual form of
Reorganization Agreement. It is attached as Exhibit A.
How Will the Reorganization be Carried Out?
If the shareholders of QMAB Fund approve the Reorganization Agreement,
the Reorganization will take place after various conditions are satisfied by
QMAB Fund and MS Fund, including delivery of certain documents. The Closing
Date is presently scheduled for September 5, 2003 and the Valuation Date is
presently scheduled for September 4, 2003.
If shareholders of QMAB Fund approve the Reorganization Agreement, QMAB
Fund will deliver to MS Fund substantially all of its net assets on the
closing date. In exchange, shareholders of QMAB Fund will receive Class A,
Class B, Class C and Class N MS Fund shares that have a value equal to the
dollar value of the assets delivered by QMAB Fund to MS Fund. Class Y shares
of QMAB Fund were liquidated prior to the merger. QMAB Fund will then be
liquidated and its outstanding shares will be cancelled. The stock transfer
books of QMAB Fund will permanently be closed at the close of business on the
Valuation Date. Only redemption requests received by the Transfer Agent in
proper form on or before the close of business on the Valuation Date will be
fulfilled by QMAB Fund. Redemption requests received after that time will be
considered requests to redeem shares of MS Fund.
Shareholders of QMAB Fund who vote their Class A, Class B, Class C and
Class N shares in favor of the Reorganization will be electing in effect to
redeem their shares of QMAB Fund at net asset value on the Valuation Date,
after QMAB Fund subtracts a cash reserve, and reinvests the proceeds in Class
A, Class B, Class C and Class N shares of MS Fund at net asset value. The
cash reserve is that amount retained by QMAB Fund, which is deemed sufficient
in the discretion of the Board for the payment of the Fund's outstanding
debts, taxes, and expenses of liquidation. The cash reserve will consist of
approximately $16,000 cash. This amount of cash reserve are reflected in the
pro forma presentation of NAV. MS Fund is not assuming any debts of QMAB
Fund except debts for unsettled securities transactions and outstanding
dividend and redemption checks. Any debts paid out of the cash reserve will
be those debts, taxes or expenses of liquidation incurred by QMAB Fund on or
before the Closing Date. QMAB Fund will recognize capital gains or losses on
any sales of portfolio securities made prior to the Reorganization. The
sales contemplated in the Reorganization are anticipated to be in the
ordinary course of business of QMAB Fund's activities.
Under the Reorganization Agreement, within one year after the Closing
Date, QMAB Fund shall: (a) either pay or make provision for all of its debts
and taxes; and (b) either (i) transfer any remaining amount of the cash
reserve to MS Fund, if such remaining amount is not material (as defined
below) or (ii) distribute such remaining amount to the shareholders of QMAB
Fund who were shareholders on the Valuation Date. The remaining amount shall
be deemed to be material if the amount to be distributed, after deducting the
estimated expenses of the distribution, equals or exceeds one cent per share
of the number of QMAB Fund shares outstanding on the Valuation Date. In
order to qualify for this rebate, it is not necessary for a shareholder of
QMAB Fund to continue to hold shares of the combined entity after the Closing
Date. If the cash reserve is insufficient to satisfy any of QMAB Fund's
liabilities, the Manager will assume responsibility for any such unsatisfied
liability. Within one year after the Closing Date, QMAB Fund will complete
its liquidation.
Under the Reorganization Agreement, either QMAB Fund or MS Fund may
abandon and terminate the Reorganization Agreement for any reason and there
shall be no liability for damages or other recourse available to the other
Fund, provided, however, that in the event that one of the Funds terminates
this Agreement without reasonable cause, it shall, upon demand, reimburse the
other Fund for all expenses, including reasonable out-of-pocket expenses and
fees incurred in connection with this Agreement.
To the extent permitted by law, the Funds may agree to amend the
Reorganization Agreement without shareholder approval. They may also agree
to terminate and abandon the Reorganization at any time before or, to the
extent permitted by law, after the approval of shareholders of QMAB Fund.
Who Will Pay the Expenses of the Reorganization?
The cost of printing and mailing the proxies and this Prospectus and
Proxy Statement will be borne by QMAB Fund. Those printing costs and mailing
costs are estimated to be $7,791 and $11,046 respectively. The Funds will
bear the cost of their respective tax opinions. Any documents such as
existing prospectuses or annual reports that are included in the proxy
mailing or at a shareholder's request will be a cost of the Fund issuing the
document. Any other out-of-pocket expenses associated with the
Reorganization will be paid by the Funds in the amounts incurred by each.
The approximate cost of the Reorganization is $38,591 for QMAB Fund, and
$11,500 for MS Fund.
What are the Tax Consequences of the Reorganization?
The Reorganization is intended to qualify as a tax-free reorganization for
federal income tax purposes under Section 368(a)(1) of the Internal Revenue Code
of 1986, as amended. Based on certain assumptions and representations received
from QMAB Fund and MS Fund, it is expected to be the opinion of Deloitte &
Touche LLP, tax advisor to QMAB Fund, that shareholders of QMAB Fund will not
recognize any gain or loss for federal income tax purposes as a result of the
exchange of their shares for shares of MS Fund, and that shareholders of MS Fund
will not recognize any gain or loss upon receipt of QMAB Fund's assets. If this
type of tax opinion is not forthcoming by the Closing Date, the Fund may still
choose to go forward with the reorganization, pending re-solicitation of
shareholders and shareholder approval. In addition, neither Fund is expected to
recognize a gain or loss as a result of the Reorganization.
Immediately prior to the Valuation Date, QMAB Fund will pay a dividend
which will have the effect of distributing to QMAB Fund's shareholders all of
QMAB Fund's net investment company taxable income for taxable years ending on
or prior to the Closing Date (computed without regard to any deduction for
dividends paid) and all of its net capital gains, if any, realized in taxable
years ending on or prior to the Closing Date (after reduction for any
available capital loss carry-forward). Such dividends will be included in the
taxable income of QMAB Fund's shareholders as ordinary income and capital
gain, respectively.
You will continue to be responsible for tracking the purchase cost and
holding period of your shares and should consult your tax advisor regarding
the effect, if any, of the Reorganization in light of your individual
circumstances. You should also consult your tax advisor as to state and
local and other tax consequences, if any, of the Reorganization because this
discussion only relates to federal income tax consequences.
What should I know about Class A, Class B, Class C and Class N shares of MS
Fund?
The rights of shareholders of both Funds are substantially the same.
Both Funds are organized as Massachusetts business trusts. The Declarations
of Trust and By-Laws are substantially similar with respect to rights voting
for the election of Trustees, and rights for mergers, liquidations and
distributions, and redemptions. Shareholders of MS Fund have voting rights
that are greater on certain significant matters that shareholders of QMAB
Fund do not have. Class A, Class B, Class C and Class N shares of MS Fund
will be distributed to shareholders of Class A, Class B, Class C and Class N
shares of QMAB Fund, respectively, in connection with the Reorganization.
Class Y shares of QMAB Fund were liquidated prior to the merger. Each share
will be fully paid and nonassessable when issued, will have no preemptive or
conversion rights and will be transferable on the books of MS Fund. Each
Fund's Declaration of Trust contains an express disclaimer of shareholder or
Trustee liability for the Fund's obligations, and provides for
indemnification and reimbursement of expenses out of its property for any
shareholder held personally liable for its obligations. Neither Fund permits
cumulative voting. The shares of MS Fund will be recorded electronically in
each shareholder's account. MS Fund will then send a confirmation to each
shareholder. Shareholders of Class A shares of QMAB Fund holding
certificates representing their shares will not be required to surrender
their certificates in connection with the Reorganization. However, former
Class A shareholders of QMAB Fund whose shares are represented by outstanding
share certificates will not be allowed to redeem, transfer or pledge class
shares of MS Fund they receive in the Reorganization until the certificates
for the exchanged QMAB Fund have been returned to the Transfer Agent.
Shareholders of Class B, Class C, Class N and Class Y shares of QMAB Fund do
not have certificates representing their shares. Their shares will be
cancelled.
Like QMAB Fund, MS Fund does not routinely hold annual shareholder
meetings.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
This section describes key investment policies of QMAB Fund
and MS Fund, and certain noteworthy differences between the
investment objectives and policies of the two Funds. For a
complete description of MS Fund's investment policies and risks,
please review its prospectus and Statement of Additional
Information dated November 22, 2002. That prospectus is attached
to this Prospectus and Proxy Statement as an enclosure.
Are there any significant differences between the
investment objectives and strategies of the Funds?
In considering whether to approve the Reorganization, shareholders of
QMAB Fund should consider the differences in investment objectives, policies
and risks of the Funds. Further information about MS Fund is set forth in its
Prospectus, which accompanies this Prospectus and Proxy Statement and is
incorporated herein by reference. Additional information about both Funds is
set forth in their respective Statements of Additional Information and Annual
Reports, which may be obtained upon request to the Transfer Agent. See
"Information about QMAB Fund" and "Information about MS Fund."
QMAB Fund's investment objective is to seek income and long-term growth
of capital and MS Fund's investment objective is to seek high total
investment return consistent with preservation of principal.
What are the Main Risks Associated with an Investment in the Funds?
Like all investments, an investment in both of the Funds involves
risk. There is no assurance that either Fund will meet its investment
objective. The achievement of the Funds' goals depends upon market
conditions, generally, and on the portfolio manager's analytical and
portfolio management skills. The risks described below collectively form the
risk profiles of the Funds, and can affect the value of the Funds'
investments, investment performance and prices per share. Particular
investments and investment strategies also have risks. There is also the
risk that poor securities selection by the Manager will cause the Funds to
underperform other funds having a similar objective. These risks mean that
you can lose money by investing in either Fund. When you redeem your shares,
they may be worth more or less than what you paid for them.
How Do the Investment Policies of the Funds Compare?
In selecting securities for MS Fund, MS Fund's portfolio managers use
different investment styles to carry out an asset allocation strategy that
seeks broad diversification across asset classes. They normally maintain a
balanced mix of stocks, debt securities and cash, although MS Fund has no
requirements to weight the portfolio holdings in a fixed proportion.
Therefore, the portfolio's mix of equity and debt securities and cash will
change over time as the portfolio managers seek relative values and
opportunities in different asset classes.
Because the goal of total return looks for an increase in the overall
portfolio value from a combination of capital growth and income, MS Fund
invests in stocks mainly for their capital appreciation potential and in debt
securities for income. The income from debt securities and money market
instruments can also help the Fund preserve principal when stock markets are
volatile.
The portfolio managers of MS Fund employ both "growth" and "value"
styles in selecting stocks. They employ fundamental analysis of a company's
financial statements and management structure, operations and product
development, as well as the industry of which the company is part. Value
investing seeks stocks that are temporarily out of favor or undervalued in
the market by various measures, such as the stock's price/earnings ratio.
Growth investing seeks stocks that the manager believes have possibilities
for increases in stock price because of strong earnings growth compared to
the market, the development of new products or services or other favorable
economic factors.
In selecting securities for QMAB Fund, QMAB Fund's portfolio managers
use a quantitative model. They manage the stock portion of QMAB Fund's
portfolio using behavioral finance models to search for securities of
companies believed to be underpriced, while maintaining a risk profile like
the Standard & Poor's 500 Composite Stock Price Index.
The portfolio managers allocate QMAB Fund's investments among equity
and debt securities after assessing the relative values of these different
types of investments under prevailing market conditions. The portfolio might
hold stocks, bonds and money market instruments in different proportions at
different times. While stocks and other equity securities are normally
emphasized to seek growth of capital, the portfolio managers might buy bonds
and other fixed-income securities, instead of stocks, when they think that
(1) common stocks in general appear to be overvalued, (2) debt securities
offer meaningful capital growth opportunities relative to common stocks, or
(3) it is desirable to maintain liquidity pending investment in equity
securities to seek capital growth opportunities.
Each Fund attempts to reduce their exposure to market risks by
diversifying their investments that is, by not holding a substantial amount
of stock of any one company and by not investing too great a percentage of
the Funds' assets in any one company. Neither Fund concentrates 25% or more
of its assets in investments in any one industry. Both Funds can invest in
companies in any particular capitalization range; however both Funds are
primarily invested in large-cap ($9 billion to $25 billion) and mega-cap
(above $25 billion) stocks.
Other Equity Securities. While MS Fund emphasizes investments in
common stocks, it can also buy preferred stocks, warrants and securities
convertible into common stock, which may be subject to credit risks and
interest rate risks. QMAB Fund invests in other equity securities such as
non-convertible preferred stocks and securities convertible into common stock.
Illiquid and Restricted Securities. Investments may be illiquid
because they do not have an active trading market, making it difficult to
value them or dispose of them promptly at an acceptable price. A restricted
security is one that has a contractual restriction on its resale or which
cannot be sold publicly until it is registered under the Securities Act of
1933. MS Fund will not invest more than 10% of its net assets in illiquid or
restricted securities. QMAB Fund will not invest more than 15% of its net
assets in illiquid of restricted securities. Certain restricted securities
that are eligible for resale to qualified institutional purchasers may not be
subject to those limits. The Manager or respective Adviser or Subadviser
monitors holdings of illiquid securities on an ongoing basis to determine
whether to sell any holdings to maintain adequate liquidity.
Foreign Investing. QMAB Fund may invest up to 15% of its total assets
in foreign equity securities and up to 20% of its total assets in debt
securities of foreign issuers.
MS Fund can buy securities in any country, including developed
countries and emerging markets. MS Fund has no limits on the amount of its
assets that can be invested in foreign securities; however, it normally
expects to invest not more than 50% of its assets in foreign securities.
While foreign securities may offer special investment opportunities, they are
subject to special risks that can reduce the Fund's share prices and returns.
Special Risks of Emerging Markets. QMAB Fund and MS Fund can invest in
emerging markets. Securities in emerging and developing markets present risks
not found in more mature markets. Emerging and developing markets abroad may
also offer special opportunities for growth investing but have greater risks
than more developed foreign markets, such as those in Europe, Canada,
Australia, New Zealand and Japan. There may be less liquidity in their
securities markets, and settlements of purchases and sales of securities may
be subject to additional delays. They are subject to greater risks of
limitations on the repatriation of income and profits because of currency
restrictions imposed by local governments. Those countries may also be
subject to the risk of greater political and economic instability, which can
greatly affect the volatility of prices of securities in those countries.
Economies of developing countries may be more dependent on relatively few
industries that may be highly vulnerable to local and global changes. These
investments may be very speculative.
Derivative Investments. Both Funds can invest in a number of different
kinds of "derivative" investments. In general terms, a derivative investment
is an investment contract whose value depends on (or is derived from) the
value of an underlying asset, interest rate or index. Options, futures
contracts, structured notes such as indexed securities or inverse securities,
collateralized mortgage obligations ("CMOs") and hedging instruments are
"derivative instruments" QMAB Fund can use. Options, futures contracts and
other hedging instruments may be considered derivative investments for MS
Fund. In addition to using derivatives for hedging, QMAB Fund might use
other derivative investments because they offer the potential for increased
income and principal value. MS Fund might use other derivative investments
because they offer the potential for increased value. QMAB Fund and MS Fund
are not required to use derivative investments in seeking their objectives.
Derivatives have risks. If the issuer of the derivative does not pay
the amount due, the Funds can lose money on the investment. The underlying
security or investment on which the derivative is based, and the derivative
itself, might not perform the way the Manager of MS Fund and the Adviser or
Subadviser of QMAB Fund expected it to perform. As a result of these risks,
both Funds could realize less principal or income from the investment than
expected or their hedge might be unsuccessful. If that happens, the Funds'
share prices could fall. Certain derivative investments held by the Funds
may be illiquid.
For QMAB Fund, certain types of investments or trading strategies (such
as borrowing money to increase the amount of investment) may be subject to
leverage risk. This means a relatively small market movement may result in
large changes in the value of an investment. Certain investments or trading
strategies that involve leverage can result in losses that greatly exceed the
amount originally invested. Derivatives may be difficult or impossible to
sell at the time that the seller would like or at the price that the seller
believes the security is currently worth.
Hedging. Both Funds can buy and sell futures contracts, put and call
options and forward contracts. These are all referred to as "hedging
instruments." The Funds are not required to use hedging instruments to seek
their objectives. The Funds have limits on their use of hedging and types of
hedging instruments that can be used, and do not use them for speculative
purposes. Some of these strategies could be used to hedge the Funds'
portfolio against price fluctuations. Other hedging strategies, such as
buying futures and call options, could increase the Funds' exposure to the
securities market. Forward contracts can be used to try to manage foreign
currency risks on both Funds' foreign investments.
There are also special risks in particular hedging strategies. Options
trading involves the payment of premiums, has special tax effects on the
Funds and can increase portfolio turnover. If the Adviser or Sub-Adviser for
QMAB Fund and the Manager for MS Fund use a hedging instrument at the wrong
time or judged market conditions incorrectly, the hedge might fail and the
strategy could reduce the Funds' return. Both Funds could also experience
losses if the prices of their futures and options positions are not
correlated with their other investments or if they could not close out a
position because of an illiquid market.
Portfolio Turnover. "Portfolio turnover" describes the rate at which
the Funds traded their portfolio securities during their last fiscal year.
Both Funds can engage in short-term trading to achieve their objective.
Increased portfolio turnover affects brokerage costs the Funds pay. If QMAB
Fund realizes capital gains when it sells its portfolio investments,
generally it must pay out those gains to shareholders, increasing
non-retirement plan or non-IRA or non-education savings account shareholders'
taxable distributions. If MS Fund realizes capital gains when it sells its
portfolio investments, generally it must pay out those gains to shareholders,
increasing their taxable distributions.
Investing in Small, Unseasoned Companies. Both Funds can invest in
securities of small, unseasoned companies. These companies that have been in
operation for less than three (3) years, including the operations of any
predecessors. Securities of these companies may be subject to volatility in
their prices. They may have a limited trading market, which may adversely
affect the Funds' ability to dispose of them and can reduce the price the
Funds might be able to obtain for them. Other investors that own a security
issued by a small, unseasoned issuer for which there is limited liquidity
might trade the security when the Funds are attempting to dispose of their
holdings of that security. In that case the Funds might receive a lower
price for their holdings than might otherwise be obtained. These are more
speculative securities and can increase the Funds' overall portfolio risks.
MS Fund does not intend to invest more than 5% of its net assets in these
securities.
Repurchase Agreements. Both Funds can acquire securities subject to
repurchase agreements. In a repurchase transaction, the Funds buy a security
from, and simultaneously resell it to, an approved vendor for delivery on an
agreed-upon future date. The resale price exceeds the purchase price by an
amount that reflects an agreed-upon interest rate effective for the period
during which the repurchase agreement is in effect. Approved vendors include
U.S. commercial banks, U.S. branches of foreign banks, or broker-dealers that
have been designated as primary dealers in government securities. They must
meet credit requirements set by the Funds' Adviser from time to time.
The majority of these transactions run from day to day, and delivery
pursuant to the resale typically occurs within one to five days of the
purchase. Repurchase agreements having a maturity beyond seven days are
subject to the Funds' limits on holding illiquid investments. QMAB Fund and
MS Fund will not enter into a repurchase agreement that causes more than 15%
and 10%, respectively, of each of their net assets to be subject to
repurchase agreements having a maturity beyond seven (7) days. There is no
limit on the amount of MS Fund's net assets that may be subject to repurchase
agreements having maturities of seven days or less.
Loans of Portfolio Securities. To raise cash for liquidity purposes,
MS Fund can lend its portfolio securities to brokers, dealers and other types
of financial institutions approved by the Fund's Board of Trustees. As a
fundamental policy, these loans are limited to not more than 25% of the value
of MS Fund's total assets. MS Fund currently does not intend to engage in
loans of securities, but if it does so, such loans will not likely exceed 5%
of the Fund's total assets.
There are some risks in connection with securities lending. MS Fund
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.
The Fund must receive collateral for a loan.
When MS Fund lends securities, it receives amounts equal to the
dividends or interest on loaned securities. It also receives one or more of
(a) negotiated loan fees, (b) interest on securities used as collateral, and
(c) interest on any short-term debt securities purchased with such loan
collateral. Any of these types of interest may be shared with the borrower.
MS Fund may also pay reasonable finder's, custodian and administrative fees
in connection with these loans. The terms of the Fund's loans must meet
applicable tests under the Internal Revenue Code and must permit the Fund to
reacquire loaned securities on five (5) days' notice or in time to vote on
any important matter. QMAB Fund is not authorized to lend portfolio
securities.
Temporary Defensive and Interim Investments. In times of adverse or
unstable market, economic or political conditions, both Funds can invest up
to 100% of their assets in temporary defensive investments that are
inconsistent with the Funds' principal investment strategies. For QMAB Fund
they would be cash equivalents (such as commercial paper), money market
instruments, short-term debt securities, U.S. government securities,
repurchase agreements and purchase and sales contracts and could include
other investment grade debt securities and short-term securities for cash
management purposes. For MS Fund, they would be high-quality, short-term
money market instruments, such as U.S. government securities, highly rated
commercial paper, short-term corporate debt obligations, or repurchase
agreements. MS Fund might also hold these types of securities pending the
investment of proceeds from the sale of Fund's shares or portfolio securities
or to meet anticipated redemptions of Fund shares. To the extent the Funds
invest in these securities, they might not achieve their investment
objective.
What are the fundamental investment restrictions of the Funds?
Both QMAB Fund and MS Fund have certain additional investment
restrictions that are fundamental policies, changeable only by shareholder
approval. Both Funds' investment objectives are also fundamental policies.
Generally, these investment restrictions are similar between the Funds and
are discussed below:
|_| Neither Fund can buy securities issued or guaranteed by any
one issuer if more than 5% of their total assets would be invested
in securities of that issuer or if they would then own more than 10%
of that issuer's voting securities. That restriction applies to 75%
of each Fund's total assets. The limit does not apply to securities
issued by the U.S. government or any of its agencies or
instrumentalities, and in the case of QMAB Fund, securities of other
investment companies.
|_| Neither Fund can invest in physical commodities or physical
commodity contracts. However, the Funds can buy and sell hedging
instruments to the extent specified in their Prospectuses and
Statements of Additional Information from time to time. The Funds
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.
|_| MS Fund cannot lend money. However, it can buy debt securities that
its investment policies and restrictions permit it to purchase. MS
Fund may also lend its portfolio securities subject to the
restrictions stated in its Prospectus and Statement of Additional
Information and can enter into repurchase agreements.
|_| QMAB Fund cannot make loans except (a) through lending of securities,
(b) through the purchase of debt instruments, loan participations or
similar evidences of indebtedness, (c) through an inter-fund lending
program with other affiliated funds, and (d) through repurchase
agreements.
|_| Neither Fund can concentrate investments. That means they cannot
invest 25% or more of their total assets in companies in any one
industry. For MS Fund, obligations of the U.S. government, its
agencies and instrumentalities are not considered to be part of an
"industry" for purposes of this restriction.
|_| Neither Fund can underwrite securities of other companies. A
permitted exception is in case they are deemed to be underwriters
under the Securities Act of 1933 when reselling any securities held
in their own portfolio.
|_| Neither Fund can invest in real estate or in interests in real estate.
For MS Fund, this includes futures contracts. However, QMAB Fund
may purchase readily-marketable securities of companies holding real
estate or interests in real estate. MS Fund may purchase debt
securities secured by real estate or interests in real estate.
|_| Neither Fund can issue "senior securities." However, that restriction
does not prohibit the Funds from borrowing money subject to the
provisions set forth in their Statements of Additional Information,
or from entering into margin, collateral or escrow arrangements
permitted by their other investment policies.
|_| QMAB Fund cannot borrow money in excess of 33 1/3% of the value of its
total assets. QMAB Fund may borrow only from banks and/or affiliated
investment companies. With respect to this fundamental policy, QMAB
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. MS Fund does not have such a fundamental restriction.
|_| MS Fund cannot borrow money in excess of 5% of the value of
its total assets. It can borrow only as a temporary measure for
extraordinary or emergency purposes.
|_| MS Fund cannot invest in the securities issued by any
company for the purpose of acquiring control or management of that
company, except in connection with a merger, reorganization,
consolidation or acquisition of assets. QMAB Fund does not have such
a fundamental investment restriction.
|_| MS Fund cannot invest in or hold securities of any issuer
if officers and Trustees of MS Fund or the 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. QMAB Fund does not have such a fundamental investment
restriction.
|_| MS Fund cannot buy securities on margin. However,
this does not prohibit MS Fund from making margin deposits in
connection with any of the hedging instruments permitted by any of
its other investment policies. QMAB Fund does not have such a
fundamental investment restriction.
MS Fund cannot mortgage, hypothecate or pledge any of its assets to
secure a debt. However, the escrow arrangements in connection with
hedging instruments are not considered to involve a mortgage,
hypothecation or pledge. QMAB Fund does not have such a fundamental
investment restriction.
How do the Account Features and Shareholder Services for the Funds Compare?
Investment Management - Pursuant to each investment advisory agreement,
the Manager acts as the investment advisor for both Funds. For QMAB Fund,
the Manager has retained Prudential Investment Management, the Sub-Advisor,
to provide day-to-day portfolio management for QMAB Fund. The sub-advisory
fee is paid by the Manager out of its management fee. Under the Investment
Advisory Agreement for MS Fund and under the Subadvisory Agreement for QMAB
Fund, the Manager, Adviser, or SubAdviser is authorized and directed to (i)
regularly provide investment advice and recommendations to each Fund with
respect to the Fund's investments, investment policies and the purchase and
sale of securities and other investments; (ii) supervise and monitor the
investment program of each Fund and the composition of its portfolio to
determine what securities and other investments shall be purchased or sold by
the Fund; and (iii)
arrange for the purchase of securities and other investments for each Fund
and the sale of securities and other investments held in the portfolio of the
Fund.
The investment advisory agreements state that the Manager will provide
administrative services for the Funds, including compilation and maintenance
of records, preparation and filing of reports required by the SEC, reports to
shareholders, and composition of proxy statements and registration statements
required by Federal and state securities laws. The administrative services
to be provided by the Manager under the investment advisory agreement will be
at its own expense.
Expenses not expressly assumed by the Manager under each Fund's
advisory agreement or by the Distributor under the General Distributor's
Agreement are paid by the Funds. The investment advisory agreements list
examples of expenses paid by the Funds, the major categories of which relate
to interest, taxes, brokerage commissions, fees to certain Trustees, legal
and audit expenses, custodian and transfer agent expenses, share issuance
costs, certain printing and registration costs and non-recurring expenses,
including litigation costs.
Both investment advisory agreements generally provide that in the
absence of willful misfeasance, bad faith, gross negligence in the
performance of its duties or reckless disregard of its obligations and duties
under the investment advisory agreement, the Manager is not liable for any
loss sustained by reason of good faith errors or omissions in connection with
any matters to which the agreement(s) relate. The agreements permit the
Manager to act as investment advisor for any other person, firm or
corporation. Pursuant to each agreement, the Manager is permitted to use the
name "Oppenheimer" in connection with other investment companies for which it
may act as investment advisor or general distributor. If the Manager shall
no longer act as investment advisor to the Funds, the Manager may withdraw
the right of the Funds to use the name "Oppenheimer" as part of their names.
The Manager is controlled by Oppenheimer Acquisition Corp., a holding
company owned in part by senior officers of the Manager and ultimately
controlled by Massachusetts Mutual Life Insurance Company, a mutual life
insurance company that also advises pension plans and investment companies.
The Manager has been an investment advisor since January 1960. The Manager
and its subsidiaries and controlled affiliates managed more than $120 billion
in assets as of March 31, 2003, including other Oppenheimer funds with more
than 7 million shareholder accounts. The Manager is located at 498 Seventh
Avenue, New York, New York 10018. OppenheimerFunds Services, a division of
the Manager, acts as transfer and shareholder servicing agent and is paid an
annual per account fee by each of QMAB Fund and MS Fund and for certain other
open-end funds managed by the Manager and its affiliates.
Distribution - Pursuant to General Distributor's Agreements, the
Distributor acts as principal underwriter in a continuous public offering of
shares of both Funds, but is not obligated to sell a specific number of
shares. Expenses normally attributable to sales, including advertising and
the cost of printing and mailing prospectuses other than those furnished to
existing shareholders, are borne by the Distributor, except for those for
which the Distributor is paid under each Fund's Rule 12b-1 Distribution and
Service Plan described below.
The Service Plan provides for the reimbursement to OppenheimerFunds
Distributor, Inc. (the "Distributor"), for a portion of its costs incurred
in connection with the personal service and maintenance of accounts that hold
Class A shares of the respective Funds. Under the Class A Service Plans,
reimbursement is made quarterly at an annual rate that may not exceed 0.25%
of the average annual net assets of Class A shares of the respective Funds.
The Distributor currently uses all of those fees to compensate dealers,
brokers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold
Class A shares of the respective Funds.
Both Funds have adopted Distribution and Service Plans and Agreements
under Rule 12b-1 of the Investment Company Act for Class B, Class C and Class
N shares. These plans compensate the Distributor for its services and costs
in connection with the distribution of Class B, Class C and Class N shares
and the personal service and maintenance of shareholder accounts. Under each
Class B and Class C Plan, the Funds pay the Distributor a service fee at an
annual rate of 0.25% of average annual net assets and an asset-based sales
charge at an annual rate of 0.75% of average annual net assets. Under each
Class N Plan, the Funds pay the Distributor a service fee at an annual rate
of 0.25% of average annual net assets and an asset-based sales charge at an
annual rate of 0.25% of average annual net assets. All fee amounts are
computed on the average annual net assets of the class determined as of the
close of each regular business day of each Fund. The Distributor uses all of
the service fees to compensate dealers for providing personal services and
maintenance of accounts of their customers that hold shares of the Funds.
The Class B and Class N asset-based sales charge is retained by the
Distributor. After the first year, the Class C asset-based sales charge is
paid to the broker-dealer as an ongoing concession for shares that have been
outstanding for a year or more. The terms of the Funds' respective
Distribution and Service Plans are substantially similar.
Purchases and Redemptions - Both Funds are part of the OppenheimerFunds
family of mutual funds. Shares of QMAB Fund are offered for sale only to
retirement plans. The procedures for purchases, exchanges and redemptions of
shares of the Funds are nearly identical; however, for QMAB Fund, not only
can shares be redeemed by mail and telephone, but by wire as well. Shares of
either Fund may be exchanged for shares of the same class of other
Oppenheimer funds offering such shares. Exchange privileges are subject to
amendment or termination at any time.
Both Funds have the same initial and subsequent minimum investment
amounts for the purchase of shares. These amounts are $1,000 and $50,
respectively. Both Funds have a maximum initial sales charge of 5.75% on
Class A shares for purchases of less than $25,000. The sales charge of 5.75%
is reduced for purchases of Class A shares of $25,000 or more. Investors who
purchase $1 million or more of Class A shares pay no initial sales charge.
Class B shares of the Funds are sold without a front-end sales charge but
investors will pay an annual asset-based sales charge. If investors sell
their shares within six years from the beginning of the calendar month of
their purchase, they will normally pay a CDSC. The CDSC begins at 5% for
shares redeemed in the first year and declines to 1% in the sixth year and is
eliminated after that. Class C shares may be purchased without an initial
sales charge, but investors will pay an annual asset-based sales charge, and
if redeemed within 12 months of buying them, a CDSC of 1% will be deducted
from the redemption proceeds. Class N shares (available only through certain
retirement plans) are purchased without an initial sales charge, but
investors will pay an annual asset-based sales charge, and if redeemed within
18 months of the retirement plan's first purchase of Class N shares, a CDSC
of 1% may be deducted.
Class A, Class B, Class C and Class N shares of MS Fund received in the
Reorganization will be issued at net asset value, without a sales charge and
no CDSC will be imposed on any QMAB Fund shares exchanged for MS Fund shares
as a result of the Reorganization. However, any CDSC that applies to QMAB
Fund shares as of the date of the exchange will carry over to MS Fund shares
received in the Reorganization.
Shareholder Services - Both Funds also offer the following privileges:
(i) Right of Accumulation, (ii) Letter of Intent, (iii) reinvestment of
dividends and distributions at net asset value, (iv) net asset value
purchases by certain individuals and entities, (v) Asset Builder (automatic
investment) Plans, (vi) Automatic Withdrawal and Exchange Plans for
shareholders who own shares of the Funds valued at $5,000 or more, (vii)
AccountLink and PhoneLink arrangements, (viii) exchanges of shares for shares
of the same class of certain other funds at net asset value, (ix) telephone
and Internet redemption and exchange privileges, and (x) for QMAB Fund only,
wire redemptions of fund shares (for a fee). All of such services and
privileges are subject to amendment or termination at any time and are
subject to the terms of the Funds' respective prospectuses.
Dividends and Distributions - QMAB Fund declares dividends separately
for each class of shares from net investment income on an annual basis and
pays those dividends to shareholders in December on a date selected by the
Board of Trustees of the Fund. MS Fund declares dividends separately for each
class of shares from net investment income on a quarterly basis in March,
June, September and December on a date selected by the Board of Trustees of
the Fund. Dividends and the distributions paid on Class A, Class B, Class C,
and Class N shares may vary over time, depending on market conditions, the
composition of the Funds' portfolios, and expenses borne by the particular
class of shares. Dividends paid on Class A shares will generally be higher
than those paid on Class B, Class C and Class N shares. That is because of
the effect of the asset-based sales charge on Class B, Class C and Class N
shares. The Funds have no fixed dividend rates and there can be no guarantee
that either Fund will pay any dividends or distributions.
Either Fund may realize capital gains on the sale of portfolio
securities. If either does, it may make distributions out of any net
short-term or long-term capital gains in December of each year. The Funds
may make supplemental distributions of dividends and capital gains following
the end of their fiscal years.
VOTING INFORMATION
How many votes are necessary to approve the Reorganization Agreement?
The affirmative vote of the holders of a majority of the outstanding
voting securities (as defined in the Investment Company Act) of QMAB Fund
voting in the aggregate and not by class is necessary to approve the
Reorganization Agreement and the transactions contemplated thereby. As
defined in the Investment Company Act, the vote of a majority of the
outstanding shares means the vote of (1) 67% or more of QMAB Fund's
outstanding shares present at a meeting if the holders of more than 50% of
the outstanding shares of the Fund are present or represented by proxy; or
(2) more than 50% of the Fund's outstanding shares, whichever is less. Each
shareholder will be entitled to one vote for each full share, and a
fractional vote for each fractional share of QMAB Fund held on the Record
Date. If sufficient votes to approve the proposal are not received by the
date of the Meeting, the Meeting may be adjourned to permit further
solicitation of proxies. The holders of a majority of shares entitled to
vote at the Meeting and present in person or by proxy (whether or not
sufficient to constitute a quorum) may adjourn the Meeting to permit further
solicitation of proxies.
How do I ensure my vote is accurately recorded?
You can vote in three (3) different ways:
o By mail, with the enclosed proxy card.
o In person at the Meeting.
o By telephone (please see the insert for instructions)
A proxy card is, in essence, a ballot. If you simply sign and date the
proxy but give no voting instructions, your shares will be voted in favor of
the Reorganization Agreement.
Votes may also be recorded by telephone. Shareholders must enter a
unique control number found on their respective proxy ballots before
providing voting instructions by telephone. 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.
Can I revoke my proxy?
Yes. You may revoke your proxy at any time before it is voted by (i)
writing to the Secretary of QMAB Fund at 6803 South Tucson Way, Centennial,
Colorado 80112 (if received in time to be acted upon); (ii) attending the
Meeting and voting in person; or (iii) signing and returning a later-dated
proxy (if returned and received in time to be voted).
What other matters will be voted upon at the Meeting?
The Board of Trustees of QMAB Fund does not intend to bring any matters
before the Meeting other than those described in this proxy. It is not aware
of any other matters to be brought before the Meeting by others. If any
other matters legally come before the Meeting, the proxy ballots confer
discretionary authority with respect to such matters, and it is the intention
of the persons named as attorneys-in-fact to vote proxies to vote in
accordance with their judgment in such matters.
Who is entitled to vote?
Shareholders of record of QMAB Fund at the close of business on June
18, 2003 (the "record date") will be entitled to vote at the Meeting. On
June 18, 2003, there were __________ outstanding shares of QMAB Fund,
consisting of __________ Class A shares, _________ Class B shares, __________
Class C shares, __________ Class N shares and _________ Class Y shares. On
June 18, 2003, there were _________ outstanding shares of MS Fund, consisting
of _________ Class A shares, _________ Class B shares, __________ Class C
shares, and __________ Class N shares. Under relevant state law, proxies
representing abstentions and broker non-votes will be included for purposes
of determining whether a quorum is present at the Meeting. Shares owned of
record by broker-dealers for the benefit of their customers ("street account
shares") will be voted by the broker-dealer based on instructions received
from its customers. If no instructions are received, and the broker-dealer
does not have discretionary power to vote such street account shares under
applicable stock exchange rules, the shares represented thereby will be
considered to be present at the Meeting for purposes of only determining the
quorum ("broker non-votes"). Because of the need to obtain a vote of the
majority of the outstanding voting securities for the Reorganization proposal
to pass, abstentions and broker non-votes will have the same effect as a vote
"against" the Proposal. For purposes of the Meeting, a majority of shares
outstanding and entitled to vote, present in person or represented by proxy,
constitutes a quorum. MS Fund shareholders do not vote on the Reorganization.
What other solicitations will be made?
QMAB Fund will request broker-dealer firms, custodians, nominees and
fiduciaries to forward proxy material to the beneficial owners of the shares
of record, and may reimburse them for their reasonable expenses incurred in
connection with such proxy solicitation. In addition to solicitations by
mail, officers of QMAB Fund or officers and employees of OppenheimerFunds
Services, without extra pay, may conduct additional solicitations personally
or by telephone or telegraph. Any expenses so incurred will be borne by
OppenheimerFunds Services. Proxies may also be solicited by a proxy
solicitation firm hired at QMAB Fund's expense. If a proxy solicitation firm
is hired, it is anticipated that the cost of engaging a proxy solicitation
firm would not exceed $17,000, plus the additional costs which would be
incurred in connection with contacting those shareholders who have not voted,
in the event of a need for resolicitation of votes.
Are there appraisal rights?
No. Under the Investment Company Act, shareholders do not have rights
of appraisal as a result of the Reorganization. Although appraisal rights
are unavailable, you have the right to redeem your shares at net asset value
until the Valuation Date for the Reorganization. After the closing date, you
may redeem your new MS Fund shares or exchange them into shares of certain
other funds in the OppenheimerFunds family of mutual funds, subject to the
terms of the prospectuses of both funds.
INFORMATION ABOUT MULTIPLE STRATEGIES FUND
Information about MS Fund (File no. 811-3864) is included in MS Fund's
Prospectus dated November 22, 2002 as supplemented January 31, 2003, which is
attached to and considered a part of this Prospectus and Proxy Statement.
Additional information about MS Fund is included in the Fund's Statement of
Additional Information dated November 30, 2002, and the Annual Report dated
September 30, 2002, which have been filed with the SEC and are incorporated
herein by reference. You may request a free copy of these materials and
other information by calling 1.800.708.7780 or by writing to MS Fund at
OppenheimerFunds Services, P.O. Box 5270, Denver, CO 80217-5270. MS Fund
also files proxy materials, reports and other information with the SEC in
accordance with the informational requirements of the Securities and Exchange
Act of 1934 and the Investment Company Act. These materials can be inspected
and copied at: the SEC's Public Reference Room in Washington, D.C. (Phone:
1.202.942.8090) or the EDGAR database on the SEC's Internet website at
www.sec.gov. Copies may be obtained upon payment of a duplicating fee by
electronic request at the SEC's e-mail address: publicinfo@sec.gov or by
------------------
writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.
INFORMATION ABOUT QM ACTIVE BALANCED FUND
Information about QMAB Fund (File no. 811-10153) is included in the
current QMAB Fund Prospectus. This document has been filed with the SEC and
is incorporated herein by reference. Additional information about QMAB Fund
is also included in the Fund's Statement of Additional Information dated
March 28, 2003, and the Annual Report dated November 30, 2002, which have
been filed with the SEC and are incorporated herein by reference. You may
request free copies of these or other documents relating to QMAB Fund by
calling 1.800.708.7780 or by writing to OppenheimerFunds Services, P.O. Box
5270, Denver, CO 80217-5270. Reports and other information filed by QMAB
Fund can be inspected and copied at: the SEC's Public Reference Room in
www.sec.gov. Copies may be obtained upon payment of a duplicating fee by
electronic request at the SEC's e-mail address: publicinfo@sec.gov or by
------------------
writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.
PRINCIPAL SHAREHOLDERS
As of June 18, 2003, the officers and Trustees of QMAB Fund, as a
group, owned less than 1% of the outstanding voting shares of QMAB Fund. As
of June 18, 2003, the only persons who owned of record or was known by QMAB
Fund to own beneficially or of record 5% or more of any class of the Fund's
outstanding shares were as follows:
5% Shareholder information will be updated
------------------------------------------
As of June 18, 2003, the officers and Trustees of MS Fund, as a group,
owned less than 1% of the outstanding voting shares of MS Fund. As of June
18, 2003, the only persons who owned of record or was known by MS Fund to own
beneficially or of record 5% or more of any class of the Fund's outstanding
shares were as follows:
5% Shareholder information will be updated
------------------------------------------
By Order of the Board of Trustees
Robert G. Zack, Secretary
July 7, 2003
Appendix to Prospectus and Proxy Statement of
Oppenheimer Multiple Strategies Fund
Graphic material included in the Prospectus of Oppenheimer Multiple
Strategies Fund under the heading "Annual Total Returns (Class A) (as of
12/31 each year)":
A bar chart will be included in the Prospectus of the Fund depicting
the annual total returns of a hypothetical investment in Class A shares of
the Fund for its ten most recent calendar years, without deducting sales
charges. Set forth below are the relevant data points that will appear on the
bar chart.
Calendar
- --------
Year Oppenheimer Multiple Strategies Fund
- ---- ------------------------------------
Ended Class A Shares
- ----- --------------
12/31/93 16.30%
12/31/94 -1.59%
12/31/95 22.79%
12/31/96 17.23%
12/31/97 17.77%
12/31/98 7.05%
12/31/99 10.60%
12/31/00 6.57%
12/31/01 1.68%
12/31/02 -10.60%
Appendix to Prospectus and Proxy Statement of
Oppenheimer Select Managers QM Active Balanced Fund
Graphic material included in the Prospectus of Oppenheimer Select
Managers QM Active Balanced Fund under the heading "Annual Total Returns
(Class A) (as of 12/31 each year)":
A bar chart will be included in the Prospectus of the Fund depicting
the annual total returns of a hypothetical investment in Class A shares of
the Fund for the calendar year ended 12/31/02, without deducting sales
charges. Set forth below is the relevant data point that will appear on the
bar chart.
Calendar
- --------
Year Oppenheimer Select Managers QM Active Balanced
- ---- -----------------------------------------------
Fund
----
Ended Class A Shares
- ----- --------------
12/31/02 -12.44%
EXHIBITS TO THE COMBINED PROXY
STATEMENT AND PROSPECTUS
Exhibit
- -------
A Agreement and Plan of Reorganization between Oppenheimer Select Managers
QM Active Balanced Fund and Oppenheimer Multiple Strategies Fund
B Principal Shareholders
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of
April 28, 2003 by and between Oppenheimer Select Managers QM Active Balanced
Fund ("QMAB Fund"), a Massachusetts business trust and Oppenheimer Multiple
Strategies Fund ("MS Fund"), a Massachusetts business trust.
W I T N E S S E T H:
WHEREAS, the parties are each open-end investment companies of the
management type; and
WHEREAS, the parties hereto desire to provide for the reorganization
pursuant to Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"), of QMAB Fund through the acquisition by MS Fund of
substantially all of the assets of QMAB Fund in exchange for the voting
shares of beneficial interest ("shares") of Class A, Class B, Class C, and
Class N shares of MS Fund and the assumption by MS Fund of certain
liabilities of QMAB Fund, for which Class A, Class B, Class C, and Class N
shares of MS Fund are to be distributed by QMAB Fund pro rata to its
shareholders in complete liquidation of QMAB Fund and complete cancellation
of its shares;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. The parties hereto hereby adopt this Agreement and Plan of
Reorganization (the "Agreement") pursuant to Section 368(a)(1) of
the Code as follows: The reorganization will be comprised of the
acquisition by MS Fund of substantially all of the assets of QMAB
Fund in exchange for Class A, Class B, Class C, and Class N
shares of MS Fund and the assumption by MS Fund of certain
liabilities of QMAB Fund, followed by the distribution of such
Class A, Class B, Class C, and Class N shares of MS Fund to the
Class A, Class B, Class C, and Class N shareholders of QMAB Fund
in exchange for their Class A, Class B, Class C, and Class N
shares of QMAB Fund, all upon and subject to the terms of the
Agreement hereinafter set forth. Class Y shares of QMAB Fund will
be redeemed prior to the merger.
The share transfer books of QMAB Fund will be permanently closed at the
close of business on the Valuation Date (as hereinafter defined) and only
redemption requests received in proper form on or prior to the close of
business on the Valuation Date shall be fulfilled by QMAB Fund; redemption
requests received by QMAB Fund after that date shall be treated as requests
for the redemption of the shares of MS Fund to be distributed to the
shareholder in question as provided in Section 5 hereof.
2. On the Closing Date (as hereinafter defined), all of the assets of QMAB
Fund on that date, excluding a cash reserve (the "cash reserve") to be
retained by QMAB Fund sufficient in its discretion for the payment of the
expenses of QMAB Fund's dissolution and its liabilities, but not in excess of
the amount contemplated by Section 10E, shall be delivered as provided in
Section 8 to MS Fund, in exchange for and against delivery to QMAB Fund on
the Closing Date of a number of Class A, Class B, Class C, and Class N shares
of MS Fund, having an aggregate net asset value equal to the value of the
assets of QMAB Fund so transferred and delivered.
3. The net asset value of Class A, Class B, Class C, and Class N shares of
MS Fund and the value of the assets of QMAB Fund to be transferred shall in
each case be determined as of the close of business of The New York Stock
Exchange on the Valuation Date. The computation of the net asset value of the
Class A, Class B, Class C, and Class N shares of MS Fund and the Class A,
Class B, Class C, and Class N shares of QMAB Fund shall be done in the manner
used by MS Fund and QMAB Fund, respectively, in the computation of such net
asset value per share as set forth in their respective prospectuses. The
methods used by MS Fund in such computation shall be applied to the valuation
of the assets of QMAB Fund to be transferred to MS Fund.
QMAB Fund shall declare and pay, immediately prior to the Valuation Date, a
dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to QMAB Fund's
shareholders all of QMAB Fund's investment company taxable income
for taxable years ending on or prior to the Closing Date
(computed without regard to any dividends paid) and all of its
net capital gain, if any, realized in taxable years ending on or
prior to the Closing Date (after reduction for any capital loss
carry-forward).
4. The closing (the "Closing") shall be at the offices of
OppenheimerFunds, Inc. (the "Agent"), 6803 South Tucson Way, Centennial, CO
80112, on such time or such other place as the parties may designate or as
provided below (the "Closing Date"). The business day preceding the Closing
Date is herein referred to as the "Valuation Date."
In the event that on the Valuation Date either party has, pursuant to the
Investment Company Act of 1940, as amended (the "Act"), or any
rule, regulation or order thereunder, suspended the redemption of
its shares or postponed payment therefore, the Closing Date shall
be postponed until the first business day after the date when
both parties have ceased such suspension or postponement;
provided, however, that if such suspension shall continue for a
period of 60 days beyond the Valuation Date, then the other party
to the Agreement shall be permitted to terminate the Agreement
without liability to either party for such termination.
5. In conjunction with the Closing, QMAB Fund shall distribute on a pro
rata basis to the shareholders of QMAB Fund as of the Valuation Date Class A,
Class B, Class C, and Class N shares of MS Fund received by QMAB Fund on the
Closing Date in exchange for the assets of QMAB Fund in complete liquidation
of QMAB Fund; for the purpose of the distribution by QMAB Fund of Class A,
Class B, Class C, and Class N shares of MS Fund to QMAB Fund's shareholders,
MS Fund will promptly cause its transfer agent to: (a) credit an appropriate
number of Class A, Class B, Class C, and Class N shares of MS Fund on the
books of MS Fund to each Class A, Class B, Class C, and Class N shareholder
of QMAB Fund in accordance with a list (the "Shareholder List") of QMAB Fund
shareholders received from QMAB Fund; and (b) confirm an appropriate number
of Class A, Class B, Class C, and Class N shares of MS Fund to each Class A,
Class B, Class C, and Class N shareholder of QMAB Fund; certificates for
Class A shares of MS Fund will be issued upon written request of a former
shareholder of QMAB Fund but only for whole shares, with fractional shares
credited to the name of the shareholder on the books of MS Fund and only
after any share certificates for QMAB Fund are returned to the transfer agent.
The Shareholder List shall indicate, as of the close of business on the
Valuation Date, the name and address of each shareholder of QMAB
Fund, indicating his or her share balance. QMAB Fund agrees to
supply the Shareholder List to MS Fund not later than the Closing
Date. Shareholders of QMAB Fund holding certificates
representing their shares shall not be required to surrender
their certificates to anyone in connection with the
reorganization. After the Closing Date, however, it will be
necessary for such shareholders to surrender their certificates
in order to redeem, transfer or pledge the shares of MS Fund
which they received.
6. Within one year after the Closing Date, QMAB Fund shall (a) either pay
or make provision for payment of all of its liabilities and taxes, and (b)
either (i) transfer any remaining amount of the cash reserve to MS Fund, if
such remaining amount (as reduced by the estimated cost of distributing it to
shareholders) is not material (as defined below) or (ii) distribute such
remaining amount to the shareholders of QMAB Fund on the Valuation Date.
Such remaining amount shall be deemed to be material if the amount to be
distributed, after deduction of the estimated expenses of the distribution,
equals or exceeds one cent per share of QMAB Fund outstanding on the
Valuation Date.
7. Prior to the Closing Date, there shall be coordination
between the parties as to their respective portfolios so that,
after the Closing, MS Fund will be in compliance with all of its
investment policies and restrictions. At the Closing, QMAB Fund
shall deliver to MS Fund two copies of a list setting forth the
securities then owned by QMAB Fund. Promptly after the Closing,
QMAB Fund shall provide to MS Fund a list setting forth the
respective federal income tax bases thereof.
8. Portfolio securities or written evidence acceptable to MS Fund of
record ownership thereof by The Depository Trust Company or through the
Federal Reserve Book Entry System or any other depository approved by QMAB
Fund pursuant to Rule 17f-4 and Rule 17f-5 under the Act shall be endorsed
and delivered, or transferred by appropriate transfer or assignment
documents, by QMAB Fund on the Closing Date to MS Fund, or at its direction,
to its custodian bank, in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of brokers and
shall be accompanied by all necessary state transfer stamps, if any. The
cash delivered shall be in the form of certified or bank cashiers' checks or
by bank wire or intra-bank transfer payable to the order of MS Fund for the
account of MS Fund. Class A, Class B, Class C, and Class N shares of MS Fund
representing the number of Class A, Class B, Class C, and Class N shares of
MS Fund being delivered against the assets of QMAB Fund, registered in the
name of QMAB Fund, shall be transferred to QMAB Fund on the Closing Date.
Such shares shall thereupon be assigned by QMAB Fund to its shareholders so
that the shares of MS Fund may be distributed as provided in Section 5.
If, at the Closing Date, QMAB Fund is unable to make delivery under
this Section 8 to MS Fund of any of its portfolio securities or cash for the
reason that any of such securities purchased by QMAB Fund, or the cash
proceeds of a sale of portfolio securities, prior to the Closing Date have
not yet been delivered to it or QMAB Fund's custodian, then the delivery
requirements of this Section 8 with respect to said undelivered securities or
cash will be waived and QMAB Fund will deliver to MS Fund by or on the
Closing Date with respect to said undelivered securities or cash executed
copies of an agreement or agreements of assignment in a form reasonably
satisfactory to MS Fund, together with such other documents, including a due
bill or due bills and brokers' confirmation slips as may reasonably be
required by MS Fund.
9. MS Fund shall not assume the liabilities (except for
portfolio securities purchased which have not settled and for
shareholder redemption and dividend checks outstanding) of QMAB
Fund, but QMAB Fund will, nevertheless, use its best efforts to
discharge all known liabilities, so far as may be possible, prior
to the Closing Date. The cost of printing and mailing the
proxies and proxy statements will be borne by QMAB Fund. QMAB
Fund and MS Fund will bear the cost of their respective tax
opinions. Any documents such as existing prospectuses or annual
reports that are included in that mailing will be a cost of the
Fund issuing the document. Any other out-of-pocket expenses of
MS Fund and QMAB Fund associated with this reorganization,
including legal, accounting and transfer agent expenses, will be
borne by QMAB Fund and MS Fund, respectively, in the amounts so
incurred by each.
10.
The obligations of MS Fund hereunder shall be subject to the
following conditions:
A. The Board of Trustees of QMAB Fund shall have
authorized the execution of the Agreement, and the shareholders
of QMAB Fund shall have approved the Agreement and the
transactions contemplated hereby, and QMAB Fund shall have
furnished to MS Fund copies of resolutions to that effect
certified by the Secretary or the Assistant Secretary of QMAB
Fund; such shareholder approval shall have been by the
affirmative vote required by the Massachusetts Law and its
charter documents at a meeting for which proxies have been
solicited by the Proxy Statement and Prospectus (as hereinafter
defined).
B. MS Fund shall have received an opinion dated as of the Closing Date
from counsel to QMAB Fund, to the effect that (i) QMAB Fund is a business
trust duly organized, validly existing and in good standing under the laws of
the State of Massachusetts with full corporate powers to carry on its
business as then being conducted and to enter into and perform the Agreement;
and (ii) that all action necessary to make the Agreement, according to its
terms, valid, binding and enforceable on QMAB Fund and to authorize
effectively the transactions contemplated by the Agreement have been taken by
QMAB Fund. Massachusetts counsel may be relied upon for this opinion.
C. The representations and warranties of QMAB Fund contained herein
shall be true and correct at and as of the Closing Date, and MS Fund shall
have been furnished with a certificate of the President, or a Vice President,
or the Secretary or the Assistant Secretary or the Treasurer or the Assistant
Treasurer of QMAB Fund, dated as of the Closing Date, to that effect.
D. On the Closing Date, QMAB Fund shall have furnished to MS Fund a
certificate of the Treasurer or Assistant Treasurer of QMAB Fund as to the
amount of the capital loss carry-over and net unrealized appreciation or
depreciation, if any, with respect to QMAB Fund as of the Closing Date.
E. The cash reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of QMAB Fund at the close of
business on the Valuation Date.
F. A Registration Statement on Form N-14 filed by MS Fund under the
Securities Act of 1933, as amended (the "1933 Act"), containing a preliminary
form of the Proxy Statement and Prospectus, shall have become effective under
the 1933 Act.
G. On the Closing Date, MS Fund shall have received a letter from
Robert G. Zack or other senior executive officer of OppenheimerFunds, Inc.
acceptable to MS Fund, stating that nothing has come to his or her attention
which in his or her judgment would indicate that as of the Closing Date there
were any material, actual or contingent liabilities of QMAB Fund arising out
of litigation brought against QMAB Fund or claims asserted against it, or
pending or to the best of his or her knowledge threatened claims or
litigation not reflected in or apparent from the most recent audited
financial statements and footnotes thereto of QMAB Fund delivered to MS
Fund. Such letter may also include such additional statements relating to
the scope of the review conducted by such person and his or her
responsibilities and liabilities as are not unreasonable under the
circumstances.
H. MS Fund shall have received an opinion, dated as of the Closing
Date, of Deloitte & Touche LLP (or an appropriate substitute tax expert), to
the same effect as the opinion contemplated by Section 11.E. of the Agreement.
I. MS Fund shall have received at the Closing all of the assets of QMAB
Fund to be conveyed hereunder, which assets shall be free and clear of all
liens, encumbrances, security interests, restrictions and limitations
whatsoever.
11.
The obligations of QMAB Fund hereunder shall be subject to the
following conditions:
A. The Board of Trustees of MS Fund shall have authorized the execution
of the Agreement, and the transactions contemplated thereby, and MS Fund
shall have furnished to QMAB Fund copies of resolutions to that effect
certified by the Secretary or the Assistant Secretary of MS Fund.
B. QMAB Fund's shareholders shall have approved the Agreement and the
transactions contemplated hereby, by an affirmative vote required by the
Massachusetts Law and its charter documents and QMAB Fund shall have
furnished MS Fund copies of resolutions to that effect certified by the
Secretary or an Assistant Secretary of QMAB Fund.
C. QMAB Fund shall have received an opinion dated as of the Closing Date
from counsel to MS Fund, to the effect that (i) MS Fund is a business trust
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts with full powers to carry on its business as
then being conducted and to enter into and perform the Agreement; (ii) all
actions necessary to make the Agreement, according to its terms, valid,
binding and enforceable upon MS Fund and to authorize effectively the
transactions contemplated by the Agreement have been taken by MS Fund; and
(iii) the shares of MS Fund to be issued hereunder are duly authorized and
when issued will be validly issued, fully-paid and non-assessable, except as
set forth under "Shareholder and Trustee Liability" in MS Fund's Statement of
Additional Information. Massachusetts counsel may be relied upon for this
opinion.
D. The representations and warranties of MS Fund contained herein shall
be true and correct at and as of the Closing Date, and QMAB Fund shall have
been furnished with a certificate of the President, a Vice President or the
Secretary or the Assistant Secretary or the Treasurer or the Assistant
Treasurer of the Trust to that effect dated as of the Closing Date.
E. QMAB Fund shall have received an opinion of Deloitte & Touche LLP to
the effect that the federal tax consequences of the transaction, if carried
out in the manner outlined in the Agreement and in accordance with (i) QMAB
Fund's representation that there is no plan or intention by any QMAB Fund
shareholder who owns 5% or more of QMAB Fund's outstanding shares, and, to
QMAB Fund's best knowledge, there is no plan or intention on the part of the
remaining QMAB Fund shareholders, to redeem, sell, exchange or otherwise
dispose of a number of MS Fund shares received in the transaction that would
reduce QMAB Fund shareholders' ownership of MS Fund shares to a number of
shares having a value, as of the Closing Date, of less than 50% of the value
of all of the formerly outstanding QMAB Fund shares as of the same date, and
(ii) the representation by each of QMAB Fund and MS Fund that, as of the
Closing Date, QMAB Fund and MS Fund will qualify as regulated investment
companies or will meet the diversification test of Section 368(a)(2)(F)(ii)
of the Code, will be as follows:
1. The transactions contemplated by the Agreement will qualify as a
tax-free "reorganization" within the meaning of Section 368(a)(1) of the
Code, and under the regulations promulgated thereunder.
2. QMAB Fund and MS Fund will each qualify as a "party to a
reorganization" within the meaning of Section 368(b)(2) of the Code.
3. No gain or loss will be recognized by the shareholders of QMAB
Fund upon the distribution of Class A, Class B, Class C, and Class N shares
of beneficial interest in MS Fund to the shareholders of QMAB Fund pursuant
to Section 354 of the Code.
4. Under Section 361(a) of the Code no gain or loss will be
recognized by QMAB Fund by reason of the transfer of substantially all its
assets in exchange for Class A, Class B, Class C, and Class N shares of MS
Fund.
5. Under Section 1032 of the Code no gain or loss will be recognized
by MS Fund by reason of the transfer of substantially all of QMAB Fund's
assets in exchange for Class A, Class B, Class C, and Class N shares of MS
Fund and MS Fund's assumption of certain liabilities of QMAB Fund.
6. The shareholders of QMAB Fund will have the same tax basis and
holding period for the Class A, Class B, Class C, and Class N shares of
beneficial interest in MS Fund that they receive as they had for QMAB Fund
shares that they previously held, pursuant to Section 358(a) and 1223(1),
respectively, of the Code.
7. The securities transferred by QMAB Fund to MS Fund will have the
same tax basis and holding period in the hands of MS Fund as they had for
QMAB Fund, pursuant to Section 362(b) and 1223(1), respectively, of the Code.
F. The cash reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of QMAB Fund at the close of
business on the Valuation Date.
G. A Registration Statement on Form N-14 filed by MS Fund under the
1933 Act, containing a preliminary form of the Proxy Statement and
Prospectus, shall have become effective under the 1933 Act.
H. On the Closing Date, QMAB Fund shall have received a letter from
Robert G. Zack or other senior executive officer of OppenheimerFunds, Inc.
acceptable to QMAB Fund, stating that nothing has come to his or her
attention which in his or her judgment would indicate that as of the Closing
Date there were any material, actual or contingent liabilities of MS Fund
arising out of litigation brought against MS Fund or claims asserted against
it, or pending or, to the best of his or her knowledge, threatened claims or
litigation not reflected in or apparent by the most recent audited financial
statements and footnotes thereto of MS Fund delivered to QMAB Fund. Such
letter may also include such additional statements relating to the scope of
the review conducted by such person and his or her responsibilities and
liabilities as are not unreasonable under the circumstances.
I. QMAB Fund shall acknowledge receipt of the Class A, Class B, Class C,
Class N and Class Y shares of MS Fund.
12. QMAB Fund hereby represents and warrants that:
A. The audited financial statements of QMAB Fund as of November 30,
2002 and unaudited financial statements as of May 31, 2003 heretofore
furnished to MS Fund, present fairly the financial position, results of
operations, and changes in net assets of QMAB Fund as of that date, in
conformity with generally accepted accounting principles applied on a basis
consistent with the preceding year; and that from May 31, 2003 through the
date hereof there have not been, and through the Closing Date there will not
be, any material adverse change in the business or financial condition of
QMAB Fund, it being agreed that a decrease in the size of QMAB Fund due to a
diminution in the value of its portfolio and/or redemption of its shares
shall not be considered a material adverse change;
B. Contingent upon approval of the Agreement and the transactions
contemplated thereby by QMAB Fund's shareholders, QMAB Fund has authority to
transfer all of the assets of QMAB Fund to be conveyed hereunder free and
clear of all liens, encumbrances, security interests, restrictions and
limitations whatsoever;
C. The Prospectus, as amended and supplemented, contained in QMAB Fund's
Registration Statement under the 1933 Act, as amended, is true, correct and
complete, conforms to the requirements of the 1933 Act and does not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Registration Statement, as amended, was, as of the date of
the filing of the last Post-Effective Amendment, true, correct and complete,
conformed to the requirements of the 1933 Act and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
D. There is no material contingent liability of QMAB Fund and no
material claim and no material legal, administrative or other proceedings
pending or, to the knowledge of QMAB Fund, threatened against QMAB Fund, not
reflected in such Prospectus;
E. Except for the Agreement, there are no material contracts
outstanding to which QMAB Fund is a party other than those ordinary in the
conduct of its business;
F. QMAB Fund is a Massachusetts business trust duly organized, validly
existing and in good standing under the laws of the State of Massachusetts;
and has all necessary and material Federal and state authorizations to own
all of its assets and to carry on its business as now being conducted; and
QMAB Fund is duly registered under the Act and such registration has not been
rescinded or revoked and is in full force and effect;
G. All federal and other tax returns and reports of QMAB Fund required
by law to be filed have been filed, and all federal and other taxes shown due
on said returns and reports have been paid or provision shall have been made
for the payment thereof and to the best of the knowledge of QMAB Fund no such
return is currently under audit and no assessment has been asserted with
respect to such returns; and
H. QMAB Fund has elected that QMAB Fund be treated as a regulated
investment company and, for each fiscal year of its operations, QMAB Fund has
met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and QMAB Fund intends to meet
such requirements with respect to its current taxable year.
13. MS Fund hereby represents and warrants that:
A. The audited financial statements of MS Fund as of September 30, 2002
and unaudited financial statements as of March 31, 2003 heretofore furnished
to QMAB Fund, present fairly the financial position, results of operations,
and changes in net assets of MS Fund, as of that date, in conformity with
generally accepted accounting principles applied on a basis consistent with
the preceding year; and that from April 30, 2003 through the date hereof
there have not been, and through the Closing Date there will not be, any
material adverse changes in the business or financial condition of MS Fund,
it being understood that a decrease in the size of MS Fund due to a
diminution in the value of its portfolio and/or redemption of its shares
shall not be considered a material or adverse change;
B. The Prospectus, as amended and supplemented, contained in MS Fund's
Registration Statement under the 1933 Act, is true, correct and complete,
conforms to the requirements of the 1933 Act and does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
The Registration Statement, as amended, was, as of the date of the filing of
the last Post-Effective Amendment, true, correct and complete, conformed to
the requirements of the 1933 Act and did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
C. Except for this Agreement, there is no material contingent liability
of MS Fund and no material claim and no material legal, administrative or
other proceedings pending or, to the knowledge of MS Fund, threatened against
MS Fund, not reflected in such Prospectus;
D. There are no material contracts outstanding to which MS Fund is a
party other than those ordinary in the conduct of its business;
E. MS Fund is a business trust duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts; MS Fund
has all necessary and material federal and state authorizations to own all
its properties and assets and to carry on its business as now being
conducted; the Class A, Class B, Class C, and Class N shares of MS Fund which
it issues to QMAB Fund pursuant to the Agreement will be duly authorized,
validly issued, fully-paid and non-assessable, except as set forth under
"Shareholder & Trustee Liability" in MS Fund's Statement of Additional
Information, will conform to the description thereof contained in MS Fund's
Registration Statement and will be duly registered under the 1933 Act and in
the states where registration is required; and MS Fund is duly registered
under the Act and such registration has not been revoked or rescinded and is
in full force and effect;
F. All federal and other tax returns and reports of MS Fund required by
law to be filed have been filed, and all federal and other taxes shown due on
said returns and reports have been paid or provision shall have been made for
the payment thereof and to the best of the knowledge of MS Fund, no such
return is currently under audit and no assessment has been asserted with
respect to such returns and to the extent such tax returns with respect to
the taxable year of MS Fund ended September 30, 2002 have not been filed,
such returns will be filed when required and the amount of tax shown as due
thereon shall be paid when due;
G. MS Fund has elected to be treated as a regulated investment company
and, for each fiscal year of its operations, MS Fund has met the requirements
of Subchapter M of the Code for qualification and treatment as a regulated
investment company and MS Fund intends to meet such requirements with respect
to its current taxable year;
H. MS Fund has no plan or intention (i) to dispose of any
of the assets transferred by QMAB Fund, other than in the
ordinary course of business, or (ii) to redeem or reacquire any
of the Class A, Class B, Class C, and Class N shares issued by it
in the reorganization other than pursuant to valid requests of
shareholders; and
I. After consummation of the transactions contemplated by the
Agreement, MS Fund intends to operate its business in a substantially
unchanged manner.
14. Each party hereby represents to the other that no broker or
finder has been employed by it with respect to the Agreement or the
transactions contemplated hereby. Each party also represents and warrants to
the other that the information concerning it in the Proxy Statement and
Prospectus will not as of its date contain any untrue statement of a material
fact or omit to state a fact necessary to make the statements concerning it
therein not misleading and that the financial statements concerning it will
present the information shown fairly in accordance with generally accepted
accounting principles applied on a basis consistent with the preceding year.
Each party also represents and warrants to the other that the Agreement is
valid, binding and enforceable in accordance with its terms and that the
execution, delivery and performance of the Agreement will not result in any
violation of, or be in conflict with, any provision of any charter, by-laws,
contract, agreement, judgment, decree or order to which it is subject or to
which it is a party. MS Fund hereby represents to and covenants with QMAB
Fund that, if the reorganization becomes effective, MS Fund will treat each
shareholder of QMAB Fund who received any of MS Fund's shares as a result of
the reorganization as having made the minimum initial purchase of shares of
MS Fund received by such shareholder for the purpose of making additional
investments in shares of MS Fund, regardless of the value of the shares of MS
Fund received.
15. MS Fund agrees that it will prepare and file a Registration
Statement on Form N-14 under the 1933 Act which shall contain a preliminary
form of proxy statement and prospectus contemplated by Rule 145 under the
1933 Act. The final form of such proxy statement and prospectus is referred
to in the Agreement as the "Proxy Statement and Prospectus." Each party
agrees that it will use its best efforts to have such Registration Statement
declared effective and to supply such information concerning itself for
inclusion in the Proxy Statement and Prospectus as may be necessary or
desirable in this connection. QMAB Fund covenants and agrees to liquidate
and dissolve under the laws of the State of Massachusetts, following the
Closing, and, upon Closing, to cause the cancellation of its outstanding
shares.
16. The obligations of the parties shall be subject to the right of
either party to abandon and terminate the Agreement for any reason and there
shall be no liability for damages or other recourse available to a party not
so terminating this Agreement, provided, however, that in the event that a
party shall terminate this Agreement without reasonable cause, the party so
terminating shall, upon demand, reimburse the party not so terminating for
all expenses, including reasonable out-of-pocket expenses and fees incurred
in connection with this Agreement.
17. The Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all taken together shall constitute
one Agreement. The rights and obligations of each party pursuant to the
Agreement shall not be assignable.
18. All prior or contemporaneous agreements and representations are
merged into the Agreement, which constitutes the entire contract between the
parties hereto. No amendment or modification hereof shall be of any force
and effect unless in writing and signed by the parties and no party shall be
deemed to have waived any provision herein for its benefit unless it executes
a written acknowledgment of such waiver.
19. MS Fund understands that the obligations of QMAB Fund under the
Agreement are not binding upon any Trustee or shareholder of QMAB Fund
personally, but bind only QMAB Fund and QMAB Fund's property. MS Fund
represents that it has notice of the provisions of the Declaration of Trust
of QMAB Fund disclaiming shareholder and trustee liability for acts or
obligations of QMAB Fund.
20. QMAB Fund understands that the obligations of MS Fund under the
Agreement are not binding upon any trustee or shareholder of MS Fund
personally, but bind only MS Fund and MS Fund's property. QMAB Fund
represents that it has notice of the provisions of the Declaration of Trust
of MS Fund disclaiming shareholder and trustee liability for acts or
obligations of MS Fund.
IN WITNESS WHEREOF, each of the parties has caused the Agreement to be
executed and attested by its officers thereunto duly authorized
on the date first set forth above.
OPPENHEIMER SELECT MANAGERS QM
ACTIVE BALANCED FUND
By: ______________________
Robert G. Zack
Vice President and Secretary
OPPENHEIMER MULTIPLE STRATEGIES FUND
By: ______________________
Robert G. Zack
Secretary
EXHIBIT B
PRINCIPAL SHAREHOLDERS
A. Major Shareholders of MS Fund. As of June 18, 2003, the only persons
who owned of record or who were known by MS Fund to own beneficially 5% or
more of any class of that Fund's outstanding shares, and their holdings of
that class as of that date, were the following:
[TBS]
B. Major Shareholders of QMAB Fund. As of June 18, 2003, the only persons
who owned of record or who were known by QMAB Fund to own beneficially 5%
or more of any class of that Fund's outstanding shares, and their holdings
of that class as of that date, were the following:
[TBS]
STATEMENT OF ADDITIONAL INFORMATION
TO PROSPECTUS AND PROXY STATEMENT
PART B
Acquisition of the Assets of the
OPPENHEIMER SELECT MANAGERS QM ACTIVE BALANCED FUND
By and in exchange for Shares of the
OPPENHEIMER MULTIPLE STRATEGIES FUND
This Statement of Additional Information to this Prospectus and Proxy
Statement (the "SAI") relates specifically to the proposed delivery of
substantially all of the assets of Oppenheimer Select Managers QM Active
Balanced Fund ("QMAB Fund") for shares of Oppenheimer Multiple Strategies
Fund ("MS Fund").
This SAI consists of this Cover Page and the following documents: (i)
audited financial statements for the 12-month period ended November 30, 2002,
and financial statements (to be filed upon availability) for the six-month
period ended May 31, 2003, respectively, of QMAB Fund; (ii) audited financial
statements for the 12-month period ended September 30, 2002, and financial
statements for the six-month period ended March 31, 2003, respectively, of MS
Fund; (iii) the Prospectus of QMAB Fund dated March 28, 2003, as supplemented
May 7, 2003; (iv) the Statement of Additional Information of QMAB Fund dated
March 28, 2003; and (iv) the Statement of Additional Information of MS Fund
dated November 30, 2002, as supplemented February 12, 2003.
This SAI is not a Prospectus; you should read this SAI in conjunction
with the Prospectus and Proxy Statement dated July 7, 2003, relating to the
above-referenced transaction. You can request a copy of the Prospectus and
Proxy Statement by calling 1.800.708.7780 or by writing OppenheimerFunds
Services at P.O. Box 5270, Denver, Colorado 80217. The date of this SAI is
July 7, 2003.
OPPENHEIMER MULTIPLE STRATEGIES FUND
FORM N-14
PART C
OTHER INFORMATION
Item 15. Indemnification
- -------------------------
Reference is made to the provisions of Article Seventh of Registrant's
Amended and Restated Declaration of Trust, filed by cross-reference to
Exhibit 16(1) to this Registration Statement, and incorporated herein by
reference.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.
Item 16. Exhibits
(1) Amended and Restated Declaration of Trust dated
3/6/97: Previously filed with Registrant's Post-Effective Amendment
No. 29 to Registrant's registration statement, (Reg. No. 2-86903),
11/24/97, and incorporated herein by reference.
(2) Amended and Restated By-Laws dated 6/4/98: Previously filed with
Registrant's Post-Effective Amendment No. 32 to Registrant's
registration statement, (Reg. No. 2-86903), 1/29/99, and incorporated
herein by reference.
(3) N/A
(4) Agreement and Plan of Reorganization: See Exhibit A to Part A of the
Registration Statement: Filed herewith.
(5) (i) Specimen Class A Share Certificate: Previously filed
with Registrant's Post-Effective Amendment No. 37 to Registrant's
Registration Statement, (Reg. No. 2-86903), 11/21/02, and
incorporated herein by reference.
(ii) Specimen Class B Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 37 to Registrant's
Registration Statement, (Reg. No. 2-86903), 11/21/02, and
incorporated herein by reference.
(iii)Specimen Class C Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 37 to Registrant's
Registration Statement, (Reg. No. 2-86903), 11/21/02, and
incorporated herein by reference.
(iv) Specimen Class N Share Certificate: Previously filed with
Registrant's Post Effective Amendment No. 37 to Registrant's
Registration Statement, (Reg. No. 2-86903), 11/21/02, and
incorporated herein by reference.
(6) (i) Amended and Restated Investment Advisory Agreement dated 12/11/97:
Previously filed with Registrant's Post-Effective Amendment No. 30 to
Registrant's Registration Statement (Reg. No. 2-86903), 1/22/98, and
incorporated herein by reference.
(7) (i) General Distributor's Agreement dated 12/10/92:
Previously filed with Registrant's Post-Effective Amendment No. 15
to Registrant's Registration Statement, (Reg. No. 2-86903),
4/19/93, refiled with Registrant's Post-Effective Amendment No. 20,
3/2/95, pursuant to Item 102 of Regulation S-T and incorporated
herein by reference.
(ii) Form of Dealer Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Post-Effective Amendment No. 45 to the
Registration Statement of Oppenheimer High Yield Fund (Reg. No.
2-62076), 10/26/01, and incorporated herein by reference.
(iii) Form of Broker Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Post-Effective Amendment No. 45 to the
Registration Statement of Oppenheimer High Yield Fund (Reg. No.
2-62076), 10/26/01, and incorporated herein by reference.
(iv) Form of Agency Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Post-Effective Amendment No. 45 to the
Registration Statement of Oppenheimer High Yield Fund (Reg. No.
2-62076), 10/26/01, and incorporated herein by reference.
(v) Form of Trust Company Fund/SERV Purchase Agreement of
OppenheimerFunds Distributor, Inc.: Previously filed with
Post-Effective Amendment No. 45 to the Registration Statement of
Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and
incorporated herein by reference.
(vi) Form of Trust Company Agency Agreement of OppenheimerFunds
Distributor, Inc.: Previously filed with Post-Effective Amendment No.
45 to the Registration Statement of Oppenheimer High Yield Fund (Reg.
No. 2-62076), 10/26/01, and incorporated herein by reference.
(8) Form of Deferred Compensation Plans for Disinterested
Trustees/Directors:
(i) Amended and Reinstated Retirement Plan for Non-Interested Trustees
or Directors dated 8/9/01: Previously filed with Post-Effective
Amendment No. 34 to the Registration Statement of Oppenheimer Gold &
Special Minerals Fund (Reg. No. 2-82590), 10/25/01, and incorporated
herein by reference.
(ii) Form of Deferred Compensation Plan for Disinterested
Trustees/Directors: Previously filed with Post-Effective Amendment No.
26 to the Registration Statement of Oppenheimer Gold & Special Minerals
Fund (Reg. No. 2-82590), 10/28/98, and incorporated herein by reference.
(9) Global Custody Agreement dated August 16, 2002 between Registrant and
JP Morgan Chase Bank: Previously filed with Post-Effective Amendment
No. 9 to the Registration Statement of Oppenheimer International Bond
Fund (Reg. No. 33-58383), 11/21/02, and incorporated herein by
reference.
(10) (i) Amended and Restated Service Plan and Agreement
for Class A shares dated 4/11/02: Previously filed with
Registrant's Post-Effective Amendment No. 37 to Registrant's
Registration Statement (Reg. No. 2-86903), 11/21/02, and
incorporated herein by reference.
(ii) Distribution and Service Plan and Agreement for Class B shares
dated 2/12/98: Previously filed with Registrant's Post-Effective
Amendment No. 30 to Registrant's Registration Statement (Reg. No.
2-86903), 1/22/98, and incorporated herein by reference.
(iii) Distribution and Service Plan and Agreement for Class C shares
dated 2/12/98: Previously filed with Registrant's Post-Effective
Amendment No. 30 to Registrant's Registration Statement (Reg. No.
2-86903), 1/22/98, and incorporated herein by reference.
(iv) Distribution and Service Plan and Agreement for Class N shares
dated 10/12/00: Previously filed with Registrant's Post-Effective
Amendment No. 37 to Registrant's Registration Statement (Reg. No.
2-86903), 11/21/02, and incorporated herein by reference.
(11) Opinion and Consent of Counsel: Opinion of Mayer, Brown, Rowe & Maw:
Filed herewith.
(12) Tax Opinion Relating to the Reorganization: Draft Tax Opinion of
Deloitte and Touche LLP: Filed herewith.
(13) N/A.
(14) (i) Consent of Deloitte and Touche LLP: To be filed by Amendment.
(ii) Consent of KPMG LLP: To be filed by Amendment.
(15) N/A.
(16) (i) Powers of Attorney for all Trustees/Directors and Principal
Officers except for Joel W. Motley and John V. Murphy (including
Certified Board Resolutions): Previously filed with Pre-Effective
Amendment No. 1 to the Registration Statement of Oppenheimer Emerging
Growth Fund (Reg. No. 333-44176), 10/5/00, and incorporated herein by
reference.
(ii) Power of Attorney for John Murphy (including Certified Board
Resolution): Previously filed with Post-Effective Amendment No. 41 to
the Registration Statement of Oppenheimer U.S. Government Trust (Reg.
No. 2-76645), 10/22/01, and incorporated herein by reference.
(iii) Power of Attorney for Joel W. Motley (including Certified Board
Resolution): Previously filed with Post-Effective Amendment No. 8 to
the Registration Statement of Oppenheimer International Small Company
Fund (Reg. 333-31537), 10/22/02, and incorporated herein by reference.
Item 17. Undertakings
- ----------------------
(1) N/A.
(2) N/A.
(3) The undersigned registrant agrees to file a final tax opinion relating to
the Reorganization within a reasonable time within the Closing Date.
(4) Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on
the 19 day of June 2003.
OPPENHEIMER MULTIPLE STRATEGIES FUND
By: /s/ John V. Murphy*
-------------------------------------------
John V. Murphy, President,
Principal Executive Officer & Trustee
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ Clayton K. Yeutter* Chairman of the June 19, 2003
- ----------------------------- Board of Trustees
Clayton K. Yeutter
/s/ Donald W. Spiro* Vice Chairman of the June 19, 2003
- ----------------------------- Board and Trustee
Donald W. Spiro
/s/ John V. Murphy * President, Principal June 19, 2003
- ------------------------------Executive Officer
John V. Murphy and Trustee
/s/ Brian W. Wixted* Treasurer, Principal June 19, 2003
- ------------------------------Financial and
Brian W. Wixted Accounting Officer
/s/ Robert G. Galli* Trustee June 19, 2003
- ----------------------------------
Robert G. Galli
/s/ Phillip A. Griffiths Trustee June 19, 2003
- ---------------------------------
Phillip A. Griffiths
/s/ Benjamin Lipstein* Trustee June 19, 2003
- ---------------------------------
Benjamin Lipstein
/s/ Joel W. Motley* Trustee June 19, 2003
- ---------------------------------
Joel W. Motley
/s/ Elizabeth B. Moynihan* Trustee June 19, 2003
- ---------------------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee June 19, 2003
- ---------------------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee June 19, 2003
- ---------------------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee June 19, 2003
- ---------------------------------
Russell S. Reynolds, Jr.
*By: /s/ Robert G. Zack June 19, 2003
- -----------------------------------------
Robert G. Zack, Attorney-in-Fact
OPPENHEIMER MULTIPLE STRATEGIES FUND
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
16(11) Opinion and Consent of Counsel
16(12) Draft Tax Opinion Relating to Reorganization
