Oppenheimer Discovery Fund (ODIBX) Inactive
Filed: 29 May 02, 12:00am
SCHEDULE 14A
Information Required in Proxy Statement
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or 14a-12
Oppenheimer Discovery Fund
(Name of Registrant as Specified in its Charter)
Katherine P. Feld
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2)
or Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set
forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.: Schedule 14A
(3) Filing Party: Katherine P. Feld
(4) Date Filed: May 29, 2002
PROXY CARD OPPENHEIMER DISCOVERY FUND
PROXY CARD
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 12, 2002
The undersigned, revoking prior proxies, hereby appoints Robert Zack, Brian Wixted, Katherine Feld, Denis
Molleur, and Kathleen Ives, and each of them, as attorneys-in-fact and proxies of the undersigned, with full
power of substitution, to vote shares held in the name of the undersigned on the record date at the Special
Meeting of Shareholders of Oppenheimer Discovery Fund (the "Fund") to be held at 6803 South Tucson Way,
Englewood, Colorado, 80112, on August 12, 2002, at 1:00 P. M. Mountain time, or at any adjournment thereof, upon
the proposals described in the Notice of Meeting and accompanying Proxy Statement, which have been received by
the undersigned.
This proxy is solicited on behalf of the Fund's Board of Trustees, and all proposals (set forth on the reverse
side of this proxy card) have been proposed by the Board of Trustees. When properly executed, this proxy will be
voted as indicated on the reverse side or "FOR" a proposal if no choice is indicated. The proxy will be voted in
accordance with the proxy holders' best judgment as to any other matters.
VOTE VIA THE TELEPHONE:
1-800-597-7836
CONTROL NUMBER: 999
9999 9999 999
PLEASE VOTE ON THE REVERSE SIDE, SIGN AND DATE THIS PROXY AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK. Example: [ ]
1. To elect a Board of Trustees:
01 Leon Levy 02 Donald W. Spiro 03 John V. Murphy
04 Robert G. Galli 05 Phillip A. Griffiths 06 Benjamin Lipstein
07 Elizabeth B. Moynihan 08 Kenneth A. Randall 09 Edward V. Regan
10 Russell S. Reynolds, Jr. 11 Clayton K. Yeutter
If you do not wish your shares voted "FOR" a particular nominee, mark the "For All Except" box and
write the nominee's number on the line provided below. Your shares will be voted for the remaining
nominee(s).
2. To approve the elimination or amendment of certain fundamental investment policies of the Fund:
A. Purchasing Securties on Margin or Making Short Sales
B. Purchasing Securities of Issuers in which Officers or Trustees have an Interest
C. Investing in Unseasoned Issuers
D. Real Estate
E. Pledging, Mortgaging and Hypothecating of Assets
F. Borrowing
3. To approve an amended and restated Class B 12b-1 Distribution and Service Plan and Agreement:
Class B shareholders voting only.
FOR AGAINST FOR ALL
ALL ALL EXCEPT
[ ] [ ] [ ] 1.
FOR AGAINST ABSTAIN
[ ] [ ] [ ] 2A.
[ ] [ ] [ ] 2B.
[ ] [ ] [ ] 2C.
[ ] [ ] [ ] 2D.
[ ] [ ] [ ] 2E.
[ ] [ ] [ ] 2F.
[ ] [ ] [ ] 3.
OPPENHEIMER DISCOVERY FUND
6803 South Tucson Way, Englewood, CO 80112
Notice Of Special Meeting Of Shareholders To Be Held
August 12, 2002
To The Shareholders of Oppenheimer Discovery Fund:
Notice is hereby given that a Special Meeting of the Shareholders (the "Meeting") of Oppenheimer Discovery Fund (the "Fund") will be held
at 6803 South Tucson Way, Englewood, Colorado, 80112, at 1:00 P.M. Mountain time, on August 12, 2002.
During the Meeting, shareholders of the Fund will vote on the following proposals and sub-proposals:
1. To elect a Board of Trustees;
2. To approve the elimination or amendment of certain fundamental investment policies of the Fund;
3. To approve an amended and restated Class B 12b-1 Distribution and Service Plan and Agreement; and
4. To transact such other business as may properly come before the meeting, or any adjournments thereof.
Shareholders of record at the close of business on April 29, 2002 are entitled to vote at the meeting. The proposals and sub-proposals are
more fully discussed in the Proxy Statement. 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 the Fund recommends a vote to elect each of the nominees as Trustee and in favor of each
proposal. WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Trustees,
Robert G. Zack, Secretary
PLEASE RETURN YOUR PROXY BALLOT PROMPTLY.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
500
12
i
TABLE OF CONTENTS
Proxy Statement Page
Questions and Answers -
Proposal 1: To elect a Board of Trustees -
Introduction to Proposal 2
Proposal 2: To approve the elimination or amendment of certain fundamental -
investment policies of the Fund
Proposal 3: To approve an Amended and Restated Class B 12b-1 Distribution
and Service Plan and Agreement
Information About the Fund -
Further Information About Voting and the Meeting -
Other Matters -
Exhibit A: Class B 12b-1 Distribution and Service Plan and Agreement A-1
OPPENHEIMER DISCOVERY FUND
PROXY STATEMENT QUESTIONS AND ANSWERS
Q. Who is Asking for My Vote?
A. The Trustees of Oppenheimer Discovery Fund (the "Fund") have asked that you vote on several matters at the Special Meeting of
Shareholders to be held on August 12, 2002.
Q. Who is Eligible to Vote?
A. Shareholders of record at the close of business on April 29, 2002 are entitled to vote at the Meeting or any adjournment of the
Meeting. Shareholders are entitled to cast one vote per share (and a fractional vote for a fractional share) for each
matter presented at the Meeting. It is expected that the Notice of Meeting, proxy ballot and proxy statement will be
mailed to shareholders of record on or about June 17, 2002.
Q. On What Matters Am I Being Asked to Vote?
A. You are being asked to vote on the following proposals:
1. To elect a board of Trustees;
2. To approve the elimination or amendment of certain fundamental investment policies of the Fund; and
3. To approve an Amended and Restated Class B 12b-1 Distribution and Service Plan and Agreement.
Q. How do the Trustees Recommend that I Vote?
A. The Trustees recommend that you vote:
1. FOR the election of all nominees as Trustees;
2. FOR the elimination or amendment of each of the Fund's fundamental investment policies proposed to be eliminated or amended, as
the case may be; and
3. FOR approval of an Amended and Restated Class B 12b-1 Distribution and Service Plan and Agreement.
Q. What are the reasons for the proposed changes to some of the Fund's fundamental investment policies?
A. Some of the Fund's current policies reflect regulations that no longer apply to the Fund. In other cases, the Fund's policies are
more stringent than current regulations require. The Fund's Trustees and the Fund's investment advisor,
OppenheimerFunds, Inc., believe that the proposed changes to the Fund's investment policies will benefit shareholders by
allowing the Fund to adapt to future changes in the investment environment and increase the Fund's ability to take
advantage of investment opportunities.
Q. How Can I Vote?
A. You can vote in three (3) different ways:
o By mail, with the enclosed ballot
o In person at the Meeting (if you are a record owner)
o By telephone (please see the insert for instructions)
Voting by telephone is convenient and can help reduce the Fund's expenses. Whichever method you choose, please take
---------- -----------------------------------
the time to read the full text of the proxy statement before you vote.
Please be advised that the deadline for voting by telephone is 3:00 p.m. (EST) on the last business day before the
Meeting.
Q. How Will My Vote Be Recorded?
A. Proxy ballots that are properly signed, dated and received at or prior to the Meeting, or any adjournment thereof, will be voted
as specified. If you specify a vote for any of the proposals, your proxy will be voted as indicated. If you sign and date
the proxy ballot, but do not specify a vote for one or more of the proposals, your shares will be voted in favor of the
Trustees' recommendations. Telephonic votes will be recorded according to the telephone voting procedures described in
the "Further Information About Voting and the Meeting" section below.
Q. How Can I Revoke My Proxy?
A. You may revoke your proxy at any time before it is voted by forwarding a
written revocation or a later-dated proxy ballot to the Fund that is received at or prior to the Meeting, or any
adjournment thereof, or by attending the Meeting, or any adjournment thereof, and voting in person. Please be advised
that the deadline for revoking your proxy by telephone is 3:00 p.m. (ET) on the last business day before the Meeting if
you are a record owner.
Q. How Can I Get More Information About the Fund?
Copies of the Fund's annual report dated September 30, 2001 have previously been mailed to Shareholders. If you would like
to have copies of the Fund's most recent annual and semi-annual reports sent to you free of charge, please call us
toll-free at 1.800.708.7780, write to the Fund at OppenheimerFunds Services, P.O. Box 5270, Denver Colorado 80217-5270 or
visit the Oppenheimer funds website at www.oppenheimerfunds.com.
Q. Whom Do I Call If I Have Questions?
A. Please call us at 1.800.708.7780.
The proxy statement is designed to furnish shareholders with the information necessary to vote on the matters coming before the Meeting. If you
have any questions, please call us at 1.800.708.7780.
1
OPPENHEIMER DISCOVERY FUND
PROXY STATEMENT
Special Meeting of Shareholders
To Be Held August 12, 2002
This statement is furnished to the shareholders of Oppenheimer Discovery Fund (the "Fund") in connection with the solicitation by
the Fund's Board of Trustees of proxies to be used at a special meeting of shareholders (the "Meeting") to be held at 6803 South Tucson
Way, Englewood, Colorado, 80112, at 1:00 P.M. Mountain time, on August 12, 2002, or any adjournments thereof. It is expected that the
mailing of this Proxy Statement will be made on or about June 17, 2002.
SUMMARY OF PROPOSALS
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Proposal Shareholders Voting
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- ------- ------------------------------------------------------------------------ -----------------------------------
1. To elect a Board of Trustees All
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- ------- ------------------------------------------------------------------------ -----------------------------------
2. To approve the elimination or amendment of certain fundamental
investment policies for the Fund
- ------- ------------------------------------------------------------------------ -----------------------------------
- ------- ------------------------------------------------------------------------ -----------------------------------
A. Purchasing Securities on Margin or Making Short Sales All
- ------- ------------------------------------------------------------------------ -----------------------------------
- ------- ------------------------------------------------------------------------ -----------------------------------
B. Purchasing Securities of Issuers in which Officers or Trustees have All
an Interest
- ------- ------------------------------------------------------------------------ -----------------------------------
- ------- ------------------------------------------------------------------------ -----------------------------------
C. Investing in Unseasoned Issuers All
- ------- ------------------------------------------------------------------------ -----------------------------------
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D. Real Estate All
- ------- ------------------------------------------------------------------------ -----------------------------------
- ------- ------------------------------------------------------------------------ -----------------------------------
E. Pledging, Mortgaging and Hypothecating Assets All
- ------- ------------------------------------------------------------------------ -----------------------------------
- ------- ------------------------------------------------------------------------ -----------------------------------
F. Borrowing All
- ------- ------------------------------------------------------------------------ -----------------------------------
- ------- ------------------------------------------------------------------------ -----------------------------------
3. To approve an Amended and Restated Class B 12b-1 Distribution and Class B Shareholders Only
Service Plan and Agreement
- ------- ------------------------------------------------------------------------ -----------------------------------
PROPOSAL 1: ELECTION OF TRUSTEES
At the Meeting, eleven (11) Trustees are to be elected. If elected, the Trustees will serve indefinite terms until a special
shareholder meeting is called for the purpose of voting for Trustees and until their successors are properly elected and qualified. The
persons named as attorneys-in-fact in the enclosed proxy have advised the Fund that, unless a proxy ballot instructs them to withhold
authority to vote for all listed nominees or any individual nominee, all validly executed proxies will be voted for the election of the
nominees named below.
As a Massachusetts business trust, the Fund is not required and does not intend to hold annual shareholder meetings for the
purpose of electing Trustees. As a result, if elected, the Trustees will hold office until the next meeting of shareholders called for the
purpose of electing Trustees and until their successors are duly elected and shall have qualified. If a nominee should be unable to accept
election, serve his or her term or resign, the Board of Trustees may, in its discretion, select another person to fill the vacant
position.
Although the Fund will not normally hold annual meetings of its shareholders, it may hold shareholder meetings from time to time
on important matters, and shareholders have the right to call a meeting to remove a Trustee or to take other action described in the Fund's
Declaration of Trust. Also, if at any time, less than a majority of the Trustees holding office has been elected by the shareholders, the
Trustees then in office will promptly call a shareholders' meeting for the purpose of electing Trustees.
Each of the nominees currently serves as a Trustee of the Fund. Each of the nominees has consented to be named as such in this
proxy statement and to serve as Trustee if elected. Each of the Trustees serves as Trustee of other funds in the Oppenheimer family of
funds (referred to as "Board I Funds" in this proxy statement).
The Fund's Trustees and officers, their positions with the Fund and length of service in such positions as well as their principal
occupations and business affiliations during the past five years are listed below. Except for Mr. Murphy, each of the Trustees is an
independent trustee of the Fund ("Independent Trustee"). Mr. Murphy is an "interested trustee" (as that term is defined in the Investment
Company Act of 1940, referred to in this Proxy Statement as the "1940 Act") of the Fund, because he is affiliated with OppenheimerFunds,
Inc. (the "Manager") by virtue of his positions as an officer and director of the Manager, and as a shareholder of its parent company. Mr.
Murphy was elected as a Trustee of the Fund by the Independent Trustees with the understanding that in the event he ceases to be the chief
executive officer of the Manager, he will resign as a trustee of the Fund and the other Board I Funds for which he is a trustee or
director. All information is as of December 31, 2001.
Mr. Reynolds has reported he has a controlling interest in The Directorship Search Group, Inc., a director recruiting firm that
provided consulting services to Massachusetts Mutual Life Insurance Company (which controls the Manager) for fees aggregating $100,000 for
the calendar year ended December 31, 2001, an amount representing less than 5% of the annual revenues of The Directorship Search Group,
Inc. The Independent Trustees have unanimously (except for Mr. Reynolds, who abstained) determined that the consulting arrangements
between The Directorship Search Group, Inc. and Massachusetts Mutual Life Insurance Company were not material business or professional
relationships that would compromise Mr. Reynolds' status as an Independent Trustee. Nonetheless, to assure certainty as to determinations
of the Board and the Independent Trustees as to matters upon which the 1940 Act or the rules thereunder require approval by a majority of
Independent Trustees, Mr. Reynolds will not be counted for purposes of determining whether a quorum of Independent Trustees was present or
whether a majority of Independent Trustees approved the matter.
Messrs. Galli and Spiro have had no material business relationship with the Manager or its affiliates within the past two years.
However, within the past five years and before becoming Independent Trustees they had been officers of the Manager and owned shares of its
parent company. In 1997, Mr. Galli sold his remaining shares of the Manager's parent company for a cash payment of approximately
$7,851,200. In 1997, Mr. Spiro sold shares of the Manager's parent company for a cash payment of approximately $9,814,000. In 1999, Mr.
Spiro sold his remaining shares of the Manager's parent company for a cash payment of approximately $9,399,000.
Nominees for Independent Trustee
- ------------------------- ------------------------------------------------------- ----------------- ------------------
Name, Address,1 Age, Principal Occupation(s) During Past 5 Years / Other Dollar Range of Aggregate Dollar
Range of Shares
Beneficially
Position(s) Held with Shares Owned in Owned in the
Fund and Length of Trusteeships/Directorships Held by Nominee / Number the Fund (as of Board I Funds
Service (as applicable)2 of Portfolios in Fund Complex Overseen by Nominee 12/31/01) (as of 12/31/01)
- ------------------------- ------------------------------------------------------- ----------------- ------------------
- ------------------------- ------------------------------------------------------- ----------------- ------------------
Leon Levy, Chairman of General Partner of Odyssey Partners, L.P. (investment $0 None
the Board of Trustees partnership) (since 1982) and Chairman of the Board
Trustee since 1959 of Avatar Holdings, Inc. (real estate development)
Age: 76 (since 1981). Oversees 31 portfolios in the
OppenheimerFunds complex.
- ------------------------- ------------------------------------------------------- ----------------- ------------------
- ------------------------- ------------------------------------------------------- ----------------- ------------------
Robert G. Galli, A Trustee or Director of other Oppenheimer funds. $0 Over $100,000
Trustee since 1993 Age: Formerly Vice Chairman of the Manager (October 1995 -
68 December 1997). Oversees 41 portfolios in the
OppenheimerFunds complex. From January
1997-September 1997, Mr. Galli owned shares of the
Manager's parent company valued in excess of $60,000.
- ------------------------- ------------------------------------------------------- ----------------- ------------------
- ------------------------- ------------------------------------------------------- ----------------- ------------------
Phillip A. Griffiths, The Director of the Institute for Advanced Study, $0 Over $100,000
Trustee since 1999 Princeton, N.J. (since 1991), director of GSI
Age: 63 Lumonics (since 2001) and a member of the National
Academy of Sciences (since 1979); formerly (in
descending chronological order) a director of Bankers
Trust Corporation, Provost and Professor of
Mathematics at Duke University, a director of
Research Triangle Institute, Raleigh, N.C., and a
Professor of Mathematics at Harvard University.
Oversees 30 portfolios in the OppenheimerFunds
complex.
- ------------------------- ------------------------------------------------------- ----------------- ------------------
- ------------------------- ------------------------------------------------------- ----------------- ------------------
Benjamin Lipstein, Professor Emeritus of Marketing, Stern Graduate $10,001-$50,000 Over $100,000
Trustee since 1974 School of Business Administration, New York
Age: 79 University. Oversees 31 portfolios in the
OppenheimerFunds complex.
- ------------------------- ------------------------------------------------------- ----------------- ------------------
- ------------------------- ------------------------------------------------------- ----------------- ------------------
Elizabeth B. Moynihan, Author and architectural historian; a trustee of the $1-$10,000 $50,001 -
Trustee since 1992 Freer Gallery of Art and Arthur M. Sackler Gallery
Age: 72 (Smithsonian Institute), Trustees Council of the
National Building Museum; a member of the Trustees
Council, Preservation League of New York State. $100,000
Oversees 31 portfolios in the OppenheimerFunds
complex.
- ------------------------- ------------------------------------------------------- ----------------- ------------------
- ------------------------- ------------------------------------------------------- ----------------- ------------------
Kenneth A. Randall, A director of Dominion Resources, Inc. (electric Over $100,000 Over $100,000
Trustee since 1980 utility holding company) and Prime Retail, Inc. (real
Age: 74 estate investment trust); formerly a director of
Dominion Energy, Inc. (electric power and oil & gas
producer), President and Chief Executive Officer of
The Conference Board, Inc. (international economic
and business research) and a director of Lumbermens
Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance
Company. Oversees 31 portfolios in the
OppenheimerFunds complex.
- ------------------------- ------------------------------------------------------- ----------------- ------------------
- ------------------------- ------------------------------------------------------- ----------------- ------------------
Edward V. Regan, President, Baruch College, CUNY; a director of
Trustee since 1993 RBAsset (real estate manager); a director of
Age: 71 OffitBank; formerly Trustee, Financial Accounting
Foundation (FASB and GASB), Senior Fellow of Jerome
Levy Economics Institute, Bard College, Chairman of $1-$10,000 $50,001 -
Municipal Assistance Corporation for the City of New $100,000
York, New York State Comptroller and Trustee of New
York State and Local Retirement Fund. Oversees 31
portfolios in the OppenheimerFunds complex.
- ------------------------- ------------------------------------------------------- ----------------- ------------------
- ------------------------- ------------------------------------------------------- ----------------- ------------------
Russell S. Reynolds, Chairman of The Directorship Search Group, Inc.
Jr., (corporate governance consulting and executive
Trustee since 1989 recruiting) (since 1993); a life trustee of
Age: 70 International House (non-profit educational $0 $10,001 - $50,000
organization), and a trustee of the Greenwich
Historical Society (since 1996). Oversees 31
portfolios in the OppenheimerFunds complex.
- ------------------------- ------------------------------------------------------- ----------------- ------------------
- ------------------------- ------------------------------------------------------- ----------------- ------------------
Donald W. Spiro, Vice Chairman Emeritus of the Manager (since August 1999);
Chairman of the Board formerly Chairman (November 1987 - January 1991) and
of Trustees, a director (January 1969 - August 1999) of the
Trustee since 1985 Manager; President and Director of OppenheimerFunds
Age: 76 Distributor, Inc., a subsidiary of the Manager and
the Fund's Distributor (July 1978 - January 1992). Over $100,000 Over $100,000
Oversees 31 portfolios in the OppenheimerFunds
complex. From January 1997-August 1999, Mr. Spiro
owned shares of the Manager's parent company valued
in excess of $60,000.
- ------------------------- ------------------------------------------------------- ----------------- ------------------
- ------------------------- ------------------------------------------------------- ----------------- ------------------
Clayton K. Yeutter, Of Counsel, Hogan & Hartson (a law firm) (since $0 $50,001 -
Trustee since 1991 1993). Other directorships: Caterpillar, Inc. (since
Age: 71 1993) and Weyerhaeuser Co. (since 1999). Oversees 31 $100,000
portfolios in the OppenheimerFunds complex.
- ------------------------- ------------------------------------------------------- ----------------- ------------------
Nominee as Interested Trustee
- ------------------------ -------------------------------------------------------------- ------------ -------------------
Name, Address, Age, Principal Occupation(s) During Past 5 Years / Other Dollar Aggregate Dollar
Range of
Shares
Owned in Range of Shares
Position(s) Held with the Fund Owned in the
Fund and Length of Trusteeships/Directorships Held by Nominee / Number of (as of Board I Funds (as
Service Portfolios in Fund Complex Overseen by Nominee 12/31/01) of 12/31/01)\
- ------------------------ -------------------------------------------------------------- ------------ -------------------
- ------------------------ -------------------------------------------------------------- ------------ -------------------
John V. Murphy, Chairman, Chief Executive Officer and director (since June None Over $100,000
President and Trustee 2001) and President (since September 2000) of the Manager;
since October 2001 President and a director or trustee of other Oppenheimer
Age: 52 funds; President and a director (since July 2001) of
Oppenheimer Acquisition Corp., the Manager's parent holding
company and of Oppenheimer Partnership Holdings, Inc., a
holding company subsidiary of the Manager; Director (since
November 2001) of OppenheimerFunds Distributor, Inc., a
subsidiary of the Manager; Chairman and a director (since
July 2001) of Shareholder Services, Inc. and of Shareholder
Financial Services, Inc., transfer agent subsidiaries of the
Manager; President and a director (since July 2001) of
OppenheimerFunds Legacy Program, a charitable trust program
established by the Manager; a director of the following
investment advisory subsidiaries of the Manager: OAM
Institutional, Inc. and Centennial Asset Management
Corporation (since November 2001), HarbourView Asset
Management Corporation and OFI Private Investments, Inc.
(since July 2001); President (since November 2001) and a
director (since July 2001) of Oppenheimer Real Asset
Management, Inc., an investment advisor subsidiary of the
Manager; a director (since November 2001) of Trinity
Investment Management Corp. and Tremont Advisers, Inc.,
investment advisory affiliates of the Manager; Executive
Vice President (since February 1997) of Massachusetts Mutual
Life Insurance Company, the Manager's parent company; a
director (since June 1995) of DBL Acquisition Corporation;
formerly Chief Operating Officer (from September 2000 to
June 2001) of the Manager; President and trustee (from
November 1999 to November 2001) of MML Series Investment
Fund and MassMutual Institutional Funds, open-end investment
companies; a director (from September 1999 to August 2000)
of C.M. Life Insurance Company; President, Chief Executive
Officer and director (from September 1999 to August 2000) of
MML Bay State Life Insurance Company; a director (from June
1989 to June 1998) of Emerald Isle Bancorp and Hibernia
Savings Bank, wholly-owned subsidiary of Emerald Isle
Bancorp (from June 1989 to June 1998). Oversees 63
portfolios in the OppenheimerFunds complex.
- ------------------------ -------------------------------------------------------------- ------------ -------------------
A. General Information Regarding the Board of Trustees.
The Fund is governed by a Board of Trustees, which is responsible for protecting the interests of shareholders. The Trustees meet
periodically throughout the year to oversee the Fund's activities, review its performance and review the actions of the Manager, which is
responsible for the Fund's day-to-day operations. Six regular meetings of the Trustees were held during the fiscal year ended September 30,
2001. Each of the incumbent Trustees was present for at least 75% of the Board of Trustees meetings held and of all committees on which
that Trustee served that were held during the period.
B. Committees of the Board of Trustees.
The Board of Trustees has appointed standing Audit, Study and Proxy Committees comprised of Independent Trustees only. The
members of the Audit Committee are Kenneth Randall (Chairman), Benjamin Lipstein and Edward Regan.
The Audit Committee held five meetings during the Fund's fiscal year ended September 30, 2001. The Audit Committee furnishes the
Board with recommendations regarding the selection of the Fund's independent auditors. Other functions of the Audit Committee include, but
are not limited to: (i) reviewing the scope and results of audits and the audit fees charged; (ii) reviewing reports from the Fund's
independent auditor regarding the Fund's internal accounting procedures and controls; and (iii) establishing a separate line of
communication between the Fund's independent auditors and its Independent Trustees.
The members of the Study Committee are Benjamin Lipstein (Chairman), Robert Galli and Elizabeth Moynihan. The Study Committee
held seven meetings during the Fund's fiscal year ended September 30, 2001. Among other functions, the Study Committee evaluates and
reports to the Board on the Fund's contractual arrangements, including the investment advisory and distribution agreements, transfer and
shareholder service agreements and custodian agreements as well as the policies and procedures adopted by the Fund to comply with the 1940
Act and other applicable law.
The members of the Proxy Committee are Edward Regan (Chairman), Russell Reynolds and Clayton Yeutter. The Proxy Committee held
one meeting during the fiscal year ended September 30, 2001. The Proxy Committee provides the Board with recommendations for proxy voting
and monitors proxy voting by the Fund.
Based on the Audit Committee's recommendation, the Board of Trustees of the Fund, including a majority of the Independent
Trustees, at a meeting held October 11, 2001, selected KPMG LLP ("KPMG") as auditors of the Fund for the fiscal year beginning October 1,
2001. KPMG LLP also serves as auditors for certain other funds for which the Manager acts as investment advisor.
During the fiscal year ended September 30, 2001, KPMG LLP performed audit services for the Fund including the audit of the Fund's
financial statements, review of the Fund's annual report and registration statement amendment, consultation on financial accounting and
reporting matters and meetings with the Board of Trustees.
1. Audit Fees.
The aggregate fees billed by KPMG LLP or professional services rendered for the audit of the Fund's annual financial statements
for the fiscal year ended September 30, 2001 were $28,000.
2. All Other Fees.
There were no fees billed by KPMG LLP for services rendered to the Fund other than the services described above under "Audit Fees"
for the fiscal year ended September 30, 2001. Additionally, there were no fees billed by KPMG LLP to the Manager or affiliates of the
Manager for non-audit services rendered to the Manager or its affiliates for the fiscal year ended September 30, 2001.
Representatives of KPMG LLP are not expected to be present at the Meeting but will be available should any matter arise requiring
their presence.
C. Additional Information Regarding Trustees and Officers.
The Fund's Independent Trustees are paid a retainer plus a fixed fee for attending each meeting and are reimbursed for expenses
incurred in connection with attending such meetings. Each Board I Fund for which they serve as a director or trustee pays a share of those
expenses.
Neither the officers of the Fund nor any Trustee who is not an Independent Trustee receives any salary or fee from the Fund. The
remaining Trustees of the Fund received the compensation shown below from the Fund with respect to the Fund's fiscal year ended September
30, 2001.
The compensation from all of the Board I Funds (including the Fund) represents compensation received as a director, trustee or
member of a committee of the boards of those funds during the calendar year 2001.Compensation from the Fund is paid for services in the
positions below their names.
----------------------------------- ------------------------ ------------------------ ---------------------------
Total
Retirement Compensation
Benefits from all
Aggregate Compensation Accrued as Part New York based Board I
Trustee's Name From Fund1 of Fund Funds (31 Funds)2
and Other Positions Expenses1
----------------------------------- ------------------------ ------------------------ ---------------------------
----------------------------------- ------------------------ ------------------------ ---------------------------
Leon Levy $7,747 $0 $173,700
Chairman
----------------------------------- ------------------------ ------------------------ ---------------------------
----------------------------------- ------------------------ ------------------------ ---------------------------
Robert G. Galli 3 $4,717 $0 $191,134
Study Committee Member
----------------------------------- ------------------------ ------------------------ ---------------------------
----------------------------------- ------------------------ ------------------------ ---------------------------
Phillip A. Griffiths4 $2,595 $0 $59,529
----------------------------------- ------------------------ ------------------------ ---------------------------
----------------------------------- ------------------------ ------------------------ ---------------------------
Benjamin Lipstein $6,697 $0 $148,639
Study Committee Chairman
Audit Committee Member
----------------------------------- ------------------------ ------------------------ ---------------------------
----------------------------------- ------------------------ ------------------------ ---------------------------
Elizabeth B. Moynihan $4,717 $0 $104,695
Study Committee Member
----------------------------------- ------------------------ ------------------------ ---------------------------
----------------------------------- ------------------------ ------------------------ ---------------------------
Kenneth A. Randall $4,327 $0 $96,034
Audit Committee Chairman
----------------------------------- ------------------------ ------------------------ ---------------------------
----------------------------------- ------------------------ ------------------------ ---------------------------
Edward V. Regan $4,280 $0 $94,995
Proxy Committee Chairman Audit
Committee Member
----------------------------------- ------------------------ ------------------------ ---------------------------
----------------------------------- ------------------------ ------------------------ ---------------------------
Russell S. Reynolds, Jr. $3,202 $0 $71,069
Proxy Committee Member
----------------------------------- ------------------------ ------------------------ ---------------------------
----------------------------------- ------------------------ ------------------------ ---------------------------
Donald W. Spiro $2,858 $0 $64,435
----------------------------------- ------------------------ ------------------------ ---------------------------
----------------------------------- ------------------------ ------------------------ ---------------------------
Clayton K. Yeutter 5 $3,202 $0 $71,069
Proxy Committee Member
----------------------------------- ------------------------ ------------------------ ---------------------------
1For the fiscal year ended September 30, 2001. Aggregate compensation includes fees, deferred compensation, if any, and retirement plan
benefits accrued for a Trustee. No retirement benefits were allocated to the Fund for fiscal year ended September 30, 2001.
2For the 2001 calendar year.
3Total compensation for the 2001 calendar year includes compensation received for serving as a Trustee/Director of 10 Oppenheimer funds
other than Board I Funds.
4 Aggregate compensation from the Fund includes $266 deferred under Deferred Compensation Plan described below.
5 Aggregate compensation from the Fund includes $51 deferred under Deferred Compensation Plan described below.
The Fund has adopted a retirement plan that provides for payments to retired Trustees. Payments are up to 80% of the average
compensation paid during a Trustee's five years of service in which the highest compensation was received. A Trustee must serve as director
or trustee for any of the Board I Funds for at least 15 years to be eligible for the maximum payment. Each Trustee's retirement benefits
will depend on the amount of the Trustee's future compensation and length of service. The Fund cannot estimate the number of years of
credited service that will be used to determine those benefits at this time. Therefore, the amount of the retirement benefits cannot be
determined at this time.
The Board of Trustees has adopted a Deferred Compensation Plan for Independent Trustees that enables them to elect to defer
receipt of all or a portion of the annual fees they are entitled to receive from the Fund. Under the plan, the compensation deferred by a
Trustee is periodically adjusted as though an equivalent amount had been invested in shares of one or more Oppenheimer funds selected by
the Trustee. The amount paid to the Trustee under the plan will be determined based upon the performance of the selected funds.
Deferral of Trustees' fees under the plan will not materially affect the Fund's assets, liabilities or net income per share. The
plan will not obligate the Fund to retain the services of any Trustee or to pay any particular level of compensation to any Trustee.
Pursuant to an order issued by the Securities and Exchange Commission, the Fund may invest in the funds selected by the Trustee under the
plan without shareholder approval.
Information is given below about the executive officers who are not Trustees of the Fund, including their business experience during the
past five years. Messrs. Murphy, Zack, Wixted, Molleur, and Mses. Feld, Ives and Stevlingson, respectively, hold the same offices with one
or more of the other funds in the OppenheimerFunds complex.
- ----------------------------------------------- ----------------------------------------------------------------------
Name, Address,3 Age, Position(s) Held with Principal Occupation(s) During Past 5 Years
Fund and Length of Service4
- ----------------------------------------------- ----------------------------------------------------------------------
- ----------------------------------------------- ----------------------------------------------------------------------
Jayne M. Stevlingson, Vice President and Vice President (since August 1999) of the Manager; formerly a
Portfolio Manager
Age: 42. small-cap growth fund portfolio manager with Morgan Stanley Dean
Witter Advisors, Inc. (October 1992- July 1999).
- ----------------------------------------------- ----------------------------------------------------------------------
- ----------------------------------------------- ----------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer of the Advisor (since March
Treasurer, Principal Financial and Accounting 1999); Treasurer (since March 1999) of HarbourView Asset Management
Officer (since April 1999) Corporation, Shareholder Services, Inc., Oppenheimer Real Asset
Age: 42 Management Corporation, Shareholder Financial Services, Inc.,
Oppenheimer Partnership Holdings, Inc., OFI Private Investments,
Inc. (since March 2000), OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since May 2000), and OAM
Institutional, Inc. (since November 2000); Treasurer and Chief
Financial Officer of Oppenheimer Trust Company, a trust company
subsidiary of the Advisor (since May 2000); Assistant Treasurer of
Oppenheimer Acquisition Corp. (since March 1999) and
OppenheimerFunds Legacy Program (since April 2000); an officer of
other Oppenheimer funds. Formerly Principal and Chief Operating
Officer, Bankers Trust Company - Mutual Fund Services Division
(March 1995 - March 1999).
- ----------------------------------------------- ----------------------------------------------------------------------
- ----------------------------------------------- ----------------------------------------------------------------------
Robert G. Zack, Senior Vice President (since May 1985) and General Counsel (since
Secretary February 2002) of the Manager; Assistant Secretary of Shareholder
(since November 1, 2001) Services, Inc. (since May 1985), Shareholder Financial Services,
Age: 53 Inc. (since November 1989); OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since October 1997); an officer of
other Oppenheimer funds; formerly Acting General Counsel (November
2001 - February 2002) and Associate General Counsel (1984 - October
2001)
- ----------------------------------------------- ----------------------------------------------------------------------
- ----------------------------------------------- ----------------------------------------------------------------------
Denis R. Molleur, Vice President and Senior Counsel of the Manager (since July 1999);
Assistant Secretary (since November 1, 2001) an officer of other Oppenheimer funds; formerly a Vice President and
Age: 44 Associate Counsel of the Manager (September 1995 - July 1999).
- ----------------------------------------------- ----------------------------------------------------------------------
- ----------------------------------------------- ----------------------------------------------------------------------
Katherine P. Feld, Vice President and Senior Counsel of the Manager (since July 1999);
Assistant Secretary (since November 1, 2001) an officer of other Oppenheimer funds; formerly a Vice President and
Age: 43 Associate Counsel of the Manager (June 1990 - July 1999).
- ----------------------------------------------- ----------------------------------------------------------------------
- ----------------------------------------------- ----------------------------------------------------------------------
Kathleen T. Ives, Assistant Secretary Vice President and Assistant Counsel of the Manager (since June
(since November 1, 2001) 1998); an officer of other Oppenheimer funds; formerly an Assistant
Age: 36 Vice President and Assistant Counsel of the Manager (August 1997 -
June 1998); and Assistant Counsel of the Manager (August 1994-August
1997).
- ----------------------------------------------- ----------------------------------------------------------------------
All officers serve at the pleasure of the Board.
As of May 15, 2002, the Trustees and officers as a group beneficially owned or less than 1% of the outstanding Class A shares and
no Class B, Class C, Class N or Class Y shares of the Fund. The foregoing statement does not reflect ownership of shares of the Fund held
of record by an employee benefit plan for employees of the Manager, other than the shares beneficially owned under the plan by the officers
of the Fund listed above. In addition, each Independent Trustee, and his or her family members, do not own securities of either the Manager
or Distributor of the Board I Funds or any person directly or indirectly controlling, controlled by or under common control with the
Manager or Distributor.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMEND
A VOTE FOR THE ELECTION OF EACH NOMINEE AS TRUSTEE
Introduction to Proposal 2
A. What is the Historical Background of the Fund's Current Investment Policies?
The Fund operates in accordance with its investment objective, policies and restrictions, which are described in its prospectus
and statement of additional information (together, the "prospectus"). The Fund's policies generally are classified as either "fundamental"
or "non-fundamental." Fundamental policies can be changed only by a shareholder vote. Non-fundamental policies may be changed by the
Trustees without shareholder approval, although significant changes will be described in amendments to the Fund's prospectus.
The 1940 Act requires that certain policies of the Fund be classified as fundamental. Proposal 2 is intended to modernize the
Fund's policies as well as standardize its policies by reclassifying fundamental policies that are not required to be fundamental as
non-fundamental or by eliminating them entirely. The proposals are designed to provide the Fund with maximum flexibility to pursue its
investment objective and respond to an ever-changing investment environment. The Fund, however, has no current intention of significantly
changing its actual investment strategies should shareholders approve the proposed changes.
Subsequent to the Fund being established, certain regulatory requirements applicable to registered open-end investment companies
(referred to as "mutual funds" in this Proxy Statement) changed. For example, certain restrictions previously imposed by state regulations
were preempted by the National Securities Markets Improvement Act of 1996 ("NSMIA"), and are no longer applicable to mutual funds. As a
result, the Fund currently is subject to several fundamental investment policies that are either more restrictive than required under
current regulations or no longer required at all.
With the passage of time, the development of new industry practices and changes in regulatory standards, several of the Fund's
fundamental policies are considered by the Trustees and the Manager to be unnecessary or unwarranted. Other fundamental policies merely
restate applicable regulatory requirements and are therefore redundant. The standardized policies proposed below would satisfy current
federal regulatory requirements and are written to provide the Fund with flexibility to respond to future legal, regulatory, market and
industry developments. The proposed standardized changes will not affect the Fund's investment objective.
B. Why do the Fund's Trustees Recommend the Proposed Changes?
The Trustees believe standardizing and reducing the total number of investment policies that can be changed only by a shareholder
vote will assist the Fund and the Manager in maintaining compliance with the various investment restrictions to which the Fund is subject,
and will help minimize the costs and delays associated with holding future shareholder meetings to revise fundamental investment policies
that become outdated or inappropriate. The Trustees also believe that the Manager's ability to manage the Fund's assets in a changing
investment environment will be enhanced, and that investment management opportunities will be increased by the proposed changes.
Although the Trustees believe the proposed changes in fundamental investment policies will provide the Fund greater flexibility to
respond to future investment opportunities, the Trustees do not anticipate that the changes, either individually or together, will result
in a material change in the level of risk associated with an investment in the Fund. In addition, the Fund's Trustees do not anticipate
that the proposed changes will materially affect the manner in which the Fund is managed. In the future, if the Trustees determine to
change materially the manner in which the Fund is managed, the Fund's prospectus will be amended to reflect such a change.
The recommended changes are specified below. Shareholders are requested to vote on each sub-proposal in Proposal 2 separately. If
approved, the effective date of the sub-proposals will be delayed until the Fund's prospectus can be updated to reflect the changes. If any
sub-proposal in Proposal 2 is not approved, the fundamental investment policy or policies covered in that sub-proposal will remain
unchanged.
PROPOSAL 2: TO APPROVE THE ELIMINATION OR AMENDMENT OF CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF THE FUND
2.A. Purchasing Securities on Margin or Making Short Sales.
The Fund is currently subject to a fundamental investment policy prohibiting it from purchasing securities on margin or engaging
in short sales except "short sales against-the-box." The existing policy is not required to be a fundamental investment policy under the
1940 Act. It is proposed that this current fundamental policy prohibiting purchases of securities on margin or engaging in short sales be
eliminated. The current fundamental investment policy is set forth below.
Current Fundamental Policy
--------------------------
The Fund cannot make short sales of securities except "short sales against-the-box." The Fund cannot purchase securities
on margin. However, the Fund may make margin deposits in connection with any of the hedging instruments permitted by any
of its other fundamental policies.
Margin purchases involve the purchase of securities with borrowed money and the 1940 Act imposes certain restrictions on borrowing
as discussed under Proposal 2.F, "Borrowing," below. "Margin" is the cash or securities that the borrower places with a broker as
collateral against the loan. Although the Fund's current fundamental investment policy prohibits it from purchasing securities on margin,
the 1940 Act permits the Fund to obtain such short-term credits as may be necessary for the clearance of transactions. In addition, SEC
staff interpretations permit mutual funds to make margin payments in connection with the purchase and sale of futures contracts and options
on futures contracts.
In a short sale, an investor sells a borrowed security with a corresponding obligation to the lender to return the identical
security. In an investment technique known as a short sale "against-the-box," an investor sells short while owning the same securities in
the same amount, or having the right to obtain equivalent securities. The investor could have the right to obtain equivalent securities,
for example, through ownership of options or convertible securities.
A short sale is a form of leverage. Leverage exists when a fund has the right to a return on an investment that exceeds the amount
the fund contributed to the investment. The use of leverage exposes shareholders and their investments in a fund to a greater risk of loss.
For example, engaging in short sales may cause the value of a fund's shares to be more volatile than if the fund did no engage in short
selling. In addition, in a short sale, there is a risk that the investor may have to buy the security later at a price higher than the
sales price and incur a loss as a result.
As a result of NSMIA, the state restrictions regarding margin purchases and short sales no longer apply to the Fund. The Trustees
recommend that shareholders eliminate this fundamental investment policy in order to conform the Fund's policy with that of other
Oppenheimer funds.
Elimination of this fundamental investment policy is unlikely to affect management of the Fund, and is not expected to materially
increase the risk of an investment in the Fund. The Fund would continue to be prohibited from purchasing securities on margin. However,
consistent with the 1940 Act, the Fund would continue to be able to obtain such short-term credits as may be necessary for clearance of
transactions and to make margin payments in connection with the purchase and sale of futures contracts and options on futures contracts.
Although the Fund would be permitted to sell securities short if shareholders approve this sub-proposal, the Fund would have to
segregate liquid assets to cover its obligation under any short sale. If the Fund's Manager and its Trustees believed that it was in the
best interests of the Fund to engage in short sales to a significant degree, the Fund's prospectus would have to be updated to reflect that
change in policy. Among other things, the prospectus would be updated to describe in detail the risks associated with short sales, which
are outline above.
2.B. Purchasing Securities of Issuers in which Officers or Trustees Have An Interest.
The Fund is currently subject to a fundamental investment policy prohibiting it from purchasing or holding the securities of an
issuer if the officers and trustees of the Fund or the Manager individually beneficially own more than1/2of 1% of such securities and
together own more than 5% of such securities. It is proposed that the current fundamental policy be eliminated. The current fundamental
investment policy is set forth below.
Current Fundamental Policy
--------------------------
The Fund cannot invest in or hold securities of any issuer if officers and Trustees of the Fund, and is not expected to
materially increase the risk of an investment in the 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.
Elimination of this fundamental policy is unlikely to affect management of the Fund, and is not expected to materially increase
the risk of an investment in the Fund. This policy was originally adopted to address then existing state requirements in connection with
the registration of shares of the Fund for sale in a particular state or states. As a result of NSMIA, the state restriction no longer
applies to the Fund.
The Trustees recommend that shareholders eliminate this fundamental investment policy in order to conform the Fund's policy in
this area with that of other Oppenheimer funds. In addition, the Trustees believe that its elimination could increase the Fund's
flexibility when choosing investments in the future without materially increasing the risk of an investment in the Fund.
2.C. Investing in Unseasoned Issuers.
The Fund is currently subject to a fundamental investment policy limiting its investment in securities of issuers that have been
in operation less than three years ("unseasoned issuers"). It is proposed that the current fundamental policy be eliminated. The current
fundamental policy is set forth below.
Current Fundamental Policy
--------------------------
The Fund may invest up to 20% of its total assets in small, unseasoned companies (which are companies that have been in
operation less than three years, including the operations of predecessors).
Elimination of this fundamental policy is unlikely to materially affect management of the Fund. This policy was originally
adopted to address state requirements in connection with the registration of shares of the Fund for sale in a particular state or states.
As a result of NSMIA, the state restriction no longer applies to the Fund.
Should shareholders approve this Proposal 2.C., the Fund anticipates that it may invest more than 5% but would invest less than
20% (as currently permitted) of its assets in securities of so-called unseasoned issuers. Securities issued by so-called unseasoned issuers
may have limited liquidity so that the Fund could have difficulty selling them at an acceptable price when it wants to sell them. The
values of these securities also may be very volatile, especially in the short term. The Trustees recommend that shareholders eliminate this
fundamental investment policy because they believe that its elimination could increase the Fund's flexibility when choosing investments in
the future without materially increasing the risk of an investment in the Fund.
2.D. Real Estate.
The Fund is currently subject to a fundamental investment policy prohibiting it from purchasing real estate. The Fund's policy
regarding investments in real estate and commodities is required to be fundamental. Although this policy does not prohibit the Fund from
investing in hedging instruments or structured notes whose returns are linked to the returns of physical commodities or currencies, the
Fund's Trustees propose that the Fund's current fundamental policy be clarified and remain a fundamental policy as indicated below.
Current Fundamental Policy Proposed Fundamental Policy
-------------------------- ---------------------------
The Fund cannot invest in real estate or in interests in The Fund cannot invest in real estate, except to the
real estate. However, the Fund can purchase extent permitted under the 1940 Act, the rules or
readily-marketable securities of companies holding real regulations thereunder or any exemption therefrom, as
estate or interests in real estate. such statute, rules or regulations may be amended or
interpreted from time to time.
The existing and proposed policies permit the Fund to invest in debt securities secured by real estate or interests in real
estate, or issued by companies, including real estate investment trusts, that invest in real estate or interests in real estate. The
purpose of this proposal is to clarify the Fund's permitted investments and to conform the Fund's policy in this area with that of other
Oppenheimer funds. The Trustees believe that standardized policies will assist the Fund and the Manager in maintaining compliance with the
various investment restrictions to which the Oppenheimer funds are subject.
2.E. Pledging, Mortgaging or Hypothecating Assets.
The Fund is currently subject to a fundamental investment policy concerning the pledging, mortgaging or hypothecating of the
Fund's assets. It is proposed that this current fundamental investment policy be eliminated.
Current Fundamental Policy
--------------------------
The Fund cannot pledge, mortgage or hypothecate any of its assets. However, this does not prohibit the escrow
arrangements contemplated by the put and call activities of the Fund or other collateral or margin arrangements in
connection with any of the hedging instruments permitted by any of its other policies.
The existing policy concerning pledging, mortgaging or hypothecating of the Fund's assets is not required to be fundamental under
the 1940 Act, and the Trustees believe that the Fund should be provided with the maximum flexibility permitted by law to pursue its
investment objective. The Trustees recommend that the policy regarding pledging, mortgaging or hypothecating be eliminated so that the
Fund may enter into collateral arrangements in connection with its borrowing requirements consistent with its other investment policies,
including its policies regarding borrowing and issuing senior securities.
2.F. Borrowing.
The 1940 Act imposes certain restrictions on the borrowing activities of mutual funds. A fund's borrowing policy must be a
fundamental investment policy.
The restrictions on borrowing are designed to protect mutual fund shareholders and their investments in a fund by limiting a
fund's ability to leverage its assets. Leverage exists when a fund has the right to a return on an investment that exceeds the amount the
fund contributed to the investment. Borrowing money to make an investment is an example of how a fund may leverage its assets.
A mutual fund may borrow money to meet redemptions in order to avoid forced, unplanned sales of portfolio securities. This
technique allows a fund greater flexibility to buy and sell portfolio securities for investment or tax considerations rather than for cash
flow considerations. Some mutual funds also borrow for investment purposes. The Fund currently may borrow for investment purposes, which
may cause the value of its shares to be more volatile than a fund that does not borrow for investment purposes.
There are risks associated with borrowing. Borrowing exposes shareholders and their investments in a fund to a greater risk of
loss. For example, borrowing may cause the value of a fund's shares to be more volatile than if the fund did not borrow. In addition, to
the extent a fund borrows, it will pay interest on the money that it borrows, and that interest expense will raise the overall expenses of
the fund and reduce its returns. The interest payable on the borrowed amount may be more (or less) than the return the fund receives from
the securities purchased with the borrowed amount. Whether or not this sub-proposal is approved by shareholders, the Fund currently does
not anticipate that, under normal market conditions, its borrowings would exceed 5% percent of its total assets.
The Fund is currently subject to a fundamental investment policy concerning borrowing that is more restrictive than required by
the 1940 Act. The Trustees propose that the Fund's policy on borrowing be amended to permit the Fund to borrow as permitted under the 1940
Act. As amended, the Fund's policy on borrowing would remain a fundamental policy changeable only by the vote of a majority of the
outstanding voting securities of the Fund as defined in the 1940 Act.
Current Fundamental Policy Proposed Fundamental Policy
-------------------------- ---------------------------
The Fund may borrow only from banks. Under current The Fund may not borrow money, except to the extent
regulatory requirements, borrowings can be made only to the permitted under the 1940 Act, the rules or regulations
extent that the value of the Fund's assets, less its thereunder or any exemption therefrom that is applicable
liabilities other than borrowings, is equal to at least to the Fund, as such statute, rules or regulations may be
300% of all borrowings (including the proposed borrowing). amended or interpreted from time to time.
If the value of the Fund's assets fails to meet this 300%
asset coverage requirement, the Fund will reduce its bank
debt within three days to meet the requirement.
Currently, under the 1940 Act, the maximum amount a mutual fund may borrow from banks is up to one-third of its total assets
(including the amount borrowed). A fund may borrow up to 5% of its total assets for temporary purposes from any person. Under the 1940
Act, there is a rebuttable presumption that a loan is temporary if it is repaid within 60 days and not extended or renewed. If
shareholders approve this sub-proposal, the Fund's current fundamental policy will be replaced by the proposed fundamental policy and the
Fund's prospectus will be updated to describe the current restrictions regarding borrowing under the 1940 Act, the rules and regulations
thereunder and any exemptions applicable to the Fund.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS
THAT YOU APPROVE EACH SUB-PROPOSAL DESCRIBED ABOVE WITHIN THIS PROPOSAL NO. 2
PROPOSAL 3: APPROVAL OF A NEW CLASS B 12b-1
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
Class B shares were first offered to the public on March 31, 1994. At that time, the Fund had adopted a Distribution and Service
Plan and Agreement for Class B shares. On June 20, 1994, the Board of Trustees approved an amendment to the Fund's Class B Distribution and
Service Plan to eliminate a provision that would require the Fund to continue to make payments to OppenheimerFunds Distributor, Inc. (the
"Distributor") after a termination of the Distribution and Service Plan Agreement.
At a meeting of the Board of Trustees held December 13, 2001, the Manager proposed the adoption of a new Distribution and Service
Plan (the "Proposed Plan"), which is a "compensation type plan" instead of the current "reimbursement type plan." The Fund's Board of
Trustees, including a majority of the Independent Trustees, approved the Proposed Plan, subject to shareholder approval, and determined to
recommend the Proposed Plan for approval by the shareholders. A copy of the Proposed Plan is attached as Exhibit A to this proxy
statement, and is hereby submitted to Class B shareholders for approval.
Rule 12b-1 of the 1940 Act permits the Fund to adopt both the Proposed Plan and the current Distribution and Service Plan and
Agreement (the "Current Plan") and each plan conforms with the rules of the National Association of Securities Dealers, Inc. ("NASD"). The
payments under the Proposed Plan will remain subject to the limits imposed by the NASD. The current plan was most recently approved by the
Fund's Board of Trustees on October 12, 2000 and on October 11, 2001.
Description of the Distribution and Service Plans. Under both the Proposed Plan and the Current Plan, the Fund makes payments to the
Distributor for its services in connection with the distribution of Class B Shares and the personal service and maintenance of accounts
that hold Class B shares. The Fund pays the Distributor an asset-based sales charge of 0.75% per year of Class B shares outstanding for no
more than six years, and the Fund also pays the Distributor a service fee of 0.25% per year. Each fee is computed on the average annual
net assets of Class B shares of the Fund.
Service Fee. Under the Proposed Plan and the Current Plan, the Distributor pays certain brokers, dealers, banks or other persons or
entities ("Recipients") a service fee of 0.25% for providing personal services to Class B shareholders and for maintenance of shareholder
accounts by those Recipients. The services rendered by Recipients in connection with personal services and the maintenance of Class B
shareholder accounts may include, but are not be limited to, the following: answering routine inquiries from the Recipient's customers
concerning the Fund, assisting in the establishment and maintenance of accounts or sub-accounts in the Fund and processing share redemption
transactions, making the Fund's investment plans and dividend payment options available, and providing such other information and services
in connection with the rendering of personal services and/or the maintenance of accounts, as the Distributor or the Fund may reasonably
request. The Distributor is permitted under the Proposed and Current Plans to retain service fee payments to compensate it for rendering
such services.
Under both the Proposed Plan and the Current Plan, service fee payments by the Distributor to Recipients are made (i) in advance
for the first year Class B shares are outstanding, following the purchase of shares, in an amount equal to 0.25% of the net asset value of
the shares purchased by the Recipient or its customers and (ii) thereafter, on a quarterly basis, computed as of the close of business each
day at an annual rate of 0.25% of the net asset value of Class B shares held in accounts of the Recipient or its customers. The
Distributor retains the service fee during the first year shares are outstanding. In the event Class B shares are redeemed less than one
year after the date such shares were sold, the Recipient is obligated to repay to the Distributor on demand a pro rata portion of such
advance service fee payments, based on the ratio of the remaining period to one year.
The main difference between the proposed and current plan for the payment of the service fee is that under the current Plan, the
Fund reimburses the Distributor for service fee payments made to Recipients. Under the Proposed Plan, the Fund will pay the Distributor a
service fee at a flat rate of 0.25% per annum without regard to the Distributor's expenses. Under the Current Plan, the full 0.25% service
fee paid by the Fund is, in effect, passed through the Distributor and paid to Recipients for the Recipient's services in servicing
accounts and personal services to account holders. It is anticipated that under the Proposed Plan the full 0.25% service fee currently paid
by the Fund will continue to be passed through the Distributor and paid to Recipients. The amount of the service fee payments made by the
Fund is not expected to increase as a result of this proposal should the Proposed Plan be approved by shareholders.
Asset-Based Sales Charge. The Current Plan, a reimbursement type plan, provides that the Fund will pay the Distributor on a monthly basis
an asset-based sales charge at an annual rate of 0.75% of the net asset value of Class B Shares outstanding to reimburse the Distributor
for its expenses in rendering services in connection with the distribution of the Fund's Class B shares. Under the Current Plan, the
distribution assistance and administrative support services rendered by the Distributor in connection with the sales of Class B shares may
include: (i) paying sales commissions to any broker, dealer, bank or other institution that sells the Fund's Class B shares; (ii) paying
compensation to and expenses of personnel of the Distributor who support distribution of Class B shares by Recipients; (iii) paying or
reimbursing the Distributor for interest and other borrowing costs incurred on any unreimbursed expenses carried forward to subsequent
fiscal quarters; (iv) other direct distribution costs of the type approved by the Board, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished to current shareholders) and state "blue sky" registration expenses;
and (v) any services rendered by the Distributor that a Recipient may render as described above.
The Proposed Plan, a compensation type plan, provides that the Fund will pay the Distributor on a monthly basis an asset-based
sales charge at an annual rate of 0.75% of the net asset value of Class B Shares outstanding to compensate the Distributor for providing
distribution assistance in connection with the distribution of the Fund's Class B Shares. Under the Proposed Plan, the distribution
assistance and administrative support services rendered by the Distributor in connection with the distribution of Class B Shares may
include: (i) paying sales commissions to any broker, dealer, bank or other person or entity that sells and services the Fund's Class B
Shares; (ii) paying compensation to and expenses of personnel of the Distributor who support distribution of Class B Shares by Recipients;
(iii) obtaining financing or providing such financing from its own resources, or from an affiliate, for interest and other borrowing costs
of the Distributor's unreimbursed expenses, incurred in rendering distribution assistance and administrative support services for Class B
Shares; and (iv) paying certain other direct distribution expenses.
Other distribution assistance rendered by Recipients under either Plan may include, but shall not be limited to, the following:
distributing sales literature and prospectuses other than those furnished to current Class B shareholders, providing compensation to and
paying expenses of personnel of the Recipient who support the distribution of Class B shares by the Recipient, and providing such other
information and services in connection with the distribution of Class B shares as the Distributor or the Fund may reasonably request.
The Proposed Plan provides that payments may be made in connection with Class B Shares acquired (i) by purchase, (ii) in exchange
for shares of another investment company for which the Distributor serves as distributor or sub-distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party.
Under both Plans, the Distributor pays sales commissions from its own resources to Recipients at the time of sale currently equal
to 3.75% of the purchase price of Fund shares sold by such Recipient, and advances the first year service fee of 0.25%. The Proposed Plan
provides that the Distributor may advance the service fee for the first year at the time of sale, pay the service fee quarterly or pay the
service fee more frequently than quarterly. The Proposed Plan also provides that the Distributor may pay the asset-based sales charge on
Class B shares instead of paying the commission. The Distributor retains the service fee and the asset-based sales charge during the first
year shares are outstanding to recoup the sales commissions it pays, the advances of service fee payments it makes, and its financing
costs. Thereafter, the Distributor pays the service fee to Recipients and retains the asset-based sales charge.
Asset-based sales charge payments are designed to permit an investor to purchase shares of the Fund without paying a front-end
sales load and at the same time permit the Distributor to compensate Recipients in connection with the sale of Class B shares of the Fund.
The Distributor and the Fund anticipate that it will take a number of years for the Distributor to recoup the sales commissions paid to
Recipients and other distribution-related expenses, from the Fund's payments to the Distributor under the Class B Plan, and from the
contingent deferred sales charge deducted from redemption proceeds for Class B shares redeemed within six years of their purchase, as
described in the Fund's prospectus.
Like the Current Plan, the Proposed Plan contains a provision which provides that the Board may allow the Fund to continue
payments to the Distributor for Class B shares sold prior to termination of the Plan. Pursuant to this provision, payment of the service
fee and the asset-based sales charge could be continued by the Board after termination.
Like the service fee, the main difference between the Proposed and Current Plans regarding payment of the asset-based sales charge
is that under the Current Plan, the Fund reimburses the Distributor for its services rendered and, under the Proposed Plan, the Fund will
pay the Distributor at a flat rate of 0.75% per annum without regard to the Distributor's expenses. As discussed below, it is possible
that the Fund will, over time, pay more under the Proposed Plan than under the Current Plan. This possibility is due to the fact that the
length of time over which the Fund's payments will continue under the Proposed Plan is not limited by any reimbursement factor, and the
Fund's payments may thus continue for a longer period of time than under the Current Plan.
Additional Information. Both Plans have the effect of increasing annual expenses of Class B Shares of the Fund by up to 1.00% of the
class's average annual net assets from what those expenses would otherwise be. Payments by the Fund to the Distributor under the Current
Plan for the fiscal year ended September 30, 2001 were $3,160,873 (1.00% of the Fund's average net assets represented by Class B Shares
during that period) of which the Distributor paid $62,758 to an affiliate of the Distributor and retained $2,511,302 as reimbursement for
Class B sales commissions and service fee advances, as well as financing costs. The balance was paid to Recipients not affiliated with the
Distributor.
If the Class B shareholders approve this Proposal, the Proposed Plan shall, unless terminated as described below, become effective
upon shareholder approval or such later date as the Fund's officers may determine and continue in effect until December 31, 2002 and from
year to year thereafter only so long as such continuance is specifically approved, at least annually, by the Fund's Board of Trustees and
its Independent Trustees by a vote cast in person at a meeting called for the purpose of voting on such continuance. Either plan may be
terminated at any time by a vote of a majority of the Independent Trustees or by a vote of the holders of a majority (as defined in the
1940 Act) of the Fund's outstanding Class B shares. Neither the Current Plan nor the Proposed Plan may be amended to increase materially
the amount of payments to be made without approval by Class B shareholders. All material amendments to either plan must be approved by a
majority of the Independent Trustees. If the Class B shareholders do not approve this Proposal, the Current Plan will remain in effect.
Each of the Proposed Plan and the Current Plan provides that while it is in effect, the selection and nomination of those Trustees
of the Fund who are not "interested persons" of the Fund or the Manager is committed to the discretion of the Independent Trustees. This
requirement does not prevent the involvement of others in such selection and nomination if the final decision on any such selection or
nomination is approved by a majority of the Independent Trustees.
Under either plan, the Board of Trustees may determine that no payment for service fees or asset-based sales charge will be made
to any Recipient in any quarter if the aggregate net asset value of all Fund shares held by the Recipient for itself and its customers does
not exceed a minimum amount, if any, that may be fixed from time to time by a majority of the Independent Trustees. Under both Plans, the
Board of Trustees has set the fee at the maximum rate and set no minimum amount. Each plan permits the Distributor and the Manager to make
additional distribution payments to Recipients from their own resources (including profits from management fees) at no cost to the Fund.
The Distributor and the Manager may, in their sole discretion, increase or decrease the amount of distribution assistance payments they
make to Recipients from their own assets.
Analysis of the Proposed Plan by the Board of Trustees. In considering whether to recommend the Proposed Plan for approval, the Board
requested and evaluated information it deemed necessary to make an informed determination. The Board, including the Independent Trustees,
did not single out any factor or group of factors as being more important than other factors, but considered such matters together in
arriving at its decision. The Board found that there is a reasonable likelihood that the Proposed Plan benefits the Fund and its Class B
shareholders by providing financial incentives to financial intermediaries to attract new Class B shareholders to the Fund and by assisting
the efforts of the Fund and the Distributor to service and retain existing shareholders and attract new investors.
The Proposed Plan enables the Fund and the Distributor to offer investors in the Fund alternative ways to purchase shares. This
arrangement allows the Fund to be competitive with similar funds, including funds that impose sales charges, provide financial incentives
to institutions that direct investors to such funds, and provide shareholder servicing and administrative services.
The Distributor identified two main difficulties with the Current Plan. These involve accurately following certain distribution
expenses when exchanges among the funds occur, and the Distributor's inability to recover its distribution-related expenses incurred when
funds enter into reorganization agreements.
The Fund and the other mutual funds in the OppenheimerFunds complex have arrangements so that a shareholder of one fund may
exchange his or her shares for the shares of one or more other Oppenheimer funds. Over time, a shareholder will enter into a number of
exchanges.
The Distributor advised the Board that the Distributor could not at this time design and implement an expedient and cost-effective
accounting system to follow expenses of the sales commission, service fee payment and other distribution-related expenses on a per share
basis as exchanges occur. As a result, the Distributor may not receive full reimbursement for its distribution-related expenses under the
Current Plan.
It occasionally happens that, for various reasons, it is desirable for one fund to reorganize into another fund when it is
anticipated that such a reorganization will benefit the funds involved. When reorganizations occur, the Distributor currently must write
off and thus is unable to recover previously spent, but unrecovered, distribution expenses for the fund which will go out of existence.
The compensation type Plan proposed for approval will eliminate the foregoing difficulties and allow the Distributor to continue
to provide exchanges and reorganizations without having to risk the loss of, in some cases, substantial amounts of money previously spent
for distribution. The Proposed Plan expressly provides that the distribution and administrative support services under the plan may be
rendered in connection with Class B shares issued by the Fund in exchanges for other Oppenheimer funds and in a reorganization with another
mutual fund.
The Distributor advised the Board that under the Proposed Plan, it will be able to track its expenses of distribution for the
OppenheimerFunds complex, and that it will also be able reasonably to identify its distribution costs with respect to the Fund and each
other Oppenheimer fund by allocating the Distributor's distribution expenses among the funds in the complex according to sales. While not
a precise method, the Board concluded that this method of allocating distribution expenses to the Fund is a reasonable manner by which to
identify the Distributor's expenses in distributing the Fund's shares.
The Board considered that a wide range of different situations might occur in the future regarding the sale and redemption of Fund
shares. It is possible under the current reimbursement Plan for the Fund's payments to be substantially reduced or cease when limited to
reimbursement to the Distributor for its costs. The Board concluded that this type of situation is unlikely to occur. The Board also
recognized that superior investment performance could result in larger amounts paid by the Fund under the Proposed Plan and the
Distributor's recovery of more Plan payments from the Fund than the Distributor had expended on the Fund. Other differing scenarios were
also reviewed.
The level of annual payments by the Fund under the Proposed Plan will not increase over, and are not anticipated to be less than,
the amounts currently paid by the Fund. Under the Proposed Plan, however, over time, the Fund's Plan payments may exceed the amount which
the Fund might pay under the Current Plan. The length of time over which the Fund's payments will continue under the Proposed Plan is not
limited by any reimbursement factor, and the Fund's payments may thus continue for a longer period of time than under the Current Plan,
potentially increasing the amount of Plan payments which reduce the dividends and total return on Fund shares. The Board also recognized
that Class B shares convert to Class A shares at the end of six years after their purchase.
The Board concluded that it is extremely difficult to predict purchases, sales and exchanges by shareholders, and how future
individual, market and economic events may influence individual investor decisions. The Board thus concluded that it is not reasonably
possible to determine with any degree of certainty at this time whether the Fund will pay more under the Proposed Plan than it would under
the Current Plan. The Distributor has agreed to provide the Board with certain quarterly reports as to the amount of payments made by the
Fund under the Proposed Plan and the purpose for which payments were made (similar to the reports the Distributor currently provides to the
Trustees under the Current Plan). The Distributor will provide extensive annual reports to the Board which set forth the Distributor's
allocated distribution-related expenses and recovery of expenses by the Distributor from the asset-based sales charges and contingent
deferred sales charges, and information on sales, redemptions and exchanges of Fund shares and related data.
The Board determined that under these quarterly and annual reports, the Board will be provided with adequate information about the
payments which the Fund makes to the Distributor, about the payments which the Distributor makes and receives in connection with the
distribution of the Fund's shares, and about the Distributor's other distribution expenses. The Board anticipates that with this
information, the Board will be able to review each year the benefits which the Fund is receiving from the plan payments it makes to
determine if the Fund is benefiting at a level commensurate with those payments.
Stimulation of distribution of mutual fund shares and providing for shareholder services and account maintenance services by
payments to a mutual fund's distributor and to brokers, dealers, banks and other financial institutions has become common in the mutual
fund industry. Competition among brokers and dealers for these types of payments has intensified. The Trustees concluded that promotion,
sale and servicing of mutual fund shares and shareholders through various brokers, dealers, banks and other financial institutions is a
successful way of distributing shares of a mutual fund. The Trustees concluded that without an effective means of selling and distributing
Fund shares and servicing shareholders and providing account maintenance, shareholders may redeem shares, or not buy more shares, and if
assets decline, expenses may increase on a per share basis. By providing an alternative means of acquiring Fund shares, the Distribution
and Service Plan proposed for shareholder approval is designed to stimulate sales by and services from many types of financial institutions.
The Trustees recognize that the Manager will benefit from the Proposed Plan through larger investment advisory fees resulting from
an increase in Fund assets, because its investment advisory fees are based upon a percentage of net assets of the Fund. The Manager was
also advised by the Trustees that a compensation plan could possibly decrease the time necessary for the Distributor to recover, and could
possibly increase the likelihood that the Distributor might actually recover, the costs of distributing Class B shares. If either were to
occur, the profits of the Manager, which is the parent company of the Distributor, would be increased. The Board, including each of the
Independent Trustees, determined that the Proposed Plan is in the best interests of the Fund, and that its adoption has a reasonable
likelihood of benefiting the Fund and its Class B shareholders. In its annual review of the Proposed Plan, the Board will consider the
continued appropriateness of the distribution and service plan, including the level of payments provided for therein.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS
THAT YOU APPROVE THIS PROPOSAL NO. 3
INFORMATION ABOUT THE FUND
Fund Information. As of April 29, 2002, the Fund had 30,938,511 shares outstanding, consisting of 21,254,840 Class A shares, 6,859,717
Class B shares, 1,398,205 Class C shares, 65,571 Class N shares, and 1,360,178 Class Y shares. Each share has voting rights as stated in
this Proxy Statement and is entitled to one vote for each share (and a fractional vote for a fractional share).
Beneficial Owners. Occasionally, the number of shares of the Fund held in "street name" accounts of various securities dealers for the
benefit of their clients as well as the number of shares held by other shareholders of record may exceed 5% of the total shares
outstanding. As of May 15, 2002, the only persons who owned of record or were known by the Fund to own beneficially 5% or more of any class
of the Fund's outstanding shares were:
Merrill Lynch Pierce Fenner & Smith, Attn Fund Admn/#971C8, 4800 Deer Lake Drive East, Third Floor, Jacksonville, Florida 32246-6484 which
owned 1,935,326.219 Class A shares (9.10% of the Class A shares outstanding) for the sole benefit of its customers. Merrill Lynch Pierce
Fenner & Smith, Inc. has advised that no such customer owned 5% or more of the Fund's outstanding Class A shares.
Merrill Lynch Pierce Fenner & Smith, Attn Fund Admn/#97HR9, 4800 Deer Lake Drive East, Third Floor, Jacksonville, Florida 32246-6484 which
owned 72,326.423 Class C shares (5.18% of the Class C shares outstanding) for the sole benefit of its customers. Merrill Lynch Pierce
Fenner & Smith, Inc. has advised that no such customer owned 5% or more of the Fund's outstanding Class A shares.
RPSS TR, VML INC 401K Plan, ATTN: Kathy Labonte, 250 NW Richards Road, Kansas City, Missouri 64116-4272 which owned 8,587.415 Class N
shares (13.05% of the Class N shares outstanding).
HSBC U/A Jun 01 95, North American Watch Corp, Deferred Compensation Plan, ATTN: Lynne Marshall, 1 HSBC Center 17th Floor, Buffalo, New
York 14203-2840 which owned 7,903.094 Class N shares (12.01% of the Class N shares outstanding).
RPSS TR, Mull Group 401K PSP, ATTN: Diana Lontz, PO BOX 6561, Wheeling, West Virginia 26003-0627, which owned 6,784.305 Class N shares
(10.31% of the Class N shares then outstanding).
RPSS TR, Empress International Ltd, 401(K) Plan, ATTN: Linda Levy, 10 Harbor Park Drive, Port Washington, New York 11050-4648 which owned
6,018.755 Class N shares (9.14% of the Class N shares then outstanding).
RPSS TR, Air Academy Federal Credit Union, 401(K) Plan, ATTN: Lisa Passalacqua, 1355 Kelly Johnson Boulevard, Colorado Springs, Colorado
80920-3907 which owned 5,512.476 Class N shares (8.37% of the Class N shares then outstanding).
Mass Mutual Life Insurance Co, Separate Investment Account, ATTN Monica Margeson N-328, 1295 State Street, Springfield, Massachusetts
01111-0001 which owned 1,213,038.659 Class Y shares (89.53% of the Class Y shares then outstanding).
Persumma Financial Services, Mass Mutual Financial Group, 1295 State Street #N328, Springfield, Massachusetts 01111-0001 which owned
141,804.016 Class Y shares (10.46% of the Class Y shares then outstanding).
The Manager, the Distributor and the Transfer Agent. Subject to the authority of the Board of Trustees, the Manager is responsible for the
day-to-day management of the Fund's business pursuant to its investment advisory agreement with the Fund. OppenheimerFunds Distributor,
Inc. (the "Distributor"), a wholly owned subsidiary of the Manager, is the general distributor of the Fund's shares. OppenheimerFunds
Services, a division of the Manager, located at 6803 South Tucson Way, Englewood, CO 80112, serves as the transfer and shareholder
servicing agent (the "Transfer Agent") for the Fund, for which it was paid $3,754 by the Fund during the fiscal year ended September 30,
2001.
The Manager (including affiliates and subsidiaries) managed assets of more than $130 billion in assets as of March 31, 2002, including
other Oppenheimer funds with more than 6.3 million shareholder accounts. The Manager is a wholly owned subsidiary of Oppenheimer
Acquisition Corp. ("OAC"), a holding company controlled by Massachusetts Mutual Life Insurance Company ("MassMutual"). The Manager, the
Distributor and OAC are located at 498 Seventh Avenue, New York, New York 10018. MassMutual is located at 1295 State Street, Springfield,
Massachusetts 01111. OAC acquired the Manager on October 22, 1990. As indicated below, the common stock of OAC is owned by (i) certain
officers and/or directors of the Manager, (ii) MassMutual and (iii) another investor. No institution or person holds 5% or more of OAC's
outstanding common stock except MassMutual. MassMutual has engaged in the life insurance business since 1851.
The common stock of OAC is divided into three classes. At December 31, 2001, MassMutual held (i) all of the 21,600,000 shares of Class A
voting stock, (ii) 12,642,025 shares of Class B voting stock, and (iii) 21,178,801 shares of Class C non-voting stock. This collectively
represented 95.35% of the outstanding common stock and 96.46% of the voting power of OAC as of that date. Certain officers and/or directors
of the Manager held (i) 884,810 shares of the Class B voting stock, representing 1.52% of the outstanding common stock and 2.49% of the
voting power, (ii) 537,090 shares of Class C non-voting stock, and (iii) options acquired without cash payment which, when they become
exercisable, allow the holders to purchase up to 8,395,700 shares of Class C non-voting stock. That group includes persons who serve as
officers of the Fund and John V. Murphy, who serves as a Trustee of the Fund.
Holders of OAC Class B and Class C common stock may put (sell) their shares and vested options to OAC or MassMutual at a formula price
(based on, among other things, the revenue, income, working capital, and excess cash of the Manager). MassMutual may exercise call
(purchase) options on all outstanding shares of both such classes of common stock and vested options at the same formula price. There were
no transactions by a person who serves as a Trustee of the Fund during the period June 30, 2000 to December 31, 2001.
The names and principal occupations of the executive officers and directors of the Manager are as follows: John Murphy, Chairman,
President, Chief Executive Officer and a director; Jeremy Griffiths, Executive Vice President, Chief Financial Officer and a director; O.
Leonard Darling, Vice Chairman, Executive Vice President, Chief Investment Officer and a director; George Batejan, Executive Vice President
and Chief Information Officer; Robert G. Zack, Senior Vice President and General Counsel; Craig Dinsell, James Ruff and Andrew Ruotolo,
Executive Vice Presidents; Brian W. Wixted, Senior Vice President and Treasurer; and Charles Albers, Victor Babin, Bruce Bartlett, Robert
A. Densen, Ronald H. Fielding, P. Lyman Foster, Robert B. Grill, Robert Guy, Steve Ilnitzki, Lynn Oberist Keeshan, Thomas W. Keffer, Avram
Kornberg, Chris Leavy, Angelo Manioudakis, Andrew J. Mika, David Negri, David Robertson, Richard Rubinstein, Arthur Steinmetz, John Stoma,
Jerry A. Webman, William L. Wilby, Donna Winn, Kenneth Winston, Carol Wolf, Kurt Wolfgruber and Arthur J. Zimmer, Senior Vice Presidents.
These officers are located at one of the three offices of the Manager: 498 Seventh Avenue, New York, NY 10018; 6803 South Tucson Way,
Englewood, CO 80112; and 350 Linden Oaks, Rochester, NY 14625-2807.
Custodian. The Bank of New York, One Wall Street, New York, New York 10015, acts as custodian of the Fund's securities and other assets.
Reports to Shareholders and Financial Statements. The Annual Report to Shareholders of the Fund, including financial statements of the Fund
for the fiscal year ended September 30, 2001, has previously been sent to shareholders. Upon request, shareholders may obtain without
charge a copy of the Annual Report and Semi-Annual Report by writing the Fund at the address above, or calling the Fund at 1.800.708.7780
or visiting the Manager's website at www.oppenheimerfunds.com. The Fund's transfer agent will provide a copy of the reports promptly upon
request.
To avoid sending duplicate copies of materials to households, the Fund mails only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records. The consolidation of these mailings, called householding,
benefits the Fund through reduced mailing expenses.
If you want to receive multiple copies of these materials or request householding in the future, you may call the Transfer Agent at
1.800.708.7780. You may also notify the Transfer Agent in writing. Individual copies of prospectuses and reports will be sent to you
within 30 days after the Transfer Agent receives your request to stop householding.
FURTHER INFORMATION ABOUT VOTING AND THE MEETING
Solicitation of Proxies. The cost of preparing, printing and mailing the proxy ballot, notice of meeting, and this Proxy Statement and all
other costs incurred with the solicitation of proxies, including any additional solicitation by letter, telephone or otherwise, will be
paid by the Fund. In addition to solicitations by mail, officers of the Fund or officers and employees of the Transfer Agent, without
extra compensation, may conduct additional solicitations personally or by telephone.
Proxies also may be solicited by a proxy solicitation firm hired at the Fund's expense to assist in the solicitation of proxies. As the
Meeting date approaches, certain shareholders of the Fund may receive telephone calls from a representative of the solicitation firm if
their vote has not yet been received. Authorization to permit the solicitation firm to execute proxies may be obtained by telephonic
instructions from shareholders of the Fund. Proxies that are obtained telephonically will be recorded in accordance with the procedures
set forth below. These procedures have been designed to reasonably ensure that the identity of the shareholder providing voting
instructions is accurately determined and that the voting instructions of the shareholder are accurately recorded.
In all cases where a telephonic proxy is solicited, the solicitation firm representative is required to ask for each shareholder's full
name, address, the last four digits of the shareholder's social security or employer identification number, title (if the shareholder is
authorized to act on behalf of an entity, such as a corporation) and to confirm that the shareholder has received the Proxy Statement and
ballot in the mail. If the information solicited agrees with the information provided to the solicitation firm, the solicitation firm
representative has the responsibility to explain the process, read the proposals listed on the proxy ballot, and ask for the shareholder's
instructions on such proposals. The solicitation firm representative, although he or she is permitted to answer questions about the
process, is not permitted to recommend to the shareholder how to vote. The solicitation firm representative may read any recommendation
set forth in the Proxy Statement. The solicitation firm representative will record the shareholder's instructions. Within 72 hours, the
shareholder will be sent a letter or mailgram to confirm his or her vote and asking the shareholder to call the solicitation firm
immediately if his or her instructions are not correctly reflected in the confirmation.
It is anticipated the cost of engaging a proxy solicitation firm would not exceed $5,000 plus the additional costs, that may be
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substantial, incurred in connection with contacting those shareholders that have not voted. Brokers, banks and other fiduciaries may be
required to forward soliciting material to their principals and to obtain authorization for the execution of proxies. For those services,
they will be reimbursed by the Fund for their expenses.
If the shareholder wishes to participate in the Meeting, but does not wish to give his or her proxy telephonically, the shareholder may
still submit the proxy ballot originally sent with the Proxy Statement in the postage paid envelope provided or attend in person. Should
shareholders require additional information regarding the proxy ballot or a replacement proxy ballot, they may contact us toll-free at
1.800.708.7780. Any proxy given by a shareholder, whether in writing or by telephone, is revocable as described below under the paragraph
entitled "Revoking a Proxy."
Please take a few moments to complete your proxy ballot promptly. You may provide your completed proxy ballot via facsimile,
telephonically or by mailing the proxy ballot in the postage paid envelope provided. You also may cast your vote by attending the Meeting
in person if you are a record owner.
Telephone Voting. The Fund has arranged to have votes 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.
Voting By Broker-Dealers. Shares owned of record by a broker-dealer for the benefit of its customers ("street account shares") will be
voted by the broker-dealer based on instructions received from its customers. If no instructions are received, the broker-dealer may (if
permitted by applicable stock exchange rules) vote, as record holder of such shares, for the election of Trustees and on the Proposals in
the same proportion as that broker-dealer votes street account shares for which it has received voting instructions in time to be voted.
Beneficial owners of street account shares cannot vote in person at the meeting. Only record owners may vote in person at the meeting.
A "broker non-vote" is deemed to exist when a proxy received from a broker indicates that the broker does not have discretionary authority
to vote the shares on that matter. Abstentions and broker non-votes will have the same effect as a vote against the proposal.
Voting by the Trustee for OppenheimerFunds-Sponsored Retirement Plans. Shares held in OppenheimerFunds-sponsored retirement accounts for
which votes are not received as of the last business day before the Meeting Date, will be voted by the trustee for such accounts in the
same proportion as Shares for which voting instructions from the Fund's other shareholders have been timely received.
Quorum. A majority of the shares outstanding and entitled to vote, present in person or represented by proxy, constitutes a quorum at the
Meeting. Shares over which broker-dealers have discretionary voting power, shares that represent broker non-votes and shares whose proxies
reflect an abstention on any item are all counted as shares present and entitled to vote for purposes of determining whether the required
quorum of shares exists.
Required Vote. Persons nominated as Trustees must receive a plurality of the votes cast, which means that the eleven (11) nominees
receiving the highest number of affirmative votes cast at the Meeting will be elected as long as the votes FOR a nominee exceed the votes
AGAINST that nominee. Approval of each sub-proposal of Proposal 2 requires the affirmative vote of a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of the Fund voting in the aggregate and not by class. As defined in the 1940 Act, the vote of a
majority of the outstanding shares means the vote of (i) 67% or more of the 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 (ii) more than 50% of the Fund's outstanding
shares, whichever is less. Approval of Proposal No. 3 requires the affirmative vote of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding Class B shares.
How are votes counted? The individuals named as proxies on the proxy ballots (or their substitutes) will vote according to your directions
if your proxy ballot is received and properly executed, or in accordance with the instructions you provide if you vote by telephone. You
may direct the proxy holders to vote your shares on a proposal by checking the appropriate box "FOR" or "AGAINST," or instruct them not to
vote those shares on the proposal by checking the "ABSTAIN" box. Alternatively, you may simply sign, date and return your proxy ballot
with no specific instructions as to the proposals. If you properly execute and return a proxy ballot but fail to indicate how the votes
should be cast, the proxy ballot will be voted in favor of the election of each of the nominees named in this Proxy Statement for Trustee
and in favor of each Proposal.
Shares of the Fund may be held by certain institutional investors for the benefit of their clients. If the institutional investor does not
timely receive voting instructions from its clients with respect to such Shares, the institutional investor may be authorized to vote such
Shares, as well as Shares the institutional investor itself owns, in the same proportion as Shares for which voting instructions from
clients are timely received.
Revoking a Proxy. You may revoke a previously granted proxy at any time before it is exercised by (1) delivering a written notice to the
Fund expressly revoking your proxy, (2) signing and forwarding to the Fund a later-dated proxy, or (3) attending the Meeting and casting
your votes in person. Granted proxies typically will be voted at the final meeting, but may be voted at an adjourned meeting if
appropriate. Please be advised that the deadline for revoking your proxy by telephone is 3:00 p.m. (EST) on the last business day before
the Meeting if you are a record owner.
Shareholder Proposals. The Fund is not required and does not intend to hold shareholder meetings on a regular basis. Special meetings of
shareholders may be called from time to time by either the Fund or the shareholders (for certain matters and under special conditions
described in the Statement of Additional Information). Under the proxy rules of the SEC, shareholder proposals that meet certain conditions
may be included in a fund's proxy statement for a particular meeting. Those rules currently require that for future meetings, the
shareholder must be a record or beneficial owner of Fund shares either (i) with a value of at least $2,000 or (ii) in an amount
representing at least 1% of the fund's securities to be voted, at the time the proposal is submitted and for one year prior thereto, and
must continue to own such shares through the date on which the meeting is held. Another requirement relates to the timely receipt by the
fund of any such proposal. Under those rules, a proposal must have been submitted a reasonable time before the Fund began to print and mail
this Proxy Statement in order to be included in this Proxy Statement. A proposal submitted for inclusion in the Fund's proxy material for
the next special meeting after the meeting to which this Proxy Statement relates must be received by the Fund a reasonable time before the
Fund begins to print and mail the proxy materials for that meeting. Notice of shareholder proposals to be presented at the Meeting must
have been received within a reasonable time before the Fund began to mail this Proxy Statement. The fact that the Fund receives a proposal
from a qualified shareholder in a timely manner does not ensure its inclusion in the proxy material because there are other requirements
under the proxy rules for such inclusion.
OTHER MATTERS
The Trustees do not intend to bring any matters before the Meeting other than Proposals 1 through 3 and the Trustees and the
Manager are not aware of any other matters to be brought before the Meeting by others. Because matters not known at the time of the
solicitation may come before the Meeting, the proxy as solicited confers discretionary authority with respect to such matters as properly
come before the Meeting, including any adjournment or adjournments thereof, and it is the intention of the persons named as
attorneys-in-fact in the proxy (or their substitutes) to vote the proxy in accordance with their judgment on such matters.
In the event a quorum is not present or sufficient votes in favor of one or more Proposals set forth in the Notice of Meeting of
Shareholders are not received by the date of the Meeting, the persons named in the enclosed proxy (or their substitutes) may propose and
approve one or more adjournments of the Meeting to permit further solicitation of proxies. All such adjournments will require the
affirmative vote of a majority of the shares present in person or by proxy at the session of the Meeting to be adjourned. The persons named
as proxies on the proxy ballots (or their substitutes) will vote the Shares present in person or by proxy (including broker non-votes and
abstentions) in favor of such an adjournment if they determine additional solicitation is warranted and in the interests of the Fund's
shareholders. A vote may be taken on one or more of the proposals in this proxy statement prior to any such adjournment if a quorum is
present, sufficient votes for its approval have been received and it is otherwise appropriate.
By Order of the Board of Trustees,
Robert G. Zack, Secretary
June 17, 2002
A-7
EXHIBIT A
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
with
OppenheimerFunds Distributor, Inc.
For Class B Shares of
Oppenheimer Discovery Fund
This Distribution and Service Plan and Agreement (the "Plan") is dated as of the ____ day of ______________, 2002, by and between
Oppenheimer Discovery Fund (the "Fund") and OppenheimerFunds Distributor, Inc. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for Class B shares of the Fund (the "Shares"), designed to
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comply with the provisions of Rule 12b-1, as it may be amended from time to time (the "Rule") under the Investment Company Act of 1940 (the
"1940 Act"). Pursuant to this Plan the Fund will compensate the Distributor for its services in connection with the distribution of Shares,
and the personal service and maintenance of shareholder accounts that hold Shares ("Accounts"). The Fund may act as distributor of
securities of which it is the issuer, pursuant to the Rule, according to the terms of this Plan. The terms and provisions of this Plan
shall be interpreted and defined in a manner consistent with the provisions and definitions contained in (i) the Fund's Registration
Statement, (ii) the 1940 Act, (iii) the Rule, (iv) Rule 2830 of the Conduct Rules of the National Association of Securities Dealers, Inc.,
or any amendment or successor to such rule (the "NASD Conduct Rules") and (v) any conditions pertaining either to distribution-related
expenses or to a plan of distribution to which the Fund is subject under any order on which the Fund relies, issued at any time by the U.S.
Securities and Exchange Commission ("SEC").
2. Definitions. As used in this Plan, the following terms shall have the following meanings:
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(a) "Recipient" shall mean any broker, dealer, bank or other person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or has provided administrative support services with respect to Shares held
by Customers (defined below) of the Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may arise concerning the sale of Shares; and (iii) has been selected by
the Distributor to receive payments under the Plan.
(b) "Independent Trustees" shall mean the members of the Fund's Board of Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Fund and who have no direct or indirect financial interest in the operation of this Plan or in any
agreement relating to this Plan.
(c) "Customers" shall mean such brokerage or other customers or investment advisory or other clients of a Recipient, and/or
accounts as to which such Recipient provides administrative support services or is a custodian or other fiduciary.
(d) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned beneficially or of record by: (i) such Recipient,
or (ii) such Recipient's Customers, but in no event shall any such Shares be deemed owned by more than one Recipient for purposes of this
Plan. In the event that more than one person or entity would otherwise qualify as Recipients as to the same Shares, the Recipient which is
the dealer of record on the Fund's books as determined by the Distributor shall be deemed the Recipient as to such Shares for purposes of
this Plan.
3. Payments for Distribution Assistance and Administrative Support Services.
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(a) Payments to the Distributor. In consideration of the payments made by the Fund to the Distributor under this Plan, the
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Distributor shall provide administrative support services and distribution assistance services to the Fund. Such services include
distribution assistance and administrative support services rendered in connection with Shares (1) sold in purchase transactions, (2)
issued in exchange for shares of another investment company for which the Distributor serves as distributor or sub-distributor, or (3)
issued pursuant to a plan of reorganization to which the Fund is a party. If the Board believes that the Distributor may not be rendering
appropriate distribution assistance or administrative support services in connection with the sale of Shares, then the Distributor, at the
request of the Board, shall provide the Board with a written report or other information to verify that the Distributor is providing
appropriate services in this regard. For such services, the Fund will make the following payments to the Distributor:
(i) Administrative Support Service Fees. Within forty-five (45) days of the end of each calendar quarter, the Fund will
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make payments in the aggregate amount of 0.0625% (0.25% on an annual basis) of the average during that calendar quarter of the aggregate
net asset value of the Shares computed as of the close of each business day (the "Service Fee"). Such Service Fee payments received from
the Fund will compensate the Distributor for providing administrative support services with respect to Accounts. The administrative support
services in connection with Accounts may include, but shall not be limited to, the administrative support services that a Recipient may
render as described in Section 3(b)(i) below.
(ii) Distribution Assistance Fees (Asset-Based Sales Charge). Within ten (10) days of the end of each month, the Fund
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will make payments in the aggregate amount of 0.0625% (0.75% on an annual basis) of the average during the month of the aggregate net asset
value of Shares computed as of the close of each business day (the "Asset-Based Sales Charge") outstanding until such Shares are
repurchased or converted to another class of shares of the Fund, provided, however, that a majority of the Independent Trustees may, but
are not obligated to, set a time period (the "Fund Maximum Holding Period") from time to time for such payments.. Such Asset-Based Sales
Charge payments received from the Fund will compensate the Distributor for providing distribution assistance in connection with the sale of
Shares.
The distribution assistance to be rendered by the Distributor in connection with the Shares may include, but shall not be
limited to, the following: (i) paying sales commissions to any broker, dealer, bank or other person or entity that sells Shares, and/or
paying such persons "Advance Service Fee Payments" (as defined below) in advance of, and/or in amounts greater than, the amount provided
for in Section 3(b) of this Agreement; (ii) paying compensation to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from its own resources, or from an affiliate, for the interest
and other borrowing costs of the Distributor's unreimbursed expenses incurred in rendering distribution assistance and administrative
support services to the Fund; and (iv) paying other direct distribution costs, including without limitation the costs of sales literature,
advertising and prospectuses (other than those prospectuses furnished to current holders of the Fund's shares ("Shareholders")) and state
"blue sky" registration expenses.
(b) Payments to Recipients. The Distributor is authorized under the Plan to pay Recipients (1) distribution assistance fees
----------------------
for rendering distribution assistance in connection with the sale of Shares and/or (2) service fees for rendering administrative support
services with respect to Accounts. However, no such payments shall be made to any Recipient for any quarter in which its Qualified
Holdings do not equal or exceed, at the end of such quarter, the minimum amount ("Minimum Qualified Holdings"), if any, that may be set
from time to time by a majority of the Independent Trustees. All fee payments made by the Distributor hereunder are subject to reduction or
chargeback so that the aggregate service fee payments and Advance Service Fee Payments do not exceed the limits on payments to Recipients
that are, or may be, imposed by the NASD Conduct Rules. The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a Recipient or retain such payments if the Distributor qualifies as
a Recipient.
(i) Service Fee. In consideration of the administrative support services provided by a Recipient during a calendar
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quarter, the Distributor shall make service fee payments to that Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the calendar quarter of the aggregate
net asset value of Shares, computed as of the close of each business day, constituting Qualified Holdings owned beneficially or of record
by the Recipient or by its Customers for a period of more than the minimum period (the "Minimum Holding Period"), if any, that may be set
from time to time by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make the following service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter: (i) "Advance Service Fee Payments" at a rate not to exceed
0.25% of the average during the calendar quarter of the aggregate net asset value of Shares, computed as of the close of business on the
day such Shares are sold, constituting Qualified Holdings, sold by the Recipient during that quarter and owned beneficially or of record by
the Recipient or by its Customers, plus (ii) service fee payments at a rate not to exceed 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of Shares, computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient or by its Customers for a period of more than one (1) year. At the
Distributor's sole option, the Advance Service Fee Payments may be made more often than quarterly, and sooner than the end of the calendar
quarter. In the event Shares are redeemed less than one year after the date such Shares were sold, the Recipient is obligated to and will
repay the Distributor on demand a pro rata portion of such Advance Service Fee Payments, based on the ratio of the time such Shares were
held to one (1) year.
The administrative support services to be rendered by Recipients in connection with the Accounts may include, but shall
not be limited to, the following: answering routine inquiries concerning the Fund, assisting in the establishment and maintenance of
accounts or sub-accounts in the Fund and processing Share repurchase transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services in connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may reasonably request.
(ii) Distribution Assistance Fee (Asset-Based Sales Charge) Payments. In its sole discretion and irrespective of
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whichever alternative method of making service fee payments to Recipients is selected by the Distributor, in addition the Distributor may
make distribution assistance fee payments to a Recipient quarterly, within forty-five (45) days after the end of each calendar quarter, at
a rate not to exceed 0.1875% (0.75% on an annual basis) of the average during the calendar quarter of the aggregate net asset value of
Shares computed as of the close of each business day constituting Qualified Holdings owned beneficially or of record by the Recipient or
its Customers until such Shares are repurchased or converted to another class of shares of the Fund, provided, however, that a majority of
the Independent Trustees may, but are not obligated to set a time period (the "Recipient Maximum Holding Period") for making such payments.
Distribution assistance fee payments shall be made only to Recipients that are registered with the SEC as a broker-dealer or are exempt
from registration.
The distribution assistance to be rendered by the Recipients in connection with the sale of Shares may include, but shall
not be limited to, the following: distributing sales literature and prospectuses other than those furnished to current Shareholders,
providing compensation to and paying expenses of personnel of the Recipient who support the distribution of Shares by the Recipient, and
providing such other information and services in connection with the distribution of Shares as the Distributor or the Fund may reasonably
request.
(c) A majority of the Independent Trustees may at any time or from time to time increase or decrease the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the rates set forth above, and/or direct the Distributor to set, eliminate
or modify the Fund Maximum Holding Period, any Minimum Holding Period, the Recipient Maximum Holding Period and/or any Minimum Qualified
Holdings and/or to split requirements so that different time periods apply to shares that are afforded different shareholder privileges and
features. The Distributor shall notify all Recipients of any Minimum Qualified Holdings, Maximum Holding Period and Minimum Holding Period
that are established and the rate of payments hereunder applicable to Recipients, and shall provide each Recipient with written notice
within thirty (30) days after any change in these provisions. Inclusion of such provisions or a change in such provisions in a revised
current prospectus, Statement of Additional Information or supplement to either shall constitute sufficient notice.
(d) The Service Fee and the Asset-Based Sales Charge on Shares are subject to reduction or elimination under the limits that
apply to such fees and charges under the NASD Conduct Rules relating to sales of shares of open-end funds.
(e) Under the Plan, payments may also be made to Recipients: (i) by OppenheimerFunds, Inc. ("OFI") from its own resources
(which may include profits derived from the advisory fee it receives from the Fund), or (ii) by the Distributor (a subsidiary of OFI), from
its own resources, from Asset-Based Sales Charge payments or from the proceeds of its borrowings, in either case, in the discretion of OFI
or the Distributor, respectively.
(f) Recipients are intended to have certain rights as third-party beneficiaries under this Plan, subject to the limitations
set forth below. It may be presumed that a Recipient has provided distribution assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares that entitle it to payments under the Plan. In the event that either the
Distributor or the Board should have reason to believe that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of Shares or administrative support services for Accounts, then
the Distributor, at the request of the Board, shall require the Recipient to provide a written report or other information to verify that
said Recipient is providing appropriate distribution assistance and/or services in this regard. If the Distributor or the Board of Trustees
still is not satisfied after the receipt of such report, either may take appropriate steps to terminate the Recipient's status as such
under the Plan, whereupon such Recipient's rights as a third-party beneficiary hereunder shall terminate. Additionally, in their
discretion, a majority of the Fund's Independent Trustees at any time may remove any broker, dealer, bank or other person or entity as a
Recipient, where upon such person's or entity's rights as a third-party beneficiary hereof shall terminate. Notwithstanding any other
provision of this Plan, this Plan does not obligate or in any way make the Fund liable to make any payment whatsoever to any person or
entity other than directly to the Distributor. The Distributor has no obligation to pay any Service Fees or Distribution Assistance Fees to
any Recipient if the Distributor has not received payment of Service Fees or Distribution Assistance Fees from the Fund.
4. Selection and Nomination of Trustees. While this Plan is in effect, the selection and nomination of persons to be Trustees of the
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Fund who are not "interested persons" of the Fund ("Disinterested Trustees") shall be committed to the discretion of the incumbent
Disinterested Trustees. Nothing herein shall prevent the incumbent Disinterested Trustees from soliciting the views or the involvement of
others in such selection or nominations as long as the final decision on any such selection and nomination is approved by a majority of the
incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund shall provide written reports to the Fund's Board for its review,
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detailing the amount of all payments made under this Plan and the purpose for which the payments were made. The reports shall be provided
quarterly, and shall state whether all provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing and shall provide that: (i) such agreement may be
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terminated at any time, without payment of any penalty, by a vote of a majority of the Independent Trustees or by a vote of the holders of
a "majority" (as defined in the 1940 Act) of the Fund's outstanding Class B voting shares; (ii) such termination shall be on not more than
sixty days' written notice to any other party to the agreement; (iii) such agreement shall automatically terminate in the event of its
"assignment" (as defined in the 1940 Act); (iv) such agreement shall go into effect when approved by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose of voting on such agreement; and (v) such agreement shall, unless
terminated as herein provided, continue in effect from year to year only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Trustees cast in person at a meeting called for the purpose of voting on such
continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been approved by a vote of the Board and its Independent
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Trustees cast in person at a meeting called on October 11, 2001, for the purpose of voting on this Plan, and has been approved by the vote
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding Class B voting shares at a meeting held ______, 2002. Unless
terminated as hereinafter provided, it shall continue in effect until renewed by the Board in accordance with the Rule and thereafter from
year to year or as the Board may otherwise determine but only so long as such continuance is specifically approved at least annually by a
vote of the Board and its Independent Trustees cast in person at a meeting called for the purpose of voting on such continuance.
This Plan may not be amended to increase materially the amount of payments to be made under this Plan, without approval of the
Class B Shareholders at a meeting called for that purpose and all material amendments must be approved by a vote of the Board and of the
Independent Trustees.
This Plan may be terminated at any time by vote of a majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the 1940 Act) of the Fund's outstanding Class B voting shares. In the event of such termination, the Board and
its Independent Trustees shall determine whether the Distributor shall be entitled to payment from the Fund of all or a portion of the
Service Fee and/or the Asset-Based Sales Charge in respect of Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands that the obligations of the Fund under this Plan are
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not binding upon any Trustee or shareholder of the Fund personally, but bind only the Fund and the Fund's property. The Distributor
represents that it has notice of the provisions of the Declaration of Trust of the Fund disclaiming Trustee and shareholder liability for
acts or obligations of the Fund.
Oppenheimer Discovery Fund
By: ____________________________________
Name: _________________________________
Title: ___________________________________
OppenheimerFunds Distributor, Inc.
By: _____________________________________
Name: ___________________________________
Title: ____________________________________
The address of each nominee is 498 Seventh Avenue, New York, NY 10018.
2 If elected, each Trustee will serve for an indefinite term, until his or her resignation, death or removal.
3 The address of each Officer is 498 Seventh Avenue, New York, NY 10018 except for Mr. Wixted and Ms. Ives, whose address is 6803 S. Tucson
Way, Englewood, CO 80112-3924 .
4 Each Officer serves for an annual term or until his or her resignation, death or removal.