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 GLOBAL GROWTH & INCOME FUND
- - ------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
OPPENHEIMER GLOBAL GROWTH & INCOME 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: 1
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing Party:
(4) Date Filed:
- - --------------------
1 - Set forth the amount on which the filing fee is calculated and state
how it was determined.
Preliminary Copy
Oppenheimer Global Growth & Proxy for Shareholders Meeting To
Income Fund Be Held June 20, 1994
Your Shareholder Your prompt response can save your
Vote Is Important! 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 GLOBAL GROWTH & INCOME FUND
PROXY FOR SHAREHOLDERS MEETING TO BE HELD JUNE 20, 1994
The undersigned shareholder of Oppenheimer Global Growth & Income 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 80231 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.
(over)
Your Shareholder Your prompt response can save your
Vote Is Important! 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.
1. Election of Trustees
____ FOR all nominees listed _____ WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary at left) listed at left
L. Cherne E. Delaney R. Galli L. Levy 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 at left.
2. Ratification of selection of KPMG Peat Marwick as independent auditors
(Proposal No. 1)
FOR ____ AGAINST ____ ABSTAIN ____
3. Approval of the Proposed Investment Advisory Agreement (Proposal No.
2)
FOR ____ AGAINST ____ ABSTAIN ____
Dated: _______________________, 1994
(Month) (Day)
____________________________
Signature(s)
____________________________
Signature(s)
Please read both sides of this ballot.
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 GLOBAL GROWTH & INCOME FUND
Two World Trade Center, New York, New York 10048-0203
NOTICE OF MEETING OF SHAREHOLDERS TO BE HELD
JUNE 20, 1994
To The Class A & Class C Shareholders of
Oppenheimer Global Growth & Income Fund
Notice is hereby given that a Meeting of the Class A and Class C
Shareholders of Oppenheimer Global Growth & Income Fund (the "Fund") will
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, 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 October 1, 1993 (Proposal No. 1);
(c) To approve an Investment Advisory Agreement between the Fund and
Oppenheimer Management Corporation (the "Manager") which would provide for
an increase in the management fee rates at certain asset levels (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 15, 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 MARK, SIGN, DATE AND MAIL THE ENCLOSED
PROXY PROMPTLY.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
May 13, 1994
- - -----------------------------------------------------------------------
Shareholders who do not expect to attend the meeting are asked 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 GLOBAL GROWTH & INCOME FUND
Two World Trade Center, New York, New York 10048-0203
PROXY STATEMENT
MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 1994
This statement is furnished to the Class A and Class C shareholders of
Oppenheimer Global Growth & Income 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 13, 1994. Financial
statements covering the operations of the Fund for the fiscal year ended
September 30, 1993 were mailed to all persons who were shareholders of
record on that date, and simultaneously with the mailing of this proxy
statement will be mailed to persons who became shareholders between
September 30, 1993 (the record date for the mailing of that Annual Report)
and the record date for this shareholder meeting.
The enclosed proxy, if properly executed and returned, will be voted (or
counted as an abstention) 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) as record holder vote such shares for the
election of Trustees and on the Proposals in the same proportion as that
broker-dealer votes street account shares for which 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, 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 printing and distributing 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, if any,
they will be reimbursed by the Fund for their out-of-pocket expenses.
Shares Outstanding and Entitled to Vote. As of April 15, 1994, the record
date, there were 8,669,276.730 shares of the Fund issued and outstanding,
consisting of 8,191,634.028 Class A shares and 477,642.702 Class C shares
issued and outstanding. All shares of the Fund have equal voting rights
as to the election of Trustees and as to 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 either class of the Fund,
except for the following: (i) Merrill Lynch Pierce Fenner & Smith, 4800
Deer Lake Drive, Jacksonville, FL 32246, 33,063.000 Class C shares
(6.92%); (ii) H.P. Midgett and K.L. Sheppard, TR, Charitable Remainder
Trust, 11595 Meridian Street, Carmel, IN, 37,173.963 Class C shares
(7.78%).
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
Trustees except Mr. Robert G. Galli have been elected by shareholders of
the Fund. Each of the Trustees is also a Trustee or Director of
Oppenheimer Fund, Oppenheimer Discovery Fund, Oppenheimer Global Bio-Tech
Fund, Oppenheimer Global Environment 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 California Tax-Exempt
Fund, Oppenheimer Multi-State Tax-Exempt Trust, Oppenheimer Asset
Allocation Fund, Oppenheimer Mortgage Income Fund, Oppenheimer Money
Market Fund, Inc., Oppenheimer U.S. Government Trust, Oppenheimer Multi-
Government Trust and Oppenheimer Multi-Sector Income 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, hereinafter
referred to as the "Investment Company Act") of the Fund due to the
positions indicated with the Manager or its affiliates, or other positions
described. 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 Class A 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 selected and nominated by disinterested Trustees as the Board
of Trustees may, in its discretion, recommend. As of April 15, 1994 the
Trustees and officers of the Fund as a group owned 6,049.636 Class A
shares of the Fund in the aggregate, which is less than 1% of the
outstanding shares of that class.
Shares
Beneficially
Name And Business Experience Owned as of
Other Information During the Past Five Years April 22,
1994
Leon Levy General Partner of Odyssey Partners, None
first became a L.P. (investment partnership); Chairman
Trustee in 1959 of Avatar Holdings, Inc. (real estate
Age: 68 development).
Leo Cherne Chairman Emeritus of the International None
first became a Rescue Committee (philanthropic organization);
Trustee in 1982 formerly Executive Director of the
Age: 81 Research Institute of America.
Edmund T. Delaney Attorney-at-law; formerly a member of None
first became a the Connecticut State Historical Commission
Trustee in 1959 and Counsel to Copp, Berall & Hempstead
Age: 80 (a law firm).
Robert G. Galli*
first became a Vice Chairman of the Manager; Vice None
Trustee in 1993 President and General Counsel of Oppenheimer
Age: 60 Acquisition Corp. ("OAC"), the Manager's
parent holding company; formerly he held the
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 None
first became a Graduate School of Business Administration,
Trustee in 1974 New York University.
Age: 71
Elizabeth B. Moynihan
first became a Author and architectural historian; a None
Trustee in 1992 trustee of the American Schools of
Age: 64 Oriental Research, the Institute of Fine
Arts (New York University), the Freer Gallery
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. 235.941
first became a bank holding company), Dominion Resources,
Trustee in 1980 Inc. (electric utility holding company),
Age: 66 and Kemper Corporation (insurance and financial
services company); formerly Chairman of the
Board of ICL Inc. (information systems).
Edward V. Regan
first became a President of Jerome Levy Economics Institute, None
Trustee in 1993 Bard College; a member of the U.S. Competitiveness
Age: 63 Policy Council; a director of GranCare, Inc.
(health care provider); formerly New York State
Comptroller and a trustee, New York State and Local
Retirement Fund.
Russell S. Reynolds, Founder Chairman of Russell Reynolds None
Jr. Associates Inc. (executive recruiting);
first became a a trustee of Mystic Seaport Museum,
Trustee in 1989 International House, Greenwich Historical
Age: 62 Society and Greenwich Hospital.
Sidney M. Robbins Chase Manhattan Professor Emeritus of 1946.753(1)
first became a Financial Institutions, Graduate School
Trustee in 1963 of Business, Columbia University; Visiting
Age: 82 Professor of Finance, University 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 None
first became a Manager; formerly Chairman of the Manager
Trustee in 1985 and the Distributor.
Age: 68
Pauline Trigere Chairman and Chief Executive Officer of None
first became a Trigere, Inc. (design and sale of
Trustee in 1977 women's fashions).
Age: 81
Clayton K. Yeutter
first became a Counsel to Hogan & Hartson (a law firm); None
Trustee in 1993 of B.A.T. Industries, Ltd. (tobacco and
Age: 63 financial services), Caterpillar, Inc.
(machinery), ConAgra,
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 under the Investment
Company Act.
(1) Such shares are held by Professor Robbins' spouse; Professor Robbins
disclaims beneficial ownership of such shares.
Vote Required. The affirmative vote of a majority of the votes cast by
shareholders of the Fund without regard to class is required for the
election of a nominee as 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 its day-to-day
operations. Six regular meetings of the Trustees were held in the fiscal
year ended September 30, 1993. Each of the Trustees other than Mr. Cherne
was present for at least 75% of the meetings held. The Trustees of the
Fund have appointed an Audit Committee, comprised of Messrs. Randall
(Chairman), Robbins (Vice Chairman) 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 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 Committee met four times during the fiscal year ended
September 30, 1993, and all members other than Mr. Cherne attended at
least 75% of the meetings held during that period. 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 $782 to $2,115 for serving as Trustee,
or as Chairman or a member of the committees of the Board of Trustees.
During the fiscal year ended September 30, 1993, Trustees' fees and
expenses aggregated $14,895. 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 funds listed above for
at least 15 years in order to be eligible for the maximum payment. No
Trustee has retired under this plan, and therefore no payments have been
made by the Fund. In the fiscal year ended September 30, 1993, the Fund
accrued $912 for retirement plan benefits for its Trustees 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.
William L. Wilby, Vice President and Portfolio Manager; Age: 49.
Vice President of the Manager and HarbourView; an officer of other
OppenheimerFunds; formerly international investment strategist at Brown
Brothers, Harriman & Co., prior to which he was a Managing Director and
Portfolio Manager at AIG Global Investors.
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) and director and an officer of
First Investors Family of Funds and First Investors Life Insurance
Company.
George C. Bowen, Vice President and Treasurer; Age 57.
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer and Assistant Secretary and a Director of Centennial; Vice
President, Treasurer and Secretary of SSI, SFSI; an officer of other
OppenheimerFunds; formerly Senior Vice President/Comptroller and Secretary
of Oppenheimer Asset Management Corporation, a former investment advisory
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 offier
of other OppenheimerFunds; previously a Fund Controller for the Manager,
prior to which he was an Accountant for Yale & Seffinger, an accounting
firm, 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 offier
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 October 6, 1993, selected KPMG Peat
Marwick ("KPMG") as auditors of the Fund for the fiscal year beginning
October 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 Class A and Class C 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 NEW INVESTMENT ADVISORY AGREEMENT
(Proposal No. 2)
The Fund has an investment advisory agreement dated October 22, 1990, with
the Manager (the "Current Agreement"). It was submitted to and approved
by the Fund's shareholders at a meeting held October 1, 1990.
At a meeting of the Fund's Board of Trustees held February 10, 1994, the
Board, including a majority of the Trustees who are not "interested
persons" (as defined in the Investment Company Act) of the Fund or the
Manager and who have no direct or indirect financial interest in the
operation of the Current Agreement or in any related agreements, approved
the terms of a new Investment Advisory Agreement (the "Proposed
Agreement") between the Fund and the Manager. If approved by the
shareholders at this meeting, the Proposed Agreement will be effective on
such date and continue in effect until December 31, 1994, and thereafter
from year to year unless terminated, but only so long as such continuance
is approved in accordance with the Investment Company Act. If the
Proposed Agreement is not approved by shareholders, the Current Agreement
will continue in effect.
The Proposed Agreement differs from the Current Agreement in the schedule
of fee rates paid by the Fund. Under the Current Agreement, the
management fee payable monthly to the Manager is computed on the net
assets of the Fund as of the close of business each day at the annual
rates of 0.75% of the first $200 million of net assets; 0.72% of the next
$200 million; 0.69% of the next $200 million; 0.66% of the next $200
million of net assets; 0.60% of net assets in excess of $800 million. At
September 30, 1993, the Fund's net assets were $86,018,991, and the Fund
paid a management fee of $449,323 to the Manager for the fiscal year then
ended. Under the Proposed Agreement the management fee would be payable
monthly to the Manager and computed on the net assets of the Fund as of
the close of business each day at annual rates of 0.80% of the first $250
million; 0.77% of the next $250 million; 0.75% of the next $500 million;
0.69% of the next $1 billion; and 0.67% thereafter. Had the Proposed
Agreement been in effect for all of the fiscal year ended September 30,
1993, the Fund would have paid the Manager approximately $30,000 more in
management fees.
The Proposed Agreement and the Current Agreement (hereinafter jointly
referred to as the "Agreements") are identical other than the change in
the management fee rates described above and the date of the Agreements.
Under the Agreements, 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 Agreements require
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 continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the Agreements or by
the distributor of the Fund's shares are paid by the Fund. The Agreements
list examples of expenses paid by the Fund, the major categories of which
relate to interest, taxes, brokerage commissions, fees to certain
Trustees, legal and audit expenses, custodian and transfer agent expenses,
share certificate issuance costs, certain printing and registration costs,
and non-recurring expenses, including litigation.
The Agreements contain no expense limitation. However, independently of
the Agreements, the Manager has undertaken that the total expenses of the
Fund in any fiscal year (including the management fee but excluding taxes,
interest, brokerage commissions, distribution and/or service plan payments
and extraordinary non-recurring expenses such as litigation costs) shall
not exceed the most stringent applicable regulatory limitation. 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 Agreements provide that in the absence of willful misfeasance, bad
faith or gross negligence in the performance of its duties or reckless
disregard of its obligations under the Agreements, as long as it has acted
with due care and in good faith, the Manager is not liable for any loss
sustained by reason of any investment, the adoption of any investment
policy, or the purchase, sale or retention of any security, irrespective
of whether the determinations of the Manager relative thereto shall have
been based, wholly or partly, upon the investigation or research of any
other individual, firm or corporation believed by it to be reliable. The
Agreements permit 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. 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 Agreements. One of the
duties of the Manager under the Agreements is to arrange the portfolio
transactions for the Fund. In doing so, the Manager is authorized by the
Agreements to employ broker-dealers, including "affiliated" brokers (as
that term is defined in the Investment Company Act) ("brokers") 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 Agreements and
the interests and policies of the Fund as established by its Board of
Trustees.
Under the Agreements, the Manager is authorized to select brokers, other
than affiliated 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. Subject to the foregoing
considerations, the Manager may also consider the willingness of
particular broker-dealers to sell shares of the Fund and other investment
companies managed by the Manager and its affiliates as a factor in their
selection.
Description of Brokerage Practices. Subject to the provisions of the
Agreement, allocations of brokerage are made by portfolio managers under
the supervision of the Manager's executive officers. 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 for 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.
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 those 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,
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 the benefit of such
services. The Board of Trustees has permitted the Manager to use
concessions on fixed-price offerings to obtain research, in the same
manner as is permitted for agency transactions.
During the Fund's fiscal year ended September 30, 1993, total brokerage
commissions paid by the Fund (not including spreads or concessions on
principal transactions on a net trade basis) were $1,462,229, of which
$14,931 was paid to brokers as commissions in return for research services
(including special research, statistical information and execution). The
aggregate dollar amount of transactions for which commissions were paid
for research services was $7,563,779. The transactions giving rise to
those commissions were allocated in accordance with the internal
allocation procedures described above.
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 Corp. ("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 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 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 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 ("SARs") 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 A.
Attached as Exhibit B to this Proxy Statement is a list of all registered
investment companies for which the Manager and its affiliates act as
investment advisers together with a description of the advisory fee paid
by each.
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 Board; Samuel Freedman, Jr.,
Director; Robert Doll Jr. and O. Leonard Darling, Executive Vice
Presidents; Tilghman G. Pitts, Executive Vice President and Director;
Andrew J. Donohue, Executive Vice President and General Counsel; Kenneth
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.
Considerations by the Board of Trustees. In connection with the Manager's
request to the Board that the investment management fee be increased, the
Manager provided extensive information to the Independent Trustees. The
Independent Trustees were provided with data as to the qualifications of
the Manager's personnel, the quality and extent of the services rendered
and its commitment to its mutual fund advisory business. The Independent
Trustees also considered data presented by the Manager showing the extent
to which it had expanded its investment personnel and other services
dedicated to the global area of its mutual fund advisory activities.
Information prepared specifically for the purpose of assisting the
Independent Trustees in their evaluation of the Proposed Agreements
included an analysis of the performance and expenses of the Fund as
compared to other similar funds. This analysis was prepared by the
Manager from materials provided by Lipper Analytical Services, Inc.
("Lipper") and reviewed by an independent consultant retained by the
Independent Trustees on behalf of the Fund. The Independent Trustees also
relied upon information previously provided to them in connection with
their annual and ongoing review, on the nature, quality and extent of the
Manager's services to the Fund.
After consideration of all of the data and information provided to them
at a meeting called to evaluate the new management fee proposed by the
Manager, a committee of the Independent Trustees discussed with
representatives of the Manager changes in the proposed fee schedule.
After certain modifications in the proposed fee schedule were made, the
Independent Trustees met separately with their counsel to discuss the
information and to consider the factors to be weighed and standards to be
applied in evaluating the Manager's proposed fee schedule.
The Independent Trustees first examined the nature, quality and scope of
the services provided to the Fund by the Manager. Second, they reviewed
the basis for an increase in the management fee and analyzed the fee
proposed by the Manager in terms of management fees charged by the Manager
and other investment advisors for similar services. Finally, the
Independent Trustees examined the mutual fund related revenues and
expenses of the Manager.
Analysis of Nature, Quality and Extent of Services. The Independent
Trustees considered, among other factors: (1) the necessity of the Manager
maintaining and enhancing its ability to retain and attract capable
personnel to serve the Fund; (2) the increased complexity and expansion
of the domestic and international securities markets and the Manager's
expenditures and projected expenses associated with research and multi-
currency accounting and portfolio pricing systems; (3) the complexity of
research and investment activities in emerging markets; (4) the investment
record of the Manager in managing the Fund and other investment companies
for which it acts as investment adviser; (5) the Manager's overall
profitability; (6) pro-forma profitability data giving effect to the
proposed increase in the investment management fee but before marketing
and promotional expenses anticipated to be paid by the Manager and its
affiliates; (7) the effect of the proposed investment management fee
increase on the expense ratio of the Fund; (8) possible economies of
scale; (9) data as to investment performance, advisory fees and expense
ratios of other global flexible investment companies having net assets of
less than $200 million as of March 31, 1993, not advised by the Manager
but believed to be generally comparable in many ways to the Fund; (10)
other benefits to the Manager from serving as investment manager to the
Fund, as well as benefits to its affiliates acting as principal
underwriter and its division acting as transfer agent to the Fund; (11)
current and developing conditions in the financial services industry,
including the entry into the industry of larger and highly capitalized
companies which are spending and appear to be prepared to continue to
spend substantial sums to engage personnel and to provide services to
competing investment companies; and (12) the financial resources of the
Manager and the desirability of appropriate incentives to assure that the
Manager will continue to furnish high quality services to the Fund.
Analysis of Proposed Fee Increase. In their review of the proposed
increase in the level of the investment advisory fees, the Independent
Trustees considered the fact that the current investment advisory fees
paid by the Fund, as well as the Fund's total expense ratio, including the
investment advisory fees, is below the median fee rate and expense ratio
of comparable funds. Also, if the Proposed Investment Advisory Agreement
had been in effect, the Fund's pro-forma investment advisory fee rate and
expense ratio (including the investment management fee) would not have
exceeded the median for its group. The proposed investment advisory fee
is higher than that paid by most other investment companies although the
fee is comparable to that paid by those which invest globally. The
Independent Trustees also noted that an affiliate of the Manager provides
advisory services, as a sub-adviser, to an employee benefit account at a
fee which is at lower rates than that proposed for the Fund.
Analysis of Profitability of the Manager. The Independent Trustees were
advised that the Manager does not maintain its financial records on a
fund-by-fund basis. However, the Manager does provide the Independent
Trustee on an annual basis with its allocation of expenses on a fund-by-
fund basis. The Independent Trustees considered specific information
provided by the Manager regarding its profitability and also considered
comparative information relating to the profitability of other mutual fund
investment managers. The Independent Trustees also noted the substantial
marketing and promotional activities in which the Manager and its
affiliates engage and propose to engage on behalf of the Fund.
Determination by the Independent Trustees and the Board of Trustees.
After completion of its review, the Independent Trustees recommended that
the Board of Trustees approve, and the Board unanimously approved, the
Proposed Agreement.
Vote Required. An affirmative vote of the holders of a "majority" (as
defined in the Investment Company Act) of all outstanding voting
securities of the Fund is required for approval of the Proposed Agreement;
the classes do not vote separately. Such "majority" vote is defined in
the Investment Company Act as the vote of the holders of the lesser of:
(1) 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. The Board of Trustees
recommends a vote in favor of approving the Proposed Investment Advisory
Agreement.
ADDITIONAL INFORMATION
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 Distributor's Agreement dated October 22, 1990.
The General Distributor's Agreement is subject to the same annual renewal
requirements and termination provisions as the Agreement. For the fiscal
year ended September 30, 1993, selling charges on the Fund's shares
amounted to $429,513, of which the Distributor and an affiliated broker-
dealer retained $120,083 in the aggregate.
Class A Service Plan and Class C Distribution and Service Plan. The Fund
has adopted a Service Plan (the "Class A Plan") pursuant to Rule 12b-1 of
the Investment Company Act under which the Fund reimburses the Distributor
for a portion of its costs incurred in connection with the personal
service and maintenance of accounts that hold Class A shares. The
Distributor uses such fees received from the Fund in their entirety: (i)
to compensate brokers, dealers, banks and other institutions
("Recipients") each quarter for providing personal service and the
maintenance of accounts that hold Class A shares, and (ii) to reimburse
itself (to the extent authorized by the Board) for its other expenditures
under the Class A Plan and for its direct costs for personal service and
the maintenance of accounts. For the fiscal year ended September 30,
1993, the Board has not authorized any reimbursement to the Distributor
under (i) above. The services to be provided under the Class A Plan
include, but are not limited to, the following: answering routine
inquiries from the Recipient's customers concerning the Fund, providing
such customers with information on their investment in Class A 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 Class A Plan has the affect of
increasing annual expenses of the Fund by up to 0.25% of its average
annual net assets from what its expense would otherwise be. For the
fiscal year ended September 30, 1993, payments under that Plan totalled
$148,546, all of which was paid by the Distributor to Recipients as
reimbursement for distribution-related services, including $4,087 paid to
an affiliate of the Distributor.
The Fund has also adopted a Distribution and Service Plan (the "Class C
Plan") pursuant to Rule 12b-1 of the Investment Company Act, under which
it will compensate the Distributor for its services and costs incurred in
connection with the distribution and service of the Fund's Class C shares,
which were first publicly sold on December 1, 1993. Pursuant to the Class
C Plan, the Fund will pay the Distributor an asset-based sales charge of
0.75% per annum plus a service fee of 0.25% per annum on Class C shares.
The Distributor will use the service fee payment to compensate Recipients
for providing personal service and the maintenance of shareholder accounts
that hold Class C shares, examples of which are described in the above
paragraph. The asset-based sales charge and service fee payments by the
Fund to the Distributor under the Class C Plan are intended to allow the
Distributor to recoup its sales commissions and service fee advances to
authorized dealers or brokers that sell Class C shares, as well as
financing costs. The Distributor anticipates that it will take a number
of years to recoup such sales commissions from the Fund's payments to the
Distributor under the Class C Plan. The Class C Plan has the affect of
increasing annual expenses of Class C shares of the Fund by up to 1.00%
of the Class's average annual net assets from what its expenses would
otherwise be.
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 $130,843 from the
Fund during the fiscal year ended September 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 series 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 proxy rules of the
Securities and Exchange Commission, shareholder proposals which 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 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 13, 1994
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 taxes 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
-----------
$29,615,298
===========
EXHIBIT B
INFORMATION ON INVESTMENT COMPANIES MANAGED BY
OPPENHEIMER MANAGEMENT CORPORATION
AND CENTENNIAL ASSET MANAGEMENT CORPORATION
Maximum
Approximate Advisory Fee
Net Assets Rate as % of
as of Average
Name of 12/31/93 Annual
Name of Fund Advisor1 ($ Millions) Net Assets
- - ------------ -------- ------------- ------------
Oppenheimer Asset Allocation Fund OMC $ 278.6 1.00%6
Oppenheimer California Tax-Exempt OMC 276.4 .60%5
Fund
Oppenheimer Cash Reserves OMC 71.1 .50%9
Oppenheimer Champion High Yield OMC 125.1 .70%14
Fund
Oppenheimer Discovery Fund OMC 622.2 .75%4
Oppenheimer Equity Income Fund OMC 1,904.2 .75%10
Oppenheimer Fund OMC 229.0 .75%4
Oppenheimer Global Bio-Tech Fund OMC 216.9 1.00%3
Oppenheimer Global Environment Fund OMC 42.1 .75%2
Oppenheimer Global Fund OMC 1,691.5 .75%23
Oppenheimer Global Growth & Income OMC 112.9 .75%4
Fund
Oppenheimer Gold & Special Minerals OMC 190.1 .80%7
Fund
Oppenheimer Government Securities OMC 185.1 .50%18
Fund
Oppenheimer High Yield Fund OMC 1,203.2 .75%12
Oppenheimer Integrity Funds OMC 207.5 15
Oppenheimer Main Street Funds, Inc. OMC 256.7 16
Oppenheimer Money Market Fund, Inc. OMC 597.4 .45%11
Oppenheimer Mortgage Income Fund OMC 89.0 .75%13
Oppenheimer Multi-Government Trust OMC 56.5 .65%
Oppenheimer Multi-Sector Income OMC 319.2 .65%
Trust
Oppenheimer Multi-State Tax-Exempt OMC 81.9 .60%5
Trust
Oppenheimer New York Tax-Exempt OMC 827.3 .60%5
Fund
Oppenheimer Special Fund OMC 746.2 .75%4
Oppenheimer Strategic Funds Trust OMC 4,012.4 .75%12
Oppenheimer Strategic Income & OMC 66.0 .75%12
Growth Fund
Oppenheimer Strategic Investment OMC 44.9 .75%12
Grade Bond Fund
Oppenheimer Strategic Short-Term OMC 31.5 .65%22
Income Fund
Oppenheimer Target Fund OMC 369.0 .80%7
Oppenheimer Tax-Exempt Bond Fund OMC 153.1 19
Oppenheimer Tax-Exempt Cash OMC 23.9 .50%9
Reserves
Oppenheimer Tax-Free Bond Fund OMC 641.1 .60%5
Oppenheimer Time Fund OMC 414.3 .75%4
Oppenheimer Total Return Fund, OMC 1,440.4 .75%10
Inc.
Oppenheimer U.S. Government Trust OMC 363.7 .75%13
Oppenheimer Variable Account Funds OMC 815.9 8
Centennial America Fund, L.P. OMC 4.4 .45%17
Centennial California Tax Exempt Centennial 64.1 .50%9
Trust
Centennial Government Trust Centennial 648.8 .50%9
Centennial Money Market Trust Centennial 2,271.8 .50%9
Centennial New York Tax Exempt Centennial 22.0 .50%9
Centennial Tax Exempt Trust Centennial 1,008.9 .50%20
Daily Cash Accumulation Fund, Centennial 3,613.5 .45%21
Inc.
The New York Tax-Exempt Income OMC 24.8 .50%
Fund, Inc.
[FN]
___________________
1
"OMC" and "Centennial" are abbreviations for Oppenheimer Management
Corporation and Centennial Asset Management Corporation, respectively.
Centennial is a wholly-owned subsidiary of OMC, and also acts as general
distributor of each fund advised by it.
2
This rate is charged on the first $200 million of average annual net
assets; the rate is .72% of the next $200 million, .69% of the next $200
million and .66% of net assets in excess of $600 million.
3
The rate is charged on the first $50 million of average annual net
assets; the rate is .75% of the next $150 million; .72% of the next $200
million; .69% of the next $200 million; .66% of the next $200 million,
and .60% of net assets in excess of $800 million.
4
This rate is charged on the first $200 million of average annual net
assets; the rate is .72% of the next $200 million, .69% of the next $200
million, .66% of the next $200 million and .60% of net assets in excess
of $800 million. A proposal has been made to shareholders of
Oppenheimer Global Growth & Income Fund to increase the rate paid by the
Fund at certain asset levels.
5
For Oppenheimer Florida Tax-Exempt Fund, Oppenheimer New Jersey Tax-
Exempt Fund and Oppenheimer Pennsylvania Tax-Exempt Fund, this rate is
charged on the first $200 million of average annual net assets; the rate
is .55% of the next $100 million, .50% of the next $200 million, .45%
of the next $250 million, .40% of the next $250 million and .35% of net
assets in excess of $1.0 billion.
6
This rate is charged on the first $50 million of average annual net
assets; the rate is .75% of the next $150 million, .70% of the next $200
million, .65% of the next $200 million and .60% of net assets in excess
of $600 million. Effective January 1, 1993, OMC has voluntarily agreed
to reduce its management fee, so that it will not exceed the following:
.75% of the first $200 million of average annual net assets, .72% of the
next $200 million, .69% of the next $200 million, .66% of the next $200
million, and .60% of average annual net assets in excess of $800
million. It is expected that shareholders will be asked to approve a
new Investment Advisory Agreement with OMC which includes this reduced
fee rate when a shareholder meeting is next held.
7
This rate is charged on the first $200 million of average annual net
assets; the rate is .75% of the next $200 million, .69% of the next $200
million, .66% of the next $200 million and .60% of assets over $800
million. Effective July 1, 1994, the first two breakpoints of that
management fee will be reduced to .75% of the first $200 million of
average annual net assets and .72% of the next $200 million.
8
For Oppenheimer Bond Fund, Oppenheimer Capital Appreciation Fund,
Oppenheimer Growth Fund and Oppenheimer Multiple Strategies Fund, a .50%
rate is charged on the first $250 million of average annual net assets
of the Trust; the rate is .45% of the next $50 million, .40% of the next
$100 million, .35% of the next $400 million and .30% of net assets in
excess of $800 million. The management fee of one series (Oppenheimer
Money Fund) is reduced from that rate by .05% on the first $250 million
of its net assets and on its net assets in excess of $4 billion.
Another series (Oppenheimer High Income Fund) pays an additional .15%
fee. The management fee of another series (Oppenheimer Global
Securities Fund) is .75% on the first $200 million of average annual net
assets, .72% on the next $200 million, .69% on the next $200 million,
.66% on the next $200 million and .60% of net assets in excess of $800
million. The management fee of another series (Oppenheimer Strategic
Bond Fund) is .65% of its average annual net assets.
9
This rate is charged on the first $250 million of average annual net
assets; the rate is .475% of the next $250 million, .450% of the next
$250 million, .425% of the next $250 million and .40% of net assets in
excess of $1 billion.
10 This rate is charged on the first $100 million of average annual net
assets; the rate is .70% of the next $100 million, .65% of the next $100
million, .60% of the next $100 million, .55% of the next $100 million and
.50% of net assets in excess of $500 million.
11 This rate is charged on the first $500 million of average annual net
assets; the rate is .425% of the next $500 million, .400% of the next $500
million and .375% of net assets in excess of $1.5 billion.
12 This rate is charged on the first $200 million of average annual net
assets; the rate is .72% of the next $200 million, .69% of the next $200
million, .66% of the next $200 million, .60% of the next $200 million of
net assets and .50% of net assets in excess of $1 billion.
13 This rate is charged on the first $200 million of average annual net
assets; the rate is .70% of the next $200 million, .65% of the next $400
million and .60% of net assets in excess of $800 million. The Manager has
voluntarily agreed to reduce its fees by .05% at each net asset level
effective January 1, 1994, with a further decrease of .05% at each net
asset level effective July 1, 1994.
14 This rate is charged on the first $250 million of average annual net
assets; the rate is .65% of the next $250 million, .60% of the next $500
million and .55% of net assets in excess of $1.0 billion.
15 For Oppenheimer Investment Grade Bond Fund, a .50% rate is charged on
the first $100 million of net assets; the rate is .45% of the next $200
million; .40% of the next $200 million, and .35% of net assets over $500
million. For Oppenheimer Value Stock Fund, the rate is .75% of the first
$100 million, .72% of the next $200 million, .69% of the next $200
million, and .66% of net assets over $500 million. OMC pays Massachusetts
Mutual Life Insurance Company ("MassMutual") a subadvisory fee of .35% of
Investment Grade Bond Fund's first $100 million of average annual net
assets, .25% of the next $200 million, .20% of the next $200 million, and
.15% of net assets in excess of $500 million. For Value Stock Fund, OMC
pays Concert Capital Management, Inc., a subsidiary of MassMutual, a sub-
advisory fee of .40% of Value Stock Fund's first $50 million of average
annual net assets and .20% of net assets in excess of $50 million.
16
For Oppenheimer Main Street Income & Growth Fund, a rate of .65% is
charged on the first $200 million of average annual net assets; the rate
is .60% of the next $150 million, .55% of the next $150 million and .45%
of net assets in excess of $500 million. For Oppenheimer Main Street
California Tax-Exempt Fund, a rate of .55% of net assets is charged when
that Fund's net assets exceed $100 million, .40% when net assets are $75
million or more but less than $100 million, .25% when net assets are $50
million or more but less than $75 million, .15% when net assets are $25
million or more but less than $50 million, and 0% when net assets are
less than $25 million.
17
This rate is charged on the first $500 million of average annual net
assets; the rate is .40% on net assets in excess of $500 million.
18 This rate is charged on the first $100 million of average annual net
assets; the rate is .45% on the next $150 million, .425% on the next $250
million, and .40% of net assets in excess of $500 million.
19 For Oppenheimer Intermediate Tax-Exempt Bond Fund, a .50% rate is
charged on the first $100 million of net assets; the rate is .450% of the
next $150 million, .425% of the next $250 million, and .400% of net assets
over $500 million. For Oppenheimer Insured Tax-Exempt Bond Fund, the rate
is .05% lower at each breakpoint.
20 This rate is charged on the first $250 million of average annual net
assets; the rate is .475% of the next $250 million, .450% of the next $250
million, .425% of the next $250 million, .400% of the next $250 million,
.375% of the next $250 million, .350% of the next $500 million, and .325%
of net assets in excess of $2.0 billion. In addition, until the net
assets of the Trust reach $1.5 billion, the fee otherwise payable to the
Manager will be reduced by $100,000 per annum, but in no event lower than
$0.
21 This rate is charged on the first $500 million of average annual net
assets; the rate is .425% of the next $500 million, .400% of the next $500
million, .375% of the next $500 million, .350% of the next $500 million,
.325% of the next $500 million, .300% of the next $500 million, .275% of
the next $500 million and .250% of net assets in excess of $4.0 billion.
Centennial has voluntarily agreed to reduce its management fee to the
extent necessary to ensure that the annual management fee does not exceed
.35% of the Fund's average net assets.
22 This rate is charged on the first $500 million of average annual net
assets; the rate is .62% of the next $500 million, .59% of the next $500
million, and .50% of average annual net assets in excess of $1.5 billion.
23 This rate is charged on the first $200 million of average annual net
assets; the rate is .72% of the next $200 million, .69% of the next $200
million, .66% of the next $200 million and .60% of the next $200 million,
and .57% of net assets in excess of $1.0 billion. A proposal has been
made to shareholders to increase the rate paid by the Fund at certain
asset levels.