SCHEDULE 14A
Information Required in Proxy Statement
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant / X /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement (Revised)
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or 14a-12
OPPENHEIMER TOTAL RETURN FUND, INC.
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(Name of Registrant as Specified in its Charter)
KATHERINE P. FELD, ESQ.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) or Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1) Title of each class of securities to which transaction
applies:
- -----------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -----------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined):
- -----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -----------------------------------------------------------------
(5) Total fee paid:
- -----------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
(1) Amount Previously Paid: $125
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(2) Form, Schedule or Registration Statement No.:
Preliminary Proxy Statement
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(3) Filing Party: Katherine P. Feld. Esq.
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(4) Date Filed: 4/21/97
<PAGE>
[Bridget Macaskill Letterhead]
April, 1997
Dear Oppenheimer Total Return Fund, Inc. Shareholder:
We have scheduled a shareholder meeting in June for you to decide upon
some important proposals for the Fund. Your ballot card and a detailed statement
of the issues are enclosed with this letter.
Your vote is very important because these decisions can affect your
investment, and it's your chance to help shape the policies of the Fund. So we
urge you to consider these issues carefully and to make your vote count.
How do you vote?
To vote, simply complete the ballot by marking your choices, sign it, and
return it in the postage-paid envelope provided. Remember, it can be expensive
for the Fund -- a portion of which is owned by you as a shareholder -- to remail
ballots if not enough responses are received to conduct the meeting.
What are the issues?
After consideration, the Board of Directors, which represents your
interests in the day-to-day management of the Fund, recommends approval of the
following items:
o Election of Directors. There are eleven Directors up for reelection in
June. You will find detailed information on the Directors in the enclosed proxy
statement.
o Ratification of Auditors. Each year, outside auditors are employed to
review the Fund's annual financial statements, as explained in the proxy
statement.
o Approval of Certain Changes to Fundamental Investment Policies. Your
approval is requested to change certain of the Fund's fundamental investment
policies. These proposed changes would further define the Fund's investment
parameters and provide more investment flexibility.
o Approval of the current Investment Advisory Agreement. The Fund's
Investment Advisory Agreement establishes the Manager's responsibility for
day-to-day management of the Fund, including managing the Fund's investments,
adherence to investment policies and arranging for the purchase and sale of
securities. The Agreement also requires the Manager to maintain effective
administration and recordkeeping for the Fund.
<PAGE>
|_| Approval of Distribution and Service Plan for Class B Shares (Class B
Shareholders Only). You are asked to approve the Fund's current Class B 12b-1
Distribution and Service Plan. The Fund's current Class B 12b-1 plan was
initially approved by the Manager as the sole initial shareholder of the Fund's
Class B shares, and is now being submitted to all shareholders for approval.
|_| Approval of Distribution and Service Plan for Class C Shares (Class C
Shareholders Only). You are asked to approve the Fund's current Class C 12b-1
Distribution and Service Plan. The Fund's current Class C 12b-1 plan was
initially approved by the Manager as the sole initial shareholder of the Fund's
Class C shares, and is now being submitted to all shareholders for approval.
Please read the enclosed proxy statement for complete details on these
proposals. Of course if you have any questions, please contact your financial
advisor or call us at 1-800-525-7048.
As always, we appreciate your confidence in OppenheimerFunds and thank you
for allowing us to manage a portion of your investment assets.
Sincerely,
[Bridget Macaskill signature]
Enclosures
<PAGE>
Oppenheimer Total Return Proxy for Shareholders Meeting To
Fund, Inc. - Class A Shares Be Held June 25, 1997
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 Total Return Proxy For Shareholders Meeting To
Fund, Inc. - Class A Shares Be Held June 25, 1997
The undersigned shareholder of Proxy solicited on behalf of the
Oppenheimer Total Return Fund, Inc. Board of Directors, which
(the "Fund"), does hereby appoint recommends a vote FOR the election
Robert Bishop, George C. Bowen, of all nominees for Director and FOR
Rendle Myer and Scott Farrar, each proposal on the reverse side.
and each of them, as attorneys-in The shares represented hereby
fact and proxies of the undersigned, will be voted as indicated on the
with full power of substitution, to reverse side or FOR if no choice
attend the Meeting of Shareholders is indicated.
of the Fund to be held June 25,
1997, at 6803 South Tucson Way,
Englewood, Colorado 80112 at
11:00 A.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
Directors 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.
OVER
420
<PAGE>
Oppenheimer Total Return Proxy for Shareholders Meeting to be held
Fund, Inc. - Class A Shares June 25, 1997
Your shareholder Your prompt response can save your Fund money.
vote is important! 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 A) R. Avis H) R. Kirchner 1.// For all nominees
of Directors B) W. Baker I) B. Macaskill listed except as marked
C) C. Conrad J) N Steel to the contrary at left.
D) J. Fossel K) J. Swain Instruction: To withhold
E) S. Freedman authority to vote for
F) R. Kalinowski any individual nominees,
G)C.H. Kast line out that nominee's
name at left.
// Withhold authority to
vote for all nominees
listed at left.
2. Ratification of selection 2./ /For / /Against / /Abstain
of Deloitte & Touche LLP as
independent auditors (Proposal No. 1)
3. Approval of changes to the 3./ /For / /Against / /Abstain
Fund's fundamental investment
policies (Proposal No. 2)
/ / Real Estate Investment Trusts
/ / Investments in Other Investment Companies
/ / Commodities
/ / Hedging
/ / Borrowing and Lending
/ / Unseasoned Issuers
/ / Diversification
4. Approval of the current 4./ /For / /Against / /Abstain
Investment Advisory Agreement
(Proposal No. 3)
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.
OVER
Dated: , 1997
-------------------------------------
(Month) (Day)
Signature(s)
-------------------------------------
Signature(s)
-------------------------------------
Please read both sides of this ballot. 420
proxy\420bal.a
<PAGE>
Oppenheimer Total Return Proxy for Shareholders Meeting To
Fund, Inc. - Class B Shares Be Held June 25, 1997
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 Total Return Proxy For Shareholders Meeting To
Fund, Inc. - Class B Shares Be Held June 25, 1997
The undersigned shareholder of Proxy solicited on behalf of the
Oppenheimer Total Return Fund, Inc. Board of Directors, which
(the "Fund"), does hereby appoint recommends a vote FOR the election
Robert Bishop, George C. Bowen, of all nominees for Director and FOR
Rendle Myer and Scott Farrar, each proposal on the reverse side.
and each of them, as attorneys-in The shares represented hereby
fact and proxies of the undersigned, will be voted as indicated on the
with full power of substitution, to reverse side or FOR if no choice
attend the Meeting of Shareholders is indicated.
of the Fund to be held June 25,
1997, at 6803 South Tucson Way,
Englewood, Colorado 80112 at 11:00
A.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
Directors 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.
OVER
420
<PAGE>
Oppenheimer Total Return Proxy for Shareholders Meeting to be held
Fund, Inc. - Class B Shares June 25, 1997
Your shareholder Your prompt response can save your Fund money.
vote is important! 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 A) R. Avis H) R. Kirchner 1.// For all nominees
of Directors B) W. Baker I) B. Macaskill listed except as marked
C) C. Conrad J) N Steel to the contrary at left.
D) J. Fossel K) J. Swain Instruction: To withhold
E) S. Freedman authority to vote for
F) R. Kalinowski any individual nominees,
G)C.H. Kast line out that nominee's
name at left.
// Withhold authority to
vote for all nominees
listed at left.
2. Ratification of selection 2./ /For / /Against / /Abstain
of Deloitte & Touche LLP as
independent auditors (Proposal No. 1)
3. Approval of changes to the 3./ /For / /Against / /Abstain
Fund's fundamental investment
policies (Proposal No. 2)
/ / Real Estate Investment Trusts
/ / Investments in Other Investment Companies
/ / Commodities
/ / Hedging
/ / Borrowing and Lending
/ / Unseasoned Issuers
/ / Diversification
4. Approval of the current 4./ /For / /Against / /Abstain
Investment Advisory Agreement
(Proposal No. 3)
5. Approval of the Fund's Class B 5./ /For / /Against / /Abstain
12b-1 Distribution and Service Plan
(Proposal No. 4)
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.
OVER
Dated: , 1997
-------------------------------------
(Month) (Day)
Signature(s)
-------------------------------------
Signature(s)
-------------------------------------
Please read both sides of this ballot. 420
proxy\420bal.b
<PAGE>
Oppenheimer Total Return Proxy for Shareholders Meeting To
Fund, Inc. - Class C Shares Be Held June 25, 1997
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 Total Return Proxy For Shareholders Meeting To
Fund, Inc. - Class C Shares Be Held June 25, 1997
The undersigned shareholder of Proxy solicited on behalf of the
Oppenheimer Total Return Fund, Inc. Board of Directors, which
(the "Fund"), does hereby appoint recommends a vote FOR the election
Robert Bishop, George C. Bowen, of all nominees for Director and FOR
Rendle Myer and Scott Farrar, each proposal on the reverse side.
and each of them, as attorneys-in The shares represented hereby
fact and proxies of the undersigned, will be voted as indicated on the
with full power of substitution, to reverse side or FOR if no choice
attend the Meeting of Shareholders is indicated.
of the Fund to be held June 25,
1997, at 6803 South Tucson Way,
Englewood, Colorado 80112 at 11:00
A.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
Directors 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.
OVER
420
<PAGE>
Oppenheimer Total Return Proxy for Shareholders Meeting to be held
Fund, Inc. - Class C Shares June 25, 1997
Your shareholder Your prompt response can save your Fund money.
vote is important! 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 A) R. Avis H) R. Kirchner 1.// For all nominees
of Directors B) W. Baker I) B. Macaskill listed except as marked
C) C. Conrad J) N Steel to the contrary at left.
D) J. Fossel K) J. Swain Instruction: To withhold
E) S. Freedman authority to vote for
F) R. Kalinowski any individual nominees,
G)C.H. Kast line out that nominee's
name at left.
// Withhold authority to
vote for all nominees
listed at left.
2. Ratification of selection 2./ /For / /Against / /Abstain
of Deloitte & Touche LLP as
independent auditors (Proposal No. 1)
3. Approval of changes to the 3./ /For / /Against / /Abstain
Fund's fundamental investment
policies (Proposal No. 2)
/ / Real Estate Investment Trusts
/ / Investments in Other Investment Companies
/ / Commodities
/ / Hedging
/ / Borrowing and Lending
/ / Unseasoned Issuers
/ / Diversification
4. Approval of the current 4./ /For / /Against / /Abstain
Investment Advisory Agreement
(Proposal No. 3)
5. Approval of the Fund's Class C 5./ /For / /Against / /Abstain
12b-1 Distribution and Service Plan
(Proposal No. 4)
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.
OVER
Dated: , 1997
-------------------------------------
(Month) (Day)
Signature(s)
-------------------------------------
Signature(s)
-------------------------------------
Please read both sides of this ballot. 420
proxy\420bal.c
<PAGE>
Oppenheimer Total Return Proxy for Shareholders Meeting To
Fund, Inc. Class Y Shares Be Held June 25, 1997
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 Total Return Proxy For Shareholders Meeting To
Fund, Inc. Class Y Shares Be Held June 25, 1997
The undersigned shareholder of Proxy solicited on behalf of the
Oppenheimer Total Return Fund, Inc. Board of Directors, which
(the "Fund"), does hereby appoint recommends a vote FOR the election
Robert Bishop, George C. Bowen, of all nominees for Director and FOR
Rendle Myer and Scott Farrar, each proposal on the reverse side.
and each of them, as attorneys-in The shares represented hereby
fact and proxies of the undersigned, will be voted as indicated on the
with full power of substitution, to reverse side or FOR if no choice
attend the Meeting of Shareholders is indicated.
of the Fund to be held June 25,
1997, at 6803 South Tucson Way,
Englewood, Colorado 80112 at 11:00
A.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
Directors 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.
OVER
420
<PAGE>
Oppenheimer Total Return Proxy for Shareholders Meeting to be held
Fund, Inc. Class Y Shares June 25, 1997
Your shareholder Your prompt response can save your Fund money.
vote is important! 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 A) R. Avis H) R. Kirchner 1.// For all nominees
of Directors B) W. Baker I) B. Macaskill listed except as marked
C) C. Conrad J) N Steel to the contrary at left.
D) J. Fossel K) J. Swain Instruction: To withhold
E) S. Freedman authority to vote for
F) R. Kalinowski any individual nominees,
G)C.H. Kast line out that nominee's
name at left.
// Withhold authority to
vote for all nominees
listed at left.
2. Ratification of selection 2./ /For / /Against / /Abstain
of Deloitte & Touche LLP as
independent auditors (Proposal No. 1)
3. Approval of changes to the 3./ /For / /Against / /Abstain
Fund's fundamental investment
policies (Proposal No. 2)
/ / Real Estate Investment Trusts
/ / Investments in Other Investment Companies
/ / Commodities
/ / Hedging
/ / Borrowing and Lending
/ / Unseasoned Issuers
/ / Diversification
4. Approval of the current 4./ /For / /Against / /Abstain
Investment Advisory Agreement
(Proposal No. 3)
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.
OVER
Dated: , 1997
-------------------------------------
(Month) (Day)
Signature(s)
-------------------------------------
Signature(s)
-------------------------------------
Please read both sides of this ballot. 420
proxy\420bal.y
<PAGE>
OPPENHEIMER TOTAL RETURN FUND, INC.
6803 South Tucson Way, Englewood, Colorado 80112
Notice Of Meeting Of Shareholders To Be Held
June 25, 1997
To The Shareholders of Oppenheimer Total Return Fund, Inc.:
Notice is hereby given that a Meeting of the Shareholders of Oppenheimer Total
Return Fund, Inc. (the "Fund") will be held at 6803 South Tucson Way, Englewood,
Colorado, 80112, at 10:00 A.M., Denver time, on June 25, 1997, or any
adjournments thereof, for the following purposes:
To be voted on by holders of:
Class A Class BClass C Class Y
Shares Shares Shares Shares
X X X X (a) To elect eleven Directors to hold
office until the next meeting of shareholders
called for the purpose of electing Directors
and until their successors are elected and
shall qualify;
X X X X (b) To ratify the selection of Deloitte &
Touche LLP as the independent certified public
accountants and auditors of the Fund for the
fiscal year beginning January 1, 1997 (Proposal
No.
1);
X X X X (c) To approve changes to certain of the Fund's
fundamental investment policies (Proposal No.
2);
X X X X (d) To approve the current Investment Advisory
Agreement between the Fund and OppenheimerFunds,
Inc. (the "Manager") (Proposal No. 3);
X (e) To approve the Fund's Class B 12b-1
Distribution and Service Plan (only
shareholders of Class B shares vote on this
proposal) (Proposal No. 4);
X (f) To approve the Fund's Class C 12b-1
Distribution and Service Plan (only
shareholders of Class C shares vote on this
proposal) (Proposal No. 5); and
X X X X (g) 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 2, 1997, are entitled
to notice of and to vote at the meeting. The election of Directors 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 Directors of the Fund recommends a vote to
elect each of the
<PAGE>
nominees as Director 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 Directors,
Andrew J. Donohue, Secretary
May 1, 1997
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.
420
<PAGE>
OPPENHEIMER TOTAL RETURN FUND, INC.
6803 South Tucson Way, Englewood, Colorado 80112
PROXY STATEMENT
Meeting of Shareholders
To Be Held June 25, 1997
This statement is furnished to the shareholders of Oppenheimer Total Return
Fund, Inc. (the "Fund") in connection with the solicitation by the Fund's Board
of Directors of proxies to be used at a meeting (the "Meeting") of shareholders
to be held at 6803 South Tucson Way, Englewood, Colorado, 80112, at 10:00 A.M.,
Denver time, on June 25, 1997, or any adjournments thereof. It is expected that
the mailing of this Proxy Statement will be made on or about May 1, 1997. For a
free copy of the Fund's annual report for its most recent fiscal year ended
December 31, 1996, call OppenheimerFunds Services, the Fund's transfer agent, at
1-800-525-7048.
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
Director 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
("broker non-votes"), the broker-dealer may (if permitted under applicable stock
exchange rules) as record holder vote such shares for the election of Directors
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.
In addition, Class Y shares held by Massachusetts Mutual Life Insurance
("MassMutual") and shares held by the Oppenheimer Total Return Fund, Inc.
Periodic Investment Plan (see "Shares Outstanding and Entitled to Vote," below)
for which no voting instructions are received will be voted by MassMutual and
the Periodic Investment Plan, respectively, in the same proportion as shares for
which voting instructions were received in time to be voted. Abstentions and
broker non-votes will be counted as present for purposes of determining a quorum
and will have the same effect as a vote against the proposal.
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 Director 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 6803 South Tucson Way, Englewood, Colorado 80112 (if
received in time to be acted upon); (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
-1-
<PAGE>
to the solicitation of proxies by mail, proxies may be solicited by officers or
employees of the Fund's transfer agent, personally or by telephone or other
means; 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 2, 1997, the record date,
there were approximately 270,696,010 shares of the Fund issued and outstanding,
consisting of approximately 187,142,782 Class A shares, 79,360,554 Class B
shares, 2,273,399 Class C shares and 1,919,275 Class Y shares. Each Class A,
Class B, Class C share and Class Y share of the Fund has voting rights as stated
in this Proxy Statement and is entitled to one vote for each share (and a
fractional vote for a fractional share) held of record at the close of business
on the record date. As of April 2, 1997, the only shareholder owning of record
or known by management of the Fund to be the beneficial owner of 5% or more of
the outstanding shares of any class of the Fund's shares was: (i) Merrill Lynch
Pierce Fenner & Smith, 4800 Deer Lake Drive East, 3rd floor, Jacksonville, FL
32246-6484, which owned of record 141,522.000 Class C shares (6.22% of that
class) for the benefit of its customers and not for its own account, and (ii)
Massachusetts Mutual Life Insurance Company Act, Separate Investment Account N1,
1295 State Street, Springfield, MA 01111, which owned of record 1,919,275.344
Class Y shares (100% of that class). In addition, Oppenheimer Total Return Fund,
Inc. Periodic Investment Plan, 6803 South Tucson Way, Englewood, CO 80112, which
owned 100% of the shares of Periodic Investment Plan, which equals approximately
9,039,505 Class A shares (approximately 4.83% of that class).
ELECTION OF DIRECTORS
At the Meeting, eleven Directors are to be elected to hold office until the next
meeting of shareholders called for the purpose of electing Directors and until
their successors shall be duly elected and shall have qualified. Each nominee
has agreed to be named and to serve. 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 Directors of the Fund. As a Maryland corporation, the
Fund does not contemplate holding annual shareholder meetings for the purpose of
electing Directors. Thus, the Directors will be elected for indefinite terms
until a shareholder meeting is called for the purpose of voting for Directors
and until their successors are elected and shall qualify.
Each of the nominees is also a Director, Trustee or managing general partner of
Oppenheimer Equity Income Fund, Oppenheimer Cash Reserves, Centennial America
Fund, L.P., Oppenheimer Variable Account Funds, Oppenheimer Champion Income
Fund, Oppenheimer High Yield Fund, Oppenheimer Main Street Funds, Inc.,
Oppenheimer Municipal Fund, Oppenheimer Real Asset Fund, Oppenheimer Strategic
Income Fund, Oppenheimer Strategic Income & Growth Fund, Oppenheimer
International Bond Fund, Oppenheimer Integrity Funds, Oppenheimer Limited-Term
Government Fund, The New York Tax-Exempt Income Fund, Inc., Panorama Series
Fund, Inc., Centennial Money Market Trust, Centennial Government Trust,
Centennial New York Tax Exempt Trust, Centennial California Tax Exempt Trust,
Daily Cash Accumulation Fund, Inc. and Centennial
-2-
<PAGE>
Tax Exempt Trust (which together with the Fund, comprise the "Denver-based
Oppenheimer funds"), except that Mr. Fossel and Ms. Macaskill are not Directors
or Trustees of Oppenheimer Strategic Income Fund, Panorama Series Fund, Inc.,
Oppenheimer Variable Account Funds and Oppenheimer Integrity Funds and Mr.
Fossel is not a Trustee of Centennial New York Tax Exempt Trust or a managing
general partner of Centennial America Fund, L.P. Ms. Macaskill is the President
and Mr. Swain is the Chairman and CEO, of all the Denver Oppenheimer funds.
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 Fund's investment adviser, OppenheimerFunds, Inc. (the "Manager") or its
affiliates, or other positions described. Mr. Fossel may also be considered an
"interested person" of the Fund or the Manager. Please see the section entitled
"The Manager, the Distributor and the Transfer Agent" under Proposal No. 3 for
more information. The year given below indicates when the nominee first became a
Director or Trustee of any of the Denver-based Oppenheimer funds without a break
in service. The beneficial ownership of Class A shares listed below includes
voting and investment control, unless otherwise indicated below. If a nominee
should be unable to accept election, the Board of Directors may, in its
discretion, select another person to fill the vacant position. As of April 2,
1997, the Directors and officers of the Fund as a group owned approximately
62,560 Class A shares of the Fund in the aggregate (including 2,746.848 shares
owned by Ms. Macaskill's spouse, of which she disclaims beneficial ownership),
which is less than 1% of the outstanding shares of that class. None of the
Directors or officers owned any Class B, Class C or Class Y shares of the Fund.
Class A Shares
Beneficially
Name And Business Experience Owned as of
Other Information During the Past Five Years April 2, 1997
Robert G. Avis* Vice Chairman of A.G. Edwards & Sons, -0-
first became a Inc. (a broker-dealer) and A.G.E. Edwards,
Director in 1993. Inc. (its parent holding company);
Age: 65 Chairman of A.G.E. Asset Management and
A.G. Edwards Trust Company (its affiliated
investment adviser and trust company,
respectively).
William A. Baker Management Consultant. -0-
first became a
Director in 1966.
Age: 82
- --------
*A nominee who is an "interested person" of the Fund and the Manager under the
Investment Company Act.
-3-
<PAGE>
Class A Shares
Beneficially
Name And Business Experience Owned as of
Other Information During the Past Five Years April 2, 1997
Charles Conrad, Jr. Chairman and Chief Executive Officer 300.438
first became a of Universal Space Lines, Inc. (a
Director in 1970. space services management company);
Age: 66 formerly Vice President of McDonnell
Douglas Space Systems Co. and associated
with the National Aeronautics and Space
Administration.
Jon S. Fossel* Member of the Board of Governors of the -0-
first became a Investment Company Institute (a national
Director in 1990. trade association of investment companies),
Age: 54 Chairman of the Investment Company
Institute Education Foundation; formerly
Chairman and a director of the Manager,
President and a director of Oppenheimer
Acquisition Corp. ("OAC"), the Manager's
parent holding company, and formerly
a director of Shareholder Services, Inc.
("SSI") and Shareholder Financial
Services, Inc. ("SFSI"), transfer agent
subsidiaries of the Manager.
Sam Freedman Formerly Chairman and Chief Executive -0-
first become a Officer of OppenheimerFunds Services,
Director in 1996. a division of the Manager which is a
Age 56 transfer agent; formerly Chairman, Chief
Executive Officer and a director of SSI & SFSI; Vice
President and director of OAC, and a director of the
Manager.
Raymond J. Kalinowski Director of Wave Technologies Internatio-0-,
first became a Inc. (a computer products training company);
Director in 1988. formerly Vice Chairman and a director of
Age: 67 A.G. Edwards, Inc., parent holding company
of A.G. Edwards & Sons, Inc. (a broker-dealer),
of which he was a Senior Vice President.
- --------
*A nominee who is an "interested person" of the Fund and the Manager under the
Investment Company Act.
-4-
<PAGE>
Class A Shares
Beneficially
Name And Business Experience Owned as of
Other Information During the Past Five Years April 2, 1997
C. Howard Kast Formerly Managing Partner of Deloitte, -0-
first became a Haskins & Sells (an accounting firm).
Director in 1988.
Age: 75
Robert M. Kirchner President of The Kirchner Company 9,368.353
first became a Director(management consultants).
in 1963.
Age: 75
Bridget A. Macaskill* President, Chief Executive Officer and a29,940.425**
first become a a Director of the Manager and HarbourView
Director in 1995. Asset Management Corporation
Age: 48 ("HarbourView"), an investment adviser
subsidiary of the Manager; Chairman and a director of SSI
and SFSI; President and a director of OAC and Oppenheimer
Partnership Holdings, Inc., a holding company subsidiary
of the Manager; a director of Oppenheimer Real Asset
Management, Inc.; formerly Executive Vice President of
the Manager.
Ned M. Steel Chartered Property and Casualty Underwri14,938.53+
first became a a director of Visiting Nurse Corporation of
Director in 1963. Colorado; formerly Senior Vice President
Age: 81 and a director of Van Gilder Insurance Corp.
(insurance brokers).
- --------
*A nominee who is an "interested person" of the Fund and the Manager under the
Investment Company Act.
**2,746.484 of these shares are owned by Ms. Macaskill's spouse, of which she
disclaims beneficial ownership.
+256.624 of these shares are owned by Mr. Steel's spouse, of which he disclaims
beneficial ownership.
-5-
<PAGE>
Class A Shares
Beneficially
Name And Business Experience Owned as of
Other Information During the Past Five Years April 2, 1997
James C. Swain* Vice Chairman of the Manager; formerly a -0-
first became a director of the Manager, President and a
Director in 1969. director of Centennial Asset Management
Age: 63 Corporation ("Centennial"), an investment
adviser subsidiary of the Manager, and
Chairman of the Board of SSI.
- ------------------------
*A nominee who is an "interested person" of the Fund and the Manager under the
Investment Company Act.
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 Director. The Board of Directors recommends a vote for the election
of each nominee.
Functions of the Board of Directors. The primary responsibility for the
management of the Fund rests with the Board of Directors. The Directors 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 Directors
were held during the fiscal period ended December 31, 1996. Each of the
Directors was present for at least 75% of the meetings held of the Board (except
Mr. Freedman who was appointed a Director on June 27, 1996 and attended all
Board meetings during the remainder of the Fund's fiscal year ended December 31,
1996) and of all committees on which that Director served. The Directors of the
Fund have appointed an Audit Committee, comprised of Messrs. Baker (Chairman),
Conrad and Kirchner, 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; (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 Directors. The Committee met six times during the fiscal year ended
December 31, 1996. The Board of Directors does not have a standing nominating or
compensation committee.
o Remuneration of Directors. The officers of the Fund are affiliated with the
Manager. They and the Directors of the Fund who are affiliated with the Manager
(Ms. Macaskill and Mr. Swain, who are both officers and Directors) receive no
salary or fee from the Fund. The remaining Directors of the Fund (excluding Mr.
Fossel) received the compensation shown below from the Fund during its fiscal
year ended December 31, 1996, and from all of the Denver-based Oppenheimer funds
(including the Fund) for which they served as Director, Trustee or Managing
General Partner. Mr. Freedman became a Director on June 27, 1996. Mr. Fossel
received no payments from the Fund during any period noted below. Compensation
is paid for services in the positions listed beneath their names:
-6-
<PAGE>
Aggregate
Compensation Total Compensation
From the Fund From All
Fiscal Year Denver-based
Name and Position Ended 12/31/96 Oppenheimer funds1
Robert G. Avis $7,569 $58,003
Director
William A. Baker $10,402 $79,715
Audit and Review
Committee Chairman
and Director
Charles Conrad, Jr. $9,749 $74,717
Audit and Review
Committee Member
and Director
Sam Freedman $3,850 $29,502
Director
Raymond J. Kalinowski $9,678 $74,173
Risk Management
Oversight Committee
Member and Director
C. Howard Kast $9,678 $74,173
Risk Management
Oversight Committee
Member and Director
Robert M. Kirchner $7,749 $74,713
Audit and Review
Committee Member
and Director
Ned M. Steel $7,569 $58,003
Director
- ----------------------
1For the 1996 calendar year during which the Denver-based funds listed in the
first paragraph of this section included Panorama Series Fund, Inc., which
became an Oppenheimer fund in March of 1996.
-7-
<PAGE>
Officers of the Fund. Each officer of the Fund is elected by the Directors to
serve an annual term. Information is given below about the executive officers
who are not Directors of the Fund, including their business experience during
the past five years.
Bruce Bartlett, Vice President and Portfolio Manager; Age: 47
Vice President of the Manager; an officer of other Oppenheimer funds; formerly a
Vice President and Senior Portfolio Manager at First of America Investment Corp.
Diane L. Sobin, Vice President and Portfolio Manager; Age: 35
Vice President of the Manager; an officer of other Oppenheimer funds; formerly a
Vice President and Senior Portfolio Manager for Dean Witter Inter Capital, Inc.
Andrew J. Donohue, Vice President and Secretary; Age 46.
Executive Vice President and General Counsel of the Manager and OppenheimerFunds
Distributor, Inc. (the "Distributor"); President and a director of Centennial
Asset Management Corporation ("Centennial"); Executive Vice President, General
Counsel and a director of HarbourView, SFSI, SSI and Oppenheimer Partnership
Holdings Inc.; President and a director of Oppenheimer Real Asset Management,
Inc.; General Counsel of OAC; Executive Vice President, General Counsel and a
director of MultiSource Services, Inc. (a broker-dealer); an officer of other
Oppenheimer funds; formerly Senior Vice President and Associate General Counsel
of the Manager and the Distributor; Partner in Kraft & McManimon (a law firm);
an officer of First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser); director and an
officer of First Investors Family of Funds and First Investors Life Insurance
Company.
George C. Bowen, Vice President, Assistant Secretary and Treasurer; Age 60.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer of the Manager; Vice President and Treasurer
of the Distributor and HarbourView; Senior Vice President, Treasurer and
Assistant Secretary and a director of Centennial; Senior Vice President,
Treasurer and Secretary of SSI; Vice President, Treasurer and Secretary of SFSI;
Treasurer of OAC; Vice President and Treasurer of Oppenheimer Real Asset
Management, Inc.; Chief Executive Officer, Treasurer and a director of
MultiSource Services, Inc.
and an officer of other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age 48.
Senior Vice President and Associate General Counsel of the Manager; Assistant
Secretary of SSI and SFSI; an officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age 38.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of other
Oppenheimer funds; 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.
-8-
<PAGE>
Scott T. Farrar, Assistant Treasurer; Age 31.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of other
Oppenheimer funds; previously a Fund Controller for the Manager.
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
Directors 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 Directors
of the Fund, including a majority of the Directors who are not "interested
persons" (as defined in the Investment Company Act) of the Fund or the Manager,
at a meeting held December 17, 1996, selected Deloitte & Touche LLP ("Deloitte")
as auditors of the Fund for the ensuing fiscal year. Deloitte also serves as
auditors for certain other funds for which the Manager acts as investment
adviser and also serves as auditors for the Manager and certain of its
affiliates. At the Meeting, a resolution will be presented for the shareholders'
vote to ratify the selection of Deloitte as auditors. Representatives of
Deloitte are not expected to be present at the Meeting but will have the
opportunity to make a statement if they desire to do so and will be available
should any matter arise requiring their presence. The Board of Directors
recommends approval of the selection of Deloitte as auditors of the Fund.
APPROVAL OF CHANGES TO CERTAIN OF THE
FUND'S FUNDAMENTAL INVESTMENT POLICIES
(Proposal No. 2)
The Manager proposes that certain of the Fund's fundamental investment policies
be changed, as described below, to give the Fund further investment flexibility.
An investment policy that has been designated as "fundamental" is one that
cannot be changed without the requisite shareholder approval described below
under "Vote Required." Non-fundamental investment policies may be changed by the
Manager in consultation with and approval by the Board of Directors without the
expense and delay of seeking shareholder approval. A vote in favor of this
Proposal shall be a vote in favor of all proposed investment policy changes
described in this Proposal. If approved, the effective date of this Proposal may
be delayed until the Fund's Prospectus or Statement of Additional Information is
updated to reflect these changes.
At a meeting held February 25, 1997, the Fund's Board of Directors, including a
majority of its independent Directors, determined that the best interests of the
Fund would be served by allowing the Fund greater investment flexibility, as set
forth in these proposed investment policy changes, in response to market or
regulatory developments.
o Real Estate Investment Trusts. As a matter of fundamental policy, "The Fund
cannot purchase or sell real estate, including interests in real estate
investment trusts." The Manager proposes that this fundamental policy be
replaced, subject to shareholder approval, with the following fundamental
policy, thereby removing the prohibition on investing in real estate investment
trusts
-9-
<PAGE>
("REITs"):
o The Fund cannot invest in real estate or in interests in real estate,
but may purchase securities of issuers holding real estate or interests
therein.
This new policy on investments in real estate must be fundamental, as required
by sections 8(b)(1) and 13(a)(2) of the Investment Company Act of 1940.
Securities of companies holding real estate or interests therein, including
REITs and real estate limited partnerships, seek to earn profits for investors
by managing income-producing real estate or lending money to developers. Assets
are generally managed by one or more trustees (in the case of a REIT) or general
partners (in the case of a real estate limited partnership) who control
acquisitions and investments. There are special risks associated with these
types of investments. The value of the Fund's investments in REITs or real
estate limited partnerships will be affected by changes in the values of the
underlying real estate investments as well as changes in interest rates. At
times, the real estate market can be volatile and prices can change
substantially. These risks may affect the Fund's net asset values per share.
o Investments in Other Investment Companies. Currently, as a matter of
fundamental policy, the Fund cannot buy securities of other investment
companies, except in connection with a merger or consolidation. The Manager
proposes that this fundamental policy be eliminated.
Until the recent enactment of the National Securities Markets Improvement Act of
1996 (the "Securities Markets Improvement Act"), the ability of investment
companies to invest in other investment companies had been significantly
limited. With the passage of the Securities Markets Improvement Act, the ability
to invest in other investment companies has been greatly expanded and the
Securities and Exchange Commission has been granted broad exemptive authority to
permit other arrangements. Accordingly, the elimination of this fundamental
restriction will allow the Fund to purchase securities of other investment
companies to the extent permitted by law, regulation and exemptions, subject to
the approval by the Board of Directors. This change would also permit the Fund,
subject to approval by the Board of Directors, to adopt a "master-feeder" or
"fund of funds" structure. Either type of arrangement might result in
duplication of certain fees. The Fund has no current plans to adopt a
"master-feeder" or "fund of funds" structure or to engage in significant
purchases of shares of other investment companies.
o Commodities. As a matter of fundamental policy, "The Fund cannot purchase or
sell commodities or commodity contracts or purchase securities for speculative
short-term purposes; however, the Fund may buy or sell any of the Hedging
Instruments which it may use as permitted by any of its other investment
policies, whether or not any such Hedging Instrument is considered to be a
commodity or commodity contract."
This policy prohibits the Fund from trading in physical commodities, and the
Fund does not seek permission to trade physical commodities. However, this
investment policy could be read to prohibit the Fund from buying or selling
options, futures, securities or other instruments backed by, or the investment
return from which is linked to changes in the price of, physical commodities,
including "commodity-linked" notes unless they are hedging instruments.
-10-
<PAGE>
The Manager proposes that this fundamental investment policy be deleted and
replaced with a new policy that is also fundamental, as required by sections
8(b)(1) and 13(a)(2) of the Investment Company Act of 1940. Although the Fund's
current Prospectus contains disclosure regarding options, futures, securities or
other instruments backed by, or the investment return from which is linked to
changes in the price of, physical commodities, including "commodity-linked"
notes, replacing this fundamental investment policy as described below will
resolve any ambiguity as to whether the Fund may invest in those instruments.
The new fundamental policy would read as follows:
o The Fund cannot invest in physical commodities or physical commodity
contracts, or purchase securities for speculative short-term purposes;
however, the Fund may: (i) buy and sell hedging instruments permitted by
any of its other investment policies, and (ii) buy and sell options,
futures, securities or other instruments backed by, or the investment
return from which is linked to changes in the price of, physical
commodities.
The use of derivative instruments requires special skills and knowledge and
investment techniques that are different from what is required for normal
portfolio management. In some cases, the Fund may buy a call option , a futures
contract or a commodity-linked note for the purpose of increasing its exposure
in a particular market segment, which may affect the Fund's net asset values per
share. Risks of commodity-linked notes include risk of loss of principal, risk
of loss of interest, lack of a secondary market, volatility of the instrument,
and counterparty risk.
o Hedging. The Fund has two related fundamental investment policies
that pertain to the use of hedging instruments, as follows:
o The Fund cannot purchase securities on margin or sell securities short;
however, the Fund may make margin deposits in connection with any of the
Hedging Instruments it may use as permitted by any of its other investment
policies.
o The Fund may not mortgage, pledge, or hypothecate securities; however
the Fund may enter into the escrow arrangements contemplated by the
writing of covered call options or other collateral or margin arrangements
in connection with Hedging Instruments the Fund may use under its other
fundamental policies.
The Manager proposes that these two fundamental policies be amended to allow the
Fund to enter into escrow, collateral and margin arrangements in connection not
only with its hedging instruments, but also with any of its permitted
investments.
These revised fundamental investment policies would read as follows:
o The Fund cannot purchase securities on margin or sell securities short;
however, the Fund may make margin deposits in connection with any of its
investments.
o The Fund may not mortgage, pledge or hypothecate securities; however,
the Fund may enter into the escrow arrangements contemplated by the
writing of covered call options or
-11-
<PAGE>
othercollateral or margin arrangements in connection with any of its
investments.
o Borrowing and Lending. The Fund has a fundamental investment policy that it
cannot borrow or lend money, and that it cannot lend portfolio securities (with
certain exceptions). This current fundamental policy reads as follows:
o The Fund may not borrow or lend money, or lend, pledge, mortgage, or
hypothecate securities except as provided [in the Fund's Prospectus] under
"Loans of Portfolio Securities" (however, the Fund may purchase bonds or
other debt securities, and enter into escrow arrangements contemplated by
the writing of covered call options or other collateral or margin
arrangements in connection with Hedging Instruments the Fund may use under
its other fundamental policies).
The Manager proposes that this fundamental investment policy be deleted and
replaced with two new fundamental policies, one for borrowing to give the Fund
flexibility to borrow money in the event of an emergency, and the other to
clarify the policy on loans. An emergency might be for example, unanticipated
redemptions which would require the sale of portfolio securities at a time or
price disadvantageous to the Fund.
These new fundamental investment policies would read as follows:
o The Fund cannot borrow money, except for temporary, emergency purposes
or under other unusual circumstances.
o The Fund cannot make loans, except that the Fund may purchase debt
securities and enter into repurchase agreements or when-issued, delayed
delivery or similar securities transactions, and may lend its portfolio
securities.
o Unseasoned Issuers. As a matter of fundamental policy, "The Fund cannot invest
in securities of any corporation which has a record of less than three years'
continuous operation." The Manager proposes that this fundamental policy be
replaced with the following non-fundamental investment policy, which could be
changed by the Manager in consultation with and approval by the Board of
Directors:
o The Fund cannot invest in securities of any corporation which has a
record of operations of less than three years, including operations of any
predecessors.
|X| Diversification. Under the Investment Company Act, a "diversified"
management investment company such as the Fund is defined as one wherein, with
respect to at least 75% of its total assets, (i) no more than 5% of the Fund's
total assets are invested in securities of a single issuer (other than the U.S.
Government or its agencies or instrumentalities) and (ii) the Fund owns no more
than 10% of that issuer's voting securities. Under the Fund's current
diversification policy, which is a fundamental policy, the Fund is diversified,
that is, applies the policies described in clauses (i) and (ii) above, with
respect to 100% of its total assets, and imposes additional restrictions not
required by the Investment Company Act. The Fund's current diversification
policy reads as follows:
-12-
<PAGE>
o The Fund may not invest more than 5% of its assets in securities of any
one issuer other than the U.S. Government; the Fund may not purchase the
securities of any one issuer if immediately thereafter, the Fund would own
more than 10% of the outstanding voting securities or 10% of any one class
of securities of such issuer (except for securities of investment
companies acquired in exchange for Fund shares).
If shareholders approve this Proposal No. 2, the Fund would change its
diversification from 100% to 75% of its total assets, as permitted by the
Investment Company Act. The Fund's revised diversification policy, which would
be a fundamental policy, would provide that:
o The Fund cannot buy securities issued or guaranteed by any one issuer
(except the U.S. Government or any of its agencies or instrumentalities)
if, with respect to 75% of its total assets, more than 5% of the Fund's
total assets would be invested in securities of that issuer, or the Fund
would then own more than 10% of that issuer's voting securities.
Approval of this Proposal will enable the Fund to freely invest up to 25% of its
total assets. As a result, the Fund's portfolio could be less diversified from
time to time, and thus subject, to a greater extent, to changes in value of any
one such portfolio holding. Under either 100% or 75% diversification, each
foreign government is considered to be an issuer for diversification purposes.
Under the Fund's current 100% diversification policy, the Fund is limited to
investing no more than 5% of its total assets in securities of any one foreign
government, including securities issued by that foreign government's agencies or
instrumentalities. The Fund wishes to be able to take greater advantage of
investment opportunities that exist from time to time in foreign government
securities. The change will also permit the Fund to increase its investments in
certain securities, if the Fund so chooses, and will permit investment
flexibility to a greater degree.
Vote Required. An affirmative vote of the holders of a "majority of all
outstanding voting securities" (as defined in the Investment Company Act) of the
Fund is required for approval of this Proposal; the classes do not vote
separately. The requirement for such "majority" is defined in the Investment
Company Act as the vote of the holders of the lesser of: (i) 67% or more of the
voting securities present or represented by proxy at the shareholders meeting,
if the holders of more than 50% of the outstanding voting securities are present
or represented by proxy; or (ii) more than 50% of the outstanding voting
securities. The Board of Directors recommends a vote in favor of approving this
Proposal.
APPROVAL OF CURRENT INVESTMENT ADVISORY AGREEMENT
(Proposal No. 3)
The Fund has an Investment Advisory Agreement dated October 22, 1990 with the
Manager (the "Agreement") which was most recently approved by the Fund's Board
of Directors, including a majority of the Directors who are not "interested
persons" (as defined in the Investment Company Act) of the Fund or of the
Manager, on December 17, 1996. Prior to January 5, 1996, the Manager was known
as Oppenheimer Management Corporation. The Agreement was approved by
shareholders of the Fund at a meeting held on October 1, 1990 because of the
acquisition of the Manager by Massachusetts Mutual Life Insurance Company
("MassMutual") through a wholly-owned subsidiary, Oppenheimer Acquisition Corp.
The Board of Directors has determined to submit the Fund's current Investment
Advisory Agreement for shareholder approval. The Agreement, included in this
Proxy Statement as Exhibit A, has not been modified or amended since it was last
approved by shareholders, and the Board recommends approval of the Investment
Advisory Agreement without any amendments. If approved by the shareholders at
this meeting, the Agreement will continue in effect until December 31, 1997, and
thereafter from year to year unless terminated, but only so long as such
continuance is approved in accordance with the Investment Company Act.
Under the Agreement, the Manager supervises the investment operations of the
Fund and the composition of its portfolio and furnishes the Fund advice and
recommendations with respect to investments, investment policies and the
purchase and sale of securities. The management fee, computed daily and payable
monthly under the Agreement to the Manager, is computed on the average annual
net assets of the Fund at the following annual rates: 0.75% of the first $100
million of average annual net assets; 0.70% of the next $100 million; 0.65% of
the next $100 million; 0.60% of the next $100 million; 0.55% of the next $100
million and 0.50% of average annual net assets in excess of $500 million. During
the fiscal year ended December 31, 1996, the Fund paid the Manager a fee of
$12,631,975 under the Agreement. The Manager also acts as investment adviser to
other Oppenheimer funds that have similar or comparable investment objectives. A
list of those funds and the net assets and advisory fee rates paid by those Fund
is contained in Exhibit B to this Proxy Statement.
The Agreement requires the Manager, at its expense, to provide the Fund with
adequate office space, facilities and equipment as well as to provide and
supervise the activities of all administrative and clerical personnel required
to provide effective administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and composition of proxy materials and registration
statements for continuous public sale of shares of the Fund. Expenses not
expressly assumed by the Manager under the Agreement or by the Distributor of
the Fund's shares are paid by the Fund. The Agreement lists examples of expenses
paid by the Fund, the major categories of which relate to interest, taxes,
brokerage commissions, fees to certain Directors, 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 Agreement contains no expense limitation. However, independently of the
Agreement, prior to April 18, 1997, the Manager had undertaken that the total
expenses of the Fund (including the management fee but excluding taxes,
interest, brokerage fees and any extraordinary non-recurring expenses, such as
litigation) would not exceed the most stringent applicable state regulatory
limitation. The payment of the management fee at the end of any month would be
reduced so that there would not be any accrued but unpaid liability under this
expense limitation. The Manager has reserved the right to change or eliminate
this expense limitation at any time. Due to changes in federal securities laws,
such state regulatory limitation no longer applied and the Manager withdrew its
undertaking with the Fund's updated Prospectus and Statement of Additional
Information dated April 18, 1997. During the Fund's most recent fiscal year
ended December 31, 1996, the Fund's expenses did not exceed the most stringent
state regulatory limit and the voluntary undertaking was
-13-
<PAGE>
not invoked.
So long as it shall have acted with due care and in good faith, the Manager
shall not be liable for any loss sustained by reason of any investment, the
adoption of any investment policy, or the purchase, sale or retention of any
security irrespective of whether the determinations of the Manager relative
thereto shall have been based, wholly or partly, upon the investigation or
research of any other individual, firm or corporation believed by it to be
reliable. Nothing contained in the Agreement shall, however, be construed to
protect the Manager against any liability to the Fund or its shareholders by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement.
The Agreement permits the Manager to act as investment adviser for any other
person, firm or corporation and to use the name "Oppenheimer" in connection with
other investment companies for which it may act as investment adviser. 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 Agreement. One of the duties of the Manager under
the Agreement is to arrange the portfolio transactions for the Fund. The
Agreement contains provisions relating to the employment of broker-dealers
("brokers") to effect the Fund's portfolio transactions. In doing so, the
Manager is authorized by the Agreement to employ such broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company Act, as
may, in its best judgment based on all relevant factors, implement the policy of
the Fund to obtain, at reasonable expense, the "best execution" (prompt and
reliable execution at the most favorable price obtainable) of such transactions.
The Manager need not seek competitive commission bidding but is expected to be
aware of the current rates of eligible brokers and to minimize the commissions
paid to the extent consistent with the interest and policies of the Fund as
established by its Board of Directors. Purchases of securities from underwriters
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers include a spread between the bid and asked price.
Under the Agreement, the Manager is authorized to select brokers that provide
brokerage and/or research services for the Fund and/or the other accounts over
which the Manager or its affiliates have investment discretion. The commissions
paid to such brokers may be higher than another qualified broker would have
charged if a good faith determination is made by the Manager that the
commissions are fair and reasonable in relation to the services provided.
Subject to the foregoing considerations, the Manager may also consider sales of
shares of the Fund and other investment companies managed by the Manager or its
affiliates as a factor in the selection of brokers for the Fund's portfolio
transactions.
Description of Brokerage Practices. Subject to the provisions of the Agreement,
and the procedures and rules described above, allocations of brokerage are
generally made by the Manager's portfolio traders based upon recommendations
from the Manager's portfolio managers. In certain instances, portfolio managers
may directly place trades and allocate brokerage, also subject to the provisions
of the Agreement and the procedures and rules described above. In either case,
brokerage is allocated under the supervision of the Manager's executive
officers. Transactions in securities
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<PAGE>
other than those for which an exchange is the primary market are generally done
with principals or market makers. Brokerage commissions are paid primarily for
effecting transactions in listed securities or for certain fixed-income agency
transactions in the secondary market and are otherwise paid only if it appears
likely that a better price or execution can be obtained. When the Fund engages
in an option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transaction 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. The 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 in commission dollars. The
Board of Directors permits the Manager to use concessions on fixed price
offerings to obtain research, in the same manner as is permitted for agency
transactions. The Board also permits the Manager to use stated commissions on
secondary fixed-income agency trades to obtain research where the broker has
represented to the Manager that: (i) the trade is not from or for the broker's
own inventory; (ii) the trade was executed by the broker on an agency basis at
the stated commission; and (iii) the trade is not a riskless principal
transaction.
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 by enabling the Manager to obtain market
information for the valuation of securities held in the Fund's portfolio or
being considered for purchase.
The Manager, the Distributor and the Transfer Agent. Subject to the authority of
the Board of Directors, the Manager is responsible for the day-to-day management
of the Fund's business, pursuant to its investment advisory agreement with the
Fund. OppenheimerFunds Distributor, Inc., a wholly-owned subsidiary of the
Manager, is the general distributor (the "Distributor") of the Fund's shares.
OppenheimerFunds Services, a division of the Manager, serves as the transfer and
shareholder servicing agent for the Fund on an "at-cost" basis, for which it was
paid $2,897,019 by the Fund during its fiscal year ended December 31, 1996.
The Manager (including a subsidiary) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $62 billion as of
March 31, 1997, and with more than 3 million shareholder accounts. The Manager
is a wholly-owned subsidiary of Oppenheimer
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<PAGE>
Acquisition Corp. ("OAC"), a holding company controlled by Massachusetts Mutual
Life Insurance Company ("MassMutual"). The Manager, the Distributor and OAC are
located at Two World Trade Center, New York, New York 10048. MassMutual is
located at 1295 State Street, Springfield, Massachusetts 01111. OAC acquired the
Manager on October 22, 1990. As indicated below, the common stock of OAC is
owned by (i) certain officers and/or directors of the Manager, (ii) MassMutual
and (iii) another investor. No institution or person holds 5% or more of OAC's
outstanding common stock except MassMutual. MassMutual has engaged in the life
insurance business since 1851.
The common stock of OAC is divided into three classes. At December 31, 1996,
MassMutual held (i) all of the 2,160,000 shares of Class A voting stock, (ii)
716,943 shares of Class B voting stock, and (iii) 1,353,873 shares of Class C
non-voting stock. This collectively represented 86.2% of the outstanding common
stock and 94.2% of the voting power of OAC as of that date. Certain officers
and/or directors of the Manager held (i) 407,866 shares of the Class B voting
stock, representing 8.3% of the outstanding common stock and 4.1% of the voting
power, and (ii) options acquired without cash payment which, when they become
exercisable, allow the holders to purchase up to 684,407 shares of Class C
non-voting stock. That group includes persons who serve as officers of the Fund,
and Ms. Macaskill and Mr. Swain, who serve as Directors of the Fund. Holders of
OAC Class B and Class C common stock may put (sell) their shares and vested
options to OAC or MassMutual at a formula price (based on earnings of the
Manager). MassMutual may exercise call (purchase) options on all outstanding
shares of both such classes of common stock and vested options at the same
formula price. From the period November 1, 1995 to December 31, 1996, the only
transactions by persons who serve as Directors of the Fund were by Ms.
Macaskill, who surrendered to OAC 20,000 stock appreciation rights issued in
tandem with the Class C OAC options, for cash payments aggregating $1,421,800,
Mr. Fossel who sold 117,838 shares of Class B OAC common stock to MassMutual for
an aggregate of $15,133,735, Mr. Swain who surrendered to OAC 20,000 stock
appreciation rights issued in tandem with Class C OAC options, for a cash
payment aggregating $2,267,780, and Mr. Freedman who surrendered to OAC 45,474
stock appreciation rights issued in tandem with Class C OAC options, for a cash
payment of $4,808,876. Mr. Freedman and Mr. Fossel no longer hold any OAC stock,
stock appreciation rights or other financial interests in the Manager or any of
its affiliates. Mr. Fossel, however, may be entitled to an additional payment to
be made in 1997.
The names and principal occupations of the executive officers and directors of
the Manager are as follows: Bridget A. Macaskill, President, Chief Executive
Officer and a director; Donald W. Spiro, Chairman Emeritus; Robert G. Galli and
James C. Swain, Vice Chairmen; Robert C. Doll, O. Leonard Darling, Paula
Gabriele, Barbara Hennigar, James Ruff, Loretta McCarthy, Tilghman G. Pitts III
and Nancy Sperte, Executive Vice Presidents; Andrew J. Donohue, Executive Vice
President and General Counsel; George C. Bowen, Senior Vice President and
Treasurer; Peter M. Antos, Victor Babin, Robert A. Densen, Ronald H. Fielding,
Robert E. Patterson, Richard Rubinstein, Arthur Steinmetz, Ralph Stellmacher,
John Stoma, Jerry A. Webman, William L. Wilby and Robert G. Zack, Senior Vice
Presidents. These officers are located at one of the four offices of the
Manager: Two World Trade Center, New York, NY 10048; 6803 South Tucson Way,
Englewood, CO 80112; 350 Linden Oaks, Rochester, NY 14625 and One Financial
Plaza, 755 Main Street, Hartford, CT 06103.
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<PAGE>
Considerations by the Board of Directors. In connection with the annual review
by the Board of Directors in December 1996 to determine if the Investment
Advisory Agreement should be approved and renewed, the Board and the Independent
Directors considered and reviewed materials prepared for this purpose by a
consultant. The Board also considered materials provided by the Manager. As a
result of its deliberations, the Board of Directors including the Independent
Directors concluded to approve and renew the Agreement without amendment for an
additional one year period.
The materials reviewed and considered by the Board included information on: the
nature, quality and extent of services rendered by the Manager to the Fund; an
analysis of the Fund's investment advisory fee, investment performance, expense
ratios and expenses of the Fund as compared in each case to comparable mutual
funds; the investment performance of other mutual funds for which the Manager
acts as investment adviser; information on the portfolio manager for the Fund
and his experience and qualifications; the profitability of the Manager from its
investment advisory operations for the Fund and other mutual funds for which it
or its affiliates are the investment adviser; the financial condition and
resources of the Manager and its parent, OAC; the benefits which the Manager
obtains from its relationship with the Fund; and economies of scale made
available to the Fund by the Manager. The Board also considered the terms and
conditions of the current Agreement, and considered alternatives to the use of
the Manager.
The Board of Directors including the Independent Directors considered all of the
above matters in reaching its decision to approve the Agreement and to renew it
for an additional year. The Board did not single out any one factor or group of
factors as being more important than other factors, but considered such matters
together in arriving at its decision. The Board of Directors also considered
that the Manager has been the investment adviser for the Fund for a number of
years and the Board has found the performance of the Manager pursuant to the
Investment Advisory Agreement to be satisfactory.
Determination by the Independent Directors and the Board of Directors. After
completion of its review, the Independent Directors recommended that the Board
of Directors approve, and the Board unanimously approved, the Agreement.
Vote Required. An affirmative vote of the holders of a "majority of all
outstanding voting securities" (as defined in the Investment Company Act) of the
Fund is required for approval of the Agreement; the classes do not vote
separately. The requirements for such "majority" are described in Proposal No.
2. The Board of Directors recommends a vote in favor of approving the Investment
Advisory Agreement.
APPROVAL OF THE FUND'S CLASS B 12b-1 DISTRIBUTION
AND SERVICE PLAN AND AGREEMENT
(Proposal No. 4)
NOTE: This Proposal applies to Class B Shareholders only.
Class B shares were first offered to the public on May 1, 1993. In connection
with the initial public
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<PAGE>
offering of these shares, the Fund had previously adopted a Distribution and
Service Plan for Class B shares pursuant to Rule 12b-1 of the Investment Company
Act, in conformity with the National Association of Securities Dealers, Inc.
("NASD") Rule which permits the Fund to pay up to 0.25% of its average annual
net assets as a service fee and up to 0.75% of its average annual net assets as
an asset-based sales charge. The Manager, as the sole initial shareholder of the
Fund's Class B shares, approved this Distribution and Service Plan for the Class
B shares of the Fund. On July 26, 1995, the Fund's Class B shareholders approved
the Distribution and Service Plan dated July 19, 1995.
At a meeting held October 22, 1996, the Fund's Board of Directors, including a
majority of the Directors 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 Fund's 12b-1 plans or in any
related agreements ("Independent Directors"), approved and renewed for an
additional year the Distribution and Service Plan for Class B shares with
non-material changes. On February 25, 1997, the Fund's Board reviewed its
previous deliberations at the October 22, 1996 Board meeting and determined to
submit the Distribution and Service Plan to Class B shareholders for approval. A
copy of this Distribution and Service Plan for Class B shares (the "Distribution
and Service Plan") is attached as Exhibit C to this proxy statement, and is
hereby submitted to Class B shareholders for approval.
Description of the Distribution and Service Plan. Under the Distribution and
Service Plan, the Fund compensates the Distributor for its services in
connection with the distribution of Class B Shares and the personal service and
maintenance of accounts that hold Class B shares. The Fund pays the Distributor
an asset-based sales charge of 0.75% per annum of Class B shares outstanding for
no more than six years, and also pays the Distributor a service fee of 0.25% per
annum, each of which is computed on the average annual net assets of Class B
shares of the Fund.
The Distribution and Service Plan provides for payments for two different
distribution-related functions. The Distributor pays certain brokers, dealers,
banks or other persons or entities ("Recipients") a service fee of 0.25% for
personal services to Class B shareholders and maintenance of shareholder
accounts by those Recipients. The services rendered by Recipients in connection
with personal services and the maintenance of Class B shareholder accounts may
include but 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. The Distributor is
permitted under the Distribution and Service Plan to retain service fee payments
to compensate it for rendering such services.
Service fee payments by the Distributor to Recipients are made (i) in advance
for the first year Class B shares are outstanding, following the purchase of
shares, in an amount equal to 0.25% of the net asset value of the shares
purchased by the Recipient or its customers and (ii) thereafter, on a quarterly
basis, computed as of the close of business each day at an annual rate of 0.25%
of the net asset value of Class B shares held in accounts of the Recipient or
its customers. The Distributor
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<PAGE>
retains service fee during the first year shares are outstanding. In the event
Class B shares are redeemed less than one year after the date such shares were
sold, the Recipient is obligated to repay to the Distributor on demand a pro
rata portion of such advance service fee payments, based on the ratio of the
remaining period to one year.
The Distribution and Service Plan also provides that the Fund will pay the
Distributor on a monthly basis an asset-based sales charge at an annual rate of
0.75% of the net asset value of Class B shares outstanding to compensate it for
other services in connection with the distribution of the Fund's Class B shares.
The distribution assistance and administrative support services rendered by the
Distributor in connection with the sales of Class B shares may include: (i)
paying sales commissions to any broker, dealer, bank or other person or entity
that sells the Fund's Class B shares and/or paying such Recipients advance
service fees, (ii) paying compensation to and expenses of personnel of the
Distributor who support distribution of Class B shares by Recipients, (iii)
obtaining financing or providing such financing from its own resources or from
an affiliate, for the interest and other borrowing costs of the Distributor's
unreimbursed expenses incurred in rendering distribution assistance for Class B
shares, and (iv) paying certain other distribution-related expenses. The other
distribution assistance in connection with the sale of Class B shares rendered
by the Distributor and Recipients may include, but shall not be limited to, the
following: distributing sales literature and prospectuses other than those
furnished to current Class B shareholders, processing Class B share purchase and
redemption transactions, and providing such other information in connection with
the distribution of Class B shares as the Distributor or the Fund may reasonably
request.
The Distributor currently pays sales commissions from its own resources to
Recipients at the time of sale equal to 3.75% of the purchase price of Fund
shares sold by such Recipient, and advances the first year service fee of 0.25%.
The Distribution and Service Plan also provides that the Distributor may pay to
the dealer on a quarterly basis the service fee and the asset-based sales charge
payable on Class B shares in lieu of paying the sales commission of 3.75% and
the advance of the service fee at the time of purchase. Asset-based sales charge
payments are designed to permit an investor to purchase shares of the Fund
without the assessment of a front-end sales load and at the same time permit the
Distributor to compensate Recipients in connection with the sale of shares of
the Fund. The Distributor and the Fund anticipate that it will take a number of
years for the Distributor to recoup the sales commissions paid to Recipients and
other distribution-related expenses, from the Fund's payments to the Distributor
under the Distribution and Service Plan, and from the contingent deferred sales
charge deducted from redemption proceeds for Class B shares redeemed before the
end of six years of their purchase, as described in the Fund's prospectus.
The Distribution and Service Plan has the effect of increasing annual expenses
of Class B shares of the Fund by 1.00% of the class's average annual net assets
from what those expenses would otherwise be. Payments by the Fund to the
Distributor under the current Class B Plan for the fiscal period ended December
31, 1996 totalled $6,709,692 (1.00% of the Fund's average net assets represented
by Class B shares during that period), of which $5,318,916 was retained by the
Distributor and $93,473 was paid to an affiliate of the Distributor.
If the Class B shareholders approve this Proposal, the Distribution and Service
Plan shall, unless terminated as described below, continue in effect until
October 31, 1997 and from year to year
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<PAGE>
thereafter only so long as such continuance is specifically approved, at least
annually, by the Fund's Board of Directors and its Independent Directors by a
vote cast in person at a meeting called for the purpose of voting on such
continuance. The Distribution and Service Plan may be terminated at any time by
a vote of a majority of the Independent Directors or by a vote of the holders of
a "majority" (as defined in the Investment Company Act) of the Fund's
outstanding Class B shares The Distribution and Service Plan contains a
provision which provides that the Board may allow the Fund to continue payments
to the Distributor for Class B shares sold prior to termination of the
Distribution and Service Plan. Pursuant to this provision, payment of the
asset-based sales charge and service fee could be continued by the Board after
termination the Distribution and Service Plan may not be amended to increase
materially the amount of payments to be made without approval by Class B
shareholders. All material amendments must be approved by a majority of the
Independent Directors.
Additional Information. The Distribution and Service Plan provides that while it
is in effect, the selection and nomination of those Directors of the Fund who
are not "interested persons" of the Fund is committed to the discretion of the
Independent Directors. 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 Directors.
Under the Distribution and Service Plan, no payment for service fees will be
made to any Recipient in any quarter if the aggregate net asset value of all
Fund shares held by the Recipient for itself and its customers does not exceed a
minimum amount, if any, that may be determined from time to time by a majority
of the Independent Directors. Initially, the Board of Directors has set the fee
at the maximum rate and set no minimum amount. The Distribution and Service Plan
permits the Distributor and the Manager to make additional distribution payments
to Recipients from their own resources (including profits from management fees)
at no cost to the Fund. The Distributor and the Manager may, in their sole
discretion, increase or decrease the amount of distribution assistance payments
they make to Recipients from their own assets.
Analysis of the Distribution and Service Plan by the Board of Directors. In
considering whether to recommend the Distribution and Service Plan for approval,
the Board requested and evaluated information it deemed necessary to make an
informed determination. The Board, including the Independent Directors, did not
single out any one factor or group of factors as being more important than other
factors, but considered such matters together in arriving at its decision. The
Board found that there is a reasonable likelihood that the Distribution and
Service Plan benefits the Fund and its Class B shareholders by providing
financial incentives to financial intermediaries to attract new Class B
shareholders to the Fund and by assisting the efforts of the Fund and the
Distributor to service and retain existing shareholders and attract new
investors. The Distribution and Service Plan enables the Fund to be competitive
with similar funds, including funds that impose sales charges, provide financial
incentives to institutions that direct investors to such funds, and provide
shareholder servicing and administrative services.
The Board concluded that it is likely that because the Distribution and Service
Plan provides an alternative means for investors to acquire Fund shares without
paying an initial sales charge, it will benefit Class B shareholders of the Fund
by enabling the Fund to maintain or increase its present
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<PAGE>
asset base in the face of competition from a variety of financial products. The
Directors recognized that payments made pursuant to the Distribution and Service
Plan would likely be offset in part by economies of scale associated with the
growth of the Fund's assets. With larger assets, the Class B shareholders should
benefit as the Distribution and Service Plan should help maintain Fund assets.
Costs of shareholder administration and transfer agency operations will be
spread among a larger number of shareholders as the Fund grows larger, thereby
reducing the Fund's expense ratio. The Manager has advised the Directors that
investing larger amounts of money is made more readily, more efficiently, and at
lesser cost to the Fund. The Board found that a positive flow of new investment
money is desirable primarily to offset the potentially adverse effects that
might result from a pattern of net redemptions. Net cash outflow increases the
likelihood that the Fund will have to dispose of portfolio securities for other
than investment purposes. Net cash inflow minimizes the need to sell securities
to meet redemptions when investment considerations would dictate otherwise,
reduces daily liquidity requirements, and may assist in a prompt restructuring
of the portfolio without the need to dispose of present holdings.
Stimulation of distribution of mutual fund shares and providing for shareholder
services and account maintenance services by payments to a mutual fund's
distributor and to brokers, dealers, banks and other financial institutions has
become common in the mutual fund industry. Competition among brokers and dealers
for these types of payments has intensified. The Directors concluded that
promotion, sale and servicing of mutual fund shares and shareholders through
various brokers, dealers, banks and other financial institutions is a successful
way of distributing shares of a mutual fund. The Directors concluded that
without an effective means of selling and distributing Fund shares and servicing
shareholders and providing account maintenance, expenses higher on a per share
basis than those of some competing funds. By providing an alternative means of
acquiring Fund shares, the Distribution and Service Plan proposed for
shareholder approval is designed to stimulate sales by and services from many
types of financial institutions.
The Directors recognize that the Manager will benefit from the Distribution and
Service Plan through larger investment advisory fees resulting from an increase
in Fund assets, since its fees are based upon a percentage of net assets of the
Fund. The Board, including each of the Independent Directors, determined that
the Distribution and Service Plan is in the best interests of the Fund, and that
its continuation has a reasonable likelihood of benefiting the Fund and its
Class B shareholders. In its annual review of the Distribution and Service Plan,
the Board will consider the continued appropriateness of the Distribution and
Service Plan, including the level of payments provided for therein.
Vote Required. Pursuant to Rule 12b-1 under the Investment Company Act, an
affirmative vote of the holders of a "majority" (as defined in the Investment
Company Act) of the Fund's Class B voting securities is required for approval of
the Distribution and Service Plan. The requirements for such "majority" vote
under the Investment Company Act are described in Proposal No. 2. The Board of
Directors recommends a vote in favor of approving this Proposal.
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<PAGE>
APPROVAL OF THE FUND'S CLASS C 12b-1 DISTRIBUTION
AND SERVICE PLAN AND AGREEMENT
(Proposal No. 5)
NOTE: This Proposal applies to Class C Shareholders only.
Class C shares were first offered to the public on August 29, 1995. In
connection with the initial public offering of these shares, the Fund had
previously adopted a Distribution and Service Plan for Class C shares pursuant
to Rule 12b-1 of the Investment Company Act, in conformity with the National
Association of Securities Dealers, Inc. ("NASD") Rule which permits the Fund to
pay up to 0.25% of its average annual net assets as a service fee and up to
0.75% of its average annual net assets as an asset-based sales charge. The
Manager, as the sole initial shareholder of the Fund's Class C shares, approved
the Distribution and Service Plan for the Class C shares of the Fund dated
August 29, 1995..
At a meeting held October 22, 1996, the Fund's Board of Directors, including a
majority of the Independent Directors, approved and renewed for an additional
year the Distribution and Service Plan for Class C shares with non-material
changes. On February 25, 1997, the Fund's Board reviewed its previous
deliberations at the October 22, 1996 Board meeting and determined to submit the
Distribution and Service Plan to Class C shareholders for approval. A copy of
this Distribution and Service Plan for Class C shares (the "Distribution and
Service Plan") is attached as Exhibit D to this proxy statement, and is hereby
submitted to Class C shareholders for approval.
Description of the Distribution and Service Plan. Under the Distribution and
Service Plan, the Fund compensates the Distributor for its services in
connection with the distribution of Class C Shares and the personal service and
maintenance of accounts that hold Class C shares. The Fund pays the Distributor
an asset-based sales charge of 0.75% per annum of Class C shares, and also pays
the Distributor a service fee of 0.25% per annum, each of which is computed on
the average annual net assets of Class C shares of the Fund.
The Distribution and Service Plan provides for payments for two different
distribution-related functions. The Distributor pays certain brokers, dealers,
banks or other institutions ("Recipients") a service fee of 0.25% for personal
services to Class C shareholders and maintenance of shareholder accounts by
those Recipients. The services rendered by Recipients in connection with
personal services and the maintenance of Class C shareholder 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. The Distributor is
permitted under the Distribution and Service Plan to retain service fee payments
to compensate it for rendering such services.
Service fee payments by the Distributor to Recipients are made (i) in advance
for the first year Class C shares are outstanding, following the purchase of
shares, in an amount equal to 0.25% of the net
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<PAGE>
asset value of the shares purchased by the Recipient or its customers and (ii)
thereafter, on a quarterly basis, computed as of the close of business each day
at an annual rate of 0.25% of the net asset value of Class C shares held in
accounts of the Recipient or its customers. The Distributor retains the service
fee during the first year shares are outstanding. In the event Class C shares
are redeemed less than one year after the date such shares were sold, the
Recipient is obligated to repay to the Distributor on demand a pro rata portion
of such advance service fee payments, based on the ratio of the remaining period
to one year.
The Distribution and Service Plan also provides that the Fund will pay the
Distributor on a monthly basis an asset-based sales charge at an annual rate of
0.75% of the net asset value of Class C shares outstanding to compensate it for
other services in connection with the distribution of the Fund's Class C shares.
The distribution assistance and administrative support services rendered by the
Distributor in connection with the sales of Class C shares may include: (i)
paying sales commissions to any broker, dealer, bank or other person or entity
that sells the Fund's Class C shares, (ii) paying compensation to and expenses
of personnel of the Distributor who support distribution of Class C shares by
Recipients, (iii) obtaining financing or providing such financing from its own
resources or from an affiliate, for the interest and other borrowing costs of
the Distributor's unreimbursed expenses incurred in rendering distribution
assistance for Class C shares, and (iv) paying certain other
distribution-related expenses. The other distribution assistance in connection
with the sale of Class C shares rendered by the Distributor and Recipients may
include, but shall not be limited to, the following: distributing sales
literature and prospectuses other than those furnished to current Class C
shareholders, processing Class C share purchase and redemption transactions, and
providing such other information in connection with the distribution of Class C
shares as the Distributor or the Fund may reasonably request.
The Distributor currently pays sales commissions from its own resources to
Recipients at the time of sale equal to 0.75% of the purchase price of Fund
shares sold by such Recipient, and advances the first year service fee of 0.25%.
The Distributor retains the asset-based sales charge during the first year
shares are outstanding to recoup the sales commissions it pays, the advances of
service fee payments it makes, and its financing costs. The Distributor plans to
pay the asset-based sales charge as an ongoing commission to Recipients on Class
C shares that have been outstanding for a year or more. The Distributor may pay
to the dealer on a quarterly basis the service fee and asset-based sales charge
in lieu of paying the 0.75% sales commission and the advance of the service fee
at the time of purchase. Asset-based sales charge payments are designed to
permit an investor to purchase shares of the Fund without the assessment of a
front-end sales load and at the same time permit the Distributor to compensate
Recipients in connection with the sale of shares of the Fund.
The Distribution and Service Plan has the effect of increasing annual expenses
of Class C shares of the Fund by 1.00% of the class's average annual net assets
from what those expenses would otherwise be. Payments by the Fund to the
Distributor under the current Class C Plan for the fiscal period ended December
31, 1996 totalled $82,374 (1.00% of the Fund's average net assets represented by
Class C shares during that period), of which $76,238 was retained by the
Distributor.
If the Class C shareholders approve this Proposal, the Distribution and Service
Plan shall, unless terminated as described below, continue in effect until
October 31, 1997 and from year to year
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<PAGE>
thereafter only so long as such continuance is specifically approved, at least
annually, by the Fund's Board of Directors and its Independent Directors by a
vote cast in person at a meeting called for the purpose of voting on such
continuance. The Distribution and Service Plan may be terminated at any time by
a vote of a majority of the Independent Directors or by a vote of the holders of
a "majority" (as defined in the Investment Company Act) of the Fund's
outstanding Class C shares. The Distribution and Service Plan contains a
provision which provides that the Board may allow the Fund to continue payments
to the Distributor for Class C shares sold prior to termination of the
Distribution and Service Plan. Pursuant to this provision, payment of the
asset-based sales charge and service fee could be continued by the Board after
termination. The Distribution and Service Plan may not be amended to increase
materially the amount of payments to be made without approval by Class C
shareholders. All material amendments must be approved by a majority of the
Independent Directors.
Additional Information. The Distribution and Service Plan provides that while it
is in effect, the selection and nomination of those Directors of the Fund who
are not "interested persons" of the Fund is committed to the discretion of the
Independent Directors. 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 Directors.
Under the Distribution and Service Plan, no payment for service fees will be
made to any Recipient in any quarter if the aggregate net asset value of all
Fund shares held by the Recipient for itself and its customers does not exceed a
minimum amount, if any, that may be determined from time to time by a majority
of the Independent Directors. Initially, the Board of Directors has set the fee
at the maximum rate and set no minimum amount. The Distribution and Service Plan
permits the Distributor and the Manager to make additional distribution payments
to Recipients from their own resources (including profits from management fees)
at no cost to the Fund. The Distributor and the Manager may, in their sole
discretion, increase or decrease the amount of distribution assistance payments
they make to Recipients from their own assets.
Analysis of the Distribution and Service Plan by the Board of Directors. In
considering whether to recommend the Distribution and Service Plan for approval,
the Board requested and evaluated information it deemed necessary to make an
informed determination. The Board, including the Independent Directors, did not
single out any one factor or group of factors as being more important than other
factors, cut considered such matters together in arriving at its decision. The
Board found that there is a reasonable likelihood that the Distribution and
Service Plan benefits the Fund and its Class C shareholders by providing
financial incentives to financial intermediaries to attract new Class C
shareholders to the Fund and by assisting the efforts of the Fund and the
Distributor to service and retain existing shareholders and attract new
investors. The Distribution and Service Plan enables the Fund to be competitive
with similar funds, including funds that impose sales charges, provide financial
incentives to institutions that direct investors to such funds, and provide
shareholder servicing and administrative services.
The Board concluded that it is likely that because the Distribution and Service
Plan provides an alternative means for investors to acquire Fund shares without
paying an initial sales charge, it will benefit Class C shareholders of the Fund
by enabling the Fund to maintain or increase its present
-24-
<PAGE>
asset base in the face of competition from a variety of financial products. The
Directors recognized that payments made pursuant to the Distribution and Service
Plan would likely be offset in part by economies of scale associated with the
growth of the Fund's assets. With larger assets, the Class C shareholders should
benefit as the Distribution and Service Plan should help maintain Fund assets.
Costs of shareholder administration and transfer agency operations will be
spread among a larger number of shareholders as the Fund grows larger, thereby
reducing the Fund's expense ratio. The Manager has advised the Directors that
investing larger amounts of money is made more readily, more efficiently, and at
lesser cost to the Fund. The Board found that a positive flow of new investment
money is desirable primarily to offset the potentially adverse effects that
might result from a pattern of net redemptions. Net cash outflow increases the
likelihood that the Fund will have to dispose of portfolio securities for other
than investment purposes. Net cash inflow minimizes the need to sell securities
to meet redemptions when investment considerations would dictate otherwise,
reduces daily liquidity requirements, and may assist in a prompt restructuring
of the portfolio without the need to dispose of present holdings.
Stimulation of distribution of mutual fund shares and providing for shareholder
services and account maintenance services by payments to a mutual fund's
distributor and to brokers, dealers, banks and other financial institutions has
become common in the mutual fund industry. Competition among brokers and dealers
for these types of payments has intensified. The Directors concluded that
promotion, sale and servicing of mutual fund shares and shareholders through
various brokers, dealers, banks and other financial institutions is a successful
way of distributing shares of a mutual fund. The Directors concluded that
without an effective means of selling and distributing Fund shares and servicing
shareholders and providing account maintenance, expenses might be higher on a
per share basis than those of some competing funds. By providing an alternative
means of acquiring Fund shares, the Distribution and Service Plan proposed for
shareholder approval is designed to stimulate sales by and services from many
types of financial institutions.
The Directors recognize that the Manager will benefit from the Distribution and
Service Plan through larger investment advisory fees resulting from an increase
in Fund assets, since its fees are based upon a percentage of net assets of the
Fund. The Board, including each of the Independent Directors, determined that
the Distribution and Service Plan is in the best interests of the Fund, and that
its continuation has a reasonable likelihood of benefiting the Fund and its
Class C shareholders. In its annual review of the Distribution and Service Plan,
the Board will consider the continued appropriateness of the Distribution and
Service Plan, including the level of payments provided for therein.
Vote Required. Pursuant to Rule 12b-1 under the Investment Company Act, an
affirmative vote of the holders of a "majority" (as defined in the Investment
Company Act) of the Fund's Class C voting securities is required for approval of
the Distribution and Service Plan. The requirements for such "majority" vote
under the Investment Company Act are described in Proposal No. 2. A vote in
favor of this Proposal shall be deemed a vote to approve the prior Plan and the
Distribution and Service Plan. The Board of Directors recommends a vote in favor
of approving this Proposal.
-25-
<PAGE>
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 Directors,
Andrew J. Donohue, Secretary
May 1, 1997
proxy\420-697.def
-26-
<PAGE>
Exhibit A
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made as of the October 22, 1990, by and between OPPENHEIMER
TOTAL RETURN FUND, INC. (hereinafter the "Fund"), and OPPENHEIMER MANAGEMENT
CORPORATION (hereinafter the "Manager"):
WHEREAS, the Fund is an open-end, diversified investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940, as amended (the
"Investment Company Act") and the Manager is a registered investment adviser;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as follows:
1. GENERAL PROVISION.
The Fund hereby employs the Manager and the Manager hereby undertakes to
act as the investment adviser of the Fund and to perform for the Fund such other
duties and functions as are hereinafter set forth. The Manager shall, in all
matters, give to the Fund and its Board of Directors the benefit of its best
judgment, effort, advice and recommendations and shall, at all times conform to,
and use its best efforts to enable the Fund to conform to (i) the provisions of
the Investment Company Act and any rules and regulations thereunder; (ii) any
other applicable provisions of state or federal law; (iii) the provisions of the
Certificate of Incorporation and By-Laws of the Fund as amended from time to
time; (iv) policies and determinations of the Board of Directors of the Fund;
(v) the fundamental policies and investment restrictions of the Fund as
reflected in its registration statement under the Investment Company Act and the
Fund's By-Laws, or as such policies may, from time to time, be amended by the
Fund's shareholders; and (vi) the Prospectus of the Fund in effect from time to
time. The appropriate officers and employees of the Manager shall be available
upon reasonable notice for consultation with any of the Directors and officers
of the Fund with respect to any matters dealing with the business and affairs of
the Fund including the valuation of any of the Fund's portfolio securities which
are either not registered for public sale or not being traded on any securities
market.
2. INVESTMENT MANAGEMENT.
(a) The Manager shall, subject to the direction and control by the Fund's
Board of Directors (i) regularly provide investment advice and recommendations
to the Fund with respect to its investments, investment policies and the
purchase and sale of securities; (ii) supervise continuously the investment
program of the Fund and the composition of its portfolio and determine what
securities shall be purchased or sold by the Fund; and (iii) arrange, subject to
the provisions of paragraph "6" hereof, for the purchase of securities and other
investments for the Fund and the sale of securities and other investments held
in the portfolio of the Fund. The Manager shall also conduct
A-1
<PAGE>
investigations and research in the securities field and furnish to the Fund's
Board of Directors statistical and other factual information and reports on
industries, businesses or corporations, to assist the Manager and the Fund's
Board of Directors in furthering the investment policies of the Fund; and the
Manager shall compile, for its use and that of the Fund, and furnish to the
Fund's Board of Directors, information and advice on economic and business
trends, and render such other complete investment management services as may be
necessary or appropriate to effectuate the investment of the resources of the
Fund through the acquisition, holding and disposition of portfolio securities.
(b) Provided that the Fund shall not be required to pay any compensation
other than as provided by the terms of this Agreement and subject to the
provisions of paragraph 6 hereof, the Manager may obtain investment information,
research or assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services.
(c) So long as it shall have acted with due care and in good faith, the
Manager shall not be liable for any loss sustained by reason of any investment,
the adoption of any investment policy, or the purchase, sale or retention of any
security irrespective of whether the determinations of the Manager relative
thereto shall have been based, wholly or partly, upon the investigation or
research of any other individual, firm or corporation believed by it to be
reliable. Nothing herein contained shall, however, be construed to protect the
Manager against any liability to the Fund or its shareholders by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and duties
under this Agreement.
(d) Nothing in this Agreement shall prevent the manager or any officer
thereof from acting as investment adviser or performing management services for
any other person, firm or corporation and shall not in any way limit or restrict
the Manager or any of its directors, officers, shareholders or employees from
buying, selling or trading any securities for its or their own account or for
the account of others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the performance by the
Manager of its duties and obligations under this Agreement, nor adversely affect
the Fund.
3. OTHER DUTIES OF THE MANAGER.
The Manager shall, at its own expense, provide and supervise the activities
of all executive, administrative and clerical personnel as shall be required to
provide effective corporate administration for the Fund, including the
compilation and maintenance of such records with respect to its operations as
may reasonably be required; the preparation and filing of such reports with
respect thereto as shall be required by the Commission, and the laws of any
state, territory or possession of the United States or any foreign country;
composition of periodic reports with respect to its operations for the
shareholders of the Fund; composition of proxy materials for meetings of the
Fund's shareholders; and the composition of such registration statements as may
be required by federal securities laws and the laws of any state, territory or
possession of the United States or any foreign country for continuous public
sale of shares of the Fund. The Manager shall, at its own cost and expense,
provide such officers for the Fund as the Fund's Board may request and shall
also provide the Fund's Directors, at their request, with adequate office space,
and normal office
A-2
<PAGE>
equipment and secretarial assistance as may be necessary for them to perform
their functions as such, and the Manager shall, at its own cost and expense,
calculate the daily net asset value of the Fund's shares and maintain the Fund's
general accounting books and records. The cost and expenses of the Manager set
forth in this paragraph 3 do not include the transfer agent and other costs and
expenses set forth in paragraph 4 following.
4. ALLOCATION OF EXPENSES TO THE FUND.
All other costs and expenses not expressly assumed by the Manager under
this Agreement, or to be paid by the General Distributor of the shares of the
Fund, shall be paid by the Fund, including but not limited to (i) interest and
taxes; (ii) brokerage commissions; (iii) insurance premiums on fidelity and
other coverage requisite to its operations; (iv) compensation and expenses of
its Directors except as qualified further in this paragraph 4; (v) legal and
audit expenses; (vi) custodian and transfer agent fees and expenses; (vii)
expenses incident to the redemption of its shares; (viii) expenses incident to
the issuance of its shares against payment therefor by or on behalf of the
subscribers thereto; (ix) fees and expenses, other than as hereinabove provided,
incident to the registration of the Fund's shares for public sale under federal
securities laws or the laws of any state, territory or possession of the United
States or any foreign country; (x) expenses of printing and mailing reports and
notices and proxy material to shareholders of the Fund; (xi) except as noted in
paragraph 3 hereof, all other expenses incidental to holding meetings of the
Fund's shareholders; and (xii) such extraordinary non-recurring expenses as may
arise, including litigation, affecting the Fund and the legal obligation or
right which the Fund may have to indemnify its officers and Directors with
respect thereto unless the Fund has the right to recover said indemnity payments
from the Manager. Any officers or employees of the Manager or any entity
controlling, controlled by or under common control with the Manager who may also
serve as officers, Directors or employees of the Fund shall not receive any
compensation by the Fund for their services.
5. COMPENSATION OF THE MANAGER.
The Fund agrees to pay the Manager and the Manager agrees to accept as full
compensation for the performance of all functions and duties on its part to be
performed pursuant to the provisions hereof, a fee computed on the net asset
value of the Fund as of the close of each business day and payable monthly at
the following annual rates:
.75% of the first $100 million of net assets;
.70% of the next $100 million;
.65% of the next $100 million;
.60% of the next $100 million;
.55% of the next $100 million;
.50% of net assets in excess of $500 million.
6. PORTFOLIO TRANSACTIONS AND BROKERAGE.
(a) The Manager will render all services for the Fund in connection with
placing orders with brokers and dealers for the purchase, sale or trade of
securities for the Fund's portfolio.
A-3
<PAGE>
(b) The Manager is authorized, in arranging the purchase and sale of the
Fund's portfolio securities, to employ or deal with such members of securities
exchanges, brokers or dealers (hereinafter "broker-dealers"), including
"affiliated" broker-dealers (as that term is defined in the Investment Company
Act), as may, in its best judgment, implement the policy of the Fund to obtain,
at reasonable expense, the "best execution" (prompt and reliable execution at
the most favorable securities price obtainable) of the Fund's portfolio
transactions as well as to obtain, consistent with provisions of subparagraph
(c) of this paragraph 6, the benefit of such investment information or research
as will be of significant assistance to the performance by the Manager of its
investment management functions.
(c) The Manager shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain best
execution of particular and related portfolio transactions. The abilities of a
broker-dealer to obtain best execution of particular portfolio transaction(s)
will be judged by the Manager on the basis of all relevant factors and
considerations including, insofar as feasible, the execution capabilities
required by the transaction or transactions; the ability and willingness of the
broker-dealer to facilitate the Fund's portfolio transactions by, participating
therein for its own account; the importance to the Fund of speed, efficiency or
confidentiality; the broker-dealer's apparent familiarity with sources from or
to whom particular securities might be purchased or sold; as well as any other
matters relevant to the selection of a broker-dealer for particular and related
transactions of the Fund.
(d) The Manager shall have discretion, in the interests of the Fund, to
allocate brokerage on the Fund's portfolio transactions to broker-dealers, other
than an affiliated broker-dealer, qualified to obtain best execution of such
transactions and who provide "brokerage and/or research services" (as such
services are defined in Section 28 (e) (3) of the Securities Exchange Act of
1934) for the Fund and/or other accounts for which the Manager exercises
"investment discretion" (as that term is defined in Section 3 (a) (35) of the
Securities Exchange Act of 1934) and to cause the Fund to pay such
broker-dealers a commission for effecting a portfolio transaction for the Fund
that is in excess of the amount of commission another broker-dealer adequately
qualified to effect such transaction would have charged for effecting that
transaction, if the Manager determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage and/or research services
provided by such broker-dealer, viewed in terms of either that particular
transaction or the Manager's overall responsibilities with respect to the
accounts as to which it exercises investment discretion. In reaching such
determination, the Manager will not be required to place or attempt to place a
specific dollar value on the brokerage and/or research services provided or
being provided by such broker-dealer. In demonstrating that such determinations
were made in good faith, the Manager shall be prepared to show that all
commissions were allocated for purposes contemplated by this Agreement and that
the total commissions paid by the Fund over a representative period selected by
the Fund's Directors were reasonable in relation to the benefits to the Fund.
(e) The Manager shall have discretion in the interests of the Fund and when
consistent with the then effective rules of the Commission and the National
Association of Securities Dealers, Inc., to consider the sales of shares of the
Fund and other Funds managed by the Manager and its affiliates as a factor in
the selection of broker-dealers to execute portfolio transactions for the Fund.
In doing so, the portfolio transactions must be (i) consistent with obtaining
the "best execution" of
A-4
<PAGE>
the Fund's portfolio transactions (as defined in subparagraph (b) of this
paragraph), and (ii) the commissions paid to brokers selected wholly or partly
on this basis do not exceed the commissions otherwise authorized by this
Management Agreement.
(f) The Manager shall have no duty or obligation to seek advance
competitive bidding for the most favorable commission rate applicable to any
particular portfolio transactions or to select any broker-dealer on the basis of
its purported or "posted" commission rate but will, to the best of its ability,
endeavor to be aware of the current level of the charges of eligible
broker-dealers and to minimize the expense incurred by, the Fund for effecting
its portfolio transactions to the extent consistent with the interests and
policies of the Fund as established by the determinations of its Board of
Directors and the provisions of this paragraph 6.
(g) The Fund recognizes that an affiliated broker (i) may act as one of the
Fund's regular brokers so long as it is lawful for it so to act; (ii) may be a
major recipient of brokerage commissions paid by the Fund, and (iii) may effect
portfolio transactions for the Fund only if the commissions, fees or other
remuneration received or to be received by it are determined in accordance with
procedures contemplated in any rule, regulation or order adopted under the
Investment Company Act for determining the permissible level of such
commissions.
7. USE OF NAME "OPPENHEIMER".
The Manager hereby grants to the Fund a royalty-free, non-exclusive license
to use the name "Oppenheimer" in the name of the Fund for the duration of this
Agreement and any extensions or renewals thereof. To the extent necessary to
protect the Manager's rights to the name "Oppenheimer" under applicable law,
such license shall allow the Manager to inspect and, subject to control by the
Fund's Board, control the nature and quality of services offered by the Fund
under such name. Such license may, upon termination of this Agreement, be
terminated by the Manager, in which event the Fund shall promptly take whatever
action may be necessary to change its name and discontinue any further use of
the name "Oppenheimer" in the name of the Fund or otherwise. The name
"Oppenheimer" may be used by the Manager in connection with any of its
activities, or licensed by the Manager to any other party.
8. DURATION.
This Agreement will take effect on the date first set forth above and shall
continue in effect until December 31, 1991, and thereafter, from year to year,
so long as such continuance shall be approved at least annually by the Fund's
Board of Directors, including the vote of a majority of the Directors of the
Fund who are not parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, or by the holders of a majority of the outstanding voting securities
of the Fund and by such a vote of the Fund's Board of Directors.
9. TERMINATION.
This Agreement may be terminated (i) by the Manager at any time without
penalty by giving
A-5
<PAGE>
sixty days' written notice (which notice may be waived by the Fund); or (ii) by
the Fund at any time without penalty upon sixty days' written notice to the
Manager (which notice may be waived by the Manager), provided that such
termination by the Fund shall be directed or approved by the Board of Directors
of the Fund or by the vote of the holders of a majority of the outstanding
voting securities of the Fund.
10. ASSIGNMENT OR AMENDMENT.
This Agreement may not be amended or the rights of the Manager thereunder
sold, transferred, pledged or otherwise in any manner encumbered without the
affirmative vote or written consent of the holders of the majority of the
outstanding voting securities of the Fund; this Agreement shall automatically
and immediately terminate in the event of its assignment.
11. DEFINITIONS.
The terms and provisions of this Agreement shall be interpreted and defined
in a manner consistent with the provisions and definitions of the Investment
Company Act and other applicable laws.
ATTEST: OPPENHEIMER TOTAL RETURN FUND, INC.
/s/ Sara L. Badler By: /s/ Robert G. Galli
- --------------------- -----------------------------------
Sara L. Badler Robert G. Galli, President
ATTEST: OPPENHEIMER MANAGEMENT CORPORATION
/s/ Sara L. Badler By: /s/ Katherine P. Feld
- ------------------------ ---------------------------------
Sara L. Badler Katherine P. Feld
A-6
<PAGE>
Exhibit B
<TABLE>
<CAPTION>
Approximate
Net Assets as
of 12/31/96 Advisory Fee Rate as % of
Name of Fund ($ Millions) Average Annual Net Assets
<S> <C> <C>
Oppenheimer Total Return $2,615.1 .75% of the first $100 million of average
Fund, Inc. annual net assets,
.70% of the next $100 million,
Oppenheimer Equity Income $2,678.3 .65% of the next $100 million,
Fund .60% of the next $100 million,
.55% of the next $100 million, and
.50% of average annual net assets in excess
of $500 million
Oppenheimer Main Street $6,809.1 .65% of the first $200 million of average
Income & Growth Fund, annual net assets,
a series of Oppenheimer .60% of the next $150 million,
Main Street Funds, Inc. .55% of the next $150 million, and
.45% of average annual net assets in excess
of $500 million
Oppenheimer Growth & Income $46.9
Fund, a series of Oppenheimer
Variable Account Funds
.75% of the first $200 million of average
annual net assets,
Oppenheimer Multiple $484.3 .72% of the next $200 million,
Strategies Fund, a series of .69% of the next $200 million,
Oppenheimer Variable .66% of the next $200 million, and
Account Funds .60% of average annual net assets in excess
of $800 million
Oppenheimer Multiple Strategies $308.6
Fund (formerly "Oppenheimer
Asset Allocation Fund")
</TABLE>
B-1
<PAGE>
Exhibit C
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
With
OppenheimerFunds Distributor, Inc.
For Class B Shares of
Oppenheimer Total Return Fund, Inc.
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the ____ day of
__________, 1997, by and between Oppenheimer Total Return Fund (the "Fund") and
OppenheimerFunds Distributor, Inc. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
Class B shares of the Fund (the "Shares"), contemplated by Rule 12b-1 as it may
be amended from time to time (the "Rule") under the Investment Company Act of
1940 (the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services in connection with the distribution of Shares, and
the personal service and maintenance of shareholder accounts that hold Shares
("Accounts"). The Fund may act as distributor of securities of which it is the
issuer, pursuant to the Rule, according to the terms of this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Rule 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc., or any amendment or successor to such rule (the "NASD
Conduct Rules") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution to which the Fund is
subject under any order on which the Fund relies, issued at any time by the U.S.
Securities and Exchange Commission ("SEC").
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan.
(b) "Independent Directors" shall mean the members of the Fund's Board of
Directors who are not "interested persons" (as defined in the 1940 Act) of the
Fund and who have no direct or indirect financial interest in the operation of
this Plan or in any agreement relating to this Plan.
(c) "Customers" shall mean such brokerage or other customers or investment
advisory or other clients of a Recipient, and/or accounts as to which such
Recipient provides administrative
C-1
<PAGE>
support services or is a custodian or other fiduciary.
(d) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such Recipient's
Customers, but in no event shall any such Shares be deemed owned by more than
one Recipient for purposes of this Plan. In the event that more than one person
or entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support Services.
(a) Payments to the Distributor. In consideration of the payments made by
the Fund to the Distributor under this Plan, the Distributor shall provide
administrative support services and distribution assistance services to the
Fund. Such services include distribution assistance and administrative support
services rendered in connection with Shares acquired (1) by purchase, (2) in
exchange for shares of another investment company for which the Distributor
serves as distributor or sub-distributor, or (3) pursuant to a plan of
reorganization to which the Fund is a party. If the Board believes that the
Distributor may not be rendering appropriate distribution assistance or
administrative support services in connection with the sale of Shares, then the
Distributor, at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is providing
appropriate services in this regard. For such services, the Fund will make the
following payments to the Distributor:
(i) Administrative Support Services Fees. Within forty-five (45)
days of the end of each calendar quarter, the Fund will make payments in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the average during
that calendar quarter of the aggregate net asset value of the Shares computed as
of the close of each business day (the "Service Fee"). Such Service Fee payments
received from the Fund will compensate the Distributor for providing
administrative support services with respect to Accounts. The administrative
support services in connection with Accounts may include, but shall not be
limited to, the administrative support services that a Recipient may render as
described in Section 3(b)(ii) below.
(ii) Distribution Assistance Fees (Asset-Based Sales Charge). Within
ten (10) days of the end of each month, the Fund will make payments in the
aggregate amount of 0.0625% (0.75% on an annual basis) of the average during the
month of the aggregate net asset value of Shares computed as of the close of
each business day (the "Asset-Based Sales Charge") outstanding for no more than
six years (the "Maximum Holding Period"). Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor for providing
distribution assistance in connection with the sale of Shares.
The distribution assistance to be rendered by the Distributor
in connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons "Advance Service
Fee Payments" (as defined below) in advance of, and\or in amounts greater than,
the amount provided for in Section 3(b) of this Agreement; (ii) paying
compensation to and
C-2
<PAGE>
expenses of personnel of the Distributor who support distribution of Shares by
Recipients; (iii) obtaining financing or providing such financing from its own
resources, or from an affiliate, for the interest and other borrowing costs of
the Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative support services to the Fund; and (iv) paying
other direct distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those prospectuses
furnished to current holders of the Fund's shares ("Shareholders")) and state
"blue sky" registration expenses.
(b) Payments to Recipients. The Distributor is authorized under the Plan
to pay Recipients (1) distribution assistance fees for rendering distribution
assistance in connection with the sale of Shares and/or (2) service fees for
rendering administrative support services with respect to Accounts. However, no
such payments shall be made to any Recipient for any 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, that may be set from time
to time by a majority of the Independent Directors. All fee payments made by the
Distributor hereunder are subject to reduction or chargeback so that the
aggregate service fee payments and Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed by the NASD
Conduct Rules. The Distributor may make Plan payments to any "affiliated person"
(as defined in the 1940 Act) of the Distributor if such affiliated person
qualifies as a Recipient or retain such payments if the Distributor qualifies as
a Recipient.
(i) Service Fee. In consideration of the administrative support
services provided by a Recipient during a calendar quarter, the Distributor
shall make service fee payments to that Recipient quarterly, within forty-five
(45) days of the end of each calendar quarter, at a rate not to exceed 0.0625%
(0.25% on an annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of each business
day, constituting Qualified Holdings owned beneficially or of record by the
Recipient or by its Customers for a period of more than the minimum period (the
"Minimum Holding Period"), if any, that may be set from time to time by a
majority of the Independent Directors.
Alternatively, the Distributor may, at its sole option, make
the following service fee payments to any Recipient quarterly, within forty-five
(45) days of the end of each calendar quarter: (i) "Advance Service Fee
Payments" at a rate not to exceed 0.25% of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close of
business on the day such Shares are sold, constituting Qualified Holdings, sold
by the Recipient during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) service fee payments at a rate not to
exceed 0.0625% (0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned beneficially or of
record by the Recipient or by its Customers for a period of more than one (1)
year. At the Distributor's sole option, the Advance Service Fee Payments may be
made more often than quarterly, and sooner than the end of the calendar quarter.
In the event Shares are redeemed less than one year after the date such Shares
were sold, the Recipient is obligated to and will repay the Distributor on
demand a pro rata portion of such Advance Service Fee Payments, based on the
ratio of the time such Shares were held to one (1) year.
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<PAGE>
The administrative support services to be rendered by
Recipients in connection with the Accounts may include, but shall not be limited
to, the following: answering routine inquiries concerning the Fund, assisting in
the establishment and maintenance of accounts or sub-accounts in the Fund and
processing Share redemption transactions, making the Fund's investment plans and
dividend payment options available, and providing such other information and
services in connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may reasonably request.
(ii) Distribution Assistance Fees: (Asset-Based Sales Charge)
Payments. In its sole discretion and irrespective of whichever alternative
method of making service fee payments to Recipients is selected by the
Distributor, in addition the Distributor may make distribution service fee
payments to a Recipient quarterly, within forty-five (45) days after the end of
each calendar quarter, at a rate not to exceed 0.1875% (0.75% on an annual
basis) of the average during the calendar quarter of the aggregate net asset
value of shares computed as of the close of each business day constituting
Qualified Holdings owned beneficially or of record by the Recipient or its
Customers for no more than six years and for any minimum period that the
Distributor may establish. Such payments shall be made only to Recipients that
are registered with the SEC as a broker-dealer or are exempt from registration.
The distribution assistance to be rendered by the Recipients
in connection with the sale of Shares may include, but shall not be limited to,
the following: distributing sales literature and prospectuses other than those
furnished to current Shareholders, providing compensation to and expenses of
personnel of the Recipient who support the distribution of Shares by the
Recipient, and providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may reasonably
request.
(c) A majority of the Independent Trustees may at any time or from time to
time increase or decrease the rate of fees to be paid to the Distributor or to
any Recipient, but not to exceed the rates set forth above, and/or direct the
Distributor to increase or decrease (the "Maximum Holding Period"), any Minimum
Holding Period or any Minimum Qualified Holdings. The Distributor shall notify
all Recipients of any Minimum Qualified Holdings, Maximum Holding Period and
Minimum Holding Period, if any, that are established and the rate of payments
hereunder applicable to Recipients, and shall provide each Recipient with
written notice within thirty (30) days after any change in these provisions.
Inclusion of such provisions or a change in such provisions in a revised current
prospectus shall constitute sufficient notice.
(d) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination under the limits to which the Distributor is, or may
become, subject under of the NASD Conduct Rules.
(e) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset- Based
Sales Charge payments or from the proceeds of its borrowings.
C-4
<PAGE>
(f) Recipients are intended to have certain rights as third-party
beneficiaries under this Plan, subject to the limitations set forth below. It
may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it has
Qualified Holdings of Shares that entitle it to payments under the Plan. In the
event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the Distributor, at
the request of the Board, shall require the Recipient to provide a written
report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Directors still is not satisfied after the receipt
of such report, either may take appropriate steps to terminate the Recipient's
status as such under the Plan, whereupon such Recipient's rights as a
third-party beneficiary hereunder shall terminate. Additionally, in their
discretion, a majority of the Fund's Independent Directors at any time may
remove any broker, dealer, bank or other person or entity as a Recipient, where
upon such person's or entity's rights as a third-party beneficiary hereof shall
terminate. Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of persons to be Directors of the Fund who are not
"interested persons" of the Fund ("Disinterested Directors") shall be committed
to the discretion of the incumbent Disinterested Directors. Nothing herein shall
prevent the incumbent Disinterested Directors from soliciting the views or the
involvement of others in such selection or nominations as long as the final
decision on any such selection and nomination is approved by a majority of the
incumbent Disinterested Directors.
5. Reports. While this Plan is in effect, the Treasurer of the Fund shall
provide written reports to the Fund's Board for its review, detailing services
rendered in connection with the distribution of the Shares, the amount of all
payments made under this Plan and the purpose for which the payments were made.
The reports shall be provided quarterly, and shall state whether all provisions
of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Directors or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class B voting shares; (ii) such termination
shall be on not more than sixty days' written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its "assignment" (as defined in the 1940 Act); (iv) such agreement shall go into
effect when approved by a vote of the Board and its Independent Directors cast
in person at a meeting called for the purpose of voting on such agreement; and
(v) such agreement shall, unless terminated as herein provided, continue in
effect from year to year only so long as such continuance is specifically
approved at least annually by a vote of the Board and its Independent Trustees
cast in person at a meeting called for the purpose of voting on such
continuance.
C-5
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called on February 25, 1997, for the purpose of voting on this Plan, and
shall take effect after being approved by Class B shareholders of the Fund, at
which time it shall replace the Fund's Distribution and Service Plan for the
Shares dated February 23, 1994. Unless terminated as hereinafter provided, it
shall continue in effect until October 31, 1997 and thereafter from year to year
or as the Board may otherwise determine but only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Directors cast in person at a meeting called for the purpose of
voting on such continuance.
This Plan may not be amended to increase materially the amount of payments
to be made under this Plan, without approval of the Class B Shareholders in the
manner described above, and all material amendments must be approved by a vote
of the Board and of the Independent Directors.
This Plan may be terminated at any time by vote of a majority of the
Independent Directors or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding Class B voting shares. In the event
of such termination, the Board and its Independent Trustees shall determine
whether the Distributor shall be entitled to payment from the Fund of all or a
portion of the Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
Oppenheimer Total Return Fund
By:
---------------------------------------------
OppenheimerFunds Distributor, Inc.
By:
--------------------------------------------
ofmi\modelb.1
C-6
<PAGE>
Exhibit D
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
with
OppenheimerFunds Distributor, Inc.
For Class C Shares of
Oppenheimer Total Return Fund
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the ____ day of
______, 1997, by and between Oppenheimer ______ Fund (the "Fund") and
OppenheimerFunds Distributor, Inc. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan for
Class C shares of the Fund (the "Shares"), contemplated by Rule 12b-1 as it may
be amended from time to time (the "Rule") under the Investment Company Act of
1940 (the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services in connection with the distribution of Shares, and
the personal service and maintenance of shareholder accounts that hold Shares
("Accounts"). The Fund may act as distributor of securities of which it is the
issuer, pursuant to the Rule, according to the terms of this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Rule 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc., or any applicable amendment or successor to such rule
(the "NASD Conduct Rules") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution to which the Fund is
subject under any order on which the Fund relies, issued at any time by the U.S.
Securities and Exchange Commission ("SEC").
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan.
(b) "Independent Directors" shall mean the members of the Fund's Board of
Directors who are not "interested persons" (as defined in the 1940 Act) of the
Fund and who have no direct or indirect financial interest in the operation of
this Plan or in any agreement relating to this Plan.
(c) "Customers" shall mean such brokerage or other customers or investment
advisory
D-1
<PAGE>
or other clients of a Recipient, and/or accounts as to which such Recipient
provides administrative support services or is a custodian or other fiduciary.
(d) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such Recipient's
Customers, but in no event shall any such Shares be deemed owned by more than
one Recipient for purposes of this Plan. In the event that more than one person
or entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support Services.
(a) Payments to the Distributor. In consideration of the payments made by
the Fund to the Distributor under this Plan, the Distributor shall provide
administrative support services and distribution services to the Fund. Such
services include distribution assistance and administrative support services
rendered in connection with Shares (1) sold in purchase transactions, (2) issued
in exchange for shares of another investment company for which the Distributor
serves as distributor or sub-distributor, or (3) issued pursuant to a plan of
reorganization to which the Fund is a party. If the Board believes that the
Distributor may not be rendering appropriate distribution assistance or
administrative support services in connection with the sale of Shares, then the
Distributor, at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is providing
appropriate services in this regard. For such services, the Fund will make the
following payments to the Distributor:
(i) Administrative Support Services Fees. Within forty-five (45)
days of the end of each calendar quarter, the Fund will make payments in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the average during
that calendar quarter of the aggregate net asset value of the Shares computed as
of the close of each business day (the "Service Fee"). Such Service Fee payments
received from the Fund will compensate the Distributor for providing
administrative support services with respect to Accounts. The administrative
support services in connection with Accounts may include, but shall not be
limited to, the administrative support services that a Recipient may render as
described in Section 3(b)(i) below.
(ii) Distribution Assistance Fees (Asset-Based Sales Charge). Within
ten (10) days of the end of each month, the Fund will make payments in the
aggregate amount of 0.0625% (0.75% on an annual basis) of the average during the
month of the aggregate net asset value of Shares computed as of the close of
each business day (the "Asset-Based Sales Charge"). Such Asset-Based Sales
Charge payments received from the Fund will compensate the Distributor for
providing distribution assistance in connection with the sale of Shares.
The distribution assistance services to be rendered by the
Distributor in connection with the Shares may include, but shall not be limited
to, the following: (i) paying sales commissions to any broker, dealer, bank or
other person or entity that sells Shares, and/or paying such persons "Advance
Service Fee Payments" (as defined below) in advance of, and/or in amounts
greater than, the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation
D-2
<PAGE>
to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for the interest and other borrowing
costs of the Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the Fund; and
(iv) paying other direct distribution costs, including without limitation the
costs of sales literature, advertising and prospectuses (other than those
prospectuses furnished to current holders of the Fund's shares ("Shareholders"))
and state "blue sky" registration expenses.
(b) Payments to Recipients. The Distributor is authorized under the Plan
to pay Recipients (1) distribution assistance fees for rendering distribution
assistance in connection with the sale of Shares and/or (2) service fees for
rendering administrative support services with respect to Accounts. However, no
such payments shall be made to any Recipient for any quarter in which its
Qualified Holdings do not equal or exceed, at the end of such quarter, the
minimum amount ("Minimum Qualified Holdings"), if any, that may be set from time
to time by a majority of the Independent Directors. All fee payments made by the
Distributor hereunder are subject to reduction or chargeback so that the
aggregate service fee payments and Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed by the NASD
Conduct Rules. The Distributor may make Plan payments to any "affiliated person"
(as defined in the 1940 Act) of the Distributor if such affiliated person
qualifies as a Recipient or retain such payments if the Distributor qualifies as
a Recipient.
In consideration of the services provided by Recipients, the
Distributor shall make the following payments to Recipients:
(i) Service Fee. In consideration of administrative support services
provided by a Recipient during a calendar quarter, the Distributor shall make
service fee payments to that Recipient quarterly, within forty-five (45) days of
the end of each calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by the Recipient
or by its Customers for a period of more than the minimum period (the "Minimum
Holding Period"), if any, that may be set from time to time by a majority of the
Independent Directors.
Alternatively, the Distributor may, at its sole option, make
the following service fee payments to any Recipient quarterly, within forty-five
(45) days of the end of each calendar quarter: (A) "Advance Service Fee
Payments" at a rate not to exceed 0.25% of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close of
business on the day such Shares are sold, constituting Qualified Holdings, sold
by the Recipient during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (B) service fee payments at a rate not to
exceed 0.0625% (0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned beneficially or of
record by the Recipient or by its Customers for a period of more than one (1)
year. At the Distributor's sole option, Advance Service Fee Payments may be made
more often than quarterly, and sooner than the end of the calendar quarter. In
the event Shares are redeemed less than one year after the date such Shares were
D-3
<PAGE>
sold, the Recipient is obligated to and will repay the Distributor on demand a
pro rata portion of such Advance Service Fee Payments, based on the ratio of the
time such Shares were held to one (1) year.
The administrative support services to be rendered by
Recipients in connection with the Accounts may include, but shall not be limited
to, the following: answering routine inquiries concerning the Fund, assisting in
the establishment and maintenance of accounts or sub-accounts in the Fund and
processing Share redemption transactions, making the Fund's investment plans and
dividend payment options available, and providing such other information and
services in connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may reasonably request.
(ii) Distribution Assistance Fee (Asset-Based Sales Charge)
Payments. Irrespective of whichever alternative method of making service fee
payments to Recipients is selected by the Distributor, in addition the
Distributor shall make distribution service fee payments to each Recipient
quarterly, within forty-five (45) days after the end of each calendar quarter,
at a rate not to exceed 0.1875% (0.75% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day constituting Qualified Holdings owned
beneficially or of record by the Recipient or its Customers for a period of more
than one (1) year. Alternatively, at its sole option, the Distributor may make
distribution assistance fee payments to a Recipient quarterly, at the rate
described above, on Shares constituting Qualified Holdings owned beneficially or
of record by the Recipient or its Customers without regard to the 1-year holding
period described above. Such payments shall be made only to Recipients that are
registered with the SEC as a broker-dealer or are exempt from registration.
The distribution assistance to be rendered by the Recipients
in connection with the sale of Shares may include, but shall not be limited to,
the following: distributing sales literature and prospectuses other than those
furnished to current Shareholders, providing compensation to and expenses of
personnel of the Recipient who support the distribution of Shares by the
Recipient, and providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may reasonably
request.
(c) A majority of the Independent Directors may at any time or from time
to time (i) increase or decrease the rate of fees to be paid to the Distributor
or to any Recipient, but not to exceed the rates set forth above, and/or (ii)
direct the Distributor to increase or decrease any Minimum Holding Period, any
maximum period set by a majority of the Independent Directors during which fees
will be paid on Shares constituting Qualified Holdings owned beneficially or of
record by a Recipient or by its Customers (the "Maximum Holding Period") or
Minimum Qualified Holdings. The Distributor shall notify all Recipients of any
Minimum Qualified Holdings, Maximum Holding Period and Minimum Holding Period,
if any, that are established and the rate of payments hereunder applicable to
Recipients, and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such provisions or
a change in such provisions in a supplement or amendment to or revision of the
prospectus of the Fund shall constitute sufficient notice.
D-4
<PAGE>
(d) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination under the limits to which the Distributor is, or may
become, subject under the NASD Conduct Rules.
(e) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset- Based
Sales Charge payments or from the proceeds of its borrowings.
(f) Recipients are intended to have certain rights as third-party
beneficiaries under this Plan, subject to the limitations set forth below. It
may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it has
Qualified Holdings of Shares that entitle it to payments under the Plan. If
either the Distributor or the Board believe that, notwithstanding the level of
Qualified Holdings, a Recipient may not be rendering appropriate distribution
assistance in connection with the sale of Shares or administrative support
services for Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other information to verify
that said Recipient is providing appropriate distribution assistance and/or
services in this regard. If the Distributor or the Board of Directors still is
not satisfied after the receipt of such report, either may take appropriate
steps to terminate the Recipient's status as a Recipient under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate. Additionally, in their discretion a majority of the Fund's
Independent Directors at any time may remove any broker, dealer, bank or other
person or entity as a Recipient, whereupon such person's or entity's rights as a
third-party beneficiary hereof shall terminate. Notwithstanding any other
provision of this Plan, this Plan does not obligate or in any way make the Fund
liable to make any payment whatsoever to any person or entity other than
directly to the Distributor.
4. Selection and Nomination of Directors. While this Plan is in effect, the
selection and nomination of persons to be Directors of the Fund who are not
"interested persons" of the Fund ("Disinterested Directors") shall be committed
to the discretion of the incumbent Disinterested Directors. Nothing herein shall
prevent the incumbent Disinterested Directors from soliciting the views or the
involvement of others in such selection or nomination as long as the final
decision on any such selection and nomination is approved by a majority of the
incumbent Disinterested Directors.
5. Reports. While this Plan is in effect, the Treasurer of the Fund shall
provide written reports to the Fund's Board for its review, detailing services
rendered in connection with the distribution of the Shares, the amount of all
payments made under this Plan and the purpose for which the payments were made.
The reports shall be provided quarterly, and shall state whether all provisions
of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Directors or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting Class C shares; (ii) such termination
shall be on not
D-5
<PAGE>
more than sixty days' written notice to any other party to the agreement; (iii)
such agreement shall automatically terminate in the event of its "assignment"
(as defined in the 1940 Act); (iv) such agreement shall go into effect when
approved by a vote of the Board and its Independent Directors cast in person at
a meeting called for the purpose of voting on such agreement; and (v) such
agreement shall, unless terminated as herein provided, continue in effect from
year to year only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Directors cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Board and its Independent Directors cast in person at
a meeting called on February 25, 1997, for the purpose of voting on this Plan,
and shall take effect as of the date first set forth above, at which time it
shall replace the Fund's Distribution and Service Plan for the Shares dated
August 29, 1995. Unless terminated as hereinafter provided, it shall continue in
effect until October 31, 1997 and thereafter from year to year or as the Board
may otherwise determine but only so long as such continuance is specifically
approved at least annually by a vote of the Board and its Independent Directors
cast in person at a meeting called for the purpose of voting on such
continuance.
This Plan may not be amended to increase materially the amount of payments
to be made under this Plan, without approval of the Class C Shareholders in the
manner described above, and all material amendments must be approved by a vote
of the Board and of the Independent Directors.
This Plan may be terminated at any time by vote of a majority of the
Independent Directors or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding Class C voting shares. In the event
of such termination, the Board and its Independent Directors shall determine
whether the Distributor shall be entitled to payment from the Fund of all or a
portion of the Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
Oppenheimer Total Return Fund
By:
-----------------------------------
OppenheimerFunds Distributor, Inc.
By:
-------------------------------------
D-6
<PAGE>
