SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant / X /
Filed by a party other than the registrant / /
Check the appropriate box:
/ X / Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
OPPENHEIMER MULTI-SECTOR INCOME TRUST
- ------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
OPPENHEIMER MULTI-SECTOR INCOME TRUST
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ X / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
/ / Fee Computed on table below per Exchange Act Rules 14a
-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: 1
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing Party:
(4) Date Filed:
- --------------------
1 - Set forth the amount on which the filing fee is calculated and state
how it was determined.
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Preliminary Copy
YOUR SHAREHOLDER VOTE IS IMPORTANT!
Your prompt response can save your Fund money.
Please vote by signing and mailing your proxy ballot (this card) in
the enclosed self-addressed 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.
(Street name accounts only:) If your shares are held of record by
your broker on your behalf, the New York Stock Exchange Rules provide that
if instructions are not received from you by the 10th day before the
meeting, the proxy may be given at the discretion of the record holder.
If you return your proxy after that date, we will follow your instructions
provided they are received prior to the meeting.
(Reverse side:)
Your prompt response can save your 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.
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Preliminary Copy
OPPENHEIMER MULTI-SECTOR INCOME TRUST
Two World Trade Center, New York, New York 10048-0203
Notice Of Annual Meeting Of Shareholders
To Be Held June 20, 1994
To The Shareholders of
Oppenheimer Multi-Sector Income Trust:
Notice is hereby given that an Annual Meeting of the Shareholders of
Oppenheimer Multi-Sector Income Trust (the "Fund") will be held at 3410
South Galena Street, Denver, Colorado 80231, at 10:00 A.M., Denver time,
on Monday, June 20, 1994, or any adjournments thereof (the "Meeting"), for
the following purposes:
(1) To elect four Trustees in Class A and two Trustees in
Class B to hold office until the term of such classes
shall expire in 1997 and 1995, respectively, or until
their successors are elected and shall qualify;
(2) To ratify the selection of KPMG Peat Marwick as the
independent certified public accountants and auditors of
the Fund for the fiscal year commencing November 1, 1993
(Proposal No. 1); and
(3) To transact such other business as may properly come
before the Meeting or any adjournments thereof.
Shareholders of record at the close of business on April 26, 1994 are
entitled to vote at the Meeting. The election of Trustees and the
Proposal 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 its nominees as Trustee and in favor of the
Proposal. WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
May 6, 1994
Shareholders who do not expect to attend the Meeting are requested to
indicate voting instructions on the enclosed proxy and to date, sign and
return it in the accompanying postage-paid envelope. To avoid unnecessary
expense and duplicate mailings, we ask your cooperation in promptly
mailing your proxy no matter how large or small your holdings may be.
680
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OPPENHEIMER MULTI-SECTOR INCOME TRUST
Two World Trade Center, New York, New York 10048-0203
PROXY STATEMENT
Annual Meeting Of Shareholders
To Be Held June 20, 1994
This Proxy Statement is furnished to the shareholders of Oppenheimer
Multi-Sector Income Trust (the "Fund") in connection with the solicitation
by the Fund's Board of Trustees of proxies to be used at an Annual Meeting
of Shareholders to be held at 3410 South Galena Street, Denver, Colorado
80231, at 10:00 A.M., Denver time, on June 20, 1994, or any adjournments
thereof (the "Meeting"). It is expected that the mailing of this Proxy
Statement will be made on or about May 6, 1994. Financial statements
covering the operations of the Fund for the fiscal year ended October 31,
1993 were mailed to all persons who were shareholders of record on October
31, 1993, and simultaneously with the mailing of this Proxy Statement will
be mailed to persons who became shareholders between October 31, 1993 (the
record date for the mailing of that Annual Report) and the record date for
the Meeting.
The enclosed proxy, if properly executed and returned, will be voted (or
counted as an abstention or withheld from voting) in accordance with the
choices specified thereon, and will be included in determining whether
there is a quorum to conduct the Meeting. The proxy will be voted in
favor of the nominees for Trustee named in this Proxy Statement unless a
choice is indicated to withhold authority to vote for all listed nominees
or any individual nominee. The proxy will be voted in favor of the
Proposal to ratify the selection of independent auditors unless a choice
is indicated to vote against or to abstain from voting on the 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 in the same proportion
as that broker-dealer votes street account shares for which voting
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 the 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 the preparation and distribution of 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 "Adviser"),
personally or by telephone or telegraph; any expenses so incurred will
also be borne by the Fund. Brokers, banks and other fiduciaries may be
required to forward soliciting material to their principals and to obtain
authorization for the execution of proxies. For those services they will
be reimbursed by the Fund for their out-of-pocket expenses.
Shares Outstanding and Entitled to Vote. As of April 26, 1994, the record
date, there were _________ shares of the Fund issued and outstanding. All
shares of the Fund have equal voting rights as to the election of Trustees
and as to the Proposal described herein, and the holders of shares are
entitled to one vote for each share (and a fractional vote for a
fractional share) held of record at the close of business on the record
date. As of the record date, no person owned of record or was known by
the management of the Fund to be the beneficial owner of 5% or more of the
outstanding shares of the Fund.
ELECTION OF TRUSTEES
The membership of the Fund's Board of Trustees is classified into
staggered three-year terms. At the Meeting, four Trustees in Class A are
to be elected for a three year term, as described below, or until the
respective successors of each shall be duly elected and shall have
qualified. In addition, two Trustees in Class B are to be elected at the
Meeting for a one year term, as described below, or until their respective
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. The proxies being solicited hereby cannot be voted
for more than six nominees.
Each of the Class A nominees, Leon Levy, Leo Cherne, Edmund T. Delaney and
Clayton K. Yeutter, is presently a Trustee and has been previously elected
by shareholders of the Fund. Each of the Class B nominees, Robert G.
Galli and Edward V. Regan, has been recently appointed as a Trustee by the
Fund's Board of Trustees and, in connection therewith, has not been
elected by shareholders of the Fund. Each nominee has agreed to be
nominated and to serve as a Trustee. Class A Trustees to be elected at
the Meeting shall serve as such for a three year term, or until their
respective successors shall be duly elected and shall have qualified, and
constitute the first class of the Board. The second class of the Board
consists of Messrs. Galli, Lipstein, Randall, Regan and Reynolds and the
third class of the Board consists of Ms. Moynihan, Ms. Trigere and Messrs.
Robbins and Spiro, whose terms expire in 1995 and 1996, respectively.
Each of the nominees and other Trustees is also a trustee or director of
Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer Global Bio-Tech
Fund, Oppenheimer Global Environment Fund, Oppenheimer Global Growth &
Income Fund, Oppenheimer Special Fund, Oppenheimer Time Fund, Oppenheimer
Target Fund, Oppenheimer Tax-Free Bond Fund, Oppenheimer Gold & Special
Minerals Fund, Oppenheimer New York Tax-Exempt Fund, Oppenheimer
California Tax-Exempt Fund, Oppenheimer Multi-State Tax-Exempt Trust,
Oppenheimer Asset Allocation Fund, Oppenheimer Mortgage Income Fund,
Oppenheimer Discovery Fund, Oppenheimer Money Market Fund, Inc.,
Oppenheimer Multi-Government Trust and Oppenheimer U.S. Government Trust
(together with the Fund, the "New York OppenheimerFunds"). Mr. Spiro is
President of the Fund and each of the other New York OppenheimerFunds.
The nominees and other Trustees indicated below by an asterisk are
"interested persons" (as that term is defined in the Investment Company
Act of 1940, as amended, hereinafter referred to as the "Investment
Company Act") of the Fund due to the connections indicated with the
Adviser or its affiliates. The year given below indicates when the
nominees and the other Trustees first became a trustee or director of any
of the New York OppenheimerFunds without a break in service. If any of
the nominees should be unable to accept nomination or election, it is the
intention of the persons named as attorneys-in-fact in the enclosed proxy
to vote such proxy for the election of such other person or persons
selected and nominated by disinterested Trustees as the Board of Trustees
may, in its discretion, recommend. As of April 26, 1994, Edmund T.
Delaney and Donald W. Spiro, each a Trustee, beneficially owned 300 shares
and 25,000 shares, respectively, of the Fund. Mr. Spiro holds such shares
as trustee of a special account. Sidney M. Robbins and Benjamin Lipstein,
each a Trustee, disclaim beneficial ownership of the 1,000 shares of the
Fund held as of April 26, 1994 by each of their wives, Anne S. Robbins and
Rosalind Lipstein, respectively. Robert G. Galli, a Trustee, held 3,000
shares of the Fund as of April 26, 1994 in a joint tenancy account and
disclaims beneficial ownership of such shares. Except for the foregoing,
no other Trustee and no officers of the Fund beneficially owned shares of
the Fund as of April 26, 1994.
Class A:
Name and Other Information:
Leon Levy
first became a Trustee or Director in 1959
Age: 68
Business Experience During the Past Five Years:
General Partner of Odyssey Partners, L.P. (investment partnership);
Chairman of Avatar Holdings, Inc. (real estate development).
Term Currently Expires: 1994
Name and Other Information:
Leo Cherne
first became a Trustee or Director in 1982
Age: 81
Business Experience During the Past Five Years:
Chairman Emeritus of the International Rescue Committee (philanthropic
organization); formerly Executive Director of The Research Institute of
America.
Term Currently Expires: 1994
Name and Other Information:
Edmund T. Delaney
first became a Trustee or Director in 1959
Age: 80
Business Experience During the Past Five Years:
Attorney-at-law; formerly a member of the Connecticut State Historical
Commission and Counsel to Copp, Berall & Hempstead (a law firm).
Term Currently Expires: 1994
Name and Other Information:
Clayton K. Yeutter
first became a Trustee or Director in 1992
Age: 63
Business Experience During the Past Five Years:
Of Counsel to Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar, Inc.
(machinery), ConAgra, Inc. (food and agricultural products), FMC Corp.
(chemicals and machinery), Lindsay Manufacturing Co. and Texas
Instruments, Inc. (electronics); formerly (in descending chronological
order) Deputy Chairman, Bush/Quayle Presidential Campaign; Counsellor to
the President (Bush) for Domestic Policy; Chairman of the Republican
National Committee; Secretary of the U.S. Department of Agriculture; and
U.S. Trade Representative, Executive Office of the President.
Term Currently Expires: 1994
Class B:
Name and Other Information:
Robert G. Galli*
first became a Trustee or Director in 1993
Age: 60
Business Experience During the Past Five Years:
Vice Chairman of the Adviser; Vice President and General Counsel of
Oppenheimer Acquisition Corp. ("OAC"), the Adviser's parent holding
company; formerly held the following positions: a director of the Adviser
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 Adviser; a director
of Shareholder Financial Services, Inc. ("SFSI") and Shareholder Services,
Inc. ("SSI"), transfer agent subsidiaries of the Adviser; an officer of
other OppenheimerFunds; and Executive Vice President and General Counsel
of the Adviser and the Distributor.
Term Currently Expires: 1995
Name and Other Information:
Benjamin Lipstein
first became a Trustee or Director in 1974
Age: 71
Business Experience During the Past Five Years:
Professor Emeritus of Marketing, Stern Graduate School of Business
Administation, New York University.
Term Currently Expires: 1995
Name and Other Information:
Kenneth A. Randall
first became a Trustee or Director in 1980
Age: 66
Business Experience During the Past Five Years:
A director of Northeast Bancorp, Inc. (bank holding company), Dominion
Resources, Inc. (electric utility holding company), and Kemper Corporation
(insurance and financial services company); formerly Chairman of the Board
of ICL Inc. (information systems).
Term Currently Expires: 1995
Name and Other Information:
Edward V. Regan
first became a Trustee or Director in 1993
Age: 63
Business Experience During the Past Five Years:
President of Jerome Levy Economics Institute; a member of the U.S.
Competitiveness Policy Council; a director of GranCare, Inc. (health care
provider); formerly New York State Comptroller and a trustee, New York
State and Local Retirement Fund.
Term Currently Expires: 1995
Name and Other Information:
Russell S. Reynolds, Jr.
first became a Trustee or Director in 1989
Age: 62
Business Experience During the Past Five Years:
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting; Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House,
Greenwich Historical Society and Greenwich Hospital.
Term Currently Expires: 1995
Class C:
Name and Other Information:
Elizabeth Moynihan
first became a Trustee or Director in 1992
Age: 64
Business Experience During the Past Five Years:
Author and architectural historian; a trustee of the American Schools of
Oriental Research, the Freer Gallery of Art (Smithsonian Institution), the
Institute of Fine Arts (New York University) and the Preservation League
of New York State; a member of the Indo-U.S. Sub-Commission on Education
and Culture.
Term Currently Expires: 1996
Name and Other Information:
Sidney M. Robbins
first became a Trustee or Director in 1963
Age: 82
Business Experience During the Past Five Years:
Chase Manhattan Professor Emeritus of Financial Institutions, Graduate
School of Business, Columbia University; Visiting Professor of Finance,
University of Hawaii; a director of The Korea Fund, Inc. and The Malaysia
Fund, Inc. (closed-end investment companies); a member of the Board of
Advisors of Olympus Private Placement Fund, L.P.; Professor Emeritus of
Finance, Adelphi University.
Term Currently Expires: 1996
Name and Other Information:
Donald W. Spiro*
first became a Trustee or Director in 1985
Age: 68
Business Experience During the Past Five Years:
Chairman Emeritus and a director of the Adviser; formerly Chairman of the
Adviser and the Distributor.
Term Currently Expires: 1996
Name and Other Information:
Pauline Trigere
first became a Trustee or Director in 1977
Age: 81
Business Experience During the Past Five Years:
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale of
women's fashions).
Term Currently Expires: 1996
_____________________________________________
* A Trustee who is an "interested person" of the Fund under the
Investment Company Act.
Vote Required. An affirmative vote of a plurality of the votes cast by
holders of voting securities 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 the Adviser, which
is responsible for the Fund's day-to-day operations. Six regular meetings
of the Trustees were held in the fiscal year ended October 31, 1993 and
all of the Trustees, other than Mr. Cherne and Ms. Trigere, were present
for at least 75% of the meetings held during the time he or she was a
Trustee. 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 Adviser or the Fund. The functions
of the Audit 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 Audit Committee met five times during the
fiscal year ended October 30, 1993 and all members, other than Mr. Cherne,
attended at least 75% of the meetings held during this period. The Board
of Trustees does not have a standing nominating or compensation committee.
Remuneration of Trustees and Officers. Mr. Spiro, the other officers of
the Fund listed below and Mr. Galli are affiliated with the Adviser and
receive no salary or fee from the Fund. The Fund currently pays the
Trustees other than Messrs. Spiro and Galli a fee varying from $3,126 to
$13,236 for serving as Trustee, or as Chairman or a member of one or more
committees of the Board of Trustees. During the Fund's fiscal year ended
October 31, 1993, the Trustees' fees and expenses aggregated $66,114. 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 for at least 15 years in order to be
eligible for the maximum payment. No Trustee has retired since the
adoption of the plan and, accordingly, no payments have been made by the
Fund under the plan. During the fiscal year ended October 31, 1993, the
Fund accrued $18,391 for retirement plan benefits for its independent
Trustees under the plan.
Officers of the Fund. Each officer of the Fund is elected by the Trustees
to serve an annual term. Information is given below about the Fund's
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.
Robert E. Patterson, Vice President and Portfolio Manager; Age: 50
Senior Vice President of the Adviser; an officer of other
OppenheimerFunds.
Thomas P. Reedy, Vice President and Portfolio Manager; Age: 32
Vice President of the Adviser; an officer of other
OppenheimerFunds; formerly a Securities Analyst for the Adviser.
Ashwin Vasan, Vice President and Portfolio Manager; Age: 31
Vice President of the Adviser; an officer of other
OppenheimerFunds; formerly a Securities Analyst for the Adviser,
prior to which he was a Securities Analyst for Citibank, N.A.
Carol E. Wolf, Vice President and Portfolio Manager; Age: 42
Vice President of the Adviser and Centennial; an officer of
other OppenheimerFunds.
Arthur J. Zimmer, Vice President and Portfolio Manager; Age: 47
Vice President of the Adviser and Centennial; an officer of
other OppenheimerFunds; formerly Vice President of Hanifen
Imhoff Management Company (mutual fund investment adviser).
Andrew J. Donohue, Secretary; Age: 43
Executive Vice President and General Counsel of the Adviser and
the Distributor; an officer of other OppenheimerFunds; formerly,
Senior Vice President and Associate General Counsel of the
Adviser and the Distributor, Partner in Kraft & McManimon (a law
firm), an officer of First Investors Corporation (a broker-
dealer) and First Investors Management Company, Inc. (broker-
dealer and investment adviser), director and an officer of First
Investors Family of Funds and First Investors Life Insurance
Company.
George C. Bowen, Treasurer; Age 57
Senior Vice President and Treasurer of the Adviser; 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 Adviser.
Robert G. Zack, Assistant Secretary; Age: 45
Senior Vice President and Associate General Counsel of the
Adviser; Assistant Secretary of SSI and SFSI; an officer of
other OppenheimerFunds.
Robert Bishop, Assistant Treasurer; Age 35
Assistant Vice President of the Manager/Mutual Fund Accounting;
an officer of other OppenheimerFunds; previously a Fund
Controller for the Manager, prior to which he was an Accountant
for Resolution Trust Corporation 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 Adviser, at a meeting held October 6, 1993, selected KPMG Peat
Marwick ("Peat Marwick") as auditors of the Fund for the fiscal year
beginning November 1, 1993. Peat Marwick also serves as auditors for
certain other funds for which the Adviser 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 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.
ADDITIONAL INFORMATION
The Adviser. Subject to the authority of the Board of Trustees, the
Adviser is responsible for the day-to-day management of the Fund's
business. The Adviser is a wholly-owned subsidiary of 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 Adviser 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 Adviser, (ii) MassMutual
and (iii) another investor. No institution or person holds 5% or more of
OAC's outstanding common stock except Donald W. Spiro (5.24%) and
MassMutual. MassMutual has engaged in the life insurance business since
1851. It is the nation's twelfth largest life insurance company by assets
and has an A.M. Best Co. rating of "A+".
The common stock of OAC is divided into three classes. At December 31,
1993, MassMutual held (i) all of the 2,160,000 shares of Class A voting
stock, (ii) 317,854 shares of Class B voting stock, and (iii) 350,063
shares of Class C non-voting stock. This collectively represented 74.1%
of the outstanding common stock and 84.9% of the voting power of OAC as
of December 31, 1993. Certain officers and/or directors of the Adviser
as a group held (i) 821,455 shares of the Class B voting stock,
representing 21.5% of the outstanding common stock and 12.6% of the voting
power, and (ii) options acquired without cash payment which, when they
become exercisable, allow the holders to purchase up to 706,150 shares of
Class C non-voting stock. That group includes persons who serve as
officers of the Fund and two of whom (Messrs. Donald W. Spiro and Robert
G. Galli) serve as Trustees of the Fund. Holders of OAC Class B and Class
C common stock may put (sell) their shares and vested options to OAC or
MassMutual at a formula price (based on earnings of the Adviser).
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 on September 30,
1995. Since October 1, 1992, certain officers and/or directors of the
Adviser (i) sold 295,354 shares of Class B OAC common stock to MassMutual
at the formula price, and (ii) surrendered to OAC 436,053 stock
appreciation rights issued in tandem with the Class C OAC options. Cash
payments aggregating $32,729,119 have or will be made by OAC or
MassMutual to such persons (including Messrs. Spiro and Galli, identified
above) as follows: one-third of the amount due (i) within 30 days of the
transaction, (ii) by the first anniversary following the transaction (with
interest), and (iii) by the second anniversary following the transaction
(with interest). On December 15, 1993, MassMutual purchased its 350,063
shares of Class C OAC stock from OAC for $17,751,718.
As part of the acquisition of the common stock of OAC, MassMutual also
purchased approximately $45 million of subordinated notes of a subsidiary
of OAC; the notes are now an obligation of the Adviser. In addition to
the purchase of such notes, MassMutual holds warrants issued by OAC
exercisable over the life of the notes which will allow MassMutual to
purchase shares of Class C common stock representing approximately 15.4%
of the common stock of OAC on a fully diluted basis.
The Adviser and its affiliates act as investment advisers to investment
companies having combined net assets of more than $27 billion as of
December 31, 1993, and having more than 1.8 million shareholder accounts.
A consolidated statement of financial condition of the Adviser as of
December 31, 1993 is included in this Proxy Statement as Exhibit A.
The names and principal occupations of the executive officers and
directors of the Adviser are as follows: Jon S. Fossel, Chairman, Chief
Executive Officer and a director; Bridget A. Macaskill, President and a
director; Donald W. Spiro, Chairman Emeritus and a director; Robert G.
Galli and James C. Swain, Vice Chairmen of the Adviser; Samuel Freedman,
Jr., a director; Robert C. Doll, Jr. and O. Leonard Darling, Executive
Vice Presidents; Tilghman G. Pitts III, Executive Vice President and a
director; Andrew J. Donohue, Executive Vice President and General Counsel;
Kenneth C. Eich, Executive Vice President and Chief Financial Officer;
George C. Bowen, Senior Vice President and Treasurer; Victor Babin,
Loretta McCarthy, Robert Patterson, Nancy Sperte, Arthur Steinmetz, Ralph
Stellmacher 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 and directors
is Two World Trade Center, New York, New York 10048-0203, which is also
the address of the Adviser and OAC.
Investment Advisory Agreement. The Fund has an Investment Advisory
Agreement with the Adviser dated October 22, 1990 (the "Agreement"). The
Agreement was submitted to and approved by the Fund's shareholders at a
meeting held October 1, 1990, because the acquisition of the Adviser by
OAC on October 22, 1990 terminated the previous investment advisory
agreement. 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 until December
31, 1994. At the time of such approval, Messrs. Spiro and Galli were
shareholders of OAC, the parent of the Adviser. Under the Agreement, the
Adviser 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 to the
Adviser is computed and paid weekly at an annual rate of 0.65% of 1.0% of
the net assets of the Fund at the end of that week. The combined advisory
fee and administrative fee (see "Administrator", below) is higher than
management fees and/or administrative fees paid by most other investment
companies. The Fund paid the Adviser management fees of $1,997,081 for
the fiscal year ended October 31, 1993.
The Agreement requires the Adviser, at its expense, to provide the Fund
with adequate office space, facilities and equipment as well as to provide
assistance in the supervision of the activities of all administrative and
clerical personnel required to provide effective administration for the
Fund (other than as contracted by the Fund pursuant to the Administration
Agreement, discussed below), including the compilation and maintenance of
records with respect to its operations, the preparation and filing of
specified reports, and the composition of proxy materials and registration
statements for the continuous public sale of shares of the Fund. Expenses
not expressly assumed by the Adviser under the 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, payments under the Fund's
Administration Agreement, exchange listing fees, legal and audit expenses,
custodian, dividend paying agent, registrar and transfer agent fees and
expenses, share certificate issuance costs, certain printing and
registration costs, non-recurring expenses, including litigation, and fees
and expenses of listing and maintaining the listing of the Fund's shares
on The New York Stock Exchange. The Agreement contains no expense
limitation.
The Agreement provides that the Adviser is not liable for any loss
sustained by the Fund by reason of any good faith error or omission in
connection with any matter to which the Agreement relates, except a loss
resulting by reason of the Adviser's willful misfeasance, bad faith, gross
negligence in the performance of its duties, or reckless disregard of its
obligations and duties under the Agreement. The Agreement permits the
Adviser to act as investment adviser for any other person, firm or
corporation and to use the name "Oppenheimer" in connection with any of
its activities. If the Adviser 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.
The Agreement may be terminated by the Adviser or the Fund at any time
without penalty on giving 60 days' written notice; any such termination
by the Fund must be directed or approved by the vote of a majority of all
Trustees of the Fund in office at the time or by the vote of the holders
of a "majority" (as defined in the Investment Company Act) of the voting
securities of the Fund at the time outstanding and entitled to vote. The
Agreement automatically terminates in the event of "assignment" (as
defined in the Investment Company Act).
The Adviser performs certain accounting services for the Fund for an
annual fee of $24,000, plus out-of-pocket costs and expenses reasonably
incurred.
Portfolio Transactions. Under the Agreement, the Adviser renders all
services to the Fund in connection with the purchase, sale or trade of
securities for the Fund's portfolio. As most purchases made by the Fund
are principal transactions at net prices, the Fund does not incur
substantial brokerage costs. The Fund deals directly with the selling
or purchasing principal or market maker without incurring charges for the
services of a broker-dealer on its behalf unless it is determined that a
better price or execution may be obtained by utilizing the services of a
broker-dealer. Purchases of portfolio securities from underwriters
include a commission or concession paid by the issuer to the underwriter,
and purchases from broker-dealers include a spread between the bid and
asked price. The Fund seeks to obtain prompt execution of orders at the
most favorable net prices. Transactions in foreign securities markets
generally involve the payment of fixed brokerage commissions, which are
usually higher than those in the United States.
The Agreement contains provisions relating to the selection of brokers and
dealers for the Fund's portfolio transactions. The Adviser may use such
broker-dealers as may, in its best judgment based on all relevant factors,
implement the policy of the Fund to obtain "best execution" (as defined
in the Agreement) at reasonable expense. Under the Agreement, the Adviser
has no duty or obligation to seek advance competitive bidding for the most
favorable commission rate or to select any broker-dealer on the basis of
its purported or "posted" commission rates 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 its portfolio transactions to the extent consistent with the interests
and policies of the Fund as established by the Board of Trustees and the
provisions of the Agreement. The Adviser may also consider sales of
shares of funds managed by the Adviser or its affiliates as a factor in
the selection of brokers.
Transactions may be directed to brokers or dealers for their execution and
research services, on which no dollar value can be placed. The research
services provided by a particular broker may be useful only to one or more
of the advisory accounts of the Adviser and its affiliates, and investment
research for the commissions of these 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 or a dealer,
includes information on particular companies and industries as well as
market, economic or institutional activity areas. It serves to broaden
the scope and supplement the research activities of the Adviser, to make
available additional views for consideration and comparisons, and to
enable the Adviser to obtain market information for the valuation of
securities held in the Fund's portfolio. The Board of Trustees has
permitted the Adviser to use concessions on fixed-price offerings to
obtain research, in the same manner as is permitted for agency
transactions. The commissions paid to any one broker may be higher than
another qualified broker would have charged, if a good faith determination
is made by the Adviser that the commission is reasonable in relation to
the services provided. No dollar value can be or is required to be placed
on the brokerage services provided by the brokers selected by the Adviser
and there is no formula under which any of them are entitled to the
allocation of a particular amount of commissions. The Board of Trustees
of the Fund, including the independent Trustees, annually reviews
information furnished by the Adviser relative 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. During the fiscal year ended October 31, 1993, the Fund paid
approximately $25,643 in brokerage commissions.
Subject to the provisions of the Agreement, allocations of the Fund's
brokerage commissions for its portfolio transactions are made by portfolio
managers under the supervision of executive officers of the Adviser. The
Fund pays a brokerage commission each time it writes a call or put,
purchases a call or put, effects a closing transaction, or purchases or
sells a security on the exercise of a call or put. Such option
commissions may be higher on a relative basis than those which would apply
to direct purchases and sales of portfolio securities. When the Fund
engages in an option transaction, ordinarily the same broker-dealer will
be used for the purchase or sale of the option and any transactions in the
securities to which the option relates. When orders to purchase or sell
the same security on identical items are placed by more than one of the
funds managed by the Adviser or its affiliates, the transactions are
averaged as to price and allocated as to amount in accordance with daily
purchase or sale orders actually placed for each fund. It is recognized
that in some cases this procedure could have a detrimental effect on the
price or volume of such securities as far as the Fund is concerned. In
other cases, however, it is believed that the ability of the Fund to
participate in volume transactions will produce better execution for the
Fund. Such orders are combined when possible for the purpose of
negotiating brokerage commissions.
The Administrator. Mitchell Hutchins Asset Management Inc., an affiliate
of Paine Webber Incorporated, serves as the Fund's Administrator pursuant
to an Administration Agreement between the Fund and the Administrator (the
"Administration Agreement"). Services provided by the Administrator to
the Fund relate to compliance and administrative functions, including the
preparation and dissemination of reports to shareholders and the
Securities and Exchange Commission, filing the Fund's tax returns,
establishing and monitoring its accounting policies, processing its bills,
determining and arranging for notice of the Fund's dividends and
distributions, disseminating the Fund's proxy materials and overseeing
tabulation of proxy ballots, reviewing the provision of services to the
Fund by its independent pubic accountants, custodian, transfer agent and
accounting agent and making available an employee selected to serve as a
Fund officer. Under the Administration Agreement, the Fund pays the
Administrator a fee computed and paid weekly at the annual rate of 0.20%
of the Fund's net assets at the end of the week. The Administration
Agreement is subject to the same termination provisions as the Agreement.
During the fiscal year ended October 31, 1993, the Fund paid the
Administrator administration fees of $614,792.
The Transfer, Shareholder Servicing and Dividend Paying Agent. SFSI, a
subsidiary of the Adviser, acts as primary transfer agent, shareholder
servicing agent and dividend paying agent for the Fund. Fees paid to SFSI
are based on the number of shareholder accounts and the number of
shareholder transactions, plus out-of-pocket costs and expenses. The Fund
incurred approximately $246,628 in expenses for the fiscal year ended
October 31, 1993 for services provided by SFSI. United Missouri Trust
Company of New York acts as co-transfer agent and co-registrar with SFSI
to provide such services as SFSI may request.
RECEIPT OF SHAREHOLDER PROPOSALS
Any shareholder who wishes to present a proposal for action at the next
annual meeting of shareholders and who wishes to have it set forth in a
proxy statement and identified in the form of proxy prepared by the Fund
must notify the Fund in such a manner so that such notice is received by
the Fund by November 19, 1994 and in such form as is required under the
rules and regulations promulgated by the Securities and Exchange
Commission.
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 may properly come before the Meeting, including any adjournment
or adjournments thereof, and it is the intention of the persons named as
attorneys-in-fact in the proxy to vote the proxy in accordance with their
judgment on such matters.
By Order of the Board of
Trustees,
Andrew J. Donohue, Secretary
May 6, 1994
Exhibit A
INDEPENDENT AUDITORS' REPORT
Oppenheimer Management Corporation:
We have audited the accompanying consolidated statement of financial
condition of Oppenheimer Management Corporation and subsidiaries as of
December 31, 1993. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of financial
condition is free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
statement of financial condition. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall statement of financial condition
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, such consolidated statement of financial condition
presents fairly, in all material respects, the financial position of
Oppenheimer Management Corporation and subsidiaries at December 31, 1993
in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Company changed
its method of accounting for income taxes to conform with Statement of
Financial Accounting Standards No. 109.
DELOITTE & TOUCHE
Denver, Colorado
February 16, 1994
<PAGE>
OPPENHEIMER MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
ASSETS NOTES
CURRENT ASSETS:
Cash $ 31,940,116
Investments in money market
mutual funds 26,850,605
Investments in managed mutual funds 4,981,458
Investments in Zero Coupon U.S.
Treasuries Trust, at market 3,897,237
Accounts receivable:
Brokers and dealers 2 49,538,320
Managed mutual funds 2,3
11,433,524
Affiliated companies 100,495
Income taxes 13,902,237
Other 4,471,131
Other current assets 2,124,857
-------------
Total current assets 149,239,980
-----------------
PROPERTY AND EQUIPMENT - Less
accumulated depreciation and
amortization of $8,169,031 8,896,837
-----------------
OTHER ASSETS:
Intangible assets, net 1 113,445,572
Deferred sales commissions 54,452,051
Deferred charges 1,550,484
Other 1,607,387
----------------
Total other assets 171,055,494
------------------
TOTAL $329,192,311
<PAGE>
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 taxes4 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.
<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.
<PAGE>
<TABLE>
<CAPTION>
Intangible Assets - Intangible assets at December 31, 1993, are as
follows:
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>
Deferred Sales Commissions - Sales commissions paid to brokers and
dealers in connection with sales of shares of certain mutual funds are
charged to deferred sales commissions and amortized over six years.
Early withdrawal charges received by the Company from redeeming
shareholders reduce unamortized deferred sales commissions.
Stock Appreciation Rights - OAC has granted certain stock appreciation
rights relating to OAC's stock to certain employees of OMC. During
1993, OMC recorded $21,603,294 relating to these stock appreciation
rights as a credit to additional paid-in capital.
Income Taxes - OAC files a consolidated federal income tax return which
includes the Company. Income taxes are recorded as if the Company
files on a separate return basis. During 1993 the Company was required
to adopt Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. Statement 109 requires a change from the
deferred method of accounting for income taxes of APB Opinion 11 to the
asset and liability method of accounting for income taxes. The asset
and liability method prescribed by Statement 109 results in deferred
tax assets and liabilities being recorded for the differences between
the book and tax basis relating to the Company's assets and
liabilities.
The Company adopted Statement 109 in 1993 and has elected to restate
prior years beginning with the 1990 period. The effect of this
restatement on prior years has been reflected in retained earnings as
of December 31, 1992.
2. TRANSACTIONS WITH BROKERS AND DEALERS
The Company acts as general distributor for the sale and distribution
of shares of several mutual funds. In this capacity, the Company
records a receivable when it issues confirmations of all accepted
purchase orders to the originating brokers and dealers; at the same
time, the Company records a liability to the mutual funds equal to the
net asset value of all shares subject to such confirmations. This
liability must be paid to the mutual funds within 11 business days
unless the trade is canceled. If the originating broker or dealer
fails to make timely settlement of its purchase order under the terms
of its dealer agreement with the Company, the Company may cancel the
purchase order and, at the Company's risk, hold responsible the
originating broker or dealer.
When brokers and dealers place share redemption orders with a fund's
distributor, the Company records a receivable from the mutual funds
equal to the net asset value of all shares redeemed; at the same time
the Company records a corresponding liability payable to the
originating brokers.
3. RELATED PARTIES
The following is a summary of the significant balances, transactions
and relationships with affiliated companies and other related parties
as of December 31, 1993:
Officers and Directors of the Company; Shareholders of OAC - Several
officers and directors of the Company and shareholders of OAC are also
officers and directors or trustees of the mutual funds managed and
distributed by the Company.
Transfer Agents - SSI and Oppenheimer Shareholder Services (OSS), a
division of OMC, act as transfer and shareholder servicing agents for
the mutual funds managed by the Company and others. Amounts charged
to managed mutual funds are based on costs incurred on behalf of the
mutual funds pursuant to service agreements between SSI or OSS and the
mutual funds. SSI also acts as transfer agent for certain mutual funds
not managed by the Company, and amounts charged to those funds are
based on fees set by contracts with the respective mutual funds.
The receivable from managed mutual funds includes $2,466,000 resulting
from transfer agency fees and expenditures made on behalf of the mutual
funds at December 31, 1993.
4. INCOME TAXES
As discussed in note 1, the Company adopted Statement 109 in 1993 and
has applied the provisions of the Statement retroactively to 1990. The
principal effect of this change in accounting for income taxes related
to the remeasurement of the 1990 acquisition of Maximum Holdings, Inc.
and resulted in the recording of goodwill in the amount of $13,800,000
and deferred taxes payable in the same amount. In addition, retained
earnings at December 31, 1992 was increased by $2,001,702 to reflect
the effects of the restatement as of that date.
Deferred tax assets of $20,165,000 have been recorded in the
accompanying financial statements. These amounts primarily relate to
the benefit associated with certain state tax loss carryforwards and
compensation not deductible for tax purposes until paid. A valuation
allowance has not been recorded with respect to this deferred tax
asset. Deferred tax liabilities of $35,612,000 have also been
recorded. These amounts relate primarily to the current deduction, for
tax purposes, of deferred sales commissions which are amortized over
six years for book purposes and the difference in book and tax basis
relating to certain management contracts.
The Company has certain net operating loss carryforwards relating to
various states. If not used in the interim, these losses will
generally expire on December 31, 2008.
5. SENIOR DEBT
At December 31, 1993, the Company has outstanding $77.2 million of
Senior Debt borrowed from five banks. This amount is comprised of a
term loan of $23.7 million due September 30, 1997 and $53.5 million
outstanding on a $75 million revolving credit. The revolving credit
is subject to annual renewal, and, if not renewed, is repayable in four
annual installments. The debt bears interest at the Company's election
at the rate for Eurodollar deposits plus 1 1/2% or the higher of the
prime rate, plus 1/2% or the federal funds rate plus 1/2%. The credit
agreement contains covenants requiring certain minimum financial tests
and restrictions on capital expenditures, investments, indebtedness and
dividends. At December 31, 1993, the Company was in compliance with
the terms of the credit agreement. In addition, the banks have also
received a pledge of the shares of the Company's subsidiaries and
guarantees of certain subsidiaries. Borrowings under the credit
agreement are collateralized by certain assets of the Company.
The mandatory principal repayment schedule for the term loan is as
follows (000's):
1994 $ 10,000
1995 12,000
1996 1,700
--------
$ 23,700
=======
The credit agreement has certain provisions whereby specified amounts
of excess cash flow on a semi-annual basis, as defined in the
agreement, must be applied to reduce the outstanding loan balance.
There are no prepayment penalties.
The Company has entered into interest rate swap agreements whereby
certain banks have agreed to pay the Company interest on a floating
rate (Eurodollar) basis and the Company has agreed to pay the banks
interest on a fixed rate basis. At December 31, 1993, the Company has
fixed an interest rate of 10.00% on $29,000,000 of the Senior Debt.
The interest rate swap agreements mature December 31, 1994.
The Company is exposed to credit loss in the event of non-performance
by the other parties to the interest rate swap agreements; however, the
Company does not anticipate non-performance by the counterparties.
Based on borrowing rates currently available to the Company for senior
and subordinated loans with similar terms, maturities and prepayment
options, the Company estimates that the fair value of its interest
bearing debt and the related interest rate swap agreements is $124.6
million as compared to the carrying amount shown on the balance sheet
of $121.7 million.
6. SUBORDINATED NOTES
Pursuant to a Note Agreement as amended and restated as of November 24,
1992 (the Note Agreement), the Company issued to a group of insurance
companies owned by Massachusetts Mutual Life Insurance Company,
$44,450,000 face amount of Subordinated Notes (Notes) due October 31,
2000. The Notes are subordinated to the Senior Debt obligations, (see
Note 5). The Notes require semi-annual interest payments at a rate of
14% on October 31 and April 30 of each year. The Company may make
optional prepayments of Notes, with a penalty, beginning November 1,
1995. The Note Agreement contains covenants requiring certain minimum
financial tests and restrictions on capital expenditures, investments,
indebtedness and dividends. At December 31, 1993, the Company was in
compliance with the terms of the Note Agreement.
The mandatory principal repayment schedule for the Notes is as follows
(000's):
1998 $14,800
1999 14,825
2000 14,825
-------
$44,450
======
7. SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
The following table summarizes the various series and classes of
preferred and common stocks that are authorized, issued and outstanding
as of December 31, 1993:
Shares
Issued and
Authorized Outstanding Amount
<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>
The outstanding preferred shares are redeemable, at the option of the
Company, at $10 per share plus all accrued and unpaid dividends. In
the event of dissolution or liquidation, the preferred shareholders are
entitled to receive these same amounts before any distributions are
made to the common shareholder. The Series D Preferred Shares are
convertible, at the option of the shareholder, into common shares on
a one-for-one basis.
8. COMMITMENTS
Leases - The Company rents office space and certain computer and other
equipment under leases expiring during the next 15 years. At December
31, 1993, the aggregate minimum annual rentals under noncancelable
operating leases were as follows:
Years Ending
December 31
-----------------
1994 $ 6,237,568
1995 4,406,666
1996 3,513,503
1997 2,573,471
1998 2,223,802
Thereafter 10,660,288
------------
$29,615,298
===========
<PAGE>
Preliminary Copy
OPPENHEIMER MULTI-SECTOR INCOME TRUST
PROXY FOR ANNUAL SHAREHOLDERS MEETING TO BE HELD JUNE 20, 1994
The undersigned shareholder of Oppenheimer Multi-Sector Income Trust
(the "Fund") does hereby appoint George C. Bowen, Andrew J. Donohue,
Robert Bishop and Scott Farrar, and each of them, as attorneys-in-fact and
proxies of the undersigned, with full power of substitution, to attend the
Annual Meeting of Shareholders of the Fund to be held June 20, 1994, at
3410 South Galena Street, Denver, Colorado, 80231 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 Proposal specified on the reverse side.
Said attorneys-in-fact shall vote in accordance with their best judgment
as to any other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES, WHICH RECOMMENDS A
VOTE FOR THE ELECTION OF ALL NOMINEES FOR TRUSTEE AND FOR THE PROPOSAL ON
THE REVERSE SIDE. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED ON THE REVERSE SIDE OR FOR SUCH NOMINEES AND PROPOSAL IF NO
CHOICE IS INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
1. Election of Trustees
____ FOR all nominees listed ____ WITHHOLD
AUTHORITY
(except as marked to the to vote for all
nominees listed
contrary below) below
L. Levy L. Cherne E. Delaney C. Yeutter R. Galli E. Regan
(A) (B) (C) (D) (E) (F)
INSTRUCTION: To withhold authority to vote for any individual nominee,
line out that nominee's name above.
2. Ratification of selection of KPMG Peat Marwick as independent
auditors (Proposal No. 1)
FOR____ AGAINST____ ABSTAIN____
Dated: ___________________________, 1994
(Month) (Day)
___________________________________
Signature(s)
___________________________________
Signature(s)
Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership or
other entity, a duly authorized individual must sign on behalf of such
entity and give his or her title.
