SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
/ X / Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
OPPENHEIMER FUND
- ------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
OPPENHEIMER FUND
- ------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ X / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or
14a-6(j)(2).
/ / $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:
Shares of beneficial interest
(2) Aggregate number of securities to which transaction applies:
N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: 1
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing Party:
(4) Date Filed:
- --------------------
1 - Set forth the amount on which the filing fee is calculated and state
how it was determined.
Preliminary Copy
YOUR SHAREHOLDER VOTE IS IMPORTANT!
Your prompt response can save your Fund money.
Please vote, sign and mail your proxy ballot (this card) in the
enclosed postage-paid envelope today, no matter how many shares you own.
A majority of the Fund's shares must be represented in person or by proxy.
Please vote your proxy so your Fund can avoid the expense of another
mailing.
(Reverse side:)
Your prompt response can save your Fund the expense of another mailing.
Please mark your proxy on the reverse side, date and sign it, and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
Preliminary Copy: For the Information of the Securities and Exchange
Commission Only
OPPENHEIMER FUND
PROXY FOR SHAREHOLDERS MEETING TO BE HELD JUNE 20, 1994
The undersigned shareholder of Oppenheimer Fund (the "Fund"), does hereby
appoint Robert Bishop, George C. Bowen, Andrew J. Donohue and Scott
Farrar, and each of them, as attorneys-in-fact and proxies of the
undersigned, with full power of substitution, to attend the Meeting of
Shareholders the Fund to be held June 20, 1994, at 3410 South Galena
Street, Denver, Colorado at 2:00 P.M., Denver time, and at all
adjournments thereof, and to vote the shares held in the name of the
undersigned on the record date for said meeting for the election of
Trustees and on the proposals specified on the reverse side. Said
attorneys-in-fact shall vote in accordance with their best judgment as to
any other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES, WHICH RECOMMENDS A
VOTE FOR THE ELECTION OF ALL NOMINEES FOR TRUSTEE AND FOR EACH PROPOSAL
ON THE REVERSE SIDE. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED ON THE REVERSE SIDE OR FOR IF NO CHOICE IS INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
1. Election of Trustees
- FOR all nominees listed (except as - WITHHOLD AUTHORITY
as marked to the contrary below) to vote for all nominees
listed
L. Levy L. Cherne E. Delaney R. Galli B. Lipstein
(A) (B) (C) (D) (E)
E. Moynihan K. Randall E. Regan R. Reynolds S. Robbins
(F) (G) (H) (I) (J)
D. Spiro P. Trigere C. Yeutter
(K) (L) (M)
INSTRUCTION: To withhold authority to vote for any individual nominee,
line out that nominee's name above.
2. Ratification of selection of KPMG Peat Marwick as independent auditors
(Proposal No. 1)
FOR - AGAINST - ABSTAIN -
3.
Approval of Service Plan and Agreement (Proposal No. 2)
FOR - AGAINST - ABSTAIN -
Dated: ___________________________, 1994
(Month) (Day)
_____________________________
Signature(s)
_____________________________
Signature(s)
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership or
other entity, a duly authorized individual must sign on its behalf and
give title.
Preliminary Copy
OPPENHEIMER FUND
Two World Trade Center, 34th Floor, New York, New York 10048-0203
NOTICE OF MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 1994
To The Shareholders of Oppenheimer Fund:
Notice is hereby given that a Meeting of the Shareholders of Oppenheimer
Fund (the "Fund") will be held at 3410 South Galena Street, Denver,
Colorado 80231 at 2:00 P.M., Denver time, on Monday, June 20, 1994, or any
adjournments thereof (the "Meeting"), for the following purposes:
(a)
To elect thirteen Trustees to hold office until the next meeting of
shareholders called for the purpose of electing Trustees or until
their successors are elected and shall qualify;
(b)
To ratify the selection of KPMG Peat Marwick as the independent
certified public accountants and auditors of the Fund for the fiscal
year beginning July 1, 1993 (Proposal No. 1);
(c)
To approve a new Service Plan and Agreement for Class A shares of the
Fund pursuant to Rule 12b-1 of the Investment Company Act of 1940,
under which the Fund may make certain continuing payments to the
Distributor for rendering assistance in the distribution of the Fund's
Class A shares.
(d)
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 22, 1994 are
entitled to vote at the Meeting. The election of Trustees and the
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 SIGN, DATE AND MAIL THE ENCLOSED PROXY
PROMPTLY.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
May 6, 1994
Shareholders who do not expect to attend the Meeting are requested to
indicate voting instructions on the enclosed proxy and to date, sign and
return it in the accompanying postage-paid envelope. To avoid
unnecessary duplicate mailings, we ask your cooperation in promptly
mailing your proxy no matter how large or small your holdings may be.
400
OPPENHEIMER FUND
Two World Trade Center, 34th Floor, New York, New York 10048-0203
PROXY STATEMENT
MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 1994
This Proxy Statement is furnished to the shareholders of Oppenheimer Fund
(the "Fund") in connection with the solicitation by the Fund's Board of
Trustees of proxies to be used at a meeting (the "Meeting") of
Shareholders to be held at 3410 South Galena Street, Denver, Colorado
80231 at 2:00 P.M., Denver time, on June 20, 1994, or any adjournments
thereof. It is expected that the mailing of this Proxy Statement will be
made on or about May 6, 1994. Financial statements covering the
operations of the Fund for the fiscal year ended June 30, 1993 were mailed
to all persons who were shareholders of record on June 30, 1993, and to
persons who became shareholders between June 30, 1993 (the record date for
the mailing of that Annual Report) and the record date for this Meeting
at the same time this Proxy Statement is mailed.
The enclosed proxy, if properly executed and returned, will be voted (or
counted as an abstention or withheld from voting) in accordance with the
choices specified thereon, and will be included in determining whether
there is a quorum to conduct the Meeting. The proxy will be voted in
favor of the nominees for Trustee named in this Proxy Statement unless a
choice is indicated to withhold authority to vote for all listed nominees
or any individual nominee. The proxy will be voted in favor of each
Proposal unless a choice is indicated to vote against or to abstain from
voting on that Proposal. Shares owned of record by broker-dealers for the
benefit of their customers ("street account shares") will be voted by the
broker-dealer based on instructions received from its customers. If no
instructions are received, the broker-dealer may (if permitted under
applicable stock exchange rules), vote such shares as record holder for
the election of Trustees and on the Proposals in the same proportion as
that broker-dealer votes street account shares for which voting
instructions were received in time to be voted. If a shareholder executes
and returns a proxy but fails to indicate how the votes should be cast,
the proxy will be voted in favor of the election of each of the nominees
named herein for Trustee and in favor of each Proposal.
The proxy may be revoked at any time prior to the voting by (1) writing
to the Secretary of the Fund at Two World Trade Center, 34th Floor, New
York, New York 10048-0203; (2) attending the Meeting and voting in person;
or (3) signing and returning a new proxy (if returned and received in time
to be voted).
The cost of the preparation and distribution of these proxy materials is
an expense of the Fund. In addition to the solicitation of proxies by
mail, proxies may be solicited by officers or employees of the Fund's
investment adviser, Oppenheimer Management Corporation (the "Manager"),
personally or by telephone or telegraph; any expenses so incurred will
also be borne by the Fund. 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 out-of-pocket expenses.
Shares Outstanding and Entitled to Vote. As of April 22, 1994, the record
date, there were ______________ shares of the Fund issued and outstanding.
All shares of the Fund have equal voting rights as to the election of
Trustees and each Proposal described herein, and the holders of shares are
entitled to one vote for each share (and a fractional vote for a
fractional share) held of record at the close of business on the record
date. As of the record date, no person owned of record or was known by
the management of the Fund to be the beneficial owner of 5% or more of the
outstanding shares of the Fund.
ELECTION OF TRUSTEES
At the Meeting, thirteen Trustees are to be elected to hold office until
the next meeting of shareholders called for the purpose of electing
Trustees or until their successors shall be duly elected and shall have
qualified. The persons named as attorneys-in-fact in the enclosed proxy
have advised the Fund that unless a proxy instructs them to withhold
authority to vote for all listed nominees or any individual nominee, all
validly executed proxies will be voted by them for the election of the
nominees named below as Trustees of the Fund. As a Massachusetts business
trust, the Fund does not contemplate holding annual shareholder meetings
for the purpose of electing Trustees. Thus, the Trustees will be elected
for indefinite terms until a shareholder meeting is called for the purpose
of voting for Trustees and until their successors are elected and shall
qualify.
Each of the nominees is presently a Trustee and has agreed to be nominated
and, if elected, to continue to serve as a Trustee of the Fund. All of
the Trustees except Mr. Galli and Mr. Regan have been elected by
shareholders of the Fund. Each of the Trustees is also a Trustee or
Director of Oppenheimer Global Growth & Income Fund, Oppenheimer Global
Fund, Oppenheimer Special Fund, Oppenheimer Time Fund, Oppenheimer Target
Fund, Oppenheimer Tax-Free Bond Fund, Oppenheimer Gold & Special Minerals
Fund, Oppenheimer New York Tax-Exempt Fund, Oppenheimer Multi-State Tax-
Exempt Trust, Oppenheimer California Tax-Exempt Fund, Oppenheimer Global
Bio-Tech Fund, Oppenheimer Global Environment Fund, Oppenheimer Asset
Allocation Fund, Oppenheimer Mortgage Income Fund, Oppenheimer Discovery
Fund, Oppenheimer Money Market Fund, Inc., Oppenheimer U.S. Government
Trust, Oppenheimer Multi-Sector Income Trust and Oppenheimer Multi-
Government Trust (together with the Fund, the "New York
OppenheimerFunds"). Mr. Spiro is President of the Fund and each of the
other New York OppenheimerFunds.
Each nominee indicated below by an asterisk is an "interested person" (as
that term is defined in the Investment Company Act of 1940, as amended,
hereinafter referred to as the "Investment Company Act") of the Fund due
to the connections indicated with the Manager or its affiliates. The year
given below indicates when the nominee first became a Trustee or Director
of any of the New York OppenheimerFunds without a break in service. The
beneficial ownership of shares listed below includes voting and investment
control, unless otherwise indicated below. If any of the nominees should
be unable to accept nomination or election, it is the intention of the
persons named as attorneys-in-fact in the enclosed proxy to vote such
proxy for the election of such other person or persons as the Board of
Trustees may, in its discretion, recommend. As of April 22, 1994, the
Trustees and the officers of the Fund, as a group, beneficially owned
__________ shares in the aggregate, which is less than 1% of the shares
outstanding.
Shares
Beneficially
Name And Owned as of
Other Information Business Experience During the Past Five Years April 22, 1994
- ----------------- ---------------------------------------------- --------------
Leon Levy General Partner of Odyssey Partners, L.P. (investment
first became a partnership); Chairman of Avatar Holdings, Inc. (real estate
Trustee in 1959 development).
Age: 68
Leo Cherne Chairman Emeritus of the International Rescue
first became a Committee (philanthropic organization); formerly Executive
Trustee in 1982 Director of the Research Institute of America.
Age: 81
Edmund T. Delaney Attorney-at-law; formerly a member of the Connecticut
first became a State Historical Commission and Counsel to Copp,
Trustee in 1959 Berall & Hempstead (a law firm).
Age: 80
Robert G. Galli* Vice Chairman of the Manager; Vice President and General
first became a Counsel of Oppenheimer Acquisition Corp. ("OAC"), the
Trustee in 1993 Manager's parent holding company; formerly he held the
Age: 60 following positions: a director of the Manager and
Oppenheimer Funds Distributor, Inc. (the "Distributor"), Vice
President and a director of HarbourView Asset Management
Corporation ("HarbourView") and Centennial Asset Management
Corporation ("Centennial"), investment adviser subsidiaries of
the Manager, a director of Shareholder Financial Services, Inc.
("SFSI") and Shareholder Services, Inc. ("SSI"), transfer agent
subsidiaries of the Manager, an officer of other OppenheimerFunds
and Executive Vice President and General Counsel of the Manager
and the Distributor.
Benjamin Lipstein Professor Emeritus of Marketing, Stern Graduate School of
first became a Business Administration, New York University.
Trustee in 1974
Age: 71
Elizabeth B. Moynihan Author and architectural historian; a trustee of the
first became a American Schools of Oriental Research, the Institute
Trustee in 1992 of Fine Arts (New York University), the Freer Gallery
Age: 64 of Art (Smithsonian Institution) and the Preservation
League of New York State; a member of the Indo-U.S.
Sub-Commission on Education and Culture.
Kenneth A. Randall A director of Northeast Bancorp, Inc. (bank holding
first became a company), Dominion Resources, Inc. (electric utility
Trustee in 1980 holding company), and Kemper Corporation (insurance
Age: 66 and financial services company); formerly Chairman of the
Board of ICL Inc. (information systems).
Edward V. Regan President of Jerome Levy Economics Institute; a member
first became a of the U.S. Competitiveness Policy Council; a director
Trustee in 1993 of GranCare, Inc. (health care provider); formerly
Age: 63 New York State Comptroller and a trustee, New York State
and Local Retirement Fund.
Russell S. Reynolds, Jr. Founder and Chairman of Russell Reynolds Associates, Inc.
first became a (executive recruiting); a trustee of Mystic Seaport
Trustee in 1989 Museum, International House, Greenwich Historical
Age: 62 Society and Greenwich Hospital.
Sidney M. Robbins Chase Manhattan Professor Emeritus of Financial
first became a Institutions, Graduate School of Business, Columbia
Trustee in 1963 University; Visiting Professor of Finance, University
Age: 82 of Hawaii; a director of The Korea Fund, Inc. and The
Malaysia Fund, Inc. (closed-end investment companies);
member of the Board of Advisors of Olympus Private
Placement Fund, L.P.; Professor Emeritus of Finance,
Adelphi University.
Donald W. Spiro* Chairman Emeritus and a director of the Manager;
first became a formerly Chairman of the Manager and the Distributor.
Trustee in 1985
Age: 68
Pauline Trigere Chairman and Chief Executive Officer of Trigere,
first became a Inc. (design and sale of women's fashions).
Trustee in 1977
Age: 81
Clayton K. Yeutter Counsel to Hogan & Hartson (a law firm); a director
first became a of B.A.T. Industries, Ltd. (tobacco and financial
Trustee in 1993 services), Caterpillar, Inc. (machinery), ConAgra,
Age: 63 Inc. (food and agricultural products), FMC Corp.
(chemicals and machinery), Lindsay Manufacturing Co. and
Texas Instruments, Inc. (electronics); formerly (in
descending chronological order) Deputy Chairman, Bush/Quayle
Presidential Campaign, Counsellor to the President (Bush)
for Domestic Policy, Chairman of the Republican National
Committee, Secretary of the U.S. Department of Agriculture,
and U.S. Trade Representative, Executive Office of the President.
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* A nominee who is an "interested person" of the Fund under the Investment
Company Act.
Vote Required. The affirmative vote of a plurality of the votes cast by
holders of voting securities of the Fund is required for the election of
each nominee for Trustee. The Board of Trustees recommends a vote for the
election of each nominee.
Functions of the Board of Trustees. The primary responsibility for the
management of the Fund rests with the Board of Trustees. The Trustees
meet regularly to review the activities of the Fund and of the Manager,
which is responsible for the Fund's day-to-day operations. Six meetings
of the Trustees were held in the fiscal year ended June 30, 1993. Each
of the Trustees was present for at least 75% of those meetings for which
he or she was a Trustee, except for Mr. Leo Cherne who was present at four
of the meetings. The Trustees of the Fund have appointed an Audit
Committee, comprised of Messrs. Randall (Chairman), Robbins and Cherne,
none of whom is an "interested person" (as that term is defined in the
Investment Company Act) of the Manager or the Fund. The functions of the
Audit Committee include (i) making recommendations to the Board concerning
the selection of independent auditors for the Fund; (ii) reviewing the
methods, scope and results of audits and the fees charged; (iii) reviewing
the adequacy of the Fund's internal accounting procedures and controls;
and (iv) establishing a separate line of communication between the Fund's
independent auditors and its independent Trustees. The Audit Committee
met four times during the fiscal year ended June 30, 1993. All members
attended at least 75% of the meetings held during that period, except Mr.
Cherne who was present at two of the meetings. The Board of Trustees does
not have a standing nominating or compensation committee.
Remuneration of Trustees and Officers. Mr. Spiro, the other officers of
the Fund listed below and Mr. Galli are affiliated with the Manager and
receive no salary or fee from the Fund. The Fund currently pays each
other Trustee a fee varying from $______ to $______ for serving as a
Trustee, or as Chairman or a member of the committees of the Board of
Trustees. During the fiscal year ended June 30, 1993, Trustees' fees and
expenses aggregated $_______. In addition, the Fund has adopted a
retirement plan that provides for payment to a retired Independent Trustee
of up to 80% of the average compensation paid during that Trustee's five
years of service in which the highest compensation was received. A
Trustee must serve in that capacity for any of the New York
OppenheimerFunds for at least 15 years to be eligible for the maximum
payment. No Trustee has retired since the adoption of the plan and no
payments have been made by the Fund under the plan. In the fiscal year
ended June 30, 1993, the Fund accrued $______ for its benefit obligations
under the plan, resulting in an accumulated liability of $______ at June
30, 1993.
Officers of the Fund. Each officer of the Fund is elected by the Trustees
to serve an indefinite term. 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. Bishop, Bowen,
Donohue, Farrar and Zack serve in a similar capacity with the other New
York OppenheimerFunds listed above.
Richard H. Rubinstein, Vice President and Portfolio Manager; Age: 45.
Vice President of the Manager; an officer of other OppenheimerFunds;
formerly Vice President and Portfolio Manager/Security Analyst for
Oppenheimer Capital Corp., an investment adviser.
Andrew J. Donohue, Secretary; Age: 43
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other OppenheimerFunds; formerly Senior Vice
President and General Counsel of the Manager and the Distributor; Partner
in, Kraft & McManimon (a law firm); an officer of First Investors
Corporation (a broker-dealer) and First Investors Management Company, Inc.
(broker-dealer and investment adviser); director and an officer of First
Investors Family of Funds and First Investors Life Insurance Company.
George C. Bowen, Treasurer; Age 57.
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice
President, Treasurer and Secretary of SSI and SFSI; an officer of other
OppenheimerFunds; formerly Senior Vice President/Comptroller and Secretary
of Oppenheimer Asset Management Corporation, an investment adviser that
was a subsidiary of the Manager.
Robert G. Zack, Assistant Secretary; Age 45.
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other OppenheimerFunds.
Robert Bishop, Assistant Treasurer; Age: 35.
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; previously a Fund Controller for the Manager,
prior to which he was an Accountant for Resolution Trust Corporation and
previously an Accountant and Commissions Supervisor for Stuart James
Company, Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age: 28.
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; previously a Fund Controller for the Manager,
prior to which he was an International Mutual Fund Supervisor for Brown
Brothers Harriman Co., a bank, and previously a Senior Fund Accountant for
State Street Bank & Trust Company, before which he was a sales
representative for Central Colorado Planning.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(Proposal No. 1)
The Investment Company Act requires that independent certified public
accountants and auditors ("auditors") be selected annually by the Board
of Trustees and that such selection be ratified by the shareholders at the
next-convened annual meeting of the Fund, if one is held. The Board of
Trustees of the Fund, including a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act) of the
Fund or the Manager, at a meeting held August 19, 1993, selected KPMG Peat
Marwick ("KPMG") as auditors of the Fund for the fiscal year beginning
July 1, 1992. Peat Marwick also serves as auditors for certain other
funds for which the Manager acts as investment adviser. At the Meeting,
a resolution will be presented for the shareholders' vote to ratify the
selection of KPMG as auditors. Representatives of KPMG are not expected
to be present at the Meeting but will be available should any matter arise
requiring their presence. The Board of Trustees recommends approval of
the selection of Peat Marwick as auditors of the Fund.
APPROVAL OF AN AMENDMENT TO THE FUND'S 12B-1 SERVICE PLAN
FOR CLASS A SHARES
(Only Class A shareholders may vote on this Proposal)
(Proposal No. 2)
On June 10, 1993, the Fund adopted a Service Plan and Agreement for Class
A Shares (the "Class A Service Plan") pursuant to Rule 12b-1 of the
Investment Company Act under which the Fund may make certain payments to
Oppenheimer Funds Distributor, Inc., formerly Oppenheimer Fund Management,
Inc., (the "Distributor") for a portion of its costs incurred in rendering
assistance in the distribution of Class A shares of the Fund acquired on
or after April 1, 1991.
At a meeting held February 10, 1994, the Fund's Board of Trustees,
including a majority of the Trustees who are not "interested persons" (as
defined in the Investment Company Act) of the Fund and who have no direct
or indirect interest in the operation of the Class A Service Plan
("Independent Trustees"), adopted an amendment to the Fund's Class A
Service Plan that would allow payments to be made with respect to all Fund
shares, including those acquired prior to April 1, 1991. The Board
determined to recommend the amended Class A Service Plan and Agreement
("the "Amended Class A Plan") for approval by the shareholders.
The Board determined to recommend the Proposed 12b-1 Plan for approval by
the Class A shareholders. A copy of the Proposed 12b-1 Plan is attached
as Exhibit A to this proxy statement.
The rate of the fee payable under both the Amended Class A Service Plan
and the Class A Service Plan is the same. Each plan has the effect of
increasing the Fund's expenses by up to 0.25% of the Fund's average net
assets. Under the Class A Service Plan, the Fund may make payments to the
Distributor for a portion of its costs incurred in rendering assistance
in the distribution of shares of the Fund acquired on or after April 1,
1991. Under the Amended Class A Plan, the Fund may make payments to the
Distributor for costs incurred in connection with the personal service and
maintenance of shareholder accounts regardless of when the shares held in
the accounts were acquired.
Description of the Amended Class A Plan. Under the Amended Class A Plan,
the Fund will reimburse the Distributor quarterly for all or a portion of
its costs incurred in connection with the service and maintenance of
shareholder accounts that hold Class A Shares of the Fund. The
Distributor will be reimbursed for quarterly payments made to certain
dealers, brokers, banks or other financial institutions (each is referred
to as a "Recipient") that have incurred costs in connection with the
personal service and maintenance of shareholder accounts. Such services
may include but are not limited to answering routine inquiries from the
Recipient's customers concerning the Fund, providing such customers with
information on their investment in shares, assisting in the establishment
and maintenance of accounts or sub-accounts in the Fund, making the Fund's
investment plans and dividend payment options available, and providing
such other information and customer liaison services and the maintenance
of accounts as the Distributor or the Fund may reasonably request.
The Amended Class A Plan provides that within 45 days of the end of each
calendar quarter, the Distributor shall pay each Recipient a fee for its
services at a rate to be determined from time to time by the Board, but
not to exceed 0.0625% (0.25% annually) of the average net asset value of
Fund shares owned by the Recipient or its customers. However, no payment
would be made to a Recipient in any quarter if the aggregate average value
of all Fund shares held by the Recipient for itself and its customers, did
not exceed a minimum amount to be determined from time to time by the
Funds' Board of Trustees and its Independent Trustees. The Board has not
established any minimum amount. Initially, the Board of Trustees has set
the rate for assets sold on or after April 1, 1991 at the maximum rate and
it is anticipated that a reduced rate will apply to assets representing
shares sold before April 1, 1991. However, the Board may increase the
rate for assets sold before April 1, 1991, but in no event greater than
the maximum amount. A Recipient may be affiliated with the Distributor.
The Amended Class A Plan would permit the Distributor and the Manager to
make additional distribution payments to Recipients from their own
resources at no cost to the Fund. The Distributor and the Manager may,
in their sole discretion, increase or decrease the amount of payments they
make to Recipients from their own assets.
If approved at this Meeting and implemented, the Amended Class A Plan
would have the effect of increasing the Fund's expenses from what they
otherwise would be under the Class A Service Plan, but by no more than
0.25% of the average annual net asset value of shares acquired before
April 1, 1991. It is estimated that the Fund's total expense ratio would
have increased from 0.12% of annual net assets to 0.13% of annual net
assets based on the Fund's actual annualized expenses for the six month
period ended December 31, 1993 had the proposed Amended Class A Plan been
in effect. As the proportion of Fund shares purchased before April 1,
1991 to outstanding Fund shares decreases, the actual incremental
expenses, on a percentage basis, created by Amended Class A Plan payments
over Class A Service Plan payments will decrease.
While the Amended Class A Plan is in effect, the Treasurer of the Fund
shall provide a written report to the Fund's Board of Trustees at least
quarterly for its review as to the amount of all payments made pursuant
to the Amended Class A Plan, and the purposes for which the payments were
made and, in the case of payments to Recipients, the identity of each
Recipient. The Amended Class A Plan further 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 is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of others in
such selection and nomination if the final decision on any such selection
or nomination is approved by a majority of the Independent Trustees.
If approved, the Amended Class A Plan (unless terminated as indicated
below) shall take effect as of July 1, 1994, replacing the Fund's Class
A Service Plan and shall continue in effect for one year from its
effective date and from year to year thereafter only as 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. The Amended
Class A Plan may be terminated at any time by the vote of a majority of
the Independent Trustees or by the vote of the holders of a "majority" (as
defined in the Act) of the outstanding shares of the Fund. The Amended
Class A Plan may not be amended to increase materially the amount of
payments to be made, unless such amendment is approved by shareholders in
the manner described above, and all material amendments must be approved
by a vote of the Board of the Fund, including a majority of the
Independent Trustees, cast in person at a meeting called for that purpose.
Any expenses accrued under the Amended Class A Plan by the Distributor in
one fiscal year of the Fund may not be paid from distribution fees
received from the Fund in subsequent fiscal years of the Fund. Thus, if
the Amended Class A Plan were terminated, no amounts (other than amounts
accrued prior to termination but not yet paid) would be owed by the Fund
to the Distributor. In addition, Class A Plan fees received from the Fund
would not be used to pay any interest expense, carrying charges or other
financial costs, or allocation of overhead of the Distributor.
Analysis of the Proposed Amended Class A Plan by the Board of Trustees.
In considering whether to recommend the Amended Class A Plan for approval,
the Board requested and evaluated information it deemed necessary to make
an informed determination. The Manager has represented to the Board that,
in its opinion, it would be injurious to the Fund and result in increased
redemption of shares of the Fund if the Class A Service Plan was not
amended. The Manager believed that providing continuing payments to
dealers for services provided to Fund shareholders in connection with all
shares could help reduce redemptions of Fund shares by giving dealers a
financial incentive in having the Fund shares remain outstanding.
Stabilizing or increasing Fund assets by encouraging dealers to maintain
accounts in the Fund can benefit the Fund and its shareholders by
maintaining or reducing per-share operating expenses and providing a more
stable cash flow for investment management purposes. The Board therefore
deemed it in the best interest of the Fund and its shareholders to amend
the Class A Service Plan as described. The Board was advised that many
brokers, dealers and other financial institutions currently provide
services to customers who own shares of the Fund acquired before April 1,
1991 for which they receive no compensation from the Fund. The Manager
further advised the Board that, especially in light of the amendments to
the NASD's Rules of Fair Practice recharacterizing certain payments as
compensation for continuing service, Recipients have complained that it
is inequitable to compensate Recipients for providing services for some
shares of the Fund (i.e., those sold on or after April 1, 1991) but not
for others.
Vote Required. Under the Investment Company Act, an affirmative vote of
the holders of a "majority," as defined in the Investment Company Act, of
the voting securities of the Fund is required for approval of this
Proposal. Such "majority" vote is defined in the Investment Company Act
as the vote of the holders of the lesser of: (i) 67% or more of the voting
securities present or represented by proxy at the shareholders meeting,
if the holders of more than 50% of the outstanding voting securities are
present or represented by proxy, or (ii) more than 50% of the outstanding
voting securities. If the Proposal is not approved, the Fund's Class A
Service Plan will continue to apply only to shares acquired on or after
April 1, 1991. The Board of Trustees recommends a vote in favor of
approving this Proposal.
ADDITIONAL INFORMATION
The Manager. Subject to the authority of the Board of Trustees, the
Manager is responsible for the day-to-day management of the Fund's
business. The Manager is a wholly-owned subsidiary of OAC, a holding
company controlled by Massachusetts Mutual Life Insurance Company
("MassMutual"). 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 Donald W. Spiro (5.24%) and MassMutual. MassMutual
has engaged in the life insurance business since 1851. It is the nation's
twelfth largest life insurance company by assets and has an A.M. Best Co.
rating of "A+".
The common stock of OAC is divided into three classes. At December 31,
1993, MassMutual held (i) all of the 2,160,000 shares of Class A voting
stock; (ii) 317,854 shares of the Class B voting stock; and (iii) 350,063
shares of Class C non-voting stock. That group includes persons who serve
as officers of the Fund and two of whom (Messrs. Donald W. Spiro and
Robert G. Galli) serve as Trustees 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 earnings 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, according to a schedule that will commence on
September 30, 1995. Since October 1, 1992, certain officers and/or
directors of the Manager (i) sold 295,354 shares of Class B OAC common
stock to MassMutual at the formula price, and (ii) surrendered to OAC
436,053 stock appreciation rights issued in tandem with the Class C OAC
options. Cash payments aggregating $32,729,119 have or will be made by
OAC or MassMutual to such persons (including Messrs. Spiro and Galli,
identified above) as follows: one-third of the amount due (i) within 30
days of the transaction, (ii) by the first anniversary following the
transaction (with interest), and (iii) by the second anniversary following
the transaction (with interest). On December 15, 1993, MassMutual
purchased its 350,063 shares of Class C OAC stock from OAC for
$17,751,718.
As part of the acquisition of the common stock of OAC, MassMutual also
purchased approximately $45 million of subordinated notes of a subsidiary
of OAC; the notes are now an obligation of the Manager. In addition to
the purchase of such notes, MassMutual holds warrants issued by OAC
exercisable over the life of the notes which will allow it to purchase
shares of Class C common stock representing approximately 15.4% of the
common stock of OAC on a fully diluted basis.
The Manager and its affiliates act as investment advisers to investment
companies having combined net assets of more than $27 billion as of
December 31, 1993, and having more than 1.8 million shareholder accounts.
A Consolidated Statement of Financial Condition of the Manager as of
December 31, 1993 is included in this Proxy Statement as Exhibit B.
The names and principal occupations of the executive officers and
directors of the Manager are as follows: Jon S. Fossel, Chief Executive
Officer and Chairman; Bridget A. Macaskill, President and Director; Donald
W. Spiro, Chairman Emeritus of the Board of Directors; Robert G. Galli and
James C. Swain, Vice Chairmen of the Manager; Samuel Freedman, Jr.,
Director; Robert Doll, Jr. and O. Leonard Darling, Executive Vice
Presidents; Tilghman G. Pitts III, Executive Vice President and Director;
Andrew J. Donohue, Executive Vice President and General Counsel; Kenneth
C. Eich, Executive Vice President and Chief Financial Officer; George C.
Bowen, Senior Vice President and Treasurer; Victor Babin, Loretta
McCarthy, Robert Patterson, Arthur Steinmetz, Ralph Stellmacher, Nancy
Sperte and Robert G. Zack, Senior Vice Presidents. The address of Messrs.
Bowen, Eich, Freedman and Swain is 3410 South Galena Street, Denver,
Colorado 80231. The address of all other officers is Two World Trade
Center, New York, New York 10048-0203, which is also the address of the
Manager and OAC.
Investment Advisory Agreement. The Fund has an Investment Advisory
Agreement with the Manager dated June 20, 1991 (the "Agreement"). The
Agreement was submitted to and approved by the Fund's shareholders at a
meeting held June 20, 1991. Under the Agreement, the Manager supervises
the investment operations of the Fund and the composition of its portfolio
and furnishes the Fund advice and recommendations with respect to
investments, investment policies and the purchase and sale of securities.
The management fee payable monthly to the Manager under the terms of the
Agreement is computed on the net assets of the Fund as of the close of
business each day at an annual rate of 0.75% on the first $200 million of
net assets; 0.72% on the next $200 million; 0.69% on the next $200
million; 0.66% on the next $200 million and 0.60% on average net assets
in excess of $800 million. During the fiscal year ended June 30, 1993,
the Fund paid a management fee of $_________ to the Manager.
The Agreement requires the Manager, at its expense, to provide the Fund
with adequate office space, facilities and equipment as well as to
provide, and supervise the activities of, all administrative and clerical
personnel required to provide effective administration for the Fund,
including the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and
composition of proxy materials and registration statements for the
continuous public sale of shares of the Fund. Expenses not expressly
assumed by the Manager under the Agreement or by the Distributor under the
General Distributor's Agreement are paid by the Fund. The Agreement lists
examples of expenses paid by the Fund, the major categories of which
relate to interest, taxes, brokerage commissions, fees to certain
Trustees, legal, bookkeeping and audit expenses, custodian and transfer
agent expenses, share certificate issuance costs, certain printing and
registration costs, and non-recurring expenses, including litigation.
The Agreement contains no expense limitation. However, independently of
the Agreement, the Manager has undertaken that the total expenses of the
Fund in any year (including the management fee but excluding taxes,
interest, brokerage commissions, distribution assistance payments,
extraordinary expenses such as litigation costs and the component of
custodial expenses which reflect the increased cost of the foreign
subcustodian relationship) shall not exceed (and the Manager undertakes
to reduce the Fund's management fee in the amount by which such expenses
shall exceed) the most stringent applicable state regulatory limitation.
For the purposes of that calculation, there shall be excluded any expenses
borne directly or indirectly which is permitted to be excluded from the
computation by such limitation. At present, that limitation is imposed
by California and limits expenses (with specified exclusions) to 2.5% of
the first $30 million of average annual net assets, 2.0% of the next $70
million of average annual net assets and 1.5% of average annual net assets
in excess of $100 million. The payment of the management fee at the end
of any month will be reduced so that there will not be any accrued but
unpaid liability under this expense limitation. The Manager reserves the
right to change or eliminate this expense limitation at any time.
The Agreement provides that so long as it has acted with due care and in
good faith, the Manager shall not be liable for any loss sustained by
reason of any investment, the adoption of any investment policy, or the
purchase, sale or retention of securities, irrespective of whether the
determinations of the Manager relative thereto shall have been based,
wholly or party, upon the investigation or research of any other
individual, firm or corporation believed by it to be reliable. However,
the Agreement does not protect the Manager against liability by reason of
its willful misfeasance, bad faith or gross negligence in the performance
of its duties or its reckless disregard of its obligations and duties
under the Agreement. The Agreement permits the Manager to act as
investment adviser for any other person, firm or corporation and to use
the name "Oppenheimer" in connection with other investment companies for
which it may act as investment adviser or general distributor. If the
Manager shall no longer act as investment adviser to the Fund, the right
of the Fund to use the name "Oppenheimer" as part of its name may be
withdrawn.
BROKERAGE
Provisions of the Investment Advisory Agreement. One of the duties of the
Manager under the Agreement is to arrange the portfolio transactions for
the Fund. In doing so, the Manager is authorized by the Agreement to
employ broker-dealers ("brokers"), including "affiliated" brokers as that
term is defined in the Investment Company Act, as may, in its best
judgment based on all relevant factors, implement the policy of the Fund
to obtain, at reasonable expense, the "best execution" (prompt and
reliable execution at the most favorable price obtainable) of such
transactions. The Manager need not seek competitive commission bidding
or base its selection on "posted" rates, but is expected to be aware of
the current rates of eligible brokers and to minimize the commissions paid
to the extent consistent with the provisions of the Agreement and the
interests and policies of the Fund as established by its Board of
Trustees.
Under the Agreement, the Manager is authorized to select brokers which
provide brokerage and/or research services for the Fund and/or the other
accounts over which the Manager or its affiliates have investment
discretion. The commissions paid to such brokers may be higher than
another qualified broker would have charged if a good faith determination
is made by the Manager that the commission is reasonable in relation to
the services provided. There is no formula under which any of the brokers
selected for the Fund's portfolio transactions are entitled to the
allocation of a particular amount of commissions. The Manager may
consider sales of shares of the Fund and of other investment companies
managed by the Manager or its affiliates as a factor in the selection of
brokers for the Fund's portfolio transactions.
Description of Brokerage Practices. Subject to the provisions of the
Agreement, when brokers are used for the Fund's portfolio transactions,
allocations of brokerage are made by portfolio managers under the
supervision of the executive officers of the Manager. Transactions in
securities other than those for which an exchange is the primary market
are generally done with principals or market makers. Brokerage
commissions are paid primarily for effecting transactions in listed
securities and otherwise only if it appears likely that a better price or
execution can be obtained. When the Fund engages in an option
transaction, ordinarily the same broker will be used for the purchase or
sale of the option and any transactions in the securities to which the
option relates. When possible, concurrent orders to purchase or sell the
same security by more than one of the accounts managed by the Manager or
its affiliates are combined. Transactions effected pursuant to such
combined orders are averaged as to price and allocated in accordance with
the purchase or sale orders actually placed for each account. Option
commissions may be relatively higher than those which would apply to
direct purchases and sales of portfolio securities.
Most purchases of money market instruments and debt obligations are
principal transactions at net prices. For those transactions, instead of
using a broker, the Fund normally deals directly with the selling or
purchasing principal or market maker unless it is determined that a better
price or execution can be obtained by using a broker. Purchases of these
securities from underwriters include a commission or concession paid by
the issuer to the underwriter, and purchases from dealers include a spread
between the bid and asked price. The Fund seeks to obtain prompt
execution of such orders at the most favorable net price.
The research services provided by a particular broker may be useful only
to one or more of the advisory accounts of the Manager and its affiliates,
and investment research received for the commissions of these other
accounts may be useful both to the Fund and one or more of such other
accounts. Such research, which may be supplied by a third party at the
instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid for in
commission dollars. The research services provided by brokers broaden the
scope and supplement the research activities of the Manager, by making
available additional views for consideration and comparisons, and enabling
the Manager to obtain market information for the valuation of securities
held in the Fund's portfolio or being considered for purchase. The Board
of Trustees, including the independent Trustees of the Fund, annually
reviews information furnished by the Manager as to the commissions paid
to brokers furnishing such services in an effort to ascertain that the
amount of such commissions was reasonably related to the value or benefit
of such services.
During the Fund's fiscal years ended June 30, 1991, 1992 and 1993, total
brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) were $784,558,
$510,684 and $399,597, respectively. During the fiscal year ended June
30, 1993, $153,580 was paid to brokers as commissions in return for
research services (including special research, statistical information and
execution); the aggregate dollar amount of those transactions was
$52,133,001. The transactions giving rise to those commissions were
allocated in accordance with the internal allocation procedures described
above.
Distribution Agreement. Oppenheimer Funds Distributor, Inc., a wholly-
owned subsidiary of the Manager, is the Distributor of the Fund's shares
under a General Distributors Agreement dated December 10, 1992, which is
subject to the same annual renewal requirements and termination provisions
as the Investment Advisory Agreement. For the fiscal year ended June 30,
1993, selling charges on the Fund's shares amounted to $153,936, of which
the Distributor and an affiliated broker-dealer retained $64,652 in the
aggregate and reallowed $______ to other dealers.
Service Contract. Oppenheimer Shareholder Services ("OSS"), a division
of the Manager, serves as the Fund's transfer agent and registrar pursuant
to a Service Contract under which it is reimbursed by the Fund for its
costs in providing those services to the Fund, including the cost of
rental of office space. Similar services are provided by OSS to certain
other mutual funds advised by the Manager. OSS received $_______
from the Fund during the fiscal year ended June 30, 1993. The costs
described for these services are charged to the Fund as operating expenses
and are borne ratably by all shareholders in proportion to their holdings
of shares of the Fund.
RECEIPT OF SHAREHOLDER PROPOSALS
The Fund is not required 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 (under special conditions described in the
Fund's Statement of Additional Information). Under the Commission's proxy
rules, shareholder proposals that meet certain conditions may be included
in the Fund's proxy statement and proxy for a particular meeting. Those
rules require that for future meetings, the shareholder must be a record
or beneficial owner of Fund shares with a value of at least $1,000 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 submitted for inclusion in the
Fund's proxy material for the next meeting after the Meeting to which this
Proxy Statement relates must be received by the Fund a reasonable time
before the solicitation is made. 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, since there are other requirements
under the proxy rules for such inclusion.
OTHER BUSINESS
Management of the Fund knows of no business other than the matters
specified above that will be presented at the Meeting. Since 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 may 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 to vote the proxy in accordance with their
judgment on such matters.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
May 6, 1994
Exhibit A
SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUND AND
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS A SHARES
SERVICE PLAN AND AGREEMENT dated the ____ day of _________________, by and
between OPPENHEIMER FUND (the "Fund") and OPPENHEIMER FUNDS DISTRIBUTOR,
INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written service plan for its Class
A Shares described in the Fund's registration statement as of the date
this Plan takes effect, contemplated by and to comply with Article III,
Section 26 of the Rules of Fair Practice of the National Association of
Securities Dealers, pursuant to which the Fund will reimburse the
Distributor for a portion of its costs incurred in connection with the
personal service and the maintenance of shareholder accounts ("Accounts")
that hold Class A Shares (the "Shares") of such series and class of the
Fund. The Fund may be deemed to be acting as distributor of securities
of which it is the issuer, pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act"), according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering services and for the maintenance of
Accounts. Such Recipients are intended to have certain rights as third-
party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
financial institution which: (i) has rendered services in
connection with the personal service and maintenance of Accounts;
(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 such service; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Fund's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in
any agreements relating to this Plan (the "Independent Trustees")
may remove any broker, dealer, bank or other institution as a
Recipient, whereupon such entity's rights as a third party
beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii)
such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "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 two entities would
otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books shall
be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance.
(a) Under the Plan, the Fund will make payments to the Distributor,
within forty-five (45) days of the end of each calendar quarter,
in the amount of the lesser of: (i) .0625% (.25% on an annual
basis) of the average during the calendar quarter of the
aggregate net asset value of the Shares computed as of the close
of each business day, or (ii) the Distributor's actual expenses
under the Plan for that quarter of the type approved by the
Board. The Distributor will use such fee received from the Fund
in its entirety to reimburse itself for payments to Recipients
and for its other expenditures and costs of the type approved by
the Board incurred in connection with the personal service and
maintenance of Accounts including, but not limited to, the
services described in the following paragraph. 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.
The services to be rendered by the Distributor and Recipients in
connection with the personal service and the maintenance of
Accounts may include, but shall not be limited to, the following:
answering routine inquiries from the Recipient's customers
concerning the Fund, providing such customers with information on
their investment in shares, assisting in the establishment and
maintenance of accounts or sub-accounts in the Fund, making the
Fund's investment plans and dividend payment options available,
and providing such other information and customer liaison
services and the maintenance of Accounts as the Distributor or
the Fund may reasonably request. It may be presumed that a
Recipient has provided services qualifying for compensation under
the Plan if it has Qualified Holdings of Shares to 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 services, 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 services in this regard. If
the Distributor still is not satisfied, it may take appropriate
steps to terminate the Recipient's status as such under the Plan,
whereupon such entity's rights as a third-party beneficiary
hereunder shall terminate.
Payments received by the Distributor from the Fund under the Plan
will not be used to pay any interest expense, carrying charge or
other financial costs, or allocation of overhead of the
Distributor, or for any other purpose other than for the payments
described in this Section 3. The amount payable to the
Distributor each quarter will be reduced to the extent that
reimbursement payments otherwise permissible under the Plan have
not been authorized by the Board of Trustees for that quarter.
Any unreimbursed expenses incurred for any quarter by the
Distributor may not be recovered in later periods.
(b) The Distributor shall make payments to any Recipient quarterly,
within forty-five (45) days of the end of each calendar quarter,
at a rate not to exceed .0625% (.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
of Qualified Holdings (excluding Shares acquired in
reorganizations with investment companies for which Oppenheimer
Management Corporation or an affiliate acts as investment adviser
and which have not adopted a distribution plan at the time of
reorganization with the Fund). However, no such payments shall
be made to any Recipient for any such 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, to be set from time to time by a majority of the Independent
Trustees. A majority of the Independent Trustees may at any time
or from time to time increase or decrease and thereafter adjust
the rate of fees to be paid to the Distributor or to any
Recipient, but not to exceed the rate set forth above, and/or
increase or decrease the number of shares constituting Minimum
Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings and the rate of payments
hereunder applicable to Recipients, and shall provide each such
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 shall
be sufficient notice.
(c) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") 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 OMC), from its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect,
the selection or replacement of Independent Trustees and the nomination
of those persons to be Trustees of the Fund who are not "interested
persons" of the Fund shall be committed to the discretion of the
Independent Trustees. Nothing herein shall prevent the Independent
Trustees from soliciting the views or the involvement of others in such
selection or nomination if the final decision on any such selection and
nomination is approved by a majority of the incumbent Independent
Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund
shall provide at least quarterly a written report to the Fund's Board for
its review, detailing the amount of all payments made pursuant to this
Plan, the identity of the Recipient of each such payment, and the purposes
for which the payments were made. The report shall state whether all
provisions of Section 3 of this Plan have been complied with. The
Distributor shall annually certify to the Board the amount of its total
expenses incurred that year with respect to the personal service and
maintenance of Accounts in conjunction with the Board's annual review of
the continuation of the Plan.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at
any time, without payment of any penalty, by 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 Shares of the Class,
on not more than sixty days written notice to any other party to the
agreement; (ii) such agreement shall automatically terminate in the event
of its "assignment" (as defined in the 1940 Act); (iii) it 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 (iv) it 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 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 Independent Trustees cast in person at a
meeting called on January 11, 1994 for the purpose of voting on this Plan,
and takes effect as of July 1, 1994. Unless terminated as hereinafter
provided, it shall continue in effect until December 31, 1994 and from
year to year thereafter or as the Board may otherwise determine only so
long as such continuance is specifically approved at least annually by the
Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance. 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 voting securities of the Class. This Plan may not be
amended to increase materially the amount of payments to be made without
approval of the Class A Shareholders, in the manner described above, and
all material amendments must be approved by a vote of the Board and of the
Independent Trustees.
8. Shareholder and Trustee Liability Disclaimer. The Distributor
understands and agrees that the obligations of the Fund under this Plan
are not binding upon any shareholder or Trustee of the Fund personally,
but 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 shareholder and Trustee liability for acts or obligations
of the Fund.
OPPENHEIMER FUND
By:--------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:--------------------------
Exhibit B
INDEPENDENT AUDITORS' REPORT
Oppenheimer Management Corporation:
We have audited the accompanying consolidated statement of financial
condition of Oppenheimer Management Corporation and subsidiaries as of
December 31, 1993. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of financial
condition is free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
statement of financial condition. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall statement of financial condition
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, such consolidated statement of financial condition
presents fairly, in all material respects, the financial position of
Oppenheimer Management Corporation and subsidiaries at December 31, 1993
in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Company changed
its method of accounting for income taxes to conform with Statement of
Financial Accounting Standards No. 109.
DELOITTE & TOUCHE
Denver, Colorado
February 16, 1994
OPPENHEIMER MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
ASSETS NOTES
CURRENT ASSETS:
Cash $ 31,940,116
Investments in money market
mutual funds 26,850,605
Investments in managed mutual funds 4,981,458
Investments in Zero Coupon U.S.
Treasuries Trust, at market 3,897,237
Accounts receivable:
Brokers and dealers 2 49,538,320
Managed mutual funds 2,3 11,433,524
Affiliated companies 100,495
Income taxes 13,902,237
Other 4,471,131
Other current assets 2,124,857
-----------
Total current assets 149,239,980
-------------
PROPERTY AND EQUIPMENT - Less
accumulated depreciation and
amortization of $8,169,031 8,896,837
-----------
OTHER ASSETS:
Intangible assets, net 1 113,445,572
Deferred sales commissions 54,452,051
Deferred charges 1,550,484
Other 1,607,387
----------
Total other assets 171,055,494
------------
TOTAL $329,192,311
LIABILITIES AND SHAREHOLDER'S EQUITY
NOTES
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $ 33,866,353
Subscriptions payable to managed
mutual funds 2 71,371,285
Payable to brokers and dealers 2 9,483,935
Current portion of long-term debt 5,6 17,463,094
------------
Total current liabilities 132,184,667
--------------
LONG-TERM LIABILITIES:
Deferred income taxes4 4 15,447,486
Senior debt 5 59,781,186
Subordinated notes 6 44,450,000
-----------
Total liabilities 251,863,339
-----------
COMMITMENTS 1,8
SHAREHOLDER'S EQUITY: 5,7
Preferred stock - nonvoting;
$10 par value; 392,461 shares
authorized; 25,141 shares
issued and outstanding 251,410
Common Stock - voting; $.10 par
value; 229,246 shares authorized;
179,658 shares issued and
outstanding 17,966
Additional paid-in capital 49,241,234
Retained earnings 27,818,362
------------
Total shareholder's equity 77,328,972
-------------
TOTAL $329,192,311
See notes to consolidated statement of financial condition.
OPPENHEIMER MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
1. THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Management Corporation (OMC) and its subsidiaries
(collectively, the "Company") are engaged in the business of
organizing, promoting, and managing registered investment
companies (hereafter referred to as "mutual funds").
OMC owns all the outstanding stock of Oppenheimer Funds
Distributor, Inc., Shareholder Services, Inc. (SSI), HarbourView
Asset Management Corporation, Centennial Asset Management
Corporation, Oppenheimer Partnership Holdings, Inc., and
Shareholder Financial Services, Inc. OMC is a wholly-owned
subsidiary of Oppenheimer Acquisition Corporation (OAC), which is
controlled by Massachusetts Mutual Life Insurance Company and
senior management of OMC.
Principles of Consolidation - The accompanying consolidated
statement of financial condition includes the accounts of OMC and
its subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.
Investments in Money Market Mutual Funds - The Company invests
available cash in money market mutual funds managed by the
Company. The investments are recorded at cost which equals
market.
Investments in Managed Mutual Funds - The Company owns shares of
stock in several of the mutual funds it manages. The shares are
purchased at their respective net asset values. The resulting
investments are recorded at cost which approximates market.
Investments in Zero Coupon U.S. Treasuries Trust - The Company is
the Sponsor for the Oppenheimer Zero Coupon U.S. Treasuries Trust
and has undertaken to maintain a secondary market for units in the
Trust. The investments are carried at market.
Property and Equipment - Property and equipment is recorded at
cost. Equipment depreciation expense is provided over the assets'
estimated useful lives on the straight-line method. Leasehold
improvements are amortized on the straight-line method over the
remaining terms of the lease agreements.
Intangible Assets - Intangible assets at December 31, 1993, are as
follows:
Less
Useful Accumulated Net
Lives Cost Amortization Book Value
----------- ----------- ------------ -----------
Debt Issuance Costs 7 years $ 5,535,450 $ (2,999,400) $ 2,536,050
Management Contracts 7 years 38,600,000 (18,840,667) 19,759,333
Goodwill 25 years 100,766,565 (11,671,455) 89,095,110
Other 4-10 years 4,385,906 (2,330,827) 2,055,079
----------- ------------ ----------
$149,287,921 $(35,842,349) $113,445,572
Deferred Sales Commissions - Sales commissions paid to brokers and
dealers in connection with sales of shares of certain mutual funds
are charged to deferred sales commissions and amortized over six
years. Early withdrawal charges received by the Company from
redeeming shareholders reduce unamortized deferred sales
commissions.
Stock Appreciation Rights - OAC has granted certain stock
appreciation rights relating to OAC's stock to certain employees of
OMC. During 1993, OMC recorded $21,603,294 relating to these stock
appreciation rights as a credit to additional paid-in capital.
Income Taxes - OAC files a consolidated federal income tax return
which includes the Company. Income taxes are recorded as if the
Company files on a separate return basis. During 1993 the Company
was required to adopt Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes. Statement 109 requires a
change from the deferred method of accounting for income taxes of
APB Opinion 11 to the asset and liability method of accounting for
income taxes. The asset and liability method prescribed by
Statement 109 results in deferred tax assets and liabilities being
recorded for the differences between the book and tax basis relating
to the Company's assets and liabilities.
The Company adopted Statement 109 in 1993 and has elected to restate
prior years beginning with the 1990 period. The effect of this
restatement on prior years has been reflected in retained earnings
as of December 31, 1992.
2. TRANSACTIONS WITH BROKERS AND DEALERS
The Company acts as general distributor for the sale and
distribution of shares of several mutual funds. In this capacity,
the Company records a receivable when it issues confirmations of all
accepted purchase orders to the originating brokers and dealers; at
the same time, the Company records a liability to the mutual funds
equal to the net asset value of all shares subject to such
confirmations. This liability must be paid to the mutual funds
within 11 business days unless the trade is canceled. If the
originating broker or dealer fails to make timely settlement of its
purchase order under the terms of its dealer agreement with the
Company, the Company may cancel the purchase order and, at the
Company's risk, hold responsible the originating broker or dealer.
When brokers and dealers place share redemption orders with a fund's
distributor, the Company records a receivable from the mutual funds
equal to the net asset value of all shares redeemed; at the same
time the Company records a corresponding liability payable to the
originating brokers.
3. RELATED PARTIES
The following is a summary of the significant balances, transactions
and relationships with affiliated companies and other related
parties as of December 31, 1993:
Officers and Directors of the Company; Shareholders of OAC - Several
officers and directors of the Company and shareholders of OAC are
also officers and directors or trustees of the mutual funds managed
and distributed by the Company.
Transfer Agents - SSI and Oppenheimer Shareholder Services (OSS), a
division of OMC, act as transfer and shareholder servicing agents
for the mutual funds managed by the Company and others. Amounts
charged to managed mutual funds are based on costs incurred on
behalf of the mutual funds pursuant to service agreements between
SSI or OSS and the mutual funds. SSI also acts as transfer agent
for certain mutual funds not managed by the Company, and amounts
charged to those funds are based on fees set by contracts with the
respective mutual funds.
The receivable from managed mutual funds includes $2,466,000
resulting from transfer agency fees and expenditures made on behalf
of the mutual funds at December 31, 1993.
4. INCOME TAXES
As discussed in note 1, the Company adopted Statement 109 in 1993
and has applied the provisions of the Statement retroactively to
1990. The principal effect of this change in accounting for income
taxes related to the remeasurement of the 1990 acquisition of
Maximum Holdings, Inc. and resulted in the recording of goodwill in
the amount of $13,800,000 and deferred taxes payable in the same
amount. In addition, retained earnings at December 31, 1992 was
increased by $2,001,702 to reflect the effects of the restatement as
of that date.
Deferred tax assets of $20,165,000 have been recorded in the
accompanying financial statements. These amounts primarily relate
to the benefit associated with certain state tax loss carryforwards
and compensation not deductible for tax purposes until paid. A
valuation allowance has not been recorded with respect to this
deferred tax asset. Deferred tax liabilities of $35,612,000 have
also been recorded. These amounts relate primarily to the current
deduction, for tax purposes, of deferred sales commissions which are
amortized over six years for book purposes and the difference in
book and tax basis relating to certain management contracts.
The Company has certain net operating loss carryforwards relating to
various states. If not used in the interim, these losses will
generally expire on December 31, 2008.
5. SENIOR DEBT
At December 31, 1993, the Company has outstanding $77.2 million of
Senior Debt borrowed from five banks. This amount is comprised of a
term loan of $23.7 million due September 30, 1997 and $53.5 million
outstanding on a $75 million revolving credit. The revolving credit
is subject to annual renewal, and, if not renewed, is repayable in
four annual installments. The debt bears interest at the Company's
election at the rate for Eurodollar deposits plus 1 1/2% or the
higher of the prime rate, plus 1/2% or the federal funds rate plus
1/2%. The credit agreement contains covenants requiring certain
minimum financial tests and restrictions on capital expenditures,
investments, indebtedness and dividends. At December 31, 1993, the
Company was in compliance with the terms of the credit agreement.
In addition, the banks have also received a pledge of the shares of
the Company's subsidiaries and guarantees of certain subsidiaries.
Borrowings under the credit agreement are collateralized by certain
assets of the Company.
The mandatory principal repayment schedule for the term loan is as
follows (000's):
1994 $ 10,000
1995 12,000
1996 1,700
--------
$ 23,700
========
The credit agreement has certain provisions whereby specified
amounts of excess cash flow on a semi-annual basis, as defined in
the agreement, must be applied to reduce the outstanding loan
balance. There are no prepayment penalties.
The Company has entered into interest rate swap agreements whereby
certain banks have agreed to pay the Company interest on a floating
rate (Eurodollar) basis and the Company has agreed to pay the banks
interest on a fixed rate basis. At December 31, 1993, the Company
has fixed an interest rate of 10.00% on $29,000,000 of the Senior
Debt. The interest rate swap agreements mature December 31, 1994.
The Company is exposed to credit loss in the event of non-
performance by the other parties to the interest rate swap
agreements; however, the Company does not anticipate non-performance
by the counterparties. Based on borrowing rates currently available
to the Company for senior and subordinated loans with similar terms,
maturities and prepayment options, the Company estimates that the
fair value of its interest bearing debt and the related interest
rate swap agreements is $124.6 million as compared to the carrying
amount shown on the balance sheet of $121.7 million.
6. SUBORDINATED NOTES
Pursuant to a Note Agreement as amended and restated as of November
24, 1992 (the Note Agreement), the Company issued to a group of
insurance companies owned by Massachusetts Mutual Life Insurance
Company, $44,450,000 face amount of Subordinated Notes (Notes) due
October 31, 2000. The Notes are subordinated to the Senior Debt
obligations, (see Note 5). The Notes require semi-annual interest
payments at a rate of 14% on October 31 and April 30 of each year.
The Company may make optional prepayments of Notes, with a penalty,
beginning November 1, 1995. The Note Agreement contains covenants
requiring certain minimum financial tests and restrictions on
capital expenditures, investments, indebtedness and dividends. At
December 31, 1993, the Company was in compliance with the terms of
the Note Agreement.
The mandatory principal repayment schedule for the Notes is as
follows (000's):
1998 $14,800
1999 14,825
2000 14,825
-------
$44,450
=======
7. SHAREHOLDER'S EQUITY
The following table summarizes the various series and classes of
preferred and common stocks that are authorized, issued and
outstanding as of December 31, 1993:
Shares
Issued and
Authorized Outstanding Amount
Preferred stock - non-voting;
$10 par value:
Series A - $15.00 non-cumulative,
non-convertible 1,350
Series B - $1.50 non-cumulative,
non-convertible 186,500
Series C - $1.00 cumulative,
non-convertible 12,150 12,150 $121,500
Series D - $.60 cumulative,
convertible:
Class A 161,523
Class B 30,938 12,991 129,910
--------- --------- ---------
Total 392,461 25,141 $251,410
======= ====== ========
Common stock - voting; $.10
par value:
Common shares 212,461 162,873 $ 16,287
Class A common shares 16,785 16,785 1,679
------------ ---------- -------
Total 229,246 179,658 $ 17,966
======= ======= ========
The outstanding preferred shares are redeemable, at the option of
the Company, at $10 per share plus all accrued and unpaid dividends.
In the event of dissolution or liquidation, the preferred
shareholders are entitled to receive these same amounts before any
distributions are made to the common shareholder. The Series D
Preferred Shares are convertible, at the option of the shareholder,
into common shares on a one-for-one basis.
8. COMMITMENTS
Leases - The Company rents office space and certain computer and
other equipment under leases expiring during the next 15 years. At
December 31, 1993, the aggregate minimum annual rentals under
noncancelable operating leases were as follows:
Years Ending
December 31
------------
1994 $ 6,237,568
1995 4,406,666
1996 3,513,503
1997 2,573,471
1998 2,223,802
Thereafter 10,660,288
-----------
$29,615,298
===========