-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, onfYtFjss7obYpr06jmJ2J1kw60jO5n+c0/j8RHM0NASjtKfbjCzgGnohhI0Ae+P W/LZkjFgW2oKolYSV9Ms+Q== 0000729968-94-000011.txt : 19940601 0000729968-94-000011.hdr.sgml : 19940601 ACCESSION NUMBER: 0000729968-94-000011 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940620 FILED AS OF DATE: 19940524 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER ASSET ALLOCATION FUND CENTRAL INDEX KEY: 0000729968 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 133395850 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 811-03864 FILM NUMBER: 94529966 BUSINESS ADDRESS: STREET 1: 2 WORLD TRADE CENTER 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123230234 MAIL ADDRESS: STREET 2: 2 WORLD TRADE CENTER 34TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10048 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER RETIREMENT FUND DATE OF NAME CHANGE: 19870503 FORMER COMPANY: FORMER CONFORMED NAME: OMC GROWTH & INCOME TRUST DATE OF NAME CHANGE: 19840826 DEF 14A 1 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 ASSET ALLOCATION FUND - - ------------------------------------------------------------ (Name of Registrant as Specified in Its Charter) OPPENHEIMER ASSET ALLOCATION 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. proxy/240proxy.inf May, 1994 Your vote counts... Dear Oppenheimer Asset Allocation Fund Class A Shareholder: We have scheduled a shareholder meeting for June 20, 1994 to review 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, recommends approval of 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. The names of the Trustees and a brief statement of their 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 New Investment Advisory Agreement. Approval of this proposal would decrease the management fee paid by the Fund to its investment advisor at the initial breakpoint and increase the fee at higher breakpoints. This fee is based on the aggregate net assets of the Fund as of the close of business each day. * Approval of New Class A Service Plan. Previously, a service plan was adopted, reimbursing the Fund's Distributor for the cost of servicing and maintaining accounts which hold Class A shares purchased on or after April 1, 1988. Approval of this proposal will allow the Plan to be amended to include Class A shares purchased prior to April 1, 1988. 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 vote is quick and easy. So please take a moment to complete the proxy ballot. Oppenheimer Asset Allocation Proxy for Shareholders Meeting To Fund - Class A Shares 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. Please detach at perforation before mailing. Oppenheimer Asset Allocation Fund - Class A Shares Proxy For Shareholders Meeting To Be Held June 20, 1994 The undersigned shareholder of Oppenheimer Asset Allocation 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) 240 Oppenheimer Asset Allocation Proxy for Shareholders Meeting To Fund - Class A Shares Be Held June 20, 1994 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. Please detach at perforation before mailing. 1. Election of Trustees ____ For all nominees listed _____ Withhold authority except as marked to the 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 ____ 4. Approval of the Fund's Proposed Class A 12b-1 Service Plan (Proposal No. 3) 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. Dated: _______________________, 1994 (Month) (Day) ____________________________ Signature(s) ____________________________ Signature(s) Please read both sides of this ballot. 240 proxy/240bal.1 May, 1994 Your vote counts... Dear Oppenheimer Asset Allocation Fund Class C Shareholder: We have scheduled a shareholder meeting for June 20, 1994 to review 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. The names of the Trustees and a brief statement of their 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 New Investment Advisory Agreement. Approval of this proposal would decrease the management fee paid by the Fund to its investment advisor at the initial breakpoint and increase the fee at higher breakpoints. This fee is based on the aggregate net assets of the Fund as of the close of business each day. 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 vote is quick and easy. So please take a moment to complete the proxy ballot. Oppenheimer Asset Allocation Proxy for Shareholders Meeting To Fund - Class C Shares 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. Please detach at perforation before mailing. Oppenheimer Asset Allocation Fund - Class C Shares Proxy For Shareholders Meeting To Be Held June 20, 1994 The undersigned shareholder of Oppenheimer Asset Allocation 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) 242 Oppenheimer Asset Allocation Proxy for Shareholders Meeting To Fund - Class C Shares Be Held June 20, 1994 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. Please detach at perforation before mailing. 1. Election of Trustees ____ For all nominees listed _____ Withhold authority except as marked to the 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 ____ 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. Dated: _______________________, 1994 (Month) (Day) ____________________________ Signature(s) ____________________________ Signature(s) Please read both sides of this ballot. 242 proxy/240bal.2 OPPENHEIMER ASSET ALLOCATION 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 Asset Allocation Fund Notice is hereby given that a Meeting of the Class A and Class C Shareholders of Oppenheimer Asset Allocation 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 and 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 January 1, 1994 (Proposal No. 1); (c) To approve an Investment Advisory Agreement between the Fund and Oppenheimer Management Corporation (the "Manager") which would provide for a decrease in the management fee rates at lower asset levels and an increase in the management fee rates at higher asset levels (Proposal No. 2); (d) To approve an amendment to the Service Plan under Rule 12b-1 for the Fund's Class A shares which would broaden the asset base against which the service fee is assessed (Proposal No. 3); and (e) 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 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. 240 OPPENHEIMER ASSET ALLOCATION 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 Asset Allocation 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 December 31, 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 December 31, 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 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) 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 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 21,461,094.283 shares of the Fund issued and outstanding, consisting of 21,156,600.292 Class A shares and 304,493.991 Class C shares. Each Class A and Class C share of the Fund has 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, the only entity owning of record or known by the management of the Fund to be the beneficial owner of 5% or more of the outstanding shares of the Fund was Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield, MA 01111, an affiliate of the Manager (see "The Manager" under Proposal No. 2, below) which was the record owner of 2,307,948.357 Class A shares (approximately 10.9% of the then-outstanding Class A shares). As of the record date there were three entities owning of record or known by the management of the Fund to be the beneficial owner of 5% or more of the outstanding Class C shares of the Fund. These were: (1) Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake Drive, Jacksonville, FL 32246, 21,827.000 Class C shares (7.16%), (2) FIDN TR Rollover IRA FBO Jacqueline Winquist 112 Carlyle Drive, Palm Beach, FL 34683, 19,441.267 Class C shares (6.38%), and (3) H.P. Midgett and K.L. Sheppard, Jr., Charitable Remainder Trust, 11595 Meridian Street, Carmel, IN 46032, 65,484.228 Class C shares (21.50%). 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 and 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 Messrs. Galli, Regan and Yeutter 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 Fund, Oppenheimer Global Bio-Tech Fund, Oppenheimer Global Environment Fund, Oppenheimer Global Growth & Income 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 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 22, 1994 the Trustees and officers of the Fund as a group owned 4,953.255 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); Trustee in 1959 Chairman of Avatar Holdings, Inc. Age: 68 (real estate 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), and Age: 66 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 None Trustee in 1993 Institute Bard College; a member of the Age: 63 U.S. Competitiveness 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 of Trustee in 1963 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 or the Manager under the Investment Company Act. (1) Such shares are held by Mr. Robbins' spouse, of which Mr. Robbins disclaims beneficial ownership. 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 December 31, 1993. Each of the Trustees other than Ms. Trigere 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 December 31, 1993, and all members 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 $3,126 to $8,460 for serving as Trustee, or as Chairman or a member of the committees of the Board of Trustees. During the fiscal year ended December 31, 1993, Trustees' fees and expenses aggregated $101,437. 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 December 31, 1993, the Fund accrued $50,137 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. David P. Negri, Vice President and Portfolio Manager; Age 40. Two World Trade Center, New York, NY 10048 Vice President of the Manager; Vice President and Portfolio Manager of other OppenheimerFunds. Richard H. Rubenstein, 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) 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, 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, 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 officer of other OppenheimerFunds; previously a Fund Controller for the Manager, prior to which he was an accountant for Yale & Seffinger, P.C., 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 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 February 10, 1994, selected KPMG Peat Marwick ("KPMG") as auditors of the Fund for the fiscal year beginning January 1, 1994. 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") which 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 December 9, 1993, 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, the service plan described in Proposal No. 3 or in any related agreements ("Independent Trustees"), 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 1.00% of the first $50 million of net assets; 0.75% of the next $150 million; 0.70% of the next $200 million; 0.65% of the next $200 million of net assets; and 0.60% of net assets in excess of $600 million. At December 31, 1993, the Fund's net assets were $278,309,678, and the Fund paid a management fee of $2,130,917 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 0.75% of the first $200 million; 0.72% of the next $200 million; 0.69% of the next $200 million; 0.66% of the next $200 million, and 0.60% thereafter. The initial reduction in management fees under the Proposed Agreement for the first $50 million in net assets is reduced for assets exceeding $200 million. The effective management fee will be lower for the Fund under the Proposed Agreement when net assets are below $608,333,300 (as is presently the case) and will be higher if net assets exceed that figure. For the fiscal year ended December 31, 1993, the management fee would have been approximately $111,000 less under the Proposed Agreement's schedule of fees than under the Current Agreement. 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 fees and any extraordinary non-recurring expenses, such as litigation) 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, good faith error or omission on its part in connection with any matter to which the Agreements pertain. 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 of 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 Agreements, 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 effected 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 December 31, 1993, total brokerage commissions paid by the Fund (not including spreads or concessions on principal transactions on a net trade basis) were $2,914,950, of which $83,463 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 $32,594,147. 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 at the same formula price, according to a schedule that will commence on September 30, 1995. Since January 1, 1993, 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 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 revision in the investment management fee, 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. The Independent Trustees 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. 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 adjustment 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 investment record of the Manager in managing the Fund, and the investment record of other investment companies for which it acts as investment adviser; (3) the Manager's overall profitability; (4) pro-forma profitability data giving effect to the proposed revision in the investment management fee but before marketing and promotional expenses anticipated to be paid by the Manager and its affiliates; (5) the effect of the proposed investment management fee revision on the expense ratio of the Fund; (6) possible economies of scale; (7) data as to investment performance, advisory fees and expense ratios of other flexible portfolio investment companies having net assets in excess of $25 million not advised by the Manager but believed to be generally comparable in many ways to the Fund; (8) 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; (9) 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 (10) 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 Adjustment. In their review of the proposed adjustment 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. The proposed investment advisory fee is comparable to that paid by most other flexible portfolio investment companies. 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. APPROVAL OF AMENDMENTS TO THE FUND'S CLASS A SERVICE PLAN (Proposal No. 3) NOTE: This Proposal applies to Class A shareholders only. In 1988, the Fund's shareholders approved a plan of distribution under Rule 12b-1 of the Investment Company Act. Effective July 1993, this plan was amended to restructure it as a Service Plan and Agreement for Class A shareholders (the "Current Plan") under which the Fund reimburses Oppenheimer Funds Distributor, Inc. (the "Distributor") for all or a portion of its costs incurred in connection with the personal service and maintenance of accounts that hold Class A shares of the Fund acquired on or after April 1, 1988. The 1993 amendment did not increase the payments made by the Fund. The Fund's Board of Trustees, including a majority of the Independent Trustees, has approved amendments to the Fund's Current Plan, to allow payments to be made with respect to all Class A Fund shares, including those acquired prior to April 1, 1988. The Trustees determined to recommend the proposed Class A Service Plan and Agreement (the "Proposed Class A Service Plan") for approval by the shareholders. A copy of the Proposed Class A Service Plan is attached as Exhibit C to this proxy statement. Article III, Section 26 of the Rules of Fair Practice of the National Association of Securities Dealers, Inc. (the "NASD Rule") establishes limits on the total amount of sales charges and asset-based charges that may be applicable to shares of an investment company sold by a broker- dealer member of the NASD. Under the Rule, the Fund may pay 0.25% of its average annual net assets as a service fee to brokers, dealers or other financial intermediaries for providing personal services and/or maintenance of shareholder accounts. The Current Plan and the Proposed Plan permit the Fund to make such service payments. The rate of the fee payable under both the Current Plan and the Proposed Class A Service Plan is the same. Each plan has the effect of increasing the Fund's Class A expenses by up to an annual rate of 0.25% of the Fund's average net assets represented by Class A shares. Under the Current Plan, the Fund may make payments to the Distributor for a portion of its costs incurred in connection with the personal service and maintenance of accounts that hold Class A shares of the Fund acquired on or after April 1, 1988. Under the Proposed Class A Service 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. For the fiscal year ended December 31, 1993, payments under the Class A Plan totalled $313,174, all of which was paid by the Distributor to Recipients, including $124,537 paid to an affiliate of the Distributor. Description of the Proposed Class A Service Plan. Under the Proposed Class A Service 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 Proposed Class A Service 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 .0625% (0.25% annually) of the average during the quarter of the 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, 1988 at the maximum rate; it is anticipated that initially the annual rate of 0.15% will apply to assets representing shares sold before April 1, 1988. However, the rate may increase for assets sold before April 1, 1988, but in no event greater than the maximum amount. A Recipient may be affiliated with the Distributor. The Proposed Class A Service 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 Proposed Class A Service Plan would have the effect of increasing the Fund's expenses for Class A shares from what they otherwise would be under the Current 12b-1 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, 1988. It is estimated that the Fund's total expense ratio would have increased from 1.14% of annual net assets to 1.22% of annual net assets based on the Fund's actual annualized expenses for the fiscal year ended December 31, 1993, had the Proposed Class A Service Plan been in effect. Under the Current Plan and the Proposed Class A Service Plan, 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 Plan and, the purposes for which the payments were made and, in the case of payments to Recipients, the identity of each Recipient. The Plans further provide that while 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 Proposed Class A Service Plan (unless terminated as indicated below) shall take effect as of July 1, 1994, replacing the Fund's Current 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 Proposed Class A Service 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 Class A shares of the Fund. The Proposed Class A Service 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 Proposed Class A Service 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 proposed Class A Service 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 Service 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 Class A Service Plan by the Board of Trustees. In considering whether to recommend the Current Plan amendments 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 Plan was not amended. The Manager believed that providing continuing payments to dealers for services provided to Fund shareholders in connection with all Class A 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 Trustees therefore deemed it in the best interest of the Fund and its shareholders to amend the Current Plan as described. The Board of Trustees 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, 1988 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 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, 1988) but not for others. Vote Required. Pursuant to Rule 12b-1 under the Investment Company Act, an affirmative vote of the holders of a "majority" of the Class A voting securities 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 shares present or represented by proxy at the shareholder meeting, if the holders of more than 50% of the outstanding shares of that class are present or represented by proxy, or (ii) more than 50% of the outstanding shares of the Class. If the Proposal is not approved, the Fund's Service Plan will remain unchanged and will apply only to shares acquired on or after April 1, 1988. The Board of Trustees recommends a vote in favor of approving this Proposal. 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 December 10, 1992. The General Distributor's Agreement is subject to the same annual renewal requirements and termination provisions as the Agreements. For the fiscal year ended December 31, 1993, selling charges on the Fund's shares amounted to $416,990, of which the Distributor and an affiliated broker- dealer retained $167,958 in the aggregate. Class C Distribution and Service Plan. In addition to the Proposed Class A Service Plan described in Proposal No. 3, the Fund has also adopted a Distribution and Service Plan and Agreement (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 on Class C shares outstanding for six years or less, plus a service fee of 0.25% per annum. 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. At December 31, 1993, the Distributor had received payments from the Fund under the Class C Plan of $155 and had incurred unreimbursed expenses under that Plan of $3,758 (less than 1% of the Fund's net assets attributable to Class C shares of the Fund on that date), which have been carried over into the present Class C plan year. The Class C Plan has the affect of increasing annual expenses of Class C shares of the Fund by up to 0.25% 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 $266,298 from the Fund during the fiscal year ended December 31, 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 PROXY/240'94.3 Exhibit A 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. /s/ Deloitte & Touche 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 ----------- $29,615,298 =========== EXHIBIT B INFORMATION ON INVESTMENT COMPANIES MANAGED BY OPPENHEIMER MANAGEMENT CORPORATION AND CENTENNIAL ASSET MANAGEMENT CORPORATION
Maximum Approximate Advisory Net Assets Fee Rate as of as % of Name of 12/31/93 Average Name of Fund Advisor1 ($ Millions) Annual 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. 7This 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. 9This 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. proxy/exhibed Exhibit C SERVICE PLAN AND AGREEMENT BETWEEN OPPENHEIMER FUNDS DISTRIBUTOR, INC. AND OPPENHEIMER ASSET ALLOCATION FUND For Class A Shares SERVICE PLAN AND AGREEMENT (the "Plan") dated the 1st day of July, 1994, by and between OPPENHEIMER ASSET ALLOCATION 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 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 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 of Qualified Holdings, 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 charges or other financial costs, or allocation of overhead by 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 owned beneficially or of record by the Recipient or by its Customers. 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 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 voting securities 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 June 10, 1993 for the purpose of voting on this Plan. It takes effect as of July 1, 1994, whereupon it replaces the Service Plan and Agreement dated June 10, 1993. 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 Shareholders of the Class, 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 Trustee or shareholder of the Fund personally, but bind only the Fund and the Fund's property. The Distributor represents that it has notice of the provisions of the Declaration of Trust of the Fund disclaiming shareholder and Trustee liability for acts or obligations of the Fund. OPPENHEIMER ASSET ALLOCATION FUND By: ----------------------------- OPPENHEIMER FUNDS DISTRIBUTOR, INC. By: ----------------------------- OFMI/240A#3 -----END PRIVACY-ENHANCED MESSAGE-----