Registration No. 2-62076
File No. 811-2849
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. __ / /
POST-EFFECTIVE AMENDMENT NO. 30 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 25 / X /
OPPENHEIMER HIGH YIELD FUND
(Exact Name of Registrant as Specified in Charter)
3410 South Galena Street, Denver, Colorado 80231
(Address of Principal Executive Offices)
1-303-671-3200
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation - Suite 3400
Two World Trade Center, New York, New York 10048-0203
(Names and Addresses of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box):
/ / Immediately upon filing pursuant to paragraph (b)
/ / On ________________, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ X / On October 25, 1994, pursuant to paragraph (a) of Rule 485
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the Registrant's
fiscal year ended June 30, 1994 will be filed on or before August 30,
1994.
<PAGE>
FORM N-1A
OPPENHEIMER HIGH YIELD FUND
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
1 Front Cover Page
2 Expenses
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and Policies
5 How the Fund is Managed; Expenses; Back Cover
5A Performance of the Fund
6 Dividends, Capital Gains and Taxes
7 How to Buy Shares; How to Exchange Shares; Special
Investor Services; Service Plan for Class A Shares;
Distribution and Service Plan for Class C Shares;
How to Sell Shares
8 How to Sell Shares
9 *
Part B of
Form N-1A
Item No. Statement of Additional Information Heading
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Additional Investment Restrictions
14 How the Fund is Managed - Trustees and Officers of the Fund
15 How the Fund is Managed - Major Shareholders;
16 How the Fund is Managed; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 Additional Information About the Fund
19 Your Investment Account - How to Buy Shares; How to Sell
Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the Fund
22 Performance of the Fund
23 *
- -------------------
* Not applicable or negative answer.
<PAGE>
Oppenheimer High Yield Fund
Prospectus dated October 25, 1994
Oppenheimer High Yield Fund is a mutual fund with the investment
objective of seeking a high level of current income primarily through
investing in a diversified portfolio of high-yield, fixed-income
securities. As a secondary objective, the Fund seeks capital growth when
consistent with its primary objective. The Fund invests principally in
lower-rated, high yield debt securities of U.S. companies, commonly known
as "junk bonds."
The Fund may invest up to 100% of its assets in "junk bonds" which
are securities that may be considered to be speculative and involve
greater risks, including risk of default, than higher-rated securities.
An investment in the Fund is not a complete investment program and is not
appropriate for investors unable or unwilling to assume the high degree
of risk associated with investing in lower-rated, high yield securities.
Investors should carefully consider these risks before investing.
The Fund offers two classes of shares: (1) Class A shares, which are
sold at a public offering price that includes a front-end sales charge,
and (2) Class B shares,which are sold without a front-end sales charge,
although you may pay a sales charge when you redeem your shares, depending
on how long you hold them. Class B shares are also subject to an annual
"asset-based sales charge." Each class of shares bears different expenses.
In deciding which class of shares to buy, you should consider how much you
plan to purchase, how long you plan to keep your shares, and other factors
discussed in "How to Buy Shares" starting on page -----.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the October 25, 1994, Statement of Additional Information. For a
free copy, call Oppenheimer Shareholder Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
Because of the Fund's investment policies and practices, the Fund's shares
may be considered to be speculative.
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of
principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
Page
ABOUT THE FUND
Expenses
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange
Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services, and
those expenses are reflected in the Fund's net asset value per share. As
a shareholder, you pay those expenses indirectly. Shareholders pay other
expenses directly, such as sales charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's operating expenses that you might expect
to bear indirectly. The calculations are based on the Fund's expenses
during its fiscal year ended June 30, 1994.
- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to pages ---- through ----- for
an explanation of how and when these charges apply.
Class A Shares Class B Shares
Maximum Sales Charge on Purchases
(as a % of offering price) 4.75% None
Sales Charge on Reinvested Dividends None None
Deferred Sales Charge
(as a % of the lower of the original
purchase price or redemption proceeds None(1) 5% in the first year
declining to 1% in the
sixth year and eliminated
thereafter
Exchange Fee $5.00(2) $5.00(2)
(1) If you invest more than $1 million in Class A shares, you may have
to pay a sales charge of up to 1% if you sell your shares within 18
calendar months from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares," below.
(2) Fee is waived for automated exchanges on PhoneLink, described in "How
to Buy Shares."
- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (the "Manager"), and other regular expenses for
services, such as transfer agent fees, custodial fees paid to the bank
that holds its portfolio securities, audit fees and legal and other
expenses. The following numbers are projections of the Fund's business
expenses based on the Fund's expenses in its last fiscal year. These
amounts are shown as a percentage of the average net assets of each class
of the Fund's shares for that year. The "12b-1 Distribution Plan Fees" for
Class A shares are the Service Plan Fees (which are a maximum of 0.25% of
average annual net assets of that class), and for Class B shares are the
Distribution and Service Plan Fee (maximum of 0.25%) and the asset-based
sales charge of 0.75%. The actual expenses for each class of shares in
future years may be more or less, depending on a number of factors,
including the actual amount of the assets represented by each class of
shares. A Service Plan for the Fund's Class A shares took effect July 1,
1994, that applies to all Class A shares of the Fund regardless of the
date on which the shares were purchased. "12b-1 Distribution Plan Fees"
are based on expenses that would have been incurred if that Plan had been
in effect during the Fund's fiscal year ended June 30, 1994.
Class A Shares Class B Shares
Management Fees
12b-1 Distribution Plan Fees
(restated)
Other Expenses
Total Fund Operating Expenses
- --------------------------
*Service Plan fees only
**Includes Service Plan Fee and asset-based sales charge
- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and that the Fund's annual return is 5%, and that its
operating expenses for each class are the ones shown in the chart above.
If you were to redeem your shares at the end of each period shown below,
your investment would incur the following expenses by the end of each
period shown:
1 year 3 years 5 years 10 years(1)
Class A Shares
Class B Shares
If you did not redeem your investment, it would incur the following
expenses:
Class A Shares
Class B Shares
- ------------------
(1) The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your
Class B shares into Class A shares after 6 years. Long-term Class
B shareholders could pay the economic equivalent of more than the
maximum front-end sales charge allowed under applicable regulations,
because of the effect of the asset-based sales charge and contingent
deferred sales charge. The automatic conversion is designed to
minimize the likelihood that this will occur. Please refer to "How
to Buy Shares--Class B Shares" for more information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which will vary.
<PAGE>
Financial Highlights
The table on this page presents selected financial information about the
Fund, including per share data and expense ratios and other data based on
the Fund's average net assets. This information has been audited by
Deloitte & Touche LLP, the Fund's independent auditors, whose report on
the Fund's financial statements for the fiscal year ended June 30, 1994
is included in the Statement of Additional Information.
<PAGE>
Investment Objectives and Policies
Objective. The Fund's primary objective is to earn a high level of
current income by investing mainly in a diversified portfolio of high-
yield, fixed-income securities (long-term debt and preferred stock issues,
including convertible securities). Accordingly, the Fund's investments
may be considered speculative. As a secondary objective, the Fund seeks
capital growth when consistent with its primary objective.
Investment Policies and Strategies. The high yield and high income sought
by the Fund is ordinarily associated with securities in the lower rating
categories of the established rating services.
Consistent with its primary investment objective, the Fund anticipates
that under normal conditions at least 80% of the value of its total assets
will be invested in fixed-income securities. The Fund's remaining assets
may be held in cash or cash equivalents, in rights or warrants, or
invested in common stock and other equity securities when such investments
are consistent with its investment objectives or are acquired as part of
a unit consisting of a combination of fixed-income securities and equity
investments. Since market risks are inherent in all securities to varying
degrees, there can be no assurance that the Fund's investment objectives
will be met.
- Special Risks - High Yield Securities. In seeking high current
income, the Fund may invest in higher-yielding, lower-rated debt
securities, commonly known as "junk bonds." There is no restriction on the
amount of the Fund's assets that could be invested in these types of
securities. Lower-rated debt securities are those rated "Baa" or lower
by Moody's Investors Service, Inc. ("Moody's") or "BBB" or lower by
Standard & Poor's Corporation ("S&P"). These securities may be rated as
low as "C" or "D" or may be in default at time of purchase.
The Manager does not rely solely on ratings of securities by rating
agencies when selecting investments for the Fund, but evaluates other
economic and business factors as well. The Fund may invest in unrated
securities that the Manager believes offer yields and risks comparable to
rated securities. Lower rated securities are considered speculative and
involve greater risk. They may be less liquid than higher-rated
securities. If the Fund were forced to sell a lower-rated debt security
during a period of rapidly-declining prices, it might experience
significant losses especially if a substantial number of other holders
decide to sell at the same time.
Other risks may involve the default of the issuer or price changes in
the issuer's securities due to changes in the issuer's financial strength
or economic conditions. The Fund is not obligated to dispose of
securities when issuers are in default or if the rating of the security
is reduced. These risks are discussed in more detail in the Statement of
Additional Information.
- Portfolio Turnover
Generally, the Fund will not trade for short-term profits, but when
circumstances warrant, to take advantage of differences in securities
prices and yields or of fluctuations in interest rates, consistent with
its investment objectives, the Fund may sell securities without regard to
the length of time held. As most purchases made by the Fund are principal
transactions at net prices, the Fund incurs little or no brokerage costs.
Short-term trading may affect the Fund's tax status. </R.
- How the Fund's Portfolio Securities Are Rated. As of June 30, 1994,
the Fund's portfolio included corporate bonds in the following S&P rating
categories (the amounts shown are dollar-weighted average values of the
bonds in each category measured as a percentage of the Fund's total
assets): AAA, ---%; AA, ---%; A, ---%; BBB, -----%; BB, -----%; B, ----%;
CCC, ----%; CC, ----%; C, -----%; D, -----%; unrated (by S&P or Moody's),
- -----%. The Appendix to this Prospectus describes the rating categories.
The allocation of the Fund's assets in securities in the different rating
categories will vary over time. </R.
- Interest Rate Risks. In addition to credit risks, described below,
debt securities are subject to changes in value due to changes in
prevailing interest rates. When prevailing interest rates fall, the
values of outstanding debt securities generally rise. Conversely, when
interest rates rise, the values of outstanding debt securities generally
decline. The magnitude of these fluctuations will be greater when the
average maturity of the portfolio securities is longer.
- Credit Risks. Debt securities are also subject to credit risks.
Credit risk relates to the ability of the issuer of a debt security to
make interest or principal payments on the security as they become due.
Generally, higher-yielding, lower-rated bonds (which are the type of bonds
the Fund seeks to invest in) are subject to greater credit risk than
higher-rated bonds. Securities issued or guaranteed by the U.S.
Government are subject to little, if any, credit risk if they are backed
by the "full faith and credit of the U.S. Government," which in general
terms means that the U.S. Treasury stands behind the obligation to pay
interest and principal. While the Manager may rely to some extent on
credit ratings by nationally recognized rating agencies, such as Standard
& Poor's or Moody's, in evaluating the credit risk of securities selected
for the Fund's portfolio, it may also use its own research and analysis.
However, many factors affect an issuer's ability to make timely payments,
and there can be no assurance that the credit risks of a particular
security will not change over time.
- Can the Fund's Investment Objective and Policies Change? The Fund
has an investment objective, which is described above, as well as
investment policies it follows to try to achieve its objective.
Additionally, the Fund uses certain investment techniques and strategies
in carrying out those policies. The Fund's investment policies and
practices are not "fundamental" unless the Prospectus or Statement of
Additional Information says that a particular policy is "fundamental."
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The
term "majority" is defined in the Investment Company Act to be a
particular percentage of outstanding voting shares (and this term is
explained in the Statement of Additional Information). The Fund's
investment objective is a fundamental policy. The Fund's Board of Trustees
may change non-fundamental policies without shareholder approval, although
significant changes will be described in amendments to this Prospectus.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below, which involve
certain risks. The Statement of Additional Information contains more
information about these practices, including limitations designed to
reduce some of the risks.
- Foreign Securities. The Fund may purchase debt (and equity)
securities issued or guaranteed by foreign companies or foreign
governments or their agencies. The Fund may buy securities of companies
in any country, developed or underdeveloped. There is no limit on the
amount of the Fund's assets that may be invested in foreign securities.
Foreign currency will be held by the Fund only in connection with the
purchase or sale of foreign securities. If the Fund's securities are held
abroad, the countries in which they are held and the sub-custodians
holding them must be approved by the Fund's Board of Trustees.
Foreign securities have special risks. For example, foreign issuers are
not subject to the same accounting and disclosure requirements that U.S.
companies are subject to. The value of foreign investments may be affected
by changes in foreign currency rates, exchange control regulations,
expropriation or nationalization of a company's assets, foreign taxes,
delays in settlement of transactions, changes in governmental economic or
monetary policy in the U.S. or abroad, or other political and economic
factors. More information about the risks and potential rewards of
investing in foreign securities is contained in the Statement of
Additional Information.
-Derivative Investments. The Fund can invest in a number of different
kinds of "derivative securities." In general, a "derivative investment"
is a specially designed investment whose performance is linked to the
performance of another security of investment, such as an option, future,
index or currency. The risks of investing in derivative investments
include not only the ability of the company issuing the instrument to pay
the amount due on the maturity of the instrument, but also the risk that
the underlying investment or security might not perform the way the
Manager expected it to perform. The performance of derivative investments
may also be influenced by interest rate changes in the U.S. and abroad.
All of this can mean that the Fund will realize less income than expected.
Examples of derivative investments the Fund may invest in include, among
others, "index-linked notes. These are debt securities of companies that
call for payment on the maturity of the note in different terms than the
typical note where the borrower agrees to pay a fixed sum on the maturity
of the note. The payment on maturity of an index-linked note depends on
the performance of one or more market indices, such as the S&P 500 Index.
Other examples of derivative investments the Fund may invest in are
currency-indexed securities. These are typically short-term or
intermediate-term debt securities whose maturity values or interest rates
are determined by reference to one or more specified foreign currencies.
Further examples of derivative investments the Fund may invest in include
"debt exchangeable for common stock" of an issuer or "equity-linked debt
securities" of an issuer. At maturity, the principal amount of the debt
security is exchanged for common stock of the issuer or is payable in an
amount based on the issuer's common stock price at the time of maturity.
In either case there is a risk that the amount payable at maturity will
be less than the principal amount of the debt.
- Writing and Purchasing Calls. The Fund may write (that is, sell) and
purchase call options (calls) on debt securities or Interest Rate Futures
(described below) to raise cash for liquidity purposes (for example, to
meet redemption requirements) or for defensive reasons. The Fund may
write calls only if certain conditions are met: (1) after writing any
call, not more than 50% of the Fund's total assets may be subject to
calls; (2) the calls must be listed on a domestic securities or
commodities exchange or quoted on the Automated Quotation System of the
National Association of Securities Dealers, Inc.; and (3) each call must
be "covered" while it is outstanding; that is, the Fund must own the
securities on which the call is written or it must own other securities
that are acceptable for the escrow arrangements required for calls. If
a covered call written by the Fund is exercised on a security that has
increased in value, the Fund will be required to sell the security at the
call price and will not be able to realize any profit on the security
above the call price.
- Hedging With Options and Futures Contracts. The Fund may buy and
sell options and futures contracts and engage in interest rate swap
transactions to try to manage its exposure to declining prices on its
portfolio securities or to establish a position in the equity securities
market as a temporary substitute for purchasing individual securities.
Some of these strategies, such as selling futures, buying puts and writing
covered calls, hedge the Fund's portfolio against price fluctuations.
Other hedging strategies, such as buying futures and buying call options,
tend to increase the Fund's exposure to the market.
The Fund may write and purchase certain kinds of put and call options,
Interest rate Futures, Foreign Currency Options and enter into Forward
Contracts. These are all referred to as "hedging instruments." The Fund
does not use hedging instruments for speculative purposes. The hedging
instruments the Fund may use are described below and in greater detail in
"Other Investment Techniques and Strategies" in the Statement of
Additional Information.
-Writing and Purchasing Puts. The Fund may write and purchase put
options on debt securities but only if (a) after any such purchase, the
value of all options (puts and calls) held by the Fund would not exceed
5% of the Fund's total assets; (b) the put is listed on a domestic
securities or commodities exchange or quoted on NASDAQ; and (c) any put
written on debt securities is covered by segregated liquid assets with not
more than 50% of the Fund's assets subject to puts. The Fund will not
write puts on Interest Rate Futures.
-Interest Rate Futures. The Fund may buy and sell certain futures
contracts, but only if they relate to debt instruments ("Interest Rate
Futures" or "Futures"). Interest Rate Futures obligate the seller to
deliver (and the purchaser to take) a specific type of debt security at
a specific future date for a fixed price. That obligation may be
satisfied by actual delivery of the security or by entering into an
offsetting contract to close out the Futures position. At present, the
Fund does not intend to enter into Futures contracts and options on
Futures if, after any such purchase, the sum of margin deposits on Futures
and premiums paid on Futures options would exceed 5% of the Fund's total
assets.
-Foreign Currency Options. The Fund may purchase and write puts and
calls on foreign currencies that are traded on a securities or commodities
exchange or quoted by major recognized dealers in such options, for the
purpose of protecting against declines in the dollar value of foreign
securities and against increases in the dollar cost of foreign securities
to be acquired. If a rise is anticipated in the dollar value of a foreign
currency in which securities to be acquired are denominated, the increased
cost of such securities may be partially offset by purchasing calls or
writing puts on that foreign currency. If a decline in the dollar value
of a foreign currency is anticipated, the decline in value of portfolio
securities denominated in that currency may be partially offset by writing
calls or purchasing puts on that foreign currency. However, in the event
of currency rate fluctuations adverse to the Fund's position, the Fund
would lose the premium it paid and incur transactions costs.
-Forward Contracts. The Fund may enter into foreign currency exchange
contracts ("Forward Contracts"), which obligate the seller to deliver and
the purchaser to take a specific amount of foreign currency at a specific
future date for a fixed price. The Fund may enter into a Forward
Contract in order to "lock in" the U.S. dollar price of a security
denominated in a foreign currency which it has purchased or sold but which
has not yet settled, or to protect against a possible loss resulting from
an adverse change in the relationship between the U.S. dollar and a
foreign currency. There is a risk that either strategy may reduce the
gain that the Fund would otherwise derive from a currency rate movement
if the direction of that movement was not anticipated. Forward Contracts
include standardized foreign currency futures contracts which are traded
on exchanges and are subject to procedures and regulations applicable to
other Futures. The Fund may also enter into a Forward Contract to sell
a foreign currency denominated in a currency other than that in which the
underlying security is denominated ("cross hedging"). The success of
cross hedging is dependent on many factors, including the ability of the
Manager to correctly identify and monitor the correlation between foreign
currencies and the U.S. dollar. To the extent that the correlation is not
identical, the Fund may experience losses or gains on both the underlying
security and the cross currency hedge. The expectation is that there is
a greater correlation between the foreign currency of the Forward Contract
and the underlying investment than between the U.S. dollar and the
underlying investment. The Fund will not speculate in foreign currency
exchange. There is no limitation as to the percentage of the Fund's
assets that may be committed to foreign currency exchange contracts. The
Fund does not enter into such Forward Contracts or maintain a net exposure
in such contracts to the extent that the Fund would be obligated to
deliver an amount of foreign currency in excess of the value of the Fund's
assets denominated in that currency, or enter into a "cross hedge" unless
it is denominated in a currency or currencies that the Manager believes
will have price movements that tend to correlate closely with the currency
in which the investment being hedged is denominated. See "Investment
Objectives and Policies--Covered Calls and Hedging--Tax Aspects of Hedging
Instruments" in the Additional Statement for a discussion of the tax
treatment of foreign currency exchange contracts.
Hedging instruments can be volatile investments and may involve special
risks. If the Manager uses a hedging instrument at the wrong time or
judges market conditions incorrectly, hedging strategies may reduce the
Fund's return. The Fund could also experience losses if the prices of its
futures and options positions were not correlated with its other
investments or if it could not close out a position because of an illiquid
market for the future or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. For example, in writing puts, there is a risk that the Fund
may be required to buy the underlying security at a disadvantageous price.
These risks and the hedging strategies the Fund may use are described in
greater detail in the Statement of Additional Information.
- -When-Issued Securities. The Fund may invest in debt securities on a
"when-issued" or "delayed delivery" basis. In those transactions, the
Fund obligates itself to purchase or sell securities with delivery and
payment to occur at a later date to secure what is considered to be an
advantageous price and yield at the time the obligation is entered into.
The price, which is generally expressed in yield terms, is fixed at the
time the commitment to purchase is made, but delivery and payment for
when-issued securities takes place at a later date (normally within 45
days of purchase). The Fund is subject to the risk of adverse market
fluctuation between purchase and settlement. During the period between
purchase and settlement, no payment is made by the Fund for the security,
and no interest accrues to the Fund from the investment. Although the
Fund is subject to the risk of market fluctuation between purchase and
settlement, the Manager does not believe that the Fund's net asset value
or income will be materially adversely affected by its purchase of
securities on a "when-issued" or "delayed delivery" basis. See
"Investment Objectives and Policies--When-Issued and Delayed Delivery
Transactions" in the Additional Statement for more details.
- -Asset-Backed Securities. The Fund may invest in securities which
represent undivided fractional interests in pools of consumer loans,
similar in structure to the mortgaged-backed securities in which the Fund
may invest, described below. Payments of principal and interest are
passed through to holders of asset-backed securities and are typically
supported by some form of credit enhancement, such as a letter of credit,
surety bond, limited guarantee by another entity or having a priority to
certain of the borrower's other securities. The degree of credit
enhancement varies, and generally applies to only a fraction of the asset-
backed security's par value until exhausted. If the credit enhancement
of an asset-backed security held by the Fund has been exhausted, and if
any required payments of principal and interest are not made with respect
to the underlying loans, the Fund may experience losses or delays in
receiving payment. Further details are set forth in the Additional
Statement under "Investment Objectives and Policies -- Asset-Backed
Securities."
- -Mortgage-Backed Securities and CMOs. The Fund's investments may include
securities which represent participation interests in pools of residential
mortgage loans which may or may not be guaranteed by agencies or
instrumentalities of the U.S. Government (e.g., GNMA, FNMA and FHLMC
certificates), including collateralized mortgage-backed obligations
(CMOs). Such securities differ from conventional debt securities which
provide for periodic payment of interest in fixed amounts (usually semi-
annually) with principal payments at maturity or specified call dates.
Mortgage-backed securities provide monthly payments which are, in effect,
a "pass-through" of the monthly interest and principal payments (including
any prepayments) made by the individual borrowers on the pooled mortgage
loans. The Fund's reinvestment of scheduled principal payments and
unscheduled prepayments it receives may occur at lower rates than the
original investment, thus reducing the yield of the Fund. CMOs in which
the Fund may invest are securities issued by a U.S. Government
instrumentality that are collateralized by a portfolio of mortgages or
mortgage-backed securities. The issuer's obligation to make interest and
principal payments is secured by the underlying portfolio of mortgages or
mortgage-backed securities. Mortgage-backed securities may be less
effective than debt obligations of similar maturity at maintaining yields
during periods of declining interest rates. The Fund may also enter into
"forward roll" transactions with banks that provide for future delivery
of the mortgage-backed securities in which it may invest. The Fund would
be required to place cash, U.S. Government securities or other high-grade
debt securities in a segregated account with its Custodian in an amount
equal to its purchase payment obligation under the roll. Further details
are set forth in the Additional Statement under "Mortgage-Backed
Securities." </R.
- Loans of Portfolio Securities. To raise cash for liquidity purposes,
the Fund may lend its portfolio securities to certain types of eligible
borrowers approved by the Board of Trustees. Each loan must be
collateralized in accordance with applicable regulatory requirements.
After any loan, the value of the securities loaned must not exceed 10% of
the value of the Fund's net assets. There are some risks in connection
with securities lending. The Fund might experience a delay in receiving
additional collateral to secure a loan, or a delay in recovery of the
loaned securities. The Fund presently does not intend to engage in loans
of securities that will exceed 5% of the value of the Fund's total assets
in the coming year.
- Illiquid and Restricted Securities. Under the policies established
by the Fund's Board of Trustees, the Manager determines the liquidity of
the Fund's investments. Investments may be illiquid because of the absence
of an active trading market, making it difficult to value them or dispose
of them promptly at an acceptable price. A restricted security is one that
has a contractual restriction on its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933. As a
fundamental policy, the Fund will not invest more than 15% of its net
assets in illiquid or restricted securities. The Fund currently intends
to invest no more than 10% of its net assets in illiquid and restricted
securities. Certain restricted securities, eligible for resale to
qualified institutional purchasers, are not subject to that limit.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. There is no limit on the amount of the Fund's net assets that
may be subject to repurchase agreements of seven days or less. Repurchase
agreements must be fully collateralized. However, if the vendor of the
securities under a repurchase agreement fails to pay the resale price on
the delivery date, the Fund may incur costs in disposing of the collateral
and may experience losses if there is any delay in its ability to do so.
The Fund will not enter into a repurchase agreement which causes more than
10% of its net assets to be subject to repurchase agreements having a
maturity beyond seven days.
- Participation Interests. The Fund may acquire participation
interests in U.S. dollar-denominated loans that are made to U.S. or
foreign companies (the "borrower"). They may be interests in, or
assignments of, the loan, and are acquired from banks or brokers that have
made the loan or are members of the lending syndicate. The Manager has
set certain creditworthiness standards for issuers of loan participations,
and monitors their creditworthiness. Some borrowers may have senior
securities rated as low as "C" by Moody's or "D" by S&P, but may be deemed
acceptable credit risks. Participation interests are considered
investments in illiquid securities (see "Illiquid and Restricted
Securities," below). Their value primarily depends upon the
creditworthiness of the borrower, and its ability to pay interest and
principal. Borrowers may have difficulty making payments. If a borrower
fails to make scheduled interest or principal payments, the Fund could
experience a reduction in its income and a decline in the net asset value
of its shares. Further details are set forth in the Additional Statement
under "Investment Objective and Policies."
- Temporary Defensive Investments. When stock market prices are
falling or in other unusual economic or business circumstances, the Fund
may invest all or a portion of its assets in defensive securities.
Securities selected for defensive purposes may include cash or cash
equivalents, such as U.S. Treasury Bills and other short-term obligations
of the U.S. Government, its agencies or instrumentalities, or commercial
paper rated "A-1" or better by Standard & Poor's Corporation or "P-1" or
better by Moody's Investors Service, Inc.
Other Investment Restrictions. The Fund has other investment restrictions
which are fundamental policies. Under these fundamental policies, the
Fund cannot do any of the following: (1) buy securities issued or
guaranteed by any one issuer (except the U.S. Government or its agencies
or instrumentalities) if with respect to 75% of its total assets, more
than 5% of the Fund's total assets would be invested in the securities of
that issuer, or the Fund would then own more than 10% of that issuer's
voting securities; (2) borrow money, except from banks as a temporary
measure for extraordinary or emergency purposes and not for the purpose
of leveraging its investments, and then only up to 10% of the market value
of the Fund's assets; no additional investments may be made whenever
borrowings exceed 5% of the Fund's assets; (3) buy a security if, as a
result of such purchase, more than 25% of its total assets would be
invested in the securities of issuers principally engaged in the same
industry; for purposes of this limitation, utilities will be divided
according to their services; for example, gas, gas transmission, electric
and telephone utilities will each be considered a separate industry; (4)
make loans, except by purchasing debt obligations in which the Fund may
invest consistent with its investment policies, or by entering into
repurchase agreements or as described in "Loans of Portfolio Securities";
(5) invest more than 5% of the value of its assets in rights and warrants
nor more than 2% of such value in rights and warrants which are not listed
on the New York or American Stock Exchanges; rights and warrants attached
to other securities or acquired in units are not subject to this
limitation; or (6) buy securities of an issuer which, together with any
predecessor, has been in operation for less than three years, if as a
result, the aggregate of such investments would exceed 5% of the value of
the Fund's net assets.
All of the percentage restrictions described above and elsewhere in this
Prospectus apply only at the time the Fund purchases a security, and the
Fund need not dispose of a security merely because the Fund's assets have
changed or the security has increased in value relative to the size of the
Fund. There are other fundamental policies discussed in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund was originally incorporated in
Maryland in 1978 but was reorganized in 1986 as a Massachusetts business
trust. The Fund is an open-end, diversified management investment company,
with an unlimited number of authorized shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
"Trustees and Officers of the Fund" in the Statement of Additional
Information names the Trustees and provides more information about them
and the officers of the Fund. Although the Fund is not required by law
to hold annual meetings, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call a
meeting to remove a Trustee or to take other action described in the
Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has two classes of shares, Class A and
Class B. Each class has its own dividends and distributions and pays
certain expenses which may be different for the different classes. Each
class may have a different net asset value. Each share has one vote at
shareholder meetings, with fractional shares voting proportionally. Only
shares of a particular class vote together on matters that affect that
class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager, which
chooses the Fund's investments and handles its day-to-day business. The
Manager carries out its duties, subject to the policies established by the
Board of Trustees, under an Investment Advisory Agreement which states the
Manager's responsibilities and its fees, and describes the expenses that
the Fund pays to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager and its affiliates currently manage investment companies,
including other OppenheimerFunds, with assets of more than $27 billion as
of June 30, 1994, and with more than 1.8 million shareholder accounts.
The Manager is owned by Oppenheimer Acquisition Corp., a holding company
that is owned in part by senior officers of the Manager and controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company.
- Portfolio Manager. The Portfolio Manager of the Fund is Ralph
Stellmacher. He is the person principally responsible for the day-to-day
management of the Fund's portfolio, effective January, 1988. Mr.
Stellmacher is a Senior Vice President of the Manager and Vice President
of the Fund, and also serves as an officer of other OppenheimerFunds.
- Fees and Expenses. Under the Investment Advisory Agreement, the Fund
pays the Manager the following annual fees, which decline on additional
assets as the Fund grows: 0.75% of the first $200 million of aggregate net
assets, 0.72% of the next $200 million, 0.69% of the next $200 million,
0.66% of the next $200 million, and 0.60% of the next $200 million and
0.50% of aggregate net assets over $1 billion. The Fund's management fee
for its last fiscal year was ____% of average annual net assets for Class
A shares and ____% for Class B shares, which may be higher than the rate
paid by some other mutual funds.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal and auditing
costs. Those expenses are paid out of the Fund's assets and are not paid
directly by shareholders. However, those expenses reduce the net asset
value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the investment advisory
agreement and the other expenses paid by the Fund is contained in the
Statement of Additional Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers are
selected for the Fund's portfolio transactions. When deciding which
brokers to use, the Manager is permitted by the investment advisory
agreement to consider whether brokers have sold shares of the Fund or any
other funds for which the Manager serves as investment adviser.
- The Distributor. The Fund's shares are sold through dealers and
brokers that have a sales agreement with Oppenheimer Funds Distributor,
Inc., a subsidiary of the Manager that acts as the Distributor. The
Distributor also distributes the shares of other mutual funds managed by
the Manager (the "OppenheimerFunds") and is sub-distributor for funds
managed by a subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other OppenheimerFunds
on an "at-cost" basis. Shareholders should direct inquiries about their
account to the Transfer Agent at the address and toll-free numbers shown
below in this Prospectus or on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses certain terms to
illustrate its performance: "total return" and "yield." These terms are
used to show the performance of each class of shares separately, because
the performance of each class of shares will usually be different, as a
result of the different kinds of expenses each class bears. This
performance information may be useful to help you see how well your
investment has done and to compare it to other funds or market indices,
as we have done below.
<
It is important to understand that the fund's yields and total returns
represent past performance and should not be considered to be predictions
of future returns or performance. This performance data is described
below, but more detailed information about how total returns and yields
are calculated is contained in the Statement of Additional Information,
which also contains information about other ways to measure and compare
the Fund's performance. The Fund's investment performance will vary,
depending on market conditions, the composition of the portfolio, expenses
and which class of shares you purchase.
- Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming that
all dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return
shows the average rate of return for each year in a period that would
produce the cumulative total return over the entire period. However,
average annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, they reflect the
payment of the maximum initial sales charge. Total returns may also be
quoted "at net asset value," without considering the effect of the sales
charge, and those returns would be reduced if sales charges were deducted.
When total returns are shown for Class B shares, they reflect the effect
of the contingent deferred sales charge. They may also be shown based on
the change in net asset value, without considering the effect of the
contingent deferred sales charge.
- Yield. Each Class of shares calculates its yield by dividing the
annualized net investment income per share on the portfolio during a
30-day period by the maximum offering price on the last day of the period.
The yield of each Class will differ because of the different expenses of
each Class of shares. The yield data represents a hypothetical investment
return on the portfolio, and does not measure an investment return based
on dividends actually paid to shareholders. To show that return, a
dividend yield may be calculated. Dividend yield is calculated by
dividing the dividends of a Class derived from net investment income
during a stated period by the maximum offering price on the last day of
the period. Yields and dividend yields for Class A shares reflect the
deduction of the maximum initial sales charge, but may also be shown based
on the Fund's net asset value per share. Yields for Class B shares do not
reflect the deduction of the contingent deferred sales charge.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended June 30, 1994,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.
- Management's Discussion of Performance. During the Fund's past
fiscal year, the Manager began shortening the average maturity of the
Fund's portfolio, in expectation of a stable or rising interest rate
environment. This was designed to help reduce share price declines when
interest rates increase, because shorter-term bonds are less sensitive to
interest rate changes than longer-term bonds. The portfolio includes
lower-rated bonds in cyclical industries, which are less sensitive to
interest rate changes and are expected to perform well as the economy
grows.
- Comparing the Fund's Performance to the Market. The chart below
shows the performance of a hypothetical $10,000 investment in each Class
of shares of the Fund held until June 30, 1994; in the case of Class A
shares, over a ten-year period, and in the case of Class B shares, from
the inception of the Class on May 3, 1993, with all dividends and capital
gains distributions reinvested in additional shares. The graph reflects
the deduction of the 4.75% maximum initial sales charge on Class A shares
and the maximum 5.0% contingent deferred sales charge on Class B shares.
The Fund's performance is compared to the performance of the Lehman
Brothers Corporate Bond Index and the Salomon Brothers High Yield Market
Index. The Lehman Brothers Corporate Bond Index is an unmanaged index of
publicly-issued nonconvertible investment grade corporate debt of U.S.
issuers, widely recognized as a measure of the U.S. fixed-rate corporate
bond market. The Salomon Brothers High Yield Market Index is an unmanaged
index of below-investment grade (but rated at least BB+/Ba1 by S&P or
Moody's) U.S. corporate debt obligations, widely recognized as a measure
of the performance of the high-yield corporate bond market, the market in
which the Fund principally invests. Index performance reflects the
reinvestment of dividends but does not consider the effect of capital
gains or transaction costs, and none of the data below shows the effect
of taxes. Also, the Fund's performance reflects the effect of Fund
business and operating expenses. While index comparisons may be useful
to provide a benchmark for the Fund's performance, it must be noted that
the Fund's investments are not limited to the securities in any one index.
Moreover, the index data does not reflect any assessment of the risk of
the investments included in the index.
Oppenheimer High Yield Fund
Comparison of Change in Value
of $10,000 Hypothetical Investment to the
Lehman Brothers Corporate Bond Index
and the Salomon Brothers High Yield Market Index
(Graph)
Past performance is not predictive of future performance.
Oppenheimer High Yield Fund
Average Annual Total Returns of the Fund at 6/30/94
1-Year 5-Year 10-Year
Class A: 1.22% 9.60% 10.93%
Average Annual Total Return of the Fund at 6/30/94
1-Year Life*
Class B: 0.31% 4.32%
- ----------------------------
* Class B shares of the Fund first publicly offered on 5/3/93.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors two different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.
- Class A Shares. If you buy Class A shares, you pay an initial sales
charge (on investments up to $1 million). If you purchase Class A shares
as part of an investment of at least $1 million in shares of one or more
OppenheimerFunds, and you sell any of those shares within 18 months after
your purchase, you will pay a contingent deferred sales charge, which will
vary depending on the amount you invested.
- Class B Shares. If you buy Class B shares, you pay no sales charge
at the time of purchase, but if you sell your shares within six years of
buying them, you will normally pay a contingent deferred sales charge that
varies depending on how long you own your shares.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisors:
- How Much Do You Plan to Invest? If you plan to invest a
substantial amount over the long term, the reduced sales charges available
for larger purchases of Class A shares may be more beneficial to you than
purchasing Class B shares, because of the higher annual expenses Class B
shares will likely bear. For purchases over $1 million, the contingent
deferred sales charge on Class A shares may be more beneficial. The
Distributor will not accept any order for $1 million or more for Class B
shares on behalf of a single investor for that reason.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, investors who prefer
not to pay an initial sales charge and who plan to hold their shares for
more than six years might consider Class B shares. Investors who plan to
redeem shares within seven years might consider whether the front-end
sales charge on Class A shares would result in higher net expenses after
redemption.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available for Class B
shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares is better for
you. Additionally, the dividends payable to Class B shareholders will be
reduced by the additional expenses borne solely by that class, such as the
asset-based sales charge to which Class B shares are subject, as described
below and in the Statement of Additional Information.
- How Does It Affect Payments to My Broker? A salesperson or any
other person who is entitled to receive compensation for selling Fund
shares may receive different compensation for selling one class than for
selling another class. It is important that investors understand that the
purpose of the contingent deferred sales charge and asset-based sales
charge for Class B shares is the same as the purpose of the front-end
sales charge on sales of Class A shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250
(if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other OppenheimerFunds (a list
of them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.
- How Are Shares Purchased? You can buy shares several ways -- through
any dealer, broker or financial institution that has a sales agreement
with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan under
the OppenheimerFunds AccountLink service. When you buy shares, be sure to
specify Class A or Class B shares. If you do not choose, your investment
will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your order
with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an OppenheimerFunds
New Account Application and return it with a check payable to "Oppenheimer
Funds Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217.
If you don't list a dealer on the application, the Distributor will act
as your agent in buying the shares.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member, to transmit funds electronically to purchase shares, to send
redemption proceeds, and to transmit dividends and distributions. Shares
are purchased for your account on the regular business day the Distributor
is instructed by you to initiate the ACH transfer to buy shares. You can
provide those instructions automatically, under an Asset Builder Plan,
described below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You must request AccountLink privileges
on the application or dealer settlement instructions used to establish
your account. Please refer to "AccountLink" below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up to
four other OppenheimerFunds) automatically each month from your account
at a bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value that is next determined after
the Distributor receives the purchase order in Denver. In most cases, to
enable you to receive that day's offering price, the Distributor must
receive your order by 4:00 P.M., New York time (all references to time in
this Prospectus mean "New York time"). The net asset value of each class
of shares is determined as of that time on each day The New York Stock
Exchange is open (which is a "regular business day"). If you buy shares
through a dealer, the dealer must receive your order by 4:00 P.M., on a
regular business day and transmit it to the Distributor so that it is
received before the Distributor's close of business that day, which is
normally 5:00 P.M. The Distributor may reject any purchase order for the
Fund's shares, in its sole discretion.
Class A Shares. Class A shares are sold at their offering price, which
is normally net asset value plus an initial sales charge. However, in
some cases, described below, where purchases are not subject to an initial
sales charge, the offering price may be net asset value. In some cases,
reduced sales charges may be available, as described below. Out of the
amount you invest, the Fund receives the net asset value to invest for
your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer. The current sales charge rates
and commissions paid to dealers and brokers are as follows:
Front-End
Front-End Sales Charge as
Sales Charge as Approximate Commission as
Percentage of Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
Less than $50,000 4.75% 4.98% 4.00%
$50,000 or more
but less than $100,000 4.50% 4.71% 3.75%
$100,000 or more
but less than $250,000 3.50% 3.63% 2.75%
$250,000 or more
but less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but less
than $1 million 2.00% 2.04% 1.60%
$1 million or more None* None* None*
The Distributor reserves the right to reallow the entire
commission to dealers. If that occurs, the dealer may be considered an
"underwriter" under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more. However, the Distributor
pays dealers of record commissions on such purchases in an amount equal
to the sum of 1.0% of the first $2.5 million, plus 0.50% of the next $2.5
million, plus 0.25% of share purchases over $5 million. However, that
commission will be paid only on the amount of those purchases in excess
of $1 million that were not previously subject to a front-end sales charge
and dealer commission.
If you redeem any of those shares within 18 months of the end of
the calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
the aggregate net asset value of either (1) the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate commissions the Distributor paid to your dealer on all Class A
shares of all OppenheimerFunds you purchased subject to the Class A
contingent deferred sales charge. In determining whether a contingent
deferred sales charge is payable, the Fund will first redeem shares that
are not subject to the sales charge, including shares purchased by
reinvestment of dividends and capital gains, and then will redeem other
shares in the order that you purchased them. The Class A contingent
deferred sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's Exchange Privilege (described below).
However, if the shares acquired by exchange are redeemed within 18 months
of the end of the calendar month of the purchase of the exchanged shares,
the sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance
up to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of OppenheimerFunds (other
than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:
- Right of Accumulation. You and your spouse can cumulate
Class A shares you purchase for your own accounts, or jointly, or on
behalf of your children who are minors, under trust or custodial accounts.
A fiduciary can cumulate shares purchased for a trust, estate or other
fiduciary account (including one or more employee benefit plans of the
same employer) that has multiple accounts.
Additionally, you can cumulate current purchases of Class A shares
of the Fund and other OppenheimerFunds with Class A shares of
OppenheimerFunds you previously purchased subject to a sales charge,
provided that you still hold your investment in one of the
OppenheimerFunds. The value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The OppenheimerFunds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from the
Transfer Agent. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
- Letter of Intent. Under a Letter of Intent, you may purchase Class
A shares of the Fund and other OppenheimerFunds during a 13-month period
at the reduced sales charge rate that applies to the aggregate amount of
the intended purchases, including purchases made up to 90 days before the
date of the Letter. More information is contained in the Application and
in "Reduced Sales Charges" in the Statement of Additional Information.
- Waivers of Class A Sales Charges. No sales charge is imposed
on sales of Class A shares to the following investors: (1) the Manager or
its affiliates; (2) present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced Sales
Charges" in the Statement of Additional Information) of the Fund, the
Manager and its affiliates, and retirement plans established by them for
their employees; (3) registered management investment companies, or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; (4) dealers or brokers that
have a sales agreement with the Distributor, if they purchase shares for
their own accounts or for retirement plans for their employees; (5)
employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered
into sales arrangements with such dealers or brokers (and are identified
to the Distributor) or with the Distributor; the purchaser must certify
to the Distributor at the time of purchase that the purchase is for the
purchaser's own account (or for the benefit of such employee's spouse or
minor children); (6) dealers, brokers or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular investment
products made available to their clients.
Additionally, no sales charge is imposed on shares that are (a)
issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which the Fund is a party, or (b) purchased by the
reinvestment of loan repayments by a participant in a retirement plan for
which the Manager or its affiliates acts as sponsor, or (c) purchased by
the reinvestment of dividends or other distributions reinvested from the
Fund or other OppenheimerFunds (other than the Cash Reserves Funds) or
unit investment trusts for which reinvestment arrangements have been made
with the Distributor. There is a further discussion of this policy in
"Reduced Sales Charges" in the Statement of Additional Information.
The Class A contingent deferred sales charge is also waived if
shares are redeemed in the following cases: (1) retirement distributions
or loans to participants or beneficiaries from qualified retirement plans,
deferred compensation plans or other employee benefit plans ("Retirement
Plans"), (2) returns of excess contributions made to Retirement Plans, (3)
Automatic Withdrawal Plan payments that are limited to no more than 12%
of the original account value annually, and (4) involuntary redemptions
of shares by operation of law or under the procedures set forth in the
Fund's Declaration of Trust or adopted by the Board of Trustees.
- Service Plan for Class A Shares. The Fund has adopted a
Service Plan for Class A shares to reimburse the Distributor for a portion
of its costs incurred in connection with the personal service and
maintenance of accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate that may not exceed 0.25% of the average
annual net assets of Class A shares of the Fund. The Distributor uses all
of those fees to compensate dealers, brokers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares and to reimburse
itself (if the Fund's Board of Trustees authorizes such reimbursements,
which it has not yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.
Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed
within 6 years of their purchase, a contingent deferred sales charge will
be deducted from the redemption proceeds. That sales charge will not
apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original
purchase price. The contingent deferred sales charge is not imposed on the
amount of your account value represented by the increase in net asset
value over the initial purchase price (including increases due to the
reinvestment of dividends and capital gains distributions). The Class B
contingent deferred sales charge is paid to the Distributor to reimburse
its expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies
to a redemption, the Fund redeems shares in the following order: (1)
shares acquired by reinvestment of dividends and capital gains
distributions, (2) shares held for over 6 years, and (3) shares held the
longest during the 6-year period.
The amount of the contingent deferred sales charge will depend on
the number of years since you invested and the dollar amount being
redeemed, according to the following schedule:
Contingent Deferred Sales Charge
Years Since Purchase On Redemptions in That Year
Payment Was Made (As % of Amount Subject to Charge)
- --------------------------------------------------------------
0-1 5.0%
- --------------------------------------------------------------
1-2 4.0%
- --------------------------------------------------------------
2-3 3.0%
- --------------------------------------------------------------
3-4 3.0%
- --------------------------------------------------------------
4-5 2.0%
- --------------------------------------------------------------
5-6 1.0%
- --------------------------------------------------------------
6 and following None
- --------------------------------------------------------------
In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which
the purchase was made.
- Waivers of Class B Sales Charge. The Class B contingent deferred
sales charge will be waived if the shareholder requests it for redemptions
following the death or disability of the shareholder (as evidenced by a
determination of disability by the Social Security Administration).
The contingent deferred sales charge is also waived on Class B shares
in the following cases: (i) shares sold to the Manager or its affiliates;
(ii) shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or
the Distributor for that purpose; (iii) shares issued in plans of
reorganization to which the Fund is a party; and (iv) shares redeemed in
involuntary redemptions as described above. Further details about this
policy are contained in "Reduced Sales Charges" in the Statement of
Additional Information.
- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class
B Distribution and Service Plan, described below. The conversion is based
on the relative net asset value of the two classes, and no sales load or
other charge is imposed. When Class B shares convert, any other Class B
shares that were acquired by the reinvestment of dividends and
distributions on the converted shares will also convert to Class A shares.
The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A and Class
B Shares" in the Statement of Additional Information.
- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for its services and costs in distributing Class B shares
and servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares that
are outstanding for 6 years or less. The Distributor also receives a
service fee of 0.25% per year. Both fees are computed on the average
annual net assets of Class B shares, determined as of the close of each
regular business day. The asset-based sales charge allows investors to buy
Class B shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell Class B shares.
The Distributor uses the service fee to compensate dealers for
providing personal service for accounts that hold Class B shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class B expenses by up to 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 0.75% of the
purchase price to dealers from its own resources at the time of sale. The
Distributor retains the asset-based sales charge to recoup the sales
commissions it pays, the advances of service fee payments it makes, and
its financing costs.
Because the Distributor's actual expenses in selling Class B shares
may be more than the payments it receives from contingent deferred sales
charges collected on redeemed shares and from the Fund under the
Distribution and Service Plan for Class B shares, those expenses may be
carried over and paid in future years. If the Plan is terminated by the
Fund, the Board of Trustees may allow the Fund to continue payments of the
asset-based sales charge to the Distributor for certain expenses it
incurred before the Plan was terminated.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types
of account transactions, including purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges on signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives
written instructions terminating or changing those privileges. After you
establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the
Transfer Agent signed by all shareholders who own the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase shares
in amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be
used on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number:
1-800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.
- Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number. Please refer to
"Exchange Privilege," below, for details.
- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments
of at least $50 on a monthly, quarterly, semi-annual or annual basis. The
checks may be sent to you or sent automatically to your bank account on
AccountLink. You may even set up certain types of withdrawals of up to
$1,500 per month by telephone. You should consult the Application and
Statement of Additional Information for more details.
- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of
up to five other OppenheimerFunds on a monthly, quarterly, semi-annual or
annual basis under an Automatic Exchange Plan. The minimum purchase for
each other OppenheimerFunds account is $25. These exchanges are subject
to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Fund shares,
you have up to 6 months to reinvest all or part of the redemption proceeds
in Class A shares of the Fund or other OppenheimerFunds without paying
sales charge. This privilege applies to Class A shares that you sell, and
Class B shares on which you paid a contingent deferred sales charge when
you redeemed them. You must be sure to ask the Distributor for this
privilege when you send your payment. Please consult the Statement of
Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for
your retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment
- Pension and Profit-Sharing Plans for self-employed persons and
small business owners
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing, by using the Fund's
checkwriting privilege or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described above.
If you have questions about any of these procedures, and especially if you
are redeeming shares in a special situation, such as due to the death of
the owner, please call the Transfer Agent first, at 1-800-525-7048, for
assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must submit
a withholding form with your request to avoid delay. If your retirement
plan account is held for you by your employer, you must arrange for the
distribution request to be sent by the plan administrator or trustee.
There are additional details in the Statement of Additional Information.
- Certain Requests Require a Signature Guarantee. To protect you and
the Fund from fraud, certain redemption requests must be in writing and
must include a signature guarantee in the following situations (there may
be other situations also requiring a signature guarantee):
- you wish to redeem more than $50,000 worth of shares and receive
a check
- the check is not payable to all shareholders listed on the account
statement
- the check is not sent to the address of record on your statement
- shares are being transferred to a Fund account with a different
owner or name
- shares are redeemed by someone other than the owners (such as an
Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If
you are signing as a fiduciary or on behalf of a corporation, partnership
or other business, you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
- your name
- the Fund's name
- your Fund account number (from your statement)
- the dollar amount or number of shares to be redeemed
- any special payment instructions
- any share certificates for the shares you are selling, and
- any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell
shares.
Use the following address for requests by mail:
Oppenheimer Shareholder Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by 4:00 P.M. You may not redeem shares held under a share
certificate by telephone.
- To redeem shares through a service representative, call
1-800-852-8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address
on the account, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds wired to that account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, once in each 7-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account. This service is not available within 30 days of changing the
address on an account.
- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH wire to your bank is
initiated on the business day after the redemption. You do not receive
dividends on the proceeds of the shares you redeemed while they are
waiting to be wired.
Checkwriting. To be able to write checks against your Fund account, you
may request that privilege on your account Application or you can contact
the Transfer Agent for signature cards, which must be signed (with a
signature guarantee) by all owners of the account and returned to the
Transfer Agent so that checks can be sent to you to use. Shareholders with
joint accounts can elect in writing to have checks paid over the signature
of one owner.
- Checks can be written to the order of whomever you wish, but may
not be cashed at the Fund's bank or custodian.
- Checkwriting privileges are not available for accounts holding
Class B shares or Class A shares that are subject to a contingent deferred
sales charge.
- Checks must be written for at least $100.
- Checks cannot be paid if they are written for more than your
account value.
Remember: your shares fluctuate in value and you should not write a
check close to the total account value.
- You may not write a check that would require the Fund to redeem
shares that were purchased by check or Asset Builder Plan payments within
the prior 15 days.
- Don't use your checks if you changed your Fund account number.
The Fund will charge a $10 fee for any check that is not paid because
(1) the owners of the account told the Fund not to pay the check, or (2)
the check was for more than the account balance, or (3) the check did not
have the proper signatures, or (4) the check was written for less than
$100.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. A $5 service fee will be deducted from the fund
account you are exchanging into to help defray administrative costs. That
charge is waived for automated exchanges between already established
accounts on PhoneLink described below. To exchange shares, you must meet
several conditions:
- Shares of the fund selected for exchange must be available for
sale in your state of residence
- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of the
same class in the other OppenheimerFunds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, not all of the OppenheimerFunds offer the same classes of shares.
If a fund has only one class of shares that does not have a class
designation, they are "Class A" shares for exchange purposes. In some
cases, sales charges may be imposed on exchange transactions. Certain
OppenheimerFunds offer Class A shares and either Class B or Class B
shares, and a list can be obtained by calling the Distributor at 1-800-
525-7048. Please refer to "How to Exchange Shares" in the Statement of
Additional Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same name(s) and address. Shares held under certificates may not
be exchanged by telephone.
You can find a list of OppenheimerFunds currently available for
exchanges in the Statement of Additional Information or by calling the
Transfer Agent at 1-800-525-7048. Exchanges of shares involve a redemption
of the shares of the fund you own and a purchase of shares of the other
fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from
the other fund in the exchange transaction on the same regular business
day on which the Transfer Agent receives an exchange request by 4:00 P.M.
that is in proper form, but either fund may delay the purchase of shares
of the fund you are exchanging into if it determines it would be
disadvantaged by a same-day transfer of the proceeds to buy shares. For
example, the receipt of multiple exchange requests from a dealer in a
"market-timing" strategy might require the disposition of securities at
a time or price disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege
at any time. Although the Fund will attempt to provide you notice
whenever it is reasonably able to do so, it may impose these changes at
any time.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
The Distributor has entered into agreements with certain dealers and
investment advisers permitting them to exchange their clients' shares by
telephone. These privileges are limited under those agreements and the
Distributor has the right to reject or suspend those privileges. As a
result, those exchanges may be subject to notice requirements, delays and
other limitations that do not apply to shareholders who exchange their
shares directly by calling or writing to the Transfer Agent.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of shares
as of 4:00 P.M. each day The New York Stock Exchange is open by dividing
the value of the Fund's net assets attributable to a class by the number
of shares of that class that are outstanding. The Fund's Board of
Trustees has established procedures to value the Fund's securities to
determine net asset value. In general, securities values are based on
market value. There are special procedures for valuing illiquid and
restricted securities, obligations for which market values cannot be
readily obtained, and call options and hedging instruments. These
procedures are described more completely in the Statement of Additional
Information.
- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise it will not be liable for losses or expenses
arising out of telephone instructions reasonably believed to be genuine.
If you are unable to reach the Transfer Agent during periods of unusual
market activity, you may not be able to complete a telephone transaction
and should consider placing your order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients
by participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously.
- The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A and Class B shares. Therefore, the redemption
value of your shares may be more or less than their original cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. The Transfer Agent may
delay forwarding a check or processing a payment via AccountLink for
recently purchased shares, but only until the purchase payment has
cleared. That delay may be as much as 15 days from the date the shares
were purchased. That delay may be avoided if you purchase shares by
certified check or arrange with your bank to provide telephone or written
assurance to the Transfer Agent that your purchase payment has cleared.
- Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $200 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
- Under unusual circumstances, shares of the fund may be redeemed
"in kind", which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to the Statement of
Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or taxpayer identification number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of dividends.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A and Class C shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report and
updated prospectus to shareholders having the same address on the Fund's
records. However, each shareholder may call the Transfer Agent at 1-800-
525-7048 to ask that copies of those materials be sent personally to that
shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A and Class
B shares from net investment income each regular business day and pays
those dividends to shareholders monthly. Normally dividends are paid on
or about the last business day of each month, but the Board of Trustees
can change that date. It is expected that dividends paid on Class A shares
will generally be higher than for Class B shares because expenses
allocable to Class B shares will generally be higher.
During the Fund's fiscal year ended June 30, 1994, the Fund
maintained the practice, to the extent consistent with the amount of the
Fund's net investment income and other distributable income, of attempting
to pay dividends on Class A shares at a constant level, although the
amount of such dividends were subject to change from time to time
depending on market conditions, the composition of the Fund's portfolio
and expenses borne by the Fund or borne separately by that Class. The
practice of attempting to pay dividends on Class A shares at a constant
level required the Manager, consistent with the Fund's investment
objectives and investment restrictions, to monitor the Fund's portfolio
and select higher yielding securities when deemed appropriate to maintain
necessary net investment income levels. The Fund was able to pay
dividends at the targeted dividend level from net investment income and
other distributable income without any impact on the Fund's net asset
value per share. The Board of Trustees may change the Fund's targeted
dividend level at any time, without prior notice to shareholders; the Fund
does not otherwise have a fixed dividend rate and there can be no
assurance as to the payment of any dividends or the realization of any
capital gains.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of dividends and capital gains following the
end of its fiscal year. Long-term capital gains will be separately
identified in the tax information the Fund sends you after the end of the
year. Short-term capital gains are treated as dividends for tax purposes.
There can be no assurances that the Fund will pay any capital gains
distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
- Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or
sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or have
them sent to your bank on AccountLink.
- Reinvest Your Distributions in Another OppenheimerFunds Account.
You can reinvest all distributions in another OppenheimerFunds account you
have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. Dividends paid from short-term capital gains
and net investment income are taxable as ordinary income. Distributions
are subject to federal income tax and may be subject to state or local
taxes. Your distributions are taxable when paid, whether you reinvest
them in additional shares or take them in cash. Every year the Fund will
send you and the IRS a statement showing the amount of each taxable
distribution you received in the previous year.
- "Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy shares on
or just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.
- Taxes on Transactions: Share redemptions, including redemptions
for exchanges, are subject to capital gains tax. A capital gain or loss
is the difference between the price you paid for the shares and the price
you received when you sold them.
- Returns of Capital: In certain cases distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.
If that occurs, it will be identified in notices to shareholders.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.
<PAGE>
Appendix A
Description of Moody's Investors Service, Inc. Bond Ratings
Aaa: Bonds which are rated "Aaa" are judged to be the best quality
and to carry the smallest degree of investment risk. Interest payments
are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, the changes that can be expected are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group, they comprise what are
generally known as "high-grade" bonds. They are rated lower than the best
bonds because margins of protection may not be as large as with "Aaa"
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger than those of "Aaa" securities.
A: Bonds which are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
The investments in which the Fund will principally invest will be in the
lower-rated categories described below.
Baa: Bonds which are rated "Baa" are considered medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and have speculative
characteristics as well.
Ba: Bonds which are rated "Ba" are judged to have speculative
elements; their future cannot be considered well-assured. Often the
protection of interest and principal payments may be very moderate and not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B: Bonds which are rated "B" generally lack characteristics of
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa: Bonds which are rated "Caa" are of poor standing and may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated "Ca" represent obligations which are
speculative in a high degree and are often in default or have other marked
shortcomings.
C: Bonds which are rated "C" can be regarded as having extremely
poor prospects of ever retaining any real investment standing.
Description of S&P Bond Ratings
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority
of instances they differ from "AAA" issues only in small degree.
A: Bonds rated "A" have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse effects
of change in circumstances and economic conditions.
The investments in which the Fund will principally invest will be in
the lower-rated categories, described below.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity
to pay principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for
bonds in this capacity than for bonds in the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded,
on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms
of the obligation. "BB" indicates the lowest degree of speculation and
"CC" the highest degree. While such bonds will likely have some quality
and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds
rated "D" are in default and payment of interest and/or repayment of
principal is in arrears.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER HIGH YIELD FUND
Graphic material included in Prospectus of Oppenheimer High Yield
Fund: "Comparison of Total Return of Oppenheimer High Yield Fund with the
Lehman Brothers Corporate Bond Index and
the Salomon Brothers High Yield Market Index- Change in Value of a $10,000
Hypothetical Investment"
A linear graph will be included in the Prospectus of Oppenheimer High
Yield Fund (the "Fund") depicting the initial account value and subsequent
account value of a hypothetical $10,000 investment in the Fund. In the
case of the Fund's Class A shares, that graph will cover each of the
Fund's last ten fiscal years from 6/30/84 through 6/30/94 and in the case
of the Fund's Class B shares, will cover the period from inception of the
class (5/3/93) through 6/30/94. The graph will compare such values with
hypothetical $10,000 investments over the same time periods in the Lehman
Brothers Corporate Bond Index and the Salomon Brothers High Yield Market
Index. Set forth below are the relevant data points that will appear on
the linear graph. Additional information with respect to the foregoing,
including a description of the Lehman Brothers Corporate Bond Index and
the Salomon Brothers High Yield Market Index, is set forth in the
Prospectus under "Fund Information - Management's Discussion of
Performance."
Salomon Brothers
Fiscal Oppenheimer Lehman Brothers High Yield
Year Ended High Yield Fund A Corporate Bond Index Market Index
06/30/84 $9,525 $10,000 $10,000
06/30/85 $11,259 $13,477 $12,743
06/30/86 $13,202 $16,346 $15,670
06/30/87 $14,605 $17,391 $17,058
06/30/88 $15,590 $18,834 $18,740
06/30/89 $16,988 $21,275 $20,776
06/30/90 $17,133 $22,890 $19,247
06/30/91 $19,172 $25,298 $22,678
06/30/92 $23,018 $29,206 $28,411
06/30/93 $26,542 $33,267 $34,753
06/30/94 $28,207 $32,152 $34,945
Salomon Brothers
Fiscal Oppenheimer Lehman Brothers High Yield
Period Ended High Yield Fund B Corporate Bond Index Market Index
05/01/93 $10,000 $10,000 $10,000
06/30/93 $10,354 $10,243 $10,300
06/30/94 $10,504 $ 9,900 $10,357
<PAGE>
Oppenheimer High Yield Fund
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson & Adams, P.C.
1600 Broadway
Denver, Colorado 80202
No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Additional Statement, and if given or
made, such information and representations must not be relied upon as
having been authorized by the Fund, Oppenheimer Management Corporation,
Oppenheimer Funds Distributor, Inc. or any affiliate thereof. This
Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such an offer in such state.
PR280 * Printed on recycled paper.
Prospectus
Oppenheimer High Yield Fund
Effective October 25, 1994
(OppenheimerFunds Logo)
<PAGE>
Oppenheimer High Yield Fund
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
Statement of Additional Information dated October 25, 1994
This Statement of Additional Information of Oppenheimer High Yield
Fund is not a Prospectus. This document contains additional information
about the Fund and supplements information in the Prospectus dated October
25, 1994. It should be read together with the Prospectus, which may be
obtained by writing to the Fund's Transfer Agent, Oppenheimer Shareholder
Services, at P.O. Box 5270, Denver, Colorado 80217 or by calling the
Transfer Agent at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies
Investment Policies and Strategies
Other Investment Techniques and Strategies
Other Investment Restrictions
How the Fund is Managed
Organization and History
Trustees and Officers of the Fund
The Manager and Its Affiliates
Brokerage Policies of the Fund
Performance of the Fund
Distribution and Service Plans
About Your Account
How To Buy Shares
How To Sell Shares
How To Exchange Shares
Dividends, Capital Gains and Taxes
Additional Information About the Fund
Financial Information About the Fund
Independent Auditors' Report
Financial Statements
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and policies
of the Fund are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities
in which the Fund invests, as well as the strategies the Fund may use to
try to achieve its objective. Capitalized terms used in this Statement
of Additional Information have the same meaning as those terms have in the
Prospectus.
The Fund's investment manager, Oppenheimer Management Corporation (the
"Manager"), evaluates the investment merits of fixed-income securities
primarily through the exercise of its own investment analysis. This may
include consideration of the financial strength of the issuer, including
its historic and current financial condition, the trading activity in its
securities, present and anticipated cash flow, estimated current value of
assets in relation to historical cost, the issuer's experience and
managerial expertise, responsiveness to changes in interest rates and
business conditions, debt maturity schedules, current and future borrowing
requirements, and any change in the financial condition of the issuer and
the issuer's continuing ability to meet its future obligations. The
Manager also may consider anticipated changes in business conditions,
levels of interest rates of bonds as contrasted with levels of cash
dividends, industry and regional prospects, the availability of new
investment opportunities and the general economic, legislative and
monetary outlook for specific industries, the nation and the world.
All fixed-income securities are subject to two types of risks: credit
risk and interest rate risk. Credit risk relates to the ability of the
issuer to meet interest or principal payments or both as they become due.
Generally, higher yielding bonds are subject to credit risk to a greater
extent than higher quality bonds. Interest rate risk refers to the
fluctuations in net asset value of fixed-income securities resulting
solely from the inverse relationship between price and yield of fixed-
income securities. An increase in interest rates will tend to reduce the
market value of fixed-income investments, and a decline in interest rates
will tend to increase their value. In addition, debt securities with
longer maturities, which tend to produce higher yields, are subject to
potentially greater capital appreciation and depreciation than obligations
with shorter maturities. Fluctuations in the market value of fixed-income
securities subsequent to their acquisition will not affect cash income
from such securities but will be reflected in the Fund's net asset value.
- - Warrants and Rights. The Fund may, to the limited extent described in
the Prospectus, invest in warrants and rights. Warrants basically are
options to purchase equity securities at specific prices valid for a
specific period of time. Their prices do not necessarily move parallel
to the prices of the underlying securities. Rights are similar to
warrants but normally have a short duration and are distributed by the
issuer to its shareholders. Warrants and rights have no voting rights,
receive no dividends and have no rights with respect to the assets of the
issuer.
- Foreign Securities. "Foreign securities" include equity and debt
securities of companies organized under the laws of countries other than
the United States and debt securities of foreign governments that are
traded on foreign securities exchanges or in the foreign over-the-counter
markets. Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Fund's investment allocations, because
they are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held abroad.
Investing in foreign securities offer potential benefits not available
from investing solely in securities of domestic issuers, including the
opportunity to invest in foreign issuers that appear to offer growth
potential, or in foreign countries with economic policies or business
cycles different from those of the U.S., or to reduce fluctuations in
portfolio value by taking advantage of foreign stock markets that do not
move in a manner parallel to U.S. markets. If the Fund's portfolio
securities are held abroad, the countries in which they may be held and
the sub-custodians holding them must be approved by the Fund's Board of
Trustees under applicable rules of the Securities and Exchange Commission.
- Risks of Foreign Investing. Investments in foreign securities
present special additional risks and considerations not typically
associated with investments in domestic securities: reduction of income
by foreign taxes; fluctuation in value of foreign portfolio investments
due to changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of public
information about foreign issuers; lack of uniform accounting, auditing
and financial reporting standards comparable to those applicable to
domestic issuers; less volume on foreign exchanges than on U.S. exchanges;
greater volatility and less liquidity on foreign markets than in the U.S.;
less regulation of foreign issuers, stock exchanges and brokers than in
the U.S.; greater difficulties in commencing lawsuits; higher brokerage
commission rates than in the U.S.; increased risks of delays in settlement
of portfolio transactions or loss of certificates for portfolio
securities; possibilities in some countries of expropriation, confiscatory
taxation, political, financial or social instability or adverse diplomatic
developments; and unfavorable differences between the U.S. economy and
foreign economies. In the past, U.S. Government policies have
discouraged certain investments abroad by U.S. investors, through
taxation or other restrictions, and it is possible that such restrictions
could be re-imposed.
- - Asset-Backed Securities. The value of asset-backed securities is
affected by changes in the market's perception of the creditworthiness of
the servicing agent for the loan pool, the originator of the loans, or the
financial institution providing any credit enhancement, and is also
affected if a credit enhancement is exhausted. The risks of investing in
asset-backed securities are ultimately dependent upon payment of consumer
loans by the individuals, and the Fund would generally have no recourse
to the entity that originated the loans in the event of default by a
borrower. The underlying loans are subject to prepayments which shorten
the weighted average life of asset-backed securities and may lower their
return, in the same manner as described below for prepayments of a pool
of mortgage loans underlying mortgage-backed securities.
- - Mortgage-Backed Securities. These securities represent participation
interests in pools of residential mortgage loans which may or may not be
guaranteed by agencies or instrumentalities of the U.S. Government. Such
securities differ from conventional debt securities which provide for
periodic payment of interest in fixed amounts (usually semi-annually) with
principal payments at maturity or specified call dates. The mortgage-
backed securities in which the Fund may invest may be based on the full
faith and credit of the U.S. Treasury (e.g. direct pass-through
certificates of the Government National Mortgage Association); some are
supported by the right of the issuer to borrow from the U.S. Government
(e.g. obligations of the Federal Home Loan Bank); and some are backed by
only the credit of the issuer itself. Any such guarantees do not extend
to the value of or yield of the mortgage-backed securities themselves or
to the net asset value of the Fund's shares.
The yield on mortgage-backed securities is based on the average expected
life of the underlying pool of mortgage loans. The actual life of any
particular pool will be shortened by any unscheduled or early payments of
principal and interest. Principal prepayments generally result from the
sale of the underlying property or the refinancing or foreclosure of
underlying mortgages. The occurrence of prepayments is affected by a wide
range of economic, demographic and social factors and, accordingly, it is
not possible to predict accurately the average life of a particular pool.
Yield on such pools is usually computed by using the historical record of
prepayments for that pool, or, in the case of newly-issued mortgages, the
prepayment history of similar pools. The actual prepayment experience of
a pool of mortgage loans may cause the yield realized by the Fund to
differ from the yield calculated on the basis of the expected average life
of the pool.
Prepayments tend to increase during periods of falling interest rates,
while during periods of rising interest rates, prepayments will most
likely decline. When prevailing interest rates rise, the value of a pass-
through security may decrease as do other debt securities, but, when
prevailing interest rates decline, the value of a pass-through security
is not likely to rise on a comparable basis with other debt securities
because of the prepayment feature of pass-through securities. The Fund's
reinvestment of scheduled principal payments and unscheduled prepayments
it receives may occur at a time of higher or lower prevailing rates than
the original investment, thus affecting the yield of the Fund. Monthly
interest payments received by the Fund have a compounding effect which may
increase the yield to shareholders more than debt obligations that pay
interest semi-annually. Because of those factors, mortgage-backed
securities may be less effective than Treasury bonds of similar maturity
at maintaining yields during periods of declining interest rates.
Accelerated prepayments adversely affect yields for pass-through
securities purchased at a premium (i.e. at a price in excess of principal
amount) and may involve additional risk of loss of principal because the
premium may not have been fully amortized at the time the obligation is
repaid. The opposite is true for pass-through securities purchased at a
discount. The Fund may purchase mortgage-backed securities at a premium
or at a discount.
-GNMA Certificates. Certificates of the Government National Mortgage
Association ("GNMA Certificates") are mortgage-backed securities which
evidence an undivided interest in a pool or pools of mortgages. The GNMA
Certificates that the Fund may purchase are of the "modified pass-through"
type, which entitle the holder to receive timely payment of all interest
and principal payments due on the mortgage pool, net of fees paid to the
"issuer" and GNMA, regardless of whether the mortgagor actually makes the
payments.
The National Housing Act authorizes GNMA to guarantee the timely payment
of principal and interest on securities backed by a pool of mortgages
insured by the Federal Housing Administration ("FHA") or guaranteed by the
Veterans Administration ("VA"). The GNMA guarantee is backed by the full
faith and credit of the U.S. Government. GNMA is also empowered to borrow
without limitation from the U.S. Treasury if necessary to make any
payments required under its guarantee.
The average life of a GNMA Certificate is likely to be substantially
shorter than the original maturity of the mortgages underlying the
securities. Prepayments of principal by mortgagors and mortgage
foreclosures will usually result in the return of the greater part of
principal investment long before the maturity of the mortgages in the
pool. Foreclosures impose no risk to principal investment because of the
GNMA guarantee, except to the extent that the Fund has purchased the
certificates at a premium in the secondary market.
-FNMA Securities. The Federal National Mortgage Association ("FNMA")
was established to create a secondary market in mortgages insured by the
FHA. FNMA issues guaranteed mortgage pass-through certificates ("FNMA
Certificates"). FNMA Certificates resemble GNMA Certificates in that each
FNMA Certificate represents a pro rata share of all interest and principal
payments made and owed on the underlying pool. FNMA guarantees timely
payment of interest and principal on FNMA Certificates. The FNMA
guarantee is not backed by the full faith and credit of the U.S.
Government.
-FHLMC Securities. The Federal Home Loan Mortgage Corporation (FHLMC")
was created to promote development of a nationwide secondary market for
conventional residential mortgages. FHLMC issues two types of mortgage
pass-through securities ("FHLMC Certificates"), which are not guaranteed
or backed by the full faith and credit of the U.S. Government: mortgage
participation certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble GNMA Certificates in that each PC represents a pro
rata share of all interest and principal payments made and owed on the
underlying pool. FHLMC guarantees timely monthly payment of interest on
PCs and the ultimate payment of principal. GMCs also represent a pro rata
interest in a pool of mortgages. However, these instruments pay interest
semi-annually and return principal once a year in guaranteed minimum
payments. The expected average life of these securities is approximately
ten years. The FHLMC guarantee is not backed by the full faith and credit
of the U.S. Government.
- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral on each business day must at least equal the value of the
loaned securities and must consist of cash, bank letters of credit or
securities of the U.S. Government (or its agencies or instrumentalities).
To be acceptable as collateral, letters of credit must obligate a bank to
pay amounts demanded by the Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund.
When it lends securities, the Fund receives amounts equal to the dividends
or interest on loaned securities and also receives one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral, and
(c) interest on short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower. The
Fund may also pay reasonable finder's, custodian and administrative fees.
The terms of the Fund's loans must meet applicable tests under the
Internal Revenue Code and must permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter.
-When-Issued and Delayed Delivery Transactions. The Fund may purchase
securities on a "when-issued" basis, and may purchase or sell such
securities on a "delayed delivery" basis. Although the Fund will enter
into such transactions for the purpose of acquiring securities for its
portfolio or for delivery pursuant to options contracts it has entered
into, the Fund may dispose of a commitment prior to settlement. "When-
issued" or "delayed delivery" refers to securities whose terms and
indenture are available and for which a market exists, but which are not
available for immediate delivery. When such transactions are negotiated
the price (which is generally expressed in yield terms) is fixed at the
time the commitment is made, but delivery and payment for the securities
take place at a later date. During the period between commitment by the
Fund and settlement (generally within two months but not to exceed 120
days), no payment is made for the securities purchased by the purchaser,
and no interest accrues to the purchaser from the transaction. Such
securities are subject to market fluctuation; the value at delivery may
be less than the purchase price. The Fund will maintain a segregated
account with its Custodian, consisting of cash, U.S. Government Securities
or other high grade debt obligations at least equal to the value of
purchase commitments until payment is made.
The Fund will engage in when-issued transactions in order to secure
what is considered to be an advantageous price and yield at the time of
entering into the obligation. When the Fund engages in when-issued or
delayed delivery transactions, it relies on the buyer or seller, as the
case may be, to consummate the transaction. Failure to do so may result
in the Fund losing the opportunity to obtain a price and yield considered
to be advantageous. If the Fund chooses to (i) dispose of the right to
acquire a when-issued security prior to its acquisition or (ii) dispose
of its right to deliver or receive against a forward commitment, it may
incur a gain or loss. (At the time the Fund makes a commitment to
purchase or sell a security on a when-issued or forward commitment basis,
it records the transaction and reflects the value of the security
purchased, or if a sale, the proceeds to be received in determining its
net asset value).
To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objective and policies and not
for the purposes of investment leverage. The Fund enters into such
transactions only with the intention of actually receiving or delivering
the securities, although (as noted above), when-issued securities and
forward commitments may be sold prior to settlement date. In addition,
changes in interest rates in a direction other than that expected by the
Manager before settlement will affect the value of such securities and may
cause loss to the Fund.
When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and prices.
For instance, in periods of rising interest rates and falling prices, the
Fund might sell securities in its portfolio on a forward commitment basis
to attempt to limit its exposure to anticipated falling prices. In
periods of falling interest rates and rising prices, the Fund might sell
portfolio securities and purchase the same or similar securities on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields.
- Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements for liquidity purposes to meet anticipated
redemptions, or pending the investment of the proceeds from sales of Fund
shares, or pending the settlement of purchases of portfolio securities.
In a repurchase transaction, the Fund acquires a security from, and
simultaneously resells it to, an approved vendor. An "approved vendor"
is a U.S. commercial bank or the U.S. branch of a foreign bank or a
broker-dealer which has been designated a primary dealer in government
securities, which must meet credit requirements set by the Fund's Board
of Trustees from time to time. The resale price exceeds the purchase
price by an amount that reflects an agreed-upon interest rate effective
for the period during which the repurchase agreement is in effect. The
majority of these transactions run from day to day, and delivery pursuant
to the resale typically will occur within one to five days of the
purchase. Repurchase agreements are considered "loans" under the
Investment Company Act, collateralized by the underlying security. The
Fund's repurchase agreements require that at all times while the
repurchase agreement is in effect, the value of the collateral must equal
or exceed the repurchase price to fully collateralize the repayment
obligation. Additionally, the Manager will impose creditworthiness
requirements to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
- Restricted and Illiquid Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the
Fund may have to cause those securities to be registered. The expenses
of registration of restricted securities may be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund,
if such registration is required before such securities may be sold
publicly. When registration must be arranged because the Fund wishes to
sell the security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would be
permitted to sell them. The Fund would bear the risks of any downward
price fluctuation during that period. The Fund may also acquire, through
private placements, securities having contractual restrictions on their
resale, which might limit the Fund's ability to dispose of such securities
and might lower the amount realizable upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those percentage
restrictions do not limit purchases of restricted securities that are
eligible for sale to qualified institutional purchasers pursuant to Rule
144A under the Securities Act of 1933, provided that those securities have
been determined to be liquid by the Board of Trustees of the Fund or by
the Manager under Board-approved guidelines. Those guidelines take into
account the trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's holding
of that security may be deemed to be illiquid.
- Participation Interests. The Fund may invest in participation
interests, subject to the 15% of net assets limitation on illiquid
investments. These participation interests provide the Fund an undivided
interest in a loan made by the issuing bank in the proportion that the
Fund's participation interest bears to the total principal amount of the
loan. No more than 5% of the Fund's net assets can be invested in
participation interests of the same issuing bank. The Fund must look to
the creditworthiness of the borrowing corporation, which is obligated to
make payments of principal and interest on the loan. In the event the
borrower fails to pay scheduled interest or principal payments, the Fund
would experience a reduction in its income and might experience a decline
in the net asset value of its shares. In the event of a failure by the
bank to perform its obligation in connection with the participation
agreement, the Fund might incur certain costs and delays in realizing
payment or may suffer a loss of principal and/or interest.
- Brady Bonds. The Fund may invest in U.S. dollar-denominated,
collateralized Brady Bonds. These debt obligations of foreign entities
may be fixed-rate par bonds or floating rate discount bonds and are
generally collateralized in full as the principal due at maturity by U.S.
Treasury zero coupon obligations which have the same maturity as the Brady
Bonds. Brady Bonds are often viewed as having three or four valuation
components: (i) the collateralized repayment of principal at final
maturity; (ii) the collateralized interest payments; (iii) the
uncollateralized interest payments; and (iv) any uncollateralized
repayment of principal at maturity (these uncollateralized amounts
constitute the "residual risk"). In the event of default with respect to
collateralized Brady Bonds as a result of which the payment obligations
of the issuer are accelerated, the zero coupon Treasury securities held
as collateral for the payment of principal will not be distributed to
investors nor will such obligations be sold and the proceeds distributed.
The collateral will be held by the collateral agent to the scheduled
maturity of the defaulted Brady Bonds, which will continue to be
outstanding, at which time the face amount of the collateral will equal
the principal payments which would have then been due on the Brady Bonds
in the normal course. In addition, in light of the residual risk of Brady
Bonds and, among other factors, the history of defaults with respect to
commercial bank loans by public and private entities of countries issuing
Brady Bonds, investments in Brady Bonds are to be viewed as speculative.
-Writing and Purchasing Calls. As described in the Prospectus, the
Fund may write covered calls. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call period
(usually not more than 9 months) at a fixed exercise price (which may
differ from the market price of the underlying investment) regardless of
market price changes during the call period. To terminate its obligation
on a call it has written, the Fund may purchase a corresponding call in
a "closing purchase transaction." A profit or loss will be realized,
depending upon whether the net of the amount of option transaction costs
and the premium received on the call the Fund has written is more or less
than the price of the call the Fund subsequently purchased. A profit may
also be realized if the call lapses unexercised because the Fund retains
the underlying investment and the premium received. Those profits are
considered short-term capital gains for Federal income tax purposes, as
are premiums on lapsed calls, and when distributed by the Fund are taxable
as ordinary income. If the Fund could not effect a closing purchase
transaction due to the lack of a market, it would have to hold the
callable investment until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a futures
contract or deliverable securities, provided that at the time the call is
written, the Fund covers the call by segregating in escrow an equivalent
dollar value of liquid assets. The Fund will segregate additional liquid
assets if the value of the escrowed assets drops below 100% of the current
value of the Future. In no circumstances would an exercise notice as to
a Future put the Fund in a short futures position.
When the Fund buys a call (other than in a closing purchase
transaction), it pays a premium and has the right to buy the underlying
investment from a seller of a corresponding call on the same investment
during the call period at a fixed exercise price. The Fund benefits only
if the call is sold at a profit or if, during the call period, the market
price of the underlying investment is above the sum of the call price plus
the transaction costs and the premium paid for the call and the call is
exercised. If the call is not exercised or sold (whether or not at a
profit), it will become worthless at its expiration date and the Fund will
loss its premium payment and the right to purchase the underlying
investment.
The Fund's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent, through the facilities of
the Options Clearing Corporation ("OCC"), as to the investments on which
the Fund has written options that are traded on exchanges, or as to other
acceptable escrow securities, so that no margin will be required from the
Fund for such option transactions. OCC will release the securities
covering a call on the expiration of the call or when the Fund enters into
a closing purchase transaction. Call writing affects the Fund's turnover
rate and the brokerage commissions it pays. Commissions, normally higher
than on general securities transactions, are payable on writing or
purchasing a call.
- -Hedging With Options and Futures Contracts. The Fund may use hedging
instruments for the purposes described in the Prospectus. When hedging
to attempt to protect against declines in the market value of the Fund's
portfolio, to permit the Fund to retain unrealized gains in the value of
portfolio securities which have appreciated, or to facilitate selling
securities for investment reasons, the Fund may: (i) sell Interest Rate
Futures, (ii) buy puts on such Futures or on debt securities, or (iii)
write calls on debt securities held by it or on Interest Rate Futures.
When hedging to attempt to protect against the possibility that portfolio
securities are not fully included in a rise in value of the bond market,
the Fund may: (i) buy Interest Rate Futures, or (ii) buy calls on such
Futures or on debt securities. The Fund's strategy of hedging with
Futures and options on Futures will be incidental to the Fund's activities
in the underlying cash market. Additional Information about the Hedging
Instruments the Fund may use is provided below.
--Interest Rate Futures and Forward Contracts. The Fund may buy and
sell futures contracts relating to debt securities ("Interest Rate
Futures") and foreign currency exchange contracts ("Forward Contracts"),
discussed below. Interest Rate Futures obligate one party to deliver and
the other to take a specific debt security or amount of foreign currency,
respectively, at a specified price on a specified date. No price is paid
or received upon the purchase or sale of an Interest Rate Future. Upon
entering into a Futures transaction, the Fund will be required to deposit
an initial margin payment in cash or U.S. Treasury bills with the futures
commission merchant (the "futures broker"). The initial margin will be
deposited with the Fund's Custodian in an account registered in the
futures broker's name; however, the futures broker can gain access to that
account only under specified conditions. As the Future is marked to
market to reflect changes in its market value, subsequent margin payments,
called variation margin, will be paid to or by the futures broker on a
daily basis. Prior to expiration of the Future, if the Fund elects to
close out its position by taking an opposite position, a final
determination of variation margin is made, additional cash is required to
be paid by or released to the Fund, and any loss or gain is realized.
Although Interest Rate Futures, by their terms, call for settlement by
delivery or acquisition of debt securities, in most cases the obligation
is fulfilled by entering into an offsetting position. All futures
transactions are effected through a clearinghouse associated with the
exchange on which the contracts are traded.
A Forward Contract involves bilateral obligations of one party to
purchase, and another party to sell, a specific currency at a future date
(which may be any fixed number of days from the date of the contract
agreed upon by the parties), at a price set at the time the contract is
entered into. These contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial
banks) and their customers.
The Fund may use Forward Contracts to protect against uncertainty in
the level of future exchange rates. The use of Forward Contracts does not
eliminate fluctuations in the prices of the underlying securities the Fund
owns or intends to acquire, but it does fix a rate of exchange in advance.
In addition, although Forward Contracts limit the risk of loss due to a
decline in the value of the hedged currencies, at the same time they limit
any potential gain that might result should the value of the currencies
increase. The Fund will not speculate with Forward Contracts or foreign
currency exchange rates.
The Fund may enter into Forward Contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when
the Fund anticipates receipt of dividend payments in a foreign currency,
the Fund may desire to "lock-in" the U.S. dollar price of the security or
the U.S. dollar equivalent of such payment by entering into a Forward
Contract, for a fixed amount of U.S. dollars per unit of foreign currency,
for the purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will thereby be
able to protect itself against a possible loss resulting from an adverse
change in the relationship between the currency exchange rates during the
period between the date on which the security is purchased or sold, or on
which the payment is declared, and the date on which such payments are
made or received.
The Fund may also use Forward Contracts to lock in the U.S. dollar
value of portfolio positions ("position hedge"). In a position hedge, for
example, when the Fund believes that foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a forward
sale contract to sell an amount of that foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in
such foreign currency, or when the Fund believes that the U.S. dollar may
suffer a substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a fixed
dollar amount. In this situation the Fund may, in the alternative, enter
into a forward contract to sell a different foreign currency for a fixed
U.S. dollar amount where the Fund believes that the U.S. dollar value of
the currency to be sold pursuant to the forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in
which portfolio securities of the Fund are denominated ("cross-hedge").
The Fund's Custodian will place cash not available for investment or
U.S. Government securities or other liquid high-quality debt securities
in a separate account of the Fund having a value equal to the aggregate
amount of the Fund's commitments under forward contracts entered into with
respect to position hedges and cross-hedges. If the value of the
securities placed in a separate account declines, additional cash or
securities will be placed in the account on a daily basis so that the
value of the account will equal the amount of the Fund's commitments with
respect to such contracts. As an alternative to maintaining all or part
of the separate account, the Fund may purchase a call option permitting
the Fund to purchase the amount of foreign currency being hedged by a
forward sale contract at a price no higher than the forward contract price
or the Fund may purchase a put option permitting the Fund to sell the
amount of foreign currency subject to a forward purchase contract at a
price as high or higher than the forward contract price. Unanticipated
changes in currency prices may result in poorer overall performance for
the Fund than if it had not entered into such contracts.
The precise matching of the Forward Contract amounts and the value of
the securities involved will not generally be possible because the future
value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities between
the date the Forward Contract is entered into and the date it is sold.
Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (i.e., cash) market (and bear the expense of
such purchase), if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some
of the foreign currency received upon the sale of the portfolio security
if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-
term hedging strategy is highly uncertain. Forward Contracts involve the
risk that anticipated currency movements will not be accurately predicted,
causing the Fund to sustain losses on these contracts and transactions
costs. The Fund may enter into Forward Contracts or maintain a net
exposure on such contracts only if: (1) the consummation of the contracts
would not obligate the Fund to deliver an amount of foreign currency in
excess of the value of the Fund's portfolio securities or other assets
denominated in that currency, or (2) the Fund maintains cash, U.S.
Government securities or liquid high-grade debt securities in a segregated
account in an amount not less than the value of the Fund's total assets
committed to the consummation of the contract.
At or before the maturity of a Forward Contract requiring the Fund to
sell a currency, the Fund may either sell a portfolio security and use the
sale proceeds to make delivery of the currency or retain the security and
offset its contractual obligation to deliver the currency by purchasing
a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Fund may close out a Forward Contract requiring
it to purchase a specified currency by entering into a second contract
entitling it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss as a
result of entering into such an offsetting Forward Contract under either
circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first
contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period
and the market conditions then prevailing. Because Forward Contracts are
usually entered into on a principal basis, no fees or commissions are
involved. Because such contracts are not traded on an exchange, the Fund
must evaluate the credit and performance risk of each particular
counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may convert foreign currency from time
to time, and investors should be aware of the costs of currency
conversion. Foreign exchange dealers do not charge a fee for conversion,
but they do seek to realize a profit based on the difference between the
prices at which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while offering
a lesser rate of exchange should the Fund desire to resell that currency
to the dealer.
- Writing and Purchasing Puts. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying
security at the exercise price during the option period. As noted above
under "Writing and Purchasing Calls," an additional reason for writing
options on a securities portfolio is to attempt to realize, through the
receipt of premiums, a greater return than would be realized on the
securities alone. Writing a put, covered by segregated liquid assets
equal to the exercise price of the put, has the same economic effect to
the Fund as writing a covered call.
The premium the Fund receives from writing a put option will reflect,
among other things, the current market price of the underlying security,
the relationship of the exercise price to such market price, the
historical price volatility of the underlying security, the option period,
supply and demand, and interest rates. When the Fund writes a put, it has
gained a profit in the form of the premium as long as the price of the
underlying security remains above the exercise price, but has assumed an
obligation to purchase the underlying security from the buyer of the put
option at the exercise price at any time during the option period, even
though the security may fall below the exercise price. If the put expires
unexercised, the Fund (as the writer of the put) realizes a gain in the
amount of the premium. If the put option is exercised, the Fund must
fulfill its obligation to purchase the underlying security at the exercise
price, which will usually exceed the then market value of the underlying
security. The Fund may incur a loss equal to the difference between the
exercise price of the option and the sum of the sale price of underlying
security plus the premium received from the sale of the option.
When writing put options, to secure its obligation to pay for the
underlying security, the Fund will deposit in escrow with its Custodian
liquid assets with a value equal to or greater than the exercise price of
the underlying securities. The Fund therefore forgoes the opportunity of
investing the segregated assets. So long as the obligation of the put
writer continues, it may be assigned an exercise notice by the broker-
dealer through whom such option was sold, requiring the Fund to take
delivery of the underlying security against payment of the exercise price.
The Fund has no control over when it may be required to purchase the
underlying security since it may be assigned an exercise notice at any
time prior to the termination of its obligation as the writer of the put.
This obligation terminates upon expiration of the put, or such earlier
time at which the Fund effects a closing purchase transaction by
purchasing a put of the same series as that previously sold. Once the
Fund has been assigned an exercise notice, it is thereafter not allowed
to effect a closing purchase transaction. The Fund may effect a closing
purchase transaction to realize a profit on an outstanding put option it
has written or to prevent an underlying security from being put.
Furthermore, effecting such a closing purchase transaction will permit the
Fund to write another put option to the extent that the exercise price
thereof is secured by the deposited assets, or to utilize the proceeds
from the sale of such assets for other investments by the Fund. The Fund
will realize a profit or loss from a closing purchase transaction if the
cost of the transaction is less or more than the premium received from
writing the option. As with writing covered calls, any and all such
profits described herein from writing puts are considered short-term gains
for Federal tax purposes, and when distributed to shareholders by the
Fund, are taxable as ordinary income.
When the Fund buys a put, it pays a premium and has the right to sell
the underlying investment to a seller of a put on a corresponding
investment during the put period at a fixed exercise price. Buying a put
on a debt security or Future enables the Fund to attempt to protect itself
during the put period against a decline in the value of the underlying
investment below the exercise price by selling the underlying investment
at the exercise price to a seller of a corresponding put. Thus, in the
event of a decline in the market, the Fund could exercise or sell the put
at a profit that would offset some or all of its loss on the underlying
investment. If a put held by the Fund is exercised, the amount the Fund
receives on its sale of the underlying investment is reduced by the amount
of the premium paid by the Fund. If the market price of the underlying
investment is above the exercise price and, as a result, the put is not
exercised or resold, the put will become worthless as its expiration date
and the Fund will lose its premium payment and the right to sell the
underlying investment; the put may, however, be sold prior to expiration
(whether or not a profit).
- Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the Fund
under a swap agreement will have been greater than those received by it.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, the
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor the
creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements. A master netting agreement provides that all swaps done
between the Fund and that counterparty under the master agreement shall
be regarded as parts of an integral agreement. If on any date amounts are
payable in the same currency in respect of one or more swap transactions,
the net amount payable on that date in that currency shall be paid. In
addition, the master netting agreement may provide that if one party
defaults generally or on one swap, the counterparty may terminate the
swaps with that party. Under such agreements, if there is a default
resulting in a loss to one party, the measure of that party's damages is
calculated by reference to the average cost of a replacement swap with
respect to each swap (i.e., the mark-to-market value at the time of the
termination of each swap). The gains and losses on all swaps are then
netted, and the result is the counterparty's gain or loss on termination.
The termination of all swaps and the netting of gains and losses on
termination is generally referred to as "aggregation."
- Regulatory Aspects of Hedging Instruments. The use of Futures and
options thereon to attempt to protect against the market risk of a decline
in the value of portfolio securities is referred to as having a "short
futures position," and the use of such instruments to attempt to protect
against the market risk that portfolio securities are not fully included
in an increase in value of the bond market as a whole is referred to as
having a "long futures position." The Fund must operate within certain
restrictions as to its short and long positions in Futures and options
thereon under a rule (the "CFTC Rule") adopted by the Commodity Futures
Trading Commission ("CFTC") under the Commodity Exchange Act (the "CEA"),
which excludes the Fund from registration with the CFTC as a "commodity
pool operator" (as defined under the CEA) if it complies with the CFTC
Rule. Under these restrictions the Fund will not, as to any positions,
whether short, long or a combination thereof, enter into Futures and
options thereon for which the aggregate initial margins and premiums
exceed 5% of the fair market value of its assets, with certain exclusions
as defined in the CFTC Rule. Under the restrictions, the Fund also must,
as to its short positions, use Futures and options thereon solely for
bona-fide hedging purposes within the meaning and intent of the applicable
provisions under the CEA.
Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one
or more accounts or through one or more exchanges or brokers. Thus the
number of options which the Fund may write or hold may be affected by
options written or held by other entities, including other investment
companies having the same or an affiliated investment adviser. Position
limits also apply to futures contracts. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions. Due to requirements of the Investment
Company Act, when the Fund purchases a Future, the Fund will maintain, in
a segregated account or accounts with its custodian bank, cash or readily-
marketable, short-term (maturing in one year or less) debt instruments in
an amount equal to the market value of such Future, less the margin
deposit applicable to it.
- Tax Aspects of Hedging Instruments and Covered Calls. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code. One of the tests for such qualification is that less than
30% of its gross income must be derived from gains realized on the sale
of securities held for less than three months. Due to this limitation,
the Fund will limit the extent to which it engages in the following
activities, but will not be precluded from them: (i) selling investments,
including Futures, held for less than three months, whether or not they
were purchased on the exercise of a call held by the Fund; (ii) purchasing
calls or puts which expire in less than three months; (iii) effecting
closing transactions with respect to calls or puts purchased less than
three months previously; (iv) exercising puts or calls held by the Fund
for less than three months; and (v) writing calls on investments held for
less than three months.
Certain foreign currency exchange contracts in which the Fund may
invest are referred to as "section 1256 contracts." Gains or losses
relating to section 1256 contracts generally are characterized under the
Internal Revenue Code as 60% long-term and 40% short-term capital gains
or losses. However, foreign currency gains or losses arising from certain
section 1256 contracts (including foreign currency exchange contracts)
generally are treated as ordinary income or loss. In addition, section
1256 contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses are
treated as though they were realized. These contracts also may be marked-
to-market for purposes of the excise tax applicable to investment company
distributions and for other purposes under rules prescribed pursuant to
the Internal Revenue Code. An election can be made by the Fund to exempt
these transactions from this marked-to-market treatment.
Certain foreign currency forward contracts entered into by the Fund may
result in "straddles" for Federal income tax purposes. The straddle rules
may affect the character of gains (or losses) realized by the Fund on
straddle positions. Generally, a loss sustained on the disposition of a
position(s) making up a straddle is allowed only to the extent such loss
exceeds any unrecognized gain in the offsetting positions making up the
straddle. Disallowed loss is generally allowed at the point where there
is no unrecognized gain in the offsetting positions making up the
straddle, or the offsetting position is disposed.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates which occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition
of debt securities denominated in a foreign currency and on disposition
of foreign currency forward contracts, gains or losses attributable to
fluctuations in the value of a foreign currency between the date of
acquisition of the security or contract and the date of disposition also
are treated as ordinary gain or loss. Currency gains and losses are
offset against market gains and losses before determining a net "Section
988" gain or loss under the Internal Revenue Code, which may increase or
decrease the amount of the Fund's investment company income available for
distribution to its shareholders.
- Risks of Hedging With Options and Futures. In addition to the
risks with respect to options discussed in the Prospectus and above, there
is a risk in using short hedging by selling Futures to attempt to protect
against declines in the value of the Fund's portfolio (due to an increase
in interest rates) that the prices of such Futures will correlate
imperfectly with the behavior of the cash (i.e., market value) prices of
the Fund's securities. The ordinary spreads between prices in the cash
and futures markets are subject to distortions due to differences in the
natures of those markets. First, all participants in the futures markets
are subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions which could distort the
normal relationship between the cash and futures markets. Second, the
liquidity of the futures markets depend on participants entering into
offsetting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the
futures markets could be reduced, thus producing distortion. Third, from
the point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the
price of the debt securities being hedged and movements in the price of
the Hedging Instruments, the Fund may use hedging instruments in a greater
dollar amount than the dollar amount of debt securities being hedged if
the historical volatility of the prices of the debt securities being
hedged is more than the historical volatility of the applicable index.
It is also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of the debt securities
held in the Fund's portfolio may decline. If that occurred, the Fund would
lose money on the hedging instruments and also experience a decline in
value in its portfolio securities. However, while this could occur for
a very brief period or to a very small degree, over time the value of a
diversified portfolio of equity securities will tend to move in the same
direction as the indices upon which the hedging instruments are based.
If the Fund uses Hedging Instruments to establish a position in the
debt securities markets as a temporary substitute for the purchase of
individual debt securities (long hedging) by buying Futures and/or calls
on such Futures or on debt securities, it is possible that the market may
decline; if the Fund then concludes not to invest in such securities at
that time because of concerns as to possible further market decline or for
other reasons, the Fund will realize a loss on the Hedging Instruments
that is not offset by a reduction in the price of the debt securities
purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth in
the Prospectus. There are additional investment restrictions that the Fund
must follow that are also fundamental policies. Fundamental policies and
the Fund's investment objective cannot be changed without the vote of a
"majority" of the Fund's outstanding voting securities. Under the
Investment Company Act, such a "majority" vote is defined as the vote of
the holders of the lesser of (1) 67% or more of the shares present or
represented by proxy at a shareholder meeting, if the holders of more than
50% of the outstanding shares are present, or (2) more than 50% of the
outstanding shares.
Under these additional restrictions, the Fund cannot: (1) buy or sell
real estate, or commodities or commodity contracts; however, the Fund may
invest in debt securities secured by real estate or interests therein or
issued by companies, including real estate investment trusts, which invest
in real estate or interests therein, and the Fund may buy and sell any of
the Hedging Instruments which it may use, whether or not such Hedging
Instrument is considered to be a commodity or a commodity contract; (2)
buy securities on margin or engage in short sales, except that the Fund
may make margin deposits in connection with any of the Hedging Instruments
which it may use; (3) pledge, hypothecate, mortgage or otherwise encumber
its assets; however, escrow or other collateral arrangements in connection
with Hedging Instruments are not prohibited hereby; (4) underwrite
securities issued by other persons except to the extent that, in
connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under Federal securities laws; (5) buy and
retain securities of any issuer if those officers, Trustees or Directors
of the Fund or the Manager who beneficially own more than .5% of the
securities of such issuer together own more than 5% of the securities of
such issuer; (6) invest in mineral-related programs or leases; (7) buy the
securities of any company for the purpose of exercising management
control; or (8) buy securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the Fund is
not required to hold, and does not plan to hold, regular annual meetings
of shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder
meeting is called by the Trustees or upon proper request of the
shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund valued
at $25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the Trustees
will then either make the Fund's shareholder list available to the
applicants or mail their communication to all other shareholders at the
applicants' expense, or the Trustees may take such other action as set
forth under Section 16(c) of the Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides
for indemnification and reimbursement of expenses out of its property for
any shareholder held personally liable for its obligations. The
Declaration of Trust also provides that the Fund shall, upon request,
assume the defense of any claim made against any shareholder for any act
or obligation of the Fund and satisfy any judgment thereon. Thus, while
Massachusetts law permits a shareholder of a business trust (such as the
Fund) to be held personally liable as a "partner" under certain
circumstances, the risk of a Fund shareholder incurring financial loss on
account of shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations
described above. Any person doing business with the Trust, and any
shareholder of the Trust, agrees under the Trust's Declaration of Trust
to look solely to the assets of the Trust for satisfaction of any claim
or demand which may arise out of any dealings with the Trust, and the
Trustees shall have no personal liability to any such person, to the
extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and officers and
their principal business affiliations and occupations during the past five
years are listed below. Oppenheimer Total Return Fund, Inc., Oppenheimer
Equity Income Fund, Oppenheimer Cash Reserves, Oppenheimer Strategic
Income Fund, Centennial America Fund, L.P., The New York Tax-Exempt Income
Fund, Inc., Oppenheimer Variable Account Funds, Oppenheimer Champion High
Yield Fund, Oppenheimer Main Street Funds, Inc., Oppenheimer Strategic
Short-Term Income Fund, Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Investment Grade Bond Fund, Oppenheimer Integrity
Funds, Oppenheimer Limited-Term Government Fund, Oppenheimer Tax-Exempt
Bond Fund, Centennial Money Market Trust, Centennial Government Trust,
Centennial New York Tax Exempt Trust, Centennial California Tax Exempt
Trust, Daily Cash Accumulation Fund, Inc. and Centennial Tax Exempt Trust
(all of the foregoing funds are collectively referred to as the "Denver-
based OppenheimerFunds"). Mr. Fossel is President and Mr. Swain is
Chairman of the Denver-based OppenheimerFunds. As of ________________,
all of the Trustees and officers of the Fund as a group owned less than
1% of its outstanding shares.
ROBERT G. AVIS, Trustee
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment
adviser and trust company, respectively).
WILLIAM A. BAKER, Trustee
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
CHARLES CONRAD, JR., Trustee
1447 Vista del Cerro, Las Cruces, New Mexico 88005
Vice President of McDonnell Douglas Aero Space Systems Co.; formerly
associated with the National Aeronautics and Space Administration.
JON S. FOSSEL, President and Trustee*
Two World Trade Center, New York, New York 10048-0203
Chairman, Chief Executive Officer and a director of the Manager; President
and a director of Oppenheimer Acquisition Corp. ("OAC"), the Manager's
parent holding company; President and a director of HarbourView Asset
Management Corporation, a subsidiary of the Manager ("HarbourView"); a
director of Shareholder Services, Inc. ("SSI") and Shareholder Financial
Services, Inc. ("SFSI"), transfer agent subsidiaries of the Manager;
formerly President of the Manager.
RAYMOND J. KALINOWSKI, Trustee
44 Portland Drive, St. Louis, Missouri 63131
Formerly Vice Chairman and a Director of A.G. Edwards, Inc., parent
holding company of A.G. Edwards & Sons, Inc. (a broker-dealer), of which
he was a Senior Vice President.
C. HOWARD KAST, Trustee
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting
firm).
ROBERT M. KIRCHNER, Trustee
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
NED M. STEEL, Trustee
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; formerly Senior Vice
President and a Director of Van Gilder Insurance Corp. (insurance
brokers).
JAMES C. SWAIN, Chairman and Trustee*
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman of the Manager; President and Director of Centennial Asset
Management Corporation, an investment adviser subsidiary of the Manager
("Centennial"); formerly President and Director of Oppenheimer Asset
Management Corporation ("OAMC"), an investment adviser which was a
subsidiary of the Manager, and Chairman of the Board of
SSI.
ANDREW J. DONOHUE, Vice President
Two World Trade Center, New York, New York 10048
Executive Vice President and General Counsel of the Manager and
Oppenheimer Funds Distributor, Inc. (the "Distributor"); an officer of
other OppenheimerFunds; formerly Senior Vice President and Associate
General Counsel of the Manager and the Distributor; Partner in Kraft &
McManimon (a law firm); an officer of First Investors Corporation (a
broker-dealer) and First Investors Management Company, Inc. (broker-dealer
and investment adviser); director and an officer of First Investors Family
of Funds and First Investors Life Insurance Company.
RALPH W. STELLMACHER, Vice President and Portfolio Manager
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager; an officer of other
OppenheimerFunds.
GEORGE C. BOWEN, Vice President, Secretary and Treasurer
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, 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 OAMC.
ROBERT BISHOP, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; formerly a Fund Controller for the Manager,
prior to which he was an Accountant for Yale & Seffinger, P.C., an
accounting firm, and previously an Accountant and Commissions Supervisor
for Stuart James Company Inc., a broker-dealer.
SCOTT FARRAR, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; formerly 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.
ROBERT G. ZACK, Assistant Secretary
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI, SFSI; an officer of other OppenheimerFunds.
- -----------------------
* A Trustee who is an "interested person" as defined in the
Investment Company Act.
-Remuneration of Trustees. The officers of the Fund are
affiliated with the Manager; they and the Trustees of the Fund who are
affiliated with the Manager (Mr. Swain and Mr. Fossel, who is both an
officer and Trustee) receive no salary or fee from the Fund. During the
Fund's fiscal year ended June 30, 1994, the remuneration (including
expense reimbursements) paid to all Trustees of the Fund (excluding Mr.
Swain and Mr. Fossel) as a group for services as Trustees and as members
of one or more committees of the Board totaled $------------.
-Major Shareholders. As of ----------------, no person owned of
record or was known by the Fund to own beneficially 5% or more of the
Fund's outstanding shares.
The Manager and Its Affiliates. The Manager is wholly-owned by Oppenheimer
Acquisition Corp. ("OAC"), a holding company controlled by Massachusetts
Mutual Life Insurance Company. OAC is also owned in part by certain of
the Manager's directors and officers, some of whom may also serve as
officers of the Fund, and two of whom (Messrs. Fossel and Swain) serve as
Trustees of the Fund.
- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributors Agreement
are paid by the Fund. The advisory agreement lists examples of expenses
paid by the Fund, the major categories of which relate to interest, taxes,
brokerage commissions, fees to certain Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain
printing and registration costs and non-recurring expenses, including
litigation costs. For the Fund's fiscal years ended June 30, 1992, 1993
and 1994, the management fees paid by the Fund to the Manager were
$5,419,874, $6,696,256 and $------------------, respectively.
The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the Manager
has undertaken that the total expenses of the Fund in any fiscal year
(including the management fee but excluding taxes, interest, brokerage
commissions, distribution assistance payments and extraordinary expenses
such as litigation costs) shall not exceed the most stringent expense
limitation imposed under state law applicable to the Fund. Pursuant to the
undertaking, the Manager's fee will be reduced at the end of a month so
that there will not be any accrued but unpaid liability under this
undertaking. Currently, the most stringent state expense limitation is
imposed by California, and limits the Fund's expenses (with specified
exclusions) to 2.5% of the first $30 million of average annual net assets,
2% of the next $70 million of average annual net assets, and 1.5% of
average annual net assets in excess of $100 million. The Manager reserves
the right to terminate or amend the undertaking at any time. Any
assumption of the Fund's expenses under this limitation would lower the
Fund's overall expense ratio and increase its total return during any
period in which expenses are limited.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard for its obligations and duties under the
advisory agreement, the Manager is not liable for any loss resulting from
a good faith error or omission on its part with respect to any of its
duties thereunder. The advisory agreement permits the Manager to act as
investment adviser for any other person, firm or corporation and to use
the name "Oppenheimer" in connection with other investment companies for
which it may act as investment adviser or general distributor. 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.
- The Distributor. Under its General Distributor's Agreement
with the Fund, the Distributor acts as the Fund's principal underwriter
in the continuous public offering of the Fund's Class A and Class B shares
but is not obligated to sell a specific number of shares. Expenses
normally attributable to sales, including advertising and the cost of
printing and mailing prospectuses, other than those furnished to existing
shareholders, are borne by the Distributor. During the Fund's fiscal
years ended June 30, 1992, 1993 and 1994, the aggregate sales charges on
sales of the Fund's Class A shares were $5,794,352, $6,556,648 and $------
- --------, respectively, of which the Distributor and an affiliated broker-
dealer retained in the aggregate $1,365,344, $1,562,280 and $-------------
- ---- in those respective years. The contingent deferred sales charges
collected by the Distributor on the redemption of Class B shares during
the period from May 3, 1993 (the commencement of the offering of those
shares) through June 30, 1993 and the fiscal year ended June 30, 1994
totalled $--------- and $---------, respectively. For additional
information about distribution of the Fund's shares and the expenses
connected with such activities, please refer to "Distribution and Service
Plans," below.
- The Transfer Agent. Oppenheimer Shareholder Services, the
Fund's Transfer Agent, is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company
Act, as may, in its best judgment based on all relevant factors,
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
price obtainable) of such transactions. The Manager need not seek
competitive commission bidding but is expected to minimize the commissions
paid to the extent consistent with the interest and policies of the Fund
as established by its Board of Trustees.
Under the advisory 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 and the commission is fair and
reasonable in relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of the Fund
and other investment companies managed by the Manager or its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions.
Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement, the procedures and rules
described above, allocations of brokerage are made by portfolio managers
of the Manager under the supervision of the Manager's executive officers.
As most purchases made by the Fund are principal transactions at net
prices, the Fund does not incur substantial brokerage costs. The Fund
usually deals directly with the selling or purchasing principal or market
maker without incurring charges for the services of a broker on its behalf
unless it is determined that a better price or execution may be obtained
by utilizing the services of a broker. Purchases of portfolio 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
orders at the most favorable net prices. When the Fund engages in an
option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transaction in the securities to
which the option relates. When possible, concurrent orders to purchase
or sell the same security by more than one of the accounts managed by the
Manager or its affiliates are combined. The transactions effected
pursuant to such combined orders are averaged as to price and allocated
in accordance with the purchase or sale orders actually placed for each
account.
The research services provided by a particular broker may be
useful only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid in
commission dollars.
The research services provided by brokers broadens the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "independent" Trustees of the Fund (those Trustees
of the Fund who are not "interested persons" as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the advisory agreement or the Distribution Plans described
below) annually reviews information furnished by the Manager as to the
commissions paid to brokers furnishing such services so that the Board may
ascertain whether the amount of such commissions was reasonably related
to the value or benefit of such services.
During the Fund's fiscal years ended June 30, 1992, 1993 and 1994,
total brokerage commissions paid by the Fund (not including any spreads
or concessions on principal transactions on a net trade basis) amounted
to $57,677, $7,850, and $------------, respectively. During the fiscal
year ended June 30, 1994, $---------- was paid to brokers as commissions
in return for research services (including special research, statistical
information and execution); the aggregate dollar amount of these
transactions was $--------------. The transactions giving rise to those
commissions were allocated in accordance with the Manager's internal
allocation procedures.
Performance of the Fund
Yield and Total Return Information. As described in the Prospectus, from
time to time the "standardized yield," "dividend yield," "average annual
total return," "cumulative total return," "average annual total return at
net asset value" and "total return at net asset value" of an investment
in a class of shares of the Fund may be advertised. An explanation of how
these total returns are calculated for each class and the components of
those calculations is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include the
average annual total returns for each class of shares of the Fund for the
1, 5, and 10-year periods (or the life of the class, if less) ending as
of the most recently-ended calendar quarter prior to the publication of
the advertisement. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices are
not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a prediction or
representation by the Fund of future returns. The returns of Class A and
Class B shares of the Fund are affected by portfolio quality, the type of
investments the Fund holds and its operating expenses allocated to the
particular class.
- Standardized Yields
- Yield. The Fund's "yield" (referred to as "standardized yield")
for a given 30-day period for a class of shares is calculated using the
following formula set forth in rules adopted by the Securities and
Exchange Commission that apply to all funds that quote yields:
a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of that class on the last
day of the period, adjusted for undistributed net investment
income.
The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The SEC formula assumes that
the standardized yield for a 30-day period occurs at a constant rate for
a six-month period and is annualized at the end of the six-month period.
This standardized yield is not based on actual distributions paid by the
Fund to shareholders in the 30-day period, but is a hypothetical yield
based upon the net investment income from the Fund's portfolio investments
calculated for that period. The standardized yield may differ from the
"dividend yield" of that class, described below. Additionally, because
each class of shares is subject to different expenses, it is likely that
the standardized yields of the Fund's classes of shares will differ. For
the 30-day period ended June 30, 1994, the standardized yields for the
Fund's Class A and Class B shares were -----% and -----%, respectively.
- Dividend Yield and Distribution Return. From time to time the Fund
may quote a "dividend yield" or a "distribution return" for each class.
Dividend yield is based on the Class A or Class B share dividends derived
from net investment income during a stated period. Distribution return
includes dividends derived from net investment income and from realized
capital gains declared during a stated period. Under those calculations,
the dividends and/or distributions for that class declared during a stated
period of one year or less (for example, 30 days) are added together, and
the sum is divided by the maximum offering price per share of that class
on the last day of the period. When the result is annualized for a period
of less than one year, the "dividend yield" is calculated as follows:
Dividend Yield of the Class =
Dividends of the Class
- ----------------------------------------------------
Max Offering Price of the Class (last day of period)
Divided by number of days (accrual period) x 365
The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B shares, the maximum offering price
is the net asset value per share, without considering the effect of
contingent deferred sales charges.
From time to time similar yield or distribution return calculations
may also be made using the Class A net asset value (instead of its
respective maximum offering price) at the end of the period. The dividend
yields on Class A shares for the 30-day period ended June 30, 1994, were
____% and _____% when calculated at maximum offering price and at net
asset value, respectively. The dividend yield on Class B shares for the
30-day period ended June 30, 1994, 1993, was ____% when calculated at net
asset value.
- - Total Return Information
- Average Annual Total Returns. The "average annual total return"
of each class is an average annual compounded rate of return for each year
in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") to achieve an Ending
Redeemable Value ("ERV") of that investment, according to the following
formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical investment of
$1,000 over an entire period of years. Its calculation uses some of the
same factors as average annual total return, but it does not average the
rate of return on an annual basis. Cumulative total return is determined
as follows:
ERV - P
- ------- = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 4.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as described below). For Class B shares, payment of contingent
deferred sales charge of 5.0% for the first year, 4.0% for the second
year, 3.0% for the third and fourth years, 2.0% in the fifth year, 1.0%
in the sixth year and none thereafter is applied, as described in the
Prospectus. Total returns also assume that all dividends and capital
gains distributions during the period are reinvested to buy additional
shares at net asset value per share, and that the investment is redeemed
at the end of the period. The "average annual total returns" on an
investment in Class A shares of the Fund for the one, five and ten year
periods ended June 30, 1994 were ________, __________ and ___________,
respectively. The cumulative "total return" on Class A shares for the ten
year period ended June 30, 1994 was ____%. During a portion of the
periods for which total returns are shown for Class A shares, the Fund's
maximum initial sales charge rate was higher; as a result, performance
returns on actual investments during those periods may be lower than the
results shown. The cumulative total return on Class B shares for the
period from May 3, 1993 (the commencement of the offering of the shares)
through June 30, 1994 was ___%.
- Total Returns at Net Asset Value. From time to time the Fund may
also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A or Class B shares.
Each is based on the difference in net asset value per share at the
beginning and the end of the period for a hypothetical investment in that
class of shares (without considering front-end or contingent deferred
sales charges) and takes into consideration the reinvestment of dividends
and capital gains distributions. The cumulative total return at net asset
value of the Fund's Class A shares for the ten-year period ended June 30,
1994 was ____%. The average annual total returns at net asset value for
the one, five and ten-year periods ended June 30, 1994, for Class A shares
were ____%, _____% and _____%, respectively.
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A or Class B shares. However, when
comparing total return of an investment in Class A or Class B shares of
the Fund with that of other alternatives, investors should understand that
as the Fund invests in high yield securities, its shares are subject to
greater market risks than shares of funds having other investment
objectives and that the Fund is designed for investors who are willing to
accept greater risk of loss in the hopes of realizing greater gains.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A or Class B shares by Lipper Analytical Services,
Inc. ("Lipper"), a widely-recognized independent service. Lipper monitors
the performance of regulated investment companies, including the Fund, and
ranks their performance for various periods based on categories relating
to investment objectives. The performance of the Fund is ranked against
(i) all other funds (excluding money market funds), (ii) all other high
current yield or fixed income funds and (iii) all other such funds in a
specific size category. The Lipper performance rankings are based on
total returns that include the reinvestment of capital gain distributions
and income dividends but do not take sales charges or taxes into
consideration.
From time to time the Fund may publish the ranking of the performance
of its Class A or Class B shares by Morningstar, Inc., an independent
mutual fund monitoring service that ranks mutual funds, including the
Fund, monthly in broad investment categories (equity, taxable bond,
municipal bond and hybrid). The ranking calculations are based upon the
Fund's three, five and ten-year average annual total returns (when
available) in excess of 90-day Treasury bill returns with a risk
adjustment factor that reflects fund performance below three-month U.S.
Treasury bill monthly returns. Such returns are adjusted for fees and
sales loads. There are five ranking categories, with a corresponding
number of stars: highest (5), above average (4), neutral (3), below
average (2) and lowest (1). The top ten percent of the funds, series or
classes in an investment category receive five stars; 22.5% receive four
stars; 35% receive three stars; 22.5% receive two stars; and the bottom
10% receive one star. Morningstar ranks the Class A and Class B shares of
the Fund in relation to other corporate bond funds.
The total return on an investment in the Fund's Class A or Class B
shares may be compared with performance for the same period of the Lehman
Brothers Corporate Bond Index and the Salomon Brothers High Yield Market
Index. The Lehman Brothers Corporate Bond Index is an unmanaged index of
publicly-issued nonconvertible investment grade corporate debt of U.S.
issuers, widely recognized as a measure of the U.S. fixed-rate corporate
bond market. The Salomon Brothers High Yield Market Index is an unmanaged
index of below-investment grade (but rated at least BB+/Ba1 by Standard
& Poor's or Moody's) U.S. corporate debt obligations, widely recognized
as a measure of the performance of the high-yield corporate bond market,
the market in which the Fund principally invests. Each Index includes a
factor for the reinvestment of interest but does not reflect expenses or
taxes.
Investors may also wish to compare the Fund's Class A or Class B
return to the returns on fixed income investments available from banks and
thrift institutions, such as certificates of deposit, ordinary interest-
paying checking and savings accounts, and other forms of fixed or variable
time deposits, and various other instruments such as Treasury bills.
However, the Fund's returns and share price are not guaranteed by the FDIC
or any other agency and will fluctuate daily, while bank depository
obligations may be insured by the FDIC and may provide fixed rates of
return, and Treasury bills are guaranteed as to principal and interest by
the U.S. government.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and a
Distribution and Service Plan for Class B shares under Rule 12b-1 of the
Investment Company Act pursuant to which the Fund will reimburse the
Distributor quarterly for all or a portion of its costs incurred in
connection with the distribution and/or servicing of the shares of that
class, as described in the Prospectus. Each Plan has been approved by a
vote of (i) the Board of Trustees of the Fund, including a majority of the
Independent Trustees, cast in person at a meeting called for the purpose
of voting on that Plan, and (ii) the holders of a "majority" (as defined
in the Investment Company Act) of the shares of each class.
In addition, under the Plans the Manager and the Distributor, in
their sole discretion, from time to time may use their own resources
(which, in the case of the Manager, may include profits from the advisory
fee it receives from the Fund) to make payments to brokers, dealers or
other financial institutions (each is referred to as a "Recipient" under
the Plans) for distribution and administrative services they perform. The
Distributor and the Manager may, in their sole discretion, increase or
decrease the amount of payments they make from their own resources to
Recipients.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as its continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Either Plan may be terminated at
any time by the vote of a majority of the Independent Trustees or by the
vote of the holders of a "majority" (as defined in the Investment Company
Act) of the outstanding shares of that class. Neither Plan may be amended
to increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. All material amendments must be approved by the Independent
Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at least
quarterly on the amount of all payments made pursuant to each Plan, the
purpose for which each payment was made and the identity of each Recipient
that received any payment. The report for the Class B Plan shall also
include the distribution costs for that quarter, and such costs for
previous fiscal periods that have been carried forward, as explained in
the Prospectus and below. Those reports, including the allocations on
which they are based, will be subject to the review and approval of the
Independent Trustees in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and nomination
of those Trustees of the Fund who are not "interested persons" of the Fund
is committed to the discretion of the Independent Trustees. This does not
prevent the involvement of others in such selection and nomination if the
final decision on selection or nomination is approved by a majority of the
Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares, held by the
Recipient for itself and its customers, did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Trustees. Initially, the Board of Trustees has set the
fee at the maximum rate and set no minimum amount. For the fiscal year
ended June 30, 1994, payments under the Class A Plan totalled $_________,
all of which was paid by the Distributor to Recipients, including $______
paid to an affiliate of the Distributor. Payments made under the Class
B Plan during that fiscal period totalled $___.
Any unreimbursed expenses incurred by the Distributor with respect
to Class A shares for any fiscal year may not be recovered in subsequent
years. Payments received by the Distributor under the Plan for Class A
shares will not be used to pay any interest expense, carrying charge, or
other financial costs, or allocation of overhead by the Distributor. The
Class B Plan allows the service fee payment to be paid by the Distributor
to Recipients in advance for the first year Class B shares are
outstanding, and thereafter on a quarterly basis, as described in the
Prospectus. The advance payment is based on the net asset value of the
Class B shares sold. An exchange of shares does not entitle the Recipient
to an advance service fee payment. In the event Class B shares are
redeemed during the first year that the shares are outstanding, the
Recipient will be obligated to repay a pro rata portion of the advance
payment for those shares to the Distributor.
Although the Class B Plan permits the Distributor to retain both the
asset-based sales charges and the service fee on Class B shares, or to pay
Recipients the service fee on a quarterly basis, without payment in
advance, the Distributor intends to pay the service fee to Recipients in
the manner described above. A minimum holding period may be established
from time to time under the Class B Plan by the Board. Initially, the
Board has set no minimum holding period. All payments under the Class B
Plan are subject to the limitations imposed by the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. on payments of
asset-based sales charges and service fees.
The Class B Plan allows for the carry-forward of distribution
expenses, to be recovered from asset-based sales charges in subsequent
fiscal periods, as described in the Prospectus. The asset-based sales
charge paid to the Distributor by the Fund under the Class B Plan is
intended to allow the Distributor to recoup the cost of sales commissions
paid to authorized brokers and dealers at the time of sale, plus financing
costs, as described in the Prospectus. Such payments may also be used to
pay for the following expenses in connection with the distribution of
Class B shares: (i) financing the advance of the service fee payment to
Recipients under the Class B Plan, (ii) compensation and expenses of
personnel employed by the Distributor to support distribution of Class B
shares, and (iii) costs of sales literature, advertising and prospectuses
(other than those furnished to current shareholders) and state "blue sky"
registration fees.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A and Class B Shares. The
availability of two classes of shares permits an investor to choose the
method of purchasing shares that is more beneficial to the investor
depending on the amount of the purchase, the length of time the investor
expects to hold shares and other relevant circumstances. Investors should
understand that the purpose and function of the deferred sales charge and
asset-based sales charge with respect to Class B shares are the same as
those of the initial sales charge with respect to Class A shares. Any
salesperson or other person entitled to receive compensation for selling
Fund shares may receive different compensation with respect to one class
of shares than the other. The Distributor will not accept any order for
$1 million or more of Class B shares on behalf of a single investor (not
including dealer "street name" or omnibus accounts) because generally it
will be more advantageous for that investor to purchase Class A shares of
the Fund instead.
The two classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B shares and the dividends payable on Class B shares will be reduced by
incremental expenses borne solely by that class, including the asset-based
sales charge to which Class B shares are subject.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A and Class B shares recognizes two
types of expenses. General expenses that do not pertain specifically to
either class are allocated pro rata to the shares of each class, based on
the percentage of the net assets of such class to the Fund's total assets,
and then equally to each outstanding share within a given class. Such
general expenses include (i) management fees, (ii) legal, bookkeeping and
audit fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other materials for
current shareholders, (iv) fees to Independent Trustees, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up
costs, (viii) interest, taxes and brokerage commissions, and (ix) non-
recurring expenses, such as litigation costs. Other expenses that are
directly attributable to a class are allocated equally to each outstanding
share within that class. Such expenses include (i) Distribution Plan
fees, (ii) incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting expenses,
to the extent that such expenses pertain to a specific class rather than
to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values per
share of Class A and Class B shares of the Fund are determined each day
The New York Stock Exchange (the "NYSE") is open, as of 4:00 P.M., New
York time, that day, by dividing the value of the Fund's net assets
attributable to that class by the number of shares of that class
outstanding. The NYSE's most recent annual announcement (which is subject
to change) states that it will close on New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. It may also close on other days. The Fund may invest
a portion of its assets in foreign securities primarily listed on foreign
exchanges which may trade on Saturdays or customary U.S. business holidays
on which the NYSE is closed. Because the Fund's price and net asset value
will not be calculated on those days, the Fund's net asset values per
share may be significantly affected on such days when shareholders may not
purchase or redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a securities exchange or on NASDAQ for which last
sale information is regularly reported are valued at the last reported
sale price on their primary exchange or NASDAQ that day (or, in the
absence of sales that day, at values based on the last sales prices of the
preceding trading day, or closing bid and asked prices); (ii) securities
traded on NASDAQ and other unlisted equity securities for which last sale
prices are not regularly reported but for which over-the-counter market
quotations are readily available are valued at the highest closing bid
price at the time of valuation, or, if no closing bid price is reported,
on the basis of a closing bid price obtained from a dealer who maintains
an active market in that security; (iii) debt securities having a maturity
in excess of 60 days are valued at the mean between the bid and asked
prices determined by a portfolio pricing service approved by the Board or
obtained from active market makers on the basis of reasonable inquiry;
(iv) short-term debt securities having a remaining maturity of 60 days or
less are valued at cost, adjusted for amortization of premiums and
accretion of discounts; (v) securities (including restricted securities)
not having readily-available market quotations are valued at fair value
under the Board's procedures; and (vi) securities traded on foreign
exchanges are valued at the closing or last sales prices reported on a
principal exchange, or, if none, at the mean between closing bid and asked
prices and reflect prevailing rates of exchange taken from the closing
price on the London foreign exchange market that day.
Trading in securities on European and Asian exchanges and over-the-
counter markets is normally completed before the close of the NYSE.
Events affecting the values of foreign securities traded in stock markets
that occur between the time their prices are determined and the close of
the NYSE will not be reflected in the Fund's calculation of net asset
value unless the Board of Trustees or the Manager, under procedures
established by the Board of Trustees, determines that the particular event
would materially affect the Fund's net asset value, in which case an
adjustment would be made. Foreign currency will be valued as close to the
time fixed for the valuation date as is reasonably practicable. The
values of securities denominated in foreign currency will be converted to
U.S. dollars at the prevailing rates of exchange at the time of valuation.
Puts, calls and Futures held by the Fund are valued at the last sales
price on the principal exchange on which they are traded, or on NASDAQ,
as applicable, or, if there are no sales that day, in accordance with (i),
above. Forward currency contracts are valued at the closing price on the
London foreign exchange market. When the Fund writes an option, an amount
equal to the premium received by the Fund is included in the Fund's
Statement of Assets and Liabilities as an asset, and an equivalent
deferred credit is included in the liability section. The deferred credit
is "marked-to-market" to reflect the current market value of the option.
In determining the Fund's gain on investments, if a call written by the
Fund is exercised, the proceeds are increased by the premium received.
If a call or put written by the Fund expires, the Fund has a gain in the
amount of the premium; if the Fund enters into a closing purchase
transaction, it will have a gain or loss depending on whether the premium
was more or less than the cost of the closing transaction. If the Fund
exercises a put it holds, the amount the Fund receives on its sale of the
underlying investment is reduced by the amount of premium paid by the
Fund.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy the shares. Dividends will begin to accrue on such shares
on the day the Fund receives Federal Funds for such purchase through the
ACH system before 4:00 P.M., which is normally 3 days after the ACH
transfer is initiated. The Distributor and the Fund are not responsible
for any delays. If the Federal Funds are received after 4:00 P.M.,
dividends will begin to accrue on the next regular business day after such
Federal Funds are received.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation
and Letters of Intent because of the economies of sales efforts and
reduction in expenses realized by the Distributor, dealers and brokers
making such sales. No sales charge is imposed in certain other
circumstances described in the Prospectus because the Distributor incurs
little or no selling expenses. The term "immediate family" refers to
one's spouse, children, grandchildren, grandparents, parents, parents-in-
law, brothers and sisters, sons- and daughters-in-law, a sibling's spouse
and a spouse's siblings.
- The OppenheimerFunds. The OppenheimerFunds are those mutual funds
for which the Distributor acts as the distributor or the sub-distributor
and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
<PAGE>
There is an initial sales charge on the purchase of Class A shares
of each of the OppenheimerFunds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a contingent deferred sales charge).
- Letters of Intent. A Letter of Intent ("Letter") is the
investor's statement of intention to purchase Class A shares of the Fund
(and other eligible OppenheimerFunds) sold with a front-end sales charge
during the 13-month period from the investor's first purchase pursuant to
the Letter (the "Letter of Intent period"), which may, at the investor's
request, include purchases made up to 90 days prior to the date of the
Letter. The Letter states the investor's intention to make the aggregate
amount of purchases (excluding any purchases made by reinvestments of
dividends or distributions or purchases made at net asset value without
sales charge), which together with the investor's holdings of such funds
(calculated at their respective public offering prices calculated on the
date of the Letter) will equal or exceed the amount specified in the
Letter. This enables the investor to obtain the reduced sales charge rate
(as set forth in the Prospectus) applicable to purchases of shares in that
amount (the "intended purchase amount"). Each purchase under the Letter
will be made at the public offering price applicable to a single lump-sum
purchase of shares in the intended purchase amount, as described in the
Prospectus.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual purchases. If total eligible purchases
during the Letter of Intent period exceed the intended purchase amount and
exceed the amount needed to qualify for the next sales charge rate
reduction set forth in the applicable prospectus, the sales charges paid
will be adjusted to the lower rate, but only if and when the dealer
returns to the Distributor the excess of the amount of commissions allowed
or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the investor's
account at the net asset value per share in effect on the date of such
purchase, promptly after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in value
to 5% of the intended purchase amount specified in the Letter shall be
held in escrow by the Transfer Agent. For example, if the intended
purchase amount is $50,000, the escrow shall be shares valued in the
amount of $2,500 (computed at the public offering price adjusted for a
$50,000 purchase). Any dividends and capital gains distributions on the
escrowed shares will be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor
an amount equal to the difference between the dollar amount of sales
charges actually paid and the amount of sales charges which would have
been paid if the total amount purchased had been made at a single time.
Such sales charge adjustment will apply to any shares redeemed prior to
the completion of the Letter. If such difference in sales charges is not
paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the
Letter, redeem the number of escrowed shares necessary to realize such
difference in sales charges. Full and fractional shares remaining after
such redemption will be released from escrow. If a request is received
to redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of the Letter) do not
include any shares sold without a front-end sales charge or without being
subject to a Class A contingent deferred sales charge unless (for the
purpose of determining completion of the obligation to purchase shares
under the Letter) the shares were acquired in exchange for shares of one
of the OppenheimerFunds whose shares were acquired by payment of a sales
charge.
6. Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as described
in the section of the Prospectus entitled "Exchange Privilege," and the
escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Tax-Exempt Cash Reserves or
Oppenheimer Cash Reserves to use those accounts for monthly automatic
purchases of shares of up to four other OppenheimerFunds.
There is a front-end sales charge on the purchase of certain
OppenheimerFunds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
- Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash. However, the
Board of Trustees of the Fund may determine that it would be detrimental
to the best interests of the remaining shareholders of the Fund to make
payment of a redemption order wholly or partly in cash. In that case the
Fund may pay the redemption proceeds in whole or in part by a distribution
"in kind" of securities from the portfolio of the Fund, in lieu of cash,
in conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets
of the Fund during any 90-day period for any one shareholder. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage or
other costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the method
the Fund uses to value it portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.
- Involuntary Redemptions. The Fund's Board of Trustees has the
right to cause the involuntary redemption of the shares held in any
account if the aggregate net asset value of those shares is less than $200
or such lesser amount as the Board may fix. The Board of Trustees will
not cause the involuntary redemption of shares in an account if the
aggregate net asset value of the shares has fallen below the stated
minimum solely as a result of market fluctuations. Should the Board elect
to exercise this right, it may also fix, in accordance with the Investment
Company Act, the requirements for any notice to be given to the
shareholders in question (not less than 30 days), or the Board may set
requirements for granting permission to the Shareholder to increase the
investment, and set other terms and conditions so that the shares would
not be involuntarily redeemed.
Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares,
or (ii) Class B shares that were subject to the Class B contingent
deferred sales charge when redeemed. The reinvestment may be made without
sales charge only in Class A shares of the Fund or any of the other
OppenheimerFunds into which shares of the Fund are exchangeable as
described below, at the net asset value next computed after the Transfer
Agent receives the reinvestment order. The shareholder must ask the
Distributor for that privilege at the time of reinvestment. Any capital
gain that was realized when the shares were redeemed is taxable, and
reinvestment will not alter any capital gains tax payable on that gain.
If there has been a capital loss on the redemption, some or all of the
loss may not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption proceeds
of Fund shares on which a sales charge was paid are reinvested in shares
of the Fund or another of the OppenheimerFunds within 90 days of payment
of the sales charge, the shareholder's basis in the shares of the Fund
that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added to the
basis of the shares acquired by the reinvestment of the redemption
proceeds. The Fund may amend, suspend or cease offering this reinvestment
privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of either class at the time of transfer
to the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain subject
to the contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B contingent deferred
sales charge will be followed in determining the order in which shares are
transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, or pension or
profit-sharing plans should be addressed to "Trustee, OppenheimerFunds
Retirement Plans," c/o the Transfer Agent at its address listed in "How
To Sell Shares" in the Prospectus or on the back cover of this Statement
of Additional Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if the
distribution is premature; and (iii) conform to the requirements of the
plan and the Fund's other redemption requirements. Participants (other
than self-employed persons) in OppenheimerFunds-sponsored pension or
profit-sharing plans may not directly request redemption of their
accounts. The employer or plan administrator must sign the request.
Distributions from pension and profit sharing plans are subject to special
requirements under the Internal Revenue Code and certain documents
(available from the Transfer Agent) must be completed before the
distribution may be made. Distributions from retirement plans are subject
to withholding requirements under the Internal Revenue Code, and IRS Form
W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed.
Unless the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that tax be
withheld from any distribution even if the shareholder elects not to have
tax withheld. The Fund, the Manager, the Distributor, the Trustee and the
Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price will be the net asset
value next computed after the receipt of an order placed by such dealer
or broker, except that orders received from dealers or brokers after 4:00
P.M. on a regular business day will be processed at that day's net asset
value if such orders were received by the dealer or broker from its
customers prior to 4:00 P.M., and were transmitted to and received by the
Distributor prior to its close of business that day (normally 5:00 P.M.).
Payment ordinarily will be made within seven days after the Distributor's
receipt of the required redemption documents, with signature(s) guaranteed
as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B shareholders should not establish withdrawal
plans, because of the imposition of the Class B contingent deferred sales
charge on such withdrawals (except where the Class B contingent deferred
sales charge is waived as described in the Prospectus under "Class B
Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of shares of
the Fund for shares (of the same class) of other OppenheimerFunds
automatically on a monthly, quarterly, semi-annual or annual basis under
an Automatic Exchange Plan. The minimum amount that may be exchanged to
each other fund account is $25. Exchanges made under these plans are
subject to the restrictions that apply to exchanges as set forth in "How
to Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. The Transfer Agent shall incur no liability to the
Planholder for any action taken or omitted by the Transfer Agent in good
faith to administer the Plan. Certificates will not be issued for shares
of the Fund purchased for and held under the Plan, but the Transfer Agent
will credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or AccountLink payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (receipt of payment on the date selected cannot be
guaranteed), according to the choice specified in writing by the
Planholder.
The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written notice
(in proper form in accordance with the requirements of the then-current
Prospectus of the Fund) to redeem all, or any part of, the shares held
under the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing
to the Transfer Agent. A Plan may also be terminated at any time by the
Transfer Agent upon receiving directions to that effect from the Fund.
The Transfer Agent will also terminate a Plan upon receipt of evidence
satisfactory to it of the death or legal incapacity of the Planholder.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed from the account will be held in uncertificated
form in the name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her executor or
guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued
without causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
OppenheimerFunds having more than one class of shares may be exchanged
only for shares of the same class of other OppenheimerFunds. All of the
OppenheimerFunds offer Class A shares (except for Oppenheimer Strategic
Diversified Income Fund), but only the following other OppenheimerFunds
(referred to as "Advisors Portfolio" funds) offer Class B shares:
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Investment Grade Bond Fund
Oppenheimer Value Stock Fund
Oppenheimer Government Securities Fund
Oppenheimer High Yield Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are only available by exchange)
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Global Fund
Oppenheimer Discovery Fund
Class A shares of OppenheimerFunds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
OppenheimerFunds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of
OppenheimerFunds subject to a contingent deferred sales charge). Shares
of this Fund acquired by reinvestment of dividends or distributions from
any other of the OppenheimerFunds or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor may
be exchanged at net asset value for shares of any of the OppenheimerFunds.
No contingent deferred sales charge is imposed on exchanges of shares of
either class purchased subject to a contingent deferred sales charge.
However, when Class A shares acquired by exchange of Class A shares of
other OppenheimerFunds purchased subject to a Class A contingent deferred
sales charge are redeemed within 18 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares, the Class
A contingent deferred sales charge is imposed on the redeemed shares (see
"Class A Contingent Deferred Sales Charge" in the Prospectus). The Class
B contingent deferred sales charge is imposed on Class B shares acquired
by exchange if they are redeemed within six years of the initial purchase
of the exchanged Class B shares.
When Class B shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class B contingent deferred sales charge will be
followed in determining the order in which the shares are exchanged.
Shareholders should take into account the effect of any exchange on the
applicability and rate of any contingent deferred sales charge that might
be imposed in the subsequent redemption of remaining shares. Shareholders
owning shares of both classes must specify whether they intend to exchange
Class A or Class B shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In those
cases, only the shares available for exchange without restriction will be
exchanged.
When exchanging shares by telephone, a shareholder must either have
an existing account in, or obtain and acknowledge receipt of a prospectus
of, the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different OppenheimerFunds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is
explained in the Prospectus under the caption "Dividends, Capital Gains
and Taxes." Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received deduction
for corporate shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends paid by
the Fund which may qualify for the deduction is limited to the aggregate
amount of qualifying dividends that the Fund derives from its portfolio
investments that the Fund has held for a minimum period, usually 46 days.
A corporate shareholder will not be eligible for the deduction on
dividends paid on Fund shares held for 45 days or less. To the extent the
Fund's dividends are derived from gross income from option premiums,
interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for
the deduction.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute 98% of its taxable investment income earned from January
1 through December 31 of that year and 98% of its capital gains realized
in the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Fund's Board of Trustees and the Manager might
determine in a particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would
reduce the amount of income or capital gains available for distribution
to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or capital gains distributions in shares of
the same class of any of the other OppenheimerFunds listed in "Reduced
Sales Charges," above, at net asset value without sales charge. Class B
shareholders should be aware that as of the date of this Statement of
Additional Information, not all of the OppenheimerFunds offer Class B
shares. The names of the funds that do as of the date of this document
can be obtained by referring to "How To Exchange Shares," above or by
calling the Distributor at 1-800-525-7048. To elect this option, a
shareholder must notify the Transfer Agent in writing and either have an
existing account in the fund selected for reinvestment or must obtain a
prospectus for that fund and an application from the Distributor to
establish an account. The investment will be made at the net asset value
per share in effect at the close of business on the payable date of the
dividend or distribution. Dividends and/or distributions from certain of
the OppenheimerFunds may be invested in shares of this Fund on the same
basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities, collecting income on the
portfolio securities and handling the delivery of such securities to and
from the Fund. The Manager has represented to the Fund that the banking
relationships between the Manager and the Custodian have been and will
continue to be unrelated to and unaffected by the relationship between the
Fund and the Custodian. It will be the practice of the Fund to deal with
the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for certain other funds advised by the Manager
and its affiliates.
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, NY 10015
Independent Auditors
Deloitte & Touche
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson & Adams, P.C.
1600 Broadway
Denver, CO 80202
<PAGE>
OPPENHEIMER HIGH YIELD FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Financial Highlights (see Parts A and B): To be filed by amendment.
(2) Independent Auditors' Report (see Part B): To be filed by amendment.
(3) Statement of Investments (see Part B): To be filed by amendment.
(4) Statement of Assets and Liabilities (see Part B): To be filed by
amendment.
(5) Statement of Operations (see Part B): To be filed by amendment.
(6) Statement of Changes in Net Assets (see Part B): To be filed by
amendment.
(7) Notes to Financial Statements (see Part B): To be filed by
amendment.
(8) Independent Auditors' Consent: To be filed by amendment.
(b) Exhibits:
Exhibit
Number Description
(1) Amended and Restated Declaration of Trust dated 4/26/93: Filed with
Registrant's Post-Effective Amendment No, 29 (10/4/93), and
incorporated herein by reference.
(2) Amended By-Laws dated 6/26/90: Previously filed with Registrant's
Post-Effective Amendment No. 26 (10/23/91), refiled herewith pursuant
to Item 102 of Regulation S-T, and incorporated herein by reference.
(3) Not applicable.
(4) (i) Specimen Class A Share Certificate: Filed with Registrant's
Post-Effective Amendment No. 29 (10/4/93), and incorporated herein
by reference.
(ii) Specimen Class B Share Certificate: Filed with Registrant's Post-
Effective Amendment No. 29 (10/4/93), and incorporated herein by
reference.
(5) Investment Advisory Agreement dated 10/22/90: Previously filed with
Post-Effective Amendment No. 23 (10/31/90), refiled herewith pursuant
to Item 102 of Regulation S-T and incorporated herein by reference.
(6)(a) General Distributor's Agreement dated 10/13/92: Filed with
Registrant's Post-Effective Amendment No. 29 (10/4/93), and incorporated
herein by reference.
(b) Form of Dealer Agreement of Oppenheimer Funds Distributor, Inc.:
Filed with Post-Effective Amendment No. 12 to the Registration
Statement of Oppenheimer Government Securities Fund (Reg. No. 33-
02769), 12/2/92, and incorporated herein by reference.
(c) Form of Oppenheimer Funds Distributor, Inc. Broker Agreement: Filed
with Post-Effective Amendment No. 12 to the Registration Statement
of Oppenheimer Government Securities Fund (Reg. No. 33-02769),
12/2/92, and incorporated herein by reference.
(d) Form of Oppenheimer Funds Distributor, Inc. Agency Agreement: Filed
with Post-Effective Amendment No. 12 of Oppenheimer Government
Securities Fund (Reg. No. 33002769), 12/2/92, and incorporated herein
by reference.
(e) Broker Agreement between Oppenheimer Funds Distributor, Inc. and
Newbridge Securities, Inc. dated 10/1/86: Filed with Post-Effective
Amendment No. 25 to the Registration Statement of Oppenheimer Special
Fund (Reg. No. 2-45272), 11/1/86, and incorporated herein by
reference.
(7) Not applicable.
(8) Custody Agreement dated 10/6/92: Filed with Post-Effective Amendment
No. 27 (10/21/92), refiled herewith pursuant to Item 102 of Regulation S-T
and incorporated herein by reference.
(9)(a) Agreement and Plan of Reorganization and Liquidation dated August
6, 1986 between Oppenheimer High Yield Fund, Inc. and Oppenheimer High
Yield Fund: Filed with Post-Effective Amendment No. 15 to Registrant's
Registration Statement (10/28/86), refiled herewith pursuant to Item 102
of Regulation S-T and incorporated herein by reference.
(b) Articles of Transfer between Oppenheimer High Yield Fund, Inc. and
Oppenheimer High Yield Fund dated and filed October 29, 1986 with the
Maryland State Department of Assessments and Taxation: Filed with
Post-Effective Amendment No. 15 to Registrant's Registration
Statement (10/28/86), refiled herewith pursuant to Item 102 of
Regulation S-T and incorporated herein by reference.
(10) Opinion and Consent of Counsel dated 8/3/78: Previously filed with
Registrant's Post-Effective Amendment No. 1 to Registrant's
Registration Statement (9/27/78), refiled herewith pursuant to Item
102 of Regulation S-T and incorporated herein by reference.
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(14) (a) Form of Individual Retirement Account Trust Agreement: Previously
filed with Post-Effective Amendment No. 21 of Oppenheimer U.S.
Government Trust (Reg. No. 2-76645), 8/25/93, and incorporated herein
by reference.
(b) Form of Standardized and Non-Standardized Profit-Sharing Plan and
Money Purchase Pension Plan for self-employed persons and
corporations: Previously filed with Post-Effective Amendment No. 3
of Oppenheimer Global Growth & Income Fund (Reg. No. 33-33799),
January 31, 1992, and incorporated herein by reference.
(c) Form of Tax-Sheltered Retirement Plan and Custody Agreement for
employees of public schools and tax-exempt organizations: Previously
filed with Post-Effective Amendment No. 22 of Oppenheimer Directors
Fund (File No. 2-62240), 2/1/90, and incorporated herein by
reference.
(d) Form of Simplified Employee Pension IRA: Previously filed with Post-
Effective Amendment No. 40 of Oppenheimer Time Fund (Reg. No. 2-
39461), 11/1/88, and incorporated herein by reference.
(e) Form SAR-SEP Simplified Employee Pension IRA: Filed with Post-
Effective Amendment No. 19 to the Registration Statement for
Oppenheimer Integrity Funds (File NO. 2-76547), 3/1/94, and
incorporated herein by reference.
(15) (i) Service Plan and Agreement for Class A shares dated 7/1/94:
Filed herewith.
(ii) Distribution and Service Plan and Agreement for Class B shares dated
6/21/94: Filed herewith.
(16) Performance Data Computation Schedule: To be filed by amendment.
(17) Financial Data Schedule: To be filed by amendment.
- -- Powers of Attorney (including Certified Board resolutions): Filed
herewith.
Item 25. Persons Controlled by or Under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
Number of Record Holders
as of August 12, 1994
Title of Class
Shares of Beneficial Interest, 52,491
Class A
Shares of Beneficial Interest,
Class B 4,772
Item 27. Indemnification
Reference is made to the provisions of Article Seventh of Registrant's
Declaration of Trust filed as Exhibit 24(b)(1) to this Registration
Statement, and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons
of Registrant pursuant to the foregoing provisions or otherwise,
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid by a
trustee, officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such trustee,
officer or controlling person, Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
Item 28. Business and Other Connections of Investment Adviser
(a) Oppenheimer Management Corporation is the investment adviser of the
Registrant; it and its affiliates act in the same capacity for other
registered investment companies as described in Parts A and B of this
Registration Statement.
(b) For information as to the business, profession, vocation or
employment of a substantial nature of each of the officers and
directors of Oppenheimer Management Corporation, reference is made
to Part B of this Registration Statement and to Form ADV filed by
Oppenheimer Management Corporation under the Investment Advisers Act
of 1940, which is incorporated herein by reference.
Item 29. Principal Underwriter
(a) Oppenheimer Funds Distributor, Inc. is the Distributor of the Fund's
shares. It is also the distributor of certain of the other open-end
registered investment companies for which Oppenheimer Management
Corporation is the investment adviser.
(b) The information contained in the registration on Form BD of
Oppenheimer Funds Distributor, Inc., filed under the Securities
Exchange Act of 1934, is incorporated herein by reference.
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and rules promulgated thereunder are in the possession of Oppenheimer
Management Corporation at its offices at 3410 South Galena Street, Denver,
Colorado 80231.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver and State of Colorado on
the 23rd day of August, 1994.
OPPENHEIMER HIGH YIELD FUND
s/s James C. Swain
by: --------------------------
James C. Swain, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities on the dates indicated:
Signatures: Title Date
- ----------- ---------------------- --------------
/s/ James C. Swain Chairman of the Board August 23, 1994
- ---------------------- of Trustees and
James C. Swain Principal Executive
Officer
/s/ Jon S. Fossel Trustee and President August 23, 1994
- ----------------------
Jon S. Fossel
/s/ George C. Bowen Treasurer and August 23, 1994
- ---------------------- Principal Financial
George Bowen and Accounting Officer
/s/ Robert G. Avis Trustee August 23, 1994
- ----------------------
Robert G. Avis
/s/ William A. Baker Trustee August 23, 1994
- ----------------------
William A. Baker
/s/ Charles Conrad, Jr. Trustee August 23, 1994
- ----------------------
Charles Conrad, Jr.
s/ Raymond J. Kalinowski Trustee August 23, 1994
- ----------------------
Raymond J. Kalinowski
/s/ C. Howard Kast Trustee August 23, 1994
- ----------------------
C. Howard Kast
/s/ Robert M. Kirchner Trustee August 23, 1994
- ----------------------
Robert M. Kirchner
/s/ Ned M. Steel Trustee August 23, 1994
- ----------------------
Ned M. Steel
/s/ Robert G. Zack
*By: -------------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER HIGH YIELD FUND
EXHIBIT INDEX
Exhibit No. Description
24(b)(2) Amended By-Laws dated 6/26/90
24(b)(5) Investment Advisory Agreement dated 10/22/90
24(b)(8) Custody Agreement dated 10/6/92
24(b)(9)(a) Agreement and Plan of Reorganization and
Liquidation dated 8/6/86
24(b)(9)(b) Articles of Transfer dated 10/29/86\
4(b)(10) Opinion and Consent of Counsel dated
8/3/78
24(b)(15)(i) Service Plan and Agreement for
Class A Shares dated 7/1/94
24(b)(15)(ii) Distribution and Service Plan and
Agreement for Class B Shares
dated 6/21/94
- -- Powers of Attorney (including Certified
Board Resolutions
Exhibit 24(b)(2)
OPPENHEIMER HIGH YIELD FUND
BY-LAWS
(as amended through June 26, 1990)
ARTICLE I
SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the Shareholders
(which terms as used herein shall, together with all other terms defined
in the Declaration of Trust, have the same meaning as in the Declaration
of Trust) shall be held at the principal office of the Fund or at such
other place as may from time to time be designated by the Board of
Trustees and stated in the notice of meeting.
Section 2. Shareholder Meetings. Meetings of the Shareholders
for any purpose or purposes may be called by the Chairman of the Board of
Trustees, if any, or by the President or by the Board of Trustees and
shall be called by the Secretary upon receipt of the request in writing
signed by Shareholders holding not less than one third in amount of the
entire number of Shares issued and outstanding and entitled to vote
thereat. Such request shall state the purpose or purposes of the proposed
meeting. In addition, meetings of the Shareholders shall be called by the
Board of Trustees upon receipt of the request in writing signed by
Shareholders that hold not less than ten percent in amount of the entire
number of Shares issued and outstanding and entitled to vote thereat,
stating that the purpose of the proposed meeting is the removal of a
Trustee.
Section 3. Notice of Meetings of Shareholders. Not less than
ten days' and not more than 120 days' written or printed notice of every
meeting of Shareholders, stating the time and place thereof (and the
general nature of the business proposed to be transacted at any special
or extraordinary meeting), shall be given to each Shareholder entitled to
vote thereat by leaving the same with him or at his residence or usual
place of business or by mailing it, postage prepaid and addressed to him
at his address as it appears upon the books of the Fund.
No notice of the time, place or purpose of any meeting of
Shareholders need be given to any Shareholder who attends in person or by
proxy or to any Shareholder who, in writing executed and filed with the
records of the meeting, either before or after the holding thereof, waives
such notice.
Section 4. Record Dates. The Board of Trustees may fix, in
advance, a date, not exceeding 120 days and not less than ten days
preceding the date of any meeting of Shareholders, and not exceeding 120
days preceding any dividend payment date or any date and entitled to
receive such dividends or rights for the allotment of rights, as a record
date for the determination of the Shareholders entitled to receive such
dividend or rights, as the case may be; and only Shareholders of record
on such date and entitled to receive such dividends or rights shall be
entitled to notice of and to vote at such meeting or to receive such
dividends or rights, as the case may be.
Section 5. Access to Shareholder List. The Board of Trustees
shall make available a list of the names and addresses of all shareholders
as recorded on the books of the Fund, upon receipt of the request in
writing signed by not less than ten Shareholders (who have been such for
at least six months) holding Shares of the Fund valued at $25,000 or more
at current offering price (as defined in the Fund's Prospectus), or
holding not less than one percent in amount of the entire number of shares
of the Fund issued and outstanding; such request must state that such
Shareholders wish to communicate with other Shareholders with a view to
obtaining signatures to a request for a meeting pursuant to Section 2 of
Article II of these By-Laws and accompanied by a form of communication to
the Shareholders. The Board of Trustees may, in its discretion, satisfy
its obligation under this Section 5 by either making available the
Shareholder List to such Shareholders at the principal offices of the
Fund, or at the offices of the Fund's transfer agents, during regular
business hours, or by mailing a copy of such Shareholders' proposed
communication and form of request, at their expense, to all other
Shareholders, or by taking alternate action as permitted by Section 16(c)
of the Investment Company Act of 1940.
Section 6. Quorum, Adjournment of Meetings. The presence in
person or by proxy of the holders of record of more than 50% of the Shares
of the stock of the Fund issued and outstanding and entitled to vote
thereat, shall constitute a quorum at all meetings of the Shareholders.
If at any meeting of the Shareholders there shall be less than a quorum
present, the Shareholders present at such meeting may, without further
notice, adjourn the same from time to time until a quorum shall attend,
but no business shall be transacted at any such adjourned meeting except
as might have been lawfully transacted had the meeting not been adjourned.
Section 7. Voting and Inspectors. At all meetings of
Shareholders, every Shareholder or record entitled to vote thereat shall
be entitled to vote at such meeting either in person or by proxy appointed
by instrument in writing subscribed by such Shareholder or his duly
authorized attorney-in-fact.
All elections of Trustees shall be had by a plurality of the
votes cast and all questions shall be decided by a majority of the votes
cast, in each case at a duly constituted meeting, except as otherwise
provided in the Declaration of Trust or in these By-Laws or by specific
statutory provision superseding the restrictions and limitations contained
in the Declaration of Trust or in these By-Laws.
At any election of Trustees, the Board of Trustees prior thereto
may, or, if they have not so acted, the Chairman of the meeting may, and
upon the request of the holders of ten percent (10%) of the Shares
entitled to vote at such election shall, appoint two inspectors of
election who shall first subscribe an oath or affirmation to execute
faithfully the duties of inspectors at such election with strict
impartiality and according to the best of their ability, and shall after
the election make a certificate of the result of the vote taken. No
candidate for the office of Trustee shall be appointed such Inspector.
The Chairman of the meeting may cause a vote by ballot to be
taken upon any election of the matter, and such vote shall be taken upon
the request of the holders of ten percent (10%) of the Shares entitled to
vote on such election or matter.
Section 8. Conduct of Shareholders' Meetings. The meetings of
the Shareholders shall be presided over by the Chairman of the Board of
Trustees, if any, or if he shall not be present, by the President, or if
he shall not be present, by a Vice-President, or if neither the Chairman
of the Board of Trustees, the President nor any Vice-President is present,
by a chairman to be elected at the meeting. The Secretary of the Fund,
if present, shall act as Secretary of such meetings, or if he is not
present, an Assistant Secretary shall so act, or if neither the Secretary
nor an Assistant Secretary is present, then the meeting shall elect its
secretary.
Section 9. Concerning Validity of Proxies, Ballots, Etc. At
every meeting of the Shareholders, all proxies shall be received and taken
in charge of and all ballots shall be received and canvassed by the
secretary of the meeting, who shall decide all questions touching the
qualification of voters, the validity of the proxies, and the acceptance
or rejection of votes, unless inspectors of election shall have been
appointed as provided in Section 7, in which event such inspectors of
election shall decide all such questions.
ARTICLE II
BOARD OF TRUSTEES
Section 1. Number and Tenure of Office. The business and
property of the Fund shall be conducted and managed by a Board of Trustees
consisting of the number of initial Trustees, which number may be
increased or decreased as provided in Section 2 of this Article. Each
Trustee shall, except as otherwise provided herein, hold office until the
meeting of Shareholders of the Fund next succeeding his election or until
his successor is duly elected and qualifies. Trustees need not be
Shareholders.
Section 2. Increase or Decrease in Number of Trustees; Removal.
The Board of Trustees, by the vote of a majority of the entire Board, may
increase the number of Trustees to a number not exceeding fifteen, and may
elect Trustees to fill the vacancies occurring for any reason, including
vacancies created by any such increase in the number of Trustees until the
next annual meeting or until their successors are duly elected and
qualify; the Board of Trustees, by the vote of a majority of the entire
Board, may likewise decrease the number of Trustees to a number not less
than three but the tenure of office of any Trustee shall not be affected
by any such decrease. In the event that after the proxy material has been
printed for a meeting of Shareholders at which Trustees are to be elected
and any one or more nominees named in such proxy material dies or becomes
incapacitated, the authorized number of Trustees shall be automatically
reduced by the number of such nominees, unless the Board of Trustees prior
to the meeting shall otherwise determine.
A Trustee at any time may be removed either with or without cause
by resolution duly adopted by the affirmative votes of the holders of two-
thirds of the outstanding Shares of the Fund, present in person or by
proxy at any meeting of Shareholders at which such vote may be taken,
provided that a quorum is present. Any Trustee at any time may be removed
for cause by resolution duly adopted at any meeting of the Board of
Trustees provided that notice thereof is contained in the notice of such
meeting and that such resolution is adopted by the vote of at least two-
thirds of the Trustees whose removal is not proposed. As used herein,
"for cause" shall mean any cause which under Massachusetts law would
permit the removal of a Trustee of a business trust.
Section 3. Place of Meeting. The Trustees may hold their
meetings, have one or more offices, and keep the books of the Fund outside
Massachusetts, at any office or offices of the Fund or at any other place
as they may from time to time by resolution determine, or, in the case of
meetings, as they may from time to time by resolution determine or as
shall be specified or fixed in the respective notices or waivers of notice
thereof.
Section 4. Regular Meetings. Regular meetings of the Board of
Trustees shall be held at such time and on such notice, if any, as the
Trustees may from time to time determine. One such regular meeting during
each fiscal year of the Fund shall be designated an annual meeting of the
Board of Trustees.
Section 5. Special Meetings. Special meetings of the Board of
Trustees may be held from time to time upon call of the Chairman of the
Board of Trustees, if any, the President or two or more of the Trustees,
by oral, telegraphic or written notice duly served on or sent or mailed
to each Trustee not less than one day before such meeting. No notice need
be given to any Trustee who attends in person or to any Trustee who in
writing executed and filed with the records of the meeting either before
or after the holding thereof, waives such notice. Such notice or waiver
of notice need not state the purpose or purposes of such meeting.
Section 6. Quorum. One-third of the Trustees then in office
shall constitute a quorum for the transaction of business, provided that
a quorum shall in no case be less than two Trustees. If at any meeting
of the Board there shall be less than a quorum present (in person or by
open telephone line, to the extent permitted by the Investment Company Act
of 1940 (the "1940 Act")), a majority of those present may adjourn the
meeting from time to time until a quorum shall have been obtained. The
act of the majority of the Trustees present at any meeting at which there
is a quorum shall be the act of the Board, except as may be otherwise
specifically provided by statute, by the Declaration of Trust or by these
By-Laws.
Section 7. Executive Committee. The Board of Trustees may, by
the affirmative vote of a majority of the entire Board, elect from the
Trustees an Executive Committee to consist of such number of Trustees as
the Board may from time to time determine. The Board of Trustees by such
affirmative vote shall have power at any time to change the members of
such Committee and may fill vacancies in the Committee by election from
the Trustees. When the Board of Trustees is not in session, the Executive
Committee shall have and may exercise any or all of the powers of the
Board of Trustees in the management of the business and affairs of the
Fund (including the power to authorize the seal of the Fund to be affixed
to all papers which may require it) except as provided by law and except
the power to increase or decrease the size of, or fill vacancies on, the
Board. The Executive Committee may fix its own rules of procedure, and
may meet, when and as provided by such rules or by resolution of the Board
of Trustees, but in every case the presence of a majority shall be
necessary to constitute a quorum. In the absence of any member of the
Executive Committee, the members thereof present at any meeting, whether
or not they constitute a quorum, may appoint a member of the Board of
Trustees to act in the place of such absent member.
Section 8. Other Committees. The Board of Trustees, by the
affirmative vote of a majority of the entire Board, may appoint other
committees which shall in each case consist of such number of members (not
less than two) and shall have and may exercise such powers as the Board
may determine in the resolution appointing them. A majority of all
members of any such committee may determine its action, and fix the time
and place of its meetings, unless the Board of Trustees shall otherwise
provide. The Board of Trustees shall have power at any time to change the
members and powers of any such committee, to fill vacancies, and to
discharge any such committee.
Section 9. Informal Action by and Telephone Meetings of Trustees
and Committees. Any action required or permitted to be taken at any
meeting of the Board of Trustees or any committee thereof may be taken
without a meeting, if a written consent to such action is signed by all
members of the Board, or of such committee, as the case may be. Trustees
or members of a committee of the Board of Trustees may participate in a
meeting by means of a conference telephone or similar communications
equipment; such participation shall, except as otherwise required by the
1940 Act, have the same effect as presence in person.
Section 10. Compensation of Trustees. Trustees shall be
entitled to receive such compensation from the Fund for their services as
may from time to time be voted by the Board of Trustees.
Section 11. Dividends. Dividends or distributions payable on
the Shares of any Series of the Fund may, but need not be, declared by
specific resolution of the Board as to each dividend or distribution; in
lieu of such specific resolutions, the Board may, by general resolution,
determine the method of computation thereof, the method of determining the
Shareholders of the Series to which they are payable and the methods of
determining whether and to which Shareholders they are to be paid in cash
or in additional Shares.
Section 12. Indemnification. The Declaration of Trust shall not
be deemed to affect any other indemnification rights to which an
indemnitee may be entitled to the extent permitted by applicable law.
Such rights to indemnification shall not be deemed exclusive of any other
rights to which such indemnitee may be entitled under any statue, By-Law,
contract or otherwise.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of the
Fund shall include a Chairman of the Board of Trustees, a President, one
or more Vice-Presidents (the number thereof to be determined by the Board
of Trustees), a Secretary and a Treasurer. The Chairman of the Board and
the President shall be selected from among the Trustees. The Board of
Trustees may also in its discretion appoint Assistant Secretaries,
Assistant Treasurers, and other officers, agents and employees, who shall
have authority and perform such duties as the Board or the Executive
Committee may determine. The Board of Trustees may fill any vacancy
which may occur in any office. Any two offices, except those of Chairman
of the Board and Secretary and President and Secretary, may be held by the
same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by
law or these By-Laws to be executed, acknowledged or verified by two or
more officers.
Section 2. Term of Office. The term of office of all officers
shall be until their respective successors are chosen and qualify;
however, any officer may be removed from office at any time with or
without cause by the vote of a majority of the entire Board of Trustees.
Section 3. Powers and Duties. The officers of the Fund shall
have such powers and duties as generally pertain to their respective
offices, as well as such powers and duties as may from time to time be
conferred by the Board of Trustees or the Executive Committee. Unless
otherwise ordered by the Board of Trustees, the Chairman of the Board
shall be the Chief Executive Officer.
ARTICLE IV
SHARES
Section 1. Share Certificates. Each Shareholder of any Series
of the Fund may be issued a certificate or certificates for his Shares of
that Series, in such form as the Board of Trustees may from time to time
prescribe, but only if and to the extent and on the conditions described
by the Board.
Section 2. Transfer of Shares. Shares of any Series shall be
transferable on the books of the Fund by the holder thereof in person or
by his duly authorized attorney or legal representative, upon surrender
and cancellation of certificates, if any, for the same number of Shares
of that Series, duly endorsed or accompanied by proper instruments of
assignment and transfer, with such proof of the authenticity of the
signature as the Fund or its agent may reasonably require; in the case of
shares not represented by certificates, the same or similar requirements
may be imposed by the Board of Trustees.
Section 3. Share Ledgers. The share ledgers of the Fund,
containing the name and address of the Shareholders of each Series of the
Fund and the number of shares of that Series, held by them respectively,
shall be kept at the principal offices of the Fund or, if the Fund employs
a transfer agent, at the offices of the transfer agent of the Fund.
Section 4. Lost, Stolen or Destroyed Certificates. The Board
of Trustees may determine the conditions upon which a new certificate may
be issued in place of a certificate which is alleged to have been lost,
stolen or destroyed; and may, in their discretion, require the owner of
such certificate or his legal representative to give bond, with sufficient
surety to the Fund and the transfer agent, if any, to indemnify it and
such transfer agent against any and all loss or claims which may arise by
reason of the issue of a new certificate in the place of the one so lost,
stolen or destroyed.
ARTICLE V
SEAL
The Board of Trustees shall provide a suitable seal of the Fund,
in such form and bearing such inscriptions as it may determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Fund shall be fixed by the Board of
Trustees.
ARTICLE VII
AMENDMENT OF BY-LAWS
The By-Laws of the Fund may be altered, amended, added to or
repealed by the Shareholders or by majority vote of the entire Board of
Trustees, but any such alteration, amendment, addition or repeal of the
By-Laws by action of the Board of Trustees may be altered or repealed by
the Shareholders.
ORGZN/280
Exhibit 24(b)(5)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 10th day of October, 1990, by and between
OPPENHEIMER HIGH YIELD FUND, a Massachusetts business trust, hereinafter
called the "Fund," and OPPENHEIMER MANAGEMENT CORPORATION, a Colorado
corporation, hereinafter called the "Management Company."
WHEREAS, the Fund is an open-end diversified management investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the
"Investment Company Act"), and the Management Company is a registered
investment adviser;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. The Management Company shall provide information to the Fund
relative to the securities owned by the Fund and funds available or to
become available for investment by the Fund, and shall provide such other
information showing the general condition of the affairs and operations
of the Fund, including financial statements and reports, as it shall deem
necessary or desirable or as the Fund's Board shall request.
2. The Management Company agrees to assist in the general
management and supervision of the business and affairs of the Fund.
3. The Management Company, either through its own organization or
through other persons employed by it or at its own expense, shall:
(a) Furnish to the Board of Trustees of the Fund advice and
information concerning the Fund's investments, suggestions concerning
proposed investment policies and the purchase or sale of securities of the
portfolio of the Fund, and information as to the holding of such
securities; it shall continuously supervise the Fund's investment programs
and the composition of its portfolio;
(b) Supervise and arrange for the purchase of securities and
for the sale of securities held in the portfolio of the Fund;
(c) Conduct investigations and research in the securities field
and furnish the Fund's Board statistical and other factual information and
reports on industries, businesses or corporations to assist the Fund's
Board in furthering the investment policies of the Fund;
(d) Compile, for its use and that of the Fund, and furnish to
the Fund's Board, information and advice on economic and business trends,
and render such other complete investment management services as may be
necessary and/or appropriate to effectuate the investment of the resources
of the Fund through the acquisition, holding and disposition of portfolio
securities;
(e) The duties described in subparagraphs (a) through (d) above
shall be performed in accordance with such policies and rules as may be
established by the Board of Trustees of the Fund.
4. The Management Company agrees to furnish the Fund or those
persons performing administrative functions for the Fund, necessary
assistance in;
(a) The preparation of all reports now or hereafter required
of the Fund by Federal, state and other laws and regulations;
(b) The preparation of prospectuses, registration statements
and amendments thereto as required by Federal, state and other laws or by
the rules and regulations of any duly authorized commission or
administrative body;
(c) The preparation of purchase agreements, confirmation forms,
certificates or other papers in connection with the issuance of shares or
certificates of the Fund;
(d) The preparation of statistical data relating to any phase
of the Fund's business; and
(e) The preparation and/or review of such other reports,
documents and contracts as may be necessary or desirable in the management
of the affairs of the Fund.
The Management Company shall, at its own expense, provide such
officers for the Fund as the Fund's Board may request, which officers may
include a Chairman of the Board, President, Vice President, Treasurer,
Secretary and Assistant Secretaries and Treasurers of the Fund; such
persons to perform the duties appertaining to their offices. Moreover,
the Management Company agrees to provide at its own expense, for the use
of such officers, such office space, normal office equipment and
secretarial assistance as shall be necessary for them to perform their
functions. The Management Company shall also furnish, at no cost to the
Fund, such office space, equipment and personnel as are necessary to
assist the Management Company in its performance of its investment
management services and in its rendition of assistance to the Fund in the
general management and supervision of the Fund's business and affairs.
5. As compensation for the services performed by the Management
Company, under this Agreement, the Fund shall pay the Management Company
an annual fee, computed daily and payable monthly, amounting to a
percentage of the average daily value of the net assets of the Fund. The
fee is as follows: .75% on the first $200 million of assets; reduced to
.72% on the next $200 million of assets; reduced to .69% on the next $200
million of net assets; reduced to .66% on the next $200 million of net
assets; reduced to .60% on the next $200 million of net assets; and
reduced to .50% on net assets in excess of $1 billion.
If this Agreement is terminated as of any date not the last day of
a month, such fee shall be paid as promptly as possible after such time
of termination, and shall be based on the average daily value of the net
assets of the Fund, in the monthly period from the beginning thereof to
the date of such termination, and shall be that portion of the fee applied
to the average daily value of the net assets for the month as the number
of business days up to the date of termination bears to the total number
of business days in such month. For the purpose of computation of the fee
to be paid to the Management Company, the average daily net assets of the
Fund shall, in all cases, be based only upon business days, and be
computed as of the time of closing of the New York Stock Exchange on the
basis of the provisions of the Declaration of Trust and By-Laws of the
Fund. Each such payment shall be accompanied by a report of the Fund,
prepared either by the Fund or by a firm of public accountants, which
shall show the amount properly payable to the Management Company under
this Agreement, and the detailed computation thereof.
6. It is agreed that the services to be performed by the Management
Company hereunder shall not include any specialized services not capable
of rendition by the regular personnel of the Management Company.
7. The Fund will pay all expenses not specifically assumed by the
Management Company hereunder, including the fees and expenses of those
Trustees of the Fund who are not officers and directors of the Management
Company, interest expenses, taxes, brokerage fees and commissions, and
those fees and expenses outlined in any Distribution Agreement.
The Fund will also pay custodial charges, auditing and legal
expenses, insurance expenses, association membership dues, and the expense
of reports to shareholders, shareholders' meetings, and proxy
solicitations therefor. The Fund will also be liable for such non-
recurring expenses as may arise, including litigation to which the Fund
may be a party and any obligation of the Fund to indemnify its Trustees
and officers with respect to liabilities which they may incur in their
capacities as such.
8. The Management Company assumes no responsibility under this
Agreement other than that which is imposed by law, and shall not be
responsible for any action of the Board of Trustees of the Fund in
following or declining to follow any advice or recommendations of the
Management Company.
The Management Company shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund in connection with
matters to which this Management Agreement relates, except a loss
resulting by reason of the Management Company's willful misfeasance, bad
faith, or gross negligence in the performance of its duties, or its
reckless disregard of its obligation and duties under this Agreement.
9. At a reasonable time prior to the date upon which the original
term of this Agreement or any renewal thereof shall expire, the Management
Company, as investment adviser to the Fund, agrees to furnish to the Fund
such information and data as shall be necessary to evaluate the terms of
this Agreement, which shall include, among other items:
(a) A description of the advisory organization of the
Management Company, including information as to the functions and
qualifications of the professional personnel therein, and as to the extent
to which the same personnel, data and facilities may be used for services
to other clients;
(b) The most recent balance sheet of the Management Company and
information with respect to compensation or payments received by the
Management Company for all services which it renders to the Fund or its
shareholders;
(c) The amount of brokerage commissions, if any, received by
the Management Company or any of its affiliates during the current term
of this Agreement by virtue of direct or indirect participation in
portfolio transactions executed on behalf of the Fund;
(d) A summary of the nature of any research or other financial
information or services received by the Management Company during the
current term of this Agreement from broker-dealers or other sources;
(e) Relevant information, to the extent known, with respect to
fees and the contracts of other management investment company complexes;
and
(f) Such other data and information as the Management Company
may choose to provide or as may be requested by the Trustees of the Fund.
10. This Agreement is not intended to prohibit any director, officer
or employee of the Management Company, or the Management Company itself,
from engaging in any other business or from devoting time and attention
in part to management or other aspects of any other business, whether of
a similar nature or a dissimilar nature, or from rendering services of any
kind to any other corporation, firm, individual, or association.
11. The Management Company will render all services for the Fund in
connection with placing orders with brokers and dealers for the purchase,
sale or trade of securities for the Fund's portfolio.
In connection with the execution of purchases and sales of the Fund's
portfolio securities, the Management Company is authorized to employ such
brokers, as may, in the best judgment of the Management Company, implement
the policy of the Fund to obtain the "best execution" (prompt and reliable
execution at the most favorable security price obtainable, taking into
account research and other services available and the reasonableness of
commission charges) of the Fund's portfolio transactions. Consistent with
this policy, the Management Company is authorized to direct the execution
of the Fund's portfolio transactions to brokers furnishing investment
information or research deemed by the Management Company to be useful or
valuable to the performance of its investment management functions for the
Fund.
Transactions in portfolio securities on a securities exchange which
are not subject to a commission schedule fixed by the exchange
("negotiated transaction"), may be directed for execution to any broker,
which, in the good faith judgment of the Management Company is qualified
to obtain the best price and execution of the particular transaction.
The Management Company has discretion in assigning an execution or
negotiating a commission to be paid therefor, to consider the full range
and quality of a broker's services which benefit the Fund, since requiring
the Management Company to seek the lowest possible commission cost could
interfere with its purpose and obligation to seek best performance by
excluding the Fund from information, analysis, execution and other
services which could be valuable to it. The Management Company has
flexibility to select a particular broker if the broker selected provides
bona fide investment research or other services which it believes are
valuable to the Fund's interest and if it believes the broker can properly
execute the transaction. Similarly, the Management Company has discretion
to pay a commission rate that will assure reliability and quality of
service provided that it is reasonable. Where the commission rate
reflects services furnished to the Fund in addition to the cost of
execution, the Management Company is required to stand ready to
demonstrate that such expenditures where bona fide.
In the selection of a broker for the execution of any negotiated
transaction, the Management Company has no duty or obligation to seek
advance competitive bidding for the most favorable negotiated commission
rate to be applicable to such transaction, or to select any broker solely
on the basis of its purported or "posted" commission rate applicable to
negotiated transactions. However, the Management Company is required to
consider such "posted" commission rates, if any, as may be applicable to
the transaction, as well as any other information available at the time,
as to the level of commissions known to be charged on comparable
transactions by other qualified brokerage firms. In reaching a judgment
relative to the qualifications of a broker to obtain the best execution
of any particular negotiated transactions, the Management Company may take
into account all relevant factors and circumstances, including the size
of any contemporaneous market in such securities; the importance to the
Fund of speed, efficiency and confidentiality of execution; the execution
capabilities required by the circumstances of the particular transactions;
and the apparent knowledge or familiarity with sources from or to whom
such securities may be purchased or sold.
Brokerage commissions may be directed to brokers in return for
special research and statistical information, as well as for services
rendered by such other brokers in the execution of orders. It is not
possible to place a dollar value on the special executions or on the
research services received by the Management Company from other brokers
effecting transactions in portfolio securities. Obtaining additional
research services permits the Management Company to supplement research
and analysis activities and to make available to the Management Company
for its analysis and consideration, prior to making recommendations, the
views and information of individuals and research staffs of other
securities firms. Selection of brokers is made in the best judgment of
the Management Company, and not in accordance with any formula. Other
than execution and supplemental research, the Fund does not receive any
direct benefit from brokerage paid to any brokers.
Over-the-counter purchases and sales are transacted directly with
principal market-makers except in those circumstances where, in the
opinion of the Fund or the Management Company better price and execution
is available elsewhere. None of the portfolio brokerage is allocated on
the basis of relative sales of the Fund's shares.
12. This Agreement shall not be assignable by either party, and, in
the event of its "assignment," as such term is defined in the Investment
Company Act of 1940, it shall automatically be terminated, unless such
automatic termination shall be prevented by an Exemptive Order of the
Securities and Exchange Commission.
13. This Agreement will take effect on the date first set forth
above and will continue in effect until December 31, 1991, and thereafter
from year to year, provided that the said Agreement is approved annually
(1) by the vote of a majority of the Trustees of the Fund or by the vote
of a majority of the outstanding voting securities of the Fund and (2) by
the vote of a majority of the Trustees of the Fund who are not parties to
the Agreement or interested persons of any such party, cast in person at
a meeting called for the purpose of voting on such approval.
Under the provisions of the Investment Company Act of 1940, and as
used in this Agreement, the phrase "vote of a majority of the outstanding
voting securities of the Fund" means the vote, at any meeting of
shareholders, of (a) 67% or more of the shares present or represented by
proxy at such meeting, if the holders of more than 50% of the outstanding
shares are present or represented by proxy, or (b) more than 50% of the
outstanding shares, whichever is less.
14. This Agreement may be terminated by the Fund at any time,
without the payment of any penalty, by proper vote and resolution of its
Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund; provided that the Fund shall give the Management
Company sixty days' written notice of its intention to terminate the
Agreement. The Management Company shall have the right to terminate this
Agreement at any time, by giving the Fund sixty days' written notice of
its election to terminate same.
15. The Management Company hereby grants to the Fund a royalty-free,
non-exclusive license to use the name "Oppenheimer" in the name of the
Fund and any service marks which it may own. To the extent necessary to
protect OMC's rights to the name "Oppenheimer" under applicable law, such
license shall allow OMC to inspect and, subject to control by the Fund's
Board, control the nature and quality of services offered by the Fund
under such name. The license may be terminated by the Management Company
upon termination of this Agreement in which case the Fund shall have no
further right to use the name "Oppenheimer" in its name or otherwise or
any of such marks, and the Fund, the holders of its shares and its
officers and Trustees shall promptly take whatever action may be necessary
to change its name accordingly. The name "Oppenheimer" or any of said
marks may be used by the Management Company in connection with any of its
activities, or licensed by the Management Company to any other party, and
the Fund, the holders of its shares and its Trustees and officers agree
to take promptly whatever action may be necessary to permit such use or
license.
16. The Management Company understands that the obligations of the
Fund under this Agreement are not binding upon any Trustee or shareholder
of the Fund personally, but bind only the Fund and the Fund's property.
The Management Company presents that it has notice of the provisions of
the Declaration of Trust of the Fund disclaiming shareholder liability for
acts or obligations of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day and year first above written.
OPPENHEIMER HIGH YIELD FUND
ATTEST:
- -------------------------- By: ---------------------------
OPPENHEIMER MANAGEMENT CORPORATION
ATTEST:
- ------------------------- By: --------------------------------
Exhibit 24(b)(8)
OPPENHEIMER HIGH YIELD FUND
CUSTODY AGREEMENT
Agreement made as of this 6th day of October, 1992, between
OPPENHEIMER HIGH YIELD FUND, a business trust organized and exist-
ing under the laws of the Commonwealth of Massachusetts, having its
principal office and place of business at 3410 South Galena Street,
Denver, Colorado 80231 (hereinafter called the "Fund"), and THE
BANK OF NEW YORK, a New York corporation authorized to do a banking
business, having its principal office and place of business at 48
Wall Street, New York, New York 10286 (hereinafter called the
"Custodian").
W I T N E S S E T H
that for and in consideration of the mutual promises hereinafter
set forth, the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, shall have the following meanings:
1. "Agreement" shall mean this Custody Agreement and all Ap-
pendices and Certifications described in the Exhibits delivered in
connection herewith.
2. "Authorized Person" shall mean any person, whether or not
such person is an Officer or employee of the Fund, duly authorized
by the Board of Trustees of the Fund to give Oral Instructions and
Written Instructions on behalf of the Fund and listed in the Certi-
ficate annexed hereto as Appendix A or such other Certificate as
may be received by the Custodian from time to time, provided that
each person who is designated in any such Certificate as an "Offi-
cer of OSS" shall be an Authorized Person only for purposes of
Articles XII and XIII hereof.
3. "Book-Entry System" shall mean the Federal Reserve/Trea-
sury book-entry system for United States and federal agency secu-
rities, its successor or successors and its nominee or nominees.
4. "Call Option" shall mean an exchange traded Option with
respect to Securities other than Index, Futures Contracts, and Fu-
tures Contract Options entitling the holder, upon timely exercise
and payment of the exercise price, as specified therein, to pur-
chase from the writer thereof the specified underlying instruments,
currency, or Securities.
5. "Certificate" shall mean any notice, instruction, or
other instrument in writing, authorized or required by this Agree-
ment to be given to the Custodian which is actually received (irre-
spective of constructive receipt) by the Custodian and signed on
behalf of the Fund by any two Officers. The term Certificate shall
also include instructions by the Fund to the Custodian communicated
by a Terminal Link.
6. "Clearing Member" shall mean a registered broker-dealer
which is a clearing member under the rules of O.C.C. and a member
of a national securities exchange qualified to act as a custodian
for an investment company, or any broker-dealer reasonably believed
by the Custodian to be such a clearing member.
7. "Collateral Account" shall mean a segregated account so
denominated which is specifically allocated to a Series and pledged
to the Custodian as security for, and in consideration of, the Cus-
todian's issuance of any Put Option guarantee letter or similar
document described in paragraph 8 of Article V herein.
8. "Covered Call Option" shall mean an exchange traded Op-
tion entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer
thereof the specified underlying instruments, currency, or Securi-
ties (excluding Futures Contracts) which are owned by the writer
thereof.
9. "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Ex-
change Commission, its successor or successors and its nominee or
nominees. The term "Depository" shall further mean and include any
other person authorized to act as a depository under the Investment
Company Act of 1940, its successor or successors and its nominee or
nominees, specifically identified in a certified copy of a resolu-
tion of the Fund's Board of Trustees specifically approving depo-
sits therein by the Custodian, including, without limitation, a
Foreign Depository.
10. "Financial Futures Contract" shall mean the firm commit-
ment to buy or sell financial instruments on a U.S. commodities ex-
change or board of trade at a specified future time at an agreed
upon price.
11. "Foreign Subcustodian" shall mean an "Eligible Foreign
Custodian" as defined in Rule 17-5 which is appointed by the Cus-
todian to perform or coordinate the receipt, custody and delivery
of Foreign Property of the Fund outside the United States in a man-
ner consistent with the provisions of this Agreement and whose
written contract is approved by the Board of Trustees of the Fund
in accordance with Rule 17f-5. References to the Custodian herein
shall, when appropriate, include reference to its Foreign Subcusto-
dians.
12. "Foreign Depository" shall mean an entity organized under
the laws of a foreign country which operates a system outside the
United States in general use by foreign banks and securities bro-
kers for the central or transnational handling of securities or
equivalent book-entries which is regulated by a foreign government
or agency thereof and which is an "Eligible Foreign Custodian" as
defined in Rule 17f-5.
13. "Foreign Securities" shall mean securities and/or short
term paper as defined in Rule 17f-5 under the Act, whether issued
in registered or bearer form.
14. "Foreign Property" shall mean Foreign Securities and
money of any currency which is held outside of the United States.
15. "Futures Contract" shall mean a Financial Futures Con-
tract and/or Index Futures Contracts.
16. "Futures Contract Option" shall mean an Option with re-
spect to a Futures Contract.
17. "Investment Company Act of 1940" shall mean the Invest-
ment Company Act of 1940, as amended, and the rules and regulations
thereunder.
18. "Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the differ-
ence between the value of a particular index at the close of the
last business day of the contract and the price at which the fu-
tures contract is originally struck.
19. "Index Option" shall mean an exchange traded Option en-
titling the holder, upon timely exercise, to receive an amount of
cash determined by reference to the difference between the exercise
price and the value of the index on the date of exercise.
20. "Margin Account" shall mean a segregated account in the
name of a broker, dealer, futures commission merchant, or a Clear-
ing Member, or in the name of the Fund for the benefit of a broker,
dealer, futures commission merchant, or Clearing Member, or other-
wise, in accordance with an agreement between the Fund, the Custo-
dian and a broker, dealer, futures commission merchant or a Clear-
ing Member (a "Margin Account Agreement"), separate and distinct
from the custody account, in which certain Securities and/or money
of the Fund shall be deposited and withdrawn from time to time in
connection with such transactions as the Fund may from time to time
determine. Securities held in the Book-Entry System or a Deposi-
tory shall be deemed to have been deposited in, or withdrawn from,
a Margin Account upon the Custodian's effecting an appropriate en-
try in its books and records.
21. "Money Market Security" shall mean all instruments and
obligations commonly known as a money market instruments, where the
purchase and sale of such securities normally requires settlement
in federal funds on the same day as such purchase or sale, includ-
ing, without limitation, certain Reverse Repurchase Agreements,
debt obligations issued or guaranteed as to interest and/or princi-
pal by the government of the United States or agencies or instru-
mentalities thereof, any tax, bond or revenue anticipation note is-
sued by any state or municipal government or public authority, com-
mercial paper, certificates of deposit and bankers' acceptances,
repurchase agreements with respect to Securities and bank time de-
posits.
22. "Nominee" shall mean, in addition to the name of the reg-
istered nominee of the Custodian, (i) a partnership or other entity
of a Foreign Subcustodian which is used solely for the assets of
its customers other than the Custodian and the Foreign Subcusto-
dian, if any, by which it was appointed; or (ii) the nominee of a
Foreign Depository which is used for the securities and other as-
sets of its customers, members or participants.
23. "O.C.C." shall mean the Options Clearing Corporation, a
clearing agency registered under Section 17A of the Securities Ex-
change Act of 1934, its successor or successors, and its nominee or
nominees.
24. "Officers" shall mean the President, any Vice President,
the Secretary, the Treasurer, the Controller, any Assistant Secre-
tary, any Assistant Treasurer, and any other person or persons,
whether or not any such other person is an officer or employee of
the Fund, but in each case only if duly authorized by the Board of
Trustees of the Fund to execute any Certificate, instruction, no-
tice or other instrument on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix B or such other Certificate
as may be received by the Custodian from time to time; provided
that each person who is designated in any such Certificate as hold-
ing the position of "Officer of OSS" shall be an Officer only for
purposes of Articles XII and XIII hereof.
25. "Option" shall mean a Call Option, Covered Call Option,
Index Option and/or a Put Option.
26. "Oral Instructions" shall mean verbal instructions actu-
ally received (irrespective of constructive receipt) by the Custo-
dian from an Authorized Person or from a person reasonably believed
by the Custodian to be an Authorized Person.
27. "Put Option" shall mean an exchange traded Option with
respect to instruments, currency, or Securities other than Index
Options, Futures Contracts, and Futures Contract Options entitling
the holder, upon timely exercise and tender of the specified under-
lying instruments, currency, or Securities, to sell such instru-
ments, currency, or Securities to the writer thereof for the exer-
cise price.
28. "Repurchase Agreement" shall mean an agreement pursuant
to which the Fund buys Securities and agrees to resell such Secu-
rities at a described or specified date and price.
29. "Reverse Repurchase Agreement" shall mean an agreement
pursuant to which the Fund sells Securities and agrees to repur-
chase such Securities at a described or specified date and price.
30. "Rule 17f-5" shall mean Rule 17f-5 (Reg. Section 270.17f-5)
promulgated by the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended.
31. "Security" shall be deemed to include, without limita-
tion, Money Market Securities, Call Options, Put Options, Index Op-
tions, Index Futures Contracts, Index Futures Contract Options,
Financial Futures Contracts, Financial Futures Contract Options,
Reverse Repurchase Agreements, over the counter Options on Securi-
ties, common stocks and other securities having characteristics
similar to common stocks, preferred stocks, debt obligations issued
by state or municipal governments and by public authorities, (in-
cluding, without limitation, general obligation bonds, revenue
bonds, industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any certifi-
cates, receipts, warrants or other instruments representing rights
to receive, purchase, sell or subscribe for the same, or evidencing
or representing any other rights or interest therein, or rights to
any property or assets.
32. "Senior Security Account" shall mean an account main-
tained and specifically allocated to a Series under the terms of
this Agreement as a segregated account, by recordation or other-
wise, within the custody account in which certain Securities and/or
other assets of the Fund specifically allocated to such Series
shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such
transactions as the Fund may from time to time determine.
33. "Series" shall mean the various portfolios, if any, of
the Fund as described from time to time in the current and effec-
tive prospectus for the Fund, except that if the Fund does not have
more than one portfolio, "Series" shall mean the Fund or be ignored
where a requirement would be imposed on the Fund or the Custodian
which is unnecessary if there is only one portfolio.
34. "Shares" shall mean the shares of beneficial interest of
the Fund and its Series.
35. "Terminal Link" shall mean an electronic data transmis-
sion link between the Fund and the Custodian requiring in connec-
tion with each use of the Terminal Link the use of an authorization
code provided by the Custodian and at least two access codes estab-
lished by the Fund, provided, that the Fund shall have delivered to
the Custodian a Certificate substantially in the form of Appendix
C.
36. "Transfer Agent" shall mean Oppenheimer Shareholder
Services, a division of Oppenheimer Management Corporation, its
successors and assigns.
37. "Transfer Agent Account" shall mean any account in the
name of the Fund, or the Transfer Agent, as agent for the Fund,
maintained with United Missouri Bank or such other Bank designated
by the Fund in a Certificate.
38. "Written Instructions" shall mean written communications
actually received (irrespective of constructive receipt) by the
Custodian from an Authorized Person or from a person reasonably be-
lieved by the Custodian to be an Authorized Person by telex or any
other such system whereby the receiver of such communications is
able to verify by codes or otherwise with a reasonable degree of
certainty the identity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of the Securities and moneys at any time owned or held by
the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such custo-
dian and agrees to perform the duties thereof as hereinafter set
forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except for monies received and maintained in the Transfer
Agent Account, or as otherwise provided in paragraph 7 of this Ar-
ticle or in Article VIII or XV, the Fund will deliver or cause to
be delivered to the Custodian all Securities and all moneys owned
by it, at any time during the period of this Agreement, and shall
specify with respect to such Securities and money the Series to
which the same are specifically allocated, and the Custodian shall
not be responsible for any Securities or money not so delivered.
Except for assets held at DTC, the Custodian shall physically seg-
regate, keep and maintain the Securities of the Series separate and
apart from each other Series and from other assets held by the Cus-
todian. Except as otherwise expressly provided in this Agreement,
the Custodian will not be responsible for any Securities and moneys
not actually received by it, unless the Custodian has been negli-
gent or has engaged in willful misconduct with respect thereto.
The Custodian will be entitled to reverse any credit of money made
on the Fund's behalf where such credits have been previously made
and moneys are not finally collected, unless the Custodian has been
negligent or has engaged in willful misconduct with respect there-
to; provided that if such reversal is thirty (30) days or more
after the credit was issued, the Custodian will give five (5) days'
prior notice of such reversal. The Fund shall deliver to the Cus-
todian a certified resolution of the Board of Trustees of the Fund,
substantially in the form of Exhibit A hereto, approving, authoriz-
ing and instructing the Custodian on a continuous and on-going
basis to deposit in the Book-Entry System all Securities eligible
for deposit therein, regardless of the Series to which the same are
specifically allocated and to utilize the Book-Entry System to the
extent possible in connection with its performance hereunder, in-
cluding, without limitation, in connection with settlements of pur-
chases and sales of Securities, loans of Securities and deliveries
and returns of Securities collateral. Prior to a deposit of Secu-
rities specifically allocated to a Series in any Depository, the
Fund shall deliver to the Custodian a certified resolution of the
Board of Trustees of the Fund, substantially in the form of Exhibit
B hereto, approving, authorizing and instructing the Custodian on
a continuous and ongoing basis until instructed to the contrary by
a Certificate to deposit in such Depository all Securities specifi-
cally allocated to such Series eligible for deposit therein, and to
utilize such Depository to the extent possible with respect to such
Securities in connection with its performance hereunder, including,
without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and re-
turns of Securities collateral. Securities and moneys deposited in
either the Book-Entry System or a Depository will be represented in
accounts which include only assets held by the Custodian for custo-
mers, including, but not limited to, accounts in which the Custo-
dian acts in a fiduciary or representative capacity and will be
specifically allocated on the Custodian's books to the separate ac-
count for the applicable Series. Prior to the Custodian's accept-
ing, utilizing and acting with respect to Clearing Member confir-
mations for Options and transactions in Options for a Series as
provided in this Agreement, the Custodian shall have received a
certified resolution of the Fund's Board of Trustees, substantially
in the form of Exhibit C hereto, approving, authorizing and in-
structing the Custodian on a continuous and on-going basis, until
instructed to the contrary by a Certificate to accept, utilize and
act in accordance with such confirmations as provided in this
Agreement with respect to such Series. All Securities are to be
held or disposed of by the Custodian for, and subject at all times
to the instructions of, the Fund pursuant to the terms of this
Agreement. The Custodian shall have no power or authority to as-
sign, hypothecate, pledge or otherwise dispose of any Securities
except as provided by the terms of this Agreement, and shall have
the sole power to release and deliver Securities held pursuant to
this Agreement.
2. The Custodian shall establish and maintain separate ac-
counts, in the name of each Series, and shall credit to the sepa-
rate account for each Series all moneys received by it for the ac-
count of the Fund with respect to such Series. Money credited to
a separate account for a Series shall be subject only to drafts,
orders, or charges of the Custodian pursuant to this Agreement and
shall be disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates or Resolutions of the
Fund's Board of Trustees certified by an Officer and by the Secre-
tary or Assistant Secretary of the Fund setting forth the name and
address of the person to whom the payment is to be made, the Series
account from which payment is to be made, the purpose for which
payment is to be made, and declaring such purpose to be a proper
corporate purpose; provided, however, that amounts representing
dividends, distributions, or redemptions proceeds with respect to
Shares shall be paid only to the Transfer Agent Account;
(c) In payment of the fees and in reimbursement of
the expenses and liabilities of the Custodian attributable to such
Series and authorized by this Agreement; or
(d) Pursuant to Certificates to pay interest,
taxes, management fees or operating expenses (including, without
limitation thereto, Board of Trustees' fees and expenses, and fees
for legal accounting and auditing services), which Certificates set
forth the name and address of the person to whom payment is to be
made, state the purpose of such payment and designate the Series
for whose account the payment is to be made.
3. Promptly after the close of business on each day, the
Custodian shall furnish the Fund with confirmations and a summary,
on a per Series basis, of all transfers to or from the account of
the Fund for a Series, either hereunder or with any co-custodian or
subcustodian appointed in accordance with this Agreement during
said day. Where Securities are transferred to the account of the
Fund for a Series but held in a Depository, the Custodian shall
upon such transfer also by book-entry or otherwise identify such
Securities as belonging to such Series in a fungible bulk of Secu-
rities registered in the name of the Custodian (or its nominee) or
shown on the Custodian's account on the books of the Book-Entry
System or the Depository. At least monthly and from time to time,
the Custodian shall furnish the Fund with a detailed statement, on
a per Series basis, of the Securities and moneys held under this
Agreement for the Fund.
4. Except as otherwise provided in paragraph 7 of this Arti-
cle and in Article VIII, all Securities held by the Custodian here-
under, which are issued or issuable only in bearer form, except
such Securities as are held in the Book-Entry System, shall be held
by the Custodian in that form; all other Securities held hereunder
may be registered in the name of the Fund, in the name of any duly
appointed registered nominee of the Custodian as the Custodian may
from time to time determine, or in the name of the Book-Entry Sy-
stem or a Depository or their successor or successors, or their
nominee or nominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver
in proper form for transfer, or to register in the name of its reg-
istered nominee or in the name of the Book-Entry System or a Depo-
sitory any Securities which it may hold hereunder and which may
from time to time be registered in the name of the Fund. The Cus-
todian shall hold all such Securities specifically allocated to a
Series which are not held in the Book-Entry System or in a Deposi-
tory in a separate account in the name of such Series physically
segregated at all times from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the Custo-
dian by itself, or through the use of the Book-Entry System or a
Depository with respect to Securities held hereunder and therein
deposited, shall with respect to all Securities held for the Fund
hereunder in accordance with preceding paragraph 4:
(a) Promptly collect all income, dividends and dis-
tributions due or payable;
(b) Promptly give notice to the Fund and promptly
present for payment and collect the amount of money or other con-
sideration payable upon such Securities which are called, but only
if either (i) the Custodian receives a written notice of such call,
or (ii) notice of such call appears in one or more of the publica-
tions listed in Appendix D annexed hereto, which may be amended at
any time by the Custodian without the prior consent of the Fund,
provided the Custodian gives prior notice of such amendment to the
Fund;
(c) Promptly present for payment and collect for
the Fund's account the amount payable upon all Securities which
mature;
(d) Promptly surrender Securities in temporary form
in exchange for definitive Securities;
(e) Promptly execute, as custodian, any necessary
declarations or certificates of ownership under the Federal Income
Tax Laws or the laws or regulations of any other taxing authority
now or hereafter in effect;
(f) Hold directly, or through the Book-Entry System
or the Depository with respect to Securities therein deposited, for
the account of a Series, all rights and similar securities issued
with respect to any Securities held by the Custodian for such Ser-
ies hereunder; and
(g) Promptly deliver to the Fund all notices, prox-
ies, proxy soliciting materials, consents and other written infor-
mation (including, without limitation, notices of tender offers and
exchange offers, pendency of calls, maturities of Securities and
expiration of rights) relating to Securities held pursuant to this
Agreement which are actually received by the Custodian, such prox-
ies and other similar materials to be executed by the registered
holder (if Securities are registered otherwise than in the name of
the Fund), but without indicating the manner in which proxies or
consents are to be voted.
6. Upon receipt of a Certificate and not otherwise, the Cus-
todian, directly or through the use of the Book-Entry System or the
Depository, shall:
(a) Promptly execute and deliver to such persons as
may be designated in such Certificate proxies, consents, authoriza-
tions, and any other instruments whereby the authority of the Fund
as owner of any Securities held hereunder for the Series specified
in such Certificate may be exercised;
(b) Promptly deliver any Securities held hereunder
for the Series specified in such Certificate in exchange for other
Securities or cash issued or paid in connection with the liquida-
tion, reorganization, refinancing, merger, consolidation or recapi-
talization of any corporation, or the exercise of any right, war-
rant or conversion privilege and receive and hold hereunder speci-
fically allocated to such Series any cash or other Securities re-
ceived in exchange;
(c) Promptly deliver any Securities held hereunder
for the Series specified in such Certificate to any protective com-
mittee, reorganization committee or other person in connection with
the reorganization, refinancing, merger, consolidation, recapitali-
zation or sale of assets of any corporation, and receive and hold
hereunder specifically allocated to such Series in exchange there-
for such certificates of deposit, interim receipts or other instru-
ments or documents as may be issued to it to evidence such delivery
or such Securities as may be issued upon such delivery; and
(d) Promptly present for payment and collect the
amount payable upon Securities which may be called as specified in
the Certificate.
7. Notwithstanding any provision elsewhere contained herein,
the Custodian shall not be required to obtain possession of any in-
strument or certificate representing any Futures Contract, any Op-
tion, or any Futures Contract Option until after it shall have de-
termined, or shall have received a Certificate from the Fund stat-
ing, that any such instruments or certificates are available. The
Fund shall deliver to the Custodian such a Certificate no later
than the business day preceding the availability of any such in-
strument or certificate. Prior to such availability, the Custodian
shall comply with Section 17(f) of the Investment Company Act of
1940 in connection with the purchase, sale, settlement, closing out
or writing of Futures Contracts, Options, or Futures Contract Op-
tions by making payments or deliveries specified in Certificates in
connection with any such purchase, sale, writing, settlement or
closing out upon its receipt from a broker, dealer, or futures com-
mission merchant of a statement or confirmation reasonably believed
by the Custodian to be in the form customarily used by brokers,
dealers, or future commission merchants with respect to such Fu-
tures Contracts, Options, or Futures Contract Options, as the case
may be, confirming that such Security is held by such broker,
dealer or futures commission merchant, in book-entry form or other-
wise in the name the Custodian (or any nominee of the Custodian) as
custodian for the Fund; provided, however, that notwithstanding the
foregoing, payments to or deliveries from the Margin Account and
payments with respect to Securities to which a Margin Account re-
lates, shall be made in accordance with the terms and conditions of
the Margin Account Agreement. Whenever any such instruments or
certificates are available, the Custodian shall, notwithstanding
any provision in this Agreement to the contrary, make payment for
any Futures Contract, Option, or Futures Contract Option for which
such instruments or such certificates are available only against
the delivery to the Custodian of such instrument or such certi-
ficate, and deliver any Futures Contract, Option or Futures Con-
tract Option for which such instruments or such certificates are
available only against receipt by the Custodian of payment there-
for. Any such instrument or certificate delivered to the Custodian
shall be held by the Custodian hereunder in accordance with, and
subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS,
FUTURES CONTRACT OPTIONS, REPURCHASE AGREEMENTS,
REVERSE REPURCHASE AGREEMENTS AND SHORT SALES
1. Promptly after each execution of a purchase of Securities
by the Fund, other than a purchase of an Option, a Futures Con-
tract, a Futures Contract Option, a Repurchase Agreement, a Reverse
Repurchase Agreement or a Short Sale, the Fund shall deliver to the
Custodian (i) with respect to each purchase of Securities which are
not Money Market Securities, a Certificate, and (ii) with respect
to each purchase of Money Market Securities, a Certificate, oral
Instructions or Written Instructions, specifying with respect to
each such purchase: (a) the Series to which such Securities are to
be specifically allocated; (b) the name of the issuer and the title
of the Securities; (c) the number of shares or the principal amount
purchased and accrued interest, if any; (d) the date of purchase
and settlement; (e) the purchase price per unit; (f) the total
amount payable upon such purchase; (g) the name of the person from
whom or the broker through whom the purchase was made, and the name
of the clearing broker, if any; and (h) the name of the broker or
other party to whom payment is to be made. Custodian shall, upon
receipt of such Securities purchased by or for the Fund, pay to the
broker specified in the Certificate out of the moneys held for the
account of such Series the total amount payable upon such purchase,
provided that the same conforms to the total amount payable as set
forth in such Certificate, oral Instructions or Written Instruc-
tions.
2. Promptly after each execution of a sale of Securities by
the Fund, other than a sale of any Option, Futures Contract, Fu-
tures Contract Option, Repurchase Agreement, Reverse Repurchase
Agreement or Short Sale, the Fund shall deliver such to the Custo-
dian (i) with respect to each sale of Securities which are not
Money Market Securities, a Certificate, and (ii) with respect to
each sale of Money Market Securities, a Certificate, Oral Instruc-
tions or Written Instructions, specifying with respect to each such
sale: (a) the Series to which such Securities were specifically
allocated; (b) the name of the issuer and the title of the Secur-
ity; (c) the number of shares or principal amount sold, and accrued
interest, if any; (d) the date of sale and settlement; (e) the sale
price per unit; (f) the total amount payable to the Fund upon such
sale; (g) the name of the broker through whom or the person to whom
the sale was made, and the name of the clearing broker, if any; and
(h) the name of the broker to whom the Securities are to be deliv-
ered. On the settlement date, the Custodian shall deliver the
Securities specifically allocated to such Series to the broker in
accordance with generally accepted street practices and as speci-
fied in the Certificate upon receipt of the total amount payable to
the Fund upon such sale, provided that the same conforms to the
total amount payable as set forth in such Certificate, oral In-
structions or Written Instructions.
ARTICLE V
OPTIONS
1. Promptly after each execution of a purchase of any Option
by the Fund other than a closing purchase transaction, the Fund
shall deliver to the Custodian a Certificate specifying with re-
spect to each Option purchased: (a) the Series to which such Op-
tion is specifically allocated; (b) the type of Option (put or
call); (c) the instrument, currency, or Security underlying such
Option and the number of Options, or the name of the in the case of
an Index Option, the index to which such Option relates and the
number of Index Options purchased; (d) the expiration date; (e) the
exercise price; (f) the dates of purchase and settlement; (g) the
total amount payable by the Fund in connection with such purchase;
and (h) the name of the Clearing Member through whom such Option
was purchased. The Custodian shall pay, upon receipt of a Clearing
Member's written statement confirming the purchase of such Option
held by such Clearing Member for the account of the Custodian (or
any duly appointed and registered nominee of the Custodian) as Cus-
todian for the Fund, out of moneys held for the account of the Ser-
ies to which such Option is to be specifically allocated, the total
amount payable upon such purchase to the Clearing Member through
whom the purchase was made, provided that the same conforms to the
amount payable as set forth in such Certificate.
2. Promptly after the execution of a sale of any Option pur-
chased by the Fund, other than a closing sale transaction, pursuant
to paragraph 1 hereof, the Fund shall deliver to the Custodian a
Certificate specifying with respect to each such sale: (a) the
Series to which such Option was specifically allocated; (b) the
type of Option (put or call); (c) the instrument, currency, or
Security underlying such Option and the number of Options, or the
name of the issuer and the title and number of shares subject to
such Option or, in the case of a Index Option, the index to which
such Option relates and the number of Index Options sold; (d) the
date of sale; (e) the sale price; (f) the date of settlement; (g)
the total amount payable to the Fund upon such sale; and (h) the
name of the Clearing Member through whom the sale was made. The
Custodian shall consent to the delivery of the Option sold by the
Clearing Member which previously supplied the confirmation descri-
bed in preceding paragraph of this Article with respect to such Op-
tion upon receipt by the Custodian of the total amount payable to
the Fund, provided that the same conforms to the total amount pay-
able as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Op-
tion purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the Custodian a Certificate specifying with re-
spect to such Call Option: (a) the Series to which such Call Op-
tion was specifically allocated; (b) the name of the issuer and the
title and number of shares subject to the Call Option; (c) the ex-
piration date; (d) the date of exercise and settlement; (e) the ex-
ercise price per share; (f) the total amount to be paid by the Fund
upon such exercise; and (g) the name of the Clearing Member through
whom such Call Option was exercised. The Custodian shall, upon re-
ceipt of the Securities underlying the Call Option which was exer-
cised, pay out of the moneys held for the account of the Series to
which such Call Option was specifically allocated the total amount
payable to the Clearing Member through whom the Call Option was ex-
ercised, provided that the same conforms to the total amount pay-
able as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the Custodian a Certificate specifying with re-
spect to such Put Option: (a) the Series to which such Put Option
was specifically allocated; (b) the name of the issuer and the
title and number of shares subject to the Put Option; (c) the ex-
piration date; (d) the date of exercise and settlement; (e) the
exercise price per share; (f) the total amount to be paid to the
Fund upon such exercise; and (g) the name of the Clearing Member
through whom such Put Option was exercised. The Custodian shall,
upon receipt of the amount payable upon the exercise of the Put
Option, deliver or direct a Depository to deliver the Securities
specifically allocated to such Series, provided the same conforms
to the amount payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Index Op-
tion purchased by the Fund pursuant to paragraph 1 hereof, the Fund
shall deliver to the Custodian a Certificate specifying with re-
spect to such Index Option: (a) the Series to which such Index Op-
tion was specifically allocated; (b) the type of Index Option (put
or call) (c) the number of Options being exercised; (d) the index
to which such Option relates; (e) the expiration date; (f) the ex-
ercise price; (g) the total amount to be received by the Fund in
connection with such exercise; and (h) the Clearing Member from
whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Covered Call Option: (a) the Series for which
such Covered Call Option was written; (b) the name of the issuer
and the title and number of shares for which the Covered Call Op-
tion was written and which underlie the same; (c) the expiration
date; (d) the exercise price; (e) the premium to be received by the
Fund; (f) the date such Covered Call Option was written; and (g)
the name of the Clearing Member through whom the premium is to be
received. The Custodian shall deliver or cause to be delivered,
upon receipt of the premium specified in the Certificate with re-
spect to such Covered Call Option, such receipts as are required in
accordance with the customs prevailing among Clearing Members deal-
ing in Covered Call Options and shall impose, or direct a Deposi-
tory to impose, upon the underlying Securities specified in the
Certificate specifically allocated to such Series such restrictions
as may be required by such receipts. Notwithstanding the forego-
ing, the Custodian has the right, upon prior written notification
to the Fund, at any time to refuse to issue any receipts for Secu-
rities in the possession of the Custodian and not deposited with a
Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and
described in the preceding paragraph of this Article is exercised,
the Fund shall promptly deliver to the Custodian a Certificate in-
structing the Custodian to deliver, or to direct the Depository to
deliver, the Securities subject to such Covered Call Option and
specifying: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of
shares subject to the Covered Call Option; (c) the Clearing Member
to whom the underlying Securities are to be delivered; and (d) the
total amount payable to the Fund upon such delivery. Upon the re-
turn and/or cancellation of any receipts delivered pursuant to para-
graph 6 of this Article, the Custodian shall deliver, or direct a
Depository to deliver, the underlying Securities as specified in
the Certificate upon payment of the amount to be received as set
forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to such Put Option: (a) the Series for which such Put Op-
tion was written; (b) the name of the issuer and the title and num-
ber of shares for which the Put Option is written and which under-
lie the same; (c) the expiration date; (d) the exercise price; (e)
the premium to be received by the Fund; (f) the date such Put Op-
tion is written; (g) the name of the Clearing Member through whom
the premium is to be received and to whom a Put Option guarantee
letter is to be delivered; (h) the amount of cash, and/or the
amount and kind of Securities, if any, specifically allocated to
such Series to be deposited in the Senior Security Account for such
Series; and (i) the amount of cash and/or the amount and kind of
Securities specifically allocated to such Series to be deposited
into the Collateral Account for such Series. The Custodian shall,
after making the deposits into the Collateral Account specified in
the Certificate, issue a Put Option guarantee letter substantially
in the form utilized by the Custodian on the date hereof, and de-
liver the same to the Clearing Member specified in the Certificate
upon receipt of the premium specified in said Certificate. Not-
withstanding the foregoing, the Custodian shall be under no obliga-
tion to issue any Put Option guarantee letter or similar document
if it is unable to make any of the representations contained there-
in.
9. Whenever a Put Option written by the Fund and described
in the preceding paragraph is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series
to which such Put Option was written; (b) the name of the issuer
and title and number of shares subject to the Put Option; (c) the
Clearing Member from whom the underlying Securities are to be re-
ceived; (d) the total amount payable by the Fund upon such deliv-
ery; (e) the amount of cash and/or the amount and kind of Securi-
ties specifically allocated to such Series to be withdrawn from the
Collateral Account for such Series and (f) the amount of cash
and/or the amount and kind of Securities, specifically allocated to
such series, if any, to be withdrawn from the Senior Security Ac-
count. Upon the return and/or cancellation of any Put Option guar-
antee letter or similar document issued by the Custodian in connec-
tion with such Put Option, the Custodian shall pay out of the
moneys held for the account of the series to which such Put Option
was specifically allocated the total amount payable to the Clearing
Member specified in the Certificate as set forth in such Certifi-
cate, upon delivery of such Securities, and shall make the with-
drawals specified in such Certificate.
10. Whenever the Fund writes an Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with re-
spect to such Index Option: (a) the Series for which such Index
Option was written; (b) whether such Index Option is a put or a
call; (c) the number of Options written; (d) the index to which
such Option relates; (e) the expiration date; (f) the exercise
price; (g) the Clearing Member through whom such Option was writ-
ten; (h) the premium to be received by the Fund; (i) the amount of
cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in the Senior Security Ac-
count for such Series; (j) the amount of cash and/or the amount and
kind of Securities, if any, specifically allocated to such Series
to be deposited in the Collateral Account for such Series; and (k)
the amount of cash and/or the amount and kind of Securities, if
any, specifically allocated to such Series to be deposited in a
Margin Account, and the name in which such account is to be or has
been established. The Custodian shall, upon receipt of the premium
specified in the Certificate, make the deposits, if any, into the
Senior Security Account specified in the Certificate, and either
(1) deliver such receipts, if any, which the Custodian has specifi-
cally agreed to issue, which are in accordance with the customs
prevailing among Clearing Members in Index Options and make the de-
posits into the Collateral Account specified in the Certificate, or
(2) make the deposits into the Margin Account specified in the Cer-
tificate.
11. Whenever an Index Option written by the Fund and descri-
bed in the preceding paragraph of this Article is exercised, the
Fund shall promptly deliver to the Custodian a Certificate specify-
ing with respect to such Index Option: (a) the Series for which
such Index Option was written; (b) such information as may be
necessary to identify the Index Option being exercised; (c) the
Clearing Member through whom such Index Option is being exercised;
(d) the total amount payable upon such exercise, and whether such
amount is to be paid by or to the Fund; (e) the amount of cash
and/or amount and kind of Securities, if any, to be withdrawn from
the Margin Account; and (f) the amount of cash and/or amount and
kind of Securities, if any, to be withdrawn from the Senior Secur-
ity Account for such Series; and the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from the
Collateral Account for such Series. Upon the return and/or can-
cellation of the receipt, if any, delivered pursuant to the preced-
ing paragraph of this Article, the Custodian shall pay out of the
moneys held for the account of the Series to which such Stock Index
Option was specifically allocated to the Clearing Member specified
in the Certificate the total amount payable, if any, as specified
therein.
12. Promptly after the execution of a purchase or sale by the
Fund of any Option identical to a previously written Option descri-
bed in paragraphs, 6, 8 or 10 of this Article in a transaction ex-
pressly designated as a "Closing Purchase Transaction" or a "Clos-
ing Sale Transaction", the Fund shall promptly deliver to the Cus-
todian a Certificate specifying with respect to the Option being
purchased: (a) that the transaction is a Closing Purchase Transac-
tion or a Closing Sale Transaction; (b) the Series for which the
Option was written; (c) the instrument, currency, or Security sub-
ject to the Option, or, in the case of an Index Option, the index
to which such Option relates and the number of Options held; (d)
the exercise price; (e) the premium to be paid by or the amount to
be paid to the Fund; (f) the expiration date; (g) the type of Op-
tion (put or call); (h) the date of such purchase or sale; (i) the
name of the Clearing Member to whom the premium is to be paid or
from whom the amount is to be received; and (j) the amount of cash
and/or the amount and kind of Securities, if any, to be withdrawn
from the Collateral Account, a specified Margin Account, or the
Senior Security Account for such Series. Upon the Custodian's pay-
ment of the premium or receipt of the amount, as the case may be,
specified in the Certificate and the return and/or cancellation of
any receipt issued pursuant to paragraphs 6, 8 or 10 of this Arti-
cle with respect to the Option being liquidated through the Closing
Purchase Transaction or the Closing Sale Transaction, the Custodian
shall remove, or direct a Depository to remove, the previously im-
posed restrictions on the Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Clos-
ing Purchase Transaction with respect to any Option purchased or
written by the Fund and described in this Article, the Custodian
shall delete such Option from the statements delivered to the Fund
pursuant to paragraph 3 Article III herein, and upon the return
and/or cancellation of any receipts issued by the Custodian, shall
make such withdrawals from the Collateral Account, and the Margin
Account and/or the Senior Security Account as may be specified in
a Certificate received in connection with such expiration, exer-
cise, or consummation.
14. Securities acquired by the Fund through the exercise of
an Option described in this Article shall be subject to Article IV
hereof.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract,
the Fund shall deliver to the Custodian a Certificate specifying
with respect to such Futures Contract, (or with respect to any
number of identical Futures Contract (s)): (a) the Series for
which the Futures Contract is being entered; (b) the category of
Futures Contract (the name of the underlying index or financial
instrument); (c) the number of identical Futures Contracts entered
into; (d) the delivery or settlement date of the Futures Con-
tract(s); (e) the date the Futures Contract(s) was (were) entered
into and the maturity date; (f) whether the Fund is buying (going
long) or selling (going short) such Futures Contract(s); (g) the
amount of cash and/or the amount and kind of Securities, if any, to
be deposited in the Senior Security Account for such Series; (h)
the name of the broker, dealer, or futures commission merchant
through whom the Futures Contract was entered into; and (i) the
amount of fee or commission, if any, to be paid and the name of the
broker, dealer, or futures commission merchant to whom such amount
is to be paid. The Custodian shall make the deposits, if any, to
the Margin Account in accordance with the terms and conditions of
the Margin Account Agreement. The Custodian shall make payment out
of the moneys specifically allocated to such Series of the fee or
commission, if any, specified in the Certificate and deposit in the
Senior Security Account for such Series the amount of cash and/or
the amount and kind of Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund to a broker, dealer, or futures
commission merchant with respect to an outstanding Futures Contract
shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment
from a broker, dealer, or futures commission merchant to the Fund
with respect to an outstanding Futures Contract shall be received
and dealt with by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian here-
under is retained by the Fund until delivery or settlement is made
on such Futures Contract, the Fund shall deliver to the Custodian
prior to the delivery or settlement date a Certificate specifying:
(a) the Futures Contract and the Series to which the same relates;
(b) with respect to an Index Futures Contract, the total cash set-
tlement amount to be paid or received, and with respect to a Finan-
cial Futures Contract, the Securities and/or amount of cash to be
delivered or received; (c) the broker, dealer, or futures commis-
sion merchant to or from whom payment or delivery is to be made or
received; and (d) the amount of cash and/or Securities to be with-
drawn from the Senior Security Account for such Series. The Custo-
dian shall make the payment or delivery specified in the Certifi-
cate, and delete such Futures Contract from the statements deliv-
ered to the Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to
offset a Futures Contract held by the Custodian hereunder, the Fund
shall deliver to the Custodian a Certificate specifying: (a) the
items of information required in a Certificate described in para-
graph 1 of this Article, and (b) the Futures Contract being offset.
The Custodian shall make payment out of the money specifically al-
located to such Series of the fee or commission, if any, specified
in the Certificate and delete the Futures Contract being offset
from the statements delivered to the Fund pursuant to paragraph 3
of Article III herein, and make such withdrawals from the Senior
Security Account for such Series as may be specified in the Cer-
tificate. The withdrawals, if any, to be made from the Margin Ac-
count shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the execution of a purchase of any Futures
Contract Option by the Fund, the Fund shall deliver to the Custo-
dian a Certificate specifying with respect to such Futures Contract
Option: (a) the Series to which such Option is specifically allo-
cated; (b) the type of Futures Contract Option (put or call); (c)
the type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures
Contract Option purchased; (d) the expiration date; (e) the exer-
cise price; (f) the dates of purchase and settlement; (g) the
amount of premium to be paid by the Fund upon such purchase; (h)
the name of the broker or futures commission merchant through whom
such Option was purchased; and (i) the name of the broker, or fu-
tures commission merchant, to whom payment is to be made. The Cus-
todian shall pay out of the moneys specifically allocated to such
Series the total amount to be paid upon such purchase to the broker
or futures commissions merchant through whom the purchase was made,
provided that the same conforms to the amount set forth in such
Certificate.
2. Promptly after the execution of a sale of any Futures
Contract Option purchased by the Fund pursuant to paragraph 1 here-
of, the Fund shall deliver to the Custodian a Certificate specify-
ing with respect to each such sale: (a) Series to which such Fu-
tures Contract Option was specifically allocated; (b) the type of
Future Contract Option (put or call); (c) the type of Futures Con-
tract and such other information as may be necessary to identify
the Futures Contract underlying the Futures Contract Option; (d)
the date of sale; (e) the sale price; (f) the date of settlement;
(g) the total amount payable to the Fund upon such sale; and (h)
the name of the broker of futures commission merchant through whom
the sale was made. The Custodian shall consent to the cancellation
of the Futures Contract Option being closed against payment to the
Custodian of the total amount payable to the Fund, provided the
same conforms to the total amount payable as set forth in such
Certificate.
3. Whenever a Futures Contract Option purchased by the Fund
pursuant to paragraph 1 is exercised by the Fund, the Fund shall
promptly deliver to the Custodian a Certificate specifying: (a)
the Series to which such Futures Contract Option was specifically
allocated; (b) the particular Futures Contract Option (put or call)
being exercised; (c) the type of Futures Contract underlying the
Futures Contract Option; (d) the date of exercise; (e) the name of
the broker or futures commission merchant through whom the Futures
Contract Option is exercised; (f) the net total amount, if any,
payable by the Fund; (g) the amount, if any, to be received by the
Fund; and (h) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account for such
Series. The Custodian shall make, out of the moneys and Securities
specifically allocated to such Series, the payments of money, if
any, and the deposits of Securities, if any, into the Senior Secur-
ity Account as specified in the Certificate. The deposits, if any,
to be made to the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
4. Whenever the Fund writes a Futures Contract Option, the
Fund shall promptly deliver to the Custodian a Certificate speci-
fying with respect to such Futures Contract Option: (a) the Series
for which such Futures Contract Option was written; (b) the type of
Futures Contract Option (put or call); (c) the type of Futures Con-
tract and such other information as may be necessary to identify
the Futures Contract underlying the Futures Contract Option; (d)
the expiration date; (e) the exercise price; (f) the premium to be
received by the Fund; (g) the name of the broker or futures commis-
sion merchant through whom the premium is to be received; and (h)
the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in the Senior Security Account for such Ser-
ies. The Custodian shall, upon receipt of the premium specified in
the Certificate, make out of the moneys and Securities specifically
allocated to such Series the deposits into the Senior Security Ac-
count, if any, as specified in the Certificate. The deposits, if
any, to be made to the Margin Account shall be made by the Custo-
dian in accordance with the terms and conditions of the Margin Ac-
count Agreement.
5. Whenever a Futures Contract Option written by the Fund
which is a call is exercised, the Fund shall promptly deliver to
the Custodian a Certificate specifying: (a) the Series to which
such Futures Contract Option was specifically allocated; (b) the
particular Futures Contract Option exercised; (c) the type of Fu-
tures Contract underlying the Futures Contract Option; (d) the name
of the broker or futures commission merchant through whom such Fu-
tures Contract Option was exercised; (e) the net total amount, if
any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the
amount of cash and/or the amount and kind of Securities to be de-
posited in the Senior Security Account for such Series. The Custo-
dian shall, upon its receipt of the net total amount payable to the
Fund, if any, specified in such Certificate make the payments, if
any, and the deposits, if any, into the Senior Security Account as
specified in the Certificate. The deposits, if any, to be made to
the Margin Account shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is written by
the Fund and which is a put is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series
to which such Option was specifically allocated; (b) the particular
Futures Contract Option exercised; (c) the type of Futures Contract
underlying such Futures Contract Option; (d) the name of the broker
or futures commission merchant through whom such Futures Contract
Option is exercised; (e) the net total amount, if any, payable to
the Fund upon such exercise; (f) the net total amount, if any, pay-
able by the Fund upon such exercise; and (g) the amount and kind of
Securities and/or cash to be withdrawn from or deposited in, the
Senior Security Account for such Series, if any. The Custodian
shall, upon its receipt of the net total amount payable to the
Fund, if any, specified in the Certificate, make out of the moneys
and Securities specifically allocated to such Series, the payments,
if any, and the deposits, if any, into the Senior Security Account
as specified in the Certificate. The deposits to and/or withdraw-
als from the Margin Account, if any, shall be made by the Custodian
in accordance with the terms and conditions of the Margin Account
Agreement.
7. Promptly after the execution by the Fund of a purchase of
any Futures Contract Option identical to a previously written Fu-
tures Contract Option described in this Article in order to liqui-
date its position as a writer of such Futures Contract Option, the
Fund shall deliver to the Custodian a Certificate specifying with
respect to the Futures Contract Option being purchased: (a) the
Series to which such Option is specifically allocated; (b) that the
transaction is a closing transaction; (c) the type of Future Con-
tract and such other information as may be necessary to identify
the Futures Contract underlying the Futures Option Contract; (d)
the exercise price; (e) the premium to be paid by the Fund; (f) the
expiration date; (g) the name of the broker or futures commission
merchant to whom the premium is to be paid; and (h) the amount of
cash and/or the amount and kind of Securities, if any, to be with-
drawn from the Senior Security Account for such Series. The Custo-
dian shall effect the withdrawals from the Senior Security Account
specified in the Certificate. The withdrawals, if any, to be made
from the Margin Account shall be made by the Custodian in accor-
dance with the terms and conditions of the Margin Account Agree-
ment.
8. Upon the expiration, exercise, or consummation of a clos-
ing transaction with respect to, any Futures Contract Option writ-
ten or purchased by the Fund and described in this Article, the
Custodian shall (a) delete such Futures Contract Option from the
statements delivered to the Fund pursuant to paragraph 3 of Article
III herein and (b) make such withdrawals from and/or in the case of
an exercise such deposits into the Senior Security Account as may
be specified in a Certificate. The deposits to and/or withdrawals
from the Margin Account, if any, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
9. Futures Contracts acquired by the Fund through the exer-
cise of a Futures Contract Option described in this Article shall
be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after the execution of any short sales of Secu-
rities by any Series of the Fund, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the Series for which such
short sale was made; (b) the name of the issuer-and the title of
the Security; (c) the number of shares or principal amount sold,
and accrued interest or dividends, if any; (d) the dates of the
sale and settlement; (e) the sale price per unit; (f) the total
amount credited to the Fund upon such sale, if any, (g) the amount
of cash and/or the amount and kind of Securities, if any, which are
to be deposited in a Margin Account and the name in which such Mar-
gin Account has been or is to be established; (h) the amount of
cash and/or the amount and kind of Securities, if any, to be de-
posited in a Senior Security Account, and (i) the name of the bro-
ker through whom such short sale was made. The Custodian shall
upon its receipt of a statement from such broker confirming such
sale and that the total amount credited to the Fund upon such sale,
if any, as specified in the Certificate is held by such broker for
the account of the Custodian (or any nominee of the Custodian) as
custodian of the Fund, issue a receipt or make the deposits into
the Margin Account and the Senior Security Account specified in the
Certificate.
2. Promptly after the execution of a purchase to close-out
any short sale of Securities, the Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to each such
closing out: (a) the Series for which such transaction is being
made; (b) the name of the issuer and the title of the Security; (c)
the number of shares or the principal amount, and accrued interest
or dividends, if any, required to effect such closing-out to be
delivered to the broker; (d) the dates of closing-out and settle-
ment; (e) the purchase price per unit; (f) the net total amount
payable to the Fund upon such closing-out; (g) the net total amount
payable to the broker upon such closing-out; (h) the amount of cash
and the amount and kind of Securities to be withdrawn, if any, from
the Margin Account; (i) the amount of cash and/or the amount and
kind of Securities, if any, to be withdrawn from the Senior Secur-
ity Account; and (j) the name of the broker through whom the Fund
is effecting such closing-out. The Custodian shall, upon receipt
of the net total amount payable to the Fund upon such closing-out,
and the return and/or cancellation of the receipts, if any, issued
by the Custodian with respect to the short sale being closed-out,
pay out of the moneys held for the account of the Fund to the bro-
ker the net total amount payable to the broker, and make the with-
drawals from the Margin Account and the Senior Security Account, as
the same are specified in the Certificate.
ARTICLE IX
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Repurchase Agreement or
a Reverse Repurchase Agreement with respect to Securities and money
held by the Custodian hereunder, the Fund shall deliver to the Cus-
todian a Certificate, or in the event such Repurchase Agreement or
Reverse Repurchase Agreement is a Money Market Security, a Certifi-
cate, Oral Instructions, or Written Instructions specifying: (a)
the Series for which the Repurchase Agreement or Reverse Repurchase
Agreement is entered; (b) the total amount payable to or by the
Fund in connection with such Repurchase Agreement or Reverse Repur-
chase Agreement and specifically allocated to such Series; (c) the
broker, dealer, or financial institution with whom the Repurchase
Agreement or Reverse Repurchase Agreement is entered; (d) the
amount and kind of Securities to be delivered or received by the
Fund to or from such broker, dealer, or financial institution; (e)
the date of such Repurchase Agreement or Reverse Repurchase Agree-
ment; and (f) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to be
deposited in a Senior Security Account for such Series in connec-
tion with such Reverse Repurchase Agreement. The Custodian shall,
upon receipt of the total amount payable to or by the Fund speci-
fied in the Certificate, Oral Instructions, or Written Instructions
make or accept the delivery to or from the broker, dealer, or fin-
ancial institution and the deposits, if any, to the Senior Security
Account, specified in such Certificate, Oral Instructions, or Writ-
ten Instructions.
2. Upon the termination of a Repurchase Agreement or a Re-
verse Repurchase Agreement described in preceding paragraph 1 of
this Article, the Fund shall promptly deliver a Certificate or, in
the event such Repurchase Agreement or Reverse Repurchase Agreement
is a Money Market Security, a Certificate, Oral Instructions, or
Written Instructions to the Custodian specifying: (a) the Repur-
chase Agreement or Reverse Repurchase Agreement being terminated
and the Series for which same was entered; (b) the total amount
payable to or by the Fund in connection with such termination; (c)
the amount and kind of Securities to be received or delivered by
the Fund and specifically allocated to such Series in connection
with such termination; (d) the date of termination; (e) the name of
the broker, dealer, or financial institution with whom the Repur-
chase Agreement or Reverse Repurchase Agreement is to be termina-
ted; and (f) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Senior Securities
Account for such Series. The Custodian shall, upon receipt or
delivery of the amount and kind of Securities or cash to be re-
ceived or delivered by the Fund specified in the Certificate, Oral
Instructions, or Written Instructions, make or receive the payment
to or from the broker, dealer, or financial institution and make
the withdrawals, if any, from the Senior Security Account, speci-
fied in such Certificate, Oral Instructions, or Written Instruc-
tions.
3. The Certificates, Oral Instructions, or Written Instruc-
tions described in paragraphs 1 and 2 of this Article may with re-
spect to any particular Repurchase Agreement or Reverse Repurchase
Agreement be combined and delivered to the Custodian at the time of
entering into such Repurchase Agreement or Reverse Repurchase
Agreement.
ARTICLE X
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifi-
cally allocated to a Series held by the Custodian hereunder, the
Fund shall deliver or cause to be delivered to the Custodian a Cer-
tificate specifying with respect to each such loan: (a) the Series
to which the loaned Securities are specifically allocated; (b) the
name of the issuer and the title of the Securities, (c) the number
of shares or the principal amount loaned, (d) the date of loan and
delivery, (e) the total amount to be delivered to the Custodian ag-
ainst the loan of the Securities, including the amount of cash col-
lateral and the premium, if any, separately identified, and (f) the
name of the broker, dealer, or financial institution to which the
loan was made. The Custodian shall deliver the Securities thus de-
signated to the broker, dealer or financial institution to which
the loan was made upon receipt of the total amount designated in
the Certificate as to be delivered against the loan of Securities.
The Custodian may accept payment in connection with a delivery
otherwise than through the Book-Entry System or a Depository only
in the form of a certified or bank cashier's check payable to the
order of the Fund or the Custodian drawn on New York Clearing House
funds.
2. In connection with each termination of a loan of Securi-
ties by the Fund, the Fund shall deliver or cause to be delivered
to the Custodian a Certificate specifying with respect to each such
loan termination and return of Securities: (a) the Series to which
the loaned Securities are specifically allocated; (b) the name of
the issuer and the title of the Securities to be returned, (c) the
number of shares or the principal amount to be returned, (d) the
date of termination, (e) the total amount to be delivered by the
Custodian (including the cash collateral for such Securities minus
any offsetting credits as described in said Certificate), and (f)
the name of the broker, dealer, or financial institution from which
the Securities will be returned. The Custodian shall receive all
Securities returned from the broker, dealer, or financial institu-
tion to which such Securities were loaned and upon receipt thereof
shall pay, out of the moneys held for the account of the Fund, the
total amount payable upon such return of Securities as set forth in
the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall establish a Senior Security Account
and from time to time make such deposits thereto, or withdrawals
therefrom, as specified in a Certificate. Such Certificate shall
specify the Series for which such deposit or withdrawal is to be
made and the amount of cash and/or the amount and kind of Securi-
ties specifically allocated to such Series to be deposited in, or
withdrawn from, such Senior Security Account for such Series. In
the event that the Fund fails to specify in a Certificate the Ser-
ies, the name of the issuer, the title and the number of shares or
the principal amount of any particular Securities to be deposited
by the Custodian into, or withdrawn from, a Senior Securities
Account, the Custodian shall be under no obligation to make any
such deposit or withdrawal and shall promptly notify the Fund that
no such deposit has been made.
2. The Custodian shall make deliveries or payments from a
Margin Account to the broker, dealer, futures commission merchant
or Clearing Member in whose name, or for whose benefit, the account
was established as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distri-
butions with respect to Securities deposited in any Margin Account
shall be dealt with in accordance with the terms and conditions of
the Margin Account Agreement.
4. The Custodian shall to the extent permitted by the Fund's
Declaration of Trust, investment restrictions and the Investment
Company Act of 1940 have a continuing lien and security interest in
and to any property at any time held by the Custodian in any Colla-
teral Account described herein. In accordance with applicable law
the Custodian may enforce its lien and realize on any such property
whenever the Custodian has made payment or delivery pursuant to any
Put Option guarantee letter or similar document or any receipt is-
sued hereunder by the Custodian; provided, however, that the Custo-
dian shall not be required to issue any Put Option guarantee letter
unless it shall have received an opinion of counsel to the Fund or
its investment adviser that the issuance of such letters is autho-
rized by the Fund and that the Custodian's continuing lien and
security interest is valid, enforceable and not limited by the
Declaration of Trust, any investment restrictions or the Investment
Company Act of 1940. In the event the Custodian should realize on
any such property net proceeds which are less than the Custodian's
obligations under any Put Option guarantee letter or similar docu-
ment or any receipt, such deficiency shall be a debt owed the Cus-
todian by the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund
with a statement with respect to each Margin Account in which money
or Securities are held specifying as of the close of business on
the previous business day: (a) the name of the Margin Account; (b)
the amount and kind of Securities held therein; and (c) the amount
of money held therein. The Custodian shall make available upon re-
quest to any broker, dealer, or futures commission merchant speci-
fied in the name of a Margin Account a copy of the statement fur-
nished the Fund with respect to such Margin Account.
6. The Custodian shall establish a Collateral Account and
from time to time shall make such deposits thereto as may be speci-
fied in a Certificate. Promptly after the close of business on
each business day in which cash and/or Securities are maintained in
a Collateral Account for any Series, the Custodian shall furnish
the Fund with a statement with respect to such Collateral Account
specifying the amount of cash and/or the amount and kind of Securi-
ties held therein. No later than the close of business next suc-
ceeding the delivery to the Fund of such statement, the Fund shall
furnish to the Custodian a Certificate or Written Instructions
specifying the then market value of the Securities described in
such statement. In the event such then market value is indicated
to be less than the Custodian's obligation with respect to any out-
standing Put Option guarantee letter or similar document, the Fund
shall promptly specify in a Certificate the additional cash and/or
Securities to be deposited in such Collateral Account to eliminate
such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the re-
solution of the Board of Trustees of the Fund, certified by the
Secretary or any Assistant Secretary, either (i) setting forth with
respect to the Series specified therein the date of the declaration
of a dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to the
shareholders of record as of that date and the total amount payable
to the Transfer Agent Account and any sub-dividend agent or co-
dividend agent of the Fund on the payment date, or (ii) authorizing
with respect to the Series specified therein and the declaration of
dividends and distributions thereon the Custodian to rely on Oral
Instructions, Written Instructions, or a Certificate setting forth
the date of the declaration of such dividend or distribution, the
date of payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per
Share of such Series to the shareholders of record as of that date
and the total amount payable to the Transfer Agent Account on the
payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions, or Certificate, as the case may
be, the Custodian shall pay to the Transfer Agent Account out of
the moneys held for the account of the Series specified therein the
total amount payable to the Transfer Agent Account and with respect
to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver
or cause to be delivered, to the Custodian a Certificate duly
specifying:
(a) The Series, the number of Shares sold, trade
date, and price; and
(b) The amount of money to be received by the Cus-
todian for the sale of such Shares and specifically allocated to
the separate account in the name of such Series.
2. Upon receipt of such money from the Fund's General Dis-
tributor, the Custodian shall credit such money to the separate
account in the name of the Series for which such money was re-
ceived.
3. Upon issuance of any Shares of any Series the Custodian
shall pay, out of the money held for the account of such Series,
all original issue or other taxes required to be paid by the Fund
in connection with such issuance upon the receipt of a Certificate
specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires
the Custodian to make payment out of the money held by the Custo-
dian hereunder in connection with a redemption of any Shares, it
shall furnish, or cause to be furnished, to the Custodian a Certi-
ficate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt of an advice from an Authorized Person set-
ting forth the Series and number of Shares received by the Transfer
Agent for redemption and that such Shares are in good form for re-
demption, the Custodian shall make payment to the Transfer Agent
Account out of the moneys held in the separate account in the name
of the Series the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance
funds on behalf of any Series which results in an overdraft because
the moneys held by the Custodian in the separate account for such
Series shall be insufficient to pay the total amount payable upon
a purchase of Securities specifically allocated to such Series, as
set forth in a Certificate, Oral Instructions, or Written Instruc-
tions or which results in an overdraft in the separate account of
such Series for some other reason, or if the Fund is for any other
reason indebted to the Custodian with respect to a Series, (except
a borrowing for investment or for temporary or emergency purposes
using Securities as collateral pursuant to a separate agreement and
subject to the provisions of paragraph 2 of this Article), such
overdraft or indebtedness shall be deemed to be a loan made by the
Custodian to the Fund for such Series payable on demand and shall
bear interest from the date incurred at a rate per annum (based on
a 360-day year for the actual number of days involved) equal to the
effective date of any change in such Federal Funds Rate but in no event
to be less than 6% per annum. In addition, unless the Fund has
given a Certificate that the Custodian shall not impose a lien and
security interest to secure such overdrafts (in which event it
shall not do so), the Custodian shall have a continuing lien and
security interest in the aggregate amount of such overdrafts and
indebtedness as may from time to time exist in and to any property
specifically allocated to such Series at any time held by it for
the benefit of such Series or in which the Fund may have an in-
terest which is then in the Custodian's possession or control or in
possession or control of any third party acting in the Custodian's
behalf. The Fund authorizes the Custodian, in its sole discretion,
at any time to charge any such overdraft or indebtedness together
with interest due thereon against any money balance in an account
standing in the name of such Series' credit on the Custodian's
books. In addition, the Fund hereby covenants that on each Busi-
ness Day on which either it intends to enter a Reverse Repurchase
Agreement and/or otherwise borrow from a third party, or which next
succeeds a Business Day on which at the close of business the Fund
had outstanding a Reverse Repurchase Agreement or such a borrowing,
it shall prior to 9 a.m., New York City time, advise the Custodian,
in writing, of each such borrowing, shall specify the Series to
which the same relates, and shall not incur any indebtedness, in-
cluding pursuant to any Reverse Repurchase Agreement, not so speci-
fied other than from the Custodian.
2. The Fund will cause to be delivered to the Custodian by
any bank (including, if the borrowing is pursuant to a separate
agreement, the Custodian) from which it borrows money for invest-
ment or for temporary or emergency purposes using Securities held
by the Custodian hereunder as collateral for such borrowings, a no-
tice or undertaking in the form currently employed by any such bank
setting forth the amount which such bank will loan to the Fund ag-
ainst delivery of a stated amount of collateral. The Fund shall
promptly deliver to the Custodian a Certificate specifying with re-
spect to each such borrowing: (a) the Series to which such borrow-
ing relates; (b) the name of the bank, (c) the amount and terms of
the borrowing, which may be set forth by incorporating by reference
an attached promissory note, duly endorsed by the Fund, or other
loan agreement, (d) the time and date, if known, on which the loan
is to be entered into, (e) the date on which the loan becomes due
and payable, (f) the total amount payable to the Fund on the bor-
rowing date, (g) the market value of Securities to be delivered as
collateral for such loan, including the name of the issuer, the
title and the number of shares or the principal amount of any par-
ticular Securities, and (h) a statement specifying whether such
loan is for investment purposes or for temporary or emergency pur-
poses and that such loan is in conformance with the Investment Com-
pany Act of 1940 and the Fund's prospectus and Statement of Addi-
tional Information. The Custodian shall deliver on the borrowing
date specified in a Certificate the specified collateral and the
executed promissory note, if any, against delivery by the lending
bank of the total amount of the loan payable, provided that the
same conforms to the total amount payable as set forth in the Cer-
tificate. The Custodian may, at the option of the lending bank,
keep such collateral in its possession, but such collateral shall
be subject to all rights therein given the lending bank by virtue
of any promissory note or loan agreement. The Custodian shall de-
liver such Securities as additional collateral as may be specified
in a Certificate to collateralize further any transaction described
in this paragraph. The Fund shall cause all Securities released
from collateral status to be returned directly to the Custodian,
and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund
fails to specify in a Certificate the Series, the name of the
issuer, the title and number of shares or the principal amount of
any particular Securities to be delivered as collateral by the
Custodian, to any such bank, the Custodian shall not be under any
obligation to deliver any Securities.
ARTICLE XV
CUSTODY OF ASSETS OUTSIDE THE U.S.
1. The Custodian is authorized and instructed to employ, as
its agent, as subcustodians for the securities and other assets of
the Fund maintained outside of the United States the Foreign Sub-
custodians and Foreign Depositories designated on Schedule A here-
to. Except as provided in Schedule A, the Custodian shall employ
no other Foreign Custodian or Foreign Depository. The Custodian
and the Fund may amend Schedule A hereto from time to time to agree
to designate any additional Foreign Subcustodian or Foreign Deposi-
tory with which the Custodian has an agreement for such entity to
act as the Custodian's agent, as subcustodian, and which the Custo-
dian in its absolute discretion proposes to utilize to hold any of
the Fund's Foreign Property. Upon receipt of a Certificate or
Written Instructions from the Fund, the Custodian shall cease the
employment of any one or more of such subcustodians for maintaining
custody of the Fund's assets and such custodian shall be deemed
deleted from Schedule A.
2. The Custodian shall limit the securities and other assets
maintained in the custody of the Foreign Subcustodians to: (a)
"foreign securities," as defined in paragraph (c)(1) of Rule 17f-5
under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Fund may determine to be rea-
sonably necessary to effect the foreign securities transactions of
the Fund.
3. The Custodian shall identify on its books as belonging to
the Fund, the Foreign Securities held by each Foreign Subcustodian.
4. Each agreement pursuant to which the Custodian employs a
Foreign Subcustodian shall be substantially in the form reviewed
and approved by the Fund and will not be amended in a way that
materially affects the Fund without the Fund's prior written
consent and shall:
(a) require that such institution establish custody
account(s) for the Custodian on behalf of the Fund and physically
segregate in each such account securities and other assets of the
fund, and, in the event that such institution deposits the secu-
rities of the Fund in a Foreign Depository, that it shall identify
on its books as belonging to the Fund or the Custodian, as agent
for the Fund, the securities so deposited;
(b) provide that:
(1) the assets of the Fund will not be subject to
any right, charge, security interest, lien or claim of any kind in
favor of the Foreign Subcustodian or its creditors, except a claim
of payment for their safe custody or administration;
(2) beneficial ownership for the assets of the Fund
will be freely transferable without the payment of money or value
other than for custody or administration;
(3) adequate records will be maintained identifying
the assets as belonging to the Fund;
(4) the independent public accountants for the Fund
will be given access to the books and records of the Foreign Sub-
custodian relating to its actions under its agreement with the Cus-
todian or confirmation of the contents of those records;
(5) the Fund will receive periodic reports with
respect to the safekeeping of the Fund's assets, including, but not
necessarily limited to, notification of any transfer to or from the
custody account(s); and
(6) assets of the Fund held by the Foreign Subcus-
todian will be subject only to the instructions of the Custodian or
its agents.
(c) Require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harm-
less, the Custodian from and against any loss, damage, cost, ex-
pense, liability or claim arising out of or in connection with the
institution's performance of such obligations, with the exception
of any such losses, damages, costs, expenses, liabilities or claims
arising as a result of an act of God. At the election of the Fund,
it shall be entitled to be subrogated to the rights of the Custo-
dian with respect to any claims against a Foreign Subcustodian as
a consequence of any such loss, damage, cost, expense, liability or
claim of or to the Fund, if and to the extent that the Fund has not
been made whole for any such loss, damage, cost, expense, liability
or claim.
5. Upon receipt of a Certificate or Written Instructions,
which may be continuing instructions when deemed appropriate by the
parties, the Custodian shall on behalf of the Fund make or cause
its Foreign Subcustodian to transfer, exchange or deliver securi-
ties owned by the Fund, except to the extent explicitly prohibited
therein. Upon receipt of a Certificate or Written Instructions,
which may be continuing instructions when deemed appropriate by the
parties, the Custodian shall on behalf of the fund pay out or cause
its Foreign Subcustodians to pay out monies of the Fund. The
Custodian shall use all means reasonably available to it,
including, if specifically authorized by the Fund in a Certificate,
any necessary litigation at the cost and expense of the Fund
(except as to matters for which the Custodian is responsible
hereunder) to require or compel each Foreign Subcustodian or
Foreign Depository to perform the services required of it by the
agreement between it and the Custodian authorized pursuant to this
Agreement.
6. The Custodian shall maintain all books and records as
shall be necessary to enable the Custodian readily to perform the
services required of it hereunder with respect to the Fund's For-
eign Properties. The Custodians shall supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
Foreign Securities and other Foreign Properties of the Fund held by
Foreign Subcustodians, directly or through Foreign Depositories,
including but not limited to an identification of entities having
possession of the Fund's Foreign Securities and other assets, an
advice or other notification of any transfers of securities to or
from each custodial account maintained for the Fund or the Cus-
todian on behalf of the Fund indicating, as to securities acquired
for the Fund, the identity of the entity having physical possession
of such securities. The Custodian shall promptly and faithfully
transmit all reports and information received pertaining to the
Foreign Property of the Fund, including, without limitation, no-
tices or reports of corporate action, proxies and proxy soliciting
materials.
7. Upon request of the Fund, the Custodian shall use reason-
able efforts to arrange for the independent accountants of the Fund
to be afforded access to the books and records of any Foreign Sub-
custodian, or confirmation of the contents thereof, insofar as such
books and records relate to the Foreign Property of the Fund or the
performance of such Foreign Subcustodian under its agreement with
the Custodian; provided that any litigation to afford such access
shall be at the sole cost and expense of the Fund.
8. The Custodian recognizes that employment of a Foreign
Subcustodian or Foreign Depository for the Fund's Foreign Securi-
ties and Foreign Property is permitted by Section 17(f) of the In-
vestment Company Act of 1940 only upon compliance with Section (a)
of Rule 17f-5 promulgated thereunder. With respect to the Foreign
Subcustodians and Foreign Depositories identified on Schedule A,
the Custodian represents that it has furnished the Fund with cer-
tain materials prepared by the Custodian and with such other in-
formation in the possession of the Custodian as the Fund advised
the Custodian was reasonably necessary to assist the Board of
Trustees of the Fund in making the determinations required of the
Board of Trustees by Rule 17f-5, including, without limitation,
consideration of the matters set forth in the Notes to Rule 17f-5.
If the Custodian recommends any additional Foreign Subcustodian or
Foreign Depository, the Custodian shall supply information similar
in kind and scope to that furnished pursuant to the preceding sen-
tence. Further, the Custodian shall furnish annually to the Fund,
at such time as the Fund and Custodian shall mutually agree,
information concerning each Foreign Subcustodian and Foreign
Depository then identified on Schedule A similar in kind and scope
to that furnished pursuant to the preceding two sentences.
9. The Custodian's employment of any Foreign Subcustodian or
Foreign Depository shall constitute a representation that the Cus-
todian believes in good faith that such Foreign Subcustodian or
Foreign Depository provides a level of safeguards for maintaining
the Fund's assets not materially different from that provided by
the Custodian in maintaining the Fund's securities in the United
States. In addition, the Custodian shall monitor the financial
condition and general operational performance of the Foreign Sub-
custodians and Foreign Depositories and shall promptly inform the
Fund in the event that the Custodian has actual knowledge of a ma-
terial adverse change in the financial condition thereof or that
there appears to be a substantial likelihood that the shareholders'
equity of any Foreign Subcustodian will decline below $200 million
(U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million , or that the Foreign
Subcustodian or Foreign Depository has breached the agreement
between it and the Custodian in a way that the Custodian believes
adversely affects the Fund. Further, the Custodian shall advise
the Fund if it believes that there is a material adverse change in
the operating environment of any Foreign Subcustodian or Foreign
Depository.
ARTICLE XVI
CONCERNING THE CUSTODIAN
1. The Custodian shall use reasonable care in the perform-
ance of its duties hereunder, and, except as hereinafter provided,
neither the Custodian nor its nominee shall be liable for any loss
or damage, including counsel fees, resulting from its action or
omission to act or otherwise, either hereunder or under any Margin
Account Agreement, except for any such loss or damage arising out
of its own negligence, bad faith, or willful misconduct or that of
the subcustodians or co-custodians appointed by the Custodian or of
the officers, employees, or agents of any of them. The Custodian
may, with respect to questions of law arising hereunder or under
any Margin Account Agreement, apply for and obtain the advice and
opinion of counsel to the Fund, at the expense of the Fund, or of
its own counsel, at its own expense, and shall be fully protected
with respect to anything done or omitted by it in good faith in
conformity with such advice or opinion. The Custodian shall be
liable to the Fund for any loss or damage resulting from the use of
the Book-Entry System or any Depository arising by reason of any
negligence, bad faith or willful misconduct on the part of the
Custodian or any of its employees or agents.
2. Notwithstanding the foregoing, the Custodian shall be
under no obligation to inquire into, and shall not be liable for:
(a) The validity (but not the authenticity) of the issue
of any Securities purchased, sold, or written by or for the Fund,
the legality of the purchase, sale or writing thereof, or the pro-
priety of the amount paid or received therefor, as specified in a
Certificate, Oral Instructions, or Written Instructions;
(b) The legality of the sale or redemption of any
Shares, or the propriety of the amount to be received or paid
therefor, as specified in a Certificate;
(c) The legality of the declaration or payment of any
dividend by the Fund, as specified in a resolution, Certificate,
Oral Instructions, or Written Instructions;
(d) The legality of any borrowing by the Fund using
Securities as collateral;
(e) The legality of any loan of portfolio Securities,
nor shall the Custodian be under any duty or obligation to see to
it that the cash collateral delivered to it by a broker, dealer, or
financial institution or held by it at any time as a result of such
loan of portfolio Securities of the Fund is adequate collateral for
the Fund against any loss it might sustain as a result of such
loan, except that this subparagraph shall not excuse any liability
the Custodian may have for failing to act in accordance with Ar-
ticle X hereof or any Certificate, Oral Instructions or Written In-
structions given in accordance with this Agreement. The Custodian
specifically, but not by way of limitation, shall not be under any
duty or obligation periodically to check or notify the Fund that
the amount of such cash collateral held by it for the Fund is suf-
ficient collateral for the Fund, but such duty or obligation shall
be the sole responsibility of the Fund. In addition, the Custodian
shall be under no duty or obligation to see that any broker, dealer
or financial institution to which portfolio Securities of the Fund
are lent pursuant to Article X of this Agreement makes payment to
it of any dividends or interest which are payable to or for the ac-
count of the Fund during the period of such loan or at the termina-
tion of such loan, provided, however, that the Custodian shall
promptly notify the Fund in the event that such dividends or inter-
est are not paid and received when due; or
(f) The sufficiency or value of any amounts of money
and/or Securities held in any Margin Account, Senior Security Ac-
count or Collateral Account in connection with transactions by the
Fund, except that this subparagraph shall not excuse any liability
the Custodian may have for failing to establish, maintain, make de-
posits to or withdrawals from such accounts in accordance with this
Agreement. In addition, the Custodian shall be under no duty or
obligation to see that any broker, dealer, futures commission mer-
chant or Clearing Member makes payment to the Fund of any variation
margin payment or similar payment which the Fund may be entitled to
receive from such broker, dealer, futures commission merchant or
Clearing Member, to see that any payment received by the Custodian
from any broker, dealer, futures commission merchant or Clearing
Member is the amount the Fund is entitled to receive, or to notify
the Fund of the Custodian's receipt or non-receipt of any such pay-
ment.
3. The Custodian shall not be liable for, or considered to
be the Custodian of, any money, whether or not represented by any
check, draft, or other instrument for the payment of money, recei-
ved by it on behalf of the Fund until the Custodian actually re-
ceives such money directly or by the final crediting of the account
representing the Fund's interest at the Book-Entry System or the
Depository.
4. With respect to Securities held in a Depository, except
as otherwise provided in paragraph 5(b) of Article III hereof, the
Custodian shall have no responsibility and shall not be liable for
ascertaining or acting upon any calls, conversions, exchange of-
fers, tenders, interest rate changes or similar matters relating to
such Securities, unless the Custodian shall have actually received
timely notice from the Depository in which such Securities are
held. In no event shall the Custodian have any responsibility or
liability for the failure of a Depository to collect, or for the
late collection or late crediting by a Depository of any amount
payable upon Securities deposited in a Depository which may mature
or be redeemed, retired, called or otherwise become payable. How-
ever, upon receipt of a Certificate from the Fund of an overdue
amount on Securities held in a Depository the Custodian shall make
a claim against the Depository on behalf of the Fund, except that
the Custodian shall not be under any obligation to appear in, pro-
secute or defend any action suit or proceeding in respect to any
Securities held by a Depository which in its opinion may involve it
in expense or liability, unless indemnity satisfactory to it ag-
ainst all expense and liability be furnished as often as may be
required, or alternatively, the Fund shall be subrogated to the
rights of the Custodian with respect to such claim against the
Depository should it so request in a Certificate. This paragraph
shall not, however, excuse any failure by the Custodian to act in
accordance with a Certificate, Oral Instructions, or Written In-
structions given in accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation
to take action to effect collection of any amount due the Fund from
the Transfer Agent of the Fund nor to take any action to effect
payment or distribution by the Transfer Agent of the Fund of any
amount paid by the Custodian to the Transfer Agent of the Fund in
accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation
to take action to effect collection of any amount if the Securities
upon which such amount is payable are in default, or if payment is
refused after the Custodian has timely and properly, in accordance
with this Agreement, made due demand or presentation, unless and
until (i) it shall be directed to take such action by a Certificate
and (ii) it shall be assured to its satisfaction of reimbursement
of its costs and expenses in connection with any such action, but
the Custodian shall have such a duty if the Securities were not in
default on the payable date and the Custodian failed to timely and
properly make such demand for payment and such failure is the rea-
son for the non-receipt of payment.
7. The Custodian may, with the prior approval of the Board
of Trustees of the Fund, appoint one or more banking institutions
as subcustodian or subcustodians, or as co-Custodian or co-Custo-
dians, of Securities and moneys at any time owned by the Fund, upon
such terms and conditions as may be approved in a Certificate or
contained in an agreement executed by the Custodian, the Fund and
the appointed institution; provided, however, that appointment of
any foreign banking institution or depository shall be subject to
the provisions of Article XV hereof.
8. The Custodian agrees to indemnify the Fund against and
save the Fund harmless from all liability, claims, losses and de-
mands whatsoever, including attorney's fees, howsoever arising or
incurred because of the negligence, bad faith or willful misconduct
of any subcustodian of the Securities and moneys owned by the Fund.
9. The Custodian shall not be under any duty or obligation
(a) to ascertain whether any Securities at any time delivered to,
or held by it, for the account of the Fund and specifically allo-
cated to a Series are such as properly may be held by the Fund or
such Series under the provisions of its then current prospectus, or
(b) to ascertain whether any transactions by the Fund, whether or
not involving the Custodian, are such transactions as may properly
be engaged in by the Fund.
10. The Custodian shall be entitled to receive and the Fund
agrees to pay to the Custodian all reasonable out-of-pocket expen-
ses and such compensation as may be agreed upon in writing from
time to time between the Custodian and the Fund. The Custodian may
charge such compensation, and any such expenses with respect to a
Series incurred by the Custodian in the performance of its duties
under this Agreement against any money specifically allocated to
such Series. The Custodian shall also be entitled to charge ag-
ainst any money held by it for the account of a Series the amount
of any loss, damage, liability or expense, including counsel fees,
for which it shall be entitled to reimbursement under the provi-
sions of this Agreement attributable to, or arising out of, its
serving as Custodian for such Series. The expenses for which the
Custodian shall be entitled to reimbursement hereunder shall in-
clude, but are not limited to, the expenses of subcustodians and
foreign branches of the Custodian incurred in settling outside of
New York City transactions involving the purchase and sale of
Securities of the Fund. Notwithstanding the foregoing or anything
else contained in this Agreement to the contrary, the Custodian
shall, prior to effecting any charge for compensation, expenses, or
any overdraft or indebtedness or interest thereon, submit an in-
voice therefor to the Fund.
11. The Custodian shall be entitled to rely upon any Certi-
ficate, notice or other instrument in writing, Oral Instructions,
or Written Instructions received by the Custodian and reasonably
believed by the Custodian to be genuine. The Fund agrees to for-
ward to the Custodian a Certificate or facsimile thereof confirming
Oral Instructions or Written Instructions in such manner so that
such Certificate or facsimile thereof is received by the Custodian,
whether by hand delivery, telecopier or other similar device, or
otherwise, by the close of business of the same day that such Oral
Instructions or Written Instructions are given to the Custodian.
The Fund agrees that the fact that such confirming instructions are
not received by the Custodian shall in no way affect the validity
of the transactions or enforceability of the transactions thereby
authorized by the Fund. The Fund agrees that the Custodian shall
incur no liability to the Fund in acting upon Oral Instructions or
Written Instructions given to the Custodian hereunder concerning
such transactions provided such instructions reasonably appear to
have been received from an Authorized Person.
12. The Custodian shall be entitled to rely upon any instru-
ment, instruction or notice received by the Custodian and reason-
ably believed by the Custodian to be given in accordance with the
terms and conditions of any Margin Account Agreement. Without li-
miting the generality of the foregoing, the Custodian shall be
under no duty to inquire into, and shall not be liable for, the ac-
curacy of any statements or representations contained in any such
instrument or other notice including, without limitation, any
specification of any amount to be paid to a broker, dealer, futures
commission merchant or Clearing Member. This paragraph shall not
excuse any failure by the Custodian to have acted in accordance
with any Margin Agreement it has executed or any Certificate, Oral
Instructions, or Written Instructions given in accordance with this
Agreement.
13. The books and records pertaining to the Fund, as descri-
bed in Appendix E hereto, which are in the possession of the Custo-
dian shall be the property of the Fund. Such books and records
shall be prepared and maintained by the Custodian as required by
the Investment Company Act of 1940, as amended, and other applic-
able Securities laws and rules and regulations. The Fund, or the
Fund's authorized representatives, shall have access to such books
and records during the Custodian's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and re-
cords shall be provided by the Custodian to the Fund or the Fund's
authorized representative, and the Fund shall reimburse the Custo-
dian its expenses of providing such copies. Upon reasonable req-
uest of the Fund, the Custodian shall provide in hard copy or on
micro-film, whichever the Custodian elects, any records included in
any such delivery which are maintained by the Custodian on a com-
puter disc, or are similarly maintained, and the Fund shall reim-
burse the Custodian for its expenses of providing such hard copy or
micro-film.
14. The Custodian shall provide the Fund with any report ob-
tained by the Custodian on the system of internal accounting con-
trol of the Book-Entry system, each Depository or O.C.C., and with
such reports on its own systems of internal accounting control as
the Fund may reasonably request from time to time.
15. The Custodian shall furnish upon request annually to the
Fund a letter prepared by the Custodian's accountants with respect
to the Custodian's internal systems and controls in the form gener-
ally provided by the Custodian to other investment companies for
which the Custodian acts as custodian.
16. The Fund agrees to indemnify the Custodian against and
save the Custodian harmless from all liability, claims, losses and
demands whatsoever, including attorney's fees, howsoever arising
out of, or related to, the Custodian's performance of its obliga-
tions under this Agreement, except for any such liability, claim,
loss and demand arising out of the negligence, bad faith, or will-
ful misconduct of the Custodian, any co-Custodian or subcustodian
appointed by the Custodian, or that of the officers, employees, or
agents of any of them.
17. Subject to the foregoing provisions of this Agreement,
the Custodian shall deliver and receive Securities, and receipts
with respect to such Securities, and shall make and receive pay-
ments only in accordance with the customs prevailing from time to
time among brokers or dealers in such Securities and, except as may
otherwise be provided by this Agreement or as may be in accordance
with such customs, shall make payment for Securities only against
delivery thereof and deliveries of Securities only against payment
therefor.
18. The Custodian will comply with the procedures, guidelines
or restrictions ("Procedures") adopted by the Fund from time to
time for particular types of investments or transactions, e.g.,
Repurchase Agreements and Reverse Repurchase Agreements, provided
that the Custodian has received from the Fund a copy of such Pro-
cedures. If within ten days after receipt of any such Procedures,
the Custodian determines in good faith that it is unreasonable for
it to comply with any new procedures, guidelines or restrictions
set forth therein, it may within such ten day period send notice to
the Fund that it does not intend to comply with those new proce-
dures, guidelines or restrictions which it identifies with particu-
larity in such notice, in which event the Custodian shall not be
required to comply with such identified procedures, guidelines or
restrictions; provided, however, that, anything to the contrary set
forth herein or in any other agreement with the Fund, if the Custo-
dian identifies procedures, guidelines or restrictions with which
it does not intend to comply, the Fund shall be entitled to termi-
nate this Agreement without cost or penalty to the Fund upon thirty
days' written notice.
19. Whenever the Custodian has the authority to deduct monies
from the account for a series without a Certificate, it shall
notify the Fund within one business day of such deduction and the
reason for it. Whenever the Custodian has the authority to sell
Securities or any other property of the Fund on behalf of any Ser-
ies without a Certificate, the Custodian will notify the Fund of
its intention to do so and afford the Fund the reasonable oppor-
tunity to select which Securities or other property it wishes to
sell on behalf of such Series. If the Fund does not promptly sell
sufficient Securities or Deposited Property on behalf of the Ser-
ies, then, after notice, the Custodian may proceed with the in-
tended sale.
20. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are speci-
fically set forth or referred to in this Agreement, and no covenant
or obligation shall be implied in this Agreement against the Custo-
dian.
ARTICLE XVII
TERMINATION
1. Except as provided in paragraph 3 of this Article, this
Agreement shall continue until terminated by either the Custodian
giving to the Fund, or the Fund giving to the Custodian, a notice
in writing specifying the date of such termination, which date
shall be not less than 60 days after the date of the giving of such
notice. In the event such notice or a notice pursuant to paragraph
3 of this Article is given by the Fund, it shall be accompanied by
a copy of a resolution of the Board of Trustees of the Fund, cer-
tified by an Officer and the Secretary or an Assistant Secretary of
the Fund, electing to terminate this Agreement and designating a
successor custodian or custodians, each of which shall be eligible
to serve as a custodian for the Securities of a management invest-
ment company under the Investment Company Act of 1940. In the
event such notice is given by the Custodian, the Fund shall, on or
before the termination date, deliver to the Custodian a copy of a
resolution of the Board of Trustees of the Fund, certified by the
Secretary or any Assistant Secretary, designating a successor cus-
todian or custodians. In the absence of such designation by the
Fund, the Custodian may designate a successor custodian which shall
be a bank or trust company eligible to serve as a custodian for
Securities of a management investment company under the Investment
Company Act of 1940 and which is acceptable to the Fund. Upon the
date set forth in such notice this Agreement shall terminate, and
the Custodian shall upon receipt of a notice of acceptance by the
successor custodian on that date deliver directly to the successor
custodian all Securities and moneys then owned by the Fund and held
by it as Custodian, after deducting all fees, expenses and other
amounts for the payment or reimbursement of which it shall then be
entitled.
2. If a successor custodian is not designated by the Fund or
the Custodian in accordance with the preceding paragraph, the Fund
shall upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all Securities
(other than Securities held in the Book-Entry System which cannot
be delivered to the Fund) and moneys then owned by the Fund be
deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agree-
ment arising thereafter, other than the duty with respect to Secu-
rities held in the Book Entry System which cannot be delivered to
the Fund to hold such Securities hereunder in accordance with this
Agreement.
3. Notwithstanding the foregoing, the Fund may terminate
this Agreement upon the date specified in a written notice in the
event of the "Bankruptcy" of The Bank of New York. As used in this
sub-paragraph, the term "Bankruptcy" shall mean The Bank of New
York's making a general assignment, arrangement or composition with
or for the benefit of its creditors, or instituting or having in-
stituted against it a proceeding seeking a judgment of insolvency
or bankruptcy or the entry of a order for relief under any applic-
able bankruptcy law or any other relief under any bankruptcy or in-
solvency law or other similar law affecting creditors rights, or if
a petition is presented for the winding up or liquidation of the
party or a resolution is passed for its winding up or liquidation,
or it seeks, or becomes subject to, the appointment of an adminis-
trator, receiver, trustee, custodian or other similar official for
it or for all or substantially all of its assets or its taking any
action in furtherance of, or indicating its consent to approval of,
or acquiescence in, any of the foregoing.
ARTICLE XVIII
TERMINAL LINK
1. At no time and under no circumstances shall the Fund be
obligated to have or utilize the Terminal Link, and the provisions
of this Article shall apply if, but only if, the Fund in its sole
and absolute discretion elects to utilize the Terminal Link to
transmit Certificates to the Custodian.
2. The Terminal Link shall be utilized only for the purpose
of the Fund providing Certificates to the Custodian and the Custo-
dian providing notices to the Fund and only after the Fund shall
have established access codes and internal safekeeping procedures
to safeguard and protect the confidentiality and availability of
such access codes. Each use of the Terminal Link by the Fund shall
constitute a representation and warranty that at least two officers
have each utilized an access code that such internal safekeeping
procedures have been established by the Fund, and that such use
does not contravene the Investment Company Act of 1940 and the
rules and regulations thereunder.
3. Each party shall obtain and maintain at its own cost and
expense all equipment and services, including, but not limited to
communications services, necessary for it to utilize the Terminal
Link, and the other party shall not be responsible for the reli-
ability or availability of any such equipment or services, except
that the Custodian shall not pay any communications costs of any
line leased by the Fund, even if such line is also used by the Cus-
todian.
4. The Fund acknowledges that any data bases made available
as part of, or through the Terminal Link and any proprietary data,
software, processes, information and documentation (other than any
such which are or become part of the public domain or are legally
required to be made available to the public) (collectively, the
"Information"), are the exclusive and confidential property of the
Custodian. The Fund shall, and shall cause others to which it dis-
closes the Information, to keep the Information confidential by us-
ing the same care and discretion it uses with respect to its own
confidential property and trade secrets, and shall neither make nor
permit any disclosure without the express prior written consent of
the Custodian.
5. Upon termination of this Agreement for any reason, each
Fund shall return to the Custodian any and all copies of the Infor-
mation which are in the Fund's possession or under its control, or
which the Fund distributed to third parties. The provisions of
this Article shall not affect the copyright status of any of the
Information which may be copyrighted and shall apply to all Infor-
mation whether or not copyrighted.
6. The Custodian reserves the right to modify the Terminal
Link from time to time without notice to the Fund, except that the
Custodian shall give the Fund notice not less than 75 days in ad-
vance of any modification which would materially adversely affect
the Fund's operation, and the Fund agrees not to modify or attempt
to modify the Terminal Link without the Custodian's prior written
consent. The Fund acknowledges that any software provided by the
Custodian as part of the Terminal Link is the property of the Cus-
todian and, accordingly, the Fund agrees that any modifications to
the same, whether by the Fund or the Custodian and whether with or
without the Custodian's consent, shall become the property of the
Custodian.
7. Neither the Custodian nor any manufacturers and suppliers
it utilizes or the Fund utilizes in connection with the Terminal
Link makes any warranties or representations, express or implied,
in fact or in law, including but not limited to warranties of mer-
chantability and fitness for a particular purpose.
8. Each party will cause its officers and employees to treat
the authorization codes and the access codes applicable to Terminal
Link with extreme care, and irrevocably authorizes the other to act
in accordance with and rely on Certificates and notices received by
it through the Terminal Link. Each party acknowledges that it is
its responsibility to assure that only its authorized persons use
the Terminal Link on its behalf, and that a party shall not be re-
sponsible nor liable for use of the Terminal Link on behalf of the
other party by unauthorized persons of such other party.
9. Notwithstanding anything else in this Agreement to the con-
trary, neither party shall have any liability to the other for any
losses, damages, injuries, claims, costs or expenses arising as a
result of a delay, omission or error in the transmission of a Cer-
tificate or notice by use of the Terminal Link except for money
damages for those suffered as the result of the negligence, bad
faith or willful misconduct of such party or its officers, em-
ployees or agents in an amount not exceeding for any incident
$100,000; provided, however, that a party shall have no liability
under this Section 9 if the other party fails to comply with the
provisions of Section 11.
10. Without limiting the generality of the foregoing, in no
event shall either party or any manufacturer or supplier of its
computer equipment, software or services relating to the Terminal
Link be responsible for any special, indirect, incidental or conse-
quential damages which the other party may incur or experience by
reason of its use of the Terminal Link even if such party, manufac-
turer or supplier has been advised of the possibility of such dam-
ages, nor with respect to the use of the Terminal Link shall either
party or any such manufacturer or supplier be liable for acts of
God, or with respect to the following to the extent beyond such
person's reasonable control: machine or computer breakdown or mal-
function, interruption or malfunction of communication facilities,
labor difficulties or any other similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors, omis-
sions or interruptions in, or delay or unavailability of, the Ter-
minal Link as promptly as practicable, and in any event within 24
hours after the earliest of (i) discovery thereof, and (ii) in the
case of any error, the date of actual receipt of the earliest no-
tice which reflects such error, it being agreed that discovery and
receipt of notice may only occur on a business day. The Custodian
shall promptly advise the Fund whenever the Custodian learns of any
errors, omissions or interruption in, or delay or unavailability
of, the Terminal Link.
12. Each party shall, as soon as practicable after its re-
ceipt of a Certificate or a notice transmitted by the Terminal
Link, verify to the other party by use of the Terminal Link its
receipt of such Certificate or notice, and in the absence of such
verification the party to which the Certificate or notice is sent
shall not be liable for any failure to act in accordance with such
Certificate or notice and the sending party may not claim that such
Certificate or notice was received by the other party.
ARTICLE XIX
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by
two of the present Officers of the Fund under its seal, setting
forth the names and the signatures of the present Authorized Per-
sons. The Fund agrees to furnish to the Custodian a new Certifi-
cate in similar form in the event that any such present Authorized
Person ceases to be an Authorized Person or in the event that other
or additional Authorized Persons are elected or appointed. Until
such new Certificate shall be received, the Custodian shall be en-
titled to rely and to act upon Oral Instructions, Written Instruc-
tions, or signatures of the present Authorized Persons as set forth
in the last delivered Certificate to the extent provided by this
Agreement.
2. Annexed hereto as Appendix B is a Certificate signed by
two of the present Officers of the Fund under its seal, setting
forth the names and the signatures of the present Officers of the
Fund. The Fund agrees to furnish to the Custodian a new Certifi-
cate in similar form in the event any such present officer ceases
to be an officer of the Fund, or in the event that other or addi-
tional officers are elected or appointed. Until such new Certifi-
cate shall be received, the Custodian shall be entitled to rely and
to act upon the signatures of the officers as set forth in the last
delivered Certificate to the extent provided by this Agreement.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, other than
any Certificate or Written Instructions, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it
at its offices at 90 Washington Street, New York, New York 10286,
or at such other place as the Custodian may from time to time
designate in writing.
4. Any notice or other instrument in writing, authorized or
rehired by this Agreement to be given to the Fund shall be suffi-
ciently given if addressed to the Fund and mailed or delivered to
it at its office at the address for the Fund first above written,
or at such other place as the Fund may from time to time designate
in writing.
5. This Agreement constitutes the entire agreement between
the parties, replaces all prior agreements and may not be amended
or modified in any manner except by a written agreement executed by
both parties with the same formality as this Agreement and approved
by a resolution of the Board of Trustees of the Fund, except that
Appendices A and B may be amended unilaterally by the Fund without
such an approving resolution.
6. This Agreement shall extend to and shall be binding upon
the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by
the Fund without the written consent of the Custodian, or by the
Custodian or The Bank of New York without the written consent of
the Fund, authorized or approved by a resolution of the Fund's
Board of Trustees. For purposes of this paragraph, no merger,
consolidation, or amalgamation of the Custodian, The Bank of New
York, or the Fund shall be deemed to constitute an assignment of
this Agreement.
7. This Agreement shall be construed in accordance with the
laws of the State of New York without giving effect to conflict of
laws principles thereof. Each party hereby consents to the juris-
diction of a state or federal court situated in New York City, New
York in connection with any dispute arising hereunder and hereby
waives its right to trial by jury.
8. This Agreement may be executed in any number of counter-
parts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
9. A copy of the Declaration of Trust of the Fund is on file
with the Secretary of The Commonwealth of Massachusetts, and notice
is hereby given that this instrument is executed on behalf of the
Board of Trustees of the Fund as Trustees and not individually and
that the obligations of the instrument are not binding upon any of
the Trustees or shareholders individually but are binding upon the
assets and property of the Fund; provided, however, that the Decla-
ration of Trust of the Fund provides that the assets of a particu-
lar series of the Fund shall under no circumstances be charges with
liabilities attributable to any other series of the Fund and that
all persons extending credit to, or contracting with or having any
claim against a particular series of the Fund shall look only to
the assets of that particular series for payment of such credit,
contract or claim.
IN WITNESS WHEREOF, the parties hereto have caused this Agree-
ment to be executed by their respective Officers, thereunto duly
authorized and their respective seals to be hereunto affixed, as of
the day and year first above written.
OPPENHEIMER HIGH YIELD FUND
By: /s/ Robert G. Galli
---------------------------
Robert G. Galli, Vice President
[SEAL]
Attest:
/s/ Robert G. Zack
- ---------------------------------
Robert G. Zack, Assistant Secretary
THE BANK OF NEW YORK
[SEAL] By ---------------------------
Attest:
___________________________________
<PAGE>
APPENDIX A
I, President
and I, , of Oppenheimer Fund,
a Massachusetts business trust (the "Fund") do hereby certify that:
The following individuals have been duly authorized by the
Board of Trustees of the Fund in conformity with the Fund's De-
claration of Trust and By-Laws to give Oral Instructions and
Written Instructions on behalf of the Fund, except that those per-
sons designated as being an "Officer of OSS" shall be an Authorized
Person only for purposes of Articles XII and XIII. The signatures
set forth opposite their respective names are their true and
correct signatures:
Name Position Signature
--------------- --------------- ----------------------
<PAGE>
APPENDIX B
I, President and I,
, of Oppenheimer Fund, a
Massachusetts business trust (the "Fund"), do hereby certify that:
The following individuals for whom a position other than "Of-
ficer of OSS" is specified serve in the following positions with
the Fund and each has been duly elected or appointed by the Board
of Trustees of the Fund to each such position and qualified there-
for in conformity with the Fund's Declaration of Trust and By-Laws.
With respect to the following individuals for whom a position of
"Officer of OSS" is specified, each such individual has been
designated by a resolution of the Board of Trustees of the Fund to
be an Officer for purposes of the Fund's Custody Agreement with The
Bank of New York, but only for purposes of Articles XII and XIII
thereof and a certified copy of such resolution is attached hereto.
The signatures of each individual below set forth opposite their
respective names are their true and correct signatures:
Name Position Signature
--------------- --------------- ---------------------
<PAGE>
APPENDIX C
The undersigned, hereby
certifies that he or she is the duly elected and acting
of Oppenheimer Fund (the
"Fund"), further certifies that the following resolutions were
adopted by the Board of Trustees of the Fund at a meeting duly held
on ---------------, 199 , at which a quorum at all times present
and that such resolutions have not been modified or rescinded and
are in full force an effect as of the date hereof.
RESOLVED, that The Bank New York, as Custodian pur-
suant to a Custody Agreement between The Bank of
New York and the Fund dated as of 199 (the "Cus-
tody Agreement") is authorized and instructed on a
continuous and ongoing basis to act in accordance
with, and to rely on instructions by the Fund to
the Custodian communicated by a Terminal Link as
defined in the Custody Agreement.
RESOLVED, that the Fund shall establish access
codes and grant use of such access codes only to
officers of the Fund as defined in the Custody
Agreement, and shall establish internal safekeeping
procedures to safeguard and protect the confiden-
tiality and availability of such access codes.
RESOLVED, that Officers of the Fund as defined in
the Custody Agreement shall, following the estab-
lishment of such access codes and such internal
safekeeping procedures, advise the Custodian that
the same have been established by delivering a
Certificate, as defined in the Custody Agreement,
and the Custodian shall be entitled to rely upon
such advice.
IN WITNESS WHEREOF, I hereunto set my hand in the seal of
, as of the day of , 199 .
APPENDIX D
I, Richard P. Lando, an Assistant Vice President with THE
BANK OF NEW YORK do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal<PAGE>
APPENDIX E
The following books and records pertaining to Fund shall be
prepared and maintained by the Custodian and shall be the property
of the Fund:<PAGE>
EXHIBIT A
CERTIFICATION
The undersigned, , hereby
certifies that he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts
business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of the
Fund at a meeting duly held on 199 , at which a quorum was at all
times present and that such resolution has not been modified or re-
scinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of
New York and the Fund dated as of , 199
(the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis to
deposit in the Book-Entry System, as defined in the
Custody Agreement, all Securities eligible for
deposit therein, regardless of the Series to which
the same are specifically allocated, and to utilize
the Book-Entry System to the extent possible in
connection with its performance thereunder, includ-
ing, without limitation, In connection with
settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of
Securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of , as of the day
of , 199 .
------------------------------
[SEAL]<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned , hereby
certifies that he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held
on , 199 , at which a quorum was at all
times present and that such resolution has not been modified or
rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of
New York and the Fund dated as of , 199
(the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis until
such time as it receives a Certificate, as defined
in the Custody Agreement, to the contrary to de-
posit in The Depository Trust Company ("DTC") as a
"Depository" as defined in the Custody Agreement,
all Securities eligible for deposit therein, re-
gardless of the Series to which the same are speci-
fically allocated, and to utilize DTC to the extent
possible in connection with its performance there-
under, including, without limitation, in connection
with settlements of purchases and sales of Securi-
ties, loans of Securities, and deliveries and re-
turns of Securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of as of the day of , 199 .
-----------------------------
[SEAL]<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, hereby certifies that
he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held
on , 199 , at which a quorum was at all times
present and that such resolution has not been modified or rescinded
and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of
New York and the Fund dated as of 199 , (the "Cus-
tody Agreement") is authorized and instructed on a
continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody
Agreement, to the contrary to deposit in the Parti-
cipants Trust Company as a Depository, as defined
in the Custody Agreement, all Securities eligible
for deposit therein, regardless of the Series to
which the same are specifically allocated, and to
utilize the Participants Trust Company to the ex-
tent possible in connection with its performance
thereunder, including, without limitation, in con-
nection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and
returns of Securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of , as of the day of ,
199 .
---------------------------
[SEAL]
<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, , hereby cer-
tifies that he or she is the duly elected and acting
of Oppenheimer Fund, a Massachusetts business trust (the
"Fund"), and further certifies that the following resolution was
adopted by the Board of Trustees of the Fund at a meeting duly held
on , 199 , at which a quorum was at all
times present and that such resolution has not been modified or re-
scinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of
New York and the Fund dated as of , 199
(the "Custody Agreement") is authorized and in-
structed on a continuous and ongoing basis until
such time as it receives a Certificate, as defined
in the Custody Agreement, to the contrary, to ac-
cept, utilize and act with respect to Clearing Mem-
ber confirmations for Options and transaction in
Options, regardless of the Series to which the same
are specifically allocated, as such terms are de-
fined in the Custody Agreement, as provided in the
Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of , as of the day of , 199
.
-------------------------------
[SEAL]<PAGE>
EXHIBIT D
[FORM OF FOREIGN SUBCUSTODIAN AGREEMENT]<PAGE>
Appendix A
Article XIX.1 . . . . . . . . . . . . . . . . . . . . . . 49
Appendix B
Article XIX.2 . . . . . . . . . . . . . . . . . . . . . . 50
Exhibit A
Article III.1 . . . . . . . . . . . . . . . . . . . . . . .7
Exhibit B
Article III.1 . . . . . . . . . . . . . . . . . . . . . . .8
Exhibit C
Article III.1 . . . . . . . . . . . . . . . . . . . . . . .8
Exhibit D. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Article XV.4. . . . . . . . . . . . . . . . . . . . . . . 34
Schedule A
Article XV.1. . . . . . . . . . . . . . . . . . . . . . . 33
custody\280ca
Exhibit 24(b)(9)(a)
AGREEMENT AND PLAN OF
REORGANIZATION AND LIQUIDATION
This AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION is made
this 6th day of August, 1986, by and between OPPENHEIMER HIGH YIELD FUND,
INC. (the "Fund"), a Maryland corporation and OPPENHEIMER HIGH YIELD FUND,
a Massachusetts business trust (the "Trust").
In consideration of the mutual promises herein contained, the parties
hereto agree as follows:
1. Plan of Reorganization and Liquidation. The parties hereto hereby
adopt an Agreement and Plan of Reorganization and Liquidation (the "Plan")
as follows: Prior to the Closing Date (as hereinafter defined) the Fund
and the Trust shall execute and file Articles of Transfer with respect to
the transactions contemplated hereby with the Department of Assessments
and Taxation of the State of Maryland. The Fund will convey, transfer and
deliver to the Trust on the Closing Date all of its properties and assets,
valued as of the Valuation Date (as hereinafter defined). In
consideration thereof, the Trust agrees on the Closing Date (i) to assume
and pay, to the extent they exist on or after the Closing Date, all of the
Fund's obligations and liabilities, whether absolute, accrued, contingent
or otherwise, and (ii) to deliver to the Fund full and fractional shares
of beneficial interest of the series of the Trust entitled "Oppenheimer
High Yield Fund," without par value (the "Trust Shares"), equal in number
to the number of full and fractional shares of capital stock of the Fund
outstanding on the Valuation Date, in the cancellation of such Fund
shares.
2. Valuation. The net asset value of shares of the Fund used to
compute the number of shares of the Fund against which an equal number of
shares of the Trust will be issued in cancellation thereof shall be
determined as of the close of business of the New York Stock Exchange on
the Valuation Date. The computation of the net asset value of the shares
of the Fund shall be done in the manner used by the Fund in the
computation of such net asset value per share for the purpose of the sale
and redemption of its shares. The valuation policies used by the Trust
in such computation of the valuation of its shares are the same valuation
policies used by the Fund.
3. Closing. The closing shall be at the offices of the Fund, 3410
South Galena Street, Denver, Colorado 80231 at 1:00 P.M. Denver time on
October 28, 1986, or at such other time or place as the parties may
designate or as provided below (defined as the "Closing Date"). The
business day preceding the Closing Date is herein referred to as the
"Valuation Date."
4. Postponement of Closing. In the event that on the Valuation Date
the Fund has, pursuant to the Investment Company Act of 1940 or any rule,
regulation or order thereunder, suspended the redemption of its shares or
postponed payment therefor, or if the shareholders meeting shall be
adjourned to a date following October 28, 1986, the closing date shall be
postponed until the first business day after the Fund has ceased such
suspension or postponement or the Fund has reconvened the shareholders
meeting to approve this Agreement and Plan of Reorganization and
Liquidation; provided, however, that if such suspension shall continue for
a period of 60 days beyond the valuation date, then either party shall be
permitted to terminate this Agreement without liability to the other party
for such termination.
5. Liquidation and Cancellation. At the closing, the Fund shall
distribute on a pro rata basis to its shareholders of record on the
Valuation Date the shares of the trust received by the Fund at the
closing, in liquidation and cancellation of the outstanding shares of the
Fund. For the purpose of the distribution by the Fund of such shares of
the Trust to its shareholders, the Trust will promptly: (i) credit an
appropriate number of shares of the Trust on the books of the Trust to
each shareholder of the Fund in accordance with a list (the "Shareholder
List") of its shareholders from the Fund; and (ii) confirm an appropriate
number of shares of the Trust to each shareholder of the Fund. The
Shareholder List shall indicate as of the close of business on the
Valuation Date the name and address of each shareholder of the Fund,
indicating his share balance. The Fund agrees to supply the Shareholder
List to the Trust no later than the Closing Date.
6. Termination of Agreement. The Board of Directors of the Fund or
the Board of Trustees of the Trust may terminate this Agreement and
abandon the reorganization at any time prior to the closing
notwithstanding approval thereof by the shareholders of the Fund, if in
judgment of such Board, proceeding with the Agreement would be
inadvisable. Neither the Fund nor the Trust shall have any liability
whatsoever to the other in the event of such termination.
7. Entire Agreement. This Agreement embodies the entire agreement
between the parties and there are no agreements, understandings,
restrictions or warranties among the parties other than those set forth,
referred to, or provided for herein.
8. Necessary and Proper. The Fund and the Trust shall take such
further action as may be necessary or desirable and proper to consummate
the transactions contemplated hereby.
9. Applicable Law. This Agreement and the transactions contemplated
hereby shall be governed by and construed and enforced in accordance with
the laws of the State of Maryland.
10. Exculpation. Copies of the Declaration of Trust, as amended,
establishing Oppenheimer High Yield Fund (the "Trust") will be on file
with the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given that this Agreement and Plan of Reorganization and
Liquidation is executed on behalf of the Trust by officers of the Trust
as officers and not individually and that the obligations of or arising
out of this Agreement, if any, are not binding upon any of the Trustees,
officers, shareholders, employees or agents of the Trust individually but
are binding only upon the assets and property of the Trust. The Fund
hereby acknowledges that it has notice of the disclaimer to shareholder
liability contained in the Trust's Declaration of Trust.
11. Winding-up the Fund's Affairs. Within one year after the
closing, the Fund shall effect its dissolution with the proper Maryland
authorities.
12. Evidence of Closing. The Boards of the Fund and Trust,
respectively, may authorize, deliver, receive and accept such evidence,
receipts, certificates, assignments and other documents, either at the
closing or thereafter, as each respective Board may determine to be
appropriate to document, evidence and close the Plan and the transactions
contemplated hereby.
13. Accountant's Opinion. As a condition precedent to the obligation
of either the Fund or the Trust to close this Plan, each of the Fund and
the Trust shall have received an opinion of Deloitte Haskins & Sells,
providing that the transactions contemplated by this Agreement qualify as
a tax-free reorganization within the meaning of Section 368(a)(1)(D) of
the Internal Revenue Code of 1954, as amended.
IN WITNESS WHEREOF, each of the Fund and the Trust has caused this
Agreement and Plan of Reorganization and Liquidation to be executed on its
behalf by its Chairman, President or a Vice President and its seal to be
affixed hereto and attested by its Secretary or Assistant Secretary, all
as of the day and year first above written.
OPPENHEIMER HIGH YIELD FUND, INC.
Attest:
/s/ Philip R. Carroll By /s/ Paul Suckow
- --------------------- ----------------------------
Philip R. Carroll Paul Suckow
Assistant Secretary Vice President
OPPENHEIMER HIGH YIELD FUND
Attest:
/s/ Philip R. Carroll By /s/ Robert G. Galli
- ---------------------- ----------------------------
Philip R. Carroll Robert G. Galli
Assistant Secretary Vice President
merge\200
Exhibit 24(b)(9)(b)
ARTICLES OF TRANSFER
OF
OPPENHEIMER HIGH YIELD FUND, INC.
OPPENHEIMER HIGH YIELD FUND
These Articles of Transfer executed this 29th day of October,
1986 by OPPENHEIMER HIGH YIELD FUND, INC., a Maryland corporation,
the Transferor Corporation (the "Fund") and OPPENHEIMER HIGH YIELD
FUND, a Massachusetts business trust, the Transferee (the "Trust").
The Fund and the Trust do hereby adopt these Articles of Transfer
in accordance with Title 3, Subtitle 1, Corporation & Associations,
Annotated Code of Maryland. The Fund has agreed to transfer
substantially all of its assets to the Trust pursuant to an
Agreement and Plan of Reorganization dated August 6, 1986, a true
copy of which is attached hereto and incorporated herein by this
reference. The Trust and the Fund each declare and agree that:
1. The Fund has agreed and does agree to transfer
substantially all of its property and assets to the Trust.
2. The name and place of incorporation or organization of each
party to these Articles is: Oppenheimer High Yield Fund, Inc. which
is incorporated in Maryland and Oppenheimer High Yield Fund, which
is organized as a business trust in Massachusetts, said Trust
having been organized on August 15, 1986.
3. The name, address, and principal place of business of the
Transferee is: Oppenheimer High Yield Fund, 3410 South Galena
Street, Denver, Colorado 80231.
4. The post office address of the principal office of the Fund
in the State of Maryland is c/o The Corporation Trust Incorporated,
32 South Street, Baltimore, Maryland 21202. The post office
address of the principal office of the Trust in the State of
Massachusetts is c/o C.T. Corporation System, 2 Oliver Street,
Boston, Massachusetts 02109. The name and post office address of
the resident agent of the Trust in the State of Maryland is The
Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202. Said resident agent is a corporation of this
State. No party to these Articles owns an interest in land in any
city or county in the State of Maryland or in the Commonwealth of
Massachusetts.
5. The Agreement and Plan of Reorganization dated August 6,
1986 which is attached hereto and incorporated herein by reference,
sets forth all of the terms and conditions of the transaction and
the manner of carrying it into effect.
6. The terms and conditions of the transaction set forth in
said Agreement and Plan of Reorganization were duly advised,
authorized and approved by each of the Fund and the Trust as the
parties to these Articles in the manner and by the vote required by
its Articles of Incorporation and the laws of the State of
Maryland, and its Declaration of Trust and the laws of the
Commonwealth of Massachusetts, respectively; and the transaction
was approved in the following manner, to-wit; (i) In the case of
the Fund, the transaction was duly advised by its Board of
Directors which, on August 6, 1986, adopted a resolution declaring
that said transaction was advisable substantially upon the terms
and conditions set forth in the Agreement and Plan of
Reorganization attached hereto and directing that it be submitted
for consideration at a meeting of the shareholders of the Fund.
Notice stating that the purpose of the meeting was to approve or
disapprove said Agreement and Plan of Reorganization was given as
required by law to all shareholders of the Fund entitled to vote
thereon. Said Agreement and Plan of Reorganization was duly
approved by the shareholders of the Fund in the manner and by the
vote required by its Articles of Incorporation at said meeting of
shareholders held on October 28, 1986 by the affirmative vote of
the holders on the record date for such meeting of not less than a
majority of the outstanding shares of capital stock of the Fund and
entitled to vote thereon, the only class of stock of the Fund
outstanding, (ii) In the case of the Trust, the transaction was
duly authorized and approved by its Board of Trustees which, on
August 6, 1986 adopted a resolution declaring that the transaction
was advisable upon the terms and conditions set forth in the said
Agreement and Plan or Reorganization, and authorizing and approving
said transaction.
7. Every provision necessary to effect the transfer of assets
is set forth in the Agreement and Plan of Reorganization attached
hereto.
8. The nature and amount of the consideration to be paid and
transferred for the assets of the Fund or the method by which the
consideration is to be determined is as follows: The assets of the
Fund are to be transferred to the Trust in exchange for a number of
shares of voting capital stock of the Trust having an aggregate net
asset value equal to the value of the assets of the Fund so
transferred, less certain amounts, all as set forth in the
Agreement and Plan of Reorganization attached hereto.
9. These articles of Transfer shall become effective at 5:00
P.M. Mountain Standard time on October 31, 1986.
IN WITNESS WHEREOF, each of the Fund and the Trust as parties
hereto has caused these Articles of Transfer to be executed by its
President, Senior Vice President or a Vice President and its seal
to be hereunto fixed and to be attested by its Secretary or an
Assistant Secretary, all as of the day and year first above
written.
OPPENHEIMER HIGH YIELD FUND, INC.
(Corporate Seal) By /s/ Paul Suckow
------------------------------
Paul Suckow, Vice President
ATTEST:
/s/ Philip R. Carroll
- --------------------------------------
Philip R. Carroll, Assistant Secretary
OPPENHEIMER HIGH YIELD FUND
(Seal) By /s/ Robert G. Galli
-----------------------------
Robert G. Galli, Vice President
ATTEST:
/s/ Philip R. Carroll
- ----------------------------------
Philip R. Carroll, Assistant Secretary
<PAGE>
STATE OF NEW YORK ) Acknowledgement and
)ss. Verification Under Oath
CITY AND COUNTY OF NEW YORK )
I hereby certify that on the 29th day of October, in the year
1986, before the subscriber, a Notary Public, personally appeared
Paul Suckow to me known, who being by me duly sworn, did depose and
say as follows: that he resides in Summit, New Jersey; that he
acknowledged himself to be the Vice President of Oppenheimer High
Yield Fund, Inc., the corporation described in and which executed
the foregoing Articles of Transfer; that he knows the seal of said
corporation; that the seal affixed to said Articles of Transfer is
such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation; and that he signed his name
thereto by like order; and on behalf of the said corporation the
said Paul Suckow did execute the foregoing Articles of Transfer,
under the direction and authority of the Board of Directors, for
the purposes therein contained by acknowledging and signing the
foregoing Articles of Transfer to be the act and deed of the said
business trust; and that to the best of the knowledge, information
and belief of the said Paul Suckow, the matters and facts set forth
in the Articles of Transfer and in this Acknowledgment and
Verification are true in all material respects and are made under
the penalties for perjury.
WITNESS my hand an notarial seal this 29th day of October,
1986.
- -------------------------
Notary Public
My Commission expires -------------------------------
<PAGE>
STATE OF NEW YORK ) Acknowledgement and
)ss. Verification Under Oath
CITY AND COUNTY OF NEW YORK )
I hereby certify that on the 29th day of October, in the year
1986, before the subscriber, a Notary Public, personally appeared
Robert G. Galli to me known, who being by me duly sworn, did depose
and say as follows: that he resides in Allendale, New Jersey; that
he acknowledged himself to be the Vice President of Oppenheimer
High Yield Fund, the business trust described in and which executed
the foregoing Articles of Transfer; that he knows the seal of said
business trust; that the seal affixed to said Articles of Transfer
is the seal of said business trust; that it was so affixed by order
of the Board of Trustees of said trust; and that he signed his name
thereto by like order; and on behalf of the trust the said Robert
G. Galli did execute the foregoing Articles of Transfer, under the
direction and authority of the Board of Trustees, for the purposes
therein contained by acknowledging and signing the foregoing
Articles of Transfer to be the act and deed of the said trust; and
that to the best of the knowledge, information and belief of the
said Robert G. Galli, the matters and facts set forth in the
Articles of Transfer and in this Acknowledgment and Verification
are true in all material respects and are made under the penalties
for perjury.
WITNESS my hand an notarial seal this 29th day of October,
1986.
- --------------------------------
Notary Public
My Commission expires ---------------------------
merge\2802
Exhibit 24(b)(10)
GORDON HURWITZ BUTOWSKY BAKER WEITZEN & SHALOV
299 Park Avenue
New York, NY 10017
August 3, 1978
Securities and Exchange Commission
500 North Capitol Street, N.W.
Washington, D.C. 20549
Re: Oppenheimer High Yield Fund, Inc.
Gentlemen:
As counsel for Oppenheimer High Yield Fund, Inc., a Maryland
corporation (the "Fund"), we are familiar with the Articles of
Incorporation and the By-laws of the Fund, and the corporate proceedings
taken by the Fund in connection with the preparation and filing of a
Registration Statement of Form S-5 (the "Registration Statement") covering
a public offering by the Fund of an unlimited number of shares of its
capital stock, par value $1.00 per share (the "Capital Stock"), up to
35,000,000 shares of Capital Stock authorized for issuance pursuant to its
Articles of Incorporation.
Based upon the foregoing, we are of the opinion that:
1. The fund is a corporation duly organized and validly existing
under the laws of the State of Maryland; and
2. The up to 35,000,000 shares of Capital Stock which may be issued
by the Fund as described in the Registration Statement have been duly
authorized, and when issued and sold as described in the Registration
Statement, will be legally issued, fully paid and non-assessable.
We here consent to the use of our name under the caption "Counsel and
Auditors" in the Prospectus forming part of the Registration Statement and
the filing of this opinion as Exhibit 3 thereto.
Very truly yours,
Gordon Hurwitz Butowsky Baker Weitzen & Shalov
opinion\280
Exhibit 24(b)(15)(i)
SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER HIGH YIELD FUND
FOR CLASS A SHARES
SERVICE PLAN AND AGREEMENT (the "Plan") dated the 1st day of July, 1994,
by and between OPPENHEIMER HIGH YIELD FUND (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written service plan for its
Class A Shares described in the Fund's registration statement as of the
date this Plan takes effect, contemplated by and to comply with Article
III, Section 26 of the Rules of Fair Practice of the National Association
of Securities Dealers, pursuant to which the Fund will reimburse the
Distributor for a portion of its costs incurred in connection with the
personal service and the maintenance of shareholder accounts ("Accounts")
that hold Class A Shares (the "Shares") of the Fund. The Fund may be
deemed to be acting as distributor of securities of which it is the
issuer, pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "1940 Act"), according to the terms of this Plan. The Distributor
is authorized under the Plan to pay "Recipients," as hereinafter defined,
for rendering services and for the maintenance of Accounts. Such
Recipients are intended to have certain rights as third-party
beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have
the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
institution which: (i) has rendered services in connection with the
personal service and maintenance of Accounts; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning such service; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Fund's Board of Trustees (the "Board") who
are not "interested persons" (as defined in the 1940 Act) and who have
no direct or indirect financial interest in the operation of this Plan
or in any agreements relating to this Plan (the "Independent Trustees")
may remove any broker, dealer, bank or other institution as a
Recipient, whereupon such entity's rights as a third-party beneficiary
hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed owned
by more than one Recipient for purposes of this Plan. In the event
that two entities would otherwise qualify as Recipients as to the same
Shares, the Recipient which is the dealer of record on the Fund's
books shall be deemed the Recipient as to such Shares for purposes of
this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor,
within forty-five (45) days of the end of each calendar quarter, in the
amount of the lesser of: (i) .0625% (.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value
of the Shares computed as of the close of each business day of
Qualified Holdings, or (ii) the Distributor's actual expenses under the
Plan for that quarter of the type approved by the Board. The
Distributor will use such fee received from the Fund in its entirety
to reimburse itself for payments to Recipients and for its other
expenditures and costs of the type approved by the Board incurred in
connection with the personal service and maintenance of Accounts
including, but not limited to, the services described in the following
paragraph. The Distributor may make Plan payments to any "affiliated
person" (as defined in the 1940 Act) of the Distributor if such
affiliated person qualifies as a Recipient.
The services to be rendered by the Distributor and Recipients in
connection with the personal service and the maintenance of Accounts
may include, but shall not be limited to, the following: answering
routine inquiries from the Recipient's customers concerning the Fund,
providing such customers with information on their investment in
shares, assisting in the establishment and maintenance of accounts or
sub-accounts in the Fund, making the Fund's investment plans and
dividend payment options available, and providing such other
information and customer liaison services and the maintenance of
Accounts as the Distributor or the Fund may reasonably request. It may
be presumed that a Recipient has provided services qualifying for
compensation under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either the
Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may not
be rendering appropriate services, then the Distributor, at the request
of the Board, shall require the Recipient to provide a written report
or other information to verify that said Recipient is providing
appropriate services in this regard. If the Distributor still is not
satisfied, it may take appropriate steps to terminate the Recipient's
status as such under the Plan, whereupon such entity's rights as a
third-party beneficiary hereunder shall terminate.
Payments received by the Distributor from the Fund under the Plan
will not be used to pay any interest expense, carrying charges or other
financial costs, or allocation of overhead by the Distributor, or for
any other purpose other than for the payments described in this Section
3. The amount payable to the Distributor each quarter will be reduced
to the extent that reimbursement payments otherwise permissible under
the Plan have not been authorized by the Board of Trustees for that
quarter. Any unreimbursed expenses incurred for any quarter by the
Distributor may not be recovered in later periods.
(b) The Distributor shall make payments to any Recipient quarterly,
within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed .0625% (.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the
Shares computed as of the close of each business day of Qualified
Holdings owned beneficially or of record by the Recipient or by its
Customers. However, no such payments shall be made to any Recipient
for any such quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority
of the Independent Trustees. A majority of the Independent Trustees
may at any time or from time to time increase or decrease and
thereafter adjust the rate of fees to be paid to the Distributor or to
any Recipient, but not to exceed the rate set forth above, and/or
increase or decrease the number of shares constituting Minimum
Qualified Holdings. The Distributor shall notify all Recipients of the
Minimum Qualified Holdings and the rate of payments hereunder
applicable to Recipients, and shall provide each Recipient with written
notice within thirty (30) days after any change in these provisions.
Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice.
(c) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC), from
its own resources.
4. Selection and Nomination of Trustees. While this Plan is in
effect, the selection or replacement of Independent Trustees and the
nomination of those persons to be Trustees of the Fund who are not
"interested persons" of the Fund shall be committed to the discretion of
the Independent Trustees. Nothing herein shall prevent the Independent
Trustees from soliciting the views or the involvement of others in such
selection or nomination if the final decision on any such selection and
nomination is approved by a majority of the incumbent Independent
Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund
shall provide at least quarterly a written report to the Fund's Board for
its review, detailing the amount of all payments made pursuant to this
Plan, the identity of the Recipient of each such payment, and the purposes
for which the payments were made. The report shall state whether all
provisions of Section 3 of this Plan have been complied with. The
Distributor shall annually certify to the Board the amount of its total
expenses incurred that year with respect to the personal service and
maintenance of Accounts in conjunction with the Board's annual review of
the continuation of the Plan.
6. Related Agreements. Any agreement related to this Plan shall be
in writing and shall provide that: (i) such agreement may be terminated
at any time, without payment of any penalty, by vote of a majority of the
Independent Trustees or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its "assignment" (as defined in the 1940 Act); (iii) it shall
go into effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan
has been approved by a vote of the Independent Trustees cast in person at
a meeting called on June 22, 1993 for the purpose of voting on this Plan.
It takes effect as of July 1, 1994, whereupon it replaces the Service Plan
and Agreement dated June 22, 1993. Unless terminated as hereinafter
provided, it shall continue in effect until October 31, 1994 and from year
to year thereafter or as the Board may otherwise determine only so long
as such continuance is specifically approved at least annually by the
Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance. This Plan may be terminated
at any time by vote of a majority of the Independent Trustees or by the
vote of the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. This Plan may not be
amended to increase materially the amount of payments to be made without
approval of the Shareholders of the Class, in the manner described above,
and all material amendments must be approved by a vote of the Board and
of the Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Fund under this Plan are not
binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property. The Distributor represents that
it has notice of the provisions of the Declaration of Trust of the Fund
disclaiming shareholder and Trustee liability for acts or obligations of
the Fund.
OPPENHEIMER HIGH YIELD FUND
By: -----------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: ----------------------------------
Exhibit 24(b)(15)(ii)
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS B SHARES OF
OPPENHEIMER HIGH YIELD FUND
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the 21st day of
June, 1994
by and between OPPENHEIMER HIGH YIELD FUND (the "Fund") and OPPENHEIMER FUNDS
DISTRIBUTOR, INC. (the "Distributor").
1.The Plan. This Plan is the Fund's written distribution and service plan for
Class B shares of the Fund (the "Shares"), contemplated by Rule 12b-1
(the "Rule") under the Investment Company Act of 1940 (the
"1940 Act"), pursuant to which the Fund will compensate the Distributor
for a portion of its costs incurred in
connection with the distribution of Shares, and the personal service and
maintenance of shareholder accounts
that hold Shares ("Accounts"). The Fund may act as distributor of securities of
which it is the issuer, pursuant
to the Rule, according to the terms of this Plan. The Distributor
is authorized under the Plan to pay
"Recipients," as hereinafter defined, for rendering (1) distribution assistance
in connection with the sale of
Shares and/or (2) administrative support services with respect to Accounts.
Such Recipients are intended to
have certain rights as third-party beneficiaries under this Plan. The terms
and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions and
definitions contained in (i) the 1940 Act,
(ii) the Rule, (iii) Article III, Section 26, of the Rules of Fair Practice of
the National Association of Securities
Dealers, Inc., or its successor (the "NASD Rules of Fair Practice") and (iv)
any conditions pertaining either
to distribution related expenses or to a plan of distribution,
to which the Fund is subject under any order on
which the Fund relies, issued at any time by the Securities
and Exchange Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer,
bank or other institution which: (i) has rendered
assistance (whether direct, administrative or both) in the
distribution of Shares or has provided
administrative support services with respect to Shares
held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor
(on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions
as may arise concerning the sale of
Shares; and (iii) has been selected by
the Distributor to receive payments under the Plan.
Notwithstanding the foregoing, a majority of the
Fund's Board of Trustees (the "Board") who are not
"interested persons" (as defined in the 1940 Act) and
who have no direct or indirect financial interest
in the operation of this Plan or in any agreements
relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other institution as a
Recipient, whereupon such entity's rights as
a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient,
all Shares owned beneficially or of record
by: (i) such Recipient, or (ii) such customers, clients
and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian
(collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient
for purposes of this Plan. In the
event that two entities would otherwise qualify
as Recipients as to the same Shares, the Recipient which
is the dealer of record on the Fund's books shall be deemed
the Recipient as to such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support Services.
(a)The Fund will make payments to the Distributor, (i) within forty-five (45)
days of the end of each calendar quarter, in the aggregate amount
of 0.0625% (0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares
each business day (the "Service Fee"), plus (ii) within ten (10) days
of the end of each month, in the aggregate amount of 0.0625%
(0.75% on an annual basis) of the average during the month of the
aggregate net asset value of Shares computed as of the close
of each business day (the "Asset Based Sales Charge") outstanding for
six years or less (the "Maximum Holding Period"). Such
payments received from the Fund will compensate the Distributor
and Recipients for providing administrative support services of the
type approved by the Board with respect to Accounts. Such
Asset Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution
assistance in connection with the sales of Shares.
The administrative support services in connection with the Accounts
to be rendered by Recipients may include, but shall not be limited
to, the following: answering routine inquiries
concerning the Fund, assisting in the establishment and
maintenance of accounts or sub-accounts in the
Fund and processing Share redemption transactions,
making the Fund's investment plans and dividend
payment options available, and providing such other information
and services in connection with the
rendering of personal services and/or the maintenance of
Accounts, as the Distributor or the Fund may
reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and Recipients may include,
but shall not be limited to, the following: distributing sales
literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative
support services qualifying for payment under the Plan if
it has Qualified Holdings of Shares to entitle
it to payments under the Plan. In the event that either
the Distributor or the Board should have reason
to believe that, notwithstanding the level of Qualified Holdings,
a Recipient may not be rendering
appropriate distribution assistance in connection with
the sale of Shares or administrative support
services for Accounts, then the Distributor,
at the request of the Board, shall require the Recipient to
provide a written report or other information to verify that
said Recipient is providing appropriate
distribution assistance and/or services in this regard.
If the Distributor still is not satisfied, it may take
appropriate steps to terminate the Recipient's status as such
under the Plan, whereupon such entity's
rights as a third-party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five
(45) days of the end of each calendar quarter, at a rate not to
exceed 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate
net asset value of Shares computed
as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record
by the Recipient or by its Customers for a period of
more than the minimum period (the "Minimum
Holding Period"), if any, to be set from time to time
by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option,
make service fee payments ("Advance Service Fee
Payments") to any Recipient quarterly, within forty-five
(45) days of the end of each calendar quarter,
at a rate not to exceed (i) 0.25% of the average during the
calendar quarter of the aggregate net asset
value of Shares, computed as of the close of business
on the day such Shares are sold, constituting
Qualified Holdings sold by the Recipient during that
quarter and owned beneficially or of record by
the Recipient or by its Customers, plus (ii) 0.0625%
(0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset
value of Shares computed as of the close of each
business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by
its Customers for a period of more than one (1) year,
subject to reduction or chargeback so that the
Advance Service Fee Payments do not exceed the limits
on payments to Recipients that are, or may
be, imposed by Article III, Section 26, of the
NASD Rules of Fair Practice. In the event Shares are
redeemed less than one year after the date such Shares
were sold, the Recipient is obligated and will
repay to the Distributor on demand a pro rata portion
of such Advance Service Fee Payments, based
on the ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments
described in part (i) of the preceding sentence may,
at the Distributor's sole option, be made more often
than quarterly, and sooner than the end of the calendar quarter.
However, no such payments shall be
made to any Recipient for any such quarter in which
its Qualified Holdings do not equal or exceed,
at the end of such quarter, the minimum amount
("Minimum Qualified Holdings"), if any, to be set
from time to time by a majority of the Independent Trustees.
A majority of the Independent Trustees
may at any time or from time to time decrease and thereafter
adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed
the rate set forth above, and/or direct the Distributor
to increase or decrease the Maximum Holding Period,
the Minimum Holding Period or the Minimum
Qualified Holdings. The Distributor shall notify
all Recipients of the Minimum Qualified Holdings,
Maximum Holding Period or Minimum Holding Period,
if any, and the rate of payments hereunder
applicable to Recipients, and shall provide each Recipient
with written notice within thirty (30) days
after any change in these provisions. Inclusion of such
provisions or a change in such provisions in
a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments
to any "affiliated person" (as defined in the 1940 Act) of the
Distributor if such affiliated person qualifies as a Recipient.
(c) The Distributor is entitled to retain from the payments
described in Section 3(a) the aggregate
amount of (i) the Service Fee on Shares outstanding for less
than the Minimum Holding Period plus (ii) the Asset-Based Sales
Charge on Shares outstanding for not more than the Maximum Holding
Period, in each case computed as of the close of each business day
during that period and subject to reduction or elimination of such
amounts under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair Practice.
Such amount is collectively referred to as the "Quarterly Limitation."
The distribution assistance and administrative support
services in connection with the sale of Shares to be rendered
by the Distributor may include, but shall not be limited to,
the following: (i) paying sales commissions to any broker, dealer, bank or
other institution that sell Shares, and/or paying such persons
Advance Service Fee Payments in advance of, and/or greater than,
the amount provided for in Section 3(a) of this Agreement; (ii) paying
compensation to and expenses of personnel of the Distributor who
support distribution of Shares by
Recipients; (iii) paying of or reimbursing the
Distributor for interest and other borrowing costs on
unreimbursed Carry Forward Expenses (as hereafter defined) at the
rate paid by the Distributor or, if
such amounts are financed by the Distributor from its own resources
or by an affiliate, at the rate of
1% per annum above the prime rate (which shall mean the most
preferential interest rate on corporate
loans at large U.S. money center commercial banks) then being
reported in the Eastern edition of the
Wall Street Journal (or if such prime rate is no longer so reported,
such other rate as may be designated
from time to time by the Distributor with the approval of the
Independent Trustees); (iv) other direct
distribution costs of the type approved by the Board, including
without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished
to current Shareholders) and state
"blue sky" registration expenses; and (v) any service
rendered by the Distributor that a Recipient may
render pursuant to part (a) of this Section 3. The Distributor's
costs of providing the above-mentioned
services are hereinafter collectively referred to as "Distribution and Service
Costs." "Carry Forward
Expenses" are Distribution and Service Costs that are not paid in the fiscal
quarter in which they arise
because they exceed the Quarterly Limitation. In the event that the Board
should have reason to believe
that the Distributor may not be rendering appropriate distribution assistance
or administrative support
services in connection with the sale of Shares, then the Distributor, at the
request of the Board, shall
provide the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) The excess in any fiscal quarter of (i) the Quarterly Limitation plus
any contingent deferred
sales charge ("CDSC") payments recovered by the Distributor on the proceeds of
redemption of Shares
over (ii) Distribution and Service Costs during that quarter, shall be applied
in the following order of
priority: first to interest on unreimbursed Carry Forward Expenses, second
to reduce any unreimbursed
Carry Forward Expenses, third to reduce Distribution and Service Costs during
that quarter, and
fourth, to reduce the Asset Based Sales Charge payments by the Fund to the
Distributor in that quarter.
Carry Forward Expenses shall be carried forward by the Fund until payment
can be made under the Quarterly Limitation.
(e) Under the Plan, payments may be made to Recipients: (i) by Oppenheimer
Management Corporation ("OMC") from its own resources (which may include
profits derived from the advisory
fee it receives from the Fund), or (ii) by the Distributor (a subsidiary of
OMC), from its own resources, from Asset Based Sales Charge payments or from its
borrowings.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those
persons to be Trustees of the Fund who are not "interested persons" of the Fund
("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the
Disinterested Trustees from soliciting the views or the involvement of others
in such selection or nomination
if the final decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund shall
provide at least quarterly a written
report to the Fund's Board for its review, detailing distribution expenditures
properly attributable to the Shares,
including the amount of all payments made pursuant to this Plan, the identity
of the Recipient of each such
payment, the amount paid to the Distributor and the Distribution and Service
Costs and Carry Forward
Expenses for that period. The report shall state whether all provisions of
Section 3 of this Plan have been
complied with. The Distributor shall annually certify to the Board the amount
of its total expenses incurred
that year and its total expenses incurred in prior years and not previously
recovered with respect to the
distribution of Shares in conjunction with the Board's annual review of the
continuation of the Plan.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such
agreement may be terminated at any time, without payment of any penalty, by a
vote of a majority of the
Independent Trustees or by a vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty days written
notice to any other party to the
agreement; (ii) such agreement shall automatically terminate in the event of
its assignment (as defined in the
1940 Act); (iii) it shall go into effect when approved by a vote of the Board
and its Independent Trustees cast
in person at a meeting called for the purpose of voting on such agreement; and
(iv) it shall, unless terminated
as herein provided, continue in effect from year to year only so long as such
continuance is specifically
approved at least annually by a vote of the Board and its Independent Trustees
cast in person at a meeting called for the purpose of voting on such
continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan has
been approved by a vote of the
Board and its Independent Trustees cast in person at a meeting called on
February 23, 1994 for the purpose
of voting on this Plan, and replaces the Distribution and Service Plan and
Agreement dated June 22, 1993.
Unless terminated as hereinafter provided, it shall continue in effect until
October 31, 1994 and from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically
approved at least annually by a vote of the Board and its Independent Trustees
cast in person at a meeting
called for the purpose of voting on such continuance. This Plan may not be
amended to increase materially
the amount of payments to be made without approval of the Class B Shareholders,
in the manner described
above, and all material amendments must be approved by a vote of the Board and
of the Independent Trustees.
This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of
the holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the
Class. In the event of such termination, the Board and its Independent
Trustees shall determine whether the
Distributor is entitled to payment from the Fund of any Carry Forward Expenses
and related costs properly
incurred in respect of Shares sold prior to the effective date of such
termination, and whether the Fund shall
continue to make payment to the Distributor in the amount the Distributor is
entitled to retain under part (c)
of Section 3 hereof, until such time as the Distributor has been reimbursed for
all or part of such amounts by the Fund and by retaining CDSC payments.
8. Disclaimer of Shareholder Liability. The Distributor understands that
the obligations of the Fund under
this Plan are not binding upon any Trustee or shareholder of the Fund
personally, but bind only the Fund and
the Fund's property. The Distributor represents that it has notice of the
provisions of the Declaration of Trust
of the Fund disclaiming shareholder and Trustee liability for acts or
obligations of the Fund.
OPPENHEIMER HIGH YIELD FUND
By: ---------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: -----------------------------------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, for him and in his capacity as
a trustee of OPPENHEIMER HIGH YIELD FUND, a Massachusetts business trust
(the "Fund"), to sign on his behalf any and all Registration Statements
(including any post-effective amendments to Registration Statements) under
the Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them,
may lawfully do or cause to be done by virtue hereof. This power of
attorney shall not terminate in the event of my disability or incapacity
and replaces and supersedes all previous powers of attorney executed by
me for these purposes.
Dated this 26th day of October, 1993.
/S/ NED M. STEEL
---------------------------------
NED M. STEEL
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, for him and in his capacity as
a trustee of OPPENHEIMER HIGH YIELD FUND, a Massachusetts business trust
(the "Fund"), to sign on his behalf any and all Registration Statements
(including any post-effective amendments to Registration Statements) under
the Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them,
may lawfully do or cause to be done by virtue hereof. This power of
attorney shall not terminate in the event of my disability or incapacity
and replaces and supersedes all previous powers of attorney executed by
me for these purposes.
Dated this 26th day of October, 1993.
/S/ ROBERT M. KIRCHNER
---------------------------------
ROBERT M. KIRCHNER
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, for him and in his capacity as
a trustee of OPPENHEIMER HIGH YIELD FUND, a Massachusetts business trust
(the "Fund"), to sign on his behalf any and all Registration Statements
(including any post-effective amendments to Registration Statements) under
the Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them,
may lawfully do or cause to be done by virtue hereof. This power of
attorney shall not terminate in the event of my disability or incapacity
and replaces and supersedes all previous powers of attorney executed by
me for these purposes.
Dated this 26th day of October, 1993.
/S/ C. HOWARD KAST
---------------------------------
C. HOWARD KAST
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, for him and in his capacity as
a trustee of OPPENHEIMER HIGH YIELD FUND, a Massachusetts business trust
(the "Fund"), to sign on his behalf any and all Registration Statements
(including any post-effective amendments to Registration Statements) under
the Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them,
may lawfully do or cause to be done by virtue hereof. This power of
attorney shall not terminate in the event of my disability or incapacity
and replaces and supersedes all previous powers of attorney executed by
me for these purposes.
Dated this 26th day of October, 1993.
/S/ RAYMOND J. KALINOWSKI
---------------------------------
RAYMOND J. KALINOWSKI
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, for him and in his capacity as
a trustee of OPPENHEIMER HIGH YIELD FUND, a Massachusetts business trust
(the "Fund"), to sign on his behalf any and all Registration Statements
(including any post-effective amendments to Registration Statements) under
the Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them,
may lawfully do or cause to be done by virtue hereof. This power of
attorney shall not terminate in the event of my disability or incapacity
and replaces and supersedes all previous powers of attorney executed by
me for these purposes.
Dated this 26th day of October, 1993.
/S/ JON S. FOSSEL
---------------------------------
JON S. FOSSEL
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, for him and in his capacity as
a trustee of OPPENHEIMER HIGH YIELD FUND, a Massachusetts business trust
(the "Fund"), to sign on his behalf any and all Registration Statements
(including any post-effective amendments to Registration Statements) under
the Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them,
may lawfully do or cause to be done by virtue hereof. This power of
attorney shall not terminate in the event of my disability or incapacity
and replaces and supersedes all previous powers of attorney executed by
me for these purposes.
Dated this 26th day of October, 1993.
/S/ CHARLES CONRAD, JR.
---------------------------------
CHARLES CONRAD, JR.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, for him and in his capacity as
a trustee of OPPENHEIMER HIGH YIELD FUND, a Massachusetts business trust
(the "Fund"), to sign on his behalf any and all Registration Statements
(including any post-effective amendments to Registration Statements) under
the Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them,
may lawfully do or cause to be done by virtue hereof. This power of
attorney shall not terminate in the event of my disability or incapacity
and replaces and supersedes all previous powers of attorney executed by
me for these purposes.
Dated this 26th day of October, 1993.
/S/ GEORGE C. BOWEN
---------------------------------
GEORGE C. BOWEN
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, for him and in his capacity as
a trustee of OPPENHEIMER HIGH YIELD FUND, a Massachusetts business trust
(the "Fund"), to sign on his behalf any and all Registration Statements
(including any post-effective amendments to Registration Statements) under
the Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them,
may lawfully do or cause to be done by virtue hereof. This power of
attorney shall not terminate in the event of my disability or incapacity
and replaces and supersedes all previous powers of attorney executed by
me for these purposes.
Dated this 26th day of October, 1993.
/S/ WILLIAM A. BAKER
---------------------------------
WILLIAM A. BAKER
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, for him and in his capacity as
a trustee of OPPENHEIMER HIGH YIELD FUND, a Massachusetts business trust
(the "Fund"), to sign on his behalf any and all Registration Statements
(including any post-effective amendments to Registration Statements) under
the Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them,
may lawfully do or cause to be done by virtue hereof. This power of
attorney shall not terminate in the event of my disability or incapacity
and replaces and supersedes all previous powers of attorney executed by
me for these purposes.
Dated this 26th day of October, 1993.
/S/ ROBERT G. AVIS
---------------------------------
ROBERT G. AVIS
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, for him and in his capacity as
a trustee of OPPENHEIMER HIGH YIELD FUND, a Massachusetts business trust
(the "Fund"), to sign on his behalf any and all Registration Statements
(including any post-effective amendments to Registration Statements) under
the Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them,
may lawfully do or cause to be done by virtue hereof. This power of
attorney shall not terminate in the event of my disability or incapacity
and replaces and supersedes all previous powers of attorney executed by
me for these purposes.
Dated this 26th day of October, 1993.
/S/ JAMES C. SWAIN
---------------------------------
JAMES C. SWAIN
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true
and lawful attorneys-in-fact and agents, for him and in his capacity as
the Chairman of OPPENHEIMER HIGH YIELD FUND, a Massachusetts business
trust (the "Fund"), to sign on his behalf any and all Registration
Statements (including any post-effective amendments to Registration
Statements) under the Securities Act of 1933, the Investment Company Act
of 1940 and any amendments and supplements thereto, and to file the same,
with all exhibits thereto, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, and
each of them, may lawfully do or cause to be done by virtue hereof. This
power of attorney shall not terminate in the event of my disability or
incapacity and replaces and supersedes all previous powers of attorney
executed by me for these purposes.
Dated this 26th day of October, 1993.
/S/ JAMES C. SWAIN
---------------------------------
JAMES C. SWAIN
<PAGE>
OPPENHEIMER CASH RESERVES
CENTENNIAL AMERICA FUND, L.P.
CENTENNIAL CALIFORNIA TAX-EXEMPT TRUST
CENTENNIAL GOVERNMENT TRUST
CENTENNIAL MONEY MARKET TRUST
CENTENNIAL NEW YORK TAX-EXEMPT TRUST
CENTENNIAL TAX-EXEMPT TRUST
OPPENHEIMER CHAMPION HIGH YIELD FUND
DAILY CASH ACCUMULATION FUND, INC.
OPPENHEIMER EQUITY INCOME FUND
OPPENHEIMER GOVERNMENT SECURITIES FUND
OPPENHEIMER HIGH YIELD FUND
OPPENHEIMER INTEGRITY FUNDS
OPPENHEIMER MAIN STREET FUNDS, INC.
THE NEW YORK TAX-EXEMPT INCOME FUND, INC.
OPPENHEIMER STRATEGIC INCOME FUND
OPPENHEIMER STRATEGIC INCOME & GROWTH FUND
OPPENHEIMER STRATEGIC INVESTMENT GRADE BOND FUND
OPPENHEIMER STRATEGIC SHORT-TERM INCOME FUND
OPPENHEIMER TAX-EXEMPT BOND FUND
OPPENHEIMER TAX-EXEMPT CASH RESERVES
OPPENHEIMER TOTAL RETURN FUND, INC.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
CERTIFIED RESOLUTIONS OF THE BOARDS
October 26, 1993
At a meeting of the Boards for the above referenced funds (the
"Funds") held on October 26, 1993, the members thereof by unanimous vote
of those present adopted and approved the following resolutions:
"RESOLVED, that Andrew J. Donohue or Robert G. Zack, and each
of them, be, and the same, is hereby appointed the attorneys-in-fact and
agents of James C. Swain, as Chairman of the Funds, and George C. Bowen,
as Vice President, Secretary and Treasurer (Principal Financial and
Accounting Officer) of the Funds, to sign on behalf of such officers any
and all Registration Statements (including any post-effective amendments
to such Registration Statements) under the Securities Act of 1933 and the
Investment Company Act of 1940 and any amendments and supplements thereto,
and to file the same, with all exhibits thereto, with the Securities and
Exchange Commission; and be it further
RESOLVED, that Andrew J. Donohue or Robert G. Zack, and each of
them hereby is authorized, empowered and directed, in the name and on
behalf of the Funds, to take such additional action and to execute and
deliver such additional documents and instruments as any of them may deem
necessary or appropriate to implement the provisions of the foregoing
resolution, the authority for the taking of such action and the execution
and delivery of such documents and instruments to be conclusively
evidenced thereby. These resolutions supersede and replace the
resolutions adopted June 22, 1993.
In witness whereof, the undersigned has hereunto set his hand this
26th day of October, 1993.
/s/ George C. Bowen
-------------------------
George C. Bowen, Secretary
