<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant / x /
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ x / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Oppenheimer Globla Bio-Tech Fund
- ------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Katherine P. Feld
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-
6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee Computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
- ------------------------------------------------------------------
(1) Amount previously paid:
- ------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- ------------------------------------------------------------------
(3) Filing Party:
- ------------------------------------------------------------------
(4) Date Filed:
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[FN]
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE>
OPPENHEIMER GLOBAL BIO-TECH FUND
Two World Trade Center, New York, New York 10048-0203
NOTICE OF MEETING OF SHAREHOLDERS TO BE HELD
SEPTEMBER 19, 1994
To The Shareholders of
Oppenheimer Global Bio-Tech Fund
Notice is hereby given that a Meeting of the Shareholders of Oppenheimer
Global Bio-Tech Fund (the "Fund") will be held at 3410 South Galena
Street, Denver, Colorado, 80231, at 10:00 A.M., Denver time, on September
19, 1994, or any adjournments thereof, for the following purposes:
(a) To elect thirteen Trustees to hold office until the next meeting of
shareholders called for the purpose of electing Trustees and until their
successors are elected and shall qualify;
(b) To ratify the selection of KPMG Peat Marwick as the independent
certified public accountants and auditors of the Fund for the fiscal year
beginning October 1, 1993 (Proposal No. 1);
(c) To approve a change in the Fund's investment policies to permit the
Fund to emphasize investments in emerging growth companies worldwide
(Proposal No. 2); and
(d) To transact such other business as may properly come before the
meeting, or any adjournments thereof.
Shareholders of record at the close of business on July 15, 1994, are
entitled to vote at the meeting. The election of Trustees and the
Proposals are more fully discussed in the Proxy Statement. Please read
it carefully before telling us, through your proxy or in person, how you
wish your shares to be voted. The Board of Trustees of the Fund
recommends a vote to elect each of the nominees as Trustee and in favor
of each Proposal. WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY
PROMPTLY.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
August 8, 1994
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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.
750
<PAGE>
OPPENHEIMER GLOBAL BIO-TECH FUND
Two World Trade Center, New York, New York 10048-0203
PROXY STATEMENT
MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 19, 1994
This statement is furnished to the shareholders of Oppenheimer Global
Bio-Tech Fund (the "Fund") in connection with the solicitation by the
Fund's Board of Trustees of proxies to be used at a meeting (the
"Meeting") of shareholders to be held at 3410 South Galena Street, Denver,
Colorado, 80231, at 10:00 A.M., Denver time, on September 19, 1994, or any
adjournments thereof. It is expected that the mailing of this Proxy
Statement will be made on or about August 8, 1994. Financial statements
covering the operations of the Fund for the fiscal year ended September
30, 1993 were mailed to all persons who were shareholders of record on
that date, and simultaneously with the mailing of this Proxy Statement
will be mailed to persons who became shareholders between September 30,
1993 (the record date for the mailing of that Annual Report) and the
record date for this shareholder meeting.
The enclosed proxy, if properly executed and returned, will be voted (or
counted as an abstention) in accordance with the choices specified
thereon, and will be included in determining whether there is a quorum to
conduct the meeting. The proxy will be voted in favor of the nominees for
Trustee named in this Proxy Statement unless a choice is indicated to
withhold authority to vote for all listed nominees or any individual
nominee. The proxy will be voted in favor of each Proposal unless a
choice is indicated to vote against or to abstain from voting on that
Proposal. Shares owned of record by broker-dealers for the benefit of
their customers ("street account shares") will be voted by the broker-
dealer based on instructions received from its customers. If no
instructions are received, the broker-dealer may (if permitted under
applicable stock exchange rules) vote such shares as record holder for the
election of Trustees and on the Proposals in the same proportion as that
broker-dealer votes street account shares for which instructions were
timely received. If a shareholder executes and returns a proxy but fails
to indicate how the votes should be cast, the proxy will be voted in favor
of the election of each of the nominees named herein for Trustee and in
favor of each Proposal.
The proxy may be revoked at any time prior to the voting by: (1) writing
to the Secretary of the Fund at Two World Trade Center, New York, New
York, 10048-0203; (2) attending the meeting and voting in person; or (3)
signing and returning a new proxy (if returned and received in time to be
voted).
The cost of printing and distributing these proxy materials is an expense
of the Fund. In addition to the solicitation of proxies by mail, proxies
may be solicited by officers or employees of the Fund's investment
adviser, Oppenheimer Management Corporation (the "Manager"), personally
or by telephone or telegraph; any expenses so incurred will also be borne
by the Fund. Brokers, banks and other fiduciaries may be required to
forward soliciting material to their principals and to obtain
authorization for the execution of proxies. For those services, they will
be reimbursed by the Fund for their out-of-pocket expenses.
Shares Outstanding and Entitled to Vote. As of July 15, 1994, the record
date, there were 8,738,700.983 shares of the Fund outstanding. Each share
of the Fund is entitled to one vote (and a fractional share is entitled
to a fractional vote) on the record date. As of the record date, no
person owned of record or was known by the management of the Fund to be
the beneficial owner of 5% or more of the outstanding shares of the Fund,
other than the following shareholder who held 5% or more of the Fund's
outstanding shares on the record date: Merrill Lynch Pierce Fenner &
Smith, 4800 Deer Lake Drive East, Jacksonville, Florida 32246 (669,342.328
shares constituting 7.66% ownership).
ELECTION OF TRUSTEES
At the Meeting, thirteen Trustees are to be elected to hold office until
the next meeting of shareholders called for the purpose of electing
Trustees and until their successors shall be duly elected and shall have
qualified. The persons named as attorneys-in-fact in the enclosed proxy
have advised the Fund that unless a proxy instructs them to withhold
authority to vote for all listed nominees or any individual nominee, all
validly executed proxies will be voted by them for the election of the
nominees named below as Trustees of the Fund. As a Massachusetts business
trust, the Fund does not contemplate holding annual shareholder meetings
for the purpose of electing Trustees. Thus, the Trustees will be elected
for indefinite terms until a shareholders meeting is called for the
purpose of voting for Trustees and until their successors are elected and
shall qualify.
Each of the nominees is presently a Trustee and has agreed to be nominated
and, if elected, to continue to serve as a Trustee of the Fund. All
Trustees except Messrs. Robert G. Galli, Edward V. Regan and Clayton K.
Yeutter have been elected by shareholders of the Fund. Each of the
Trustees is also a Trustee or Director of Oppenheimer Fund, Oppenheimer
Discovery Fund, Oppenheimer Target Fund, Oppenheimer Global Fund,
Oppenheimer Global Growth & Income Fund, Oppenheimer Special Fund,
Oppenheimer Time Fund, Oppenheimer Tax-Free Bond Fund, Oppenheimer Global
Environment Fund, Oppenheimer Gold & Special Minerals Fund, Oppenheimer
New York Tax-Exempt Fund, Oppenheimer California Tax-Exempt Fund,
Oppenheimer Multi-State Tax-Exempt Trust, Oppenheimer Asset Allocation
Fund, Oppenheimer Mortgage Income Fund, Oppenheimer Money Market Fund,
Inc., Oppenheimer U.S. Government Trust, Oppenheimer Multi-Government
Trust and Oppenheimer Multi-Sector Income Trust (together with the Fund,
the "New York OppenheimerFunds"). Mr. Spiro is President of the Fund and
each of the other New York OppenheimerFunds.
Each nominee indicated below by an asterisk is an "interested person" (as
that term is defined in the Investment Company Act of 1940, hereinafter
referred to as the "Investment Company Act") of the Fund due to the
positions indicated with the Manager or its affiliates. The year given
below indicates when the nominee first became a Trustee or Director of any
of the New York OppenheimerFunds without a break in service. The
beneficial ownership of shares listed below includes voting and investment
control, unless otherwise indicated below. If any of the nominees should
be unable to accept nomination or election, it is the intention of the
persons named as attorneys-in-fact in the enclosed proxy to vote such
proxy for the election of such other person or persons selected and
nominated by disinterested Trustees as the Board of Trustees may, in its
discretion, recommend. As of July 15, 1994 the Trustees and officers of
the Fund as a group owned 24,049.345 shares of the Fund in the aggregate,
which is less than 1% of the outstanding shares.
<TABLE>
<CAPTION> Shares
Name And Beneficially Owned
Other Information Business Experience During the Past Five Yearsas of July 15, 1994
<S> <C> <C>
Leo Cherne Chairman Emeritus of the International RescueNone
first became a Committee (philanthropic organization); formerly Executive
Trustee in 1982 Director of the Research Institute of America.
Age: 81
Edmund T. Delaney Attorney-at-law; formerly a member of the Connecticut484.371
first became a State Historical Commission and Counsel to Copp,
Trustee in 1959 Berall & Hempstead (a law firm).
Age: 80
Robert G. Galli* Vice Chairman of the Manager; Vice President and General670.306
first became a Counsel of Oppenheimer Acquisition Corp. ("OAC"), the Manager's
Trustee in 1993 Manager's parent holding company; formerly he held the
Age: 60 following positions: a director of the Manager and
Oppenheimer Funds Distributor, Inc. (the "Distributor"), Vice
President and a director of HarbourView Asset Management
Corporation ("HarbourView") and Centennial Asset Management
Corporation ("Centennial"), investment adviser subsidiaries of
the Manager, a director of Shareholder Financial Services, Inc.
("SFSI") and Shareholder Services, Inc. ("SSI"), transfer agent
subsidiaries of the Manager, an officer of other OppenheimerFunds
and Executive Vice President and General Counsel of the Manager
and the Distributor.
Leon Levy General Partner of Odyssey Partners, L.P. (investmentNone
first became a partnership); Chairman of Avatar Holdings, Inc. (real estate
Trustee in 1959 development).
Age: 68
Benjamin Lipstein Professor Emeritus of Marketing, Stern Graduate School ofNone
first became a Business Administration, New York University.
Trustee in 1974
Age: 71
Elizabeth B. Moynihan Author and architectural historian; a trustee of theNone
first became a American Schools of Oriental Research; the Freer Gallery
Trustee in 1992 of Art (Smithsonian Institution), the Institute of Fine
Age: 64 Arts (New York University) and Preservation League of New
York State; a member of the Indo-U.S. Sub-Commission on
Education and Culture.
Kenneth A. Randall A director of Northeast Bancorp, Inc. (bank holding49.184
first became a company), Dominion Resources, Inc. (electric utility
Trustee in 1980 holding company), and Kemper Corporation (insurance
Age: 67 and financial services company); formerly Chairman of the
Board of ICL Inc. (information systems).
Edward V. Regan President of Jerome Levy Economics Institute, Bard College; aNone
first became a member of the U.S. Competitiveness Policy Council; a director
Trustee in 1993 of GranCare, Inc. (health care provider); formerly
Age: 64 New York State Comptroller and a trustee, New York State
and Local Retirement Fund.
Russell S. Reynolds, Jr.Founder and Chairman of Russell Reynolds Associates, Inc.246.036
first became a (executive recruiting); a trustee of Mystic Seaport
Trustee in 1989 Museum, International House, Greenwich Historical
Age: 62 Society and Greenwich Hospital.
Sidney M. Robbins Chase Manhattan Professor Emeritus of Financial968.255
first became a Institutions, Graduate School of Business, Columbia
Trustee in 1963 University; Visiting Professor of Finance, University
Age: 82 of Hawaii; a director of The Korea Fund, Inc. and The
Malaysia Fund, Inc. (closed-end investment companies);
member of the Board of Advisors of Olympus Private
Placement Fund, L.P.; Professor Emeritus of Finance,
Adelphi University.
Donald W. Spiro* Chairman Emeritus and a director of the Manager;19,671.934
first became a formerly Chairman of the Manager and the Distributor.
Trustee in 1985
Age: 68
Pauline Trigere Chairman and Chief Executive Officer of Trigere,None
first became a Inc. (design and sale of women's fashions).
Trustee in 1977
Age: 81
Clayton K. Yeutter Counsel to Hogan & Hartson (a law firm); a directorNone
first became a of B.A.T. Industries, Ltd. (tobacco and financial
Trustee in 1993 services), Caterpillar, Inc. (machinery), ConAgra,
Age: 63 Inc. (food and agricultural products), FMC Corp.
(chemicals and machinery), Lindsay Manufacturing Co. and
Texas Instruments, Inc. (electronics); formerly (in
descending chronological order) Deputy Chairman, Bush/Quayle
Presidential Campaign, Counsellor to the President (Bush)
for Domestic Policy, Chairman of the Republican National
Committee, Secretary of the U.S. Department of Agriculture,
and U.S. Trade Representative, Executive Office of the President.
<FN>
- ------------------------
* A nominee who is an "interested person" of the Fund under the Investment Company Act.
</TABLE>
Vote Required. The affirmative vote of a majority of the votes cast by
shareholders of the Fund is required for the election of a nominee as
Trustee. The Board of Trustees recommends a vote for the election of each
nominee.
Functions of the Board of Trustees. The primary responsibility for the
management of the Fund rests with the Board of Trustees. The Trustees meet
regularly to review the activities of the Fund and of the Manager, which
is responsible for its day-to-day operations. Six regular meetings of the
Trustees were held in the fiscal year ended September 30, 1993. Each of
the Trustees other than Mr. Cherne was present for at least 75% of the
meetings held. The Trustees of the Fund have appointed an Audit
Committee, comprised of Messrs. Randall (Chairman), Robbins (Vice
Chairman) and Cherne, none of whom is an "interested person" (as that term
is defined in the Investment Company Act) of the Manager or the Fund. The
functions of the Committee include (i) making recommendations to the Board
concerning the selection of independent auditors for the Fund (subject to
shareholder ratification); (ii) reviewing the methods, scope and results
of audits and the fees charged; (iii) reviewing the adequacy of the Fund's
internal accounting procedures and controls; and (iv) establishing a
separate line of communication between the Fund's independent auditors and
its independent Trustees. The Committee met four times during the fiscal
year ended September 30, 1993, and all members other than Mr. Cherne
attended at least 75% of the meetings held during that period. The Board
of Trustees does not have a standing nominating or compensation committee.
Remuneration of Trustees and Officers. The officers of the Fund listed
below are affiliated with the Manager. They and the Trustees who are
affiliated with the Manager (Messrs. Spiro and Galli) receive no salary
or fee from the Fund. The Fund currently pays each other Trustee a fee
varying from $1,824 to $4,935 for serving as Trustee, or as Chairman or
a member of the committees of the Board of Trustees. During the fiscal
year ended September 30, 1993, Trustees' fees and expenses aggregated
$80,788. In addition, the Fund has adopted a retirement plan that
provides for payment to a retired independent Trustee of up to 80% of the
average compensation paid during that Trustee's five years of service in
which the highest compensation was received. A Trustee must serve in that
capacity for any of the New York OppenheimerFunds listed above for at
least 15 years in order to be eligible for the maximum payment. No
Trustee has retired under this plan, and therefore no payments have been
made by the Fund. At September 30, 1993, the Fund had accrued $63,821 for
retirement plan benefits for its Trustees under the plan.
Officers of the Fund. Each officer of the Fund is elected by the Trustees
to serve an indefinite term. Information is given below about the
executive officers who are not Trustees of the Fund, including their
business experience during the past five years. Messrs. Bishop, Bowen,
Donohue, Farrar and Zack serve in a similar capacity with the other New
York OppenheimerFunds listed above.
James Ayer, Vice President and Portfolio Manager; Age: 30.
Assistant Vice President of the Manager; an officer of other
OppenheimerFunds; formerly an international equities investment
officer with Brown Brothers Harriman & Company.
Andrew J. Donohue, Secretary; Age: 43.
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other OppenheimerFunds; formerly Senior
Vice President and General Counsel of the Manager and the
Distributor, Partner in Kraft & McManimon (a law firm), an officer
of First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser), and
director and an officer of First Investors Family of Funds and First
Investors Life Insurance Company.
George C. Bowen, Treasurer; Age 57.
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and SFSI;
an officer of other OppenheimerFunds; formerly Senior Vice
President/Comptroller and Secretary of Oppenheimer Asset Management
Corporation, a former investment advisory subsidiary of the Manager.
Robert G. Zack, Assistant Secretary; Age 45.
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI, SFSI and other OppenheimerFunds.
Robert Bishop, Assistant Treasurer; Age 35.
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for
the Manager, prior to which he was an Accountant for Yale &
Seffinger, an accounting firm, and previously an Accountant and
Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.
Scott Farrar, Assistant Treasurer; Age: 28.
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for
the Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman Co., a bank, and previously
a Senior Fund Accountant for State Street Bank & Trust Company,
before which he was a sales representative for Central Colorado
Planning.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(Proposal No. 1)
The Investment Company Act requires that independent certified public
accountants and auditors ("auditors") be selected annually by the Board
of Trustees and that such selection be ratified by the shareholders at the
next-convened annual meeting of the Fund, if one is held. The Board of
Trustees of the Fund, including a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act) of the
Fund or the Manager, at a meeting held October 6, 1993, selected KPMG Peat
Marwick ("KPMG") as auditors of the Fund for the fiscal year beginning
October 1, 1993. KPMG also serves as auditors for certain other funds for
which the Manager acts as investment adviser. At the Meeting, a
resolution will be presented for the shareholders' vote to ratify the
selection of KPMG as auditors. Representatives of KPMG are not expected
to be present at the Meeting but will be available should any matter arise
requiring their presence. The Board of Trustees recommends approval of
the selection of KPMG as auditors of the Fund.
APPROVAL OF AMENDMENT TO THE
FUND'S FUNDAMENTAL INVESTMENT POLICIES
(Proposal No. 2)
The Fund currently has a fundamental investment policy that the Fund
shall, under normal market conditions, invest at least 65% of its total
assets in securities of biotechnology companies located in the United
States and in at least three foreign countries.
At a meeting of the Fund's Board of Trustees on June 16, 1994, the Board,
including a majority of the Trustees who are not "interested persons" (as
defined in the Investment Company Act) of the Fund or the Manager (the
"Independent Trustees"), approved a change in its fundamental investment
policies. Subject to shareholder approval, the current policy requiring
generally at least 65% of total assets to be invested in securities of
biotechnology companies located in the U.S. and at least three foreign
countries would be eliminated, and the Fund's investment policies would
be broadened to emphasize investments in emerging growth companies
worldwide. As a result, the Fund would become a global emerging growth
fund. If shareholders approve this Proposal, the Board expects to change
the Fund's name to Oppenheimer Global Emerging Growth Fund or such other
name as it deems appropriate. The Fund's fundamental investment objective
of capital appreciation would remain unchanged. Oppenheimer Management
Corporation (the "Manager") will continue as the Fund's investment
adviser.
As a global emerging growth fund, under normal market conditions the Fund
would invest at least 65% of its total assets in securities of emerging
growth companies located in the United States and at least three foreign
countries. This new investment policy will be a non-fundamental policy
that may be changed by the Board of Trustees in response to changing
market conditions without further shareholder approval.
As a global emerging growth fund, the Fund would pursue growth
opportunities in their early stages, as it looks for the most promising
areas, both in the U.S. and abroad, for accelerated growth of earnings or
revenues. Emerging growth companies are often smaller companies in terms
of sales, assets or capitalization. Small companies tend to respond more
quickly (and tend to exhibit greater volatility in price and performance)
than larger companies to market changes and consequently their expansion
can occur faster. However, emerging growth companies can be any size and
can be in any industry.
The Manager expects to use a global "theme oriented approach" in managing
the Fund as a global emerging growth fund. This is the same approach the
Manager uses in managing certain other global funds that it advises. This
"theme oriented approach" seeks to capitalize on important global trends
that the Manager believes offer promising areas for long-term growth.
Examples of some current themes include telecommunications,
infrastructure, developing capital markets, technology, energy, emerging
consumer markets, healthcare/biotechnology, corporate restructuring and
the environment. The Manager further believes that certain non-U.S.
stocks will continue to outperform U.S. stocks due to rebounding economies
overseas and earnings growth rates that the Manager anticipates will be
significantly higher than those of domestic markets. If this Proposal is
approved, the Fund would reserve the freedom to concentrate its
investments (that is, to invest 25% or more of its total assets) in
securities of biotechnology companies for an interim transition period to
permit an orderly reduction in its bio-tech position. However,
unanticipated market conditions affecting the Fund's current portfolio
holdings or unanticipated redemptions of Fund shares might make it
impracticable for the Fund to quickly reduce its biotech position in an
orderly manner to less than 25% of its total assets until circumstances
permit. Otherwise, the Manager does not intend to concentrate its
investments in any industry.
Considerations by the Board of Trustees. In connection with this
Proposal, the Board of Trustees considered that the Fund's shareholders
would be better served by expanding the Fund's investment policies to
allow broader investments in domestic and foreign high-potential, emerging
growth companies. This would give the Fund the flexibility to pursue
growth opportunities across various industries. The risk of volatility
generally associated with emphasizing investments in only one sector (for
example, the biotechnology sector) should be greatly reduced, although
emerging growth companies may be more volatile than mature companies.
Nevertheless, if this Proposal is approved, the Fund anticipates that it
may continue to invest in biotechnology companies. The Manager believes
that a broadening of the Fund's investment policies is consistent with its
overall philosophy to provide shareholders with the most responsible
portfolio management. After completion of its review, the Independent
Trustees recommended that the Board of Trustees approve, and the Board
unanimously approved, the Proposal.
Vote Required. The affirmative vote of the holders of a "majority" of the
outstanding shares of the Fund is required for approval of this Proposal.
Such "majority" vote is defined in the Investment Company Act as the vote
of the holders of the lesser of (i) 67% or more of the shares present or
represented by proxy at the shareholders meeting, if the holders of more
than 50% of the outstanding shares are present or represented by proxy,
or (ii) more than 50% of the outstanding shares. If the Proposal is not
approved, the Fund's investment policy that generally at least 65% of its
total assets shall be invested in biotechnology companies located in the
United States and at least three foreign countries will remain unchanged.
The Board of Trustees recommends a vote in favor of approving this
Proposal.
ADDITIONAL INFORMATION
The Manager. Subject to the authority of the Board of Trustees, the
Manager is responsible for the day-to-day management of the Fund's
business. The Manager is a wholly-owned subsidiary of Oppenheimer
Acquisition Corp. ("OAC"), a holding company controlled by Massachusetts
Mutual Life Insurance Company ("MassMutual"). MassMutual is located at
1295 State Street, Springfield, Massachusetts 01111. OAC acquired the
Manager on October 22, 1990 (the "Acquisition Date"). As indicated below,
the common stock of OAC is owned by (i) certain officers and/or directors
of the Manager, (ii) MassMutual and (iii) another investor. No
institution or person holds 5% or more of OAC's outstanding common stock
except Donald W. Spiro (5.24%) and MassMutual. MassMutual has engaged in
the life insurance business since 1851. It is the nation's twelfth
largest life insurance company by assets and has an A.M. Best Co. rating
of "A++".
The common stock of OAC is divided into three classes. At June 30, 1994,
MassMutual held (i) all of the 2,160,000 shares of Class A voting stock,
(ii) 342,766 shares of Class B voting stock, and (iii) 380,153 shares of
Class C non-voting stock. This collectively represented 75.2% of the
outstanding common stock and 85.3% of the voting power of OAC as of
December 31, 1993. Certain officers and/or directors of the Manager held
(i) 786,543 shares of the Class B voting stock, representing 20.5% of the
outstanding common stock and 12.2% of the voting power, and (ii) options
acquired without cash payment which, when they become exercisable, allow
the holders to purchase up to 811,554 shares of Class C non-voting stock.1
That group includes persons who serve as officers of the Fund and two of
whom (Messrs. Donald W. Spiro and Robert G. Galli) serve as Trustees of
the Fund. Holders of OAC Class B and Class C common stock may put (sell)
their shares and vested options to OAC or MassMutual at a formula price
(based on earnings of the Manager). MassMutual may exercise call
(purchase) options on all outstanding shares of both such classes of
common stock and vested options at the same formula price, according to
a schedule that will commence September 30, 1995. Since January 1, 1993,
certain officers and/or directors of the Manager (i) sold 320,266 shares
of Class B OAC common stock to MassMutual at the formula price, and (ii)
surrendered to OAC 466,916 stock appreciation rights issued in tandem with
the Class C OAC options.(1) Cash payments aggregating $37,777,598 have
or will be made by OAC or MassMutual to such persons (including Messrs.
Spiro and Galli, identified above) in such transactions as follows: one-
third of the amount due (i) within 30 days of the transaction, (ii) by the
first anniversary following the transaction (with interest), and (iii) by
the second anniversary following the transaction (with interest). On
December 15, 1993 and June 15, 1994, MassMutual purchased its 380,153
shares of Class C OAC stock from OAC for a total consideration of
$20,489,833.
As part of the acquisition of the common stock of OAC, MassMutual also
purchased approximately $45 million of subordinated notes of a subsidiary
of OAC; the notes are now an obligation of the Manager. In addition to
the purchase of such notes, MassMutual holds warrants issued by OAC
exercisable over the life of the notes which will allow it to purchase
shares of Class C common stock representing approximately 13.3% of the
common stock of OAC on a fully diluted basis.
The Manager and its affiliates act as investment advisers to investment
companies having combined net assets of more than $28 billion as of June
30, 1994, and having more than 1.8 million shareholder accounts. A
Consolidated Statement of Financial Condition of the Manager as of
December 31, 1993, is included in this Proxy Statement as Exhibit A.
- -----------------------
[FN]
(1) This includes transactions by the executive officers and directors of
the Manager and officers of the Fund and excludes transactions not
exceeding 1% of the outstanding class of shares of common stock or options
of the Manager, as the case may be.
The names and principal occupations of the executive officers and
directors of the Manager are as follows: Jon S. Fossel, Chairman, Chief
Executive Officer and Director; Bridget A. Macaskill, President and
Director; Donald W. Spiro, Chairman Emeritus and a Director; Robert G.
Galli and James C. Swain, Vice Chairmen; Samuel Freedman, Jr., Director;
Robert Doll, Jr., and O. Leonard Darling, Executive Vice Presidents;
Tilghman G. Pitts, Executive Vice President and Director; Andrew J.
Donohue, Executive Vice President and General Counsel; Kenneth Eich,
Executive Vice President and Chief Financial Officer; George C. Bowen,
Senior Vice President and Treasurer; Barbara Hennigar, President and Chief
Executive Officer of Oppenheimer Shareholder Services, a division of the
Manager; Victor Babin, Loretta McCarthy, Robert Patterson, Arthur
Steinmetz, Ralph Stellmacher, Nancy Sperte and Robert G. Zack, Senior Vice
Presidents. The address of Messrs. Bowen, Eich, Freedman and Swain is
3410 South Galena Street, Denver, Colorado 80231. The address of all
other officers is Two World Trade Center, New York, New York 10048-0203,
which is also the address of the Manager and OAC.
Investment Advisory Agreement. The Fund has an Investment Advisory
Agreement with the Manager dated June 1, 1992 (the "Agreement") that was
submitted to and approved by the shareholders of the Fund at a meeting
held May 15, 1992. The Agreement continues in effect from year to year
unless terminated, but only so long as such continuance is approved
annually in accordance with the Investment Company Act. At a meeting held
on December 9, 1993, the Fund's Board of Trustees, including a majority
of the Independent Trustees, approved the renewal of the Agreement between
the Manager and the Fund until December 31, 1994. At the time of such
approval, Messrs. Spiro and Galli were shareholders of OAC, the parent of
the Manager. Under the Agreement, the Manager supervises the investment
operations of the Fund and the composition of its portfolio and furnishes
advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities. The management fee
payable monthly to the Manager under the terms of the Agreement is
computed on the net assets of the Fund as of the close of business each
day. The annual rates of the fee paid by the Fund are: 1% of the first
$50 million of average annual net assets, .75% of the next $150 million,
.72% of the next $200 million, .69% of the next $200 million, .66% of the
next $200 million and .60% of net assets in excess of $800 million.
During the fiscal year ended September 30, 1993, the Fund's fees payable
under its Agreement with the Manager were $1,580,012.
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
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 under the General
Distributor's Agreement are paid by the Fund. The Agreement lists
examples of expenses paid by the Fund, the major categories of which
relate to interest, taxes, brokerage commissions, fees to certain
Trustees, legal, bookkeeping and audit expenses, custodian and transfer
agent expenses, stock certificate issuance costs, certain printing and
registration costs, and non-recurring expenses, including litigation
costs.
Independently of the Agreement, the Manager has voluntarily undertaken
that the total expenses of the Fund in any year (including the management
fee but excluding taxes, interest, brokerage commissions, distribution
and/or service plan payments and extraordinary non-recurring expenses such
as litigation costs) shall not exceed (and the Manager undertakes to pay
or refund to the Fund any amount by which such expenses shall exceed) the
most stringent state regulatory limitation on fund expenses applicable to
the Fund. At present, that limitation is imposed by California and limits
expenses (with specified exclusions) to 2.5% of the first $30 million of
average annual net assets, 2% of the next $70 million, and 1.5% of average
annual net assets in excess of $100 million. The payment of the
management fee at the end of any month will be reduced so that there will
not be any accrued but unpaid liability under this expense limitation.
The Manager reserves the right to amend or terminate the expense
assumption undertaking at any time.
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 and duties under this Agreement, the Manager
shall not be liable for any loss sustained by reason of good faith errors
or omissions in connection with any matters to which this Agreement
relates. The Agreement permits the Manager to act as investment adviser
for any other person, firm or corporation. Pursuant to a license from the
Manager, the Fund may use the name "Oppenheimer" in connection with its
business. If the Manager shall no longer act as investment adviser to the
Fund, the right of the Fund to use the name "Oppenheimer" as part of its
name may be withdrawn.
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the Agreement is to arrange the portfolio
transactions for the Fund. In doing so, the Manager is authorized by the
Agreement to employ broker-dealers ("brokers"), including "affiliated"
brokers, as that term is defined in the Investment Company Act, as may,
in its best judgment based on all relevant factors, implement the policy
of the Fund to obtain, at reasonable expense, the "best execution" (prompt
and reliable execution at the most favorable price obtainable) of such
transactions. The Manager need not seek competitive commission bidding
or base its selection on "posted" rates, but is expected to be aware of
the current rates of eligible brokers and to minimize the commissions paid
to the extent consistent with the provisions of the Agreement and the
interests and policies of the Fund as established by its Board of
Trustees.
Under the Agreement, the Manager is authorized to select brokers that
provide brokerage and/or research services for the Fund and/or the other
accounts over which the Manager or its affiliates have investment
discretion. 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. There is no formula under which any
of the brokers selected for the Fund's portfolio transactions are entitled
to the allocation of a particular amount of commissions. The Manager may
also consider sales of shares of the Fund and of other investment
companies managed by the Manager or its affiliates as a factor in the
selection of brokers for the Fund's portfolio transactions.
Description of Brokerage Practices. Subject to the provisions of the
Agreement, when brokers are used for the Fund's portfolio transactions,
allocations of brokerage are made by portfolio managers under the
supervision of executive officers of the Manager. Transactions in
securities other than those for which an exchange is the primary market
are generally done with principals or market makers. Brokerage
commissions are paid primarily for effecting transactions in listed
securities and otherwise only if it appears likely that a better price or
execution can be obtained. When the Fund engages in an option
transaction, ordinarily the same broker will be used for the purchase or
sale of the option and any transactions in the securities to which the
option relates. When possible, concurrent orders to purchase or sell the
same security by more than one of the accounts managed by the Manager or
its affiliates are combined. Transactions effected pursuant to such
combined orders are averaged as to price and allocated in accordance with
the purchase or sale orders actually placed for each account. Option
commissions may be relatively higher than those which would apply to
direct purchases and sales of portfolio securities.
Most purchases of money market instruments and debt obligations are
principal transactions at net prices. For those transactions, instead of
using a broker the Fund normally deals directly with the selling or
purchasing principal or market maker unless it is determined that a better
price or execution can be obtained by using a broker. Purchases of these
securities from underwriters include a commission or concession paid by
the issuer to the underwriter, and purchases from dealers include a spread
between the bid and asked price. The Fund seeks to obtain prompt
execution of such orders at the most favorable net price.
The research services provided by a particular broker may be useful only
to one or more of the advisory accounts of the Manager and its affiliates,
and investment research received for the commissions of those other
accounts may be useful both to the Fund and one or more of such other
accounts. Such research, which may be supplied by a third party at the
instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid for in
commission dollars. The research services provided by brokers broaden the
scope and supplement the research activities of the Manager, by making
available additional views for consideration and comparisons, and enabling
the Manager to obtain market information for the valuation of securities
held in the Fund's portfolio or being considered for purchase. The Board
of Trustees, including the Independent Trustees of the Fund, annually
reviews information furnished by the Manager as to the commissions paid
to brokers furnishing such services in an effort to ascertain that the
amount of such commissions was reasonably related to the value or benefit
of such services. The Board of Trustees has permitted the Manager to use
concessions on fixed-price offerings to obtain research, in the same
manner as is permitted for agency transactions.
During the fiscal year ended September 30, 1993, total brokerage
commissions paid by the Fund (not including spreads or concessions on
principal transactions on a net trade basis) amounted to $414,002. During
the fiscal year ended September 30, 1993, $36,731 was paid to brokers as
commissions in return for research services (including special research,
statistical information and execution); the aggregate dollar amount of
those transactions was $19,817,816. The transactions giving rise to those
commissions were allocated in accordance with the internal allocation
procedures described above.
General Distributor's Agreement. Oppenheimer Funds Distributor, Inc., a
wholly-owned subsidiary of the Manager, is the general distributor of the
Fund's shares under a General Distributor's Agreement dated October 22,
1990. The General Distributor's Agreement is subject to the same annual
renewal requirements and termination provisions as the Agreement. For the
fiscal year ended September 30, 1993, selling charges on the Fund's shares
amounted to $4,353,366, of which the Distributor and an affiliated broker-
dealer retained $960,768 in the aggregate.
Service Plan. The Fund has adopted a Service Plan (the "Plan") pursuant
to Rule 12b-1 of the Investment Company Act under which the Fund
reimburses the Distributor for a portion of its costs incurred in
connection with the personal service and maintenance of accounts that hold
Fund shares. The Distributor uses such fees received from the Fund in
their entirety: (i) to compensate brokers, dealers, banks and other
institutions ("Recipients") each quarter for providing personal service
and the maintenance of accounts that hold Fund shares, and (ii) to
reimburse itself (to the extent authorized by the Board) for its other
expenditures under the Plan and for its direct costs for personal service
and the maintenance of accounts. For the fiscal year ended September 30,
1993, the Board has not authorized any reimbursement to the Distributor
under (ii) above. Any unreimbursed expenses incurred during any quarter
by the Distributor may not be recovered in later periods. The services
to be provided under the Plan include, but are not limited to, the
following: answering routine inquiries from the Recipient's customers
concerning the Fund, providing such customers with information on their
investment in Fund 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 Plan has the
effect of increasing annual expenses of the Fund by up to 0.25% of its
average annual net assets from what its expense would otherwise be. The
Fund will not be charged for any interest expense, carrying charges or
other financial costs, or allocation of overhead by the Distributor. For
the fiscal year ended September 30, 1993, payments under that Plan
totalled $464,072, all of which was paid by the Distributor to Recipients
as reimbursement for distribution-related services, including $16,371 paid
to an affiliate of the Distributor.
Service Contract. Oppenheimer Shareholder Services ("OSS"), a division
of the Manager, serves as the Fund's transfer agent and registrar pursuant
to a Service Contract under which it is reimbursed by the Fund for its
costs in providing those services to the Fund, including the cost of
rental of office space. Similar services are provided by OSS to certain
other mutual funds advised by the Manager. OSS received $650,147 from the
Fund during the fiscal year ended September 30, 1993. The costs described
for these services are charged to the Fund as operating expenses to the
respective class and are borne ratably by all shareholders of that class
in proportion to their holdings of shares.
RECEIPT OF SHAREHOLDER PROPOSALS
The Fund is not required to hold shareholder meetings on a regular basis.
Special meetings of shareholders may be called from time to time by either
the Fund or the shareholders (under special conditions described in the
Fund's Statement of Additional Information). Under the Commission's proxy
rules, shareholder proposals 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
August 8, 1994
<PAGE>
INDEPENDENT AUDITORS' REPORT Exhibit A
- ---------------------------------------------------------------------
Oppenheimer Management Corporation:
We have audited the accompanying consolidated statement of financial
condition of Oppenheimer Management Corporation and subsidiaries as of
December 31, 1993. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of financial
condition is free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
statement of financial condition. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall statement of financial condition
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, such consolidated statement of financial condition
presents fairly, in all material respects, the financial position of
Oppenheimer Management Corporation and subsidiaries at December 31, 1993
in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Company changed
its method of accounting for income taxes to conform with Statement of
Financial Accounting Standards No. 109.
DELOITTE & TOUCHE
Denver, Colorado
February 16, 1994
<PAGE>
OPPENHEIMER MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
<TABLE>
<S> <C> <C>
ASSETS Notes
CURRENT ASSETS:
Cash $ 31,940,116
Investments in money market mutual funds 26,850,605
Investments in managed mutual funds 4,981,458
Investments in Zero Coupon U.S. Treasuries Trust,
at market 3,897,237
Accounts receivable:
Brokers and dealers 2 49,538,320
Managed mutual funds 2,3 11,433,524
Affiliated companies 100,495
Income taxes 13,902,237
Other 4,471,131
Other current assets 2,124,857
-----------
Total current assets 149,239,980
-----------
PROPERTY AND EQUIPMENT - Less accumulated depreciation
and amortization of $8,169,031 8,896,837
-----------
OTHER ASSETS:
Intangible assets, net 1 113,445,572
Deferred sales commissions 54,452,051
Deferred charges 1,550,484
Other 1,607,387
------------
Total other assets 171,055,494
------------
TOTAL $329,192,311
============
See notes to consolidated statement of financial condition.
</TABLE>
<PAGE>
OPPENHEIMER MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
<TABLE>
<S> <C> <C>
LIABILITIES AND SHAREHOLDER'S EQUITY Notes
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 33,866,353
Subscriptions payable to managed mutual funds 2 71,371,285
Payable to brokers and dealers 2 9,483,935
Current portion of long-term debt 5,6 17,463,094
------------
Total current liabilities 132,184,667
------------
LONG-TERM LIABILITIES:
Deferred income taxes 4 15,447,486
Senior debt 5 59,781,186
Subordinated notes 6 44,450,000
------------
Total liabilities 251,863,339
------------
COMMITMENTS 1,8
SHAREHOLDER'S EQUITY: 5,7
Preferred stock - nonvoting; $10 par value;
392,461 shares authorized; 25,141 shares
issued and outstanding 251,410
Common Stock - voting; $.10 par value; 229,246
shares authorized; 179,658 shares issued
and outstanding 17,966
Additional paid-in capital 49,241,234
Retained earnings 27,818,362
------------
Total shareholder's equity 77,328,972
------------
TOTAL $329,192,311
============
See notes to consolidated statement of financial condition.
</TABLE>
<PAGE>
OPPENHEIMER MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
1. THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Management Corporation (OMC) and its subsidiaries
(collectively, the "Company") are engaged in the business of organizing,
promoting, and managing registered investment companies (hereafter
referred to as "mutual funds").
OMC owns all the outstanding stock of Oppenheimer Funds Distributor, Inc.,
Shareholder Services, Inc. (SSI), HarbourView Asset Management
Corporation, Centennial Asset Management Corporation, Oppenheimer
Partnership Holdings, Inc., and Shareholder Financial Services, Inc. OMC
is a wholly-owned subsidiary of Oppenheimer Acquisition Corporation (OAC),
which is controlled by Massachusetts Mutual Life Insurance Company and
senior management of OMC.
Principles of Consolidation - The accompanying consolidated statement of
financial condition includes the accounts of OMC and its subsidiaries.
All significant intercompany transactions and balances have been
eliminated in consolidation.
Investments in Money Market Mutual Funds - The Company invests available
cash in money market mutual funds managed by the Company. The investments
are recorded at cost which equals market.
Investments in Managed Mutual Funds - The Company owns shares of stock in
several of the mutual funds it manages. The shares are purchased at their
respective net asset values. The resulting investments are recorded at
cost which approximates market.
Investments in Zero Coupon U.S. Treasuries Trust - The Company is the
Sponsor for the Oppenheimer Zero Coupon U.S. Treasuries Trust and has
undertaken to maintain a secondary market for units in the Trust. The
investments are carried at market.
Property and Equipment - Property and equipment is recorded at cost.
Equipment depreciation expense is provided over the assets' estimated
useful lives on the straight-line method. Leasehold improvements are
amortized on the straight-line method over the remaining terms of the
lease agreements.
Intangible Assets - Intangible assets at December 31, 1993, are as follows:
<TABLE>
<CAPTION>
Less
Useful Accumulated Net
Lives Cost Amortization Book Value
---------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Debt Issuance Costs 7 years $ 5,535,450 $ (2,999,400) $ 2,536,050
Management Contracts 7 years 38,600,000 (18,840,667) 19,759,333
Goodwill 25 years 100,766,565 (11,671,455) 89,095,110
Other 4-10 years 4,385,906 (2,330,827) 2,055,079
------------ ------------- -----------
$149,287,921 $(35,842,349) $113,445,572
============ ============= ============
</TABLE>
<PAGE>
OPPENHEIMER MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
Deferred Sales Commissions - Sales commissions paid to brokers and dealers
in connection with sales of shares of certain mutual funds are charged to
deferred sales commissions and amortized over six years. Early withdrawal
charges received by the Company from redeeming shareholders reduce
unamortized deferred sales commissions.
Stock Appreciation Rights - OAC has granted certain stock appreciation
rights relating to OAC's stock to certain employees of OMC. During 1993,
OMC recorded $21,603,294 relating to these stock appreciation rights as
a credit to additional paid-in capital.
Income Taxes - OAC files a consolidated federal income tax return which
includes the Company. Income taxes are recorded as if the Company files
on a separate return basis. During 1993 the Company was required to adopt
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes. Statement 109 requires a change from the deferred method of
accounting for income taxes of APB Opinion 11 to the asset and liability
method of accounting for income taxes. The asset and liability method
prescribed by Statement 109 results in deferred tax assets and liabilities
being recorded for the differences between the book and tax basis relating
to the Company's assets and liabilities.
The Company adopted Statement 109 in 1993 and has elected to restate prior
years beginning with the 1990 period. The effect of this restatement on
prior years has been reflected in retained earnings as of December 31,
1992.
2. TRANSACTIONS WITH BROKERS AND DEALERS
The Company acts as general distributor for the sale and distribution of
shares of several mutual funds. In this capacity, the Company records a
receivable when it issues confirmations of all accepted purchase orders
to the originating brokers and dealers; at the same time, the Company
records a liability to the mutual funds equal to the net asset value of
all shares subject to such confirmations. This liability must be paid to
the mutual funds within 11 business days unless the trade is canceled.
If the originating broker or dealer fails to make timely settlement of its
purchase order under the terms of its dealer agreement with the Company,
the Company may cancel the purchase order and, at the Company's risk, hold
responsible the originating broker or dealer.
When brokers and dealers place share redemption orders with a fund's
distributor, the Company records a receivable from the mutual funds equal
to the net asset value of all shares redeemed; at the same time the
Company records a corresponding liability payable to the originating
brokers.
<PAGE>
OPPENHEIMER MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
3. RELATED PARTIES
The following is a summary of the significant balances, transactions and
relationships with affiliated companies and other related parties as of
December 31, 1993:
Officers and Directors of the Company; Shareholders of OAC - Several
officers and directors of the Company and shareholders of OAC are also
officers and directors or trustees of the mutual funds managed and
distributed by the Company.
Transfer Agents - SSI and Oppenheimer Shareholder Services (OSS), a
division of OMC, act as transfer and shareholder servicing agents for the
mutual funds managed by the Company and others. Amounts charged to
managed mutual funds are based on costs incurred on behalf of the mutual
funds pursuant to service agreements between SSI or OSS and the mutual
funds. SSI also acts as transfer agent for certain mutual funds not
managed by the Company, and amounts charged to those funds are based on
fees set by contracts with the respective mutual funds.
The receivable from managed mutual funds includes $2,466,000 resulting
from transfer agency fees and expenditures made on behalf of the mutual
funds at December 31, 1993.
4. INCOME TAXES
As discussed in note 1, the Company adopted Statement 109 in 1993 and has
applied the provisions of the Statement retroactively to 1990. The
principal effect of this change in accounting for income taxes related to
the remeasurement of the 1990 acquisition of Maximum Holdings, Inc. and
resulted in the recording of goodwill in the amount of $13,800,000 and
deferred taxes payable in the same amount. In addition, retained earnings
at December 31, 1992 was increased by $2,001,702 to reflect the effects
of the restatement as of that date.
Deferred tax assets of $20,165,000 have been recorded in the accompanying
financial statements. These amounts primarily relate to the benefit
associated with certain state tax loss carryforwards and compensation not
deductible for tax purposes until paid. A valuation allowance has not
been recorded with respect to this deferred tax asset. Deferred tax
liabilities of $35,612,000 have also been recorded. These amounts relate
primarily to the current deduction, for tax purposes, of deferred sales
commissions which are amortized over six years for book purposes and the
difference in book and tax basis relating to certain management contracts.
The Company has certain net operating loss carryforwards relating to
various states. If not used in the interim, these losses will generally
expire on December 31, 2008.
<PAGE>
OPPENHEIMER MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
5. SENIOR DEBT
At December 31, 1993, the Company has outstanding $77.2 million of Senior
Debt borrowed from five banks. This amount is comprised of a term loan
of $23.7 million due September 30, 1997 and $53.5 million outstanding on
a $75 million revolving credit. The revolving credit is subject to annual
renewal, and, if not renewed, is repayable in four annual installments.
The debt bears interest at the Company's election at the rate for
Eurodollar deposits plus 1 1/2% or the higher of the prime rate, plus 1/2%
or the federal funds rate plus 1/2%. The credit agreement contains
covenants requiring certain minimum financial tests and restrictions on
capital expenditures, investments, indebtedness and dividends. At
December 31, 1993, the Company was in compliance with the terms of the
credit agreement. In addition, the banks have also received a pledge of
the shares of the Company's subsidiaries and guarantees of certain
subsidiaries. Borrowings under the credit agreement are collateralized
by certain assets of the Company.
The mandatory principal repayment schedule for the term loan is as follows
(000's):
1994 $ 10,000
1995 12,000
1996 1,700
------------------
$ 23,700
==================
The credit agreement has certain provisions whereby specified amounts of
excess cash flow on a semi-annual basis, as defined in the agreement, must
be applied to reduce the outstanding loan balance. There are no
prepayment penalties.
The Company has entered into interest rate swap agreements whereby certain
banks have agreed to pay the Company interest on a floating rate
(Eurodollar) basis and the Company has agreed to pay the banks interest
on a fixed rate basis. At December 31, 1993, the Company has fixed an
interest rate of 10.00% on $29,000,000 of the Senior Debt. The interest
rate swap agreements mature December 31, 1994.
The Company is exposed to credit loss in the event of non-performance by
the other parties to the interest rate swap agreements; however, the
Company does not anticipate non-performance by the counterparties. Based
on borrowing rates currently available to the Company for senior and
subordinated loans with similar terms, maturities and prepayment options,
the Company estimates that the fair value of its interest bearing debt and
the related interest rate swap agreements is $124.6 million as compared
to the carrying amount shown on the balance sheet of $121.7 million.
<PAGE>
OPPENHEIMER MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
6. SUBORDINATED NOTES
Pursuant to a Note Agreement as amended and restated as of November 24,
1992 (the Note Agreement), the Company issued to a group of insurance
companies owned by Massachusetts Mutual Life Insurance Company,
$44,450,000 face amount of Subordinated Notes (Notes) due October 31,
2000. The Notes are subordinated to the Senior Debt obligations, (see
Note 5). The Notes require semi-annual interest payments at a rate of 14%
on October 31 and April 30 of each year. The Company may make optional
prepayments of Notes, with a penalty, beginning November 1, 1995. The
Note Agreement contains covenants requiring certain minimum financial
tests and restrictions on capital expenditures, investments, indebtedness
and dividends. At December 31, 1993, the Company was in compliance with
the terms of the Note Agreement.
The mandatory principal repayment schedule for the Notes is as follows
(000's):
1998 $14,800
1999 14,825
2000 14,825
-----------------
$44,450
=================
7. SHAREHOLDER'S EQUITY
The following table summarizes the various series and classes of preferred
and common stocks that are authorized, issued and outstanding as of
December 31, 1993:
<TABLE>
<CAPTION>
Shares
------------------------
Issued and
Authorized OutstandingAmount
---------- -----------------
<S> <C> <C> <C>
Preferred stock - non-voting; $10 par value:
Series A - $15.00 non-cumulative, non-convertible 1,350
Series B - $1.50 non-cumulative, non-convertible 186,500
Series C - $1.00 cumulative, non-convertible 12,150 12,150 $121,500
Series D - $.60 cumulative, convertible:
Class A 161,523
Class B 30,938 12,991 129,910
------- ------- --------
Total 392,461 25,141 $251,410
======= ======= ========
Common stock - voting; $.10 par value:
Common shares 212,461 162,873 $ 16,287
Class A common shares 16,785 16,785 1,679
------- ------- --------
Total 229,246 179,658 $ 17,966
======= ======= ========
</TABLE>
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OPPENHEIMER MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
The outstanding preferred shares are redeemable, at the option of the
Company, at $10 per share plus all accrued and unpaid dividends. In the
event of dissolution or liquidation, the preferred shareholders are
entitled to receive these same amounts before any distributions are made
to the common shareholder. The Series D Preferred Shares are convertible,
at the option of the shareholder, into common shares on a one-for-one
basis.
8. COMMITMENTS
Leases - The Company rents office space and certain computer and other
equipment under leases expiring during the next 15 years. At December 31,
1993, the aggregate minimum annual rentals under noncancelable operating
leases were as follows:
Years Ending
December 31
------------
1994 $ 6,237,568
1995 4,406,666
1996 3,513,503
1997 2,573,471
1998 2,223,802
Thereafter 10,660,288
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$29,615,298
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[logo]OppenheimerFunds
Jon S. Fossel Oppenheimer Management Corporation
Chairman and Two World Trade Center
Chief Executive Officer New York, NY 10048-0203
800 525-7048
August 1994
Dear Oppenheimer Global Bio-Tech Shareholder:
Last month, I sent a letter to let you know about some exciting
changes being proposed for your Fund. A shareholder meeting has been
scheduled for September 19th, and all shareholders of record on July 15th
are being asked to vote either in person or by proxy. You will find a
notice of the meeting and a proxy statement detailing the proposal
enclosed for your review.
What is being proposed?
On June 16th, your Board of Trustees, who represent you in matters
regarding your Fund, recommended approval of the proposal to change
certain fundamental investment policies of the Fund to expand the
investment focus from global bio-technology stocks to global emerging
growth companies.
We believe that small companies who do business globally are well-
positioned to take advantage of the dramatic changes affecting the world
markets today--and as these markets mature, the investment opportunities
should be very attractive.
If the proposal is approved, your Fund's portfolio management team
will have the flexibility to invest in many emerging growth sectors
worldwide, which they believe will provide greater growth potential. And
some of the risks associated with sector fund investing may be reduced by
diversifying the Fund's investments across different sectors.
How do you vote?
No matter how large or small your investment, your vote is important,
so please review the proxy statement carefully. To cast your vote, simply
mark, sign and date the enclosed proxy ballot and return it in the
postage-paid envelope today.
If you have questions, please contact your financial advisor or call
us at 1-800-525-7048.
Sincerely,
Jon S. Fossel
P.S. Casting your vote is quick and easy, so please take a moment to
complete the proxy ballot.
PL750.094.R
