CENTENNIAL
AMERICA FUND, L.P.
Prospectus dated April 24, 1998
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
24, 1998 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 303-768-3200 (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).
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT
GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE F.D.I.C. OR ANY OTHER AGENCY
AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF 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.
-1-
<PAGE>
CONTENTS
ABOUT THE FUND
EXPENSES
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT RESTRICTIONS
HOW THE FUND IS MANAGED
PERFORMANCE OF THE FUND
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
Checkwriting
Telephone Redemptions
Automatic Withdrawal Plans
General Information on Redemptions
EXCHANGES OF SHARES
DISTRIBUTIONS AND TAXES
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<PAGE>
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, 1997.
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 offering price) None
- ------------------------------------------------------------------
Maximum Sales Charge on Reinvested Distributions None
- ------------------------------------------------------------------
Redemption Fee None(1)
- -------------------------------------------------------------------
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 Fee 0.45%
- -------------------------------------------------------------------
12b-1 Service Plan Fee 0.20%
- ------------------------------------------------------------------
Other Expenses 0.33%
- -------------------------------------------------------------------
Total Fund Operating Expenses 0.98%
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.
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
------ ------- ------- --------
$10 $31 $54 $120
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 1997 has been audited by Deloitte & Touche LLP, the
Fund's independent auditors. The information for the fiscal period May 14, 1987
(commencement of operation) 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, 1997, is included
in the Statement of Additional Information.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996 1995 1994
========================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------
Income from investment operations--net
investment income and net realized gain .05 .05 .04 .03
Dividends and distributions to shareholders (.05) (.05) (.04) (.03)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00
===== ===== ===== =====
========================================================================================================
TOTAL RETURN(3) 4.63% 4.69% 4.56% 2.91%
========================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $14,580 $18,661 $11,102 $6,201
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $16,320 $16,998 $ 7,862 $5,693
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.53% 4.52% 4.48% 2.89%
Expenses, before voluntary
reimbursement by the Manager 0.98% 0.86% 1.48% 1.47%
Expenses, net of voluntary
reimbursement by the Manager N/A N/A N/A N/A
</TABLE>
1. All numbers of shares and per share data have been restated to reflect a
10.51 for 1 stock split effective December 5, 1991.
2. On May 25, 1990, OppenheimerFunds, Inc. became the investment advisor to the
Fund.
3. 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.
8
<PAGE>
<TABLE>
<CAPTION>
1993 1992 1991(1) 1990(1)(2) 1989(1) 1988(1)
================================================================================
<S> <C> <C> <C> <C> <C>
$1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------
.02 .03 .14 .10 .08 .09
(.02) (.03) (.14) (.10) (.08) (.09)
- --------------------------------------------------------------------------------
$1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
================================================================================
2.23% 3.92% 0.35% N/A N/A N/A
================================================================================
$4,349 $5,253 $5,056 $5,486 $8,167 $8,808
- --------------------------------------------------------------------------------
$4,780 $5,323 $5,217 $6,819 $8,589 $9,949
- --------------------------------------------------------------------------------
2.22% 3.64% 7.08% 7.87% 8.15% 8.77%
1.34% 1.86% 2.00% 1.96% 1.96% 2.14%
1.13% 0.60% 1.91% N/A 1.62% 0.92%
</TABLE>
-3-
<PAGE>
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
limited partners without being subject to U.S. Federal income tax. The Fund's
partners, including its limited partners, are also referred to herein as
"shareholders" or "investors". 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. 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").
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 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.
o YEAR 2000 RISKS. Because many computer software systems in use today
cannot distinguish the year 2000 from the year 1900, the markets for securities
in which the Fund invests could be detrimentally affected by computer failures
beginning January 1, 2000. Failures of computer systems used for securities
trading could result in settlement and liquidity problems for the fund and other
investors. Data processing errors by corporate and government issuers of
securities could result in production problems and economic uncertainties, and
those issuers may entail substantial costs in attempting to prevent or fix such
errors, all of which could have a negative effect on the Fund's investments and
returns.
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 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 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) a security 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 Rule
2a-7 ("Rating Organizations"), or, if only one Rating Organization has rated
that security, by that Rating Organization (the "Rating Requirements"), (b) a
security that is guaranteed, and either the guarantee or the party providing
that guarantee meets the Rating Requirements or (c) an unrated security that is
either issued by an issuer having another security that meets the Rating
Requirements or is judged by the Manager to be of comparable quality to
investments that meet the Rating Requirements.
Rule 2a-7 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. Additionally, under
Rule 2a-7, the Fund must maintain a dollar-weighted average portfolio maturity
of no more than 90 days, and the remaining maturity of any single portfolio
investment at the time of purchase 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 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:
o 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;
o 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;
o enter into a repurchase transaction that will cause more than 25% of the
Fund's total assets to be subject to such agreements;
o 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;
o 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
o 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.
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 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 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 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 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 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 $85 billion as of March 31, 1998, and with more than 4 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.
The management services provided to the Fund by the Manager, and services
provided by the Distributor and the Transfer Agent to shareholders, depend on
the smooth functioning of their computer systems. Many computer software systems
in use today cannot distinguish the year 2000 from the year 1900 because of the
way dates are encoded and calculated. That failure could have a negative impact
on handling securities trades, pricing and accounting services. The Manager, the
Distributor and Transfer Agent have been actively working on necessary changes
to their computer systems to deal with the year 2000 and expect that their
systems will be adapted in time for the event, although there cannot be
assurance of success. Additionally, because the services they provide depend on
the interaction of their computer systems with the computer systems of brokers,
information services and other parties, any failure on the part of the computer
systems of those third parties to deal with the year 2000 may also have a
negative effect on the services provided to the Fund.
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 the 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.
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 a subsidiary of 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.
PERFORMANCE OF THE FUND
EXPLANATION OF PERFORMANCE TERMINOLOGY. The Fund uses the terms "yield" and
"compounded effective yield" to illustrate its performance. This performance
information may be useful to help you see how well your investment has done and
to compare it to other money market funds.
It is important to understand that the Fund's yields represent past
performance and should not be considered to be predictions of future
performance. The Fund's investment performance will vary over time, depending on
market conditions, the composition of the portfolio, and expenses. More detailed
information about how yields are calculated is contained in the Statement of
Additional Information, which also contains information about other ways to
measure and compare the Fund's performance.
o YIELD. Different types of yields may be quoted to show 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.
o COMPOUNDED EFFECTIVE YIELD. The "compounded effective yield" is
calculated similarly, but the annualized income earned by an investment in the
Fund is assumed to be reinvested in additional shares. The "compounded effective
yield" will be slightly higher than the yield because of the effect of the
assumed reinvestment.
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 Denver,
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 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 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 303-768-3200 (from outside the U.S.) to
notify the Distributor of the transmittal of the wire and to receive further
instructions. 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).
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 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 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
303-768-3200 (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.
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 record. 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.
o CHECKWRITING. 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 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
checkwriting. 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 checkwriting 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, 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, but only until the purchase payment has cleared. That delay
may be as much as 10 days from the date shares were purchased. That delay may be
avoided if the shareholder purchases shares by Federal Funds wire, certified
check, through a Program, or arranges with his or her bank to provide telephone
or written assurance to the Transfer Agent that the purchase payment has
cleared. 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.
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 12 months of the end of the calendar month of
the initial purchase of the exchanged shares (18 months for shares purchased
prior to May 1, 1997) 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 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. 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 the Transfer Agent reasonably believes to be
genuine.
SHAREHOLDER TRANSACTIONS BY FAX. Requests for certain account transacations may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-9310
for information about which transactions are included. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
DISTRIBUTIONS AND TAXES
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 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 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. See "Federal Tax Legislation Affecting Publicly-Traded
Partnerships".
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 the Fund
generally are liable for 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.
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.
o FEDERAL TAX LEGISLATION AFFECTING PUBLICLY-TRADED PARTNERSHIPS.
Subsequent to the Fund's receipt of a ruling from the IRS that it would be
classified as a partnership and that its general and limited partners would be
treated as partners for Federal income tax purposes, the Revenue Act of 1987
("1987 Act") was signed into law on December 22, 1987. Under provisions of the
1987 Act, "publicly-traded" partnerships were generally characterized as
corporations rather than partnerships for Federal income tax purposes. However,
because the Fund was in existence on December 17, 1987, it qualified as an
"existing partnership" under certain "grandfathering" provisions of the 1987 Act
and, as such, continued to be treated as a partnership for Federal income tax
purposes thereafter. The "grandfathering" provisions of the 1987 Act were set to
expire on December 31, 1997, and it was anticipated that "existing partnerships"
would be classified as associations taxable as corporations as of January 1,
1998.
The Taxpayer Relief Act of 1997 permits a publicly-traded partnership that
was in existence on December 17, 1987 and that continues to meet certain other
criteria, to elect to continue its status as a partnership for U.S. Federal
income tax purposes for tax years after December 31, 1997. The Fund has made
this election. As an "electing 1987 partnership," the Fund will seek to maintain
its treatment as a partnership rather than become taxable as corporation for tax
years after December 31, 1997 by paying a tax equal to 3.5% of its gross income
and meeting certain other criteria.
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 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 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) a "10 percent shareholder", (b) a controlled foreign
corporation of the 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 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.
-4-
<PAGE>
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 24, 1998
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.)
303-768-3200 (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
PR0870.002.0498 Printed on Recycled Paper
<PAGE>
CENTENNIAL AMERICA FUND, L.P.
6803 South Tucson Way, Englewood, Colorado 80112 1-800-525-9310 (from within the
U.S.) 303-768-3200 (from outside the U.S.)
STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 24, 1998
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 24, 1998. 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
303-768-3200 (if from outside the U.S.)
CONTENTS PAGE
ABOUT THE FUND
Investment Objective and Policies.............................................
Other Investment Restrictions.................................................
Managing General Partners and Officers........................................
The Manager and its Affiliates................................................
Service Plan..................................................................
Performance of the Fund.......................................................
ABOUT YOUR ACCOUNT
Purchase, Redemption and Pricing of Shares....................................
Exchange of Shares............................................................
Automatic Withdrawal Plan Provisions..........................................
FINANCIAL INFORMATION ABOUT THE FUND
Independent Auditors' Report..................................................
Financial Statements..........................................................
APPENDICES
Appendix A: Description of Securities Ratings............................A-1
Appendix B: Industry Classification......................................B-1
Appendix C: Agreement of Limited Partnership.............................C-1
<PAGE>
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 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. If a security is in default, or ceases
to be an Eligible Security, or is determined no longer to present minimal credit
risk, the Managing General Partners must determine whether it would be in the
best interests of the Fund to dispose of the security. In each of the foregoing
instances, action by the Managing General Partners is not required if the Fund
disposes of the security within a short period of time of the Manger learning of
the change in the credit risk of the security. The Manger will provide the
Managing General Partners with subsequent notice of the change and the sale 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;
(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
above, 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 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 Real Asset
Fund, Oppenheimer Strategic Income 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 Mr. Zimmer hold similar positions as officers of all the Denver Oppenheimer
funds. As of April 14, 1998, 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 66*
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 83
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
CHARLES CONRAD, JR., MANAGING GENERAL PARTNER; AGE 68
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 57
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 68
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 76
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).
ROBERT M. KIRCHNER, MANAGING GENERAL PARTNER; AGE 76
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
BRIDGET A. MACASKILL, PRESIDENT AND MANAGING GENERAL PARTNER; AGE 49*
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView Asset Management Corporation ("HarbourView"); Chairman
and a director of SSI (since August 1994) and SFSI (September 1995); President
(since September 1995) and a director (since October 1990) of OAC; President
(since September 1995) and a director (since November 1989) of Oppenheimer
Partnership Holdings, Inc., a holding company subsidiary of the Manager; a
director of Oppenheimer Real Asset Management, Inc.(since July 1996); President
and a director (since October 1997) of OppenheimerFunds International Ltd., an
offshore fund manager subsidiary of the manager ("OFIL") and Oppenheimer
Millennium Funds plc (since October 1997); President and a director of other
Oppenheimer funds; a director of the NASDAQ Stock Market, Inc. and of Hillsdown
Holdings plc (a U.K. food company); formerly an Executive Vice President of the
Manager.
NED M. STEEL, MANAGING GENERAL PARTNER; AGE 82
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; a director of Visiting Nurse
Corporation of Colorado.
JAMES C. SWAIN, CHAIRMAN, CHIEF EXECUTIVE OFFICER AND MANAGING GENERAL PARTNER;
AGE 64* 6803 South Tucson Way, Englewood, Colorado 80112 Vice Chairman of the
Manager (since September 1988); 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 61
Vice President of the Manager and Centennial (since January 1992); an officer of
other Oppenheimer funds.
CAROL E. WOLF, VICE PRESIDENT AND PORTFOLIO MANAGER; AGE 46
Vice President of the Manager and Centennial (since June 1990); an officer of
other Oppenheimer funds.
ARTHUR J. ZIMMER, VICE PRESIDENT AND PORTFOLIO MANGER; AGE 51
Senior Vice President of the Manager (since June 1997); Vice President of
Centennial (since June 1997); an officer of other Oppenheimer funds; formerly
Vice President of the Manager (October 1990 -June 1997).
ANDREW J. DONOHUE, VICE PRESIDENT AND SECRETARY; AGE 47
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager, Executive Vice
President and general Counsel (since September 1993) and a director (since
January 1992) of the Sub-Distributor; Executive Vice President, General Counsel
and a director of HarbourView, SSI, SFSI, Oppenheimer Partnership Holdings, Inc.
(since September 1995) and MultiSource Services, Inc. (a broker-dealer) (since
December 1995); President and a director of Centennial (since September 1995);
President, General Counsel and a director of Oppenheimer Real Asset Management,
Inc. (since July 1996); General Counsel (since may 1996) and a Secretary (since
April 1997) of OAC; a director of OFIL and Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
GEORGE C. BOWEN, VICE PRESIDENT, TREASURER AND ASSISTANT SECRETARY; AGE 61
6803 Tucson Way, Englewood, Colorado 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985) of
the Manager; Vice President (since June 1983) and Treasurer (since March 1985)
of the Sub-Distributor; Vice President (since October 1989) and Treasurer (since
April 1986) of HarbourView; Senior Vice President (since February 1992),
Treasurer (since July 1991) and a director (since December 1991) of Centennial;
President, Treasurer and a director of Centennial Capital Corporation (since
June 1989); Vice President and Treasurer (since August 1978) and Secretary
(since April 1981) of SSI; Vice President, Treasurer and Secretary of SFSI
(since November 1989); Treasurer of OAC (since June 1990); Treasurer of
Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President and
Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief
Executive Officer, Treasurer and a director of MultiSource Services, Inc. (a
broker-dealer) (since December 1995); an officer and Director/Trustee of other
Oppenheimer funds.
ROBERT G. ZACK, ASSISTANT SECRETARY; AGE 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985) and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium funds plc
(since October 1997); an officer of other Oppenheimer funds.
ROBERT J. BISHOP, ASSISTANT TREASURER; AGE 39
6803 Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
SCOTT T. FARRAR, ASSISTANT TREASURER; AGE 32
6803 Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996) Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly a Fund Controller for the Manager and an
Assistant Vice President of the Manager/ Mutual Fund Account (April 1994-May
1996).
- -----------------------
* A Manager General Partner who is an "interested person" of the Fund as
defined in the Investment 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. The compensation from the Fund was paid during fiscal year ended December
31, 1997. 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 1997.
Total
Compensation
Aggregate From All
Compensation Denver-based
NAME FROM FUND OPPENHEIMER FUNDS(1)
Robert G. Avis $263 $63,501
Managing General Partner
William A. Baker $321 $77,502
Audit and Review Committee
Ex-Officio Member(2) and
Managing General Partner
Charles Conrad, Jr. $298 $72,000
Managing General Partner(3)
Sam Freedman $275 $66,501
Audit and Review
Committee Member(2) and
Managing General Partner
Raymond J. Kalinowski $296 $71,561
Audit and Review
Committee Member and
Managing General Partner
C. Howard Kast $317 $76,503
Audit and Review Committee
Chairman(2) and
Managing General Partner
Robert M. Kirchner $298 $72,000
Managing General Partner(3)
Ned M. Steel $263 $63,501
Managing General Partner
- -------------------------
(1) For the 1997 calendar year
(2) Committee positions effective July 1, 1997
(3) Prior to July 1, 1997, Messrs. Conrad and Kirchner were also member of the
Audit and Review Committee
DEFERRED COMPENSATION PLAN. The Managing General Partners have adopted a
Deferred Compensation Plan for disinterested Managing General Partners that
enables them to elect to defer receipt of all or a portion of the annual fees
they receive from the Fund. As of the date of this Statement of Additional
Information, none of the Managing General Partners has elected to participate in
the Plan. If any of the Managing General Partners were to participate in the
Plan, compensation deferred by a Managing General Partner would be periodically
adjusted as though an equivalent amount had been invested in shares of one or
more Oppenheimer funds selected by the Managing General Partner. The amount paid
to a Managing General Partner under the Plan would vary based upon the
performance of the selected funds. Deferral of Managing General Partners' fees
under the Plan would not affect the amounts paid to the Managing General Partner
by the Fund and would not materially affect the Fund's assets, liabilities and
net income per share. The Plan would not obligate the Fund to retain the
services of any Managing General Partner or to pay any particular level of
compensation to the Managing General Partner. Pursuant to an Order issued by the
Securities and Exchange Commission, the Fund may invest in the funds selected by
the Managing General Partner under the Plan without shareholder approval.
MAJOR SHAREHOLDERS. As of April 14, 1998, 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, Inc. ("Edwards"), 1 North Jefferson Avenue, St.
Louis, Missouri 63103, which owned 13,577,725.070 shares of the Fund (92.92% of
the then outstanding shares of the Fund). The Fund has been informed that as to
the shares held of record by Edwards, the following shareholders owned more than
5% of the outstanding shares of the Fund as of April 14, 1998: Gold Star Hat and
Cap Company, RD #2, 5F No. 66 Ming Chung, 2nd Road, Kaohsiung, Taiwan, 20.50%;
Sun Chu-Chiu Yang, 5F No. 66 Ming Chuan 2nd Road, Kaohsiung, Taiwan, 8.17%; and
Anatoly Lysenko, c/o YAR Communications, 220 Fifth Avenue, 11th Floor, New York,
New York 10001-7708, 6.80%.
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 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, 1997, December 31,1996 and
December 31, 1995, the Fund paid management fees in the amounts of $73,491,
$76,514 and $35,312, 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.
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 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, 1997, payments under the Plan totaled $32,060, all of
which was paid by the Distributor to Recipients.
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 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, 1997, the Fund's yield was 4.80%
and its compounded effective yield was 4.91%.
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
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") on each day the Exchange is open
(a "regular business day"), which is normally 4:00 P.M. but may be earlier on
some days, by dividing the value of the Fund's net assets by the number of
shares outstanding. The earlier closing of the Exchange may be necessitated for
example, in case of weather emergencies or may occur on days falling before or
after a holiday. All references to time mean "New York time". The Exchange's
most recent annual holiday schedule (which is subject to change) states that it
will close on New Year's Day, Martin Luther King Jr. 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 in U.S.
government securities 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 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.
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.
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 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 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 International Small Company Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer MidCap Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
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 Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Rochester Fund Municipals
the following "Money Market Funds":
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer 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).
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 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.
<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, 1997, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended December 31, 1997 and
1996 and the financial highlights for the period January 1, 1993 to December 31,
1997. 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, 1997 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, 1997, 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 23, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS December 31, 1997 Centennial America Fund, L.P.
FACE VALUE
AMOUNT SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 76.0%
- ---------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
<S> <C> <C>
5.42%, 1/6/98 $ 609,000 $ 608,541
5.52%, 1/23/98 210,000 209,292
5.52%, 2/17/98 925,000 918,334
5.73%, 1/21/98 535,000 533,297
5.74%, 1/12/98 346,000 345,393
- ---------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
5.48%, 2/5/98 500,000 497,336
5.48%, 2/6/98 450,000 447,534
5.54%, 1/21/98 1,300,000 1,295,956
5.72%, 1/5/98 350,000 349,777
5.73%, 1/15/98 301,000 300,329
6.05%, 1/12/98 1,000,000 1,000,084
- ---------------------------------------------------------------------------------------------------------------------------------
Student Loan Marketing Assn., guaranteeing commercial paper of:
Nebraska Higher Education Loan Program, 6.10%, 1/23/98 750,000 747,227
New Hampshire Higher Education Loan Corp.:
5.75%, 1/29/98 490,000 487,809
5.79%, 1/26/98 719,000 716,109
USA Group Secondary Market Services, Inc.:
5.65%, 1/22/98 549,000 547,191
5.70%, 1/29/98 1,000,000 995,567
5.75%, 1/26/98 581,000 578,680
- ---------------------------------------------------------------------------------------------------------------------------------
Tennessee Valley Authority, 5.48%, 2/10/98 500,000 496,955
--------------
Total U.S. Government Obligations 11,075,411
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 23.3%
- ---------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with PaineWebber, Inc., 6.80%, dated 12/31/97,
to be repurchased at $3,401,284 on 1/2/98, collateralized by Government
National Mortgage Assn. Participation Nts., 7.50%, 10/15/27, with a value
of $1,587,542, and Federal Home Loan Mortgage Corp. Participation Nts.,
7%, 8/1/27, with a value of $1,910,147 3,400,000 3,400,000
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE 99.3% 14,475,411
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.7 104,704
------------ ----------------
NET ASSETS 100.0% $ 14,580,115
============ ================
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES December 31, 1997 Centennial America Fund,
L.P.
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (including repurchase agreement of $3,400,000)
<S> <C>
- see accompanying statement $14,475,411
- -----------------------------------------------------------------------------------------------------------------------------
Cash 84,334
- -----------------------------------------------------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold 132,496
Interest 29,218
- -----------------------------------------------------------------------------------------------------------------------------
Other 4,251
---------------------
Total assets 14,725,710
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES Payables and other liabilities:
Shares of beneficial interest redeemed 128,309
Service plan fees 7,808
Shareholder reports 6,310
Dividends 2,238
Other 930
---------------------
Total liabilities 145,595
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS $14,580,115
=====================
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital - applicable to 14,580,115 shares of beneficial interest
outstanding $14,580,115
=====================
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
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, 1997 Centennial America
Fund, L.P.
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME - Interest $898,892
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees - Note 3 73,491
- -----------------------------------------------------------------------------------------------------------------------------
Service plan fees - Note 3 32,060
- -----------------------------------------------------------------------------------------------------------------------------
Shareholder reports 20,951
- -----------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees - Note 3 11,229
- -----------------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 8,504
- -----------------------------------------------------------------------------------------------------------------------------
Registration and filing fees 5,919
- -----------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 3,080
- -----------------------------------------------------------------------------------------------------------------------------
Managing General Partners' fees and expenses 2,330
- -----------------------------------------------------------------------------------------------------------------------------
Insurance expenses 1,698
- -----------------------------------------------------------------------------------------------------------------------------
Other 434
---------------------
Total expenses 159,696
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $739,196
=====================
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
OPERATIONS
<S> <C> <C>
Net investment income $739,196 $768,975
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (739,196) (777,172)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting from
beneficial interest transactions - Note 2 (4,081,282) 7,567,914
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) (4,081,282) 7,559,717
- -----------------------------------------------------------------------------------------------------------------------------
Beginning of period 18,661,397 11,101,680
------------------------------------------
End of period $14,580,115 $18,661,397
==========================================
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS Centennial America Fund, L.P.
Year Ended December 31,
1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
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 .05 .04 .03 .02
Dividends and distributions to shareholders (.05) (.05) (.04) (.03) (.02)
=================================================================================
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
=================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 4.63% 4.69% 4.56% 2.91% 2.23%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $14,580 $18,661 $11,102 $6,201 $4,349
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $16,320 $16,998 $ 7,862 $5,693 $4,780
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.53% 4.52% 4.48% 2.89% 2.22%
Expenses, before voluntary reimbursement by
the Manager 0.98% 0.86% 1.48% 1.47% 1.34%
Expenses, net of voluntary reimbursement by
the Manager N/A N/A N/A N/A 1.13%
</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 advisor 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. Beginning in 1998, according to the
provisions of the 1997 Taxpayer Relief Act, the Fund will elect to be
treated as an "Electing 1987 Partnership". As such it will record a U.S.
Federal income tax provision equal to 3.50% of gross income.
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.
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, 1997 YEAR ENDED DECEMBER 31, 1996
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Sold 44,369,483 $44,369,483 51,127,626 $51,127,626
Dividends and distributions
reinvested 706,803 706,803 749,505 749,505
Redeemed (49,157,568) (49,157,568) (44,309,217) (44,309,217)
------------ ------------ ------------ ------------
Net increase (decrease) (4,081,282) $(4,081,282) 7,567,914 $ 7,567,914
============ ============ ============ ============
</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%
of the first $500 million of net assets and 0.40% on net assets over $500
million.
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: 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. 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.
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 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-1
<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
Information Technology
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
Wireless Services
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
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
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
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
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
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
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
C-1
<PAGE>
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.
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.
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 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 operate and 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
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 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 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;
(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 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 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;
(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 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.
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, 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 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 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.
(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 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. 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 consent is given.
(iiiThe 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.
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 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 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 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 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:
(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 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 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 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
(iiiA 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, 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 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 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 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.
C-2
<PAGE>
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.)
303-768-3200 (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
PX0870.001.0498
