Centennial America Fund, L.P.
Prospectus dated April 23, 1997
Centennial America Fund, L.P. is a no-load "money market" mutual fund with the
investment objective of seeking as high a level of current income as is
consistent with the preservation of capital and the maintenance of liquidity.
The Fund seeks to achieve its objective through a diversified portfolio of
short-term debt instruments issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, maturing in, or having been called for redemption
in, 397 days or less. The Fund seeks to generate income that is not subject to
payment or withholding of U.S. Federal income tax for qualifying foreign
investors.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. While the Fund seeks to maintain a stable net asset value of $1.00
per share, there can be no assurance that the Fund will be able to do so.
Shares of the Fund may be purchased only by foreign investors
who are not treated as U.S. citizens or residents or as U.S.
corporations, partnerships, trusts or estates under the U.S.
Internal Revenue Code of 1986, as amended.
Shares of the Fund may be purchased directly from brokers or dealers
having sales agreements with the Fund's Distributor and also are offered to
participants in Automatic Purchase and Redemption Programs (the "Programs")
established by certain brokerage firms with which the Fund's Distributor has
entered into agreements for that purpose. See "How to Buy Shares" in this
Prospectus. Program participants should also read the description of the Program
provided by their broker.
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
April 23, 1997 Statement of Additional Information. For a free copy, call
Shareholder Services, Inc., the Fund's Transfer Agent, at 1-800-525-9310 (within
the U.S.) or 303-671-3200 (from outside the U.S.) 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).
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Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the FDIC or any other agency and
involve investment risks, including the possible loss of the principal amount
invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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Contents
ABOUT THE FUND
Expenses
Financial Highlights
Performance of the Fund
Investment Objective and Policies
Investment Restrictions
How the Fund Is Managed
ABOUT YOUR ACCOUNT
How to Buy Shares
Special Tax Considerations
Purchases Through Automatic Purchase and Redemption
Programs
Direct Purchases
Payment by Check
Payment by Federal Funds Wire
Automatic Investment Plan
Guaranteed Payment
General
Service Plan
How to Sell Shares
Program Participants
Shares of the Fund Owned Directly
Regular Redemption Procedures
Expedited Redemption Procedures
Check Writing
Telephone Redemptions
Automatic Withdrawal Plans
General Information on Redemptions
Exchanges of Shares
Distributions and Taxes
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ABOUT THE FUND
Expenses
The following tables set forth the fees that an investor in the Fund might pay
and expenses paid by the Fund during its fiscal year ended December 31, 1996.
All monetary amounts set forth in this Prospectus are in U.S. dollars.
o Shareholder Transaction Expenses
Maximum Sales Charge on Purchases
(as a percentage of the offering price) None
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Maximum Sales Charge on Reinvested Distributions None
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Redemption Fees None(1)
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Exchange Fee None
(1) There is a $10 transaction fee for redemption proceeds paid by Federal Funds
wire.
o Annual Fund Operating Expenses (as a percentage of average
net assets)
Management Fees 0.45%
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12b-1 Service Plan Fees 0.19%
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Other Expenses 0.22%
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Total Fund Operating Expenses 0.86%
The purpose of these tables is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
(shareholder transaction expenses) or indirectly (annual fund operating
expenses). "Other Expenses" includes such expenses as custodial and transfer
agent fees, audit, legal and other business operating expenses, but excludes
extraordinary expenses. For further details, see the Fund's financial statements
included in the Statement of Additional Information.
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o Example. The following example applies the above-stated expenses to a
hypothetical $1,000 investment in shares of the Fund over the time periods shown
below, assuming a 5% annual rate of return on the investment and also assuming
that the shares are redeemed at the end of each stated period. The amounts shown
below are the cumulative costs of such hypothetical $1,000 investment for the
periods shown.
1 year 3 years 5 years 10 years
------ ------- ------- --------
$9 $27 $48 $106
This example shows the effect of expenses on an investment but is not
meant to state or predict actual or expected costs or investment returns of the
Fund, all of which may be more or less than those shown.
Financial Highlights
The table on the following 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. The information for the fiscal years ended
December 31, 1990 through 1996 has been audited by Deloitte & Touche LLP, the
Fund's independent auditors. The information for the fiscal period May 14, 1987
(commencement of operations) through December 31, 1987 and each of the fiscal
years ended December 31, 1988 and 1989, was audited by the Fund's prior
independent auditors. The report of Deloitte & Touche LLP, on the financial
statements of the Fund for its fiscal year ended December 31, 1996, is included
in the Statement of Additional Information.
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FINANCIAL HIGHLIGHTS
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YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992 1991(2) 1990(2)(3)
1989(2)
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PER SHARE OPERATING DATA:
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
$1.00 $1.00
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Income from investment operations - net
investment income and net realized gain .05 .04 .03 .02 .03 .14 .10
.08
Dividends and distributions to shareholders (.05) (.04) (.03) (.02) (.03) (.14)
(.10) (.08)
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Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
$1.00 $1.00
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TOTAL RETURN, AT NET ASSET VALUE(4) 4.69% 4.56% 2.91% 2.23%
3.92% 0.35% N/A N/A
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $18,661 $11,102 $6,201 $4,349 $5,253
$5,056 $5,486 $8,167
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Average net assets (in thousands) $16,998 $7,862 $5,693 $4,780 $5,323 $5,217
$6,819 $8,589
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Ratios to average net assets:
Net investment income 4.52% 4.48% 2.89% 2.22% 3.64% 7.08%
7.87% 8.15%
Expenses, before voluntary reimbursement by
the Manager 0.86% 1.48% 1.47% 1.34% 1.86% 2.00%
1.96% 1.96%
Expenses, net of voluntary reimbursement by
the Manager N/A N/A N/A 1.13% 0.60% 1.91% N/A
1.62%
YEAR ENDED DECEMBER 31,
1988(2) 1987(1)(2)
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PER SHARE OPERATING DATA:
Net asset value, beginning of period $1.00 $1.00
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Income from investment operations - net
investment income and net realized gain .09 .05
Dividends and distributions to shareholders (.09) (.05)
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Net asset value, end of period $1.00 $1.00
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TOTAL RETURN, AT NET ASSET VALUE(4) N/A N/A
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $8,808 $8,190
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Average net assets (in thousands) $9,949 $3,573
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Ratios to average net assets:
Net investment income 8.77% 8.32%(5)
Expenses, before voluntary reimbursement by
the Manager 2.14% 3.05%(5)
Expenses, net of voluntary reimbursement by
the Manager 0.92% 0.74%(5)
1. For the period from May 14, 1987 (commencement of operations) to
December 31, 1987.
2. All numbers of shares and per share data have been restated to reflect a
10.51 for 1 stock split effective December 5, 1991.
3. On May 25, 1990, OppenheimerFunds, Inc. became the investment adviser to
the Fund.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Total returns are
not annualized for periods of less than one full year. Total returns reflect
changes in net investment income only.
5. Annualized.
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Performance of the Fund
Explanation of "Yield". From time to time the "yield" and "compounded effective
yield" of an investment in the Fund may be advertised. Both yield figures are
based on historical earnings per share and are not intended to indicate future
performance. The "yield" of the Fund is the income generated by an investment in
the Fund over a seven day period, which is then "annualized". In annualizing,
the amount of income generated by the investment during that seven days is
assumed to be generated each week over a 52 week period, and is shown as a
percentage of the investment. The "compounded effective yield" is calculated
similarly, but the annualized income earned by an investment in the Fund is
assumed to be reinvested. The "compounded effective yield" will therefore be
slightly higher than the "yield" because of the effect of the assumed
reinvestment. See "Performance of the Fund" in the Statement of Additional
Information for additional information about the methods of calculating these
yields.
Investment Objective and Policies
The Fund is a no-load "money market" fund. It is an open-end, diversified
management investment company organized as a Delaware limited partnership on
March 5, 1987. The Fund is organized as a limited partnership to permit the
income earned by the Fund on its portfolio to flow through to its foreign
shareholders (who are limited partners) without being subject to U.S. Federal
income tax. The Fund's shares may be purchased at their net asset value, which
will remain fixed at $1.00 per share except under extraordinary circumstances
(see "Purchase, Redemption and Pricing of Shares -- Determination of Net Asset
Value Per Share" in the Statement of Additional Information for further
information). The value of Fund shares is not insured or guaranteed by any
government agency. However, shares held in brokerage accounts may be eligible
for coverage by the Securities Investor Protection Corporation for losses
arising from the insolvency of the brokerage firm. There can be no assurance,
however, that the Fund's net asset value will not vary or that the Fund will
achieve its investment objective. Prior to December 6, 1991, the Fund was a
longer-term government securities fund that had a fluctuating net asset value
per share and an investment objective of seeking high current income and safety
of principal and had no restrictions on the maturity of the securities in its
portfolio. The Fund's investment policies and practices are not "fundamental"
policies (as defined below) unless a particular policy is identified as
fundamental.
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See "Investment Restrictions." The Managing General Partners may change
non-fundamental investment policies without shareholder approval.
Objective. The Fund's investment objective is to seek as high a level of current
income as is consistent with the preservation of capital and the maintenance of
liquidity. To produce income that is not subject to U.S. Federal income tax
withholding for its shareholders, the Fund invests in U.S. Government Securities
issued after July 18, 1984, in registered form. In seeking its objective, as a
matter of fundamental policy, the Fund may invest only in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities ("U.S.
Government Securities"), having a maturity of, or having been called for
redemption in, 397 days or less, or in repurchase agreements (described below)
under which such obligations are purchased. The Fund intends to invest at least
75% of its total assets in U.S. Government Securities under normal market
conditions. The securities in which the Fund may invest may not yield as high a
level of current income as longer-term or lower-rated securities, which
generally have less liquidity and experience greater price fluctuation.
Eligible Investors. The Fund is designed exclusively for investors who are not
treated as U.S. citizens or residents or as U.S. corporations, partnerships,
trusts or estates under the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"). Shares of the Fund are offered only to such foreign
investors, who must provide certification of their foreign status to the Fund on
Form W-8 on purchasing their shares (see "How to Buy Shares"). Because of 1987
changes to the Internal Revenue Code applicable to publicly-traded limited
partnerships such as the Fund, after December 31, 1997, the Fund will be treated
as if it were a corporation for Federal income tax purposes and its
distributions will be treated as "distributions" subject to withholding. See
"Distributions and Taxes."
Investment Risks. The Fund intends to exercise due care in the selection of its
portfolio securities. However, there is a risk that some of the issuers of the
Fund's portfolio securities might not be able to meet their duties and
obligations on interest or principal payments at the time called for by the
instrument. There is also the risk that because of a redemption demand by
shareholders of the Fund greater than anticipated by OppenheimerFunds, Inc. (the
"Manager"), some of the Fund's portfolio securities might have to be liquidated
prior to maturity
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at a loss. Any of these risks, if encountered, could cause a
reduction in the net asset value of the Fund's shares.
The Fund does not intend to purchase or sell securities for trading
purposes because that activity may cause the Fund to be deemed to be "engaged in
a trade or business" in the United States for U.S. Federal income tax purposes,
which would affect the withholding status of its distributions to foreign
investors (See "Distributions and Taxes," below). It is the intention of the
Fund to purchase securities and hold them until maturity to generate portfolio
interest income, not capital gains, and therefore the Fund normally does not
intend to sell securities prior to their scheduled maturities. However, the Fund
may sell securities prior to maturity for unanticipated liquidity purposes.
Investment Policies. In seeking its objective, the Fund may invest
in the types of securities listed below.
o U.S. Government Securities. Securities issued or guaranteed by the
U.S. Government include a variety of U.S. Treasury securities that differ only
in their interest rates, maturities and dates of issuance. Treasury bills have
maturities of one year or less, Treasury notes have maturities from one to ten
years, and Treasury bonds generally have maturities of greater than ten years at
the date of issuance. U.S. Government agencies or instrumentalities which issue
or guarantee securities, also include, but are not limited to, the Federal
Housing Administration, Farmers Home Administration, Export-Import Bank of the
United States, Small Business Administration, Government National Mortgage
Association, General Services Administration, Central Bank for Cooperatives,
Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Bank, Federal Land Bank, Maritime Administration, Tennessee
Valley Authority, District of Columbia Armory Board, Federal National Mortgage
Association and the Student Loan Marketing Association. The Fund will not invest
in securities issued by the Inter-American Development Bank, the Asian-American
Development Bank and the International Bank for Reconstruction and Development
or in pooled mortgages offered by the Federal Housing Administration or Veterans
Administration.
Obligations of some U.S. Government agencies and
instrumentalities may not be supported by the full faith and credit
of the United States. Some are backed by the right of the issuer
to borrow from the U.S. Treasury; others, such as the Federal
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National Mortgage Association, by the discretionary authority of the U.S.
Government to purchase the agencies' obligations; while still others, such as
the Student Loan Marketing Association, are supported only by the credit of the
instrumentality. In the case of securities not backed by the full faith and
credit of the United States, the Fund must look principally to the agency
issuing or guaranteeing the obligation for ultimate repayment, and may not be
able to assert a claim against the United States itself in the event the agency
or instrumentality does not meet its commitments.
o "When-Issued" and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell securities
on a "delayed delivery" basis. These terms refer to securities that have been
created and for which a market exists, but which are not available for immediate
delivery. The Fund does not intend to enter into such transactions for
speculative purposes. During the period between the purchase and settlement, no
payment is made for the security and no interest accrues to the buyer from the
investment. There may be a risk of loss to the Fund if the value of the security
declines prior to the settlement date.
o Repurchase Agreements. Pending the investment of the proceeds of
sales of its shares or portfolio securities, or pending distributions to
shareholders, or for liquidity purposes based on reasonably anticipated
liquidity needs of the Fund, or in times of extraordinary market uncertainty for
defensive purposes to preserve capital, the Fund may acquire U.S. Government
Securities subject to repurchase agreements. The repurchase agreement is
collateralized by the underlying security. The Fund's repurchase agreements must
comply with the collateral requirements of Rule 2a-7 of the Investment Company
Act of 1940, as amended (the "Investment Company Act"). If the vendor fails to
pay the agreed upon repurchase price on the delivery date, the Fund's risks may
include any costs of disposing of such collateral, and any loss resulting from
any delay in foreclosing on the collateral. The Fund will not enter into
repurchase transactions that will cause more than 25% of the Fund's total assets
to be subject to repurchase agreements. The Fund will not enter into a
repurchase agreement which will cause more than 5% of its total assets to be
subject to repurchase agreements having a maturity beyond seven days. See
"Repurchase Agreements" in the Statement of Additional Information for further
details.
Ratings of Securities. Under Rule 2a-7 of the Investment Company
Act, the Fund uses the amortized cost method to value its portfolio
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securities to determine the Fund's net asset value per share. Rule 2a-7 places
restrictions on a money market fund's investments. Under Rule 2a-7, the Fund may
purchase only U.S. dollar denominated securities that the Manager, under
procedures approved by the Fund's Managing General Partners has determined have
minimal credit risks and are "Eligible Securities," as defined below.
With respect to ratings, an "Eligible Security" is (a) one that has
received a rating in one of the two highest short-term rating categories by any
two "nationally recognized statistical rating organizations" (as defined in the
Rule) ("Rating Organizations"), or, if only one Rating Organization has rated
that security, by that Rating Organization, or (b) an unrated security that is
judged by the Manager to be of comparable quality to investments that are
"Eligible Securities" rated by Rating Organizations.
The Rule permits the Fund to purchase "First Tier Securities," which
are Eligible Securities rated in the highest rating category for short-term debt
obligations by at least two Rating Organizations, or, if only one Rating
Organization has rated a particular security, by that Rating Organization, or
comparable unrated securities. Under Rule 2a-7, the Fund may invest only up to
5% of its assets in "Second Tier Securities," which are Eligible Securities that
are not "First Tier Securities." In addition to the overall 5% limit on Second
Tier Securities, the Fund may not invest more than (i) 5% of its total assets in
the securities of any one issuer (other than the U.S. Government, its agencies
or instrumentalities), or (ii) 1% of its total assets or $1 million (whichever
is greater) in Second Tier Securities of any one issuer. The Fund's Managing
General Partners must approve or ratify the purchase of Eligible Securities that
are unrated (other than U.S. Government Securities) or are rated by only one
Rating Organization. Additionally, under Rule 2a-7, the Fund must maintain a
dollar-weighted average portfolio maturity of no more than 90 days, and the
maturity of any single portfolio investment may not exceed 397 days. The Fund's
Managing General Partners have adopted procedures under Rule 2a-7 pursuant to
which they have delegated to the Manager their responsibility of conforming the
Fund's investments with the requirements of Rule 2a-7 and those procedures.
The Statement of Additional Information contains additional information
on the rating categories of Rating Organizations. Ratings at the time of
purchase will determine whether securities
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may be acquired under the above restrictions. Subsequent downgrades in ratings
may require reassessments of the credit risk presented by a security and may
require sale of that security. The rating restrictions described in this
Prospectus do not apply to banks in which the Fund's cash is kept. See "Ratings
of Securities" in "Investment Objective and Policies" in the Statement of
Additional Information for further details.
Investment Restrictions
The Fund has certain investment restrictions which, together with its investment
objective, are fundamental policies changeable only by the vote of a "majority"
(as defined in the Investment Company Act) of the Fund's outstanding voting
securities. Under some of those restrictions, the Fund cannot: (a) invest in any
security other than U.S. Government Securities, mortgage-backed securities, and
securities issued by private entities unless the mortgage collateral underlying
such securities is insured, guaranteed, or otherwise backed by the U.S.
Government or one or more of its agencies or instrumentalities; (b) borrow
money, except from banks for temporary or emergency purposes in amounts not in
excess of 5% of the value of the Fund's total assets; no assets of the Fund may
be pledged, mortgaged or hypothecated other than to secure a borrowing, and then
in amounts not exceeding 7.5% of the Fund's total assets; borrowings may not be
made for investment leverage, but only for liquidity purposes to satisfy
redemption requests when liquidation of portfolio securities is considered
inconvenient or disadvantageous; however, the Fund may enter into when-issued
and delayed delivery transactions; (c) enter into a repurchase transaction that
will cause more than 25% of the Fund's total assets to be subject to such
agreements; (d) make loans, except that the Fund may purchase or hold debt
obligations permitted by its other fundamental policies and may enter into
repurchase transactions collateralized by cash or U.S. Government Securities
having a value equal at all times to at least 100% of the value of the
securities loaned, including accrued interest; (e) purchase restricted or
illiquid securities (including repurchase agreements of more than seven days'
duration and other securities that are not readily marketable) if more than 5%
of the Fund's total assets would be invested in such securities; or (f) purchase
any securities (other than U.S. Government Securities) that would cause more
than 5% of the Fund's total assets to be invested in securities of a single
issuer, or purchase more than 10% of the outstanding voting securities of an
issuer.
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Unless the Prospectus states that a percentage restriction applies on an ongoing
basis, it applies only at the time the Fund makes an investment, and the Fund
need not sell securities to meet the percentage limits if the value of the
investment increases in proportion to the size of the Fund. Additional
investment restrictions are listed in "Other Investment Restrictions" in the
Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund's Managing General Partners have overall
responsibility for the management of the Fund in accordance with the laws of
Delaware governing the responsibilities of general partners of limited
partnerships. The Managing General Partners function like a board of directors.
They establish the Fund's policies and supervise and review its management and
operations pursuant to an Agreement of Limited Partnership summarized below and
reprinted in the Statement of Additional Information. The Fund's investment
adviser, OppenheimerFunds, Inc., is responsible for the day-to-day operation of
the Fund's business. The Fund also has a corporate Non-Managing General Partner
that does not participate in the management of the Fund, but which is obligated
(together with the Managing General Partners) to maintain an investment in the
Fund equal to 1% of its assets. Oppenheimer Partnership Holdings, Inc., the
Non-Managing General Partner, is a wholly owned subsidiary of the Manager. A
list of the Fund's Managing General Partners and officers and information about
them are included in "Managing General Partners and Officers" in the Statement
of Additional Information.
Summary of the Partnership Agreement. The Fund is a limited partnership that
issues shares of limited partnership interests that are of one class. As a
limited partnership, the Fund is not required to hold annual meetings and does
not intend to do so. The Fund will, however, hold meetings of the partners from
time to time for purposes such as changing fundamental investment policies,
approving an investment advisory agreement or a distribution plan and, at the
request of investors owning 10% or more of the shares of the Fund, replacing its
general partners. All shares of the Fund are of one class, have one vote and,
when issued, are fully paid, nonassessable and redeemable. See "Liability of
Limited Partners" below. All shares of the Fund have equal voting, dividend and
liquidation rights but have no subscription, preemptive or conversion rights.
There is no cumulative voting. The full text of the Partnership Agreement of the
Fund is set forth
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in the Statement of Additional Information. The following statements summarize
and explain certain provisions of the Partnership Agreement and are qualified in
their entirety by the terms of the Partnership Agreement.
o Voting Rights of Partners. The Fund's limited partners have the
voting, approval, consent or similar rights required under the Investment
Company Act for voting security holders. Limited partners of the Fund have the
exclusive right to vote on matters affecting the Fund as set forth in the
Partnership Agreement. A meeting of the limited partners may be called by the
Managing General Partners or by limited partners holding 10% or more of the
outstanding shares. Limited partners on the record date of a meeting will be
entitled to vote at that meeting if they are admitted as limited partners prior
to the meeting date. Under the Partnership Agreement, any Managing General
Partner may be removed by the vote of two-thirds of the outstanding shares of
the Fund.
o General Partners. The general partners of the Fund consist of a
number of individuals, referred to as Managing General Partners, and one
corporate general partner, referred to as the Non-Managing General Partner
(together, the "General Partners"). The Managing General Partners have complete
and exclusive control over the management, conduct and operation of the Fund's
business. The General Partners are elected for an indefinite term by
shareholders of the Fund.
The Partnership Agreement provides that the General Partners are not
personally liable to any investor in the Fund for the repayment of any amounts
standing in the account of such investor, except by reason of their willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office. The Partnership Agreement also provides
that the General Partners will not be liable to any investor by reason of any
failure to withhold income tax with respect to distributions of income or any
change in any Federal or state tax laws or in the interpretation of such laws as
they apply to the Fund or its investors so long as the General Partners have
acted in good faith and in a manner reasonably believed to be in the best
interests of the investors. The General Partners generally are entitled to
indemnification from the Fund against liabilities and expenses to which they may
become subject in their capacity as General Partners of the Fund, provided they
have acted in good faith and for a purpose which they reasonably believed to be
in the
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best interests of the Fund or its investors. Such indemnification
by the Fund is limited to the assets of the Fund.
o Liability of Limited Partners. Generally, limited partners are not
personally liable for obligations of a partnership unless they participate in
the control of the partnership's business. Under the terms of the Partnership
Agreement, the Fund's limited partners do not have the right to participate in
the control of the Fund's business, but they may exercise the right to vote on
matters affecting the basic structure of the Fund, including matters requiring
investor approval under the Investment Company Act.
Under Delaware law, the liability of each limited partner (in his or
her capacity as a limited partner) for the losses, debts and obligations of a
Fund is generally limited to that partner's capital contribution (which is the
price of shares purchased by that partner net of all sales charges) and his or
her share of any undistributed income or assets of the Fund. Limited partners
may, however, under certain circumstances, be required to return amounts
previously distributed to them for the benefit of the Fund's creditors. The Fund
intends to include in its contracts a provision limiting the claims of creditors
to the Fund's assets and may carry insurance in such amounts as the Managing
General Partners, in their judgment, consider reasonable to cover potential
liabilities of the Fund. In addition, the Partnership Agreement for the Fund
provides for indemnification out of the Fund's property for any shareholder held
personally liable for any obligation of the Fund. The Partnership Agreement 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, the risk of a shareholder incurring financial loss on
account of his or her liability as a limited partner is limited to circumstances
in which the Fund itself would be unable to meet its obligations. The Manager
believes that, in view of the above and in view of the character of the
operations of the Fund as an investment company, the risk of personal liability
to shareholders is extremely remote. The foregoing provisions do not apply to
any liability of the Fund arising out of any liability of a limited partner for
withholding tax on his or her shares, whether due to improper certification of
tax status or otherwise.
o Admission of Limited Partners. In order to be admitted as
a limited partner, a purchaser of shares is required to complete a
partnership subscription agreement in the Fund Application included
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with this prospectus, including a special power of attorney, in the form set
forth in the Application. Admission of a purchaser as a limited partner also
requires the consent of the Managing General Partners. The Managing General
Partners of the Fund, while recognizing that they have the right to withhold
their consent, have stated that they intend to give such consent as a matter of
course to eligible investors.
o Prohibition of Assignment or Transfer of Shares. Limited partners of
the Fund do not have the right to voluntarily transfer or assign their shares to
any other person other than to secure a loan. In the event that a person who is
holding shares as collateral forecloses on such collateral, such person shall
not have the right to be substituted as a limited partner but shall have the
right (upon presentation of satisfactory evidence to the Managing General
Partners of the right to succeed to the interests of the limited partner): (1)
to redeem the shares and (2) to receive distributions with respect to such
shares. Under limited circumstances, a successor in interest of a limited
partner shall have the right to be substituted as a limited partner.
o Term of Existence - Dissolution. The Fund will continue until
December 31, 2037, but shall be dissolved before that date if and when: (1) the
shareholders of the Fund approve the prior dissolution of the Fund; (2) the Fund
disposes of all of its assets; or (3) a General Partner withdraws and the
remaining General Partners do not elect to continue the operations of the
Partnership; or (4) there are no remaining General Partners (unless the
shareholders agree by unanimous vote to continue the Fund in circumstances where
the last remaining General Partner was not removed by them, and new General
Partners are promptly elected by the shareholders).
Except by requiring the Fund to redeem outstanding shares as described
under "How to Sell Shares," limited partners have no right to the return of any
part of their contributions to the Fund until dissolution of the Fund.
Distributions by the Fund, whether upon redemption, dissolution or otherwise,
will be in proportion to the number of outstanding shares held without regard to
the dollar amount contributed to the Fund or the amount of any profits of the
Fund received.
o Other Provisions. The Partnership Agreement also provides
for the pricing, purchase and redemption of shares of the Fund as
described in this Prospectus, as well as procedures relating to the
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giving of notices, the calling of meetings and solicitation of shareholder
consents. In addition, the Partnership Agreement contains provisions relating to
the maintenance of books and records by the Fund, the accounting procedures to
be followed by the Fund, the allocation for U.S. Federal income tax purposes of
items of income, gain, loss, deduction and credit, and the procedures by which
amendments to the Partnership Agreement may be effected. Limited partners have
the right to obtain current copies of the Partnership Agreement and certain
other records of the Fund. The records of the Fund, although available to
limited partners upon request and to certain other persons in connection with
Fund business, are not matters of public record.
The Manager and Its Affiliates. The Manager has operated as an investment
adviser since 1959. The Manager (including subsidiaries) currently manages
investment companies, including other Oppenheimer funds, with assets of more
than $60 billion as of March 31, 1997, and with more than 3 million shareholder
accounts. The Manager is owned by Oppenheimer Acquisition Corp., a holding
company owned in part by senior management of the Manager and ultimately
controlled by Massachusetts Mutual Life Insurance Company, a mutual life
insurance company which also advises pension plans and investment companies.
o Fees and Expenses. Subject to the authority of the Managing General
Partners, the Manager supervises the investment operations of the Fund and the
composition of its portfolio and furnishes advice and recommendations with
respect to investments, investment policies and the purchase and sale of
securities, pursuant to an Investment Advisory Agreement with the Fund. Under
the Investment Advisory Agreement, the Fund pays Manager a fee computed on the
aggregate net assets of the Fund as of the close of business each day and
payable monthly at the following annual rates: 0.45% of the first $500 million
of net assets and 0.40% of net assets over $500 million. See "The Manager and
Its Affiliates" in the Statement of Additional Information for more complete
information about the Investment Advisory Agreement, including a description of
exculpation provisions, portfolio transactions, and Fund expenses.
o The Custodian. The Custodian of the assets of the Fund is
Citibank, N.A. The Manager and its affiliates presently have
banking relationships with the Custodian.
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o The Transfer Agent. Shareholder Services, Inc., a subsidiary of the
Manager, acts as transfer agent and shareholder servicing agent on an at cost
basis for the Fund and other mutual funds advised by the Manager, and as
transfer agent for certain other funds managed by persons unaffiliated with the
Manager. Direct shareholders should forward any inquiries regarding the Fund to
the Transfer Agent at the address or either of the phone numbers shown on the
back cover of this Prospectus. Program participants should direct any inquiries
regarding the Fund to their brokers or dealers.
ABOUT YOUR ACCOUNT
How to Buy Shares
As stated above, the Fund's shares are offered only to foreign investors who are
not treated as U.S. citizens or residents or as U.S. corporations, partnerships,
trusts or estates under the Internal Revenue Code ("eligible foreign
investors"). All purchasers of the Fund's shares are required to become limited
partners of the Fund. (See "Admission of Limited Partners," above.)
Shares of the Fund may be purchased at their offering price, which is
net asset value per share, without sales charge. The net asset value will remain
fixed at $1.00 per share, except under extraordinary circumstances (see
"Determination of Net Asset Value Per Share" in the Statement of Additional
Information for further details), but there is no guarantee that the Fund will
maintain a stable net asset value of $1.00 per share. Shares may be purchased
through "Automatic Purchase and Redemption Programs" or "Direct Purchases,"
described below. The Fund's shares may be purchased through any dealer or broker
which has a sales agreement with the Fund's distributor, Centennial Asset
Management Corporation (the "Distributor"), a wholly-owned subsidiary of the
Manager, or with OppenheimerFunds Distributor, Inc., also a wholly-owned
subsidiary of the Manager, which acts as the Sub-Distributor of the Fund's
shares pursuant to an agreement with the Distributor. Dealers and brokers
purchasing shares by phone should call the Distributor at 1-800-525-7041. The
Distributor may, in its sole discretion, accept or reject any order to purchase
the Fund's shares.
All checks for the payment of purchases of Fund shares should be drawn
only on U.S. banks and must be payable in U.S. dollars. Subject to the
discretion of the Distributor, checks drawn on non- U.S. banks will not be
considered payment and shares will not be purchased for the investor's account
until U.S. dollars are collected (in Federal Funds) from the check by the Fund.
If there are collection charges on such checks, those charges may be deducted
from the purchase payment, thereby reducing the number of shares purchased. No
daily distributions will begin to accrue for investors submitting such checks
until the regular business day after shares are purchased with Federal Funds in
U.S. dollars collected on the purchase check. (see "Distributions," below).
The minimum initial investment is $500 ($2,500 if by Federal Funds
wire), except as otherwise described in this Prospectus. Subsequent purchases
must be in amounts of $25 or more and may be made through authorized dealers or
brokers or by forwarding payment to the Distributor at P.O. Box 5143, Denver,
Colorado, 80217 with the name(s) of all account owners, the account number and
the name of the Fund. The minimum initial and subsequent purchase requirements
are waived on purchases made by reinvesting distributions from any of the
"Eligible Funds" (see "Exchange Privilege" below) or by reinvesting
distributions from unit investment trusts for which reinvestment arrangements
have been made with the Distributor. Under an Automatic Investment Plan, initial
and subsequent investments must be at least $25. No share certificates will be
issued for shares of the Fund unless specifically requested in writing by an
investor or the dealer or broker.
The Fund intends to be as fully invested as practicable to maximize its
yield. Therefore, daily distributions will accrue on newly-purchased shares only
after the Distributor accepts the purchase order at its address in Englewood,
Colorado, on a day The New York Stock Exchange (the "Exchange") is open (a
"regular business day"), under one of the methods of purchasing shares described
below. The purchase will be made at the net asset value next determined after
the Distributor accepts the purchase order.
The Fund's offering price (and net asset value) for its shares is
determined twice each regular business day at 12:00 Noon and at the close of the
Exchange, which is normally 4:00 P.M. (all references to time in this Prospectus
mean New York time), but may be earlier on some days, by dividing the value of
the Fund's net assets by the number of shares outstanding. The Fund's Managing
General Partners have established procedures for valuing the Fund's securities,
using the "amortized cost method" of valuation, as
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described in "Determination of Net Asset Value Per Share" in the
Statement of Additional Information.
Special Tax Considerations. Because the Fund is organized as a limited
partnership based in the United States and relies on certain provisions of the
Internal Revenue Code in operating in a manner designed to eliminate U.S.
Federal income tax and withholding on distributions of interest to shareholders,
certain tax factors about the Fund's operations, discussed more fully under "Tax
Considerations for Fund Investors," below, should be considered by prospective
investors before investing. All prospective investors must furnish the Fund with
a Certificate of Foreign Status on Form W-8, together with the Special Power of
Attorney and representations included in this Prospectus. If the Fund does not
receive a Certificate of Foreign Status on Form W-8 for an investor, the Fund
must withhold U.S. Federal income tax from any distributions to the shareholder
to the extent that such distributions include income from U.S. sources. By
completing the Application, each prospective investor is signing the Fund's
Partnership Agreement and consenting to the disclosure of the information
contained in the Certificate of Foreign Status (including the investor's name
and address) to the Fund and, to the extent required by the Internal Revenue
Code, to the U.S. Internal Revenue Service and to issuers of securities in which
the Fund invests.
Purchases Through Automatic Purchase and Redemption Programs. Shares of the Fund
are available under Automatic Purchase and Redemption Programs ("Programs") of
broker-dealers that have entered into an agreement with the Distributor for that
purpose. Broker-dealers whose clients participate in such Programs will invest
the "free cash balances" of such client's Program account in shares of the Fund
if the Fund has been selected as the primary fund by the client for the Program
account. Such purchases will be made by the broker-dealer under the procedures
described in "Guaranteed Payment," below. Each Program may have minimum
investment requirements established by the broker-dealer. The description of
each Program provided by the broker-dealer should be consulted for details, and
all questions about investing in, exchanging or redeeming shares of the Fund
through a Program should be directed to the broker-dealer.
Direct Purchases. An eligible foreign investor who does not
participate in a Program (a "direct shareholder") may directly
purchase shares of the Fund or may purchase shares through any
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broker-dealer which has a sales agreement with the Distributor or the
Sub-Distributor. There are two ways to make a direct initial investment, either
(1) complete a Centennial Funds New Account Application (enclosed with this
Prospectus) and mail it with payment to the Distributor at P.O. Box 5143,
Denver, Colorado 80217 (if no dealer is named in the Application, the
Sub-Distributor will act as the dealer), or (2) by Federal Funds wire, as
described below. Purchases made by Application should have a check enclosed, or
payment may be made by one of the alternative means described below.
o Payment by Check. Orders for shares purchased by check in U.S.
dollars drawn on a U.S. bank will be effected on the regular business day on
which the check (and the Application, if the account is new) is accepted by the
Distributor. Distributions will begin to accrue on such shares the next regular
business day after the purchase order is accepted and Federal Funds are
available. For checks not drawn on a U.S. bank in U.S. dollars, the shares will
not be purchased until the Distributor is able to convert the purchase payment
to Federal Funds, and distributions will begin to accrue on such shares on the
next regular business day. The minimum initial investment by check is $500.
o Payment by Federal Funds Wire. Shares of the Fund may be
purchased by direct shareholders by Federal Funds wire. The
minimum investment by wire is $2,500. The investor must first call
the Distributor's Wire Department at 1-800-852-8457 (from within
the U.S.) or 303-671-3200 (from outside the U.S.) to notify the
Distributor of the transmittal of the wire and to order the shares.
The investor's bank must wire the Federal Funds to Citibank, N.A.,
ABA No. 0210-0008-9, for credit to Concentration Account No. 3737-
5666, for further credit to Centennial America Fund, L.P.
(Custodian Account No. 846080).
The wire must state the investor's name. Distributions will begin to
accrue on newly-purchased shares on the purchase date if the Federal Funds and
order for the purchase are received and accepted by 12:00 Noon. Distributions
will begin to accrue on the next regular business day if the Federal Funds and
purchase order are received and accepted between 12:00 Noon and the close of the
Exchange, which is normally 4:00 P.M., but may be earlier on some days. The
investor must also send the Distributor a completed Application when the
purchase order is placed to establish a new account and the investor's
Certificate of Foreign Status (Form W- 8).
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<PAGE>
o Automatic Investment Plan. Under an Automatic Investment Plan, direct
shareholders may make automatic monthly investments in the Fund (minimum $25) by
authorizing the Fund's Transfer Agent, as agent for the Distributor, to debit
the investor's account at a U.S. domestic bank, savings and loan association or
credit union. If a new account is being established under the Plan, a check
(minimum $25) for the initial investment must accompany the Application. The
authorized amount may be changed or participation in the Plan may be terminated
at any time by writing to Shareholder Services, Inc. ("the Transfer Agent"). A
reasonable period (approximately 15 days) is required after receipt of such
instructions to implement them. The Fund reserves the right to amend, suspend or
discontinue offering Automatic Investment Plans at any time without prior
notice.
Guaranteed Payment. Broker-dealers with sales agreements with the Distributor
(including broker-dealers who have made special arrangements with the
Distributor for purchases for Program accounts) may place purchase orders with
the Distributor for purchases of the Fund's shares prior to 12:00 Noon on a
regular business day, and the order will be effected at the net asset value
determined at 12:00 Noon that day if the broker-dealer guarantees that payment
for such shares in Federal Funds will be received by the Fund's Custodian prior
to 2:00 P.M. on the same day. Distributions on such shares will begin to accrue
on the purchase date. If an order is received between 12:00 Noon and the close
of the New York Stock Exchange (which is normally 4:00 P.M.) on a regular
business day with the broker-dealer's guarantee that payment for such shares in
Federal Funds will be received by the Custodian prior to the close of the
Exchange the next regular business day, the order will be effected at the close
of the Exchange on the day the order is received, and distributions on such
shares will begin to accrue on the next regular business day if the Federal
Funds are received by the required time. If the broker-dealer guarantees that
the Federal Funds payment will be received by the Fund's Custodian by 2:00 P.M.
on a regular business day on which an order is placed for shares after 12:00
noon, the order will be effected at the close of the Exchange that day and
distributions will begin to accrue on such shares on the purchase date.
General. Dealers and brokers who process orders for the Fund's
shares on behalf of their customers may charge a fee for this
service. That fee can be avoided by purchasing shares directly
from the Fund. The Distributor, in its sole discretion, may accept
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or reject any order for purchase of the Fund's shares. The sale of shares will
be suspended during any period when the determination of net asset value is
suspended, and may be suspended by the Managing General Partners whenever they
judge it in the best interest of the Fund to do so.
Service Plan. The Fund has adopted a Service Plan (the "Plan") under Rule 12b-1
of the Investment Company Act pursuant to which the Fund will reimburse the
Distributor for all or a portion of its costs incurred in connection with the
personal service and maintenance of accounts that hold Fund shares. The
Distributor will use all the fees received from the Fund to compensate dealers,
brokers, banks, or other institutions ("Recipients") each quarter for providing
personal service and maintenance of accounts that hold Fund shares. The services
to be provided by Recipients under the Plan 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 Fund shares, assisting in the establishment and maintenance of
accounts or sub-accounts in the Fund, making the Fund's investment plans and
dividend payment options available, and providing such other information and
customer liaison services and the maintenance of accounts as the Distributor or
the Fund may reasonably request. Plan payments by the Fund to the Distributor
will be made quarterly in the amount of the lesser of (i) 0.05% (0.20% annually)
of the net asset value of the Fund, computed as of the close of each business
day or (ii) the Distributor's actual distribution expenses for that quarter of
the type approved by the Managing General Partners. Any unreimbursed expenses
incurred for any quarter by the Distributor may not be recovered in later
periods. The Plan has the effect of increasing annual expenses of the Fund by up
to 0.20% of its average annual net assets from what its expenses would otherwise
be. In addition, the Manager may, under the Plan, from time to time from its own
resources (which may include the profits derived from the advisory fee it
receives from the Fund), make payments to Recipients for distribution,
administrative and accounting services performed by Recipients. For further
details, see "Service Plan" in the Statement of Additional Information.
How To Sell Shares
Program Participants. Program participants may redeem shares held
in the Program by writing checks as described below, or by
contacting their dealer or broker. A Program participant may also
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arrange for "Expedited Redemptions," as described below, only through their
dealer or broker.
Shares of the Fund Owned Directly. Shares of the Fund owned by a direct
shareholder (not through a Program) may be redeemed in the following ways:
o Regular Redemption Procedures. A direct shareholder who wishes to
redeem some or all shares in an account (whether or not represented by
certificates) under the Fund's regular redemption procedures must send the
following to the Fund's transfer agent, Shareholder Services, Inc., P.O. Box
5143, Denver, Colorado 80217 [send courier or express mail deliveries to 10200
E. Girard Avenue, Building D, Denver, Colorado 80231]: (1) a written request for
redemption signed by all registered owners exactly as the shares are registered,
including fiduciary titles, if any, and specifying the account number and the
dollar amount or number of shares to be redeemed; (2) a guarantee of the
signatures of all registered owners on the redemption request or on the
endorsement on the share certificate or accompanying stock power, by a U.S.
bank, trust company, credit union or savings association, or foreign bank having
a U.S. correspondent bank or a U.S. registered dealer and broker in securities,
municipal securities or government securities, or by a U.S. national securities
exchange, registered securities association or clearing agency; (3) share
certificates, if any, issued for any of the shares to be redeemed; and (4) any
additional documents which may be required by the Transfer Agent for redemption
by corporations, partnerships or other organizations, executors, administrators,
trustees, custodians, guardians, or if the redemption is requested by anyone
other than the shareholder(s) of record. Transfers of shares are subject to
similar requirements.
A signature guarantee is not required for redemptions of $50,000 or
less, requested by and payable to all direct shareholders of record, to be sent
to the address of record for that account. To avoid delay in redemption, direct
shareholders having questions about these requirements should contact the
Transfer Agent in writing or by calling 1-800-525-9310 (from within the U.S.) or
303-671-3200 (from outside the U.S.) before submitting a request. From time to
time, the Transfer Agent, in its sole discretion, may waive any or certain of
the foregoing requirements in particular cases. Redemption or transfer requests
will not be honored until the Transfer Agent receives all required documents in
proper form.
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<PAGE>
o Expedited Redemption Procedure. In addition to the regular redemption
procedure set forth above, direct shareholders whose shares are not represented
by certificates may arrange to have redemption proceeds of $2,500 or more wired
in Federal Funds to a designated commercial bank if the bank is a member of the
Federal Reserve wire system. There is a $10 fee for each Federal Funds wire. To
place a wire redemption request, call the Transfer Agent at 1-800-852-8457. The
account number of the designated financial institution and the bank ABA number
must be supplied to the Transfer Agent on the Application or dealer settlement
instructions establishing the account or may be added to existing accounts or
changed only by signature guaranteed instructions to the Transfer Agent from all
shareholders of records. Such redemption requests may be made by telephone, wire
or written instructions to the Transfer Agent. The wire for the redemption
proceeds of shares redeemed prior to 12:00 noon, New York time, normally will be
transmitted by the Transfer Agent to the shareholder's designated U.S. bank
account on the day the shares are redeemed (or, if that day is not a bank
business day, on the next bank business day). Shares redeemed prior to 12:00
Noon do not earn accrued interest on the redemption date. The wire for the
redemption proceeds of shares redeemed between 12:00 noon and the close of the
Exchange, which is normally 4:00 P.M., but may be earlier on some days, normally
will be transmitted by the Transfer Agent to the shareholder's designated U.S.
bank account on the next bank business day after the redemption. Shares redeemed
between 12:00 noon and the close of the Exchange earn accrued interest on the
redemption date but no interest is paid on the proceeds of redeemed shares
awaiting transmittal by wire. There is normally a $10.00 fee for Federal Funds
wire redemption. See "Purchase, Redemption and Pricing of Shares" in the
Statement of Additional Information for further details.
|X| Check Writing. Upon request, the Transfer Agent will provide any
direct shareholder or Program participant whose shares are not represented by
certificates with forms of drafts ("checks") payable through a bank selected by
the Fund (the "Bank"). Program participants must arrange for checkwriting
through their brokers or dealers. The Transfer Agent will arrange for checks
written by direct shareholders to be honored by the Bank after obtaining a
specimen signature card from the shareholder(s). Shareholders of joint accounts
may elect to have checks honored with a single signature. Checks may be made
payable to the order of anyone in any amount not less than $250 and will be
subject to the Bank's
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rules and regulations governing checks. For Program participants, checks will be
drawn against the primary account designated by the Program participant. If a
check is presented for an amount greater than the account value, it will not be
honored. Shares purchased by check or Automatic Investment Plan payments within
the prior 10 days may not be redeemed by check writing. A check presented to the
Bank for payment that would require redemption of some or all of the shares so
purchased is subject to non-payment. The Bank will present checks to the Fund to
redeem shares to cover the amount of the check. Checks may not be presented for
cash payment at the offices of the Bank or the Fund's Custodian. This limitation
does not affect the use of checks for the payment of bills or to obtain cash at
other banks. The Fund reserves the right to amend, suspend or discontinue check
writing privileges at any time without prior notice.
o Telephone Redemptions. Direct shareholders of the Fund may redeem
their shares by telephone by calling the transfer Agent at 1-800-852-8457.
Proceeds of telephone redemptions will be paid by check payable to the
shareholder(s) of record and sent to the address of record for the account.
Telephone redemptions are not available within 30 days of a change of the
address of record. Up to $50,000 may be redeemed by telephone in any seven day
period.
The Transfer Agent may record any calls. Telephone redemptions may not
be available if all lines are busy, and shareholders would have to use the
Fund's regular redemption procedures described above. Telephone redemption
privileges are not available for newly-purchased (within the prior 10 days)
shares or for shares represented by certificates. Telephone redemption
privileges apply automatically to each shareholder and the dealer representative
of record unless the Transfer Agent receives cancellation instructions from a
shareholder of record. If an account has multiple owners, the Transfer Agent may
rely on the instructions of any one owner.
o Automatic Withdrawal Plans. Direct shareholders of the Fund 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 as of the close of the Exchange, three days prior
to the date requested by the shareholder for receipt of the payment. The Fund
cannot guarantee receipt of the payment on the date requested and reserves the
right to amend, suspend or discontinue offering such plans at any time without
prior notice. For further details,
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refer to "Automatic Withdrawal Plan Provisions" in the Statement of
Additional Information.
General Information on Redemptions. The redemption price will be the Fund's net
asset value per share next determined after the Transfer Agent's receipt of a
redemption request in proper form. Under certain circumstances, the Fund may
involuntarily redeem small accounts if the account has fallen below $1,000 in
value. For details, see "Purchase, Redemption and Pricing of Shares" in the
Statement of Additional Information. Payment for redeemed shares is made
ordinarily in cash in U.S. dollars and forwarded within seven days of the
Transfer Agent's receipt of redemption instructions in proper form, except under
unusual circumstances as determined by the Securities and Exchange Commission.
The Transfer Agent may delay forwarding a redemption check for recently
purchased shares only until the purchase payment has cleared, which may take up
to 10 or more days from the purchase date. Such delay may be avoided if the
shareholder purchases shares by Federal Funds wire or through a Program, or
arranges telephone or written assurance satisfactory to the Transfer Agent from
the bank upon which the purchase payment was drawn. Shares purchased by check or
Automatic Investment Plan payments within the prior 10 days may not be redeemed
by checkwriting. A check presented to the Bank for payment that would require
the redemption of some or all of the shares so purchased is subject to
non-payment. The Fund makes no charge for redemption. Dealers or brokers may
charge a fee for handling redemption transactions but such charge can be avoided
by requesting the redemption directly by the Fund through the Transfer Agent.
Under certain circumstances, the proceeds of a redemption of Fund shares
acquired by exchange of shares of Eligible Funds purchased subject to a
contingent deferred sales charge ("CDSC") may be subject to the CDSC (see
"Exchange Privilege," below).
Exchanges of Shares
Exchange Privilege. Shares of the Fund held under a Program may be exchanged for
shares of Centennial Money Market Trust, Centennial Government Trust and
Centennial Tax Exempt Trust (collectively, the "Centennial Trusts") only by
instructions of the broker. Shares of the Fund may, under certain circumstances,
be exchanged by direct shareholders for Class A shares of certain Oppenheimer
funds (collectively referred to as "Eligible Funds"). See "Exchanges of Shares"
in the Statement of Additional Information for a list of the Eligible Funds.
That list can change from time to time.
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There is an initial sales charge on the purchase of Class A shares of
each Eligible Fund except Money Market Funds (as defined in the Statement of
Additional Information.) Under certain circumstances described below, redemption
proceeds of Money Market Fund shares may be subject to a CDSC.
Shares of the Fund and of other Eligible Funds may be exchanged at net
asset value if all of the following conditions are met: (1) shares of the fund
selected for exchange are available for sale in the shareholder's state or other
jurisdiction of residence; (2) the respective prospectuses of the funds whose
shares are to be exchanged and acquired offer the Exchange Privilege to the
investor; (3) newly-purchased shares (by initial or subsequent investment) are
held in an account for at least seven days prior to the exchange; (4) the
aggregate net asset value of the shares surrendered for exchange is at least
equal to the minimum investment requirements of the fund whose shares are to be
acquired; and (5) the investor is eligible to purchase shares of the fund to be
acquired. Shares of the Fund may be acquired by exchange of shares of other
Eligible Funds only if the shareholder is an "eligible foreign investor," as
described above under "How to Buy Shares" and the shareholder submits a Form
W-8, a Special Power of Attorney form and Fund Application with the exchange
instructions.
In addition to the conditions stated above, shares of Eligible Funds
may be exchanged for shares of any Money Market Funds; shares of any Money
Market Fund (including the Fund) purchased without a sales charge may be
exchanged for shares of Eligible Funds offered with a sales charge upon payment
of the sales charge (or, if applicable, may be used to purchase shares of
Eligible Funds subject to a CDSC); and shares of the Fund acquired by
reinvestment of distributions from any Eligible Fund except Oppenheimer Cash
Reserves or from any unit investment trust for which reinvestment arrangements
have been made with the Distributor or Sub-Distributor may be exchanged at net
asset value for shares of any Eligible Fund. The redemption proceeds of shares
of the Fund, acquired by exchange of Class A shares of an Eligible Fund
purchased subject to a CDSC, that are redeemed within 18 months of the end of
the calendar month of the initial purchase of the exchanged shares will be
subject to the CDSC as described in the prospectus of that other Eligible Fund.
In determining whether the CDSC is payable, shares of the Fund not subject to
the CDSC are redeemed first, including shares purchased by reinvestment of
distributions and capital gains distributions from any Eligible
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Fund or shares of the Fund acquired by exchange of shares of Eligible Funds on
which a front-end sales charge was paid or credited, and then other shares are
redeemed in the order of purchase.
How To Exchange Shares. An exchange may be made by direct shareholders by
submitting an Exchange Authorization Form to the Transfer Agent, signed by all
registered owners. In addition, direct shareholders of the Fund may exchange
shares of the Fund for shares of any Eligible Fund by telephone exchange
instructions to the Transfer Agent by a shareholder or the dealer representative
of record for an account. The Fund may modify, suspend or discontinue this
exchange privilege at any time. Although the Fund will attempt to provide
shareholders with notice whenever reasonably able to do so, it may impose these
changes at any time. The Fund reserves the right to reject exchange requests
submitted in bulk on behalf of 10 or more accounts. Exchange requests must be
received by the Transfer Agent by the close of the Exchange on a regular
business day to be effected that day. The number of shares exchanged may be less
than the number requested if the number requested would include shares subject
to a restriction cited above or shares covered by a certificate that is not
tendered with such request. Only the shares available for exchange without
restriction will be exchanged.
Telephone Exchanges. Direct shareholders may place a telephone exchange request
by calling the Transfer Agent at 1-800-852-8457. Telephone exchange calls may be
recorded by the Transfer Agent. Telephone exchanges are subject to the rules
described above. By exchanging shares by telephone, the shareholder is
acknowledging receipt of a prospectus of the fund to which the exchange is made
and that for full exchanges, any special account features such as Automatic
Investment Plans and Automatic Withdrawal Plans will be switched to the new
account unless the Transfer Agent is otherwise instructed. Telephone exchange
privileges automatically apply to each direct shareholder of record and the
dealer representative of record unless and until the Transfer Agent receives
written instructions from the shareholder(s) of record canceling such
privileges. If an account has multiple owners, the Transfer Agent may rely on
the instructions of any one owner.
The Transfer Agent reserves the right to require shareholders to
confirm, in writing, telephone exchange privileges for an account. Shares
acquired by telephone exchange must be registered exactly as the account from
which the exchange was made.
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Certificated shares are not eligible for telephone exchange. If all telephone
exchange lines are busy (which might occur, for example, during periods of
substantial market fluctuations), shareholders might not be able to request
telephone exchanges and would have to submit written exchange requests.
General Information on Exchanges. Shares to be exchanged are redeemed on the day
the Transfer Agent receives an exchange request in proper form (the "Redemption
Date") as of the close of the Exchange, which is normally 4:00 P.M., but may be
earlier on some days. 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, in its sole discretion,
reserves the right to refuse any exchange request that may disadvantage it.
The Eligible Funds have investment objectives and policies that differ
from those of the Fund, are not designed solely for foreign investors, and
therefore are not subject to the same tax considerations as the Fund and their
dividends and distributions paid to foreign shareholders may be subject to
withholding of U.S. Federal income tax. Each of those funds imposes a sales
charge on purchases of Class A shares except the Money Market Funds. For
complete information, including sales charges and expenses, a prospectus of the
fund into which the exchange is being made should be read prior to an exchange.
Dealers or brokers who process exchange orders on behalf of customers may charge
for their services. Direct shareholders may avoid those charges by requesting
the Fund directly to exchange shares. For Federal tax purposes, an exchange is
treated as a redemption and purchase of shares.
Telephone Instructions. The Transfer Agent has adopted procedures concerning
telephone transactions including confirming that telephone instructions are
genuine by requiring callers to provide tax identification numbers and other
account data or by using PINs and by recording telephone calls and confirming
such transactions in writing. If the Transfer Agent does not use such
procedures, it may be liable for losses due to unauthorized transactions, but
otherwise neither it nor the Fund will be liable for losses or expenses arising
out of any telephone instructions it reasonably believes to be genuine.
Distributions and Taxes
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Distributions. The Fund intends to declare daily distributions of all of its net
investment income, as defined below, each regular business day, and to pay such
distributions monthly, on a date set by the Managing General Partners, which
will normally be the third Thursday of each month. Such distributions will be
payable to shareholders as set forth in "How to Buy Shares," above. If a
shareholder redeems all shares at any time during a month, the redemption
proceeds include distributions accrued up to the redemption date. Such
redemption proceeds will include all distributions accrued up to the redemption
date for shares redeemed prior to 12:00 noon, and include all distributions
accrued through the redemption date for shares redeemed between 12:00 noon and
the close of the Exchange, which is normally 4:00 P.M., but may be earlier on
some days.
All distributions for the accounts of Program participants are
automatically reinvested in additional shares of the Fund. Distributions
accumulated since the prior payment will be reinvested on the payment date in
full and fractional shares of the Fund at net asset value. Such investors may
receive cash payments by asking the broker to redeem shares. Participants in
Programs will receive account statements directly from their dealers reflecting
any account activity. Under the terms of a Program, a broker-dealer may pay out
the value of some or all of a Program participant's Fund shares prior to
redemption of such shares by the Fund. In such cases, the shareholder will be
entitled to distributions on such shares only up to and including the date of
such payment. Distributions on such shares accruing between the date of payment
and the date such shares are redeemed by the Fund will be paid to the
broker-dealer. It is anticipated that such payments will occur only to satisfy
debit balances arising in a shareholder's account under a Program.
Distributions payable to direct shareholders of the Fund will also be
automatically reinvested in shares of the Fund at net asset value on the payment
date, unless the shareholder asks the Transfer Agent in writing to pay
distributions in cash or to reinvest them in another Eligible Fund, as described
in "Reinvestment of Distributions in Another Fund" in the Statement of
Additional Information. The minimum initial and subsequent purchase requirements
are waived as to such purchases. Distributions and the proceeds of redemptions
of Fund shares represented by checks returned to the Fund by the Postal Service
as undeliverable will be reinvested in shares of the Fund, as promptly as
possible after the
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return of such checks to the Transfer Agent to enable the investor to earn a
return on otherwise idle funds.
The Fund's net investment income for distribution purposes consists of
all interest accrued on portfolio assets, less all expenses of the Fund for such
period. Accrued market discount is included in interest income; amortized market
premium is treated as an expense. Although distributions from net realized gains
on securities, if any, will be paid at least once each year, and may be made
more frequently, the Fund does not expect to realize long-term capital gains and
therefore does not contemplate payment of any capital gains distribution.
Distributions from net realized gains will not be distributed unless the Fund's
capital loss carry forwards, if any, have been used or have expired. To effect
its policy of maintaining a net asset value of $1.00 per share, the Fund, under
certain circumstances, may withhold distributions or make distributions from
capital or capital gains.
Taxes. The discussion below relates principally to U.S. Federal income
tax laws. Distributions may be subject to state and local taxation and taxation
under the laws of foreign countries. The value of Fund shares owned directly by
a non-U.S. citizen may be subject to U.S. (and possibly state) estate taxes upon
such investor's death, subject to certain exemptions and to the terms of any
applicable tax treaty between the U.S. and the investor's country of residence.
The tax consequences of investing in the Fund will depend upon the jurisdiction
in which the investor is subject to taxation. The discussion below assumes a
shareholder of the Fund generally is not subject to U.S. tax or withholding with
respect to other income or activities unrelated to an investment in the Fund;
otherwise, the discussion below may not apply. Distributions from the Fund will
not be eligible for the distributions-received deduction for corporations under
the Internal Revenue Code. Shareholders should consult a qualified tax advisor
since the discussion below is only a summary and is not exhaustive.
Because shareholders are limited partners of the Fund, consistent with
the Fund's Partnership Agreement, each shareholder will be allocated a
proportionate share of any net income and realized gains (or losses) for U.S.
Federal income tax purposes even if not distributed. Allocations of items of
income, gain, loss, deduction and credit of the Fund for U.S. Federal income tax
purposes are made in a manner intended to reflect each shareholder's respective
interest in the Fund. While there can be
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no assurance that the tax allocations made by the Fund will be respected by the
United States Internal Revenue Service (the "IRS"), the allocations are made in
a manner intended to approximate the economic experience of each shareholder, as
a limited partner, with respect to such shareholder's investment in the Fund.
After each calendar year, the Fund is required to send shareholders (regardless
of whether they are or are not U.S. taxpayers) and to file with the IRS a U.S.
Federal tax form (Form 1065, Schedule K-1) which identifies their share of net
income, gains and losses for the taxable year. The Fund will also file an annual
information return with the IRS with respect to each non- U.S. shareholder
(which includes, as an attachment, the Form W-8 furnished by the shareholder)
indicating, if applicable, that no amount was withheld with respect to income
allocated to such shareholder that qualified for the "portfolio interest"
exemption or any other applicable exemption under the Internal Revenue Code. The
Fund may be required to send shareholders additional forms under certain
circumstances, for example Form 1042S. Shareholders should consult their tax
advisors regarding any tax forms received from the Fund.
Tax Status of the Fund. The Fund intends to comply with the provisions of the
Internal Revenue Code applicable to limited partnerships, and has obtained a
ruling from the IRS that the Fund will be classified as a partnership and that
its general and limited partners will be treated as partners for Federal income
tax purposes. The Revenue Act of 1987 (the "Act"), which was enacted into law on
December 22, 1987, after the Fund had received its ruling, provides that
so-called "publicly traded partnerships" shall generally be characterized as
corporations rather than as partnerships for Federal income tax purposes. It
would appear that the Fund would be characterized as a corporation under the
Act. However, because the Fund was in existence on December 17, 1987, under
special "grandfathering" provisions of the Act, it should qualify as an
"existing partnership" for purposes of the Act. Accordingly, as an "existing
partnership," the Fund would not be classified as a corporation until January 1,
1998. (See the discussion below regarding the consequences to the Fund and its
investors after December 31, 1997, once the Fund is characterized as a
corporation pursuant to the Act.)
As a limited partnership, the Fund is not subject to U.S. Federal
income tax, and the character of any income earned or capital gains realized by
the Fund flows through directly to its shareholders. Shareholders of funds
generally are liable for
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payment of taxes on their allocated share of fund income and realized capital
gains. However, to the extent the Fund earns "portfolio interest" income,
eligible foreign investors who are not subject to payment or withholding of U.S.
tax on these types of income are likewise not subject to payment or withholding
of U.S. tax on their allocated share of these types of income from the Fund,
subject to the conditions stated below.
Although a ruling from the IRS has been obtained, foreign investors
should note that the IRS or the U.S. courts may ultimately determine that the
Fund should be characterized at all times for U.S. Federal income tax purposes
as an association taxable as a corporation, rather than as a partnership.
Moreover, application of the "publicly-traded partnership" provisions of the
Internal Revenue Code will result in the Fund being characterized as a
corporation for Federal income tax purposes after December 31, 1997.
Characterization of the Fund as an association taxable as a corporation for U.S.
Federal income tax purposes will result in the imposition of both a U.S. Federal
corporate income tax on earnings of the Fund and the imposition of U.S. Federal
income tax and withholding on distributions to the limited partners of the Fund
because such distributions would be characterized as "distributions" subject to
withholding tax rather than as interest income eligible for the "portfolio
interest" exemption and capital gains.
Tax Considerations for Fund Investors. A foreign investor (i.e., an investor
other than a U.S. citizen or resident or a U.S. corporation, partnership, estate
or trust) who is engaged in a trade or business in the United States will be
subject to U.S. Federal income tax on any ordinary income and capital gains at
the same rates applicable to U.S. persons on the foreign investor's allocable
share of ordinary income and capital gains realized by the Fund to the extent
such income and gains are deemed to be effectively connected with the conduct of
such foreign investor's trade or business and U.S. taxation of such income and
gains is not avoided under the terms of an applicable U.S. income tax treaty.
For this purpose, foreign investors will be deemed to be engaged in a trade or
business in the U.S. and will be subject to U.S. Federal income tax on their
allocable share of the Fund's net income and capital gains if the Fund were
deemed to be engaged in a trade or business in the U.S. If the Fund were deemed
to be engaged in a trade or business in the U.S., it would also be required to
withhold U.S. Federal income tax at the maximum rate applicable to the investor
on income earned. The Fund has obtained an opinion of
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counsel to the effect that neither the Fund nor its investors, solely by virtue
of their investment in the Fund, should be deemed to be engaged in a trade or
business in the United States if the Fund adheres to its stated investment
objective, policies and restrictions and to certain guidelines concerning its
investment activities. The Fund intends to comply with those restrictions and
guidelines. Consequently, any foreign investor in the Fund should not be deemed
to be engaged in a trade or business in the United States solely by virtue of an
investment in the Fund. Although the Fund and its tax counsel rendering such
opinion believe that their position is fully supported by applicable law, there
can be no assurance that the IRS or a court of law would not take a contrary
position. If the Fund is deemed to be engaged in a U.S. trade or business by a
court of law, then its portfolio interest would be subject to U.S. Federal
income tax and the Fund would be obligated to withhold tax on all income
allocated to shareholders.
Assuming that a foreign investor purchasing Fund shares is not engaged
in a trade or business in the United States, such investor's share of ordinary
income realized by the Fund will not be subject to U.S. Federal income tax
(including withholding of such taxes), if (i) the ordinary income consists of
interest income which qualifies for the "portfolio interest" exemption under
Sections 871(h) and 881(c) of the Internal Revenue Code, (ii) the foreign
investor has furnished a valid and effective IRS Form W-8 (or substitute form)
to the Fund, (iii) the Fund has no actual knowledge that the investor is, in
fact, a U.S. person, and (iv) the investor properly certifies, if so required,
that the beneficial owner of such investment is not (a) a "10% shareholder" (as
defined in Section 871(h)(3) of the Code) of the issuer of the security held by
the Fund which generates the interest income, (b) a controlled foreign
corporation related to such issuer, or (c) a bank deemed to be receiving such
interest (other than interest on an obligation of the United States) on an
extension of credit made pursuant to a loan agreement entered into in the
ordinary course of its trade or business. The Fund has been advised that
interest income will qualify for the "portfolio interest" exemption if it is
paid with respect to a publicly-offered, registered debt obligation issued after
July 18, 1984, with respect to which the Fund, which would otherwise be required
to withhold U.S. Federal income tax from such interest under Sections 1441 or
1442 of the Internal Revenue Code, has received a valid and effective statement
(such as that contained in the Application and Form W-8) that the beneficial
owner of the obligation is not a U.S. person. It should be noted that interest
income received by the Fund on certain short-term
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investments may not qualify for the "portfolio interest" exemption. Accordingly,
the portion of such interest allocable to foreign shareholders would be subject
to U.S. Federal income tax (including withholding taxes) during the calendar
year such interest is received by the Fund.
A non-U.S. investor who is not "engaged in a trade or business" in the
United States for purposes of the Internal Revenue Code generally will not be
subject to U.S. Federal income tax (or withholding) on that investor's allocated
share of net short-term or long-term capital gains realized by the Fund,
provided that, in the case of an investor who is a person, the investor is not
physically present in the U.S. for 183 or more days during the year or for such
other period as would cause the investor to be treated as a U.S. resident under
the Internal Revenue Code. Proceeds of redemption of Fund shares also will not
be subject to U.S. tax if they constitute non-U.S. source income by virtue of
the investor's non-U.S. status. However, even if the proceeds of share
redemptions are not subject to U.S. tax under such rules, the Fund nevertheless
may be required to withhold on the portion of such proceeds that represents the
investor's allocable share of income or gains of the Fund that would otherwise
be subject to withholding.
Foreign investors who do not furnish a valid and effective Form W-8 or
otherwise properly certify, if required by U.S. Federal tax laws, that such
investor is not a "10 percent shareholder" or a controlled foreign corporation
of the issuer, may be subject to U.S. withholding taxes on their allocated
shares of all income realized by the Fund (regardless of its source). Foreign
shareholders are required to furnish a Form W-8 every three calendar years. As
previously discussed, regardless of whether a valid and effective Form W-8 is
furnished, foreign shareholders may be subject to U.S. withholding taxes on
their allocated shares of income realized by the Fund from sources other than
"portfolio interest" income and net realized capital gains unless such
withholding taxes are reduced or eliminated under the terms of an applicable
U.S. income tax treaty and the investor complies with all procedures for
claiming the benefits of such a treaty. It is the intention of the Fund to
withhold amounts required by the Internal Revenue Code with respect to
non-qualifying income and/or nonqualifying investors.
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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 Statement of Additional Information, and if given or
made, such information and representations must not be relied upon as having
been authorized by the Fund, OppenheimerFunds, Inc., Centennial Asset Management
Corporation, OppenheimerFunds 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.
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
Centennial Asset Management Corporation
6803 South Tucson Way
Englewood, Colorado 80112 Centennial America Fund, L.P.
Sub-Distributor Prospectus
OppenheimerFunds Distributor, Inc.
P.O. Box 5254 Dated April 23, 1997
Denver, Colorado 80217
Transfer Agent and Shareholder Servicing Agent
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217
1-800-525-9310 (from within the U.S.)
303-671-3200 (from outside the U.S.)
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
PR0870.002.0497 Printed on Recycled Paper
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CENTENNIAL AMERICA FUND, L.P.
6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-9310 (from within the U.S.)
303-671-3200 (from outside the U.S.)
Statement of Additional Information dated April 23, 1997
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated April 23, 1997. It should be read together
with the Prospectus which may be obtained by writing to the Fund's Transfer
Agent, Shareholder Services, Inc, at P.O. Box 5143, Denver, Colorado 80217 or by
calling the toll-free number shown above (if from within the U.S.) or
303-671-3200 (if from outside the U.S.)
Contents Page
About the Fund
Investment Objective and Policies..........................................2
Other Investment Restrictions..............................................3
Managing General Partners and Officers.....................................4
The Manager and its Affiliates.............................................8
Service Plan..............................................................11
Performance of the Fund...................................................12
About Your Account
Purchase, Redemption and Pricing of Shares................................13
Exchange of Shares........................................................15
Automatic Withdrawal Plan Provisions......................................16
Financial Information About the Fund
Independent Auditors' Report..............................................19
Financial Statements......................................................20
Appendices
Appendix A: Description of Securities Ratings..........................A-1
Appendix B: Industry Classification....................................B-1
Appendix C: Agreement of Limited Partnership...........................C-1
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ABOUT THE FUND
Investment Objective and Policies
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 may invest, as well as the strategies
the Fund may use to try to achieve its objective. Certain capitalized terms used
in this Statement of Additional Information are defined in the Prospectus.
U.S. Government Securities. Obligations of certain U.S. Government agencies and
instrumentalities may or may not be guaranteed or supported by the full faith
and credit of the United States. Some obligations are backed only by the right
of the issuer to borrow from the U.S. Treasury; others, by discretionary
authority of the U.S. Government to purchase the agencies' obligations; while
others are supported only by the credit of the instrumentality. All U.S.
Treasury obligations are backed by the full faith and credit of the United
States. In the case of the securities not backed by the full faith and credit of
the United States, the Fund must look to the agency issuing or guaranteeing the
obligation for repayment and may not be able to assert a claim against the
United States if the agency does not meet its commitment. The Fund will invest
in U.S. Government Securities (as defined in the Prospectus) of such agencies
and instrumentalities only when the Manager is satisfied that the credit risk
with respect to such instrumentality is minimal and that the security is an
Eligible Security.
General changes in prevailing interest rates will affect the values of
the Fund's portfolio securities. The value will vary inversely to changes in
such rates. For example, if such rates go up after a security is purchased, the
value of the security will generally decline. The execution cost for U.S.
Government Securities is substantially less than for equivalent dollar values of
equity securities (see "Portfolio Transactions," below).
Repurchase Agreements. In a repurchase transaction, at the time the Fund
acquires a U.S. Government Security, it simultaneously resells it to an approved
vendor (a U.S. commercial bank, U.S. branch of a foreign bank or a broker-dealer
which has been designated a primary dealer in government securities, which must
meet the credit requirements set by the Fund's Managing General Partners from
time to time) for delivery on an agreed-upon future date. The sale 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
resale typically will occur within one to five days of the purchase. Repurchase
agreements are considered "loans" under the Investment Company Act of 1940 (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 collateral's value must equal or exceed the repurchase price
to fully collateralize the repayment obligation. Additionally, the Manager will
continuously monitor the collateral's value and will impose creditworthiness
requirements to confirm that the vendor is financially sound.
Ratings of Securities. The prospectus describes "Eligible Securities" in which
the Fund may invest and indicates that if a security's rating is downgraded,
the Manager and/or the Managing General
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Partners may have to reassess the security's credit risk. If a security has
ceased to be a "First Tier Security," the Fund's investment manager,
OppenheimerFunds, Inc. (the "Manager"), will promptly reassess whether the
security continues to present "minimal credit risk". If the Manager becomes
aware that any Rating Organization has downgraded its rating of a Second Tier
Security or rated an unrated security below its second highest rating category,
the Fund's Managing General Partners shall promptly reassess whether the
security presents minimal credit risk and whether it is in the best interests of
the Fund to dispose of it; but if the Fund disposes of the security within 5
days of the Manager learning of the downgrade, the Manager will provide the
Managing General Partners with subsequent notice of such downgrade. If a
security is in default, or ceases to be an Eligible Security, or is determined
no longer to present minimal credit risks, the Managing General Partners must
determine whether it would be in the best interests of the Fund to dispose of
the security. The Rating Organizations currently designated as such by the
Securities and Exchange Commission are Standard & Poor's Corporation, Moody's
Investors Service, Inc. Fitch Investors Services, Inc., Duff and Phelps, Inc.,
IBCA Limited and its affiliate, IBCA, Inc., and Thomson BankWatch, Inc. A
description of the rating categories of those Rating Organizations is contained
in Appendix A.
Other Investment Restrictions
The Fund's most significant investment restrictions are described in the
Prospectus. The following investment restrictions are also fundamental policies
of the Fund and, together with the fundamental policies and investment objective
described in the Prospectus, cannot be changed without the vote of a "majority"
of the Fund's outstanding voting shares. The Investment Company Act defines such
a "majority" vote as the vote of the holders of the lesser of: (i) 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 (ii) more than 50% of
the outstanding shares.
Under these additional restrictions, the Fund cannot:
(1) purchase or sell real estate, commodities or commodity contracts,
although it may purchase and sell marketable securities that are
secured by real estate and marketable securities of companies that
invest or deal in real estate; the Fund will not invest in U.S. real
property interests within the meaning of Section 897 of the Internal
Revenue Code;
(2) invest in interests in oil, gas, or other mineral exploration or
development programs;
(3) purchase securities on margin or make short sales of securities;
(4) underwrite securities except to the extent the Fund may be deemed
to be an underwriter in connection with the sale of securities held in
its portfolio; provided that the Fund may acquire securities
representing interests in a unit investment trust in connection with
the sale of shares of the Fund if, as a result of such acquisition, the
Fund holds not more than 3% of the outstanding voting securities of
such unit investment trust;
(5) invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or other
acquisition;
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(6) write, purchase or sell puts, calls or combinations thereof, or
purchase or sell interest rate futures contracts or related options or
otherwise enter into hedging transactions with respect to the Fund's
securities;
(7) make investments for the purpose of exercising control of
management;
(8) purchase or retain securities of any company if, to the knowledge
of the Fund, its officers and Managing General Partners and officers
and directors of the Manager who individually own more than 0.5% of the
securities of such company together own beneficially more than 5% of
such securities;
(9) invest in any warrants related to common stock;
(10) invest more than 25% of its assets in a single industry (neither
the U.S. Government nor any of its agencies or instrumentalities are
considered an industry for the purposes of this restriction); or
(11) issue any class of senior security (as defined in the Investment
Company Act) or sell any senior security of which the Fund is the
issuer, except as provided in its fundamental policy on borrowing (in
"Investment Restrictions" in the Prospectus) or as provided in the
Investment Company Act.
For purposes of the Fund's policy not to concentrate more than 25% of
its assets in a single industry as described under Investment Restrictions
number 10 in the Statement of Additional Information, the Fund has adopted the
industry classifications set forth in Appendix B to this Statement of Additional
Information. This is not a fundamental policy.
Managing General Partners and Officers
The Fund's Managing General Partners and officers and their principal business
affiliations and occupations during the past five years are listed below. All
of the Managing General Partners are also trustees or directors of Daily Cash
Accumulation Fund, Inc., Centennial Money Market Trust, Centennial Tax Exempt
Trust, Centennial Government Trust, Centennial New York Tax Exempt Trust,
Centennial California Tax Exempt Trust (the "Centennial Funds"), Oppenheimer
Cash Reserves, Oppenheimer Champion Income Fund, Oppenheimer Equity Income
Fund, Oppenheimer Limited-Term Government Fund, Oppenheimer Integrity Funds,
Oppenheimer International Bond Fund, Oppenheimer High Yield Fund, Oppenheimer
Main Street Funds, Inc., Oppenheimer Strategic Income Fund, Oppenheimer
Strategic Income & Growth Fund, Oppenheimer Municipal Fund, Oppenheimer Total
Return Fund, Inc., Oppenheimer Variable Account Funds, Panorama Series Funds,
Inc., and The New York Tax -Exempt Income Fund, Inc. (together with the
Centennial Funds, the "Denver Oppenheimer funds") except for Ms. Macaskill.
Ms. Macaskill is a Trustee, Director or Managing General Partner of all the
Denver-based Oppenheimer funds except Oppenheimer Integrity Funds, Oppenheimer
Strategic Income Fund, Panorama Series Funds, Inc. and Oppenheimer Variable
Account Funds. Ms. Macaskill is President and Mr. Swain is Chairman and CEO of
the Denver Oppenheimer funds. All of the officers except Ms. Warmack, Ms. Wolf
and
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Mr. Zimmer hold similar positions as officers of all the Denver Oppenheimer
funds. As of April 7, 1997, the Managing General Partners and officers of the
Fund as a group owned of record or beneficially less than 1% of its outstanding
shares.
ROBERT G. AVIS, Managing General Partner; Age 65*
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, Managing General Partner; Age 82
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
CHARLES CONRAD, JR., Managing General Partner; Age 67
1501 Quail Street, Newport Beach, CA 92660
Chairman and CEO of Universal Space Lines, Inc. (a space services management
company); formerly Vice President of McDonnell Douglas Space Systems Co. and
associated with the National Aeronautics and Space Administration.
SAM FREEDMAN, Managing General Partner; Age 56
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly Chairman and Chief Executive Officer of OppenheimerFunds Services,
Chairman, Chief Executive Officer and a director of Shareholder Services Inc.
("SSI"), Chairman, Chief Executive and Officer and director of Shareholder
Financial Services Inc. ("SFSI"), Vice President and director of Oppenheimer
Acquisition Corp. ("OAC") and a director of the Manager.
RAYMOND J. KALINOWSKI, Managing General Partner; Age 67
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc. (a computer products
training company); 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, Managing General Partner; Age 75
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).
ROBERT M. KIRCHNER, Managing General Partner; Age 75
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
BRIDGET A. MACASKILL, President and Managing General Partner; Age 48* President,
Chief Executive Officer and a Director of the Manager and HarbourView Asset
Management Corporation ("HarbourView"), a subsidiary of the Manager; Chairman
and a director of SSI and SFSI; President and a director of OAC and Oppenheimer
Partnership Holdings, Inc., a holding company subsidiary of the Manager; a
director of Oppenheimer Real Asset Management,
-5-
<PAGE>
Inc.; formerly an Executive Vice President of the Manager.
NED M. STEEL, Managing General Partner; Age 81
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; a director of Visiting Nurse
Corporation of Colorado; formerly Senior Vice President and a Director of Van
Gilder Insurance Corp. (insurance brokers).
JAMES C. SWAIN, Chairman, Chief Executive Officer and Managing General Partner;
Age 63* 6803 South Tucson Way, Englewood, Colorado 80112 Vice Chairman of the
Manager; formerly President and a director of Centennial Asset Management
Corporation, an investment adviser subsidiary of the Manager ("Centennial"), and
Chairman of the Board of SSI.
DOROTHY G. WARMACK, Vice President and Portfolio Manager; Age 60
Vice President of the Manager and Centennial; an officer of other Oppenheimer
funds.
CAROL E. WOLF, Vice President and Portfolio Manager; Age 45
Vice President of the Manager and Centennial; an officer of other Oppenheimer
funds.
ARTHUR J. ZIMMER, Vice President and Portfolio Manger; Age 50
Vice President of the Manager and Centennial; an officer of other Oppenheimer
funds.
ANDREW J. DONOHUE, Vice President and Secretary; Age 46
Executive Vice President, General Counsel and a Director of the Manager, the
Distributor, HarbourView, SSI, SFSI, Oppenheimer Partnership Holdings, Inc. and
MultiSource Services, Inc. (a broker-dealer); President and a director of
Centennial; President and a director of Oppenheimer Real Asset Management, Inc.;
General Counsel of OAC; an officer of other Oppenheimer funds.
GEORGE C. BOWEN, Vice President, Treasurer, and Assistant Secretary; Age 60
6803 Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer
of the Sub-Distributor and HarbourView; Senior Vice President, Treasurer,
Assistant Secretary and a director of Centennial; President, Treasurer and
a director of Centennial Capital Corporation; Senior Vice President,
Treasurer and Secretary of SSI; Vice President, Treasurer and Secretary
of SFSI; Treasurer of OAC; Treasurer of Oppenheimer Partnership Holdings,
Inc.; Vice President and Treasurer of Oppenheimer Real Asset Management,
Inc.; Chief Executive Officer, Treasurer and a director of MultiSource
Services, Inc. (a broker-dealer); an officer of other Oppenheimer funds.
ROBERT G. ZACK, Assistant Secretary; Age 48
Senior Vice President and Associate General Counsel of the Manager, Assistant
Secretary of SSI and SFSI; an officer of other Oppenheimer funds.
ROBERT J. BISHOP, Assistant Treasurer; Age 38
6803 Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of other
Oppenheimer funds; formerly a Fund Controller for the Manager.
SCOTT T. FARRAR, Assistant Treasurer; Age 31
-6-
<PAGE>
6803 Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of other
Oppenheimer funds; formerly a Fund Controller for the Manager.
- -----------------------
* A Manager General Partner who is an "interested person" of the Fund as
defined in theInvestment Company Act. .
Remuneration of Managing General Partners. The officers of the Fund and certain
Managing General Partners of the Fund (Ms. Macaskill and Mr. Swain) who are
affiliated with the Manager receive no salary or fees from the Fund. The
remaining Managing General Partners of the Fund received the total amounts shown
below. Mr. Freedman received no compensation from the Fund before July 1, 1996
when he became a Managing General Partner. The compensation from the Fund was
paid during fiscal year ended December 31, 1996. The compensation from the
Denver-based Oppenheimer funds includes compensation received as a director,
trustee, managing partner or member of a committee of the Board of those funds
during calendar year 1996.
<TABLE>
<CAPTION>
Total
Compensation
Aggregate From All
Compensation Denver-based
Name Position from Fund Oppenheimer funds
<S> <C> <C> <C>
Robert G. Avis Managing General Partner $234 $58,003
William A. Baker Audit and Review $322 $79,715
Committee, Chairman and
Managing General Partner
Charles Conrad, Jr. Audit and Review $301 $74,717
Committee Member and
Managing General Partner
Sam Freedman Managing General Partner $119 $29,502
Raymond J. Kalinowski Risk Oversight Committee
Member, Managing General
Partner $299 $74,173
C. Howard Kast Risk Oversight Committee
Member, Managing
General Partner $299 $74,173
Robert M. Kirchner Audit and Review $301 $74,717
Committee and
Managing General Partner
-7-
<PAGE>
Ned M. Steel Managing General Partner $234 $58,003
</TABLE>
Major Shareholders. As of April 7, 1997, the only shareholder known by the Fund
to own of record or beneficially 5% or more of the outstanding shares of the
Fund was A.G. Edwards & Sons, 1 North Jefferson Street, St. Louis, Missouri
63013, which owned 14,174,642.480 shares of the Fund (92.72% of the then
outstanding total). The Fund has been informed that the shares held of record by
A.G. Edwards & Sons were beneficially owned for the benefit of its brokerage
clients.
The Manager and Its Affiliates
The Manager is a wholly-owned subsidiary of Oppenheimer Acquisition Corp.
("OAC"), a holding company controlled by Massachusetts Mutual Life Insurance
Company. OAC is owned by certain of the Manager's directors and officers,
some of whom may serve as officers of the Fund, and two of whom (Ms. Macaskill
and Mr. Swain) serve as Managing General Partners of the Fund.
Investment Advisory Agreement. The management fee is payable monthly to the
Manager under the terms of an Investment Advisory Agreement between the Manager
and the Fund (the "Agreement"), and is computed on the aggregate net assets of
the Fund as of the close of business each day. Expenses not expressly assumed by
the Manager under Agreement are paid by the Fund. The Agreement lists examples
of expenses paid by the Fund, the major categories of which relate to interest,
taxes, fees to certain Managing General Partners, legal and audit expenses, the
cost of calculating its net asset value, brokerage, custodian and transfer agent
expenses, share issuance costs, certain printing and share registration costs
and non-recurring expenses, including litigation.
The Agreement 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 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. The Agreement
provides that in the absence of willful misfeasance, bad faith, or gross
negligence in the performance of its duties under the Agreement, or reckless
disregard of its obligations or duties thereunder, the Manager is not liable for
any loss sustained by reason of any good faith errors or omissions in connection
with any matter to which the Agreement relates. The Agreement permits the
Manager to act as investment adviser for any other person, firm or corporation.
Under the Agreement, the Manager has undertaken that if the total
expenses of the Fund in any fiscal year should exceed the most stringent state
regulatory requirements on expense limitations applicable to the Fund, the
Manager's compensation for that year shall be reduced by the amount, if any, by
which the Fund's expenses exceeded the most stringent state regulatory limit.
Such state regulatory limitations are no longer applicable as a result of
federal legislation enacted during the fiscal year ended December 31, 1996,
which effectively pre-empted those state requirements.
From January 1, 1993 to July 1, 1993, independently of the Agreement,
the Manager had
-8-
<PAGE>
voluntarily agreed to assume expenses of the Fund (other than extraordinary
non-recurring expenses) in excess of 1.00% of average annual net assets. The
Manager terminated this voluntary expense assumption effective July 1, 1993. Any
assumption of the Fund's expenses under a voluntary undertaking would lower the
Fund's overall expense ratio and increase its total return during any period in
which expenses are limited.
During its fiscal years ended December 31, 1996, December 31,1995 and
December 31, 1994, the Fund paid management fees in the amounts of $76,514,
$35,312 and 25,638, respectively.
Custodian. Citibank, N.A. is the Custodian of the Fund's assets. The Custodian's
responsibilities include safeguarding and controlling the Fund's portfolio
securities and cash, collecting income on the portfolio securities and handling
the delivery of portfolio securities to and from the Fund. The Manager has
represented to the Fund that its banking relationships with 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 or its affiliates.
Transfer Agent. Shareholder Services, Inc., the Transfer Agent, is responsible
for maintaining the Fund's shareholder registry and shareholder accounting
records, and for shareholder servicing and administrative functions.
Distributor. The Fund's Distributor is Centennial Asset Management Corporation.
Under the General Distributor's Agreement between the Fund and the Distributor,
the Distributor acts as the Fund's principal underwriter in the continuous
public offering of its shares, but is not obligated to sell a specific number of
shares. Under the General Distributor's Agreement, the Distributor pays the
expenses of distributing the Fund's shares (other than those paid under the
Service Plan), including the preparation and distribution of advertising and
sales literature, and the cost of printing and mailing prospectuses other than
those furnished to the existing shareholders are borne by the Distributor.
The Fund's use of the name "Centennial" as part of its name is under a
license from the Distributor. If the Distributor ceases to be the Fund's
distributor, the right of the Fund to use "Centennial" as part of its name may
be terminated by the Distributor, and the Fund's Managing General Partners would
be required to take action promptly to change the Fund's name.
Sub-Distributor. The Distributor has entered into a Sub-Distributor's Agreement
with OppenheimerFunds Distributor, Inc. ("OFDI"), a wholly-owned subsidiary of
the Manager, whereby OFDI is appointed as Sub-Distributor of the Fund's shares,
and is responsible on behalf of the Distributor as its agent for accepting
orders from dealers, brokers and investors to purchase the Fund's shares. The
Sub-Distributor is not responsible for selling any specific amount of shares.
Independent Auditors. The independent auditors of the Fund examine the Fund's
financial statements and perform other related audit services. They also act as
auditors for the Manager and for certain other funds advised by the Manager.
-9-
<PAGE>
Portfolio Transactions. Portfolio decisions are based upon recommendations and
judgment of the Manager, subject to the overall authority of the Managing
Partners. As most purchases made by the Fund are principal transactions at net
prices, the Fund incurs little or no brokerage costs. The Fund deals directly
with the selling or purchasing principal or market maker without incurring
charges for the services of a broker in its behalf unless it is determined that
a better price or execution may be obtained by utilizing the services of 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 prices. The Fund seeks to obtain
prompt execution of orders at the most favorable net prices. If dealers or
brokers are used for portfolio transactions, transactions may be directed to
such dealers or brokers in return for special research and statistical
information as well as for services rendered by such brokers or dealers in the
execution of orders. The research information may or may not be useful to the
Fund and/or other accounts of the Manager; information received by those other
accounts may or may not be useful to the Fund. Such information may be in
written form or through direct contact with individuals and includes information
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.
The research services provided by brokers broaden the scope and
supplements the research activities of the Manager by making available
additional views for consideration and comparisons and enabling the Manager to
obtain market information for the valuation of securities held in the Fund's
portfolio. Sales of shares of the Fund and/or the other investment companies
managed by the Manager, or distributed by the Distributor, may, subject to
applicable rules covering the Distributor's activities as distributor, also be
considered as a factor in the direction of transactions to dealers, but only in
conformity with the price, execution and other considerations and practices
discussed above. Those other investment companies may also give similar
consideration relating to the sale of the Fund's shares. No portfolio
transactions will be handled by any securities dealer affiliated with the
Manager.
Service Plan
The Fund has adopted a Service Plan (the "Plan") under Rule 12b-1 of the
Investment Company Act, pursuant to which the Fund will reimburse the
Distributor for a portion of its costs incurred in connection with the servicing
of the Fund's shares, as described in the Prospectus. Each Plan has been
approved: (i) by a vote of the General Managing General Partners of the Fund,
including a majority of the "Independent Managing General Partners" (those
Managing General Partners 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 Plan or in any agreements relating to
the Plan) cast in person at a meeting called for the purpose of voting on the
Plan; and (ii) by the vote of the holders of a "majority of that Fund's
outstanding voting securities" (as defined under the Investment Company Act) .
In approving the Plan, the Managing General Partners determined that it is
likely the Plan will benefit the shareholders of the Fund.
The Distributor and Sub-Distributor have entered into Supplemental
Distribution Assistance Agreements ("Supplemental Agreements") under the Plan
with selected dealers distributing shares
-10-
<PAGE>
of Oppenheimer Cash Reserves, Centennial Government Trust, Centennial New York
Tax Exempt Trust, Centennial California Tax Exempt Trust and the Fund. Quarterly
payments by the Distributor for distribution-related services will range from
0.10% to 0.30%, annually, of the average net asset value of shares of the
above-mentioned funds owned during the quarter beneficially or of record by the
dealer or its customers. However, no payment shall be made to any dealer for any
quarter during which the average net asset value of shares of the
above-mentioned funds owned during that quarter by the dealer or its customers
is less than $5 million. Payments made pursuant to Supplemental Agreements are
not a Fund expense, but are made by the Distributor out of its own resources or
out of the resources of the Manager which may include profits derived from the
advisory fee it receives from the Fund. Payments to affiliates of the
Distributor are not permitted under the Supplemental Agreements.
The Plan unless terminated as described below, shall continue in effect
from year to year only so long as such continuance is specifically approved at
least annually by the Fund's Managing General Partners, including a majority or
its Independent Managing General Partners, cast in person at a meeting called
for the purpose of voting on such continuance. The Plan may be terminated at any
time by the vote of a majority of the Independent Managing General Partners or
by the vote of the holders of a "majority of the outstanding voting securities"
of the Fund. The Plan may not be amended to increase materially the amount of
payments to be made without shareholder approval, as set forth above. All
material amendments must be approved by the Managing General Partners, including
a majority of the Independent Managing General Partners. For the Fund's fiscal
year ended December 31, 1996, payments under the Plan totaled $32,946, all of
which was retained by the Distributor.
Under the Plan, 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 Managing
General Partners. The Managing General Partners have set the fee at the maximum
rate and set no minimum amount. The Plan permits the Distributor and the Manager
to make additional distribution payments to Recipients from their own resources
(including profits from advisory fees) at no cost to the Fund. The Distributor
and the Manager may, in their sole discretion, increase or decrease the amount
of distribution assistance payments they make to Recipients from their own
assets.
Each Recipient who is to receive distribution payments for any quarter
shall certify in writing that the aggregate payments to be received from the
Fund and the Distributor during that month or quarter do not exceed the
Recipient's costs in rendering services and for the maintenance of accounts
during the month or quarter, and will reimburse the Fund for any excess.
While the Plan is in effect, the Treasurer of the Fund shall provide a
report to the Managing General Partners in writing at least quarterly on the
amount of all payments made pursuant to the Plan and the identity of each
Recipient that received any such payment and the purposes for which the payments
were made. The Plan further provides that while it is in effect, the selection
and nomination of those Managing General Partners of the Fund who are not
"interested persons" of the Fund is committed to the discretion of the
Independent Managing General Partners. This does not
-11-
<PAGE>
prevent the involvement of others in such selection and nomination if the final
decision as to the selection or nomination is approved by a majority of the
Independent Managing General Partners.
Performance of the Fund
Yield Information. The Fund's current yield is calculated for a seven-day period
of time, in accordance with regulations adopted under the Investment Company
Act, as follows. First, a base period return is calculated for the seven-day
period by determining the net change in the value of a hypothetical pre-existing
account having one share at the beginning of the seven-day period. The change
includes distributions declared on the original share and distributions declared
on any shares purchased with distributions on that share, but such distributions
are adjusted to exclude any realized or unrealized capital gains or losses
affecting the distributions declared. Next, the base period return is multiplied
by 365/7, to obtain the current yield to the nearest hundredth of one percent.
The compounded effective yield for a seven-day period is calculated by (a)
adding 1 to the base period return (obtained as described above), (b) raising
the sum to a power equal to 365 divided by 7 and (c) subtracting 1 from the
result. For the seven days ended December 31, 1996, the Fund's yield was 4.56%
and its compounded effective yield was 4.66%.
The yield as calculated above may vary for accounts less than
approximately $100 in value due to the effect of rounding off each daily
distribution to the nearest full cent. Since the calculation of yield under
either procedure described above does not take into consideration any realized
or unrealized gains or losses on the Fund's portfolio securities which may
affect distributions, the return on distributions declared during a period may
not be the same on an annualized basis as the yield for that period.
Yield information may be useful to investors in reviewing the Fund's
performance. The Fund may make comparisons between its yield and that of other
investments, by citing various indices such as the Bank Rate Monitor National
Index (provided by Bank Rate MonitorTM), which measures the average rate paid on
bank money market accounts, NOW accounts and certificates of deposit by the 100
largest banks and thrift institutions in the top ten metropolitan areas.
However, a number of factors should be considered before using yield information
as a basis for comparison with other investments. An investment in the Fund is
not insured. Its yield is not guaranteed and normally will fluctuate on a daily
basis. The Fund's yield for any given past period is not an indication or
representation of future yields or rates of return on its shares. The Fund's
yield is affected by portfolio quality, portfolio maturity, type of instruments
held and operating expenses. When comparing the Fund's yield with that of other
investments, investors should understand that certain other investment
alternatives such as certificates of deposit, direct investments in U.S.
Government Securities, money market instruments or bank accounts may provide
fixed yields or yields that may vary above a stated minimum, and also that bank
accounts may be insured. Certain types of bank accounts may not pay interest
when the balance falls below a specified level and may limit the number of
withdrawals by check per month.
ABOUT YOUR ACCOUNT
Purchase, Redemption and Pricing of Shares
-12-
<PAGE>
Determination of Net Asset Value Per Share. The net asset value per share of the
Fund is determined twice a day, as of 12:00 Noon and as of the close of business
of the New York Stock Exchange (the "Exchange"), which is normally 4:00 P.M. but
may be earlier on some days, for example, in case of weather emergencies or on
days falling before a holiday (all references to time mean "New York time"), on
each day the Exchange is open (a "regular business day"), by dividing the value
of the Fund's net assets by the number of shares outstanding. The Exchange's
most recent annual holiday schedule (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. The Exchange
may also close on other days. Dealers may conduct trading on certain days on
which that Exchange is closed (e.g., holidays such as Good Friday), so that
securities of the same type held by the Fund may be traded on such days, when
shareholders do not have the ability to purchase or redeem shares.
The Fund will seek to maintain a net asset value of $1.00 per share for
purchases and redemptions. There can be no assurance that the Fund will do so.
The Fund operates under Rule 2a-7 under the Investment Company Act under which
the Fund may use the amortized cost method of valuing its shares. The amortized
cost method values a security initially at its cost and thereafter assumes a
constant amortization of any premium or accretion of any discount, regardless of
the impact of a fluctuating interest rates on the market value of the security.
This method does not take into account unrealized capital gains or losses.
The Managing General Partners have established procedures intended to
stabilize the Fund's net asset value at $1.00 per share. If the Fund's net asset
value per share were to deviate from $1.00 by more than 0.5%, Rule 2a-7 requires
the Managing General Partners promptly to consider what action, if any, should
be taken. If the Managing General Partners find that the extent of any such
deviation may result in material dilution or other unfair effects on
shareholders, they will take whatever steps they consider appropriate to
eliminate or reduce such dilution or unfair effects, including, without
limitation, selling portfolio securities prior to maturity, shortening the
average portfolio maturity, withholding or reducing dividends, reducing the
outstanding number of shares without monetary consideration, or calculating net
asset value per share by using available market quotations.
As long as the Fund uses the amortized cost method under Rule 2a-7, the
Fund must abide by certain conditions described in the Prospectus. Some of those
conditions which relate to portfolio management are that the Fund must: (i)
maintain a dollar-weighted average portfolio maturity not in excess of 90 days;
(ii) limit its investments, including repurchase agreements, to those
instruments which are denominated in U.S. dollars and which are rated in one of
the two highest short-term rating categories by at least two
"nationally-recognized statistical rating organizations" ("NRSROs") as defined
in Rule 2a-7, or by one NRSRO if only one NRSRO has rated the security; an
instrument other than a U.S. Government Security that is not rated must be of
comparable quality as determined by the Manager under procedures established by
the Managing General Partners; and (iii) not purchase any instruments with a
remaining maturity of more than 397 days. Under Rule 2a-7, the maturity of an
instrument is generally considered to be its stated maturity (or in the case of
an instrument called for redemption, the date on which the redemption payment
must be made), with special exceptions for certain variable rate demand and
floating rate instruments. Repurchase agreements are, in general, treated as
having a maturity equal to the period scheduled until repurchase, or if subject
to demand, equal to the notice period.
-13-
<PAGE>
While the amortized cost method provides certainty in valuation, there
may be periods during which the value of an instrument, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the instrument. During periods of declining interest rates, the daily yield
on shares of the Fund may tend to be lower (and net investment income and daily
distributions higher) than a like computation made by a fund with identical
investments utilizing a method of valuation based upon market prices or
estimates of market prices for its portfolio. Thus, if the use of amortized cost
by the Fund resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in the Fund would be able to obtain a somewhat higher yield
than would result from investment in a fund utilizing solely market values, and
existing investors in the Fund would receive less investment income than if the
Fund were priced at market value. Conversely, during periods of rising interest
rates, the daily yield on Fund shares will tend to be higher and its aggregate
value higher than that of a portfolio priced at market value. A prospective
investor would receive a lower yield than from an investment in a portfolio
priced at market value, while existing investors in the Fund would receive more
investment income than if the Fund were priced at market value.
The Managing General Partners have established procedures for the
valuation of the Fund's securities which provide that money market debt
securities that had a maturity of less than 397 days when issued that have a
remaining maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts.
Redemptions. The Fund's Managing General Partners have the right to cause the
involuntary redemption of the shares held in any account if the aggregate net
asset value of such shares (for reasons other than market value fluctuations) is
less than $1,000 or such lesser amount as the Managing General Partners may fix.
The Managing General Partners will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of such shares has fallen
below the stated minimum solely as a result of market fluctuations. Should they
elect to exercise this right, they 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 may set requirements to
allow the shareholder to increase the investment and other terms and conditions
so that the shares are not involuntarily redeemed.
Expedited Redemption Procedures. Under the Expedited Redemption Procedure, as
discussed in the Prospectus, the wiring of redemption proceeds may be delayed if
the Fund's Custodian bank is not open for business on a day that the Fund would
normally authorize the wire to be made, which is usually same day as a
redemption that is effected prior to 12:00 Noon, and the Fund's next regular
business day for redemptions between 12:00 Noon and the close of the Exchange.
In those circumstances, the wire will not be transmitted until the next bank
business day on which the Fund is open for business, and no dividends will be
paid on the proceeds of redeemed shares waiting transfer by wire.
Reinvestment of Distributions in Another Fund. Direct shareholders may elect to
reinvest all distributions in Class A shares of any of the other funds listed
below as "Eligible Funds" at net asset value without sales charge. To elect this
option, the shareholder must notify the Transfer Agent in writing, and either
must have an existing account in the fund selected for reinvestment or must
obtain a prospectus for that fund and application from the Transfer Agent and
establish an account. The investment will be made at the net asset value per
share in effect at the close of business on the
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<PAGE>
payable date of the distribution. The other Eligible Funds are not subject to
the same tax considerations as the Fund, and an investment in shares of those
Funds may be taxable and subject to U.S. federal income tax withholding for
foreign investors.
Exchanges of Shares
Shares of the Fund held under Automatic Purchase and Redemption Programs through
brokers or dealers may be exchanged for shares of Centennial Money Market Trust,
Centennial Tax Exempt Trust and Centennial Government Trust only by the broker's
or dealer's instructions. Shares of the Fund may be exchanged, subject to
certain conditions enumerated in the Prospectus by direct shareholders for Class
A shares of the following funds, all collectively referred to as the "Eligible
Funds":
Limited Term New York Municipal Fund*
Oppenheimer Bond Fund
Oppenheimer Bond Fund for Growth
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Champion Income Fund
Oppenheimer Developing Markets Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Equity Income Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
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<PAGE>
Oppenheimer New Jersey Municipal Fund
Oppenheimer New York Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust
Oppenheimer Value Stock Fund
Oppenheimer World Bond Fund
Rochester Fund Municipals
The New York Tax Exempt Income Fund, Inc.
the following "Money Market Funds":
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Money Market Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of each
Eligible Fund except the Money Market Funds (under certain circumstances,
described in the Prospectus, redemption proceeds of Money Market Fund shares may
be subject to a CDSC).
* Shares of the Fund are not exchangeable for shares of Limited Term New York
Municipal Fund prior to May 1, 1997.
Automatic Withdrawal Plan Provisions
By requesting an Automatic Withdrawal Plan, the applicant agrees to the terms
and conditions applicable to such plans, as stated below and elsewhere in the
Application for such Plans, in the Prospectus and in this Statement of
Additional Information as they may be amended from time to time by the Fund.
When adopted, such amendments will automatically apply to existing Plans.
Fund shares will be redeemed as necessary to meet withdrawal payments.
Shares acquired without a sales charge will be redeemed first and thereafter
shares acquired with reinvested
-16-
<PAGE>
distributions followed by shares acquired with a sales charge will be redeemed
to the extent necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made to
shareholders under such plans should not be considered as a yield or income on
an investment. The Fund reserves the right to amend, suspend or discontinue such
plans at any time without prior notice.
(1) Shareholder Services, Inc. (the "Transfer Agent"), the transfer
agent of the Fund, will administer the Automatic Withdrawal Plan
(the "Plan") as agent for the person (the "Planholder") who
executed the Plan authorization and application submitted to the
Transfer Agent.
(2) 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 now held by the 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. Those shares will be carried on the
Planholder's Plan Statement.
(3) Distributions of capital gains must be reinvested in shares of
the Fund, which will be done at net asset value without a sales
charge. Distributions of income may be paid in cash or
reinvested.
(4) Redemptions of shares in connection with disbursement payments
will be made three business days prior to the mailing of each
check.
(5) Checks will be transmitted three business days prior to the date
selected for receipt of the monthly or quarterly payment (the
date of receipt is approximate), according to the choice
specified in writing by the Planholder.
(6) The amount and the interval of disbursement payments and the
address to which checks are to be mailed may be changed at any
time by the Planholder on written notification to the Transfer
Agent. The Planholder should allow at least two weeks' time in
mailing such notification before the requested change can be put
in effect.
(7) 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
such 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 of such redemption to the
Planholder.
(8) The Plan may, at any time, be terminated by the Planholder on
written notice to the Transfer Agent, or by the Transfer Agent
upon receiving directions to that effect from the Fund. The
Transfer Agent will also terminate the Plan upon receipt of
evidence satisfactory to it of the death or legal incapacity of
the Planholder. Upon termination of the Plan by the Transfer
Agent or the Fund, shares remaining unredeemed will be held in an
uncertificated account in the name of the Planholder, and the
account will continue as a distribution-reinvestment,
uncertificated account unless and until proper instructions are
received from the Planholder, his executor or guardian, or as
otherwise appropriate.
(9) For purposes of using shares held under the Plan as collateral,
the Planholder may request issuance of a portion of his shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares as to which a
certificate may be issued, so as not to cause the withdrawal
checks to stop because of exhaustion of uncertificated shares
needed to continue payments. Should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
(10) The Transfer Agent shall incur no liability to the Planholder for
any action taken or omitted by the Transfer Agent in good faith.
(11) In the event that Shareholder Services, Inc. shall cease to act
as transfer agent for the Fund, the Planholder will be deemed to
have appointed any successor transfer agent to act as his agent
in administering the Plan.
-17-
<PAGE>
INDEPENDENT AUDITORS' REPORT
Centennial America Fund, L.P.
The Managing General Partners and Shareholders
of Centennial America Fund, L.P.:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Centennial America Fund, L.P. as of December
31, 1996, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended December 31, 1996 and
1995 and the financial highlights for the period January 1, 1992 to December 31,
1996. These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1996 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Centennial America
Fund, L.P. at December 31, 1996, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods,
in conformity with generally accepted accounting principles.
/s/Deloitte & Touche LLP
- ---------------------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
January 22, 1997
<PAGE>
<TABLE>
<CAPTION>
==========================================
STATEMENT OF INVESTMENTS DECEMBER 31, 1996 Centennial America Fund,
L.P.
FACE VALUE
AMOUNT SEE NOTE 1
========================================================================================================================
U.S. GOVERNMENT AGENCIES - 97.4%
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Bank:
5.27%, 1/2/97 $1,000,000 $ 999,854
5.38%, 1/15/97 430,000 429,100
5.45%, 1/9/97 525,000 524,364
5.48%, 1/23/97 890,000 887,019
-------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
5.21%, 2/20/97 940,000 933,198
5.23%, 2/3/97 800,000 796,172
5.25%, 1/30/97 500,000 497,885
5.29%, 1/14/97 410,000 409,215
5.37%, 3/31/97 400,000 394,690
5.38%, 3/21/97 323,000 319,190
5.40%, 1/17/97 1,000,000 997,600
5.45%, 1/15/97 500,000 498,940
5.46%, 1/30/97 1,000,000 995,602
5.50%, 1/21/97 958,000 955,073
5.60%, 1/16/97 625,000 623,542
5.70%, 1/2/97 3,000,000 2,999,458
-------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
5.18%, 5/2/97 700,000 687,813
5.22%, 3/17/97 500,000 494,563
5.22%, 3/6/97 195,000 193,190
5.30%, 3/13/97 1,000,000 989,547
5.50%, 1/13/97 900,000 898,350
-------------------------------------------------------------------------------------------------------------
Student Loan Marketing Assn., guaranteeing commercial
paper of:
New Hampshire Higher Education Loan Corp. Commercial
Paper Nts., Series 1995A, 5.40%, 1/17/97 900,000
897,840
Secondary Market Services, Inc. Education Loan
Revenue Nts., Series 1995A, 5.28%, 1/6/97 753,000
752,448
------------
Total U.S. Government Agencies (Cost $18,174,653)
18,174,653
========================================================================================================================
REPURCHASE AGREEMENT - 1.6%
- ------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Goldman, Sachs & Co., 6.52%, dated
12/31/96, to be repurchased at $300,109 on 1/2/97, collateralized by
U.S. Treasury Nts., 7.875%, 11/15/04,
with a value of $306,094 (Cost $300,000) 300,000
300,000
-------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE 99.0%
18,474,653
-------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.0
186,744
------- ------------
NET ASSETS 100.0% $18,661,397
======= ============
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
<TABLE>
<CAPTION>
=====================================================
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1996
Centennial America Fund, L.P.
========================================================================================================================
<S> <C> <C>
ASSETS Investments, at value - see accompanying statement
$18,474,653
----------------------------------------------------------------------------------------------
Cash 12,066
----------------------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold 434,099
Interest 54
----------------------------------------------------------------------------------------------
Other 5,248
------------
Total assets 18,926,120
========================================================================================================================
LIABILITIES Payables and other liabilities:
Shares of beneficial interest redeemed 239,338
Service plan fees 8,385
Shareholder reports 4,636
Dividends 1,712
Other 10,652
------------
Total liabilities 264,723
================================================================================
========================================
NET ASSETS $18,661,397
============
================================================================================
========================================
COMPOSITION OF Paid-in capital - applicable to 18,661,397 shares of beneficial
NET ASSETS interest outstanding $18,661,397
============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE
$1.00
======
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
==========================================
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER
31, 1996 Centennial America Fund, L.P.
================================================================================
========================================
<S> <C> <C>
INVESTMENT INCOME Interest $ 914,907
================================================================================
========================================
EXPENSES Management fees - Note 3 76,514
----------------------------------------------------------------------------------------------
Service plan fees - Note 3 32,946
----------------------------------------------------------------------------------------------
Shareholder reports 12,293
----------------------------------------------------------------------------------------------
Legal and auditing fees 6,996
----------------------------------------------------------------------------------------------
Registration and filing fees 4,884
----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees - Note 3 4,861
----------------------------------------------------------------------------------------------
Custodian fees and expenses 3,315
----------------------------------------------------------------------------------------------
Managing General Partners' fees and expenses 2,110
----------------------------------------------------------------------------------------------
Insurance expenses 1,569
----------------------------------------------------------------------------------------------
Other 444
------------
Total expenses 145,932
================================================================================
========================================
NET INVESTMENT INCOME 768,975
================================================================================
========================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$
768,975
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===================================
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
1996 1995
================================================================================
========================================
<S> <C> <C> <C>
OPERATIONS Net investment income $ 768,975 $
350,917
----------------------------------------------------------------------------------------------
Net realized gain -- 8,197
------------------------------
Net increase in net assets resulting from operations 768,975
359,114
================================================================================
========================================
DIVIDENDS AND
DISTRIBUTIONS
TO SHAREHOLDERS (777,172)
(350,917)
================================================================================
========================================
BENEFICIAL INTEREST Net increase in net assets resulting from
TRANSACTIONS beneficial interest transactions - Note 2 7,567,914
4,892,850
================================================================================
========================================
NET ASSETS Total increase 7,559,717 4,901,047
----------------------------------------------------------------------------------------------
Beginning of period 11,101,680 6,200,633
------------------------------
End of period $18,661,397 $11,101,680
==============================
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS Centennial America Fund, L.P.
Year Ended December 31,
1996 1995 1994 1993 1992
================================================================================
================================================
PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00
$1.00
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations - net
investment income and net realized gain .05 .04 .03 .02
.03
Dividends and distributions to shareholders (.05) (.04) (.03) (.02)
(.03)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00
$1.00
===========================================================================
================================================================================
================================================
TOTAL RETURN, AT NET ASSET VALUE(1) 4.69% 4.56% 2.91%
2.23%
3.92%
================================================================================
================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $18,661 $11,102 $6,201 $4,349
$5,253
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $16,998 $ 7,862 $5,693 $4,780
$5,323
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.52% 4.48% 2.89% 2.22%
3.64%
Expenses, before voluntary reimbursement by
the Manager 0.86% 1.48% 1.47% 1.34%
1.86%
Expenses, net of voluntary reimbursement by
the Manager N/A N/A N/A 1.13%
0.60%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Total returns
reflect changes in net investment income only.
See accompanying Notes to Financial Statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Centennial America Fund, L.P.
1. SIGNIFICANT ACCOUNTING POLICIES
Centennial America Fund, L.P. (the Fund) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Fund's investment objective is to seek as high a level
of current income as is consistent with the preservation of capital and the
maintenance of liquidity. The Fund is organized as a limited partnership and
issues one class of shares, in the form of limited partnership interests. The
Fund's investment adviser is OppenheimerFunds, Inc. (the Manager). The following
is a summary of significant accounting policies consistently followed by the
Fund.
INVESTMENT VALUATION. Portfolio securities are valued on the basis of amortized
cost, which approximates market value.
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to limited partnerships. As a limited
partnership, the Fund is not subject to U.S. federal income tax, and the
character of the income earned and capital gains or losses realized by the Fund
flows directly through to shareholders. Therefore, no federal income or excise
tax provision is required.
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends from net
investment income each day the New York Stock Exchange is open for business and
pay such dividends monthly. To effect its policy of maintaining a net asset
value of $1.00 per share, the Fund may withhold dividends or make distributions
of net realized gains.
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Realized gains and losses on investments are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
<PAGE>
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996 YEAR ENDED
DECEMBER 31, 1995
-------------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Sold 51,127,626 $51,127,626 32,857,284 $32,857,284
Dividends and distributions
reinvested 749,505 749,505 326,936 326,936
Redeemed (44,309,217) (44,309,217) (28,291,370) (28,291,370)
------------ ------------ ------------ ------------
Net increase 7,567,914 $ 7,567,914 4,892,850 $ 4,892,850
============ ============ ============
============
</TABLE>
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Centennial America Fund, L.P.
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid
to the Manager were in accordance with the investment advisory agreement with
the Fund which provides for an annual fee of 0.45% on the first $500 million of
net assets and 0.40% on net assets in excess of $500 million. The Manager has
agreed to reimburse the Fund if aggregate expenses (with specified exceptions)
exceed the most stringent applicable regulatory limit on Fund expenses.
Shareholder Services, Inc. (SSI), a subsidiary of the Manager, is the transfer
and shareholder servicing agent for the Fund, and for other registered
investment companies. SSI's total costs of providing such services are allocated
ratably to these companies.
Under an approved plan of distribution, the Fund expends 0.20% of its net assets
annually to reimburse Centennial Asset Management Corporation, a subsidiary of
the Manager, for costs incurred in distributing shares of the Fund, including
amounts paid to brokers, dealers, banks and other institutions.
9
<PAGE>
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
Below is a description of the two highest rating categories for Short Term Debt
and Long Term Debt by the "Nationally-Recognized Statistical Rating
Organizations" which the Manager evaluates in purchasing securities on behalf of
the Fund. The ratings descriptions are based on information supplied by the
ratings organizations to subscribers.
Short Term Debt Ratings.
Moody's Investors Service, Inc. ("Moody's"): The following rating designations
for commercial paper (defined by Moody's as promissory obligations not having
original maturity in excess of nine months), are judged by Moody's to be
investment grade, and indicate the relative repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally be
evidenced by the following characteristics: (a) leveling market
positions in well-established industries; (b) high rates of return on
funds employed; (c) conservative capitalization structures with
moderate reliance on debt and ample asset protection; (d) broad margins
in earning coverage of fixed financial charges and high internal cash
generation; and (e) well established access to a range of financial
markets and assured sources of alternate liquidity.
Prime-2: Strong capacity for repayment. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity
is maintained.
Moody's ratings for state and municipal short-term obligations are
designated "Moody's Investment Grade" ("MIG"). Short-term notes which have
demand features may also be designated as "VMIG". These rating categories are as
follows:
MIG1/VMIG1: Best quality. There is present strong protection by
established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample although
not so large as in the preceding group.
Standard & Poor's Corporation ("S&P"): The following ratings by S&P for
commercial paper (defined by S&P as debt having an original maturity of no more
than 365 days) assess the likelihood of payment:
A-1
<PAGE>
A-1: Strong capacity for timely payment. Those issues determined to
possess extremely strong safety characteristics are denoted with a plus
sign (+) designation.
A-2: Satisfactory capacity for timely payment. However, the relative
degree of safety is not as high as for issues designated "A-1".
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have a
demand or double feature as part of their provisions. The first rating addresses
the likelihood of repayment of principal and interest as due, and the second
rating addresses only the demand feature. With short-term demand debt, S&P's
note rating symbols are used with the commercial paper symbols (for example,
"SP-1+/A-1+").
Fitch Investors Service, Inc. ("Fitch"): Fitch assigns the following short-term
ratings to debt obligations that are payable on demand or have original
maturities of generally up to three years, including commercial paper,
certificates of deposit, medium-term notes, and municipal and investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of
assurance for timely payment.
F-1: Very strong credit quality; assurance of timely payment is only
slightly less in degree than issues rated "F-1+".
F-2: Good credit quality; satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as for issues
assigned "F-1+" or "F-1" ratings.
Duff & Phelps, Inc. ("Duff & Phelps"): The following ratings are for commercial
paper (defined by Duff & Phelps as obligations with maturities, when issued, of
under one year), asset-backed commercial paper, and certificates of deposit (the
ratings cover all obligations of the institution with maturities, when issued,
of under one year, including bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
A-2
<PAGE>
Duff 1-: High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are
very small.
Duff 2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk
factors are small.
IBCA Limited or its affiliate IBCA Inc. ("IBCA"): Short-term ratings,
including commercial paper (with maturities up to 12 months), are as follows:
A1+: Obligations supported by the highest capacity for timely
repayment.
A1: Obligations supported by a very strong capacity for timely
repayment.
A2: Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic, or financial conditions.
Thomson BankWatch, Inc. ("TBW"): The following short-term ratings apply to
commercial paper, certificates of deposit, unsecured notes, and other
securities having a maturity of one year or less.
TBW-1: The highest category; indicates the degree of safety regarding
timely repayment of principal and interest is very strong.
TBW-2: The second highest rating category; while the degree of safety
regarding timely repayment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated "TBW-1".
Long Term Debt Ratings. These ratings are relevant for securities purchased by
the Fund with a remaining maturity of 397 days or less, or for rating issuers of
short-term obligations.
Moody's: Bonds (including municipal bonds) are rated as follows:
Aaa: Judged to be the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edge." 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, such changes as can be visualized are most unlikely
to impair the fundamentally strong positions of such issues.
Aa: 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 in "Aaa" securities or fluctuations 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 in "Aaa" securities.
A-3
<PAGE>
Moody's applies numerical modifiers "1", "2" and "3" in its "Aa" rating
classification. The modifier "1" indicates that the security ranks in the higher
end of its generic rating category; the modifier "2" indicates a mid-range
ranking; and the modifier "3" indicates that the issue ranks in the lower end of
its generic rating category.
Standard & Poor's: Bonds (including municipal bonds) are rated as follows:
AAA: The highest rating assigned by S&P. Capacity to pay interest
and repay principal is extremely strong.
AA: A strong capacity to pay interest and repay principal and differ
from "AAA" rated issues only in small degree.
Fitch:
AAA: Considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Plus (+) and
minus (-) signs are used in the "AA" category to indicate the relative
position of a credit within that category.
Because bonds rated in the "AAA" and "AA" categories are not
significantly vulnerable to foreseeable future developments, short-term debt of
these issuers is generally rated "F-1+".
Duff & Phelps:
AAA: The highest credit quality. The risk factors are negligible,
being only slightly more than for risk-free U.S. Treasury debt.
AA: High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.
Plus (+) and minus (-) signs are used in the "AA" category to indicate
the relative position of a credit within that category.
IBCA: Long-term obligations (with maturities of more than 12 months) are rated
as follows:
AAA: The lowest expectation of investment risk. Capacity for timely
repayment of principal and interest is substantial such that adverse
changes in business, economic, or financial conditions are unlikely to
increase investment risk significantly.
AA: A very low expectation for investment risk. Capacity for timely
repayment of principal and interest is substantial. Adverse changes in
business, economic, or
A-4
<PAGE>
financial conditions may increase investment risk albeit not very
significantly. A plus (+) or minus (-) sign may be appended to a long
term rating to denote relative status within a rating category.
TBW: TBW issues the following ratings for companies. These ratings assess the
likelihood of receiving payment of principal and interest on a timely basis and
incorporate TBW's opinion as to the vulnerability of the company to adverse
developments, which may impact the market's perception of the company, thereby
affecting the marketability of its securities.
A: Possesses an exceptionally strong balance sheet and earnings record,
translating into an excellent reputation and unquestioned access to its
natural money markets. If weakness or vulnerability exists in any
aspect of the company's business, it is entirely mitigated by the
strengths of the organization.
A/B: The company is financially very solid with a favorable track
record and no readily apparent weakness. Its overall risk profile,
while low, is not quite as favorable as for companies in the highest
rating category.
A-5
<PAGE>
Appendix B
Industry Classifications
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
B-1
<PAGE>
Appendix C
FIRST TRUST AMERICA FUND, L.P.
AGREEMENT OF LIMITED PARTNERSHIP
dated April 28, 1987
TABLE OF CONTENTS
1. GENERAL PROVISIONS
1.1 Formation
1.2 Name and Place of Business
1.3 Term
1.4 Agent for Service of Process
1.5 Certificate of Limited Partnership
1.6 Other Acts/Filings
2. DEFINITIONS
2.1 Affiliate
2.2 Capital Account
2.3 General Partner
2.4 Holder of Record or Holder of a Share
2.5 Limited Partner
2.6 Majority Vote
2.7 Managing General Partner
2.8 Net Asset Value (per Share)
2.9 Non-Managing General Partner
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2.10 Officers
2.11 Partners
2.12 Partnership
2.13 Partnership Act
2.14 Partnership Group
2.15 Person
2.16 Registration Statement
2.17 Secretary of State
2.18 Share (including fractional Shares)
2.19 Substituted Limited Partner
2.20 Tax Code
2.21 Transfer Agent
2.22 1940 Act
3. ACTIVITIES AND PURPOSE
3.1 Operating Policy
3.2 Investment Objectives
3.3 Investment Policies and Restrictions
3.4 Other Authorized Activities
4. GENERAL PARTNERS
4.1 Identity and Number
4.2 Managing and Non-Managing General Partners
4.3 General Partners' Contributions
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4.4 Management and Control
4.5 Action by the Managing General Partners
4.6 Limitations on the Authority of the Managing
General Partners
4.7 Right of General Partners to Become
Limited Partners
4.8 Termination of a General Partner
4.9 Additional or Successor General Partners
4.10 Liability to Limited Partners
4.11 Assignment and Substitution
4.12 No Agency
4.13 Reimbursement and Compensation
4.14 Indemnification
5. LIMITED PARTNERS
5.1 Identity of Limited Partners
5.2 Admission of Limited Partners
5.3 Contributions of the Limited Partners
5.4 Additional Contributions of Limited Partners
5.5 Use of Contributions
5.6 Redemption by Limited Partners
5.7 Minimum Contribution and Mandatory Redemption
5.8 Limited Liability
5.9 No Power to Control Operations
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5.10 Tax Responsibility
6. SHARES OF PARTNERSHIP INTEREST
7. PURCHASE AND EXCHANGE OF SHARES
7.1 Purchase of Shares
7.2 Net Asset Value
7.3 Exchange of Shares
8. REDEMPTION OF SHARES
8.1 Redemption of Shares
8.2 Payment for Redeemed Shares
9. MATTERS AFFECTING THE PARTNERSHIP'S BASIC STRUCTURE
9.1 Rights of Limited Partners
9.2 Actions of the Partners
9.3 Meetings
9.4 Notices
9.5 Validity of Vote for Certain Matters
9.6 Adjournment
9.7 Waiver of Notice and Consent to Meeting
9.8 Quorum
9.9 Required Vote
9.10 Action by Consent Without a Meeting
9.11 Record Date
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9.12 Proxies
9.13 Number of Votes
9.14 Communication Among Limited Partners
10. DISTRIBUTIONS AND ALLOCATION OF PROFITS AND LOSSES
10.1 Fees of General Partners
10.2 Distributions of Income and Gains
10.3 Allocation of Income, Gains, Losses, Deductions
and Credits
10.4 Returns of Contributions
10.5 Capital Accounts
10.6 Allocations of Capital Gains and Losses and
Additional Rules
11. ASSIGNMENT OF SHARES; SUCCESSOR IN INTEREST; SUBSTITUTION
OF PARTNERS
11.1 Prohibition on Assignment
11.2 Rights of the Holders of Shares as Collateral or
Judgment Creditor
11.3 Death, Incompetency, Bankruptcy or Termination
of the Existence of a Partner
11.4 Substituted Limited Partners
12. DISSOLUTION AND TERMINATION OF THE PARTNERSHIP
12.1 Dissolution
12.2 Liquidation
12.3 Termination
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13. BOOKS, RECORDS, ACCOUNTS AND REPORTS
13.1 Books and Records
13.2 Limited Partners' Access to Information
13.3 Accounting Basis and Fiscal Year
13.4 Tax Returns
13.5 Filings with Regulatory Agencies
13.6 Tax Matters and Notice Partner
14. AMENDMENTS OF PARTNERSHIP DOCUMENTS
14.1 Amendments in General
14.2 Amendments Without Consent of Limited Partners
14.3 Amendments Needing Consent of Affected Partners
14.4 Amendments to Certificate of Limited
Partnership
14.5 Amendments After Change of Law
15. MISCELLANEOUS PROVISIONS
15.1 Notices
15.2 Section Headings
15.3 Construction
15.4 Severability
15.5 Governing Law
15.6 Counterparts
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15.7 Entire Agreement
15.8 Cross-References
15.9 Power of Attorney to the General Partners
15.10 Further Assurances
15.11 Successors and Assigns
15.12 Waiver of Action for Partition
15.13 Creditors
15.14 Remedies
15.15 Custodian
15.16 Use of Name "First Trust"
15.17 Authority
15.18 Signatures
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FIRST TRUST AMERICA FUND, L.P.
This AGREEMENT OF LIMITED PARTNERSHIP ("Partnership Agreement") is
entered into as of this 28th day of April, 1987 by and among Gerald E. Pelzer,
an individual, Thomas L. Johnson, an individual, Dr. David Johnston, an
individual, and Edward McGrew, an individual, as Managing General Partners;
Clayton Brown Investments, Inc., an Illinois corporation, as Non- Managing
General Partner (collectively, the "General Partners"); and Clayton Brown
Investments, Inc., an Illinois corporation, as Limited Partner.
1. GENERAL PROVISIONS
1.1 Formation. The parties hereby agree to form a limited
partnership (the "Partnership") under the terms and conditions set forth below
pursuant to the Delaware Revised Uniform Limited Partnership Act (the
"Partnership Act").
1.2 Name and Place of Business. The name of the Partnership shall
be First Trust America Fund, L.P., or such other name as shall be selected from
time to time by the Managing General Partners. The principal place of business
of the Partnership shall be 300 W. Washington Street, Chicago, Illinois 60606 or
such other place or places as the Managing General Partners may deem necessary
or desirable to the conduct of the Partnership's activities, including places
for the conduct of activities relating to its investments, the location and
holding of its assets, the execution of its portfolio transactions and other
operations. The registered office of the Partnership in Delaware is located at
1209 Orange Street, in the City of Wilmington, County of New Castle.
1.3 Term. The term of the Partnership shall commence upon the
filing of the Certificate of Limited Partnership with the Secretary of State and
shall continue until the 31st day of December, 2037, unless terminated earlier
in accordance with the provisions of this Partnership Agreement.
1.4 Agent for Service of Process. The registered agent for
service of process on the Partnership in Delaware is The Corporation Trust
Company, 1209 Orange Street, Wilmington, Delaware or such other eligible
Delaware resident individual or corporation qualified to act as an agent for
service of process as the Managing General Partners shall designate.
1.5 Certificate of Limited Partnership. The Managing General
Partners shall cause a Certificate of Limited Partnership to be filed with the
Secretary of State in accordance with the terms of the Partnership Act.
1.6 Other Acts/Filings. The Partners shall from time to time
execute or cause to be executed all such certificates, fictitious business name
statements, and other documents, and do or cause to be done all such filings,
recordings, publishings, and other acts as the Managing General Partners may
deem necessary or appropriate to comply with the requirements of law for the
formation and operation of the Partnership in all jurisdictions in which the
Partnership shall desire to conduct its activities.
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2. DEFINITIONS
When used in this Partnership Agreement the following terms shall
have the meanings set forth below:
2.1 Affiliate. "Affiliate" shall mean: (i) any person directly or
indirectly controlling, controlled by or under common control with another
person; (ii) a person owning or controlling 10% or more of the outstanding
securities of that other person; (iii) any officer, director, trustee or partner
of that other person; or (iv) if that other person is an officer, director,
trustee or partner, any company for which that person acts in any such capacity
(person shall include any natural person, partnership, corporation, association
or other legal entity).
2.2 Capital Account. The account maintained for each
Partner in accordance with Section 10.5 hereof.
2.3 General Partner. Each of the initial General Partners
designated in the Preamble and any other person or entity who shall hereafter
become a General Partner.
2.4 Holder of Record or Holder of a Share.
(a) a General Partner;
(b) a Limited Partner if he or it has not redeemed or
transferred all of his (its) Shares of the Partnership pursuant to Sections 8
or 11;
(c)a purchaser of a Share or Shares of the Partnership;
or
(d) the successor in interest of a Partner under
Section 11.
2.5 Limited Partner. The original Limited Partner and all
other persons who shall hereinafter be admitted to the Partnership as
additional Limited Partners or Substituted Limited Partners, except those
persons who:
(a) have redeemed all Shares of the Partnership owned
by them and such redemption has been reflected in the records of the
Partnership; or
(b) have been replaced by a Substituted Limited
Partner to the extent of their entire Limited Partnership Interest. Reference
to a "Limited Partner" shall mean any one of the Limited Partners.
2.6 Majority Vote. The affirmative vote of the lesser of (i) 67%
or more of the Shares represented at a meeting and entitled to vote if more than
50% of the then outstanding Shares are present or represented by proxy, or (ii)
more than 50% of the then outstanding Shares entitled to vote.
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2.7 Managing General Partner. Each General Partner who is
an individual.
2.8 Net Asset Value (per Share). The value (in U.S. Dollars)
of a Share as determined in accordance with Section 7.2 hereof.
2.9 Non-Managing General Partner. Each General Partner that
is not an individual (i.e., any General Partner that is a corporation,
association, partnership, joint venture or trust).
2.10 Officers. Those persons designated by the Managing
General Partners to perform administrative and operational functions on behalf
of the Managing General Partners.
2.11 Partners. Collectively, the General Partners and the
Limited Partners. "Partner" means any one of the Partners.
2.12 Partnership. The limited partnership created and
continued by this Partnership Agreement.
2.13 Partnership Act. The Delaware Revised Uniform Limited
Partnership Act (Sections 17-101 through 17-1108, Chapter 17, Title 6 of the
Delaware Code).
2.14 Partnership Group. All other investment companies of
which Clayton Brown & Associates, Inc. or any parent, subsidiary or affiliate
is organizer or sponsor and which are registered under the 1940 Act.
2.15 Person. An individual, partnership, joint venture,
association, corporation or trust.
2.16 Registration Statement. The Registration Statement on
Form N-1A, registering the Partnership under the 1940 Act and the Shares of the
Partnership under the Securities Act of 1933, as such Registration Statement
may be amended from time to time.
2.17 Secretary of State. The Secretary of State of the
State of Delaware.
2.18 Share (including fractional Shares). A partnership
interest in the Partnership. Reference to "Shares" shall be to more than one
Share.
2.19 Substituted Limited Partner. A successor in interest
of a Limited Partner who has complied with the conditions set forth in
Section 11.
2.20 Tax Code. The Internal Revenue Code of 1986, as
amended, or corresponding provisions of subsequent revenue laws, and all
regulations, rulings and other promulgations or judicial decisions thereunder.
2.21 Transfer Agent. The person appointed by the Managing
General Partners to be primarily responsible for maintaining the records
pertaining to Limited Partners and certain other
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records of the Partnership.
2.22 1940 Act. The Investment Company Act of 1940, as
amended, or as it may hereafter be amended, and the Rules and Regulations
thereunder.
3. ACTIVITIES AND PURPOSE
3.1 Operating Policy. The Partnership will be authorized
and empowered to operateand will operate as an open-end, diversified management
investment company under the 1940 Act.
3.2 Investment Objectives. The investment objective of the
Partnership is to seek high current return and safety of principal with income
free of U.S. taxes and U.S. tax withholding requirements for qualifying foreign
investors by investing in obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities, including
mortgage-backed securities and securities issued by private entities and
collateralized by such obligations, or such other investment objectives as may
be adopted from time to time by the Managing General Partners.
3.3 Investment Policies and Restrictions. The investment policies
and restrictions of the Partnership shall be the investment policies and
restrictions set forth in the Partnership's then current Prospectus or Statement
of Additional Information (hereinafter referred to collectively as the
"Prospectus"). Unless otherwise indicated in the Prospectus, such investment
policies and restrictions may be changed from time to time by the Managing
General Partners.
3.4 Other Authorized Activities. Subject to the limitations set
forth in this Partnership Agreement, the Partnership shall have the power to
purchase and sell securities, issue evidences of indebtedness in connection with
Partnership business, to join or become a partner in limited or general
partnerships and to do any and all other things and acts, and to exercise any
and all of the powers that a natural person could do or exercise and which now
or hereafter may be lawfully done or exercised by a Delaware limited
partnership.
4. GENERAL PARTNERS
4.1 Identity and Number. The names of the General Partners and
their last known business or residence address shall be set forth in the
Certificate of Limited Partnership, as it may be amended from time to time; this
same information, together with the amounts of the contributions of each General
Partner and their current Share ownership, shall be set forth on the records of
the Partnership. The General Partners shall be identified as such on such
records and also shall be identified separately as Managing General Partners or
Non-Managing General Partners. The numbers of Managing and Non-Managing General
Partners shall be fixed by the Managing General Partners, provided, however,
that the number of General Partners shall at no time exceed eighteen.
4.2 Managing and Non-Managing General Partners. Only
individuals may act as Managing General Partners, and all General Partners who
are individuals shall act as Managing General Partners. Any General Partner
that is a corporation, association, partnership, joint venture
or trust shall act as a Non-Managing General Partner. Except as provided in
Section 4.4 hereof, a
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Non-Managing General Partner as such shall take no part in the management,
conduct or operation of the Partnership's business and shall have no authority
to act on behalf of the Partnership or to bind the Partnership. All General
Partners, including Managing and Non-Managing General Partners, shall be subject
to election and removal by the Partners to the extent hereinafter provided.
4.3 General Partners' Contributions. (a) Each General Partner, as
such, shall make a contribution of cash to the Partnership sufficient to
purchase at least one Share (plus any applicable sales charge) and shall
continue to own unencumbered at least one such Share at all times while serving
as a General Partner. The amount contributed by each General Partner shall be
the amount actually invested in Shares of the Partnership at their Net Asset
Value, which amount shall not include any sales charges and which amount may be
less than the offering price paid by such General Partner for his shares to the
extent the offering price includes any sales charges. The amount of such
contributions and the number of Shares owned by each General Partner shall be
set forth in the records of the Partnership.
(b) The Non-Managing General Partner shall, in its
capacity as such Non-Managing General Partner, be obligated to contribute to
the Partnership through the purchase of Shares from time to time amounts
sufficient to enable the
General Partners, in the aggregate, to maintain in their capacities as General
Partners an interest in each material item of Partnership income, gain, loss,
deduction or credit equal to at least 1% of each such item at all times during
the existence of the Partnership. If, upon termination of the Partnership, the
General Partners have a negative balance in their Capital Accounts, they shall
in their capacity as General Partners be obligated to make additional capital
contributions in cash equal to the lesser of (i) the negative balance in their
Capital Accounts or (ii) the amount, if any, by which 1.01% of the total capital
contributions of the Limited Partners exceeds the total capital contributions of
the General Partners prior to such termination. For as long as the Non-Managing
General Partner retains its status as such, it shall not redeem or assign Shares
held by it in its capacity as the Non-Managing General Partner or otherwise
accept distributions in cash or property if such action would result in the
failure of the General Partners to maintain such an interest. In the event that
the Non-Managing General Partner is removed or stands for re-election and is not
re-elected by the Partners pursuant to Section 9 hereof, the Non-Managing
General Partner may, upon not less than thirty (30) days' written notice, redeem
its Shares in the same manner as is provided in Section 8 hereof. In the event
that the Non- Managing General Partner voluntarily withdraws or declines to
stand for reelection, the Non- Managing General Partner may, upon not less than
thirty (30) days' written notice following the occurrence of such event, redeem
its Shares in the same manner as provided in Section 8. In the event that the
Non-Managing General Partner is removed, stands for reelection and is not
re-elected, voluntarily withdraws or declines to stand for reelection, the
Managing General Partners shall cause the Certificate of Limited Partnership to
be amended as provided in Section 14.4 hereof to reflect such withdrawal.
4.4 Management and Control. Subject to the terms of this
Partnership Agreement and the 1940 Act, the Partnership will be managed by the
Managing General Partners, who will have complete and exclusive control over the
management, conduct and operation of the Partnership's business, and, except as
otherwise specifically provided in this Partnership Agreement, the Managing
General Partners shall have the rights, powers and authority, on behalf of the
Partnership and in its
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name to exercise all of the rights, powers and authority of partners of a
partnership without limited partners. Any Managing General Partner may, by power
of attorney, delegate his power to any other Managing General Partner, provided
that in no case shall less than two General Partners personally exercise their
other powers hereunder except as herein otherwise expressly provided. The
Managing General Partners may contract on behalf of the Partnership with one or
more banks, trust companies, underwriters or investment advisers for the
performance of such functions as the Managing General Partners may determine,
but subject always to their continuing supervision, including, without
limitation, the investment and reinvestment of all or part of the Partnership's
assets and execution of portfolio transactions, the distribution of Shares, and
any or all administrative functions. The Managing General Partners may appoint
officers or agents to perform such duties on behalf of the Partnership and the
Managing General Partners as the Managing General Partners deem desirable. Such
officers or agents need not be General or Limited Partners. The Managing General
Partners may also employ persons to perform various duties on behalf of the
Partnership as employees of the Partnership. The Managing General Partners shall
devote themselves to the Partnership's business to the extent they may determine
necessary for the efficient conduct thereof, which need not, however, occupy
their full time. The General Partners may also engage in other businesses,
whether or not similar In nature to the business of the Partnership, subject to
the limitations of the 1940 Act.
In the event that no Managing General Partner shall remain for the purpose of
managing and conducting the business of the Partnership, the Non-Managing
General Partner shall promptly call a meeting of the Limited Partners, to be
held within sixty (60) days of the date the last Managing General Partner ceases
to act in such capacity, to elect new Managing General Partners. For the period
of time during which no Managing General Partner shall remain, the Non-Managing
General Partner, subject to the terms and provisions of this Partnership
Agreement, shall be permitted to engage in the management, conduct and operation
of the business of the Partnership.
4.5 Action by the Managing General Partners. Unless otherwise
required by the 1940 Act with respect to any particular action, the Managing
General Partners shall act only by vote of a majority of the Managing General
Partners at a meeting duly called at which a quorum of the Managing General
Partners is present or by unanimous written consent of the Managing General
Partners without a meeting. At any meeting of the General Partners, a majority
of the Managing General Partners shall constitute a quorum. Any or all of the
Managing General Partners may participate in a meeting by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time; and
participation by such means shall constitute presence in person at a meeting. in
there shall be more than one Managing General Partner, no single Managing
General Partner shall have authority to act on behalf of the Partnership or to
bind the Partnership unless authorized by the Managing General Partners. The
Managing General Partners shall appoint one of their number to be Chairman.
Meetings of the Managing General Partners may be called orally or in writing by
the Chairman or by any two Managing General Partners. Notice of the time, date
and place of all meetings of the Managing General Partners shall be given by the
party or parties calling the meeting to each Managing General Partner by
telephone or telegram sent to his home or business address at least twenty-four
hours in advance of the meeting or by written notice mailed to his home or
business address at least seventy-two hours in advance of the meeting. Notice
need not be given to any Managing General Partner who attends the meeting
without objecting to the lack of notice or who
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executes a written waiver of notice with respect to the meeting. The Chairman,
if present, shall preside at all meetings of Partners. Notwithstanding anything
contained in this Partnership Agreement, the Managing General Partners may
designate one (1) or more committees to act on behalf of the Managing General
Partners.
4.6 Limitations on the Authority of the Managing General
Partners. The Managing General Partners shall have no authority without the vote
or written consent or ratification of the Limited Partners to:
(a) do any act in contravention of this Partnership
Agreement, as it may be amended from time to time;
(b) do any act which would make it impossible to
carry on the ordinary activities of the Partnership;
(c) confess a judgment against the Partnership;
(d) possess Partnership property, or assign their
rights in specific property, for other than a Partnership purpose;
(e) admit a person as a General Partner except in
accordance with Section 9 hereof; or
(f) admit a person as a Limited Partner, except in
accordance with Section 5 hereof.
4.7 Right of General Partners to Become Limited Partners. A
General Partner may also own Shares as a Limited Partner without obtaining the
consent of the Limited Partners and thereby become entitled to all the rights of
a Limited Partner to the extent of the Limited Partnership Interest so acquired.
Such event shall not, however, be deemed to reduce or otherwise affect any of
the General Partners' liability hereunder as a General Partner. If a General
Partner shall also become a Limited Partner, the contributions and Share
ownership of such General Partner shall be separately designated in the records
of the Partnership to reflect his interest in each capacity.
4.8 Termination of a General Partner. (a) The interest of a
General Partner shall terminate and such person shall have no further right or
power to act as a General Partner (except to execute any amendment to this
Partnership Agreement to evidence his termination):
(i) upon death of the General Partner;
(ii) upon an adjudication of incompetency of the
General Partner;
(iii) if such General Partner is removed pursuant
to Subsection (c) of this Section 4.8 or stands for reelection and is not
reelected by the Partners, as provided in Section 9 below;
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(iv) in the case of the Non-Managing General
Partner, upon the filing of a certificate of dissolution, or its equivalent, or
a voluntary or involuntary petition in bankruptcy for such Non-Managing General
Partner; or
(v) If such General Partner voluntarily
withdraws or retires upon not less than ninety (90) days' written notice to the
other General Partners.
(b) Notwithstanding the foregoing, the Non-Managing General Partner shall
not voluntarily withdraw or otherwise voluntarily terminate its status as the
Non-Managing General Partner until the earliest of (i) 180 days from the date
that the Non-Managing General Partner gives the other General Partners written
notice of Its intention to withdraw as a Non-Managing General Partner, (ii) the
date that a successor Non-Managing General Partner, who has agreed to assume the
obligations of a Non-Managing General Partner as set forth in Section 1.3(b)
hereof, is appointed by the Managing General Partners pursuant to Section 4.9
hereof or elected by the Partners pursuant to Section 9 hereof, or (iii) the
date that another General Partner assumes the obligations imposed upon the
Non-Managing General Partner pursuant to Section 4.3(b) hereof. The failure of
the Non- Managing General Partner to seek reelection at any meeting of the
Partners called for such purpose shall be deemed to constitute a voluntary
withdrawal as of the date of such meeting and shall constitute written notice as
at the date of notice of such meeting of its intention to withdraw as a
Non-Managing General Partner, unless it has delivered written notice at an
earlier date.
(c) Any Managing General Partner may be removed at any time by vote of, or
a written instrument signed by, at least two-thirds of the Managing General
Partners prior to such removal, specifying the date when such removal shall
become effective. A Managing General Partner may also be removed after Limited
Partners holding of record not less than two-thirds of the outstanding Shares
have declared that such Managing General Partner be removed from that office by
a declaration in writing signed by such Limited Partners and filed with the
custodian of the assets of the Partnership or by votes cast by such Limited
Partners in person or by proxy at a meeting called for such purpose.
Solicitation of such a declaration shall be deemed a solicitation of a proxy
within the meaning of Section 20(a) of the 1940 Act.
(d) In the event a General Partner ceases to be a General Partner, the
remaining General Partners shall have the right to continue the
operations of the Partnership.
(e) Termination of a person's status as a General Partner shall not affect his
status, if any, as a Limited Partner. A General Partner may retain Shares owned
in his capacity as a Limited Partner provided such General Partner has been or
is admitted to Partnership as a Limited Partner in accordance with Section 5.2.
(f) A person who ceases to be a General Partner shall nevertheless be deemed
to be acting as a General Partner with respect to a third party doing business
with the Partnership until an amended Certificate of Limited Partnership is
filed with the Secretary of State.
4.9 Additional or Successor General Partners. In case a vacancy shall, by
reason of the withdrawal or termination of a General Partner, an increase in
the number of General Partners
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or for any other reason exist, the remaining Managing General Partners, if any,
shall fill such vacancy by appointing such other person as General Partner as
they in their discretion may see fit. Such appointment shall be evidenced by a
written instrument signed by a majority of the Managing General Partners
whereupon the appointment shall take effect. Within 90 days after such
appointment the Managing General Partners shall cause notice of such appointment
to be mailed to each Limited Partner at his address as recorded on the books of
the Partnership and shall cause to be filed with the Secretary of State an
amended Certificate of Limited Partnership reflecting the appointment of such
General Partner. An appointment of a General Partner may be made by the Managing
General Partners and notice thereof mailed to the Limited Partners as aforesaid
in anticipation of a vacancy to occur by reason of retirement, withdrawal or
increase in the number of General Partners effective at a later date, provided
that said appointment shall become effective only at or after the effective date
of said retirement, withdrawal or increase in the number of General Partners. A
person also may be added or substituted as a General Partner upon his election
and admission by the Partners at a meeting of Partners or by written consent
without a meeting as provided in Section 9 hereof. Each General Partner, by
becoming a General Partner, consents to the admission as an added or substituted
General Partner of any person appointed by the Managing General Partners or
elected by the Partners in accordance with this Partnership Agreement. Any
person who is appointed or elected to be admitted as a General Partner and who
shall not be serving as a General Partner at the time of such appointment or
election, shall be admitted to the Partnership as a General Partner effective as
of the date of such appointment or election. Any General Partner who stands for
re-election and is not re-elected at any such meeting in the manner specified in
Section 9 shall be deemed to have withdrawn as of the date of such meeting.
4.10 Liability to Limited Partners. The General Partners shall
not be personally liable for the repayment of any amounts standing in the
account of a Limited Partner or holder of Shares including, but not limited to,
contributions with respect to such Shares, except by reason of their willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office. Any payment, other than in the event of
willful misfeasance, bad faith, gross negligence 1 or reckless disregard of the
duties involved in the conduct of his office by a General Partner, which results
in a personal liability to Limited Partners or holders of Shares, shall be
solely from the Partnership's assets.
So long as the General Partners have acted in good faith and in a manner
reasonably believed to be in the best interests of the Limited Partners, the
General Partners shall not have any personal liability to any holder of Shares
or to any Limited Partner by reason of (1) any failure to withhold income tax
under Federal or state tax laws with respect to income allocated to Limited
Partners or (2) any change in the Federal or state tax laws or in the
interpretation thereof as they apply to the Partnership, the holders of the
Shares or the Limited Partners, whether such change occurs through legislative,
judicial or administrative action.
4.11 Assignment and Substitution. Each Share held by a General
Partner in his capacity as a General Partner shall be designated as such, and
each such Share shall be non- assignable, except to another person who already
is a General Partner, and then only with the consent of the Managing General
Partners, and shall be redeemable by the Partnership only in the event that (i)
the holder thereof has ceased to be a General Partner of the Partnership or (ii)
in the opinion of
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counsel for the Partnership redemption of Shares held by a General Partner would
not jeopardize the status of the Partnership as a partnership for Federal income
tax purposes.
4.12 No Agency. Except as provided In Section 15.9 below,
nothing in this Partnership Agreement shall be construed as establishing any
General Partner as an agent of any Limited Partner.
4.13 Reimbursement and Compensation. Managing General Partners
may receive reasonable compensation for their services as Managing General
Partners and will be reimbursed for all reasonable out-of-pocket expenses
incurred in performing their duties hereunder, as provided in Section 10.1.
4.14 Indemnification. (a) Subject to the exceptions and
limitations contained in Subsection (b) below:
(i) Every person who is, or has been, a General Partner, an
officer and/or
Director of a Non-Managing General Partner or an officer of the Partnership
(each hereinafter referred to as a "Covered Person") shall be indemnified by the
Partnership to the fullest extent permitted by law against liability and against
all expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a General Partner, an officer and/or
Director of a Non-Managing General Partner or an officer of the Partnership and
against amounts paid or incurred by him in the settlement thereof;
(ii) the words "claim", "action", "suit" or "proceeding" shall apply to all
claims, actions, suits or proceedings (civil, criminal or other, including
appeals), actual or threatened while in office or thereafter, and the words
"liability" and "expenses" shall include, without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been finally adjudicated by a court or other body before
which the proceeding was brought (A) to be liable to the Partnership or its
Partners by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office or (B)
not to have acted in good faith in the reasonable belief that his action was in
the best interests of the Partnership;
(ii) in the event of a settlement, or other disposition not involving a final
adjudication as provided in Subsection (b)(i) unless there has been a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office,
(A) by the court or other body approving the settlement or other
disposition;
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(B) by vote of at least a majority of those
Managing General Partners who are neither
interested persons (as defined in the 1940 Act) of
the Partnership nor are parties to the matter
based upon a review of readily available facts (as
opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal
counsel, based upon a review of readily available
facts (as opposed to a full trial-type inquiry);
provided, however, that any Partner may, by
appropriate legal proceedings, challenge any such
determination by the Managing General Partners, or
by independent counsel; or
(iii) who shall have acted outside the scope of the Managing General
Partners' authority.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Partnership, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be such
General Partner, officer and/or Director of a Non-Managing General Partner or
officer of the Partnership and shall inure to the benefit of the heirs,
executors and administrators of such a person. Nothing contained herein shall
affect any rights to indemnification to which Partnership personnel, other than
Covered Persons, and other persons may be entitled by contract or otherwise
under law.
(d) Expenses incurred in connection with the preparation and presentation of
a defense to any claim, action, suit or proceeding of the character described in
Subsection (a) of this Section 4.14 shall be paid by the Partnership from time
to time in advance prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be paid
over by him to the Partnership if it is ultimately determined that he is not
entitled to indemnification under this Section 4.14; provided, however, that
either (i) such Covered Persons shall have provided appropriate security for
such undertaking, (ii) the Partnership is insured against losses arising out of
any such advance payments, or (iii) either a majority of the Managing General
Partners who are neither interested persons (as defined in the 1940 Act) of the
Partnership nor are parties to the matter, or independent legal counsel in a
written opinion, shall have determined, based upon a review of readily available
facts to believe that such Covered Person will be found entitled to
indemnification under this Section 4.14.
5. LIMITED PARTNERS
5.1 Identity of Limited Partners. The names of the Limited
Partners and their last known business or residence addresses, together with the
amounts of their contributions and their current Share ownership, shall be set
forth in the records of the Partnership.
5.2 Admission of Limited Partners. The Managing General
Partners may admit a purchaser of Shares as a Limited Partner, upon (i) the
execution by such purchaser of such subscription documents and other
instruments as the Managing General Partners may deem
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necessary or desirable to effectuate such admission, which documents shall be
described in the Partnership's Registration Statement, (ii) the purchaser's
written acceptance of all the terms and provisions of this Partnership
Agreement, including the power of attorney set forth in Section 15.9 hereof, as
the same may have been amended, and (iii) the listing of such purchaser as a
Limited Partner in the records of the Partnership. In no event shall the consent
or approval of any of the Limited Partners be required to effectuate such
admission. Each purchaser of a Share of the Partnership who becomes a Limited
Partner shall be bound by all the terms and conditions of this Partnership
Agreement including, without limitation, the allocation of income, gains,
losses, deductions and credits as provided in Section 10.3. Notwithstanding
anything in this Partnership Agreement to the contrary, the Managing General
Partners reserve the right to refuse to admit any person as a Limited Partner
if, in their judgment, it would not be in the Partnership's best interests to
admit such person. At the sole discretion of and subject to the terms and
conditions set by the Managing General Partners, certificates certifying the
ownership of Shares may be issued in the form attached hereto in Appendix 1 or
in such form as shall be prescribed from time to time by the Managing General
Partners. In the event that the Managing General Partners authorize the issuance
of Share certificates, each Partner shall be entitled to a certificate stating
the number of Shares owned by him or her. Such certificate shall be signed by an
officer of the Partnership. Such signatures may be facsimiles. In case any
officer who has signed or whose facsimile signature has been placed on such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Partnership with the same effect as if he or she
were such officer at the time of its issue.
5.3 Contributions of the Limited Partners. The amount contributed
by each Limited Partner to the Partnership shall be the amount actually invested
in Shares of the Partnership at their Net Asset Value, which amount shall not
include any sales charges and which amount may be less than the offering price
paid by such Limited Partner for his Shares to the extent the offering price
includes any sales charges. All contributions shall be made in U.S. dollars,
which shall be invested in Shares of the Partnership at Net Asset Value. The
amount of such contributions and. the number of Shares owned by each Partner
shall be set forth in the records of the Partnership.
5.4 Additional Contributions of Limited Partners. No Limited
Partner shall be required to make any additional contributions to (or
investments in) or lend additional funds to the Partnership, and no Limited
Partner shall be liable for any additional assessment therefor. A Limited
Partner may make an additional contribution (or investment), however, at his
option through the purchase of additional Shares at the then current offering
price of such Shares, subject to the same terms and conditions as his initial
contribution.
5.5 Use of Contributions. The aggregate of all capital
contributions shall be, and hereby are agreed to be, available to the
Partnership to carry out the objects and purposes of the Partnership.
5.6 Redemption by Limited Partners. A Limited Partner may redeem
his Shares at any time in accordance with Section 8. The Managing General
Partners shall cause the records of the Partnership to be amended to reflect the
withdrawal of any Limited Partner or the return, in whole or in part, of the
contribution of any Limited Partner.
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5.7 Minimum Contribution and Mandatory Redemption. The Managing
General Partners shall determine the minimum amounts required for the initial or
additional contributions of a Limited Partner, which amounts may, from time to
time, be changed by the Managing General Partners. Additionally, the Managing
General Partners may, from time to time, establish a minimum total investment
for Limited Partners, and there is reserved to the Partnership the right to
redeem automatically the interest of any Limited Partner the value of whose
investment is less than such minimum upon the giving of at least 30 days' notice
to such Limited Partner. The amounts which the Managing General Partners shall
fix from time to time for initial or additional contributions and the amount of
the minimum total investment shall be stated in the Partnership's then current
Prospectus.
5.8 Limited Liability. (a) No Limited Partner shall be liable for
any debts or obligations of the Partnership and each Limited Partner shall be
indemnified by the Partnership against any such liability; provided, however,
that contributions of a Limited Partner and his share of any undistributed
assets of the Partnership shall be subject to the risks of the operations of the
Partnership and subject to the claims of the Partnership's creditors, and
provided further, that after any Limited Partner has received the return of any
part of his contribution or any distribution of assets of the partnership, he
will be liable to the Partnership for:
(i) any money or other property wrongfully distributed to him; and
(ii) any sum, not in excess of the amount of such distribution, necessary
to discharge any liabilities of the Partnership to creditors who extended credit
to the Partnership during the period before such returns or distributions were
made, but only to the extent that the assets of the Partnership are not
sufficient to discharge such liabilities. The obligation of a Limited Partner to
return all or any part of a distribution made to him shall be the sole
obligation of such Limited Partner and not of the General Partners.
(b) If an action is brought against a Limited Partner to satisfy an
obligation of
the Partnership, the Partnership, upon notice from the Limited Partner about the
action, will either pay the claim itself or, if the Partnership believes the
claim to be without merit, will undertake the defense of the claim itself
(c) The General Partners shall not have any personal liability to any Holder
of
Shares or to any Limited Partner for the repayment of any amounts standing in
the account of a Limited Partner including, but not limited to, contributions
with respect to such Shares. Any such payment shall be solely from the assets of
the Partnership. The General Partners shall not be liable to any Holder of
Shares or to any Limited Partner by reason of any change in the Federal income
tax laws as they apply to the Partnership and the Limited Partners, whether such
change occurs through legislative, judicial or administrative action, so long as
the General Partners have acted in good faith and in a manner reasonably
believed to be in the best interests of the Limited Partners.
5.9 No Power to Control Operations. A Limited Partner
shall have no right to and shall take no part in the management or control of
the Partnership's operations or activities, but may exercise the rights and
powers of a Limited Partner under this Partnership Agreement including,
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without limitation, the voting rights and the giving of consents and approvals
provided for in Section 9 hereof. The exercise of such rights and powers are
deemed to be matters affecting the basic structure of the Partnership and not
the management or control of its operations and activities.
5.10 Tax Responsibility. Each Limited Partner shall (a) provide
the Managing General Partners with any tax information which may be required
under applicable law, (b) pay any penalties imposed on such Limited Partner for
any noncompliance with applicable tax laws, and (c) be subject to withholding of
U.S. Federal income tax by the Partnership to the extent required by U.S. laws
in effect at any time.
6. SHARES OF PARTNERSHIP INTEREST
All interests in the Partnership, including contributions by the
General Partners, pursuant to Section 4.3, and by the Limited Partners, pursuant
to Section 5.3, shall be expressed in units of participation herein referred to
as "Shares" (which term includes fractional Shares). Each Share shall represent
an equal proportionate interest in the income and assets of the Partnership with
each other Share outstanding.
7. PURCHASE AND EXCHANGE OF SHARES
7.1 Purchase of Shares. The Partnership may offer Shares on a
continuing basis to investors. Except for the initial purchase of Shares by the
General Partners and the initial Limited Partner, all Shares issued shall be
issued and sold at the Net Asset Value (plus such sales charge or other charge
as may be applicable to the purchase of the Shares) next computed after receipt
of a purchase order in accordance with the Partnership's Prospectus in effect at
the time the order is received. Only investors who agree to be admitted, and who
are eligible for admission, as Limited Partners pursuant to Section 5.2 shall be
eligible to purchase Shares (unless such investor has already been admitted as a
Partner). Orders for the purchase of Shares shall be accepted on any day that
the Partnership's Transfer Agent is open for business (which shall normally be
limited to those days when the New York Stock Exchange is open for business).
The form in which purchase orders may be presented shall be as set forth in the
Partnership's Prospectus In effect at the time the order is received. The
Managing General Partners on behalf of the Partnership reserve the right to
reject any specific order and to suspend the Partnership's offering of new
Shares at any time. Payment for all Shares must be made in U.S. dollars.
7.2 Net Asset Value. The Net Asset Value per Share of the
Partnership shall be determined as of 3 p.m. Chicago time on each day the New
York Stock Exchange is open for trading or as of such other time or times as the
Managing General Partners may determine in accordance with the provisions of the
1940 Act. The Net Asset Value per share shall be expressed in U.S. dollars and
shall be computed by dividing the value of all the assets of the Partnership,
less its liabilities, by the number of Shares outstanding (including Shares held
by General Partners). Portfolio securities and other assets will be valued at
their fair value using methods determined in good faith by the Managing General
Partners in accordance with the 1940 Act. The Partnership may suspend the
determination of Net Asset Value during any period when the New York Stock
Exchange is closed, other than customary weekend and holiday closing, during
periods when trading on the
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Exchange is restricted as determined by the Securities and Exchange Commission
(the "Commission") or during any emergency as determined by the Commission which
makes it impracticable for the Partnership to dispose of its securities or value
its assets, or during any other period permitted by order of the Commission for
the protection of investors.
7.3 Exchange of Shares. Shares of the Partnership may be
exchanged for (i.e., redeemed and the proceeds reinvested in) shares of any
other partnership in the Partnership Group in accordance with the Partnership's
Prospectus in effect at the time the exchange order is received.
8. REDEMPTION OF SHARES
8.1 Redemption of Shares. The Partnership will redeem from any
Partner all or any portion of the Shares owned by him provided that the Partner
delivers to the Partnership or its designated agent notice of such redemption,
stating the number of Shares to be redeemed, together with a properly endorsed
Share certificate(s) where certificate(s) have been issued, in good order and in
proper form as determined by the Managing General Partners and the Partnership's
Transfer Agent. The Partner shall be entitled to payment in U.S. dollars of the
Net Asset Value of his Shares (as set forth in Section 7.2 hereof), reduced by
the amount of any deferred sales charge or redemption fee that may be imposed as
described in the Prospectus, provided that the amount distributed is in
accordance with and does not exceed the positive book Capital Account balance of
the Partner. Any such redemption shall be in accordance with Section 4 with
respect to General Partners or Section 5 with respect to Limited Partners. Any
distribution upon redemption pursuant to this Section 8.1 shall, in accordance
with Section 10.4 below, constitute a return in full of the redeeming Partner's
contribution attributable to the Shares which are redeemed regardless of the
amount distributed with respect to such Shares. No consent of any of the
Partners shall be required for the withdrawal or return of a Limited Partner's
contribution. All redemptions shall be recorded on the books of the Partnership.
The Managing General Partners may suspend redemptions and defer payment
of the redemption price at any time, subject to the Rules and Regulations of
the Commission.
8.2 Payment for Redeemed Shares. Payments for Shares redeemed by
the Partnership will be made at the time and in the manner set forth in the
Prospectus. Payment for redeemed Shares may, at the option of the Managing
General Partners or such officer or officers as they may duly authorize for this
purpose, in their complete discretion, be made in cash, or in kind, or partially
in cash and partially in kind. In case of payment in kind, the Managing General
Partners, or their delegate, shall have absolute discretion as to what security
or securities shall be distributed in kind and the amount of the same, and the
securities shall be valued for purposes of distribution at the amount at which
they were appraised in computing the Net Asset Value of the Shares, provided
that any Partner who cannot legally acquire securities so distributed in kind by
reason of the prohibitions of the 1940 Act shall receive cash.
9. MATTERS AFFECTING THE PARTNERSHIP'S BASIC STRUCTURE
9.1 Rights of Limited Partners. (a) The Limited Partners
shall have the right to vote
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together with the General Partners, in accordance with the provisions of this
Section 9, only upon the following matters affecting the basic structure of the
Partnership, which include the voting, approval, consent or similar rights
required under the 1940 Act for voting security holders:
(i) the right to remove General Partner(s) as set
forth in Section 4.8(c);
(ii) the right to elect or ratify the appointment
of new General Partner(s)
(subject to the requirements of Section 9.9), but only to the extent such
ratification or election is required by the 1940 Act or the Partnership Act;
(iii) the right to approve or terminate
investment advisory, underwriting and
distribution and servicing contracts and plans;
(iv) the right to ratify or reject the
appointment and to terminate the
employment of the independent public accountants of the Partnership;
(v) the right to approve or disapprove the
merger or consolidation of the
Partnership with or into one or more other limited partnerships or the sale of
all or substantially all
of the assets of the Partnership;
(vi) the right to approve the incurrence of
indebtedness by the Partnership
other than in the ordinary course of business;
(vii) the right to approve transactions in which
the General Partners have
an actual or potential conflict of interest with the Limited Partners or the
Partnership;
(viii) the right to terminate the Partnership,
as provided in Section 12
hereof;
(ix) the right to elect to continue the
operations of the Partnership (subject
to the requirements of Section 9.9); and
(x) the right to amend this Partnership
Agreement, including, without
limitation, the right to approve or disapprove proposed changes in the
Partnership's investment policies and restrictions; provided, however, that no
such amendment shall conflict with the 1940 Act so long as the Partnership
intends to remain registered thereunder, nor affect the liability of the General
Partners without their consent nor the limited liability of the Limited Partners
as provided under Section 5.8 above.
Notwithstanding the foregoing, the right of
Limited Partners to vote on
matters affecting the basic structure of the Partnership as designated herein
shall not be construed as a requirement that all such matters be submitted to
the Limited Partners for their approval or be so approved to the extent such
approval is not required by the Partnership Act, the 1940 Act or this
Partnership Agreement.
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(b) Notwithstanding the foregoing, no vote, approval
or other consent shall be
required of the Limited Partners with respect to any matter not affecting the
basic structure of the Partnership, including, without limitation, the
following: (i) any change in the amount or character of the contribution of any
Limited Partner; (ii) any change in the procedures for the purchase or
redemption of Shares; (iii) the substitution or deletion of a Limited Partner;
(iv) the admission of any additional Limited Partner; (v) the retirement,
resignation, death or incompetency of a Managing General Partner; (vi) any
addition to the duties or obligations of the General Partners, or any reduction
in the rights or powers granted to the General Partners herein, for the benefit
of the Limited Partners; (vii) any change in the name or investment objectives
of the Partnership; (viii) the correction of any false or erroneous statement,
or change in any statement in order to make such statement accurately represent
the agreement among the General and Limited Partners, in this Partnership
Agreement; (ix) the addition of any omitted provision or amendment of any
provision to cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof; or (x) such amendments as may be necessary to
conform this Partnership Agreement to the requirements of the Partnership Act,
the 1940 Act, the Tax Code or any other law or regulation applicable to the
Partnership.
(c) The Limited Partners shall have no right or power
to cause the termination
and dissolution of the Partnership except as set forth in this Partnership
Agreement. No Limited Partner shall have the right to bring an action for
partition against the Partnership.
9.2 Actions of the Partners. Actions which require the vote of
the Limited Partners under Section 9.1 of this Partnership Agreement shall be
taken at a meeting of both the General and Limited Partners, or by consent
without a meeting as provided in Section 9.10. All Partners' meetings shall be
held at such place as the Managing General Partners shall designate. The
Partners may vote at any such meeting in person or by proxy.
9.3 Meetings. Meetings of the Partnership for the purpose of
taking any action which the Limited Partners are permitted to take under this
Partnership Agreement may be called by a majority vote of the Managing General
Partners or upon written request by Limited Partners representing 10% or more of
the outstanding Shares. Written notice of such meeting shall be given in
accordance with Section 9.4.
9.4 Notices. (a) Whenever Partners are required or permitted to
take any action at a meeting, a written notice of the meeting shall be given not
less than ten (10), nor more than sixty (60), days before the date of the
meeting to each Partner entitled to vote at the meeting. The notice shall state
the place, date and hour of the meeting and the general nature of the business
to be transacted.
(b) Notice of a Partner's meeting or any report shall
be given either personally
or by mail or other means of written communication, addressed to the Partner at
the address of the Partner appearing on the books of the Partnership or given by
the Partner to the Partnership for the purpose of notice. A notice or report
shall be deemed to have been given at the time when delivered personally or
deposited in the mail or sent by other means of written communication. An
affidavit of mailing of any notice or report in accordance with the provisions
of this Subsection (b), executed
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by a General Partner, shall be prima facie evidence of the giving of the notice
or report.
If any notice or report addressed to the Partner
at the address of the Partner
appearing on the books of the Partnership is returned to the Partnership marked
to indicate that the notice or report to the Partner could not be delivered at
such address, all future notices or reports shall be deemed to have been duly
given without further mailing if they are available to the Partner at the
principal executive office of the Partnership for a period of one year from the
date of the giving of the notice or report to all other Partners.
(c) Upon written request to the General Partners by
any person entitled to call
a meeting of Partners, the General Partners immediately shall cause notice to be
given to the Partners entitled to vote that a meeting will be held at a time
requested by the person calling the meeting, not less than ten (10), nor more
than sixty (60), days after the receipt of the request. If the notice is not
given within twenty (20) days after receipt of the request, the person entitled
to call the meeting may instead give such notice.
9.5 Validity of Vote for Certain Matters. Any Partner approval at
a meeting, other than unanimous approval by those entitled to vote, with respect
to the matters set forth in Section 9.1(a) shall be valid only if the general
nature of the proposal so approved was stated in the notice of meeting or in any
written waiver of notice.
9.6 Adjournment. When a Partners' meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the Partnership may transact any business which might
have been transacted at the original meeting. If the adjournment is for more
than forty-five (45) days or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each Partner of record entitled to vote at the meeting in accordance with
Section 9.4.
9.7 Waiver of Notice and Consent to Meeting. The transactions of
any meeting of Partners, however called and noticed, and wherever held, are as
valid as though conducted at a meeting duly held after regular call and notice,
if a quorum is present either in person or by proxy, and if, either before or
after the meeting, each of the persons entitled to vote and not present in
person or by proxy signs a written waiver of notice or a consent to the holding
of the meeting or an approval of the minutes thereof. All waivers, consents and
approvals shall be filed with the Partnership records or made a part of the
minutes of the meeting. Attendance at a meeting shall constitute a waiver of
notice of the meeting, except when the Partner objects at the beginning of the
meeting on the grounds that the meeting is not lawfully called or convened and
except that attendance at a meeting is not a waiver of any right to object to
the consideration of matters required to be included in the notice of the
meeting but not so included, if the objection is expressly made at the meeting.
Neither the business to be transacted at nor the purpose of any meeting of
Partners need be specified in any written waiver of notice, except as provided
in Section 9.6.
9.8 Quorum. The presence in person or by proxy of more than forty
percent (40%) of the outstanding Shares on the record date for any meeting
constitutes a quorum at such meeting.
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The Partners present at a duly called or held meeting at which a quorum is
present may continue to transact business until adjournment notwithstanding the
withdrawal of enough Partners to leave less than a quorum, if any action taken
(other than adjournment) is approved by a majority vote of those Partners
present (except as otherwise may be required by the 1940 Act or the Partnership
Act). In the absence of a quorum, any meeting of Partners may be adjourned from
time to time by the vote of a majority in interest of the Partners represented
either in person or by proxy, but no other business may be transacted except as
provided in this Section 9.8. The Managing General Partners may adjourn such
meeting to such time or times as determined by the Managing General Partners.
9.9 Required Vote. Any action which requires the vote of the
Limited Partners shall be adopted by (i) the Majority Vote of the then
outstanding Shares or (ii) if at a meeting, a majority vote of those Shares
present if the quorum requirements of Section 9.8 hereof have been satisfied
(except as otherwise may be required by the 1940 Act or the Partnership Act);
provided, however, that the admission of a General Partner when there is no
remaining or surviving General Partner or an election to continue the operations
of the Partnership when there is no remaining or surviving General Partner shall
require the affirmative vote of all the Limited Partners.
9.10 Action by Consent Without a Meeting. Any action which may be
taken at any meeting of the Partners may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by Partners
having not less than the minimum number of votes that would be necessary to
authorize or take that action at a meeting. In the event the Limited Partners
are requested to consent to a matter without a meeting, each Partner shall be
given notice of the matter to be voted upon in the same manner as described In
Section 9.4. In the event any General Partner, or Limited Partners representing
10% or more of the outstanding Shares, request a meeting for the purpose of
discussing or voting on the matter, notice of such meeting shall be given in
accordance with Section 9.4 and no action shall be taken until such meeting is
held. Unless delayed in accordance with the provisions of the preceding
sentence, any action taken without a meeting will be effective ten (10) days
after the required minimum number of Partners have signed the consent; however,
the action will be effective immediately if the General Partners and Limited
Partners representing at least 90% of the shares of the Partners have signed the
consent.
9.11 Record Date. (a) In order that the Partnership may determine
the Partners of record entitled to notice of or to vote at any meeting, or
entitled to receive any distribution or to exercise any rights in respect of any
other lawful action, the Managing General Partners, or Limited Partners
representing more than 10% of the Shares then outstanding, may fix, in advance,
a record date which is not more than sixty (60) nor less than ten (10) days
prior to the date of the meeting and not more than sixty (60) days prior to any
other action. If no record date is fixed:
(i) The record date for determining Partners
entitled to notice of or to vote
at a meeting of Partners shall be at the close of business on the business day
next preceding the day on which notice is given or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
(ii) The record date for determining Partners
entitled to give consent to
Partnership action in writing without a meeting shall be the first day on
which the first written
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consent is given.
(iii) The record date for determining Partners
for any other purpose shall
be at the close of business on the day on which the Managing General Partners
adopt it, or the sixtieth (60th) day prior to the date of the other action,
whichever is later.
(b) The determination of Partners of record entitled
to notice of or to vote at
a meeting of Partners shall apply to any adjournment of the meeting unless the
Managing General Partners, or the Limited Partners who called the meeting, fix a
new record date for the adjourned meeting, but the Managing General Partners, or
the Limited Partners who called the meeting, shall fix a new record date if the
meeting is adjourned for more than forty-five (45) days from the date set for
the original meeting.
(c) Any Holder of a Share prior to the record date
for a meeting shall be
entitled to vote at such meeting, provided such person becomes a Partner prior
to the date of the meeting.
9.12 Proxies. A Partner may vote at any meeting of the
Partnership by a proxy executed in writing by the Partner. All such proxies
shall be filed with the Partnership before or at the time of the meeting. The
law of Delaware pertaining to corporate proxies will be deemed to govern all
Partnership proxies as if they were proxies with respect to shares of a Delaware
corporation. A proxy may be revoked by the person executing the proxy in a
writing delivered to the Managing General Partners at any time prior to its
exercise. Notwithstanding that a valid proxy is outstanding, powers of the proxy
holder will be suspended if the person executing the proxy is present at the
meeting and elects to vote in person.
9.13 Number of Votes. All Shares have equal voting rights. Each
Partner shall have the right to vote the number of Shares standing of record in
such Partner's name as of the record date set forth in the notice of meeting.
9.14 Communication Among Limited Partners. Whenever ten (10) or
more Limited Partners of record of the Partnership who have been such for at
least six months preceding the date of application, and who hold in the
aggregate either Shares having a net asset value of at least $25,000 or at least
1 per centum of the outstanding Shares, whichever is less, shall apply to the
Managing General Partners in writing, stating that they wish to communicate with
other Partners with a view to obtaining signatures to a request for a meeting of
Shareholders pursuant to Section 9.3 and accompanied by a form of communication
and request which they wish to transmit, the Managing General Partners shall
within five business days after receipt of such application either:
(a) afford to such applicants access to a list of the
names and addresses of all
Partners as recorded on the books of the Partnership;
(b) inform such applicants as to the approximate
number of Partners of record
and the approximate cost of mailing to them the proposed communication and
form of request.
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If the Managing General Partners elect to follow the
course specified in
Subsection (b) of this Section 91.14, the Managing General Partners, upon the
written request of such applicants, accompanied by a tender of the material to
be mailed and of the reasonable expenses of mailing, shall, with reasonable
promptness, mail such material to all Partners of record at their addresses as
recorded on the books of the Partnership, unless within five business days after
such tender the Managing General Partners shall mail to such applicants and file
with the Commission, together with a copy of the material to be mailed, a
written statement signed by at least a majority of the Managing General Partners
to the effect that in their opinion either such material contains untrue
statements of fact or omits to state facts necessary to make the statements
contained therein not misleading, or would be in violation of applicable law,
and specifying the basis of such opinion.
After the Commission has had an opportunity for
hearing upon the objections
specified in the written statement so filed by the Managing General Partners,
the Managing General Partners or such applicants may demand that the Commission
enter an order either sustaining one or more of such objections or refusing to
sustain any of such objections. in the Commission shall enter an order refusing
to sustain one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all objections so sustained have been
met, and shall enter an order so declaring, the Managing General Partners shall
mail copies of such material to all Partners with reasonable promptness after
the entry of such order and the renewal of such tender.
The provisions of Section 4.8(c), Section 9.3 and
this Section 9.14 may not be
amended or repealed without the vote of a majority of the Managing General
Partners and a majority of the outstanding Shares; provided, however, that such
provisions shall be deemed null, void, inoperative and removed from this
Partnership Agreement upon the effectiveness of any amendment to the 1940 Act
which eliminates them from Section 16 of the 1940 Act or the effectiveness of
any successor Federal law governing the operating of the Partnership which does
not contain such provisions.
10. DISTRIBUTIONS AND ALLOCATION OF PROFITS AND LOSSES
10.1 Fees of General Partners. As compensation for services
rendered to the Partnership, each Managing General Partner may be paid a fee
during each year, which fee shall be fixed by the Managing General Partners. All
the General Partners shall be entitled to reimbursement of reasonable expenses
incurred by them in connection with their performance of their duties as General
Partners. Neither payment of compensation or reimbursement of expenses to a
General Partner hereunder nor payment of fees to any Affiliate of a General
Partner for the performance of services to the Partnership shall be deemed a
distribution for purposes of Section 10.2, nor shall any such payment affect
such person's right to receive any distribution to which he would otherwise be
entitled as a Holder of Shares.
10.2 Distributions of Income and Gains. Subject to the provisions
of the Partnership Act and the terms of Section 10.4 hereof, the Managing
General Partners in their sole discretion shall determine the amounts, if any,
to be distributed to Holders of Shares, the record date for purposes of such
distributions and the time or times when such distributions shall be made.
Distributions of income may be in cash (U.S. Dollars) or in additional full and
fractional Shares of the Partnership
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valued at the Net Asset Value on the record date. With respect to net capital
gains, if any, the Managing General Partners may determine annually what
portion, if any, of the Partnership's capital gains will be distributed and any
such distribution may be in cash or in additional full and fractional Shares of
the Partnership at the Net Asset Value on the record date. Notwithstanding the
foregoing, the Managing General Partners shall not be required to make any
distribution of income or capital gains for any taxable year.
10.3 Allocation of Income, Gains, Losses, Deductions and Credits.
The net income, gains, losses, deductions and credits of the Partnership shall
be allocated equally among the outstanding Shares of the Partnership on a
regular basis to be determined by the Managing General Partner. The net income
earned by the Partnership shall consist of the interest accrued on portfolio
securities, less expenses, since the most recent determination of income.
Amortization of original issue discount will be treated as an income item.
Market discount, if any, will be treated as income items except as otherwise
required for Federal income tax purposes. Any permissible Federal income tax
elections or methods regarding original issue discount, market discount and
amortization of bond premium shall be made at the discretion of the Managing
General Partners. Expenses of the Partnership will be accrued on a regular basis
to be determined by the Managing General Partners. A Holder of a Share shall be
allocated with the proportionate part of such items actually realized by the
Partnership for each such full accrual period during which such Share was owned
by such Holder. A person shall be deemed to be a Holder of a Share on a specific
day if he is the record holder of such Share on such day (regardless of whether
or not such record holder has yet been admitted as a Partner).
10.4 Returns of Contributions. Except upon dissolution of the
Partnership by expiration of its term or otherwise pursuant to Section 12 hereof
(which shall be the time for return to each Partner of his contributions,
subject to the priorities therein), and except upon redemption of Shares of the
Partnership as provided in Section 8, no Partner has the right to demand the
return of any part of his contribution. The Managing General Partners may,
however, from time to time, elect to permit partial returns of contributions to
Holders of Shares, provided that:
(a) all liabilities of the Partnership to persons
other than General and Limited
Partners have been paid or, in the good faith determination of the Managing
General Partners, there remains property of the Partnership sufficient to pay
them; and
(b) the Managing General Partners cause the records
of the Partnership to be
amended to reflect a reduction in contributions.
In the event that the Managing General Partners elect
to make a partial return of
contributions to Holders of Shares, such distribution shall be made to all of
the Holders of Shares in accordance with their positive book Capital Account
balances. Each General and Limited Partner, by becoming such Partner, consents
to any such pro rata distribution therefore or thereafter duly authorized and
made in accordance with such provisions and to any distribution through
redemption of Shares pursuant to Section 8 above.
10.5 Capital Accounts. Unless additional capital accounts
are required to be
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maintained for accounting purposes in accordance with generally accepted
accounting principles, the Partnership shall generally maintain one Capital
Account for each Partner. Each Capital Account shall be credited with the
Partner's capital contributions and share of profits, shall be charged with such
partner's share of losses, distributions and withholding taxes (if any) and
shall otherwise appropriately reflect transactions of the Partnership and the
Partners. At the end of each day, the Capital Accounts of all Partners shall be
adjusted to reflect the Partnership's income (or loss) which has accrued for
that day. The Capital Accounts will be subject to further adjustment as provided
by Section 10.6. Additional adjustments shall then be made to reflect any
purchases and redemptions of Shares by the Partners. A Substituted Limited
Partner shall be deemed to succeed to the Capital Account of the Partner whom
such Substituted Limited Partner replaced.
10.6 Allocations of Capital Gains and Losses and Additional
Rules.
(a) Short Term Gains and Losses. At the end of every
month, short term capital
gains and losses for that month will be allocated and credited (or charged in
the event of losses) to each Partner's Capital Account for those Partners of
record as of the last day of that month, based upon the number of outstanding
Shares of the Partnership as of the last day of the month.
(b) Long Term Gains and Losses. At the end of every
year (or shorter period
at the discretion of the Managing General Partners), long term capital gains and
losses for that year will be allocated and credited (or charged in the event of
losses) to each Partner's Capital Account for those Partners of record as of the
last day of that year (or shorter period at the discretion of the Managing
General Partners), based upon the number of outstanding Shares of the
Partnership as of the last day of the year.
(c) Minimum Gain Chargeback. In the event that there
is a net decrease in the
Partnership's Minimum Gain during any taxable year and any Partner has a
negative Capital Account (after taking into account reductions for items
described in paragraphs (4), (5) and (6) of Treasury Department Regulations
Section 1.704-1(b)(2)(ii)(d)) and such negative balance exceeds the sum of mount
that such Partner is obligated to restore upon liquidation of the Partnership
and (ii) such Partner's share of the Minimum Gain at the end of such taxable
year, such Partner shall be allocated Partnership profits for such year (and, if
necessary, subsequent years) in an amount necessary to eliminate such excess
negative balance as quickly as possible. Allocations of profits to such Partners
having such excess negative Capital Accounts shall be made in proportion to the
amounts of such excess negative Capital Account balances. The term "Minimum
Gain" means the excess of the outstanding balances of all nonrecourse
indebtedness which is secured by property of the Partnership over the adjusted
basis of such property for Federal income tax purposes, as computed in
accordance with the provisions of Treasury Department Regulations Section
1.704-1(b)(4)(iv)(c). A Partner's share of Minimum Gain shall be computed in
accordance with Treasury Department Regulations Section 1.704-1(b)(4)(iv)(f).
(d) Qualified Income Offset. Notwithstanding anything
in Sections 10.3 and
10.6 to the contrary, in the event any Partner unexpectedly receives any
adjustments, allocations or distributions described in Treasury Department
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704- 1(b)(2)(ii)(d)(5) or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
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allocated to such Partner in an amount and manner sufficient to eliminate the
deficit balance in his Capital Account (in excess of (i) the amount he is
obligated to restore liquidation of the Partnership or upon liquidation of his
interest in the Partnership and his share of the Minimum Gain) created by such
adjustments, allocations or distributions as quickly as possible.
(e) Conformance with Treasury Regulations.
Allocations pursuant to the
Partnership Agreement may further be modified by the Managing General Partners,
if necessary, in order to comply with existing or future Treasury Regulations.
11. ASSIGNMENT OF SHARES; SUCCESSOR IN INTEREST;
SUBSTITUTION OF PARTNERS
11.1 Prohibition on Assignment. Except for redemptions as
provided in Section 8, a Partner shall not have the right to sell, transfer or
assign his Shares to any other person, but may pledge them as collateral.
11.2 Rights of the Holders of Shares as Collateral or Judgment
Creditor. In the event that any person who is holding Shares as collateral or
any judgment creditor becomes the owner of such Shares due to foreclosure or
otherwise, such person shall not have the right to be substituted as a Limited
Partner, but shall only have the rights, upon the presentation of evidence
satisfactory to the Managing General Partners of his right to succeed to the
interests of the Limited Partner, set forth immediately below:
(a) to redeem the Shares in accordance with the
provisions of Section 8 hereof;
and
(b) to receive any distributions made with respect to
such Shares.
Upon receipt by the Partnership of evidence satisfactory
to the Managing General
Partners of his ownership of Shares, the owner shall become a Holder of Record
of the subject Shares and his name shall be recorded on the books of record of
the Partnership maintained for such purpose either by the Partnership or its
Transfer Agent. Such owner shall be liable to return any excess distributions
pursuant to Section 5.8(a). However, such owner shall have none of the rights or
obligations of a Substituted Limited Partner unless and until he is admitted as
such. In addition, a creditor who makes a non-recourse loan to the Partnership
must not have or acquire, at any time as a result of making the loan, any direct
or indirect interest in the profits, capital or property of the Partnership
other than as secured creditor.
11.3 Death, Incompetency, Bankruptcy or Termination of the
Existence of a Partner. In the event of the death or an adjudication of
incompetency or bankruptcy of an individual Partner (or, in the case of a
Partner that is a corporation, association, partnership, joint venture or trust,
an adjudication of bankruptcy, dissolution or other termination of the existence
of such Partner), the successor in interest of such Partner (including without
limitation the Partner's executor, administrator, guardian, conservator,
receiver or other legal representative), upon the presentation of evidence
satisfactory to the Managing General Partners of his right to succeed to the
interests of
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the Partner, shall have the rights set forth below:
(a) to redeem the Shares of the Partner in accordance
with the provisions of
Section 8 hereof;
(b) to receive any distributions made with respect to
such Shares; and
(c) to be substituted as a Limited Partner upon
compliance with the conditions
of the admission of a Limited Partner as provided in Sections 5 and 11 hereof.
Upon receipt by the Partnership of evidence satisfactory
to the Managing General
Partners of his right to succeed to the interests of the Partner, the successor
in interest shall become a Holder of Record of the subject Shares and his name
shall be recorded on the books of record of the Partnership maintained for such
purpose either by the Partnership or its Transfer Agent.
11.4 Substituted Limited Partners. (a) A person shall not become
a Substituted Limited Partner unless the Managing General Partners consent to
such substitution (which consent may be withheld in their absolute discretion)
and receive such instruments and documents (including those specified in Section
5.2), and such reasonable transfer fees as the Managing General Partners may
require.
(b) The original Limited Partner shall cease to be a
Limited Partner, and the
person to be substituted shall become a Substituted Limited Partner, as of the
date on which the person to be substituted has satisfied the requirements set
forth above and as of the date the records of the Partnership are amended to
reflect his admission as a Substituted Limited Partner. Thereafter the original
Limited Partner shall have no rights or obligations with respect to the
Partnership insofar as the Shares transferred to the Substituted Limited Partner
are concerned.
(c) Unless and until a person becomes a Substituted
Limited Partner, his status
and rights shall be limited to the rights of a Holder of Shares pursuant to
Sections 11.3(a) and 11.3(b). A Holder of Shares who does not become a
Substituted Limited Partner shall have no right to inspect the Partnership's
books or to vote on any of the matters on which a Limited Partner would be
entitled to vote. A Holder of Shares who has become a Substituted Limited
Partner has all the rights and powers, and is subject to the restrictions and
liabilities, of a Limited Partner under this Partnership Agreement.
(d) Any person admitted to the Partnership as a
Substituted Limited Partner
shall be subject to and bound by the provisions of this Partnership Agreement as
if originally a party to this Partnership Agreement.
12. DISSOLUTION AND TERMINATION OF THE PARTNERSHIP
12.1 Dissolution. The Partnership shall be dissolved and its
affairs shall be wound up upon the happening of the first to occur of the
following:
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(a) the stated term of the Partnership has expired
unless the Partners by a
Majority Vote have previously amended the Partnership Agreement to establish
a different term;
(b) the Partnership has disposed of all of its assets;
(c) a General Partner has ceased to be a General
Partner and the remaining
General Partners elect not to continue the operations of the Partnership;
(d) there is only one General Partner remaining and
such General Partner has
ceased to be a General Partner as set forth in Section 4.8; provided, however,
that if the last remaining or surviving General Partner ceases to be a General
Partner other than by removal, the Limited Partners may agree by unanimous vote
to continue the operations of the Partnership and to admit one or more General
Partners in accordance with this Partnership Agreement;
(e) a decree of judicial dissolution has been entered
by a court of competent
jurisdiction; or
(f) the Partners by a Majority Vote have voted to
dissolve the Partnership.
12.2 Liquidation. (a) In the event of dissolution as
provided in Section 12.1, the
assets of the Partnership shall be distributed as follows:
(i) all of the Partnership's debts and
liabilities to persons (including
Partners to the extent permitted by law) shall be paid and discharged, and any
reserve deemed necessary by the Managing General Partners for the payment of
such debts shall be set aside; and
(ii) the balance of the assets of the
Partnership (and any reserves not
eventually used to satisfy debts of the Partnership) shall be distributed pro
rata to the Partners in accordance with their positive book Capital Account
balances.
(b) Upon dissolution, each Partner shall look solely
to the assets of the
Partnership for the return of his capital contribution and shall be entitled
only to a distribution of Partnership property and assets in return thereof. If
the Partnership property remaining after the payment or discharge of the debts
and liabilities of the Partnership is insufficient to return the capital
contribution of each Limited Partner, such Limited Partner shall have no
recourse against any General Partner, the assets of any other partnership of
which any General Partner is a partner, or any other Limited Partner. The
winding up of the affairs of the Partnership and the distribution of its assets
shall be conducted exclusively by the Managing General Partners, who are
authorized to do any and all acts and things authorized by law for these
purposes. In the event of dissolution where there is no remaining General
Partner, and there is a failure to appoint a new General Partner, the winding up
of the affairs of the Partnership and the distribution of its assets shall be
conducted by such persons as may be selected by Majority Vote, which person is
hereby authorized to do any and all acts and things authorized by law for these
purposes.
12.3 Termination. Upon the completion of the distribution of
Partnership assets as
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provided in this Section and the termination of the Partnership, the General
Partner(s) or other person acting as liquidator (or the Limited Partners, if
necessary) shall cause the Certificate of Limited Partnership of the Partnership
to be canceled and shall take such other actions as may be necessary to legally
terminate the Partnership.
13. BOOKS, RECORDS, ACCOUNTS AND REPORTS
13.1 Books and Records. The Partnership shall maintain at its
principal office or at the offices of its investment adviser, administrator,
custodian, Transfer Agent or other agent appointed by the Partnership such books
and records as are required by the 1940 Act or necessary for the operation of
the Partnership.
13.2 Limited Partners' Access to Information. (a) Each Limited
Partner shall have the right, subject to such reasonable standards as may be
established by the Managing General Partners, to obtain from the Managing
General Partners from time to time upon reasonable demand for any purpose
reasonably related to the Limited Partner's interest as a Limited Partner:
(1) True and full information regarding the
status of the business and
financial condition of the Partnership;
(2) Promptly after becoming available, a copy
of the Partnership's Federal,
state and local income tax returns for each year;
(3) A current list of the name and last known
business, residence or
mailing address of each Partner;
(4) A copy of the Partnership Agreement and
Certificate of Limited
Partnership and all amendments thereto, together with copies of any powers of
attorney pursuant to which the Partnership Agreement and any Certificate of
Limited Partnership and all amendments thereto have been executed;
(5) True and full information regarding the
amount of cash and a
description and statement of the agreed value of any other property or services
contributed by each Partner and which each Partner has agreed to contribute in
the future, and the date on which each became a Partner; and
(6) Such other Information regarding the
affairs of the Partnership as is
just and reasonable.
(b) The Managing General Partners shall cause to be
transmitted to each
Partner such other reports and information as shall be required by the 1940 Act,
the Partnership Act or the Tax Code.
13.3 Accounting Basis and Fiscal Year. The Partnership's
books and records (i) shall
be kept on a basis chosen by the Managing General Partners in accordance with
the accounting
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methods followed by the Partnership for Federal income tax purposes and
otherwise in accordance with generally accepted accounting principles applied in
a consistent manner, (ii) shall reflect all Partnership transactions, (iii)
shall be appropriate and adequate for the Partnership's business and for the
carrying out of all provisions of this Partnership Agreement, and (iv) shall be
closed and balanced at the end of each Partnership fiscal year. The fiscal year
of the Partnership shall be the calendar year.
13.4 Tax Returns. The Managing General Partners, at the
Partnership's expense, shall cause to be prepared any income tax or information
returns required to be made by the Partnership and shall father cause such
returns to be timely filed with the appropriate authorities.
13.5 Filings with Regulatory Agencies. The Managing General
Partners, at the Partnership's expense, shall cause to be prepared and timely
filed with appropriate Federal and state regulatory and administrative bodies,
all reports required to be filed with such entitles under then current
applicable laws, rules and regulations.
13.6 Tax Matters and Notice Partners. The Managing General
Partners shall designate one or more General Partners as the "Tax Matters
Partner" and the "Notice Partner" of the Partnership in accordance with Sections
6231(a)(7) and (8) of the Tax Code, and each such Partner shall have no personal
liability arising out of his good faith performance of his duties in such
capacity. The "Tax Matters Partner" is authorized, at the Partnership's sole
cost and expense, to represent the Partnership and each Limited Partner in
connection with all examinations of the Partnership's affairs by tax
authorities, including any resulting administrative and judicial proceedings.
Each Limited Partner agrees to cooperate with the Managing General Partners and
to do or refrain from doing any and all things reasonably required by the
Managing General Partners to conduct such proceedings. The Managing General
Partners shall have the right to settle any audits without the consent of the
Limited Partners.
14. AMENDMENTS OF PARTNERSHIP DOCUMENTS
14.1 Amendments in General. Except as otherwise provided in
this Partnership Agreement, the Partnership Agreement may be amended only by
the General Partners.
14.2 Amendments Without Consent of Limited Partners. In addition
to any amendments otherwise authorized herein and except as otherwise provided,
amendments may be made to this Partnership Agreement from time to time by the
General Partners without the consent of the Limited Partners, including, without
limitation, amendments: (i) to reflect the retirement, resignation, death or
incompetency of a Managing General Partner; (ii) to add to the duties or
obligations of the General Partners, or to surrender any right or power granted
to the General Partners herein, for the benefit of the Limited Partners; (iii)
to change the name or investment objective of the Partnership; (iv) to correct
any false or erroneous statement, or to make a change in any statement in order
to make such statement accurately represent the agreement among the General and
Limited Partners; (v) to supply any omission or to cure, correct or supplement
any ambiguous, defective or inconsistent provision hereof; or (vi) to make such
amendments as may be necessary to conform this Partnership Agreement to the
requirements of the Partnership Act, the 1940 Act, the
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Tax Code or any other law or regulation applicable to the Partnership, as now or
hereafter in effect.
14.3 Amendments Needing Consent of Affected Partners.
Notwithstanding any other provision of this Partnership Agreement, without the
consent of the Partner or Partners to be affected by any amendment to this
Agreement, this Partnership Agreement may not be amended to (i) convert a
Limited Partner's interest into a General Partner's interest, (ii) modify the
limited liability of a Limited Partner, (iii) alter the interest of a Partner in
income, gain, loss, deductions, credits and distributions, or (iv) increase, add
or alter any obligation of any Limited Partner.
14.4 Amendments to Certificate of Limited Partnership. (a) The
Managing General Partners shall cause to be filed with the Secretary of State,
within ninety (90) days after the happening of any of the following events, an
amendment to the Certificate of Limited Partnership reflecting the occurrence of
any of the following events:
(i) The admission of a new General Partner;
(ii) The withdrawal of a General Partner; or
(iii) A change in the name of the Partnership,
or, except as provided in
Sections 17-104(b) and (c) of the Partnership Act, a change in the address of
the registered office or a change in the name or address of the registered agent
of the Partnership.
(b) A Managing General Partner shall cause to be filed
with the Secretary of
State an amendment to the Certificate of Limited Partnership correcting any
false or erroneous material statement contained in the Certificate of Limited
Partnership promptly after the discovery of such false or erroneous statement by
such Managing General Partner.
(c) Any Certificate of Limited Partnership filed or
recorded in jurisdictions
other than Delaware shall be amended as required by applicable law.
(d) The Certificate of Limited Partnership may also
be amended at any time
in any other manner deemed appropriate by the General Partners.
14.5 Amendments After Change of Law. This Partnership Agreement
and any other Partnership documents may be amended and refiled, if necessary, by
the General Partners without the consent of the Limited Partners if there occurs
any change that permits or requires an amendment of this Partnership Agreement
under the Partnership Act or of any other Partnership document under applicable
law, so long as no Partner is adversely affected (or consent is given by such
Partner).
15. MISCELLANEOUS Provisions
15.1 Notices. (a) Any written notice, offer, demand or
communication required or permitted to be given by any provision of this
Partnership Agreement, unless otherwise specified herein, shall be deemed to
have been sufficiently given for all purposes if delivered personally to the
person to whom the same is directed or if sent by first class mail addressed (i)
if to a General Partner,
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to the principal place of business and office of the Partnership specified in
this Partnership Agreement and (ii) if to a Limited Partner, to such Limited
Partner's address of record; provided, however, that notice given by any other
means shall be deeded sufficient if actually received by the person to whom it
is directed.
(b) Except as otherwise specifically provided herein,
any such notice that is
sent by first class mail shall be deemed to be given two (2) days after the date
on which such notice is mailed.
(c) The Managing General Partners may change the
Partnership's address for
purposes of this Partnership Agreement by giving written notice of such change
to the Limited Partners, and any Limited Partner may change his address for
purposes of this Partnership Agreement by giving written notice of such change
to the Managing General Partners, in the manner herein provided for the giving
of notices.
15.2 Section Headings. The Section headings in this Partnership
Agreement are inserted for convenience and identification only and are in no way
intended to define or limit the scope, extent or intent of this Partnership
Agreement or any of the provisions hereof.
15.3 Construction. Whenever the singular number is used herein,
the same shall include the plural; and the neuter, masculine and feminine
genders shall include each other, as applicable. If any language is stricken or
deleted from this Partnership Agreement, such language shall be deemed never to
have appeared herein and no other implication shall be drawn therefrom. The
language in all parts of this Partnership Agreement shall be in all cases
construed according to its fair meaning and not strictly for or against the
General Partners or the Limited Partners.
15.4 Severability. If any covenant, condition, term or provision
of this Partnership Agreement is illegal, or if the application thereof to any
person or in any circumstance shall to any extent be judicially determined to be
invalid or unenforceable, the remainder of this Partnership Agreement, or the
application of such covenant, condition, term or provision to persons or in
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby, and each remaining covenant, condition, term and
provision of this Partnership Agreement shall be valid and enforceable to the
fullest extent permitted by law.
15.5 Governing Law. Notwithstanding the place where this
Partnership Agreement may be executed by any of the parties hereto, the parties
expressly agree that all the terms and provisions hereof shall be construed
under the laws of the State of Delaware and that the Partnership Act as now
adopted and as may be hereafter amended from time to time shall govern the
partnership aspects of this Partnership Agreement.
15.6 Counterparts. This Partnership Agreement may be executed in
one or more counterparts, each of which shall, far all purposes, be deemed an
original and all of such counterparts, taken together, shall constitute one and
the same Partnership Agreement.
15.7 Entire Agreement. This Partnership Agreement and the
separate subscription
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agreements of each Limited Partner and General Partner constitute the entire
agreement of the parties as to the subject matter hereof. All prior agreements
among the parties as to the subject matter hereof, whether written or oral, are
merged herein and shall be of no force or effect. This Partnership Agreement
cannot be changed, modified or discharged orally, but only by an agreement in
writing. There are no representations, warranties or agreements other than those
set forth in this Partnership Agreement and such separate subscription
agreements, if any.
15.8 Cross-References. All cross-references in this Partnership
Agreement, unless specifically directed to another agreement or document, refer
to provisions in this Partnership Agreement.
15.9 Power of Attorney to the General Partners. (a) Each Partner
hereby makes, constitutes and appoints each Managing General Partner and any
person designated by the Managing General Partners, with full substitution, his
agent and attorney-in-fact in his name, place and stead, to take any and all
actions and to make, execute, swear to and acknowledge, amend, file, record and
deliver the following documents and any other documents deemed by the Managing
General Partners necessary for the operations of the Partnership: (i) any
Certificate of Limited Partnership or Certificate of Amendment thereto, required
or permitted to be filed on behalf of the Partnership, and any and all
certificates as necessary to qualify or continue the Partnership as a limited
partnership or partnership wherein the Limited Partners thereof have limited
liability in the states where the Partnership may be conducting activities, and
all instruments which effect a change or modification of the Partnership in
accordance with this Partnership Agreement; (ii) this Partnership Agreement and
any amendments thereto in accordance with this Partnership Agreement; (iii) any
other instrument which is now or which may hereafter be required or advisable to
be filed for or on behalf of the Partnership; (iv) any document which may be
required to effect the continuation of the Partnership, the admission of an
additional Limited Partner or Substituted Limited Partner, or the dissolution
and termination of the Partnership (provided such continuation, admission or
dissolution and termination is in accordance with the terms of this Partnership
Agreement), or to reflect any reductions or additions in the amount of the
contributions of Partners, in each case having the power to execute such
instruments on his behalf, whether the undersigned approved of such action or
not; and (v) any document containing any investment representations and/or
representations relating to the citizenship, residence and tax status required
by any state or Federal law or regulation.
(b) This Power of Attorney is a special Power of
Attorney coupled with an
interest, and shall not be revoked and shall survive the transfer by any Limited
Partner of all or part of his interest in the Partnership and, being coupled
with an interest, shall survive the death or disability or cessation of the
existence as a legal entity of any Limited Partner; except that where the
successor in interest has been approved by said attorney for admission to the
Partnership as a Substituted Limited Partner, this Power of Attorney shall
survive the transfer for the sole purpose of enabling said attorney to execute,
acknowledge and file any instrument necessary to effectuate such substitution.
(c) Each Limited Partner hereby gives and grants to
his said attorney under this
Power of Attorney full power and authority to do and perform each and every act
and thing whatsoever requisites necessary or appropriate to be done in or in
connection with this Power of
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Attorney as fully to all intents and purposes as he might or could do if
personally present, hereby ratifying all that his said attorney shall lawfully
do or cause to be done by virtue of this Power of Attorney.
(d) The existence of this Power of Attorney shall not
preclude execution of any
such instrument by the undersigned individually on any such matter. A person
dealing with the Partnership may conclusively presume and rely on the fact that
any such instrument executed by such agent and attorney-in-fact is authorized,
regular and binding without further inquiry.
(e) The appointment of each Managing General Partner
and each designee of
that General Partner as attorney-in-fact pursuant to this Power of Attorney
automatically shall terminate as to such person at such time as he ceases to be
a General Partner and from such time shall be effective only as to substitute or
additional General Partners admitted in accordance with this Partnership
Agreement and his designees.
15.10 Further Assurances. The Limited Partners will execute and
deliver such further instruments and do such further acts and things as may be
required to carry out the intent and purposes of this Partnership Agreement.
15.11 Successors and Assigns. Subject in all respects to the
limitations on transferability contained herein, this Partnership Agreement
shall be binding upon, and shall inure to the benefit of, the heirs,
administrators, personal representatives, successors and assigns of the
respective parties hereto.
15.12 Waiver of Action for Partition. Each of the parties hereto
irrevocably waives during the term of the Partnership and during the period of
its liquidation following any dissolution, any right that he may have to
maintain any action for partition with respect to any of the assets of the
Partnership.
15.13 Creditors. None of the provisions of this Partnership
Agreement shall be for the
benefit of or enforceable by any of the creditors of the Partnership or the
Partners.
15.14 Remedies. The rights and remedies of the Partners hereunder
shall not be mutually exclusive, and the exercise by any Partner of any right to
which he is entitled shall not preclude the exercise of any other right he may
have.
15.15 Custodian. All assets of the Partnership shall be held by a
custodian meeting the requirements of the 1940 Act, and may be registered in the
name of the Partnership or such custodian or nominee. The terms of the custodian
agreement shall be determined by the Managing General Partners.
15.16 Use of Name "First Trust". Clayton Brown & Associates,
Inc., as the initial distributor of Shares, hereby consents to the use by the
Partnership of the name "First Trust" as part of the Partnership's name;
provided, however, that such consent shall be conditioned upon the employment of
Clayton Brown & Associates, Inc. or one of its affiliates (collectively "Clayton
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Brown") as an investment adviser of the Partnership. The name "First Trust" or
any variation thereof may be used from time to time in other connections and for
other purposes by Clayton Brown and other investment companies that have
obtained consent to use the name "First Trust." Clayton Brown shall have the
right to require the Partnership to cease using the name "First Trust" as part
of the Partnership's name if the Partnership ceases, for any reason, to employ
Clayton Brown as its investment adviser. Future names adopted by the Partnership
for itself, insofar as such names include identifying words requiring the
consent of Clayton Brown, shall be the property of Clayton Brown and shall be
subject to the same terms and conditions.
15.17 Authority. Each individual executing this Partnership
Agreement on behalf of a partnership, corporation, or other entity warrants that
he is authorized to do so and that this Partnership Agreement will constitute
the legal binding obligation of the entity which he represents.
15.18 Signatures. The signature of a Managing General Partner or
an officer or agent of the Partnership duly appointed by the Managing General
Partners shall be sufficient to bind the Partnership to any agreement or on any
document, including, but not limited to, documents drawn or agreements made in
connection with the acquisition or disposition of any assets.
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Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
Centennial Asset Management Corporation
6803 South Tucson Way
Englewood, Colorado 80112
Sub-Distributor
OppenheimerFunds Distributor, Inc.
P.O. Box 5254
Denver, Colorado 80217
Transfer Agent
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217
1-800-525-7048 (from inside the U.S.)
303-671-3200 (from outside the U.S.)
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
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