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:
/ / Preliminary proxy statement
/ X / 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.
May, 1994
Your vote counts...
Dear Oppenheimer Fund Class A Shareholder:
We have scheduled a shareholder meeting for June 20, 1994 to consider
and vote upon several important proposals for your Fund. A notice of the
meeting and a proxy statement detailing the proposals are enclosed. Your
Board of Trustees, which represents you in matters regarding your Fund,
has unanimously approved the proposals now being submitted to shareholders
for a vote.
How do you vote?
No matter how large or small your investment, your vote is important,
so please review the proxy statement carefully. To cast your vote, simply
mark, sign and date the enclosed ballot and return it in the postage-paid
envelope today.
What are the proposals?
Election of Trustees. The current members of the Board of Trustees have
been nominated to continue in office. A brief statement of each Trustee's
background is included for your information.
Ratification of Auditors. Your approval is required on the appointment
of the independent auditing firm that reviews the financial statements of
your Fund.
Approval of Amended Class A Service Plan. Under the Fund's current
service plan, the Fund reimburses its Distributor for the cost of
servicing and maintaining accounts which hold Class A shares purchased on
or after April 1, 1991. Approval of this proposal will permit the Fund
to reimburse the Distributor for the cost of servicing and maintaining
accounts which hold Class A shares, regardless of when the shares held in
the account were acquired.
If you have questions regarding the proposals, please contact your
financial advisor or call us at 1-800-525-7048.
Sincerely,
Jon S. Fossel
P.S. Casting your ballot is quick and easy. Your vote is important, so
please take a moment to complete the ballot.
May, 1994
Your vote counts...
Dear Oppenheimer Fund Class C Shareholder:
We have scheduled a shareholder meeting for June 20, 1994 to consider
and vote upon several important issues for your Fund. A notice of the
meeting and a proxy statement detailing the issues are enclosed. Your
Board of Trustees, which represents you in matters regarding your Fund,
has unanimously approved the proposal now being submitted to shareholders
for a vote.
How do you vote?
No matter how large or small your investment, your vote is important,
so please review the proxy statement carefully. To cast your vote, simply
mark, sign and date the enclosed ballot and return it in the postage-paid
envelope today.
What are the issues?
Election of Trustees. The current members of the Board of Trustees have
been nominated to continue in office. A brief statement of each Trustee's
background is included for your information.
Ratification of Auditors. Your approval is required on the appointment
of the independent auditing firm that reviews the financial statements of
your Fund.
If you have questions regarding this proxy, please contact your
financial advisor or call us at 1-800-525-7048.
Sincerely,
Jon S. Fossel
P.S. Casting your ballot is quick and easy. Your vote is important, so
please take a moment to complete the ballot.
Oppenheimer Fund
Proxy for Shareholders Meeting to be held June 20, 1994
Your Shareholder
vote is important!
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.
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 of 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.
Oppenheimer Fund
Proxy for Shareholders Meeting to be held June 20, 1994
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.
Please detach at preforation before mailing.
1. Election of Trustees
____ FOR all nominees listed ____ WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees listed
contrary below) below
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 the Fund's Amended Service Plan and Agreement for Class A
Shares (Proposal No. 2)
FOR____ AGAINST____ ABSTAIN____
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.
Date , 1994
(Month) (Day)
Signature(s)
Signature(s)
Please read both sides of this ballot.
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 the Fund's Amended 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 (Proposal No. 2);
(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.
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 Monday, 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 shareholders as of that date, and will be mailed
to shareholders who first acquired Fund shares 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 and/or by one or more proxy
soliciting firms; any expenses so incurred will also be borne by the Fund.
Brokers, banks and other fiduciaries may be requested 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 22,184,196.850 Class A shares and 16,506.343 Class
C 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 April 22, 1994, the
only persons known by the management of the Fund to own of record
beneficially 5% or more of the Fund's outstanding shares was Merrill Lynch
Pierce Fenner & Smith, 4800 Deer Lake Drive East, Jacksonville, Florida,
which owned 2,991.000 Class C shares; Charlotte Shipley, 124 Timothy
Place, Bridgewater, New Jersey, who owned 2,200.704 Class C shares; Ruble
L. Jeffers, 1012 Centerbrook Circle, Kingsport, Tennessee, who owned
2,679.241 Class C shares; and Jay E. Klompmaker, 705 Pinehurst Drive,
Chapel Hills, North Carolina, who owned 875.996 Class C shares;
representing 18.12%, 13.33%, 16.23% and 5.30%, respectively, of the Fund's
then-outstanding Class C shares.
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 shareholders 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 nominees 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.
The nominees 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 positions 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 officers of the Fund, as a group, beneficially
owned 8,891.141 shares in the aggregate, which is less than 1% of the
shares outstanding.
Shares
Beneficially
Name And Business Experience Owned as of
Other InformationDuring the Past Five Years April 22, 1994
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Leon Levy General Partner of Odyssey Partners, L.P. (investment0
first became a partnership); Chairman of Avatar Holdings, Inc. (real estate
Trustee in 1959 development).
Age: 68
Leo Cherne Chairman Emeritus of the International Rescue0
first became a Committee (philanthropic organization); formerly Executive
Trustee in 1982 Director of the Research Institute of America.
Age: 81
Edmund T. DelaneyAttorney-at-law; formerly a member of the Connecticut1,412.835
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 General0
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 LipsteinProfessor Emeritus of Marketing, Stern Graduate School of0
first became a Business Administration, New York University.
Trustee in 1974
Age: 71
Elizabeth B. MoynihanAuthor and architectural historian; a trustee of the0
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. RandallA director of Northeast Bancorp, Inc. (bank holding205.121
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 member0
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.0
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. RobbinsChase Manhattan Professor Emeritus of Financial7,273.185
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;0
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,0
first became a Inc. (design and sale of women's fashions).
Trustee in 1977
Age: 81
Clayton K. YeutterCounsel to Hogan & Hartson (a law firm); a director0
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.
- - ------------------------
* A nominee who is an "interested person" of the Fund or the Manager under the Investment Company Act.
Vote Required. The affirmative vote of a majority of the votes cast
by shareholders 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 the meetings held, 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 (subject to shareholder ratification);
(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, and 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 an annual fee varying from $585 to $4,935 for serving as a
Trustee, or as Chairman of the Board or a member of the committees of the
Board of Trustees. During the fiscal year ended June 30, 1993, Trustees'
fees and expenses paid by the Fund aggregated $18,929. 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. During the fiscal
year ended June 30, 1993, the Fund accrued $59,610 for its benefit
obligations under the plan.
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, 1993. KPMG 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 KPMG 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 financial interest in the operation of the Class A Service
Plan or any related agreements ("Independent Trustees"), approved 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. 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 current Class A Service Plan is the same. Each plan has the
effect of increasing the Fund's expenses by up to an annual rate of 0.25%
of the Fund's average net assets. Under the current 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 provided 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 during the
quarter of the aggregate net asset value of Fund shares owned by the
Recipient or its customers, computed as of the close of each business day.
However, no payment will 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, does 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.
The Board of Trustees has set the annual rate for assets sold on or after
April 1, 1991 at the maximum rate and has initially set the rate that will
apply to assets representing shares sold before April 1, 1991 at the
annual rate of 0.15%. 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 current Class A Service Plan, but by no more
than the annual rate, computed as stated above, of 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
1.18% of annual net assets to 1.28% 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.
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 current
Class A Service Plan and shall continue in effect until December 31, 1994
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 below under "vote required", 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 quarter of the Fund may not be paid from distribution fees
received from the Fund in subsequent fiscal quarters 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 current 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 Recipients a financial incentive in having the Fund shares
remain outstanding. Stabilizing or increasing Fund assets by encouraging
Recipients 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 current 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 permitting
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 current 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 Oppenheimer
Acquisition Corporation ("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 (the "Acquisition Date"). 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 Mr. 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. This collectively represented
74.1% of the outstanding common stock and 84.9% of the voting power of OAC
as of December 31, 1993. Certain officers and/or directors of the Manager
as a group held (i) 821,455 shares of the Class B voting stock,
representing 21.5% of the outstanding common stock and 12.6% of the voting
power, and (ii) options acquired without cash payment which, when they
become exercisable, allow the holders to purchase up to 706,150 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. The Agreement continues in effect from year
to year unless terminated, but only so long as such continuance is
approved annually in accordance with the Investment Company Act. At a
meeting held on December 9, 1993, the Fund's Board of Trustees, including
a majority of the Independent Trustees, approved the renewal of the
Agreement between the Manager and the Fund until December 31, 1994. At
the time of such approval, Messrs. Spiro and Galli were shareholders of
OAC, the parent of the Manager. 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 aggregate 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 $1,591,554 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
costs.
The Agreement contains no expense limitation. However, independently
of the Agreement, the Manager has undertaken that the total expenses of
the Fund in any fiscal year, exclusive of taxes, interest, brokerage
commissions, and/or service plan payments and extraordinary non-recurring
expenses such as litigation costs shall not exceed the most stringent
regulatory limitation on fund expenses applicable to the Fund. At
present, the most stringent 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 will be reduced so that at no
time will there be any accrued but unpaid liability under the above
expense limitation. The Manager reserves the right to amend or terminate
this expense limitation at any time.
The Agreement provides that in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard for its obligations
thereunder, the Manager shall not be liable for any loss sustained by
reason of any good faith error or omission on its part in connection with
any matter to which the Agreement relates. The Agreement permits the
Manager to act as investment adviser for any other person, firm or
corporation. Pursuant to a license from the Manager, the Fund may use the
name "Oppenheimer" in connection with its business. 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 most 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 that
provide brokerage and/or research services for the Fund and/or the other
accounts over which the Manager or its affiliates have investment
discretion and pay commissions to such brokers that 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, 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 factors, 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 general 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 retained $64,652.
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.
(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 the
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
constitute 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. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Fund under this Plan are not
binding upon any shareholder or Trustee 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 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
===========