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
/ / 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 ASSET ALLOCATION FUND
-----------------------------------------------------------------
(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.
- -----------------------------------------------------------------
(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:
- -----------------------------------------------------------------
/ / 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: $125.00
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(2) Form, Schedule or Registration Statement No.:
PRELIMINARY 14A PROXY STATEMENT
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(3) Filing Party: KATHERINE P. FELD, ESQ.
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(4) Date Filed: , 1996
<PAGE>
[Bridget Macaskill Letterhead]
December 1996
Dear Oppenheimer Asset Allocation Fund Shareholder:
We have scheduled a shareholder meeting in February 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 Trustees, which represents your
interests in the day-to-day management of the Fund, recommends approval of the
following items:
o Election of Trustees. There are eleven Trustees up for reelection in
February. You will find detailed information on the Trustees 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 the Fund's investment objective and certain
other fundamental investment policies. These proposed changes would further
define the Fund's investment parameters to better reflect the way the Fund is
currently managed.
o Approval of 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>
o 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. The
current Class B 12b-1 plan is the same as that proposed for Class C shares,
discussed below.
o Changes in Distribution and Service Plan for Class C Shares (Class C
Shareholders Only). Currently, the Fund's distributor is reimbursed for a
portion of its distribution expenses from the service fee and the asset-based
sales charge. Your approval is requested to change the way the distributor is
paid so that it is compensated for its distribution efforts at the same rate.
This is a common type of plan in the mutual fund industry. Any distribution
costs in excess of that rate will be the responsibility of the distributor.
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>
<TABLE>
<S> <C>
Oppenheimer Asset Allocation Proxy for Shareholders Meeting To
Fund - Class A Shares Be Held February 20, 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.
</TABLE>
Please detach at perforation before mailing.
<TABLE>
<S> <C>
Oppenheimer Asset Allocation Proxy For Shareholders Meeting To
Fund - Class A Shares Be Held February 20, 1997
The undersigned shareholder of Proxy solicited on behalf of the
Oppenheimer Asset Allocation Fund Board of Trustees, which
(the "Fund"), does herenby appoint recommends a vote FOR the election
Robert Bishop, George C Bowen, of all nominees for Trustee and FOR
Andrew J. Donohue 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 February 20,
1997, at 6803 South Tucson Way,
Englewood, Colorado 80111 at 10:00 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
Trustees and on the proposals specified
on the reverse side. Said attorneys-in-fact
shall vote in accordance with their best
judgment as to any other matter.
</TABLE>
OVER
240
<TABLE>
<S> <C>
Oppenheimer Asset Allocation Proxy for Shareholders Meeting To
Fund - Class A Shares be held February 20, 1997
Your shareholder Your prompt response can save your
vote is important! Fund money.
Please vote, sign and
mail your proxy ballot
(this card) in the
enclosed postage-paid
envelope today, no
matter how many shares
you own. A majority of
the Fund's shares must
be represented in
person or by proxy.
Please vote your proxy
so your Fund can avoid
the expense of another
mailing.
</TABLE>
Please detach at perforation before mailing.
<TABLE>
<S> <C> <C> <C>
1. Election of A) R. Galli G) E. Regan 1.// For all nominees
of Trustees B) L. Levy H) R. Reynolds listed except as marked
C) B. Lipstein I) D. Spiro to the contrary at left.
D) B. Macaskill J) P. Trigere Instruction: To withhold
E) E. Moynihan K) C. Yeutter authority to vote for any
F) K. Randall individual nominees, line
out that nominee's name
at left.
// Withhold authority to
vote for all nominees
listed at left.
</TABLE>
2. Ratification of selection 2./ /For / /Against / /Abstain
of KPMG Peat Marwick LLP as
independent auditors
(Proposal No. 1)
3. Approval of changes to the 2./ /For / /Against / /Abstain
Fund's fundamental investment
policies (Proposal No. 2)
o Investment Objective
o Diversification
o Commodities
o Other Investment Companies
4. Approval of the Investment 2./ /For / /Against / /Abstain
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.
Dated: , 1997
-------------------------------------
(Month) (Day)
Signature(s)
-------------------------------------
Signature(s)
-------------------------------------
Please read both sides of this ballot 240
proxy\240bal.a
<PAGE>
<TABLE>
<S> <C>
Oppenheimer Asset Allocation Proxy for Shareholders Meeting To
Fund - Class B Shares Be Held February 20, 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.
</TABLE>
Please detach at perforation before mailing.
<TABLE>
<S> <C>
Oppenheimer Asset Allocation Proxy For Shareholders Meeting To
Fund - Class B Shares Be Held February 20, 1997
The undersigned shareholder of Proxy solicited on behalf of the
Oppenheimer Asset Allocation Fund Board of Trustees, which
(the "Fund"), does herenby appoint recommends a vote FOR the election
Robert Bishop, George C Bowen, of all nominees for Trustee and FOR
Andrew J. Donohue 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 February 20, 1997,
at 6803 South Tucson Way, Englewood,
Colorado 80111 at 10:00 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 Trustees
and on the proposals specified on the
reverse side. Said attorneys-in-fact
shall vote in accordance with their best
judgment as to any other matter.
</TABLE>
OVER
241
<TABLE>
<S> <C>
Oppenheimer Asset Allocation Proxy for Shareholders Meeting To
Fund - Class B Shares be held February 20, 1997
Your shareholder Your prompt response can save your
vote is important! Fund money.
Please vote, sign and
mail your proxy ballot
(this card) in the
enclosed postage-paid
envelope today, no
matter how many shares
you own. A majority of
the Fund's shares must
be represented in
person or by proxy.
Please vote your proxy
so your Fund can avoid
the expense of another
mailing.
</TABLE>
Please detach at perforation before mailing.
<TABLE>
<S> <C> <C> <C>
1. Election of A) R. Galli G) E. Regan 1.// For all nominees
of Trustees B) L. Levi H) R. Reynolds listed except as marked
C) B. Lipstein I) D. Spiro to the contrary at left.
D) B. Macaskill J) P. Trigere Instruction: To withhold
E) E. Moynihan K) C. Yeutter authority to vote for any
F) K. Randall individual nominees, line
out that nominee's name
at left.
// Withhold authority to
vote for all nominees
listed at left.
</TABLE>
2. Ratification of selection 2./ /For / /Against / /Abstain
of KPMG Peat Marwick LLP as
independent auditors
(Proposal No. 1)
3. Approval of certain changes 2./ /For / /Against / /Abstain
to the Fund's fundamental
investment policies
(Proposal No. 2)
Investment Objective
o Diversification
o Commodities
o Other Investment Companies
4. Approval of the Investment 2./ /For / /Against / /Abstain
Advisory Agreement
(Proposal No. 3)
5. Approval of the Fund's Class 2./ /For / /Against / /Abstain
B 12b-1 Distribution amd
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.
Dated: , 1997
-------------------------------------
(Month) (Day)
Signature(s)
-------------------------------------
Signature(s)
-------------------------------------
Please read both sides of this ballot 241
proxy\240bal.b
<PAGE>
<TABLE>
<S> <C>
Oppenheimer Asset Allocation Proxy for Shareholders Meeting To
Fund - Class C Shares Be Held February 20, 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.
</TABLE>
Please detach at perforation before mailing.
<TABLE>
<S> <C>
Oppenheimer Asset Allocation Proxy For Shareholders Meeting To
Fund - Class C Shares Be Held February 20, 1997
The undersigned shareholder of Proxy solicited on behalf of the
Oppenheimer Asset Allocation Fund Board of Trustees, which
(the "Fund"), does herenby appoint recommends a vote FOR the election
Robert Bishop, George C Bowen, of all nominees for Trustee and FOR
Andrew J. Donohue 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 February 20, 1997,
at 6803 South Tucson Way, Englewood,
Colorado 80111 at 10:00 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 Trustees
and on the proposals specified on the
reverse side. Said attorneys-in-fact
shall vote in accordance with their best
judgment as to any other matter.
</TABLE>
OVER
242
<TABLE>
<S> <C>
Oppenheimer Asset Allocation Proxy for Shareholders Meeting To
Fund - Class C Shares be held February 20, 1997
Your shareholder Your prompt response can save your
vote is important! Fund money.
Please vote, sign and
mail your proxy ballot
(this card) in the
enclosed postage-paid
envelope today, no
matter how many shares
you own. A majority of
the Fund's shares must
be represented in
person or by proxy.
Please vote your proxy
so your Fund can avoid
the expense of another
mailing.
</TABLE>
Please detach at perforation before mailing.
<TABLE>
<S> <C> <C> <C>
1. Election of A) R. Galli G) E. Regan 1.// For all nominees
of Trustees B) L. Levy H) R. Reynolds listed except as marked
C) B. Lipstein I) D. Spiro to the contrary at left.
D) B. Macaskill J) P. Trigere Instruction: To withhold
E) E. Moynihan K) C. Yeutter authority to vote for any
F) K. Randall individual nominees, line
out that nominee's name
at left.
// Withhold authority to
vote for all nominees
listed at left.
</TABLE>
2. Ratification of selection 2./ /For / /Against / /Abstain
of KPMG Peat Marwick LLP as
independent auditors
(Proposal No. 1)
3. Approval of changes to the 2./ /For / /Against / /Abstain
Fund's fundamental investment
policies (Proposal No. 2)
o Investment Objective
o Diversification
o Commodities
o Other Investment Companies
4. Approval of the Investment 2./ /For / /Against / /Abstain
Advisory Agreement
(Proposal No. 3)
5. Approval of the Fund's Class 2./ /For / /Against / /Abstain
C 12b-1 Distribution and
Service Plan (Proposal No. 5)
NOTE: Please sign exactly as your name(s) appear hereon. When signing as
custodian, attorney, executor, administrator, trustee, etc., please give your
full title as such. All joint owners should sign this proxy. If the account is
registered in the name of a corporation, partnership or other entity, a duly
authorized individual must sign on its behalf and give title.
Dated: , 1997
-------------------------------------
(Month) (Day)
Signature(s)
-------------------------------------
Signature(s)
-------------------------------------
Please read both sides of this ballot 242
proxy\240bal.c
<PAGE>
OPPENHEIMER ASSET ALLOCATION FUND
Two World Trade Center, New York, New York 10048-0203
Notice Of Meeting Of Shareholders To Be Held
February 20, 1997
To The Shareholders of Oppenheimer Asset Allocation Fund:
Notice is hereby given that a Meeting of the Shareholders of Oppenheimer Asset
Allocation Fund (the "Fund") will be held at 6803 South Tucson Way, Englewood,
Colorado, 80111, at 10:00 A.M., Denver time, on February 20, 1997, or any
adjournments thereof, for the following purposes:
To be voted on by holders of:
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
<S> <C> <C> <C>
X X X (a) To elect eleven Trustees to
hold office until the next meeting of
shareholders called for the purpose of
electing Trustees and until their
successors are elected and shall
qualify;
X X X (b) To ratify the selection of KPMG Peat Marwick LLP as the
independent certified public accountants and auditors of the
Fund for the fiscal year beginning October 1, 1996 (Proposal
No. 1);
X X X (c) To approve changes to certain of the Fund's fundamental
investment policies (Proposal No. 2);
X X X (d) To approve an 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 (g) To transact such other business
as may properly come before the
meeting, or any adjournments thereof.
</TABLE>
Shareholders of record at the close of business on December 6, 1996, are
entitled to vote at the meeting. The election of Trustees and the Proposals are
more fully discussed in the Proxy Statement. Please read it carefully before
telling us, through your proxy or in person, how you wish your shares to be
voted. The Board of Trustees of the Fund recommends a vote to elect each of the
nominees as Trustee and in favor of each Proposal. WE URGE YOU TO MARK, SIGN,
DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
December 31, 1996
- ----------------------------------------------------------------------------
Shareholders who do not expect to attend the Meeting are asked to indicate
voting instructions on the enclosed proxy and to date, sign and return it in the
accompanying postage-paid envelope. To avoid unnecessary duplicate mailings, we
ask your cooperation in promptly mailing your proxy no matter how large or small
your holdings may be.
240
<PAGE>
OPPENHEIMER ASSET ALLOCATION FUND
Two World Trade Center, New York, New York 10048-0203
PROXY STATEMENT
Meeting of Shareholders
To Be Held February 20, 1997
This statement is furnished to the shareholders of Oppenheimer Asset Allocation
Fund (the "Fund") in connection with the solicitation by the Fund's Board of
Trustees of proxies to be used at a meeting (the "Meeting") of shareholders to
be held at 6803 South Tucson Way, Englewood, Colorado, 80111, at 10:00 A.M.,
Denver time, on February 20, 1997, or any adjournments thereof. It is expected
that the mailing of this Proxy Statement will be made on or about December 31,
1996. For a free copy of the Fund's annual report for its most recent fiscal
year ended September 30, 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
Trustee named in this Proxy Statement unless a choice is indicated to withhold
authority to vote for all listed nominees or any individual nominee. The proxy
will be voted in favor of each Proposal unless a choice is indicated to vote
against or to abstain from voting on that Proposal.
Shares owned of record by broker-dealers for the benefit of their customers
("street account shares") will be voted by the broker-dealer based on
instructions received from its customers. If no instructions are received, the
broker-dealer may (if permitted under applicable stock exchange rules) as record
holder vote such shares for the election of Trustees and on the Proposals in the
same proportion as that broker-dealer votes street account shares for which
voting instructions were received in time to be voted ("broker non-votes").
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 Trustee and in favor of each Proposal.
The proxy may be revoked at any time prior to the voting by: (1) writing to the
Secretary of the Fund at Two World Trade Center, New York, New York, 10048-0203;
(2) attending the meeting and voting in person; or (3) signing and returning a
new proxy (if returned and received in time to be voted).
The cost of printing and distributing these proxy materials is an expense of the
Fund. In addition to the solicitation of proxies by mail, proxies may be
solicited by officers or employees of the Fund's transfer agent, personally or
by telephone or telegraph; any expenses so incurred will also be borne by the
Fund. Brokers, banks and other fiduciaries may be required to forward soliciting
material to their principals and to obtain authorization for the execution of
proxies. For those services they will be reimbursed by the Fund for their
out-of-pocket expenses.
Shares Outstanding and Entitled to Vote. As of December 6, 1996, the record
date, there were 20,891,178.196 shares of the Fund issued and outstanding,
consisting of 18,665,377.085 Class A shares, 529,586.769 Class B shares and
1,696,214.342 Class C shares. Each Class A, Class B and Class C 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 November 29, 1996, the
only entity 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 Merrill Lynch Pierce Fenner & Smith, Inc., 4800 Deer Lake
Drive, Jacksonville, FL 33246, which owned of record 87,561 Class C shares
(5.18% of that class).
ELECTION OF TRUSTEES
At the Meeting, eleven Trustees are to be elected to hold office until the next
meeting of shareholders called for the purpose of electing Trustees and until
their successors shall be duly elected and shall have qualified. The persons
named as attorneys-in-fact in the enclosed proxy have advised the Fund that
unless a proxy instructs them to withhold authority to vote for all listed
nominees or any individual nominee, all validly executed proxies will be voted
by them for the election of the nominees named below as Trustees of the Fund. As
a Massachusetts business trust, the Fund does not contemplate holding annual
shareholder meetings for the purpose of electing Trustees. Thus, the Trustees
will be elected for indefinite terms until a shareholder meeting is called for
the purpose of voting for Trustees and until their successors are elected and
shall qualify.
Each of the nominees is presently a Trustee and has agreed to be nominated and,
if elected, to continue to serve as a Trustee of the Fund. A twelfth Trustee,
Professor Sidney M. Robbins, has indicated that he will resign as a Trustee as
of December 31, 1996, at which time the size of the Fund's Board shall be
changed to eleven Trustees. Each of the Trustees is also a Trustee or Director
of Oppenheimer Fund, Oppenheimer Discovery Fund, Oppenheimer Global Fund,
Oppenheimer Global Emerging Growth Fund, Oppenheimer Global Growth & Income
Fund, Oppenheimer Growth Fund, Oppenheimer Capital Appreciation Fund (formerly
named "Oppenheimer Target Fund"), Oppenheimer Municipal Bond Fund, Oppenheimer
Gold & Special Minerals Fund, Oppenheimer Asset Allocation Fund, Oppenheimer
California Municipal Fund, Oppenheimer Multi-State Municipal Trust, Oppenheimer
Money Market Fund, Inc., Oppenheimer U.S. Government Trust, Oppenheimer New York
Municipal Fund, Oppenheimer International Growth Fund, Oppenheimer Enterprise
Fund, Oppenheimer World Bond Fund (formerly named "Oppenheimer Multi-Government
Trust"), Oppenheimer Developing Markets Fund and Oppenheimer Multi-Sector Income
Trust (together with the Fund, the "New York-based Oppenheimer funds") except
that Ms. Macaskill is not a director of Oppenheimer Money Market Fund, Inc. Ms.
Macaskill is President, Mr. Levy is Chairman and Mr. Spiro is Vice Chairman of
the Fund and each of the other New York-based 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. The year given below indicates
when the nominee first became a Trustee or Director of any of the New York-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
Trustees may, in its discretion, select another person to fill the vacant
position. As of November 29, 1996, the Trustees and officers of the Fund as a
group owned 13,375.409 Class A shares of the Fund in the aggregate, which is
less than 1% of the outstanding shares of that class. None of the Trustees or
officers owned any Class B or Class C shares of the Fund.
<TABLE>
<CAPTION>
Name And Business Experience Owned as of
Other Information During the Past Five Years November 29, 1996
- ----------------- -------------------------- -----------------
<S> <C> <C>
Leon Levy General Partner of Odyssey Partners, L.P. None
first became a (investment partnership); Chairman of
Trustee in 1959 Avatar Holdings, Inc. (real estate
Age: 71 development).
Robert G. Galli* Vice Chairman of the Manager; formerly None
first became a he held the following positions: Vice
Trustee in 1993 President and Counsel of Oppenheimer
Age: 63 Acquisition Corp. ("OAC"), the Manager's
parent holding company; Executive Vice
President and General Counsel and a director of
the Manager and OppenheimerFunds Distributor,
Inc. (the "Distributor"),Vice President and a
director of HarbourView Asset Management
Corporation ("HarbourView") and Centennial
Asset Management Corporation ("Centennial"),
investment adviser subsidiaries of the Manager,
a director of Shareholder Financial Services,
Inc. ("SFSI") and Shareholder Services, Inc.
("SSI"), transfer agent subsidiaries of the
Manager, and an officer of other Oppenheimer
funds.
Benjamin Lipstein Professor Emeritus of Marketing, Stern None
first became a Graduate School of Business Administration,
Trustee in 1974 New York University; a director of Sussex
Age: 73 Publishers, Inc. (publishers of Psychology
Today and Mother Earth News) and Spy
Magazine, L.P.
Bridget A. Macaskill* President and CEO and a director of the None
first became a Manager; Chairman and a director of SSI
Trustee in 1995 and SFSI; President and a director of OAC,
Age: 48 HarbourView 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.
Elizabeth B. Moynihan Author and architectural historian; a None
first became a trustee of the Freer Gallery of Art
Trustee in 1992 (Smithsonian Institution), the Institute
Age: 67 of Fine Arts (New York University), and
National Building Museum; a member
of the Trustees Council, Preservation
League of New York State; a member of
the Indo-U.S. Sub-Commission on
Education and Culture.
Kenneth A. Randall A director of Dominion Resources, Inc. 291.711
first became a (electric utility holding company),
Trustee in 1980 Dominion Energy, Inc. (electric power and
Age: 69 and oil & gas producer), Enron-Dominion
Cogen Corp. (cogeneration company), Kemper
Corporation (insurance and financial services
company) and Fidelity Life Association (mutual
life insurance company); formerly President and
Chief Executive Officer of The Conference
Board, Inc. (international economic and
business research), a director of Lumbermans
Mutual Casualty Company, American Motorists
Insurance Company and American Manufactures
Insurance Company.
Edward V. Regan Chairman of Municipal Assistance 196.699
first became a Corporation for the City of New York;
Trustee in 1993 Senior Fellow of Jerome Levy Economics
Age: 66 Institute, Bard College; a member of the U.S.
Competitiveness Policy Council; a director
of GranCare, Inc. (health care provider);
formerly New York State Comptroller and
trustee, New York State and Local
Retirement Fund.
Russell S. Reynolds, Jr. Founder and Chairman of Russell Reynolds None
first became a Associates, Inc. (executive recruiting);
Trustee in 1989 Chairman of Directorship, Inc. (corporate
Age: 65 governance consulting); a director of
Professional Staff Limited (U.K.); and a
trustee of Mystic Seaport Museum, International
House and Greenwich Historical Society.
Sidney M. Robbins** Chase Manhattan Professor Emeritus of 2,406.933(1)
first became a Financial Institutions, Graduate School of
Trustee in 1963 Business, Columbia University; Visiting
Age: 84 Professor of Finance, University of Hawaii;
Emeritus Founding Director of The Korea Fund,
Inc.(a closed-end investment company); member
of the Board of Advisors of Olympus Private
Placement Fund, L.P.; and Professor Emeritus of
Finance, Adelphi University.
Donald W. Spiro* Chairman Emeritus and a director of the None
first became a Manager; formerly Chairman of the Manager
Trustee in 1985 and the Distributor.
Age: 71
Pauline Trigere Chairman and Chief Executive Officer of None
first became a Trigere, Inc. (design and sale of women's
Trustee in 1977 fashions).
Age: 84
Clayton K. Yeutter Of Counsel to Hogan & Hartson (a law firm); None
first became a a director of B.A.T. Industries, Ltd. (tobacco
Trustee in 1993 and financial services), Caterpillar, Inc.
Age: 66 (machinery), ConAgra, Inc. (food and
agricultural products), Farmers Insurance
Company (insurance), FMC Corp.
(chemicals and machinery), IMC Global, Inc.
(chemicals and animal feed) and Texas
Instruments, Inc. (electronics); formerly
Counsellor to the President (Bush) for
Domestic Policy, Chairman of the Republican
National Committee, Secretary of the U.S.
Department of Agriculture, and U.S. Trade
Representative.
- -------------------------
*A nominee who is an "interested person" of the Fund and the Manager under the
Investment Company Act.
** A Trustee until 12/31/96; Professor Robbins is not a nominee for election.
(1)These shares are held by Professor Robbins' spouse. Professor Robbins disclaims ownerships of
such shares.
</TABLE>
Vote Required. The affirmative vote of a majority of the votes cast by
shareholders of the Fund without regard to class is required for the election of
a nominee as Trustee. The Board of Trustees recommends a vote for the election
of each nominee.
Functions of the Board of Trustees. The primary responsibility for the
management of the Fund rests with the Board of Trustees. The Trustees meet
regularly to review the activities of the Fund and of the Manager, which is
responsible for its day-to-day operations. Six regular meetings of the Trustees
were held during the fiscal period ended September 30, 1996. The Fund has
changed its fiscal year from December 31 to September 30. Each of the Trustees
was present for at least 75% of the meetings held of the Board and of all
committees on which that Trustee served. The Trustees of the Fund have appointed
an Audit Committee, comprised of Messrs. Randall (Chairman), Lipstein, Regan and
Robbins (advisory member), none of whom is an "interested person" (as that term
is defined in the Investment Company Act) of the Manager or the Fund. The
functions of the Committee include (i) making recommendations to the Board
concerning the selection of independent auditors for the Fund (subject to
shareholder ratification); (ii) reviewing the methods, scope and results of
audits and the fees charged; (iii) reviewing the adequacy of the Fund's internal
accounting procedures and controls; and (iv) establishing a separate line of
communication between the Fund's independent auditors and its independent
Trustees. The Committee met three times during the fiscal period ended September
30, 1996. The Board of Trustees does not have a standing nominating or
compensation committee.
Remuneration of Trustees. The officers of the Fund are affiliated with the
Manager. They and the Trustees of the Fund who are affiliated with the Manager
(Ms. Macaskill and Messrs. Galli and Spiro) receive no salary or fee from the
Fund. The remaining Trustees of the Fund received the compensation shown below
from the Fund, during its fiscal period ended September 30, 1996, and from all
of the New York-based Oppenheimer funds (including the Fund) for which they
served as Trustee or Director. Compensation is paid for services in the
positions below their names:
<TABLE>
<CAPTION>
Total Compensation
Aggregate Retirement Benefits From All
Name and Compensation Accrued as Part of New York-based
Position from Fund1 Fund Expenses1 Oppenheimer funds2
<S> <C> <C> <C>
Leon Levy $6,643 $9,517 $141,000
Chairman and Trustee
Benjamin Lipstein $4,061 $5,818 $86,200
Study Committee
Chairman(3)and Trustee
Elizabeth B. Moynihan $4,061 $5,818 $86,200
Study Committee
Member and Trustee
Kenneth A. Randall $3,693 $5,291 $78,400
Audit Committee
Member and Trustee
Edward V. Regan $3,241 $4,644 $68,800
Proxy Committee
Chairman(3), Audit
Committee Member
and Trustee
Russell S. Reynolds Jr. $2,454 $3,516 $52,100
Proxy Committee
Member(3)and Trustee
Sidney M. Robbins $5,752 $8,241 $122,100
Study Committee and
Audit Committee Advisory
Member(3) and Trustee
Pauline Trigere $2,454 $3,516 $52,100
Trustee
Clayton K. Yeutter $2,454 $3,516 $52,100
Proxy Committee
Member(3)and
Trustee
</TABLE>
- ----------------------
(1)For the Fund's fiscal year ended September 30, 1996.
(2)For the 1995 calendar year (prior to the inception of the Proxy
Committee), during which the New York-based Oppenheimer funds, listed in the
first paragraph of this section, included Oppenheimer Mortgage Income Fund and
Oppenheimer Time Fund (which ceased operation following the acquisition of their
assets by certain other Oppenheimer funds) but excluded Oppenheimer
International Growth Fund and Oppenheimer Developing Markets Fund, which had not
yet commenced operations.
(3)Committee position held during a portion of the period shown. The
Study, Audit and Proxy Committees meet for all the New York-based funds and all
fees are allocated among the funds by the Board.
The Fund has adopted a retirement plan that provides for payment to a retired
Trustee of up to 80% of the average compensation paid during that Trustee's five
years of service in which the highest compensation was received. A Trustee must
serve in that capacity for any of the New York-based Oppenheimer funds for at
least 15 years to be eligible for the maximum payment. Because each Trustee's
retirement benefits will depend on the amount of the Trustee's future
compensation and length of service, the amount of those benefits cannot be
determined at this time, nor can the Fund estimate the number of years of
credited service that will be used to determine those benefits.
Officers of the Fund. Each officer of the Fund is elected by the Trustees to
serve an indefinite term. Information is given below about the executive
officers who are not Trustees of the Fund, including their business experience
during the past five years.
Richard H. Rubinstein, Vice President and Portfolio Manager; Age: 48
Senior Vice President of the Manager; an officer of other Oppenheimer funds;
formerly Vice President and Portfolio Manager/Security Analyst for Oppenheimer
Capital Corp., an investment adviser.
Andrew J. Donohue, Secretary; Age: 46
Executive Vice President and General Counsel of the Manager and the
Distributor; President and a director of Centennial; Executive Vice President,
General Counsel and a director of HarbourView, SSI, SFSI 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 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), and a
director and an officer of First Investors Family of Funds and First Investors
Life Insurance Company.
George C. Bowen, Treasurer; Age: 60
3410 South Galena Street, Denver, Colorado 80231
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; President and Treasurer of Oppenheimer Real Asset Management,
Inc.; Chief Executive Officer, Treasurer and a director of MultiSource Services,
Inc. (a broker-dealer); 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
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of other
Oppenheimer funds; previously a Fund Controller of the Manager, prior to which
he was an Accountant for Yale & Seffinger, P.C., an accounting firm, and
previously an Accountant and Commissions Supervisor for Stuart James Company
Inc., a broker-dealer.
Scott T. Farrar, Assistant Treasurer; Age: 31
3410 South Galena Street, Denver, Colorado 80231
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
Trustees and that such selection be ratified by the shareholders at the
next-convened annual meeting of the Fund, if one is held. The Board of Trustees
of the Fund, including a majority of the Trustees who are not "interested
persons" (as defined in the Investment Company Act) of the Fund or the Manager,
at a meeting held April 11, 1996, selected KPMG Peat Marwick LLP ("Peat
Marwick") as auditors of the Fund for the fiscal period beginning October 1,
1996. Peat Marwick also serves as auditors for certain other funds for which the
Manager acts as investment adviser. At the Meeting, a resolution will be
presented for the shareholders' vote to ratify the selection of Peat Marwick as
auditors. Representatives of Peat Marwick 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 Trustees recommends approval of the selection of Peat Marwick 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 more accurately reflect the Fund's investment
style. 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." 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.
Regardless of whether shareholders approve this Proposal No. 2, the Fund intends
to change its name on or shortly after the date of this shareholders meeting to
"Oppenheimer Multiple Strategies Fund." The new name will be reflected in an
updated Prospectus and Statement of Additional Information for the Fund. If
shareholders do not approve this Proposal, none of the investment policy changes
described in this Proposal will be implemented at this time. The Fund's Board of
Trustees, including a majority of its independent Trustees, at a meeting held
December 12, 1996, determined that the proposed investment policies more
accurately reflect the Fund's investment style, and recommends approval.
Investment Objective. As a matter of fundamental policy, the Fund seeks
"high total investment return" as its investment objective. The Fund proposes to
change its investment objective to "high total investment return consistent with
preservation of principal," as more accurately reflecting the Fund's investment
style. This new investment objective would be a fundamental policy.
The Fund employs a "multiple-style" approach to investing which is intended to
lower risk through diversification. The Fund's equity assets are allocated among
growth, value, contrarian, international and dividend-paying stocks, while
fixed-income securities are allocated among U.S. government, U.S. lower-grade
corporate and foreign fixed-income securities.
If shareholders approve this Proposal No. 2, it is anticipated that the
Fund will adopt two non-fundamental investment policies. Changes in
non-fundamental investment policies require approval of the Fund's Board of
Trustees. The first non-fundamental policy is that the Fund will invest at least
25% of its total assets in fixed-income senior securities. Fixed-income
securities include bonds and notes. As disclosed in the Fund's current
Prospectus, risks of fixed-income securities include credit risk and interest
rate risk. Credit risk includes the risk that the issuer will be unable to
timely make interest and/or principle payments on the security. Interest rate
risk is the change in value of a debt security due to changes in prevailing
interest rates. When interest rates rise, the values of outstanding debt
securities generally decline. The second non-fundamental policy is that the Fund
will invest at least 25% of its total assets in equity securities, including
common stocks, preferred stocks and securities convertible into common stocks.
As disclosed in the Fund's current Prospectus, risks of equity securities
include the risk of stock market volatility that can affect a particular stock's
price, as a result of, for example, poor earnings report by an issuer or loss of
a major customer. These policies are consistent with the Fund's current
investment style.
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. This is a more restrictive approach than is
required under the Investment Company Act. 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:
"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, and to permit investment flexibility to a greater degree.
Commodities. The Fund currently has a fundamental investment policy that
provides that, "The Fund cannot invest in commodities or commodity contracts;
however, the Fund may buy and sell hedging instruments permitted by any of its
other fundamental policies." 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.
The Manager proposes that this fundamental investment policy be deleted and
replaced with a new fundamental policy. 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:
"The Fund cannot invest in physical commodities or commodity contracts;
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."
Investments in Other Investment Companies. The Fund currently has a
fundamental investment policy that it will not invest in other open-end
investment companies, or invest more than 5% of its net assets at the time of
purchase in closed-end investment companies, including small business investment
companies, nor make any such investments at commission rates in excess of normal
brokerage commissions.
The Manager proposes that this fundamental policy be deleted. The Fund
would remain subject to the provisions of the Investment Company Act of 1940, as
it may be amended from time to time. Section 12(d)(1) of the 1940 Act
effectively prohibits the Fund from acquiring the securities of another
investment company if, after the acquisition, the Fund would own: (i) more than
3% of the outstanding voting stock of the acquired investment company, (ii)
securities issued by the acquired investment company having a value in excess of
5% of the Fund's total assets, and (iii) securities issued by the acquired
investment company and all other investment companies having a value in excess
of 10% of the Fund's total assets.
In addition, if this Proposal is approved, the Fund would adopt a
fundamental policy, as follows:
"The Fund may invest all of its assets in the securities of a single
open-end management investment company for which the Manager or one of
its subsidiaries or a successor is advisor or sub-advisor,
notwithstanding any other fundamental investment policy or limitation;
such other investment company must have substantially the same
fundamental investment objective, policies and limitations as the
Fund."
Under this new fundamental policy, the Fund would permitted, but not
required, to adopt a "master-feeder" structure in which the Fund and other
"feeder" funds would invest all of their assets in a single pooled "master fund"
in an effort to take advantage of potential efficiencies. The Fund has no
present intention of adopting a "master-feeder" structure, and would be required
to obtain approval from the Fund's Board of Trustees and update its Prospectus
and Statement of Additional Information prior to its doing so.
Vote Required. An affirmative vote of the holders of a "majority" (as
defined in the Investment Company Act) of all outstanding voting securities of
the Fund is required for approval of 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 Trustees recommends a vote in favor of approving this
Proposal.
APPROVAL OF PROPOSED INVESTMENT ADVISORY AGREEMENT
(Proposal No. 3)
The Fund has an Investment Advisory Agreement dated June 27, 1994 with the
Manager (the "Agreement") which was most recently approved by the Fund's Board
of Trustees, including a majority of the Trustees who are not "interested
persons" (as defined in the Investment Company Act) of the Fund or of the
Manager, on December 12, 1996. The Agreement was approved by shareholders of the
Fund at a meeting held on June 20, 1994. A copy of the Agreement is included in
this Proxy Statement as Exhibit A. Prior to January 5, 1996, the Manager was
known as Oppenheimer Management Corporation. 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 payable monthly under the
Agreement to the Manager is computed on the average net assets of the Fund as of
the close of business each day at the following annual rates: 0.75% of the first
$200 million of aggregate net assets; 0.72% of the next $200 million; 0.69% of
the next $200 million; 0.66% of the next $200 million; and 0.60% of aggregate
net assets in excess of $800 million. During the fiscal period ended September
30, 1996, the Fund paid the Manager a fee of $1,544,001 under the Agreement. The
Manager also acts as investment adviser to other funds that have similar or
comparable investment objectives. A list of those funds and the net assets and
advisory fee rates paid by those funds 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 Trustees, legal and audit expenses,
custodian and transfer agent expenses, share certificate issuance costs, certain
printing and registration costs, and non-recurring expenses, including
litigation.
The Agreement contains no expense limitation. However, independently of the
Agreement, the Manager has undertaken that the total expenses of the Fund in any
fiscal year (including the management fee but excluding taxes, interest,
brokerage fees and any extraordinary non-recurring expenses, such as litigation)
shall not exceed the most stringent applicable state regulatory limitation. The
payment of the management fee at the end of any month will be reduced so that
there will not be any accrued but unpaid liability under this expense
limitation. The Manager has reserved the right to change or eliminate this
expense limitation at any time. Due to changes in federal securities laws, such
state regulatory limitations no longer apply, and the Manager anticipates that
it will withdraw its undertaking with the Fund's next updated Prospectus and
Statement of Additional Information. During the Fund's most recent fiscal period
ended September 30, 1996 (the Fund has changed its fiscal year from December 31
to September 30), the Fund's expenses did not exceed the most stringent state
regulatory limit and the voluntary undertaking was not invoked.
The Agreement provides that in the absence of willful misfeasance, bad faith or
gross negligence in the performance of its duties or reckless disregard of its
obligations under the Agreement, the Manager is not liable for any loss
sustained by reason of any investment, or the purchase, sale or retention of any
security, or for any act or omission in performing the services required by the
Agreement. The Agreement permits the Manager to act as investment adviser for
any other person, firm or corporation and to use the name "Oppenheimer" in
connection with other investment companies for which it may act as investment
adviser. 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 Trustees. 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 commission
is 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 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 Trustees 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 Board of Trustees, including the
"independent" Trustees of the Fund (those Trustees of the Fund who are not
"interested persons" as defined in the Investment Company Act, and who have no
direct or indirect financial interest in the operation of the Agreement or the
Distribution and Service Plans described below) annually reviews information
furnished by the Manager as to the commissions paid to brokers furnishing such
services so that the Board may ascertain whether the amount of such commissions
was reasonably related to the value or benefit of such services.
The Manager, the Distributor and the Transfer Agent. Subject to the
authority of the Board of Trustees, 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 $263,045 by the Fund during its
fiscal period ended September 30, 1996.
The Manager (including a subsidiary) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $60 billion as of
November 30, 1996, and with more than 3 million shareholder accounts. The
Manager is a wholly-owned subsidiary of Oppenheimer 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 September 29, 1996,
MassMutual held (i) all of the 2,160,000 shares of Class A voting stock, (ii)
526,105 shares of Class B voting stock, and (iii) 1,328,053 shares of Class C
non-voting stock. This collectively represented 82.2% of the outstanding common
stock and 92.3% of the voting power of OAC as of that date. Certain officers
and/or directors of the Manager held (i) 598,704 shares of the Class B voting
stock, representing 12.3% of the outstanding common stock and 6.0% of the voting
power, and (ii) options acquired without cash payment which, when they become
exercisable, allow the holders to purchase up to 627,362 shares of Class C
non-voting stock. That group includes persons who serve as officers of the Fund,
and Ms. Macaskill and Messrs. Galli and Spiro, who serve as Trustees of the
Fund. Holders of OAC Class B and Class C common stock may put (sell) their
shares and vested options to OAC or MassMutual at a formula price (based on
earnings of the Manager). MassMutual may exercise call (purchase) options on all
outstanding shares of both such classes of common stock and vested options at
the same formula price. From the period October 1, 1995 to September 29, 1996,
the only transactions by persons who serve as Trustees 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
and Mr. Galli, who sold 10,000 shares of Class C OAC common stock to MassMutual
for an aggregate of $787,900.
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; 3410 South Galena Street,
Denver, CO 80231; 350 Linden Oaks, Rochester, NY 14625 and One Financial Plaza,
755 Main Street, Hartford, CT 06103.
Considerations by the Board of Trustees. In connection with the approval of the
Agreement, the Manager provided extensive information to the Independent
Trustees. The Independent Trustees were provided with data as to the
qualifications of the Manager's personnel, the quality and extent of the
services rendered and its commitment to its mutual fund advisory business. The
Independent Trustees also considered data presented by the Manager showing the
extent to which it had expanded its investment personnel and other services
dedicated to the equity area of its mutual fund advisory activities. Information
prepared specifically for the purpose of assisting the Independent Trustees in
their evaluation of the Agreement included an analysis of the performance and
expenses of the Fund as compared to other similar funds.
Analysis of Nature, Quality and Extent of Services. In determining whether to
approve the Agreement and to recommend its approval by the Fund's shareholders,
the Independent Trustees particularly considered: (1) the effect of the
investment management fee on the expense ratio of the Fund; (2) the investment
record of the Manager in managing the Fund, and the investment record of other
investment companies for which it acts as investment adviser; and (3) data as to
investment performance, advisory fees and expense ratios of other investment
companies not advised by the Manager but believed to be in the same overall
investment and size category as the Fund. The Independent Trustees also
considered the following factors, among others: (1) the necessity of the Manager
maintaining and enhancing its ability to retain and attract capable personnel to
serve the Fund; (2) the Manager's overall profitability; (3) pro-forma
profitability data giving effect to the investment management fee but before
marketing and promotional expenses anticipated to be paid by the Manager and its
affiliates; (4) possible economies of scale; (5) other benefits to the Manager
from serving as investment manager to the Fund, as well as benefits to its
affiliates acting as principal underwriter and its division acting as transfer
agent to the Fund; (6) current and developing conditions in the financial
services industry, including the entry into the industry of larger and highly
capitalized companies which are spending and appear to be prepared to continue
to spend substantial sums to engage personnel and to provide services to
competing investment companies; and (7) the financial resources of the Manager
and the desirability of appropriate incentives to assure that the Manager will
continue to furnish high quality services to the Fund.
Analysis of Profitability of the Manager. The Independent Trustees were advised
that the Manager does not maintain its financial records on a fund-by-fund
basis. However, the Manager does provide the Independent Trustee on an annual
basis with its allocation of expenses on a fund-by-fund basis. The Independent
Trustees considered information provided by the Manager regarding its
profitability and also considered comparative information relating to the
profitability of other mutual fund investment managers. The Independent Trustees
also noted the substantial marketing and promotional activities in which the
Manager and its affiliates engage and propose to engage on behalf of the Fund.
Determination by the Independent Trustees and the Board of Trustees. After
completion of its review, the Independent Trustees recommended that the Board of
Trustees approve, and the Board unanimously approved, the Agreement.
Vote Required. An affirmative vote of the holders of a "majority" (as defined in
the Investment Company Act) of all outstanding voting securities of the Fund is
required for approval of the Agreement; the classes do not vote separately. The
requirements for such "majority" are described in Proposal No. 2. The Board of
Trustees 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 August 29, 1995. At that
time, the Fund 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. At a
meeting held March 16, 1995, the Fund's Board of Trustees, including a majority
of the Trustees who are not "interested persons" (as defined in the Investment
Company Act) of the Fund 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 Trustees"), approved the Distribution and Service Plan
dated August 29,1995 and determined to recommend it for approval by all
shareholders.
At a meeting held October 10, 1996, the Fund's Board of Trustees, including a
majority of the Independent Trustees, approved a new Distribution and Service
Plan for Class B shares with non-material changes from the August 29, 1995
Distribution and Service Plan. A copy of this new Distribution and Service Plan
for Class B shares dated February 20, 1997 (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
six years or less, 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 institutions ("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. 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 institution that
sells the Fund's Class B shares, (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%.
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 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 has the effect of increasing annual expenses
of Class B shares of the Fund by up to 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 September
30, 1996 totalled $26,446 (1.0% of the Fund's average net assets represented by
Class B shares during that period), of which $25,989 was retained by 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
December 31, 1997 and from year to year thereafter only so long as such
continuance is specifically approved, at least annually, by the Fund's Board of
Trustees and its Independent Trustees by a vote cast in person at a meeting
called for the purpose of voting on such continuance. The Distribution and
Service Plan may be terminated at any time by a vote of a majority of the
Independent Trustees 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 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 Trustees.
Additional Information. The Distribution and Service Plan provides that while it
is in effect, the selection and nomination of those Trustees of the Fund who are
not "interested persons" of the Fund is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of others in such
selection and nomination if the final decision on any such selection or
nomination is approved by a majority of the Independent Trustees.
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 Trustees. Initially, the Board of Trustees 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 Trustees. 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 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 asset base in the face
of competition from a variety of financial products. The Trustees 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 Trustees 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 Trustees 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 Trustees concluded that without
an effective means of selling and distributing Fund shares and servicing
shareholders and providing account maintenance, expenses may remain 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 Trustees 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 Trustees, 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. 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 Trustees recommends a vote in favor
of approving this Proposal.
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 December 1, 1993. At that
time, the Fund adopted a Distribution and Service Plan dated December 1, 1993
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 this Distribution and Service Plan for Class C
shares of the Fund. At a meeting held October 6, 1993, the Fund's Board of
Trustees, including a majority of the Trustees who are not "interested persons"
(as defined in the Investment Company Act) of the Fund 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 Trustees"), approved this
Distribution and Service Plan.
At a meeting of the Fund's Board of Trustees held October 10, 1996, the Manager
proposed the adoption of a new Class C Distribution and Service Plan and
Agreement for Class C shares (the "Distribution and Service Plan") which is
recharacterized as a "compensation type plan" instead of a "reimbursement type
plan." The Fund's Board of Trustees, including a majority of the Independent
Trustees, approved the new Distribution and Service Plan, subject to shareholder
approval, and determined to recommend it for approval by Class C shareholders. A
copy of this Distribution and Service Plan dated February 20, 1997 is attached
as Exhibit D to this proxy statement.
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 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 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 institution 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. 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 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 current Class C 12b-1 Plan
contains a provision which would require the Fund to continue to make payments
to the Distributor after a termination of the Distribution and Service Plan.
The Distribution and Service Plan has the effect of increasing annual expenses
of Class C shares of the Fund by up to 1.00% of the class's average annual net
assets from what those expenses would otherwise be. Payments by the Fund to the
Distributor under the current Class C Plan for the fiscal period ended September
30, 1996 were $133,941, of which $53,420 was retained by the Distributor and
$6,442 was paid to an affiliate broker/dealer.
If the Class C shareholders approve this Proposal, the Distribution and Service
Plan shall, unless terminated as described below, continue in effect until
December 31, 1997 and from year to year thereafter only so long as such
continuance is specifically approved, at least annually, by the Fund's Board of
Trustees and its Independent Trustees by a vote cast in person at a meeting
called for the purpose of voting on such continuance. The Distribution and
Service Plan may be terminated at any time by a vote of a majority of the
Independent Trustees 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 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 Trustees.
Additional Information. The Distribution and Service Plan provides that while it
is in effect, the selection and nomination of those Trustees of the Fund who are
not "interested persons" of the Fund is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of others in such
selection and nomination if the final decision on any such selection or
nomination is approved by a majority of the Independent Trustees.
Under the Distribution and Service Plan, the Board may determine that no payment
will be made to the Distributor or 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 Trustees. Initially, the Board of
Trustees 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 Trustees. 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 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 also focused on the two principal differences in the Distribution and
Service Plan and its predecessor. First, the proposed plan provides for
compensating the Distributor for its distribution efforts rather than
reimbursing it for its costs. While it was possible for the Fund's Class C 12b-1
payments to be reduced when limited by the Distributor's expenses (including
past expenses which were not previously reimbursed, and which were, therefore,
carried forward with interest) under a reimbursement-type plan, under normal
circumstances this is unlikely. Therefore, adoption of this Proposal is not
expected to materially increase the Fund's expenses under normal circumstances.
Payments under the proposed Distribution and Service Plan still remain subject
to limits imposed on asset-based sales charges by the NASD. The Board also noted
that investors who purchase Class C shares are subject to an asset-based sales
charge of 0.75% per annum regardless of the Distributor's actual distribution
expenses.
A second difference in the Distribution and Service Plan over its predecessor is
that the proposed Plan expressly provides that distribution and administrative
support services may be rendered in connection with Class C shares acquired
either in exchange for shares of other Oppenheimer funds or by reorganization
with another fund. The Board determined that although these changes are less
likely to have significance under a compensation-type Plan, it should have the
flexibility to approve reorganizations among funds without concern that the
transaction would affect payments to the Distributor for its distribution
efforts. The Board also noted that investors who purchase Class C shares of the
Fund reasonably expect that they will be paying an asset-based sales charge of
0.75% per annum regardless of share exchanges or the occurrence of
reorganizations to which their Fund is a party.
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 asset base in the face
of competition from a variety of financial products. The Trustees 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 Trustees 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 Trustees 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 Trustees concluded that without
an effective means of selling and distributing Fund shares and servicing
shareholders and providing account maintenance, expenses may remain 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 Trustees 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 Trustees, 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 Trustees recommends a vote in favor
of approving this Proposal.
RECEIPT OF SHAREHOLDER PROPOSALS
The Fund is not required to hold shareholder meetings on a regular basis.
Special meetings of shareholders may be called from time to time by either the
Fund or the shareholders (under special conditions described in the Fund's
Statement of Additional Information). Under the proxy rules of the Securities
and Exchange Commission, shareholder proposals which meet certain conditions may
be included in the Fund's proxy statement and proxy for a particular meeting.
Those rules require that for future meetings the shareholder must be a record or
beneficial owner of Fund shares with a value of at least $1,000 at the time the
proposal is submitted and for one year prior thereto, and must continue to own
such shares through the date on which the meeting is held. Another requirement
relates to the timely receipt by the Fund of any such proposal. Under those
rules, a proposal submitted for inclusion in the Fund's proxy material for the
next meeting after the meeting to which this proxy statement relates must be
received by the Fund a reasonable time before the solicitation is made. The fact
that the Fund receives a proposal from a qualified shareholder in a
timely manner does not ensure its inclusion in the proxy material, since there
are other requirements under the proxy rules for such inclusion.
OTHER BUSINESS
Management of the Fund knows of no business other than the matters specified
above that will be presented at the Meeting. Since matters not known at the time
of the solicitation may come before the Meeting, the proxy as solicited confers
discretionary authority with respect to such matters as properly come before the
Meeting, including any adjournment or adjournments thereof, and it is the
intention of the persons named as attorneys-in-fact in the proxy to vote the
proxy in accordance with their judgment on such matters.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
December 31, 1996
proxy\240'97.def
<PAGE>
Exhibit A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 27th day of June, 1994, by and between OPPENHEIMER
ASSET ALLOCATION FUND (the "Fund"), and OPPENHEIMER MANAGEMENT CORPORATION
("OMC").
WHEREAS, the Fund is an open-end, diversified management investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "Investment
Company Act"), and OMC 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.
a. The Fund hereby employs OMC and OMC 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. OMC shall, in all matters, give to the
Fund and its Board of Trustees 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 or regulations thereunder; (ii) any other applicable
provisions of state or federal law; (iii) the provisions of the Declaration of
Trust and By-Laws of the Fund as amended from time to time; (iv) policies and
determinations of the Board of Trustees of the Fund; (v) the fundamental
policies and investment restrictions of the Fund as reflected in the Fund's
registration statement under the Investment Company Act or as such policies may,
from time to time, be amended by the Fund's shareholders; and (vi) the
Prospectus and Statement of Additional Information of the Fund in effect from
time to time. The appropriate officers and employees of OMC shall be available
upon reasonable notice for consultation with any of the Trustees 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 traded on any securities
market.
b. OMC shall not be liable for any loss sustained by the Fund in connection
with any matters to which this Agreement relates, except a loss resulting by
reason of OMC's 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.
2. Investment Management.
a. OMC shall, subject to the direction and control by the Fund's Board of
Trustees: (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 "8" 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.
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 "8" hereof, OMC may obtain investment information,
research or assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services.
3. Acting as Adviser for Others.
Nothing in this Agreement shall prevent OMC or any officer thereof from
acting as investment adviser for any other person, firm or corporation and shall
not in any way limit or restrict OMC or any of its directors, officers, 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 OMC of its duties and obligations under this Agreement.
4. Other Duties of OMC.
OMC shall, at its own expense, provide and supervise the activities of all
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; 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 and state securities laws for
continuous public sale of shares of the Fund. OMC shall, at its own cost and
expense, also provide the Fund with adequate office space, facilities and
equipment.
5. Allocation of Expenses.
All other costs and expenses not expressly assumed by OMC 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) premiums for fidelity and other
insurance coverage requisite to its operations; (iv) the fees and expenses of
its Trustees; (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 under federal and state
securities laws of shares of the Fund for public sale; (x) expenses of printing
and mailing reports, notices and proxy materials to shareholders of the Fund;
(xi) except as noted above, 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 any obligation which the
Fund may have to indemnify its officers and Trustees with respect thereto. Any
officers or employees of OMC or any entity controlling, controlled by or under
common control with OMC, who may also serve as officers, Trustees or employees
of the Fund shall not receive any compensation by the Fund for their services.
6. Compensation of OMC.
The Trust agrees to pay OMC and OMC 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 aggregate net assets of
the Fund as of the close of each business day and payable monthly at the
following annual rates:
0.75% of the first $200 million of aggregate net assets; 0.72% of
the next $200 million of aggregate net assets; 0.69% of the next
$200 million of aggregate net assets; 0.66% of the next $200
million of aggregate net assets; and 0.60% of aggregate net assets
over $800 million.
7. Use of Name "Oppenheimer."
OMC 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. Such license may, upon
termination of this Agreement, be terminated by OMC, 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 or licensed by OMC in connection
any of its activities or licensed by OMC to any other party.
8. Portfolio Transactions and Brokerage.
a. OMC is authorized, in arranging the Fund's portfolio transactions, to
employ or deal with such members of securities or commodities exchanges, brokers
or dealers including "affiliated" broker-dealers (as that term is defined in the
Investment Company Act) (hereinafter "broker-dealers"), 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 security
price obtainable) of the Fund's portfolio transactions as well as to obtain,
consistent with the provisions of subparagraph "(c)" of this paragraph "8," the
benefit of such investment information or research as may be of significant
assistance to the performance by OMC of its investment management functions.
b. OMC 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 OMC 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.
c. OMC shall have discretion, in the interests of the Fund, to allocate
brokerage on the Fund's portfolio transactions to broker-dealers, other than
affiliated broker-dealers, qualified to obtain best execution of such
transactions 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 OMC and its affiliates exercise "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 OMC
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 overall
responsibilities of OMC and its investment advisory affiliates with respect to
the accounts as to which they exercise investment discretion. In reaching such
determination, OMC 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, OMC 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
Trustees were reasonable in relation to the benefits to the Fund.
d. OMC 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 the Fund's portfolio
transactions to the extent consistent with the interests and policies of the
Fund as established by the determinations of the Fund's Board of Trustees and
the provisions of this paragraph "8".
e. 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 by any rule, regulation or order adopted under the
Investment Company Act for determining the permissible level of such
commissions.
f. Subject to the foregoing provisions of this paragraph "8," OMC may also
consider sales of Fund shares and shares of other investment companies managed
by OMC or its affiliates as a factor in the selection of broker-dealers for the
Fund's portfolio transactions.
9. Duration.
This Agreement will take effect on the date first set forth above, and
replaces the Fund's Investment Advisory Agreement dated October 22, 1990. This
Agreement will continue in effect until December 31, 1994, and thereafter, from
year to year, so long as such continuance shall be approved at least annually in
the manner contemplated by Section 15 of the Investment Company Act.
10. Termination.
This Agreement may be terminated: (i) by OMC at any time without penalty
upon giving the Fund 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 OMC (which notice may be waived by OMC) provided that such
termination by the Fund shall be directed or approved by the vote of a majority
of all of the Trustees of the Fund then in office or by the vote of the holders
of a "majority" (as defined in the Investment Company Act) of the outstanding
voting securities of the Fund.
11. Assignment or Amendment.
This Agreement may not be amended or the rights of OMC hereunder 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," as defined in the
Investment Company Act.
12. Disclaimer of Shareholder Liability.
OMC understands and agrees that the obligations of the Fund under this
Agreement are not binding upon any Trustee or shareholder of the Fund
personally, but bind only the Fund and its property. OMC represents that it has
notice of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder liability for acts or obligations of the Fund.
13. 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.
OPPENHEIMER ASSET ALLOCATION FUND
By: /s/ Andrew J. Donohue
--------------------------------------------
Andrew J. Donohue, Secretary
OPPENHEIMER MANAGEMENT CORPORATION
By: /s/ Mitchell J. Lindauer
--------------------------------------------
Mitchell J. Lindauer, Vice President
advisory\240
<PAGE>
Exhibit B
<TABLE>
<CAPTION>
Approximate
Net Assets as
of 9/30/96 Advisory Fee Rate as % of
Name of Fund ($ Millions) Average Annual Net Assets
- ------------ ------------ -------------------------
<S> <C> <C>
Oppenheimer Total Return $2,468 .75% of the first $100 million of average
Fund, Inc. annual net assets,
.70% of the next $100 million,
Oppenheimer Equity Income $2,449 .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 $6,197 .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 $32 .72% of the first $200 million of average
& Income Fund, a annual net assets,
series of Oppenheimer .75% of the next $200 million,
Variable Account Funds .69% of the next $200 million,
.66% of the next $200 million, and
Oppenheimer Multiple $452 .60% of average annual net assets in excess
Strategies Fund, a series of of $800 million
Oppenheimer Variable
Account Funds
</TABLE>
<PAGE>
Exhibit C
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
FOR CLASS B SHARES OF
OPPENHEIMER ASSET ALLOCATION FUND
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the 20th day of
February, 1997, by and between Oppenheimer Asset Allocation 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 (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 Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under 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
Securities and Exchange Commission.
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. Notwithstanding the foregoing, a
majority of the Fund's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such customers,
clients and/or accounts as to which such Recipient is a fiduciary or custodian
or co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that 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) The Fund will make payments to the Distributor, (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, 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 six years or less (the "Maximum Holding Period"). Such Service Fee payments
received from the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts. Such
Asset-Based Sales Charge payments received from the Fund will compensate the
Distributor and Recipients for providing distribution assistance in connection
with the sale of Shares.
The distribution assistance and administrative support 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
greater than, the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation 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; (iv) paying other direct distribution costs, including without limitation
the costs of sales literature, advertising and prospectuses, other than those
furnished to current holders of the Fund's shares ("Shareholders"), and state
"blue sky" registration expenses; and (v) any service rendered by the
Distributor that a Recipient may render as described below in this Section 3(a).
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. In the event that the Board should
have reason to believe 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.
The administrative support services in connection with the Accounts to be
rendered by Recipients 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.
The distribution assistance in connection with the sale of Shares to be
rendered by the Recipients may include, but shall not be limited to, the
following: distributing sales literature and prospectuses other than those
furnished to current Shareholders, and providing such other information and
services in connection with the distribution of Shares as the Distributor or the
Fund may reasonably request.
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 to entitle it to payments under the Plan. In the
event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate 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 Trustees still is not satisfied, 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.
(b) The Distributor shall make service fee payments to each 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, to be set from time to
time by a majority of the Independent Trustees.
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) 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 ("Advance
Service Fee Payments"), 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,
subject to reduction or chargeback so that the aggregate service fee payment and
Advance Service Fee Payments do not exceed the limits on payments to Recipients
that are, or may be, imposed by Rule 2830 of the NASD Conduct Rules. In the
event Shares are redeemed less than one year after the date such Shares were
sold, the Recipient is obligated and will repay to 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 Advance Service Fee Payments described in part (i) of the prior
paragraph of this section 3(b) may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar quarter.
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 Trustees.
(c) A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rate set forth above,
and/or direct the Distributor to increase or decrease the Maximum Holding
Period, the Minimum Holding Period or the Minimum Qualified Holdings. The
Distributor shall notify all Recipients of the Minimum Qualified Holdings,
Maximum Holding Period and Minimum Holding Period, if any, 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. The Distributor
may make Plan payments to any "affiliated person" (as defined in the 1940 Act)
of the Distributor or to the Distributor if such affiliated person and/or the
Distributor qualifies as a Recipient.
(d) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 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 its borrowings.
(f) 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. In no event shall
the amounts to be paid by the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Fund who are not
"interested persons" of the Fund ("Disinterested Trustees") shall be committed
to the discretion of such Disinterested Trustees. Nothing herein shall prevent
the Disinterested Trustees from soliciting the views or the involvement of
others in such selection or nomination if the final decision on any such
selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
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 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
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class, on not more than
sixty days' written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called on October 10, 1996, for the purpose of voting on this Plan, and
shall take effect as of the date first set forth above, at which time it should
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 December 31, 1997 and from year to year thereafter or as the Board may
otherwise determine only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees 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, 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 Trustees. This Plan may be terminated at any time by vote of
a majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the 1940 Act) of the Fund's outstanding voting
securities of the Class. 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.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Fund under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Fund.
Oppenheimer Asset Allocation Fund
By:__________________________________
Robert G. Zack, Assistant Secretary
OppenheimerFunds Distributor, Inc.
By:__________________________________
Katherine P. Feld, Vice President
& Secretary
ofmi\240b.f97
<PAGE>
Exhibit D
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
FOR CLASS C SHARES OF
OPPENHEIMER ASSET ALLOCATION FUND
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the 20th day of
February, 1997, by and between Oppenheimer Asset Allocation 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 (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 Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under 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
Securities and Exchange Commission.
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. Notwithstanding the foregoing, a
majority of the Fund's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that 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) The Fund will make payments to the Distributor, (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, 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 Service
Fee payments received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with respect to
Accounts. Such Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution assistance
in connection with the sale of Shares.
The distribution assistance and administrative support 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
greater than, the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation 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; (iv) paying other direct distribution costs, including without limitation
the costs of sales literature, advertising and prospectuses (other than those
furnished to current holders of the Fund's shares ("Shareholders")) and state
"blue sky" registration expenses; and (v) any service rendered by the
Distributor that a Recipient may render as described below in this Section 3(a).
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. In the event that the Board should
have reason to believe 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.
The administrative support services in connection with the Accounts to be
rendered by Recipients 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.
The distribution assistance in connection with the sale of Shares to be
rendered by the Recipients may include, but shall not be limited to, the
following: distributing sales literature and prospectuses other than those
furnished to current Shareholders, and providing such other information and
services in connection with the distribution of Shares as the Distributor or the
Fund may reasonably request.
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 to entitle it to payments under the Plan. In the
event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate 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 Trustees still is not satisfied, 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.
(b) (i) Service Fee. The Distributor shall make service fee payments to
each 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, to be set from time to time by a majority of the Independent Trustees.
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) 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 ("Advance
Service Fee Payments"), 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,
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 Rule 2830 of the NASD Conduct Rules.
The Advance Service Fee Payments described in part (i) of the prior
paragraph may, at the Distributor's sole option, 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 and will repay to 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.
(ii) Asset-Based Sales Charge Payments. Irrespective of whichever
alternative method of service fee payments is selected by the Distributor, in
addition the Distributor shall make asset-based sales charge 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. 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 Trustees.
(c) A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rate set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings and Minimum Holding Period, if any, 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. The Distributor
may make Plan payments to any "affiliated person" (as defined in the 1940 Act)
of the Distributor or to the Distributor if such affiliated person and/or the
Distributor qualifies as a Recipient.
(d) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 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 its borrowings.
(f) 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. In no event shall
the amounts to be paid by the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Fund who are not
"interested persons" of the Fund ("Disinterested Trustees") shall be committed
to the discretion of such Disinterested Trustees. Nothing herein shall prevent
the Disinterested Trustees from soliciting the views or the involvement of
others in such selection or nomination if the final decision on any such
selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
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, 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
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class, on not more than
sixty days' written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called on October 10, 1996 for the purpose of voting on this Plan, and
shall take effect as of the date first set forth above, at which time it should
replace the Fund's Distribution and Service Plan for the shares dated December
1, 1993. Unless terminated as hereinafter provided, it shall continue in effect
until December 31, 1997 and from year to year thereafter or as the Board may
otherwise determine only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees 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, 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
Trustees. This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding voting securities of the Class. 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.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Fund under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Fund.
Oppenheimer Asset Allocation Fund
By:________________________________________
Robert G. Zack, Assistant Secretary
OppenheimerFunds Distributor, Inc.
By:________________________________________
Katherine P. Feld
Vice President and Secretary
ofmi\240c.f97
