SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant / X /
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ x / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
OPPENHEIMER WORLD BOND FUND
- ------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
OPPENHEIMER WORLD BOND FUND
- ------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee Computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11: 1
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing Party:
(4) Date Filed:
- --------------------
1 - Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
Oppenheimer World Bond Fund
January 16, 1997
Dear World Bond Fund Shareholder:
We have scheduled a shareholder meeting on April 16, 1998 for you to decide
upon some important proposals for the Fund. Your ballot card and a detailed
statement of the issues are enclosed with this letter.
Your Board of Trustees believes the matters being proposed for approval are in
the best interests of the Fund and its shareholders and recommends a vote "for"
each Proposal. Regardless of the number of shares you own, it is important that
your shares be represented and voted. So we urge you to consider these issues
carefully and to make your vote count.
How do you vote?
To vote, simply complete the ballot by marking your choices, sign it, and
return it in the postage-paid envelope provided. Remember, it can be expensive
for the Fund -- a portion of which is owned by you as a shareholder -- to remail
ballots if not enough responses are received to conduct the meeting.
What are the issues?
You are being asked to consider and approve a proposal to convert the Fund from
a closed-end to an open-end investment company. By converting to an open-end
fund, shareholders will have the ongoing right to redeem their shares at a price
based on the net asset value of the shares rather than a price set in the
market. This would eliminate the current market discount from net asset value.
If the proposal to convert the Fund described in the accompanying proxy
statement is not approved, the Fund will continue operating as a closed-end
fund. Neither the Fund not its shareholders will realize any capital gain or
loss for tax purposes if the Fund is converted to an open-end fund.
Your Board of Trustees believes that the interests of the shareholders are best
served by converting the Fund to an open-end fund and allowing shareholders to
invest in a vehicle that closely resembles their original investment. You should
note that, as described in the Proxy Statement, the expenses of the Fund as an
open-end company would be higher than they have been for a closed-end company.
In addition, you are being asked to consider and approve changes to certain of
the Fund's fundamental investment policies to allow it to better operate as an
open-end mutual fund. You are also being asked to consider and approve a new
Investment Advisory Agreement with OppenheimerFunds, Inc. ("OFI") and a new
Service Plan and Agreement with OppenheimerFunds Distributor, Inc., a subsidiary
of OFI. The new Investment Advisory Agreement will increase the advisory fees
paid by the Fund at current asset levels. If these agreements and the other
proposals presented are approved and the conversion is implemented, shareholders
will have the advantages of being part of the Oppenheimer funds family. These
advantages include the ability to exchange shares of the Fund for shares of any
of over 35 Oppenheimer funds without paying a sales charge. The Board of
Trustees of the Fund believes that the new Agreements are in the best interests
of the Fund and the shareholders. Furthermore, the Board is asking you to
consider and approve the restatement and amendment of the Fund's Declaration of
Trust, to ratify the section of KPMG Peat Marwick as the independent auditors
for the Fund for the fiscal year beginning November 1, 1997 and to elect eleven
Trustees of the Fund.
Please read the enclosed proxy statement for complete details on these
proposals. Of course if you have any questions, please contact your financial
advisor or call us at 1-800-525-7048.
As always, we appreciate your confidence in OppenheimerFunds and thank you for
allowing us to manage a portion of your investment assets.
Sincerely,
[Bridget Macaskill signature]
Enclosures
1
<PAGE>
Two World Trade Center, New York, New York 10048-0203
Notice Of Special Meeting Of Shareholders
To Be Held April 16, 1998
To The Shareholders of Oppenheimer World Bond Fund:
Notice is hereby given that a special meeting of the holders of shares of
Oppenheimer World Bond Fund (the "Fund") will be held at 6803 South Tucson Way,
Englewood, Colorado 80112 on April 16, 1998, at 10:00 a.m. Mountain Standard
Time, or any adjournments thereof (the "Meeting"), for the following purposes:
1. To approve a proposal to change the Fund's subclassification under the
Investment Company Act of 1940 from a closed-end management investment
company to an open-end management investment company (Proposal No. 1);
2. To approve changes to certain of the Fund's fundamental investment
policies including its investment objectives (Proposal No. 2);
3. To approve the new Investment Advisory Agreement between the
Fund and OppenheimerFunds, Inc. (the "Adviser")(Proposal No.
3);
4. To approve a new Service Plan and Agreement with OppenheimerFunds
Distributor, Inc. with respect to Class A shares (Proposal No. 4);
5. To approve an Amendment and Restatement of the Fund's Declaration of Trust
(Proposal No. 5);
6. To ratify the selection of KPMG Peat Marwick LLP as the independent
auditors of the Fund for the fiscal year commencing November 1, 1997
(Proposal
No. 6);
7. To elect eleven Trustees to hold office until the next meeting of
shareholders called for the purpose of electing Trustees and until their
successor are elected and shall qualify;
8. To act upon such other matters as may properly come before the meeting or any
adjournment or adjournments thereof.
Shareholders of record at the close of business on January 6, 1998, are entitled
to notice of and to vote at the Meeting. The election of Trustees and the
Proposals are more fully discussed in the Proxy Statement. Please read it
carefully before telling us, through your proxy or in person, how you wish your
shares to be voted. The Board of Trustees of the Fund recommends a vote to elect
each of its nominees as Trustee and in favor of the Proposals. WE URGE YOU TO
SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
January 16, 1998
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Shareholders who do not expect to attend the Meeting are requested to indicate
voting instructions on the enclosed proxy and to date, sign and return it in the
accompanying postage-paid envelope. To avoid unnecessary expense and duplicate
mailings, we ask your cooperation in promptly mailing your proxy no matter how
large or small your holdings may be.
-2-
<PAGE>
OPPENHEIMER WORLD BOND FUND
Two World Trade Center, New York, New York 10048-0203
PROXY STATEMENT
Special Meeting Of Shareholders
To Be Held April 16, 1998
This Proxy Statement is furnished to the shareholders of Oppenheimer World Bond
Fund (the "Fund") in connection with the solicitation by the Fund's Board of
Trustees of proxies to be used
at a Special Meeting of Shareholders to be held at 6803 South Tucson Way,
Englewood, Colorado 80112, at 10:00 A.M., Denver time, on April 16, 1998, or any
adjournments thereof (the "Meeting"). It is expected that the mailing of the
Proxy Statement will be made on or about January 16, 1998. For a free copy of
the annual report covering the operations of the Fund for the fiscal year ended
October 31, 1997, call Shareholder Financial Services, Inc., the Fund's transfer
agent, at 1-800-647-7374.
The enclosed proxy, if properly executed and returned, will be voted (or counted
as an abstention or withheld from voting) in accordance with the choices
specified thereon, and will be included in determining whether there is a quorum
to conduct the Meeting. The proxy will be voted in favor of the Proposals unless
a choice is indicated to vote against or to abstain from voting on a
Proposal. The proxy will be voted in favor of the nominees for Trustee named in
this Proxy Statement unless a choice is indicated to withhold authority to vote
for all listed nominees or any individual nominee. Shares owned of record by
broker-dealers for the benefit of their customers ("street account shares") will
be voted by the broker-dealer based on instructions received from its customers.
If no instructions are received, the broker-dealer may (if permitted under
applicable stock exchange rules), as record holder, vote such shares in the same
proportion as that broker-dealer votes street account shares for which voting
instructions were timely received ("broker non-votes"). Abstentions and broker
non-votes will be counted for purposes of determining a quorum and will have the
same effect as a vote against a proposal. If a shareholder executes and returns
a proxy but fails to indicate how the votes should be cast, the proxy will be
voted in favor of the election of each of the nominees named herein for Trustee
and in favor of each Proposal.
The proxy may be revoked at any time prior to the voting by: (1)
writing to the Secretary of the Fund at Two World Trade Center,
Suite 3400, New York, New York 10048-0203; (2) attending the Meeting and voting
in person; or (3) signing and returning a new proxy (if returned and received in
time to be voted).
The cost of the preparation and distribution of these proxy materials is an
expense of the Fund. In addition to the solicitation of proxies by mail, proxies
may be solicited personally or by telephone by officers or employees of the
Fund's current transfer agent, Shareholder Financial Services, Inc. (a
subsidiary of OppenheimerFunds, Inc., the Fund's investment adviser), or by
officers or employees of the Fund's investment adviser; any expenses so incurred
will also be borne by the Fund. Proxies may also be solicited by a proxy
solicitation firm hired at the Fund's expense for such purpose. Brokers, banks
and other fiduciaries may be required to forward soliciting materials to their
principals and to obtain authorization for the execution of proxies. For those
services they will be reimbursed by the Fund for their out-of-pocket expenses.
Shares Outstanding and Entitled to Vote. As of January 6, 1998, the record date,
there were 6,615,505 shares of the Fund issued and outstanding. All shares of
the Fund have equal voting rights as to the election of Trustees and as to the
proposals described herein, and the holders of shares are entitled to one vote
for each share (and a fractional vote for a fractional share) held of record at
the close of business on the record date. As of the record date, the only person
know by the management of the Fund to own or be the beneficial owner of 5% or
more of the outstanding shares of the Fund was Paine Webber Incorporated, 1000
Harbor Boulevard, 6th Floor, Union City, New Jersey 07087-6727, which owned of
record 1,567,359 shares (23.69% of the shares) and Smith Barney, Inc., 388
Greenwich Street, 30th Floor, New York, New York 10013-2375, which owned 452,306
shares (6.84% of the shares)
APPROVAL OF A CHANGE IN THE FUND'S SUB CLASSIFICATION
UNDER THE INVESTMENT COMPANY ACT OF 1940 FROM A
CLOSED-END MANAGEMENT INVESTMENT COMPANY TO AN OPEN-END
MANAGEMENT INVESTMENT COMPANY
(Proposal No. 1)
BACKGROUND OF THE PROPOSAL
For the reasons set forth in detail below, the Board of Trustees of the Fund,
at a meeting held on October 9, 1997, considered the alternatives and determined
that it was in the best interests of the shareholders to convert the Fund to an
open-end fund. Accordingly, the Board approved the submission to the
shareholders of a proposal to convert the Fund from a closed-end investment
company to an open-end investment company (the "Conversion").
In connection with the Conversion, the Trustees also considered and approved
an amendment of the Fund's sub-classification under the Investment Company Act
of 1940 (the "Act") from a closed- end management investment company to an
open-end management investment company and the amendment and restatement of the
Fund's Declaration of Trust to provide for such Conversion. The Board of
Trustees also considered and approved new contractual arrangements for the
management and distribution of the Fund as an open-end investment company. Each
of the foregoing is subject to approval by the shareholders.
If the Fund is converted to an open-end management investment company,
shareholders will have the right to redeem their shares at a price based on the
net asset value of the shares rather than a price set in the market.
Shareholders also will have the ability to purchase additional shares at a price
based on the net asset value of the shares plus any applicable sales charge. All
of the Proposals must be approved by the requisite shareholder vote for the
Conversion to be implemented. If each Proposal is not approved by the
shareholders, the Fund will continue as a closed-end investment company.
EVALUATION BY THE BOARD OF TRUSTEES
In making its determination to recommend the Conversion to the shareholders,
the Board of Trustees considered, among other things: (i) the principal
differences between a closed-end fund and an open-end fund (as discussed herein)
and the relative advantages and disadvantages of each; and (ii) that the
conversion would allow the shareholders the ability to continue their
investments in a vehicle that closely resembles what they were seeking when they
invested in the Fund. In addition, the Board considered the capability of
OppenheimerFunds, Inc. ("OFI") to continue to act as investment adviser for the
Fund. The Board also considered the capability of OppenheimerFunds Distributor,
Inc. (the "Distributor"), an affiliate of OFI, to engage in an ongoing
distribution of Fund shares if Proposal No. 4 is approved.
For the reasons set forth in this Proxy Statement, the Board of Trustees
concluded that it was in the best interests of the shareholders to convert the
Fund into an open-end investment company.
DIFFERENCES BETWEEN FUND OPERATIONS
AS AN OPEN-END AND CLOSED-END INVESTMENT COMPANY
The Fund is currently registered as a "closed-end" management investment
company under the Act. Closed-end investment companies neither redeem their
outstanding shares nor generally engage in the continuous sale of new
securities, and thus operate with a relatively fixed capitalization. The shares
of closed-end investment companies are normally bought and sold on national
securities exchanges. The Fund's shares are currently traded on The New York
Stock Exchange, Inc. ("NYSE" under the symbol "OWB"). The Fund's shares will be
delisted from the NYSE upon effectiveness of the registration statement pursuant
to which the Fund offers its shares as an open-end investment company.
In contrast, open-end management investment companies, commonly referred to as
"mutual funds," issue redeemable securities. The holders of redeemable
securities have the right to surrender those securities to the mutual fund and
obtain in return their proportionate share of the value of the fund's net assets
(less any redemption fee or deferred sales charge charged by the fund). No
redemption fees or deferred sales charges will be applicable to the outstanding
shares of the Fund received as a part of the conversion. Many mutual funds
(including the Fund, if the proposed Conversion is effected) also continuously
issue new shares to investors through the fund's distributor at the public
offering price at the time of such issuance.
Some of the legal and practical differences between operations of the Fund as
a closed-end and an open-end investment company are as follows:
o ACQUISITION AND DISPOSITION OF SHARES. If the Fund is converted into an
open-end investment company, the Fund's shares will no longer be listed on the
NYSE and investors wishing to acquire shares of the Fund would be able to
purchase them from the Distributor or any broker-dealer or financial institution
that has a sales agreement with the Distributor at the public offering price
(net asset value plus any applicable sales charge). Shareholders desiring to
realize the value of their shares would be able to do so by exercising their
right to have such shares redeemed by the Fund at the next determined current
net asset value. The Fund's net asset value per share is calculated by dividing
(i) the value of its portfolio securities plus all cash and other assets
(including accrued interest and dividends received but not collected) less all
liabilities (including accrued expenses) by (ii) the number of outstanding
shares of the Fund. The Securities and Exchange Commission (the "SEC") generally
requires open-end investment companies to value their assets on each business
day in order to determine the current net asset value on the basis of which
their shares may be redeemed by shareholders or purchased by investors. It is
anticipated that the net asset value of the Fund may be published daily by
leading financial publications.
o ELIMINATION OF DISCOUNT. Converting the Fund into an open-end fund will
eliminate immediately any market discount from net asset value. If the
Conversion is approved by the shareholders, the market discount may be reduced
or the shares may trade at a premium prior to the date of any conversion to
open-end status to the extent investors are purchase shares in the open market
in anticipation of a prospective open-ending or in order to avoid the payment of
sales charges which will be in effect after the Conversion.
o PORTFOLIO MANAGEMENT. Because a closed-end investment company does not have to
redeem its shares, it may keep all of its assets fully invested and make
investment decisions without having to adjust for cash inflows and outflows from
continuing sales and redemptions of its shares. In contrast, open-end funds may
be subject to pressure to sell portfolio securities at disadvantageous times or
prices to satisfy such redemption requests. OppenheimerFunds, Inc., the Fund's
Adviser, believes that the Fund should have no difficulty in satisfying
redemption requests or in otherwise operating as an open-end fund. The Fund's
current primary investment objective is high current income consistent with the
preservation of capital and its secondary objective is capital appreciation. The
Board is recommending that shareholders of the Fund approve a change to the
Fund's investment objective to be a primary investment objective of seeking
total return, with a secondary investment objective of seeking income when
consistent with total return. That proposed change is more fully described in
Proposal No. 2 below. If the Conversion and the other Proposals presented at the
meeting are approved, the Trustees do not believe that converting the Fund to an
open-end fund will adversely affect investment performance.
o EXPENSES; POTENTIAL NET REDEMPTIONS. If the Fund is converted to an open-end
fund, the shares will become Class A shares and will bear their allocable share
of the Fund's expenses. Open-end
funds are generally more expensive to operate and administer than closed-end
funds and it is expected that the Fund's expense ratio will be higher than it is
currently. Please refer to the comparative expense information below for a
comparison of the expenses of the Fund as an open-end as opposed to a closed-end
fund. The higher expenses of the Fund as an open-end fund may reduce the
distributions paid by the Fund. Expenses of operation as an open-end fund not
currently borne by the Fund include the costs associated with the distribution
of the Fund's shares (see Proposal No. 4 regarding approval of a Distribution
and Service Plan and Agreement), higher transfer agency expenses. In addition,
the Fund might be required to sell portfolio securities in order to meet
redemptions, thereby resulting in realization of gains (or losses). The Fund's
expense ratio could be adversely affected by significant net redemptions. In the
unlikely event
the Fund's asset base is reduced to such a small size as to render the Fund no
longer economically viable, the Board might consider alternatives to continuing
the Fund's operations, including merging the Fund with another investment
company or liquidating the Fund. o STATE REGISTRATION REQUIREMENTS. As a
closed-end fund listed on the NYSE, the Fund does not currently bear the expense
of registering the sale of its shares with state securities commissions.
However, as a result of open-ending and making a continuous offering of its
shares, the Fund will be required to register the sale of its shares with state
securities commissions and will incur the costs related to such registration.
o COMPARATIVE EXPENSE INFORMATION. Set forth below are tables that compare
current and pro forma expenses based on assets and expenses for the fiscal year
ended October 31, 1997. The pro forma fees and expenses are those estimated to
be incurred if the Fund is converted to an open-end fund and the new Investment
Advisory Agreement and 12b-1 plans become effective or are implemented.
SUMMARY OF FUND EXPENSES
Below is a summary of the expenses which were incurred by the Fund for the
fiscal year ended October 31, 1997 while the Fund operated as a closed-end
investment company
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases (as a % of offering price) None
Maximum Deferred Sales Load* None
Maximum Sales Load Imposed on Reinvested Dividends None
Redemption Fee None
Exchange Fee N/A
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* Purchases and sales made on the NYSE are subject to brokerage commissions.
Customarily, these are approximately 1% but may be less or more than 1%
depending on the size of the transaction, the broker selected and other
factors.
ANNUAL FUND OPERATING EXPENSES AS OF October 31, 1997 (AS A % OF AVERAGE NET
ASSETS)
Management Fee 0.65%
12b-1 Fee none
Other Expenses 0.53%
Total Fund Operating Expenses 1.18%
PRO FORMA SUMMARY OF FUND EXPENSES
The following table summarizes the expenses expected to have been incurred if
the Fund operated as an open-end fund during the last fiscal year ended October
31, 1997 (with $55 million of assets) under the new investment advisory, 12b-1
plans and other agreements and the new capital structure of three classes of
shares: Class A with a front-end sales load and Class B and Class C sold without
a front-end sales load but with different contingent deferred sales
arrangements.
Shareholder Transaction Expenses
Class A Class B Class C
Shares Shares Shares
Maximum Sales Charge 4.75%(1) None None
on Purchases (as a % of
offering price)
Maximum
Deferred Sales None(2) 5% in the 1% if
Charge (as a % first year shares
of the lower declining are
of the original to 1% in redeemed
purchase price the sixth within 12
or redemption year and months of
proceeds) eliminated purchase
thereafter
Maximum
Sales Charge on None None None
Reinvested Dividends
Exchange Fee None None None
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(1) Shareholders will not pay a sales charge in connection with the Conversion.
The sales charge will be applicable to additional purchases of Class A shares
subsequent to the Conversion.
(2) Purchases of Class A shares made after the Conversion of $1 million or
more($500,000 or more for purchases by certain Retirement Plans), in Class A
shares, may be subject to a sales charge of up to 1% if those shares are sold
within 12 calendar months from the end of the calendar month during which they
were purchased.
ESTIMATED ANNUAL FUND OPERATING EXPENSES AS OF October 31, 1997 (AS A % OF
AVERAGE NET ASSETS)
Class A Class B Class C
Shares Shares Shares
Management Fee 0.75% 0.75% 0.75%
12b-1 Fee(1) 0.25% 1.00% 1.00%
Other Expenses 0.33% 0.33% 0.33%
Total Fund Operating
Expenses 1.33% 2.08% 2.08%
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(1) The numbers in the chart above are based upon estimates of the Fund's
expenses it would have incurred as an open-end investment company in its last
fiscal year ended October 31, 1997. The 12b-1 Service Plan Fees for Class A
shares are service fees (the maximum fee is 0.25% of average annual net assets
of that class). For Class B and Class C shares, the 12b-1 Distribution and
Service Plan Fees are the service fees (the maximum fee is 0.25%) and the annual
asset-based sales charges of 0.75%. The actual expenses for each class of shares
in future years may be more or less than the numbers in the chart, depending on
a number of factors, including changes in the actual value of the Fund's assets
represented by each class of shares.
EXAMPLES
To try to show the effect of these expenses on an investment over time, we have
created the hypothetical examples shown below. Assume that you make a $1,000
investment in each class of shares of the Fund, that the Fund's annual return is
5%, and that its operating expenses for each class are the ones shown in the
Annual Fund Operating Expenses table above.
CURRENT
Under the Fund's current organization as a closed-end mutual fund, you would pay
the following expenses over the indicated periods in the Fund.
1 Year $ 12
3 Years $ 37
5 Years $ 65
10 Years $143
PRO FORMA
The pro forma information is the expected business expenses of the Oppenheimer
World Bond Fund as an open-end investment company after giving effect to the
reorganization. All amounts shown are a percentage of net assets of each class
of each of the funds.
If you were to redeem your shares at the end of each period shown below, your
investment would incur the following expenses by the end of 1, 3, 5 and 10
years:
A B C
1 Year $ 60 $ 71 $ 31
3 Years $ 88 $ 95 $ 65
5 Years $117 $132 $112
10 Years $200 $204 $241
If you did not redeem your investment, it would incur the following expenses:
A B C
1 Year $ 60 $ 21 $ 21
3 Years $ 88 $ 65 $ 65
5 Years $117 $112 $112
10 Years $200 $204 $241
* In the first example, expenses include the Class A initial sales charge and
the applicable Class B or Class C contingent deferred sales charge. In the
second example, Class A expenses include the initial sales charge, but Class B
and Class C expenses do not include contingent deferred sales charges. The Class
B expenses in years 7 through 10 are based on the Class A expenses shown above,
because the Fund automatically converts your Class B shares into Class A shares
after 6 years. Because of the asset-based sales charge and the contingent
deferred sales charge on Class B and Class C shares, long term Class B and Class
C shareholders could pay the economic equivalent of more than the maximum
front-end sales charge allowed under applicable regulations. For Class B
shareholders, the automatic conversion of Class B shares to Class A shares is
designed to minimize the likelihood that this will occur.
The Examples Should Not Be Considered Indications of past or Future Expenses or
Performance and Actual Expenses or Performance May Vary from Those Shown.
o VOTING RIGHTS. If the Conversion and the other Proposals presented at this
meeting are approved, there will be three classes of shares of Common Stock of
the Fund. The current shares will become Class A shares and, in addition, Class
B and Class C shares will be created. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally. Only shares of a
particular class vote as a class on matters that affect that class alone.
Opportunities to vote may become less frequent if the Fund converts to open-end
status because the Fund will not hold shareholder meetings unless required to do
so by the Act. Massachusetts law provides that registered investment companies
are not required to hold annual shareholders' meetings as long as there is no
requirement under the Act which must be met by convening shareholders' meetings.
The Fund has been required to hold an annual shareholders' meeting by the
regulations of the NYSE but if the Conversion is approved, the Fund's shares
will be delisted and the Fund will not hold annual meetings in any year in which
it is not required by the Act to do so.
By not having to hold annual shareholder meetings, the Fund would save the
costs of preparing proxy materials and soliciting shareholders' votes on the
usual proposals contained therein. Based on the number of outstanding shares and
shareholders as of the record date, such costs would aggregate approximately
$4,670 per year. Under the Act, the Fund would be required to hold a shareholder
meeting if the number of Trustees elected by the shareholders were less than a
majority of the total number of Trustees, or if a change were sought in the
fundamental investment policies of the Fund or the Fund's status (such as, for
example, a change from open-end to closed-end status), among other things.
o DIVIDEND REINVESTMENT PLAN. Current shareholders may participate in the Fund's
current Dividend Reinvestment Plan. Under the Fund's Plan, Shareholder Financial
Services, Inc., as Plan Agent, pools dividends payable to shareholders who are
participants in the Plan, purchases shares on the open market on behalf of the
Plan and then allocates shares and a proportionate share of the brokerage
commissions to each participant. If the proposals presented at this meeting are
approved, shareholders would have the opportunity to reinvest dividends and
capital gains distributions in shares of the Fund, at net asset value.
o SHAREHOLDER SERVICES. If the Fund is converted into an open-end investment
company, the same services will be made available to shareholders of the Fund as
are available to shareholders of each of the open-end Oppenheimer funds. Such
services include: (1) an automatic purchasing plan, (2) a systematic withdrawal
plan, (3) an Exchange Privilege which allows shareholders of the Fund to
exchange their shares for shares of certain other Oppenheimer funds and (4) the
ability to effect various transactions by telephone including by Phone Link, a
24-hour automated telephone system.
o DISTRIBUTION PLANS. An open-end investment company, unlike a closed-end
investment company, is permitted to reimburse the Distributor for a portion of
its costs incurred in connection with the personal service and the maintenance
of shareholder accounts by adopting a plan of distribution pursuant to Rule
12b-1 under the Act.
If the Fund is converted to a mutual fund and if Proposal No. 4 is approved by
shareholders, the Fund will adopt a Service Plan pursuant to Rule 12b-1 in order
to compensate the Distributor for services provided and activities undertaken
for the personal service and the maintenance of shareholder accounts. See
Proposal No. 4 below.
o MINIMUM INVESTMENT AND INVOLUNTARY REDEMPTIONS. If the Fund is converted to an
open-end fund, it will adopt requirements for future shareholders that an
initial investment in Fund shares must be in a specified minimum amounts, in
order to reduce the administrative burdens incurred in monitoring numerous small
accounts. Additionally, any subsequent investments by all shareholders must be
in specified minimum amounts. The Fund expects that the minimum initial purchase
for future shareholders will be $1,000 ($25 if the account is opened through
certain plans, or for pension and profit-sharing plans and IRAs, $250).
Additional investments may be made in the amount of $25 or greater. The Fund
reserves the right to redeem, upon notice and at net asset value, the shares of
any shareholder, other than a shareholder that hold shares in an IRA or other
tax-deferred retirement plan, whose shares have a value of less than $200 as a
result of redemptions or repurchases, or such other amount as may be fixed by
the Board of Trustees. The Fund will notify such shareholder that the value of
his or her shares is less than the applicable amount and allow the shareholder
to make additional investments in an amount which will increase the value of the
account to at least the applicable amount before the redemption.
o QUALIFICATION AS A REGULATED INVESTMENT COMPANY. The Fund intends to continue
to qualify for treatment as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"), after conversion to open-end
status, so that it will continue to be relieved of federal income tax on that
part of its investment company taxable income and net capital gain that is
distributed to its shareholders.
CONVERSION TO AN OPEN-END INVESTMENT COMPANY
If the Conversion and the other Proposals presented at this meeting are
approved, the Board will take such other actions as are necessary to effect the
Conversion. The Conversion of the Fund to an open-end investment company will be
accomplished by: (i) the filing of an Amendment and Restatement of Declaration
of Trust for the Fund with the Secretary of State of the Commonwealth of
Massachusetts; (ii) changing the Fund's subclassification under the Act from a
closed-end management investment company to an open-end management investment
company; and (iii) the filing of a registration statement under the Securities
Act of 1933, as amended, and the Act with the SEC. It is expected that the
registration statement will be filed before the date of the meeting and will
become effective on the date of the Conversion.
Although management will use all practicable measures to keep costs at a
minimum, certain costs will be incurred, many of which will be non-recurring, in
connection with the Conversion, including costs associated with the seeking of
necessary government clearances, the preparation of a proxy statement,
registration statement and prospectus as required by federal securities laws
(including printing, mailing and legal costs) and the payment of necessary
filing fees under the securities laws of various states.
Neither the Fund nor its shareholders is expected to realize any gain or loss
for federal income tax purposes as a result of the Conversion. However,
shareholders will recognize a gain or loss if they later redeem their shares to
the extent that the redemption proceeds are greater or lesser than the
respective adjusted tax basis of their shares. Payment for any such redemption
generally will be made within seven days after receipt of a proper request for
redemption (in accordance with redemption procedures specified in the
prospectus). Such payment may be postponed or the right of redemption suspended
under unusual circumstances that affect the ability to value the securities in
the Fund's portfolio or when an emergency makes it not reasonably practicable
for the Fund to dispose of portfolio securities or fairly to determine the value
of its net assets. If the proposal to open-end the Fund and the other proposals
presented at this meeting are not approved by the shareholders, the Fund will
continue to act as a closed-end investment company.
VOTE REQUIRED
Vote Required.
An affirmative vote of the holders of a "majority" (as defined in the Investment
Company Act) of all outstanding voting securities of the Fund is required for
approval of the Agreement; the classes do not vote separately. Such "majority"
vote is defined in the Investment Company Act as the vote of the holders of the
lesser of: (i) 67% or more of the voting securities present or represented by
proxy at the shareholder meeting, if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy, or (ii) more
than 50% of the outstanding voting securities. The Board of Trustees recommends
a vote in favor of approving this Proposal.
APPROVAL OF CHANGES TO CERTAIN OF THE
FUND'S FUNDAMENTAL INVESTMENT POLICIES
(Proposal No. 2)
The Adviser proposes that certain of the Fund's fundamental investment policies
be changed, as described below, to give the Fund further investment flexibility.
An investment policy that has been designated as "fundamental" is one that
cannot be changed without the requisite shareholder approval described below
under "Vote Required." Non- fundamental investment policies may be changed by
the Adviser in consultation with and approval by the Board of Trustees without
the expense and delay of seeking shareholder approval.
A vote in favor of this Proposal shall be a vote in favor of all proposed
investment policy changes described in this Proposal. If approved, these
investment policy changes will be implemented whether or not shareholders
approve converting the Fund to an open-end fund. If approved, the effective date
of this Proposal may be delayed until the Fund's registration statement is
updated to reflect these changes.
At a meeting held December 11, 1997 the Fund's Board of Trustees, including a
majority of its independent Trustees, determined that the best interests of the
Fund would be served by allowing the Fund greater investment flexibility, as set
forth in these proposed investment policy changes, in response to market or
regulatory developments.
o Investment Objectives. Currently, the Fund's primary investment objective is
to seek high current income consistent with preservation of capital. Its
secondary objective is capital appreciation.
The Adviser recommends that the Fund change its investment objectives to a
primary investment objective of seeking total return, and a secondary investment
objective of seeking income when consistent with total return. Total return is
the change in value of an investment in shares of a fund over time, taking into
account changes in share price, from reinvested
income and capital appreciation. As an open-end global income fund, the Fund
will continue to invest primarily in government bonds, both domestic and
foreign.
The Adviser will distinguish the Fund from Oppenheimer International Bond
Fund, which has the same investment objective as that proposed for the Fund but
invests only in foreign bonds. The Adviser will also distinguish the Fund from
Oppenheimer Strategic Income Fund, which seeks a high level of current income
and invests in corporate and government bonds, both domestic and foreign.
oBorrowing. As a matter of fundamental policy, the Fund currently may borrow up
to 10% of its total assets and invest the borrowed funds. After any such
borrowing, as a matter of fundamental policy, the Fund's total assets, less its
liabilities other than borrowings, must be equal to at least 300% of all
borrowings, as required by the Investment Company Act of 1940 (the "Investment
Company Act"). In addition, subject to the 10% limit, the Fund may borrow to
finance repurchases and/or tenders of its shares and may also borrow for
temporary purposes in an amount not exceeding 5% of the value of the Fund's
total assets. The Fund also has a fundamental investment restriction that it
cannot borrow, except in conformity with the restrictions stated in its
registration statement under "Borrowing".
The Adviser proposes that these various borrowing policies be deleted, and
replaced with the maximum borrowing limit permitted under the Investment Company
Act. This new borrowing policy would also be a fundamental policy, as required
by sections 8(b)(1) and 13(a)(2) of the Investment Company Act. This new policy
would read as follows:
o The Fund may borrow money from banks on an unsecured basis to buy
securities, and may borrow for temporary, emergency purposes or under
other unusual circumstances, subject to the limits set forth in the
Investment Company Act.
The Investment Company Act currently requires that after any borrowing by an
open-end fund, the fund's total assets, less its liabilities other than
borrowings, must be maintained at least equal to 300% of all borrowings.
Interest on borrowed money is an expense the Fund would not otherwise incur, so
that it may have substantially reduced net investment income during periods of
substantial borrowings. Any investment gains made with the proceeds obtained
from borrowings in excess of interest paid on the borrowings will cause the net
income per share or the net asset value per share of the Fund's shares to be
greater than would otherwise be the case. On the other hand, if the investment
performance of the securities
purchased fails to cover their cost to the Fund (including any interest paid on
the money borrowed), then the net income per share or net asset value per share
of the Fund's shares will be less than would otherwise have been the case. This
speculative factor is known as "leverage."
Although such borrowings would therefore involve additional risk to the Fund,
the Fund will only borrow if such additional risk of loss of principal is
considered by the Adviser to be appropriate in relation to the Fund's investment
objectives. The Adviser will make this determination by examining both the
market for securities in which the Fund invests and interest rates in general to
ascertain that the climate is sufficiently stable to warrant borrowing.
o Lending. The Fund has a fundamental policy that it cannot lend portfolio
securities (with certain exceptions). This current fundamental policy reads as
follows:
o The Fund cannot make loans except through (a) the purchase of debt securities
in accordance with its investment objectives and policies; (b) the lending of
portfolio securities; or (c) the acquisition of securities subject to repurchase
agreements.
The Adviser proposes that, for clarification, this fundamental investment policy
be deleted and replaced with a new fundamental investment policy that would read
as follows:
o The Fund cannot make loans, except that the Fund may purchase debt securities
and enter into repurchase agreements or when-issued, delayed delivery or similar
securities transactions, and may lend its portfolio securities.
o Joint Securities Trading Account. The Fund currently has a fundamental
investment policy that reads as follows:
o The Fund cannot participate on a joint or joint and several basis in any
securities trading account.
The Adviser proposes that this restriction be removed. This restriction might be
interpreted as preventing the Fund from participating in the joint account
available to the other Oppenheimer funds under an Exemptive Order issued by the
SEC. This joint account is used for the pooling of excess cash of the
participating Oppenheimer funds for the purchase of overnight repurchase
agreements. Each fund's liability on any repurchase agreement purchased by the
joint account is limited to its interest in such repurchase agreement. The joint
account provides a convenient and efficient way of aggregating what otherwise
would be the one or more individual transactions for each fund necessary to
manage the daily uninvested cash balances of each fund.
oHedging. The Fund has two related fundamental investment policies that pertain
to the use of hedging instruments, as follows:
o The Fund cannot purchase securities on margin, except that the Fund may make
margin deposits in connection with any of the Hedging Instruments it may use.
o The Fund cannot pledge, hypothecate, mortgage or otherwise encumber its
assets, except to secure permitted borrowings or for the escrow arrangements
contemplated in connection with the use of Hedging Instruments.
The Adviser proposes that these two fundamental policies be amended to allow the
Fund to enter into escrow, collateral and margin arrangements in connection not
only with its hedging instruments, but also with any of its permitted
investments.
These revised fundamental investment policies would read as follows:
o The Fund cannot purchase securities on margin; however, the Fund may
make margin deposits in connection with any of its other investments.
o The Fund cannot mortgage, pledge or hypothecate the Fund's assets; for
purposes of this policy escrow, collateral and margin arrangements
involved with any of its investments are not considered to involve a
mortgage, hypothecation or pledge.
o Commodities. As a matter of fundamental policy, currently "The Fund cannot
invest in . . . (b) commodities or commodity contracts (except that the Fund may
purchase and sell Hedging Instruments whether or not they are considered to be a
commodity or commodity contract); . . ."
This policy prohibits the Fund from trading in physical commodities, and the
Fund does not seek permission to trade physical commodities. However, this
investment policy could be read to prohibit the Fund from buying or selling
options, futures, securities or other instruments backed by, or the investment
return from which is linked to changes in the price of, physical commodities,
including "commodity-linked" notes unless they are hedging instruments. To
resolve any ambiguity as to whether the Fund may invest in those instruments.
The Adviser proposes that this fundamental investment policy be deleted
and replaced with a new policy that is also fundamental, as required by
sections 8(b)(1) and 13(a)(2) of the Investment Company Act of 1940. The
new fundamental policy would read as follows:
o The Fund cannot invest in physical commodities or physical commodity
contracts; however, the Fund may: (i) buy and sell hedging instruments
permitted by any of its other investment policies, and (ii) buy and sell
options, futures, securities or other instruments backed by, or the
investment return from which is linked to changes in the price of,
physical commodities.
The use of derivative instruments requires special skills and knowledge and
investment techniques that are different from what is required for normal
portfolio management. In some cases, the Fund may buy a call option , a futures
contract or a commodity-linked note for the purpose of increasing its exposure
in a particular market segment, which may affect the Fund's net asset value per
share. Risks of commodity-linked notes include risk of loss of principal, risk
of loss of interest, lack of a secondary market, volatility of the instrument,
and counterparty risk.
Vote Required. Vote Required. An affirmative vote of the holders of a "majority"
(as defined in the Investment Company Act) of shares of the Fund is required for
approval of the new investment objectives and policies. The requirements for
such "majority" vote under the Investment Company Act are described in Proposal
No. 1. The Board of Trustees recommends a vote in favor of approving this
Proposal.
APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
(Proposal No. 3)
The Fund has a current Investment Advisory Agreement dated October 22, 1990 with
the Adviser (the "Agreement") which was most recently approved by the Fund's
Board of Trustees, including a majority of the Trustees who are not "interested
persons" (as defined in the Investment Company Act) of the Fund or of the
Adviser, on December 11, 1997. The shareholders of the Fund most recently
approved the existing Investment Advisory Agreement at a meeting held on May 5,
1997. Shareholders are now being asked to approve a new Investment Advisory
Agreement dated the date of the approval in connection with the conversion of
the Fund to an open-ended investment company. A copy of the new Agreement is
included in this Proxy Statement as Exhibit A. The new Agreement will increase
the fees paid by the Fund at current asset levels. If approved by the
shareholders at this meeting, the new Agreement will continue in effect until
December 31, 1999, and thereafter from year to year unless terminated, but only
so long as such continuance is approved in accordance with the Investment
Company Act.
Description of the Current and Proposed Investment Advisory Agreement. Under
both the current and the new Agreements, OppenheimerFunds, Inc. (the "Advisor")
supervises the investment operations of the Fund and the composition of its
portfolio and furnishes the Fund advice and recommendations with respect to
investments, investment policies and the purchase and sale of securities. Under
the current Agreement, the Fund pays the Adviser an advisory fee computed and
paid weekly at an annual rate of 0.65% of the net assets of the Fund at the end
of that week. The Fund also pays the Adviser an annual fee of $18,000, plus
out-of-pocket costs and expenses reasonably incurred, for performing limited
accounting services for the Fund. During the fiscal year ended October 31, 1997,
the Fund paid the Adviser a fee of $359,532 under the Agreement. Under the new
Agreement, the Fund would pay the Advisor an advisory fee, computed daily and
payable monthly under the Agreement to the Manager, based on the average annual
net assets of the Fund at the following annual rates: 0.75% of the first $200
million of average annual net assets; 0.72% of the next $200 million; 0.69% of
the next $200 million; 0.66% of the next $200 million; 0.60% of the next $200
million and 0.58% of average annual net assets in excess of $1 billion. The
Adviser also acts as investment adviser to other funds that have similar or
comparable investment objectives. A list of those funds and the net assets and
advisory fee rates paid by those funds is contained in Exhibit B to this Proxy
Statement.
Both Agreements requires the Adviser, at its expense, to provide the Fund with
adequate office space, facilities and equipment as well as to provide, and
supervise the activities of all administrative and clerical personnel required
to provide effective administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and composition of proxy materials and registration
statements for continuous public sale of shares of the Fund. Expenses not
expressly assumed by the Adviser under the Agreements or by the Distributor of
the Fund's shares are paid by the Fund. The Agreements list examples of expenses
paid by the Fund, the major categories of which relate to interest, taxes,
brokerage commissions, fees to certain Trustees, legal and audit expenses,
custodian and transfer agent expenses, share certificate issuance costs, certain
printing and registration costs, and non-recurring expenses, including
litigation.
Neither the current or the new Agreement contains an expense limitation. Both
Agreements provides that in the absence of willful misfeasance, bad faith or
gross negligence in the performance of its duties or reckless disregard of its
obligations under the Agreement, the Adviser is not liable for any loss
sustained by reason of any investment, or the purchase, sale or retention of any
security, or for any act or omission in performing the services required by the
Agreement. The Agreements also permit the Adviser to act as investment adviser
for any other person, firm or corporation and to use the name "Oppenheimer" in
connection with other investment companies for which it may act as investment
adviser. If the Adviser shall no longer act as investment adviser to the Fund,
the right of the Fund to use the name "Oppenheimer" as part of its name may be
withdrawn.
Brokerage Provisions of the New Agreement. One of the duties of the Adviser
under the Agreement is to arrange the portfolio transactions for the Fund. The
Agreement contains provisions relating to the employment of broker-dealers
("brokers") to effect the Fund's portfolio transactions. In doing so, the
Adviser is authorized by the Agreement to employ such broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company Act, as
may, in its best judgment based on all relevant factors, implement the policy of
the Fund to obtain, at reasonable expense, the "best execution" (prompt and
reliable execution at the most favorable price obtainable) of such transactions.
The Adviser need not seek competitive commission bidding but is expected to be
aware of the current rates of eligible brokers and to minimize the commissions
paid to the extent consistent with the interest and policies of the Fund as
established by its Board of Trustees. Purchases of securities from underwriters
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers include a spread between the bid and asked price. Most
purchases made by the Fund are principal transactions at net prices, and the
Fund incurs little or no brokerage costs.
Under the Agreement, the Adviser is authorized to select brokers that provide
brokerage and/or research services for the Fund and/or the other accounts over
which the Adviser or its affiliates have investment discretion. The commissions
paid to such brokers may be higher than another qualified broker would have
charged if a good faith determination is made by the Adviser that the commission
is fair and reasonable in relation to the services provided. Subject to the
foregoing considerations, the Adviser may also consider sales of shares of the
Fund and other investment companies managed by the Adviser or its affiliates as
a factor in the selection of brokers for the Fund's portfolio transactions.
Description of Brokerage Practices. Subject to the provisions of the Agreement,
and the procedures and rules described above, allocations of brokerage are
generally made by the Adviser's portfolio traders based upon recommendations
from the Adviser's portfolio managers. In certain instances, portfolio managers
may directly place trades and allocate brokerage, also subject to the provisions
of the Agreement and the procedures and rules described above. In either case,
brokerage is allocated under the supervision of the Adviser's officers.
Transactions in securities other than those for which an exchange is the primary
market are generally done with principals or market makers. Brokerage
commissions are paid primarily for effecting transactions in listed securities
or for certain fixed-income agency transactions in the secondary market and are
otherwise paid only if it appears likely that a better price or execution can be
obtained. When the Fund engages in an option transaction, ordinarily the same
broker will be used for the purchase or sale of the option and any transaction
in the securities to which the option relates. When possible, concurrent orders
to purchase or sell the same security by more than one of the accounts managed
by the Adviser or its affiliates are combined. The transactions effected
pursuant to such combined orders are averaged as to price and allocated in
accordance with the purchase or sale orders actually placed for each account.
Option commissions may be relatively higher than those which would apply to
direct purchases and sales of portfolio securities.
Most purchases of money market instruments and debt obligations are principal
transactions at net prices. For those transactions, instead of using a broker
the Fund normally deals directly with the selling or purchasing principal or
market maker unless it is determined that a better price or execution can be
obtained by using a broker. Purchases of these securities from underwriters
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers include a spread between the bid and asked price. The
Fund seeks to obtain prompt execution of such orders at the most favorable net
price.
The research services provided by a particular broker may be useful only to one
or more of the advisory accounts of the Adviser and its affiliates, and
investment research received for the commissions of those other accounts may be
useful both to the Fund and one or more of such other accounts. Such research,
which may be supplied by a third party at the instance of a broker, includes
information and analyses on particular companies and industries as well as
market or economic trends and portfolio strategy, receipt of market quotations
for portfolio evaluations, information systems, computer hardware and similar
products and services. If a research service also assists the Adviser in a non-
research capacity (such as bookkeeping or other administrative functions), then
only the percentage or component that provides assistance to the Adviser in the
investment decision-making process may be paid in commission dollars. The Board
of Trustees permits the Adviser to use concessions on fixed price offerings to
obtain research, in the same manner as is permitted for agency transactions. The
Board also permits the Adviser to use stated commissions on secondary
fixed-income agency trades to obtain research where the broker has represented
to the Adviser that: (i) the trade is not from or for the broker's own
inventory; (ii) the trade was executed by the broker on an agency basis at the
stated commission; and (iii) the trade is not a riskless principal transaction.
The research services provided by brokers broaden the scope and supplement the
research activities of the Adviser, by making available additional views for
consideration and comparisons, and by enabling the Adviser to obtain market
information for the valuation of securities held in the Fund's portfolio or
being considered for purchase. The Board of Trustees, including the
"independent" Trustees of the Fund (those Trustees of the Fund who are not
"interested persons" as defined in the Investment Company Act, and who have no
direct or indirect financial interest in the operation of the Agreement or the
Distribution and Service Plans described below) annually reviews information
furnished by the Adviser as to the commissions paid to brokers furnishing such
services so that the Board may ascertain whether the amount of such commissions
was reasonably related to the value or benefit of such services.
The Adviser and the Transfer Agent. Subject to the authority of the Board of
Trustees, the Adviser is responsible for the day-to-day management of the Fund's
business, pursuant to its Investment Advisory Agreement with the Fund.
Shareholder Financial Services, Inc. ("SFSI"), a subsidiary of the Adviser,
currently acts as primary transfer agent, shareholder servicing agent and
dividend paying agent for the Fund. Fees paid to SFSI are based on the number of
shareholder accounts and the number of shareholder transactions, plus
out-of-pocket costs and expenses. The Fund incurred approximately $15,011 in
expenses for the fiscal year ended October 31, 1997 for services provided by
SFSI. If the proposal to convert the Fund to an open-end investment company is
approved, OppenheimerFunds Services, a division of the Advisor will act as the
transfer agent, shareholder servicing agent and dividend paying agent for the
Fund on an at cost basis.
The Adviser (including a subsidiary) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $75 billion as of
September 30, 1997, and with more than 3 million shareholder accounts. The
Adviser is a wholly-owned subsidiary of Oppenheimer Acquisition Corp. ("OAC"), a
holding company controlled by Massachusetts Mutual Life Insurance Company
("MassMutual"). The Adviser, the Distributor and OAC are located at Two World
Trade Center, New York, New York 10048. MassMutual is located at 1295 State
Street, Springfield, Massachusetts 01111. OAC acquired the Adviser on October
22, 1990. As indicated below, the common stock of OAC is owned by (i) certain
officers and/or directors of the Adviser, (ii) MassMutual and (iii) another
investor. No institution or person holds 5% or more of OAC's outstanding common
stock except MassMutual. MassMutual has engaged in the life insurance business
since 1851.
The common stock of OAC is divided into three classes. At September 30, 1997,
MassMutual held (i) all of the 2,160,000 shares of Class A voting stock, (ii)
827,181 shares of Class B voting stock, and (iii) 1,441,473 shares of Class C
non-voting stock. This collectively represented 88.6% of the outstanding common
stock and 95.3% of the voting power of OAC as of that date. Certain officers
and/or directors of the Adviser held (i) 406,728 shares of the Class B voting
stock, representing 8.1% of the outstanding common stock and 3% of the voting
power, and (ii) options acquired without cash payment which, when they become
exercisable, allow the holders to purchase up to 607,342 shares of Class C
non-voting stock. That group includes persons who serve as officers of the Fund,
and Ms. Macaskill and Messrs. Galli and Spiro, who serve as Trustees of the
Fund. Holders of OAC Class B and Class C common stock may put (sell) their
shares and vested options to OAC or MassMutual at a formula price (based on
earnings of the Adviser). MassMutual may exercise call (purchase) options on all
outstanding shares of both such classes of common stock and vested options at
the same formula price. From the period November 1, 1995 to September, 1997, the
only transactions by persons who serve as Trustees of the Fund were by Mr.
Galli, who sold 40,000 shares of Class B OAC common stock to MassMutual for an
aggregate of $4,808,867. Mr. Galli no longer holds any OAC stock or options
The names and principal occupations of the executive officers and directors of
the Adviser are as follows: Bridget A. Macaskill, President, Chief Executive
Officer and a director; Donald W. Spiro, Chairman Emeritus and a director; James
C. Swain, Vice Chairman; O. Leonard Darling, Paula Gabriele, Barbara Hennigar,
James Ruff, Loretta McCarthy and Nancy Sperte, Executive Vice Presidents; Andrew
J. Donohue, Executive Vice President, General Counsel and a director; Robert C.
Doll, Jr., Executive Vice President and a director; Jeremy Griffiths, Executive
Vice President and Chief Financial Officer; George C. Bowen, Senior Vice
President and Treasurer; Peter M. Antos, Victor Babin, Robert A. Densen, Ronald
H. Fielding, Thomas W. Keefer, Robert E. Patterson, Russell Read, Richard
Rubinstein, Arthur Steinmetz, Ralph Stellmacher, John Stoma, Jerry A. Webman,
William L. Wilby, Robert G. Zack and Arthur Zimmer, Senior Vice Presidents.
These officers are located at one of the four offices of the Adviser: Two World
Trade Center, New York, NY 10048; 6803 South Tucson Way, Englewood, Colorado
80112; 350 Linden Oaks, Rochester, NY 14625 and One Financial Plaza, 755 Main
Street, Hartford, CT 06103.
The Administrator. Mitchell Hutchins Asset Management Inc. (the "Administrator")
currently serves as the Fund's Administrator pursuant to an Administration
Agreement between the Fund and the Administrator. The address of the
Administrator, an affiliate of Paine Webber Incorporated, is 1285 Avenue of the
Americas, New York, New York 10019. If the conversion of the Fund to an open-end
investment company and the new Investment Advisory Agreement are approved, the
Fund will no longer need the services of the Administrator and the agreement
with Mitchell Hutchins Asset Management Inc. will be terminated.
Considerations by the Board of Trustees. In connection with the approval of the
new Agreement, the Adviser provided extensive information to the Independent
Trustees. The Independent Trustees were provided with data as to the
qualifications of the Adviser's personnel, the quality and extent of the
services rendered and its commitment to its mutual fund advisory business. The
Independent Trustees also considered data presented by the Adviser showing the
extent to which it had expanded its investment personnel and other services
dedicated to the equity area of its mutual fund advisory activities. Information
prepared specifically for the purpose of assisting the Independent Trustees in
their evaluation of the Agreement included an analysis of the performance and
expenses of the Fund as compared to other similar funds.
Analysis of Nature, Quality and Extent of Services. In determining whether to
approve the new Agreement and to recommend its approval by the Fund's
shareholders, the Independent Trustees particularly considered: (1) the effect
of the investment management fee on the expense ratio of the Fund; (2) the
investment record of the Adviser in managing the Fund, and the investment record
of other investment companies for which it acts as investment adviser;(3) data
as to investment performance, advisory fees and expense ratios of other
investment companies not advised by the Adviser but believed to be in the same
overall investment and size category as the Fund; and (4) additional expenses
that would be incurred by the conversion of the Fund to an open-ended investment
company. The Independent Trustees also considered the following factors, among
others: (1) the necessity of the Adviser maintaining and enhancing its ability
to retain and attract capable personnel to serve the Fund; (2) the Adviser's
overall profitability; (3) pro-forma profitability data giving effect to the
investment management fee but before marketing and promotional expenses
anticipated to be paid by the Adviser and its affiliates; (4) possible economies
of scale; (5) other benefits to the Adviser from serving as investment adviser
to the Fund, as well as benefits to its affiliates acting as principal
underwriter and its division acting as transfer agent to the Fund; (6) current
and developing conditions in the financial services industry, including the
entry into the industry of larger and highly capitalized companies which are
spending and appear to be prepared to continue to spend substantial sums to
engage personnel and to provide services to competing investment companies; and
(7) the financial resources of the Adviser and the desirability of appropriate
incentives to assure that the Adviser will continue to furnish high quality
services to the Fund.
Analysis of Profitability of the Adviser. The Independent Trustees were advised
that the Adviser does not maintain its financial records on a fund-by-fund
basis. However, the Adviser does provide the Independent Trustee on an annual
basis with its allocation of expenses on a fund-by- fund basis. The Independent
Trustees considered information provided by the Adviser regarding its
profitability and also considered comparative information relating to the
profitability of other mutual fund investment managers. The Independent Trustees
also noted the substantial marketing and promotional activities in which the
Adviser and its affiliates engage and propose to engage on behalf of the Fund.
Determination by the Independent Trustees and the Board of Trustees. After
completion of its review, the Independent Trustees recommended that the Board of
Trustees approve, and the Board unanimously approved, the Agreement.
Vote Required. An affirmative vote of the holders of a "majority" (as defined in
the Investment Company Act) of shares of the Fund is required for approval of
the new Investment Advisory Agreement. The requirements for such "majority" vote
under the Investment Company Act are described in Proposal No. 1. The Board of
Trustees, including the Trustees who are not intrested persons of the Fund,
recommends a vote in favor of approving the Investment Advisory Agreement.
APPROVAL OF NEW SERVICE PLAN FOR CLASS A SHARES
(PROPOSAL NO. 4)
It is proposed that the Fund establish three classes of shares -- Class A, B
and C -- and that the Fund enter into a Distribution and Service Plan and
Agreement (a "Plan") with the Distributor with respect to each Class of shares
(the "Plans"). The existing shares of the Fund will be reclassified as Class A
shares effective with the Conversion. The Plan for Class A shares (the "Class A
Plan") is attached as Exhibit C. The Plans were approved on October 9, 1997 by
the Trustees, including the independent Trustees, subject to the approval by the
shareholders of each Class of Shares. Shareholders of the Fund will vote on the
approval of the Class A Plan and OFI as the initial shareholder of Class B and
Class C shares intends to approve the Class B and Class C Plans. The following
is a summary of the terms of the Class A Plan.
If the Class A Plan and the other proposals presented to the meeting are
approved by the shareholders, the Class A Plan will become effective upon the
conversion of the Fund to an open-end investment company. The conversion is
conditioned upon, among other things, approval of the Class A Plan by the
Shareholders of the Fund.
The fees payable by each class of shares of the Fund under the Plans will
consist of a service fee at the annual rate of 0.25% of the average
net assets of the shares and for Class B and Class C plans, an asset based sales
charge at the annual rate of 0.75% of the average net assets of Class B and
Class C shares of the Fund.
The Distributor will be authorized under the Plans to pay broker-dealers,
banks or other entities (the "Recipients") that render assistance in the
distribution of shares or provide administrative support
with respect to shares held by customers. The Distributor uses the service fee
payments to compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of their
customers that hold shares. Services to be provided include, among others,
answering customer inquiries about the Fund, assisting in establishing and
maintaining accounts in the Fund, making the Fund's investment plans available
and providing other services at the request of the Fund or the Distributor.
Payments under the Class A Plan are made by the Distributor quarterly at of an
annual rate not to exceed 0.25% of the average annual net assets of Class A
shares held in accounts of the dealer or its customers. The payments under the
Class A Plan increase the annual expenses of Class A shares.
The Plans provide that payments may be made by OFI or by the Distributor to
the Recipients from its own resources or from borrowings. The Plans may not be
amended to increase materially the amount of payments to be made without the
approval of the relevant class of shareholders of the Fund.
Additional Information. The Distribution and Service Plans provide that while
they are in effect, the selection and nomination of those Trustees of the Fund
who are not "interested persons" of the Fund is committed to the discretion of
the Independent Trustees. This does not prevent the involvement of others in
such selection and nomination if the final decision on any such selection or
nomination is made by a majority of the Independent Trustees.
Under either Distribution and Service Plan, no payment for service fees 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 does not exceed a
minimum amount, if any, that may be determined from time to time by a majority
of the Independent Trustees. Under each plan, the Board of Trustees has set the
fee at the maximum rate and set no minimum amount. The Distribution and Service
Plan permits the Distributor and the Manager to make additional distribution
payments to Recipients from their own resources (including profits from
management 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.
The service fee payable under the Class A Plan are subject to reduction or
elimination under the limits imposed by the Conduct Rules of the National
Association of Securities Dealers, Inc. ("NASD Rules"). The Class A Plan is
intended to comply with NASD Rules and Rule 12b-1 adopted under the Act. Rule
12b-1 requires that the selection and nomination of Trustees who are not
"interested persons" of the Fund be committed to the discretion of the
Independent Trustees and that the Trustees receive quarterly reports on the
payments made under the Plans and the purposes for those payments.
PROPOSED SALES ARRANGEMENTS
After the Conversion, the Distributor currently intends to sell Class A shares
with a maximum initial sales load of 4.75% for purchases of less than $25,000.
Purchases of Class A shares in the amount of $1 million ($500,000 or more for
purchases by certain retirement plans) or more would be made without an initial
sales load but will be subject to a contingent deferred sales charge of 1% if
the shares are redeemed within 12 months of purchase. Class B shares will be
sold without an initial sales load but would be subject to a maximum contingent
deferred sales charge ("CDSC") of 5% which decreases over time if the shares are
redeemed within six years after the end of the calendar month of their purchase.
Class B shares convert automatically to Class A shares after 6 years. Class C
shares would be sold without an initial sales load but would be subject to a
CDSC of 1% if the shares are redeemed within one year after the end of the
calendar month in which they were purchased. Class A shares of the Fund may be
exchanged for Class A shares of any eligible Oppenheimer Fund, Class B shares of
the Fund may be exchanged for Class B shares of any eligible Oppenheimer Fund
and Class C shares of the Fund may be exchanged for Class C shares of any
eligible Oppenheimer Fund.
EVALUATION BY THE BOARD OF TRUSTEES
The Trustees, including the Qualified Trustees, believe the adoption of a
distribution plan under Rule 12b-1 is essential to and a part of the purpose of
each class of shares of the Fund in selling its shares to those persons who wish
to avail themselves of the services of a broker-dealer. The Trustees took into
account the competitive market environment in which the Fund will operate as an
open-end investment company. More specifically, the Trustees recognized the need
to provide adequate compensation to broker-dealers who serve existing
shareholders or offer the Fund to prospective shareholders. Without such
service, the Fund would incur a substantial risk that it could not maintain or
increase its assets, threatening the viability of the Fund as an investment
company. In addition, the Trustees believe that maintaining a plan under Rule
12b-1 is an essential part of distributing an open-end fund. In their
deliberations, the Trustees considered many pertinent factors such as the levels
of fees prescribed by the Class A Plan. The Board also considered the potential
benefit to the Fund of the proposed method of distribution through the
Distributor; the potential conflicts of interest inherent in the use of Fund
assets to pay for distribution expenses; the relationship of the fees under the
Class A Plan to the overall cost structure of the Fund; and the potential
benefits to existing shareholders of continued asset growth, including the
potential to benefit from economies of scale. Based upon their review, the
Trustees, including a majority of the Qualified Trustees, determined that there
is a reasonable likelihood that the Class A Plan will benefit the Fund and its
shareholders.
The Board concluded that it is likely that because the Distribution and
Service Plan provides an alternative means for investors to acquire Fund shares
without paying an initial sales charge, it will benefit shareholders of the Fund
by enabling the Fund to maintain or increase its present asset base in the face
of competition from a variety of financial products. The Trustees recognized
that payments made pursuant to the Distribution and Service Plans may be offset
in part by economies of scale associated with the growth of the Fund's assets.
With larger assets, the Fund's shareholders should benefit as the Distribution
and Service Plans should help maintain Fund assets. Costs of shareholder
administration and transfer agency operations will be spread among a larger
number of shareholders as the Fund grows larger, thereby potentially reducing
the Fund's expense ratio. The Manager has advised the Trustees that investing
larger amounts of money is made more readily, more efficiently, and at lesser
cost to the Fund. The Board found that a positive flow of new investment money
is desirable primarily to offset the potentially adverse effects that might
result from a pattern of net redemptions. Net cash outflow increases the
likelihood that the Fund will have to dispose of portfolio securities for other
than investment purposes. Net cash inflow minimizes the need to sell securities
to meet redemptions when investment considerations would dictate otherwise,
reduces daily liquidity requirements, and may assist in a prompt restructuring
of the portfolio without the need to dispose of present holdings.
Stimulation of distribution of mutual fund shares and providing for
shareholder services and account maintenance services by payments to a mutual
fund's distributor and to brokers, dealers, banks and other financial
institutions has become common in the mutual fund industry. Competition among
brokers and dealers for these types of payments has intensified. The Trustees
concluded that promotion, sale and servicing of mutual fund shares and
shareholders through various brokers, dealers, banks and other financial
institutions is a successful way of distributing shares of a mutual fund. The
Trustees concluded that without an effective means of selling and distributing
Fund shares and servicing shareholders and providing account maintenance,
expenses might be higher on a per share basis than those of some competing
funds. By providing an alternative means of acquiring Fund shares, the
Distribution and Service Plan proposed for shareholder approval is designed to
stimulate sales by and services from many types of financial institutions.
The Trustees recognize that the Manager will benefit from the Distribution
and Service Plan through larger investment advisory fees resulting from an
increase in Fund assets, since its fees are based upon a percentage of net
assets of the Fund. The Board, including each of the Independent Trustees,
determined that the Proposed Service Plan is in the best interests of the Fund,
and that its adoption has a reasonable likelihood of benefiting the Fund and its
Class A shareholders. In its annual review of the Distribution and Service Plan,
the Board will consider the continued appropriateness of the Distribution and
Service Plan, including the level of payments provided for therein.
Vote Required. Pursuant to Rule 12b-1 under the Investment Company Act, an
affirmative vote of the holders of a "majority" (as defined in the Investment
Company Act) of the Fund's Class A voting securities is required for approval of
the Distribution and Service Plan. The requirements for such "majority" vote
under the Investment Company Act are described in Proposal No. 1. A vote in
favor of this Proposal shall be deemed a vote to approve the proposed
Distribution and Service Plan. The Board of Trustees, including the Trustees who
are not intrested persons of the Fund, recommends a vote in favor of approving
this Proposal.
TO APPROVE AN AMENDMENT AND RESTATEMENT OF
THE DECLARATION OF TRUST FOR THE FUND.
(PROPOSAL NO. 5)
The shareholders of the Fund are being asked to approve an amendment and
restatement of the Fund's Declaration of Trust to revise the Declaration to a
form customary for an open-end fund that continually offers to issue and redeem
its shares at net asset value, including an amendment to the provision regarding
the election of three classes of Trustees with
overlapping three year terms. A copy of the proposed Articles of Amendment and
Restatement is attached to this Proxy Statement as Exhibit D.
Vote Required. An affirmative vote of the holders of a "majority" (as defined in
the Investment Company Act) of shares of the Fund is required for approval of
the Amendment and Restatement of the Declaration of Trust for the Fund. The
requirements for such "majority" vote under the Investment Company Act are
described in Proposal No. 1. The Board of Trustees, including the Trustees who
are not interested persons of the Fund, recommend that the shareholders of the
Fund approve the amendment and restatement of the Declaration of Trust.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(Proposal No. 6)
The Investment Company Act requires that independent auditors ("auditors") be
selected annually by the Board of Trustees and that such selection be ratified
by the shareholders at the next-convened annual meeting of the Fund, if one is
held. The Board of Trustees of the Fund, including a majority of the Trustees
who are not "interested persons" (as defined in the Investment Company Act) of
the Fund or the Adviser, at a meeting held October 9, 1997, selected KPMG Peat
Marwick LLP ("KPMG") as auditors of the Fund for the fiscal year beginning
November 1, 1997. KPMG also serves as auditors for certain other funds for which
the Adviser acts as investment adviser. At the Meeting, a resolution will be
presented for the shareholders' vote to ratify the selection of KPMG as
auditors. Representatives of KPMG are not expected to be present at the Meeting
but will be available should any matter arise requiring their presence.
Vote Required. An affirmative vote of the holders of a "majority" (as defined in
the Investment Company Act) of shares of the Fund is required for ratification
of the selection of independent auditors. The
requirements for such "majority" vote under the Investment Company Act are
described in Proposal No. 1. The Board of Trustees recommends approval of the
selection of KPMG Peat Marwick LLP as auditors of the Fund.
ELECTION OF TRUSTEES
At the Meeting, eleven Trustees are to be elected to hold office until the next
meeting of shareholders called for the purpose of electing Trustees and until
their successors shall be duly elected and shall have qualified.
Each nominee has agreed to be named and to serve. The persons named as
attorneys-in-fact in the enclosed proxy have advised the Fund that unless
a proxy instructs them to withhold authority to vote for all listed nominees or
any individual nominee, all validly executed proxies will be voted by them for
the election of the nominees named below as Trustees of the Fund. As an open-end
mutual fund organized as a Massachusetts business trust, the Fund does not
contemplate holding annual shareholder meetings for the purpose of electing
Trustees. Thus, the Trustees will be elected for indefinite terms until a
shareholder meeting is called for the purpose of voting for Trustees and until
their successors are elected and shall qualify.
Each of the Nominees are presently Trustees of the Fund and have been previously
elected by the Fund's shareholders. Each nominee has agreed to be nominated and
to serve as a Trustee. The Trustees to be elected at the
Meeting shall serve as such until the next meeting of shareholders called for
the purpose of electing Trustees and until their successors shall be duly
elected and shall have qualified.
Each of the nominees and other Trustees is also a trustee or director
Oppenheimer California Municipal Fund, Oppenheimer Capital Appreciation Fund,
Oppenheimer Developing Markets Fund, Oppenheimer Discovery Fund, Oppenheimer
Enterprise Fund, Oppenheimer Global Fund, Oppenheimer Global Growth & Income
Fund, Oppenheimer Gold & Special Minerals Fund, Oppenheimer Growth Fund,
Oppenheimer International Growth Fund, Oppenheimer International Small Company
Fund, Oppenheimer Money Market Fund, Inc., Oppenheimer Multiple Strategies Fund,
Oppenheimer Municipal Bond Fund, Oppenheimer Multi-Sector Income Trust,
Oppenheimer New York Municipal Fund, Oppenheimer Multi-State Municipal Trust,
Oppenheimer Series Fund, Inc. and Oppenheimer U.S. Government Trust (the "New
York-based Oppenheimer funds"), except that Ms. Macaskill is not a Director of
Oppenheimer Money Market Fund, Inc. Ms. Macaskill and Messrs. Spiro, Bishop,
Bowen, Donohue, Farrar and Zack respectively hold the same offices with the
other New York-based Oppenheimer funds as with the Fund.
The nominees and other Trustees indicated below by an asterisk are "interested
persons" (as that term is defined in the Investment Company
Act of 1940, as amended, hereinafter referred to as the "Investment Company
Act") of the Fund due to the positions indicated with the Adviser or its
affiliates or other positions described. The year given below indicates when the
nominees and the other Trustees first became a trustee or director of any of the
New York-based Oppenheimer Funds without a break in service. If any of the
nominees should be unable to accept nomination or election, it is the intention
of the persons named as attorneys-in-fact in the enclosed proxy to vote such
proxy for the election of such other person or persons selected and nominated by
disinterested Trustees as the Board of Trustees may, in its discretion,
recommend.
As of January 6, 1998, the Trustees held which shares of the Fund, as follows:
Donald W. Spiro beneficially owned 25,000 shares of the Fund held in an account
for which Mr. Spiro is a trustee and Benjamin Lipstein disclaims beneficial
ownership of 1,000 shares of the Fund held by his wife. Except for the
foregoing, no other Trustee and no officers of the Fund beneficially owned any
shares of the Fund as of January 6, 1998.
Name and Business Experience
Other Information During the Past Five Years
Leon Levy Chairman of the Board of Trustees
first became a General Partner of
Trustee in 1959 Odyssey Partners, L.P.(investment
Age: 72 partnership)(since 1982); and Chairman of
Avatar Holdings, Inc. (real estate
development).
Donald W. Spiro* Vice Chairman of the Board of Trustees
first became a Chairman Emeritus (since August 1991)
Trustee in 1985 and a director (since January 1969)
Age: 72 of the Adviser; formerly Chairman
of the Adviser and the Distributor.
Bridget A. Macaskill* President of the Board of Trustees and
first became a President (since June 1991) and
Trustee in 1995 CEO (Since September 1995) and a
Age: 49 director (since December 1994)
of the Adviser; President and director (since
June 1991) of 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.
* A Trustee who is an "interested person" of the Fund or the Adviser under the
Investment Company Act.
Name and Business Experience
Other Information During the Past Five Years
Robert G. Galli Formerly he held the following
first became a positions: Vice President and
Trustee in 1993 Counsel of OAC, the Adviser's
Age: 64 parent holding company; Executive
Vice President and General Counsel and a
director of the Adviser and OppenheimerFunds
Distributor, Inc., and an officer of other
Oppenheimer funds.
Benjamin Lipstein Professor Emeritus of Marketing,
first became a Stern Graduate School of Business
Trustee in 1974 Administration, New York University;
Age: 74 a director of Sussex Publishers,
Inc. (publishers of Psychology
Today and Mother Earth News) and Spy
Magazine, L.P.
Elizabeth B. Moynihan Author and architectural historian;
first became a a trustee of the Freer Gallery of Art
Trustee in 1992 (Smithsonian Institution), the Institute
Age: 68 of Fine Arts (New York University), and
National Building Museum; a member
of the Trustees Council, Preservation
League of New York State; and a member
of the Indo-U.S. Sub-Commission on
Education and Culture.
Kenneth A. Randall A director of Dominion Resources, Inc.
first became a (electric utility holding company),
Trustee in 1980 Dominion Energy, Inc. (electric
Age: 70 power and oil & gas producer),
Texan Cogeneration Company
(cogeneration company), Prime
Retail, Inc. (real estate investment
trust); formerly President and Chief
Executive Officer of The Conference
Board, Inc. (international economic
and business research) and a director
of Lumbermens Mutual Casualty Company,
American Motorists Insurance Company
and American Manufacturers Mutual
Insurance Company.
Name and Business Experience
Other Information During the Past Five Years
Edward V. Regan Chairman of Municipal Assistance
first became a Corporation for the City of New York;
Trustee in 1993 Senior Fellow of Jerome Levy Economics
Age: 67 Institute, Bard College; a member of
the U.S. Competitiveness Policy Council; a
director of GranCare, Inc. (health care
provider); a director of River Bank America
(real estate manager); Trustee, Financial
Accounting Foundation (FASB and GASB); formerly
New York State Comptroller and trustee, New York
State and Local Retirement Fund.
Russell S. Reynolds, Jr. Founder Chairman of Russell
first became a Reynolds Associates, Inc.
Trustee in 1989 (executive recruiting);
Age: 66 Chairman of Directorship,
Inc. (corporate governance consulting);
a director of Professional Staff
Limited (U.K.); and a trustee
of Mystic Seaport Museum,
International House and Greenwich
Historical Society.
Pauline Trigere Chairman and Chief Executive Officer of
first became a Trigere, Inc. (design and sale of women's
Trustee in 1977 fashions).
Age: 85
Clayton K. Yeutter Of Counsel to Hogan & Hartson
first became a (a law firm); a director of B.A.T.
Trustee in 1993 Industries, Ltd. (tobacco and
Age: 67 financial services), Caterpillar, Inc.
(machinery), ConAgra, Inc. (food and
agricultural products), Farmers
Insurance Company (insurance),
FMC Corp. (chemicals and machinery),
and Texas Instruments, Inc. (electronics);
formerly (in descending chronological order)
IMC Global Inc. (chemicals and animal feed),
Counselor to the President (Bush) for
Domestic Policy, Chairman of the
Republican National Committee,
Secretary of the U.S. Department of
Agriculture, and U.S. Trade Representative.
Functions of the Board of Trustees. The primary responsibility for the
management of the Fund rests with the Board of Trustees. The Trustees meet
regularly to review the activities of the Fund and of the Adviser, which is
responsible for its day-to-day operations. Six regular meetings of the Trustees
were held during the fiscal year ended October 31, 1997. Each of the Trustees
was present for at least 75% of the meetings held of the Board and of all
committees on which that Trustee served. The Trustees of the Fund have appointed
an Audit Committee, comprised of Messrs. Randall (Chairman), Lipstein, and
Regan, none of whom is an "interested person" (as that term is defined in the
Investment Company Act) of the Adviser or the Fund. The functions of the
Committee include (i) making recommendations to the Board concerning the
selection of independent auditors for the Fund (subject to shareholder
ratification); (ii) reviewing the methods, scope and results of audits and the
fees charged; (iii) reviewing the adequacy of the Fund's internal accounting
procedures and controls; and (iv) establishing a separate line of communication
between the Fund's independent auditors and its independent Trustees. The
Committee met 6 times during the fiscal year ended October 31, 1997. The Board
of Trustees does not have a standing nominating or compensation committee.
o Remuneration of Trustees. The officers of the Fund and certain Trustees of the
Fund (Ms. Macaskill and Mr. Spiro) who are affiliated with the Adviser receive
no salary or fee from the Fund. The remaining Trustees of the Fund other than
Mr. Galli, who was affiliated with the Adviser during the fiscal year ended
October 31, 1997, received the compensation shown below. The compensation from
the Fund was paid during its fiscal year ended October 31, 1997. The
compensation from all of the New York-based Oppenheimer funds includes the Fund
and is compensation received as a director, trustee or member of a committee of
the Board during the calendar year 1997.
<TABLE>
<CAPTION>
Retirement Total Compensation
Aggregate Benefits Accrued From All
Name and Compensation as Part of New York-based
Position from Fund Fund Expenses Oppenheimer funds1
<S> <C> <C> <C>
Leon Levy $ 0 $ (72) $152,750
Chairman and Trustee
Benjamin Lipstein $ 0 $ (43) $ 91,350
Study Committee
Chairman2 and Trustee
Elizabeth B. Moynihan $ 0 $ (43) $ 91,350
Study Committee
Member and Trustee
Kenneth A. Randall $ 0 $ (39) $ 83,350
Audit Committee
Member and Trustee
Edward V. Regan $ 0 $ (37) $ 78,150
Proxy Committee
Chairman2, Audit
Committee Member
and Trustee
Russell S. Reynolds Jr. $ 0 $ (28) $ 58,800
Proxy Committee
Member2 and Trustee
Pauline Trigere $ 0 $ (26) $ 55,300
Trustee
Clayton K. Yeutter $ 0 $ (28) $ 58,800
Proxy Committee
Member2 and
Trustee
</TABLE>
- ----------------------
1 For the 1997 calendar year.
2 Committee position held during a portion of the period shown.
The Fund has adopted a retirement plan that provides for payment to a
retired Trustee of up to 80% of the average compensation paid during that
Trustee's five years of service in which the highest compensation was received.
A Trustee must serve in that capacity for any of the New York-based Oppenheimer
funds for at least 15 years to be eligible for the maximum payment. Because each
Trustee's retirement benefits will depend on the amount of the Trustee's future
compensation and length of service, the amount of those benefits cannot be
determined at this time, nor can the Fund estimate the number of years of
credited service that will be used to determine those benefits
Officers of the Fund. Each officer of the Fund is elected by the Trustees to
serve an annual term. Information is given below about the Fund's executive
officers who are not Trustees of the Fund, including their business experience
during the past five years. Messrs. Bishop, Bowen, Donohue, Farrar and Zack
serve in a similar capacity with the other New York-based Oppenheimer funds.
Thomas P. Reedy, Vice President and Portfolio Manager; Age: 36.
Vice President of the Manager (since June 1993); an officer of
other Oppenheimer funds; formerly a Securities Analyst for the
Manager.
AshwinVasan, Vice President and Portfolio Manager; Age: 35. Vice President of
the Manager (since July 1993); an officer of other Oppenheimer funds;
formerly a Securities Analyst for the manager, prior to which he was a
Securities Analyst for Citibank, N.A.
Andrew J. Donohue, 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 (since September 1993), and a director (since
January 1992) of the Distributor; Executive Vice President, General
Counsel and a director of HarbourView, SSI, SFSI and 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 and a director of
Oppenheimer Real Asset Management, Inc. (since July 1996); General Counsel
(since May 1996) and Secretary (since April 1997) of OAC; Vice President
of OFIL and Oppenheimer Millennium Funds plc (since October 1997); an
officer of other Oppenheimer funds.
George C. Bowen, Treasurer; Age: 61
6803 South 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 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); a
Trustee of the Denver-based Oppenheimer funds and an officer of other
Oppenheimer funds.
ROBERTJ. BISHOP, Assistant Treasurer, Age 39 6803 South 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 South 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 an
Assistant Vice President of the Manager/Mutual Fund Accounting (April
1994-May 1996), and a Fund Controller for the Manager.
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.
Vote Required. An affirmative vote of the holders of a majority of the voting
shares of the Fund represented in person or by proxy and entitled to vote at the
Meeting is required for the election of a nominee as Trustee. The Board of
Trustees recommends a vote for the election of each nominee.
RECEIPT OF SHAREHOLDER PROPOSALS
If the Fund is converted to an open-end investment company, it will not be
required to hold shareholder meetings on a regular basis. Special meetings of
shareholders may be called from time to time by either the Fund or the
shareholders (under special conditions described in the Fund's Statement of
Additional Information). Under the proxy rules of the Securities and Exchange
Commission, shareholder proposals which meet certain conditions may be included
in the Fund's proxy statement and proxy for a particular meeting. Those rules
require that for future meetings the shareholder must be a record or beneficial
owner of Fund shares with a value of at least $1,000 at the time the proposal is
submitted and for one year prior thereto, and must continue to own such shares
through the date on which the meeting is held. Another requirement relates to
the timely receipt by the Fund of any such proposal. Under those rules, a
proposal submitted for inclusion in the Fund's proxy material for the next
meeting after the meeting to which this proxy statement relates must be received
by the Fund a reasonable time before the solicitation is made. The fact that the
Fund receives a proposal from a qualified shareholder in a timely manner does
not ensure its inclusion in the proxy material, since there are other
requirements under the proxy rules for such inclusion.
OTHER BUSINESS
Management of the Fund knows of no business other than the matters specified
above that will be presented at the Meeting. Since matters not known at the time
of the solicitation may come before the Meeting, the proxy as solicited confers
discretionary authority with respect to such matters as may properly come before
the Meeting, including any adjournment or adjournments thereof, and it is the
intention of the persons named as attorneys-in-fact in the proxy to vote the
proxy in accordance with their judgment on such matters.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
January 16, 1998
proxy\wbf
-3-
<PAGE>
Exhibit A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the _____ day of ______, 1998, by and between OPPENHEIMER WORLD
BOND FUND (hereinafter referred to as the "Fund"), and OPPENHEIMERFUNDS, INC.
(hereinafter referred to as "OFI").
WHEREAS, the Fund is a open-end, diversified management investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "Investment
Company Act"), and OFI is an investment adviser registered as such with the
Commission under the Investment Advisors Act of 1940;
WHEREAS, the Fund desires that OFI shall act as its investment adviser pursuant
to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as follows:
1. General Provision.
The Fund hereby employs OFI and OFI hereby undertakes to act as the
investment adviser of the Fund and to perform for the Fund such other duties and
functions as are hereinafter set forth. OFI shall, in all matters, give to the
Fund and its Board of Trustees the benefit of its best judgment, effort, advice
and recommendations and shall, at all times conform to, and use its best efforts
to enable the Fund to conform to (i) the provisions of the Investment Company
Act and any rules or regulations thereunder; (ii) any other applicable
provisions of state or Federal law; (iii) the provisions of the Declaration of
Trust and By-Laws of the Fund as amended from time to time; (iv) policies and
determinations of the Board of Trustees of the Fund; (v) the fundamental
policies and investment restrictions of the Fund as reflected in its
registration statement under the Investment Company Act or as such policies may,
from time to time, be amended by the Fund's shareholders; and (vi) the
Prospectus and Statement of Additional Information of the Fund in effect from
time to time. The appropriate officers and employees of OFI shall be available
upon reasonable notice for consultation with any of the Trustees and officers of
the Fund with respect to any matters dealing with the business and affairs of
the Fund including the valuation of portfolio securities of the Fund which are
either not registered for public sale or not traded on any securities market.
2. Investment Management.
(a) OFI shall, subject to the direction and control by the Fund's Board of
Trustees, (i) regularly provide investment advice and recommendations to the
Fund with respect to its investments, investment policies and the purchase and
sale of securities; (ii) supervise
continuously the investment program of the Fund and the composition of its
portfolio and determine what securities shall be purchased or sold by the Fund;
and (iii) arrange, subject to the provisions of paragraph 7 hereof, for the
purchase of securities and other investments for the Fund and the sale of
securities and other investments held in the Fund's portfolio.
(b) Provided that the Fund shall not be required to pay any compensation
for services under this Agreement other than as provided by the terms of this
Agreement and subject to the provisions of paragraph 7 hereof, OFI may obtain
investment information, research or assistance from any other person, firm or
corporation to supplement, update or otherwise improve its investment management
services.
(c) Provided that nothing herein shall be deemed to protect OFI from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard of its obligations and duties under this
Agreement, OFI shall not be liable for any loss sustained by reason of good
faith errors or omissions in connection with any matters to which this Agreement
relates.
(d) Nothing in this Agreement shall prevent OFI or any officer thereof
from acting as investment adviser for any other person, firm or corporation or
in any way limit or restrict OFI or any of its directors, officers, stockholders
or employees from buying, selling or trading any securities for its or their own
account or for the account of others for whom it or they may be acting, provided
that such activities will not adversely affect or otherwise impair the
performance by OFI of its duties and obligations under this Agreement.
3. Other Duties of OFI.
OFI shall, at its own expense, provide and supervise the activities of all
administrative and clerical personnel as shall be required to provide effective
corporate administration for the Fund, including the compilation and maintenance
of such records with respect to its operations as may reasonably be required;
the preparation and filing of such reports with respect thereto as shall be
required by the Commission; composition of periodic reports with respect to
operations of the Fund for its shareholders; composition of proxy materials for
meetings of the Fund's shareholders; and the composition of such registration
statements as may be required by Federal and state securities laws for
continuous public sale of shares of the Fund. OFI shall, at its own cost and
expense, also provide the Fund with adequate office space, facilities and
equipment. OFI shall, at its own expense, provide such officers for the Fund as
the Board of Trustees may request.
4. Allocation of Expenses.
All other costs and expenses of the Fund not expressly assumed by OFI
under this Agreement, or to be paid by the Distributor of the shares of the
Fund, shall be paid by the Fund, including, but not limited to: (i)
interest and taxes; (ii) brokerage commissions; (iii) insurance premiums for
fidelity and other coverage requisite to its operations; (iv) compensation and
expenses of its trustees other than those affiliated with OFI; (v) legal and
audit expenses; (vi) custodian and transfer agent fees and expenses; (vii)
expenses incident to the redemption of its shares; (viii) expenses incident to
the issuance of its shares against payment therefor by or on behalf of the
subscribers thereto; (ix) fees and expenses, other than as hereinabove provided,
incident to the registration under Federal and state securities laws of shares
of the Fund for public sale; (x) expenses of printing and mailing reports,
notices and proxy materials to shareholders of the Fund; (xi) except as noted
above, all other expenses incidental to holding meetings of the Fund's
shareholders; and (xii) such extraordinary non-recurring expenses as may arise,
including litigation, affecting the Fund and any legal obligation which the Fund
may have to indemnify its officers and trustees with respect thereto. Any
officers or employees of OFI or any entity controlling, controlled by or under
common control with OFI who also serve as officers, trustees or employees of the
Fund shall not receive any compensation from the Fund for their services.
5. Compensation of OFI.
The Fund agrees to pay OFI and OFI agrees to accept as full compensation
for the performance of all functions and duties on its part to be performed
pursuant to the provisions hereof, a fee computed on the aggregate net asset
value of the shares of the Fund as of the close of each business day and payable
monthly at the following annual rate:
.75% of the first $200 million of net assets; .72% of the next $200
million; .69% of the next $200 million; .66% of the next $200
million; .60% of the next $200 million; and .58% of net assets in
excess of $1 billion.
6. Use of Name "Oppenheimer."
OFI hereby grants to the Fund a royalty-free, non-exclusive license to use
the name "Oppenheimer" in the name of the Fund for the duration of this
Agreement and any extensions or renewals thereof. To the extent necessary to
protect OFI's rights to the name "Oppenheimer" under applicable law, such
license shall allow OFI to inspect and, subject to control by the Fund's Board,
control the nature and quality of services offered by the Fund under such name
and may, upon termination of this Agreement, be terminated by OFI, in which
event the Fund shall promptly take whatever action may be necessary to change
its name and discontinue any further use of the name "Oppenheimer" in the name
of the Fund or otherwise. The name "Oppenheimer" may be used or licensed by OFI
in connection with any of its activities, or licensed by OFI to any other party.
7. Portfolio Transactions and Brokerage.
(a) OFI is authorized, in arranging the purchase and sale of the Fund's
portfolio securities, to employ or deal with such members of securities or
commodities exchanges, brokers or dealers (hereinafter "broker-dealers"),
including "affiliated" broker-dealers (as that term is defined in the Investment
Company Act), as may, in its best judgment, implement the policy of the Fund to
obtain, at reasonable expense, the "best execution" (prompt and reliable
execution at the most favorable security price obtainable) of the Fund's
portfolio transactions as well as to obtain, consistent with the provisions of
subparagraph (c) of this paragraph 7, the benefit of such investment information
or research as will be of significant assistance to the performance by OFI of
its investment management functions.
(b) OFI shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain best
execution of particular and related portfolio transactions. The abilities of a
broker-dealer to obtain best execution of particular portfolio transaction(s)
will be judged by OFI on the basis of all relevant factors and considerations
including, insofar as feasible, the execution capabilities required by the
transaction or transactions; the ability and willingness of the broker-dealer to
facilitate the Fund's portfolio transactions by participating therein for its
own account; the importance to the Fund of speed, efficiency or confidentiality;
the broker-dealer's apparent familiarity with sources from or to whom particular
securities might be purchased or sold; as well as any other matters relevant to
the selection of a broker-dealer for particular and related transactions of the
Fund.
(c) OFI shall have discretion, in the interests of the Fund, to allocate
brokerage on the Fund's portfolio transactions to broker-dealers, other than an
affiliated broker-dealer, qualified to obtain best execution of such
transactions who provide brokerage and/or research services (as such services
are defined in Section 28(e)(3) of the Securities Exchange Act of 1934) for the
Fund and/or other accounts for which OFI or its affiliates exercise "investment
discretion" (as that term is defined in Section 3(a)(35) of the Securities
Exchange Act of 1934) and to cause the Fund to pay such broker-dealers a
commission for effecting a portfolio transaction for the Fund that is in excess
of the amount of commission another broker-dealer adequately qualified to effect
such transaction would have charged for effecting that transaction, if OFI
determines, in good faith, that such commission is reasonable in relation to the
value of the brokerage and/or research services provided by such broker-dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of OFI or its affiliates with respect to the accounts as Name
and Business Experience Other Information During the Past Five Years to which
they exercise investment discretion. In reaching such determination, OFI will
not be required to place or attempt to place a specific dollar value on the
brokerage and/or research services provided or being provided by such
broker-dealer. In demonstrating that such determinations were made in good
faith, OFI shall be prepared to show that all commissions were
allocated for purposes contemplated by this Agreement and that the total
commissions paid by the Fund over a representative period selected by the Fund's
trustees were reasonable in relation to the benefits to the Fund.
(d) OFI shall have no duty or obligation to seek advance competitive
bidding for the most favorable commission rate applicable to any particular
portfolio transactions or to select any broker-dealer on the basis of its
purported or "posted" commission rate but will, to the best of its ability,
endeavor to be aware of the current level of the charges of eligible
broker-dealers and to minimize the expense incurred by the Fund for effecting
its portfolio transactions to the extent consistent with the interests and
policies of the Fund as established by the determinations of the Board of
Trustees of the Fund and the provisions of this paragraph 7.
(e) The Fund recognizes that an affiliated broker-dealer: (i) may act as
one of the Fund's regular brokers for the Fund so long as it is lawful for it so
to act; (ii) may be a major recipient of brokerage commissions paid by the Fund;
and (iii) may effect portfolio transactions for the Fund only if the
commissions, fees or other remuneration received or to be received by it are
determined in accordance with procedures contemplated by any rule, regulation or
order adopted under the Investment Company Act for determining the permissible
level of such commissions.
(f) Subject to the foregoing provisions of this paragraph 7, OFI may also
consider sales of shares of the Fund and the other funds advised by OFI and its
affiliates as a factor in the selection of broker-dealers for its portfolio
transactions.
8. Duration.
This Agreement will take effect on the date first set forth above. Unless
earlier terminated pursuant to paragraph 10 hereof, this Agreement shall remain
in effect until December 31, 1999, and thereafter will continue in effect from
year to year, so long as such continuance shall be approved at least annually by
the Fund's Board of Trustees, including the vote of the majority of the trustees
of the Fund who are not parties to this Agreement or "interested persons" (as
defined in the Investment Company Act) of any such party, cast in person at a
meeting called for the purpose of voting on such approval, or by the holders of
a "majority" (as defined in the Investment Company Act) of the outstanding
voting securities of the Fund and by such a vote of the Fund's Board of
Trustees.
9. Disclaimer of Shareholder or Trustee Liability.
OFI understands and agrees that the obligations of the Fund under this
Agreement are not binding upon any shareholder or Trustee of the Fund
personally, but bind only the Fund and the Fund's property; OFI represents
that it has notice of the provisions of the Declaration of Trust of the Fund
disclaiming shareholder or Trustee liability for acts or obligations of the
Fund.
10. Termination.
This Agreement may be terminated (i) by OFI at any time without penalty
upon sixty days' written notice to the Fund (which notice may be waived by the
Fund); or (ii) by the Fund at any time without penalty upon sixty days' written
notice to OFI (which notice may be waived by OFI) provided that such termination
by the Fund shall be directed or approved by the vote of a majority of all of
the trustees of the Fund then in office or by the vote of the holders of a
"majority" of the outstanding voting securities of the Fund (as defined in the
Investment Company Act).
11. Assignment or Amendment.
This Agreement may not be amended or the rights of OFI hereunder sold,
transferred, pledged or otherwise in any manner encumbered without the
affirmative vote or written consent of the holders of the "majority" of the
outstanding voting securities of the Fund. This Agreement shall automatically
and immediately terminate in the event of its "assignment," as defined in the
Investment Company Act.
12. Definitions.
The terms and provisions of the Agreement shall be interpreted and defined
in a manner consistent with the provisions and definitions contained in the
Investment Company Act.
OPPENHEIMER WORLD BOND FUND
Attest:
- ------------------------- -----------------------------------
Mitchell J. Lindauer Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS, INC.
Attest:
- ------------------------- -----------------------------------
Katherine P. Feld Andrew J. Donohue
Executive Vice President
-4-
<PAGE>
EXHIBIT B
Approximate Net Advisory Fee Rate as
Assets as of % of
12/31/96 Average Annual
Name of Fund ($ Millions) Net Assets
Oppenheimer International $175.7 .75% on the first $200
Bond Fund million,
Oppenheimer High Yield Fund $1513.4 .72% on the next $200
million,
Oppenheimer Strategic Income $6778 .69% on the next $200
Fund million,
Oppenheimer Bond Fund $235 .66% on the next $200
million,
Oppenheimer Bond Fund, VA $426.4 .60% on the next $200
million, and
Oppenheimer Strategic Bond, $118.7 .50% of net assets in
VA excess of $1 billion
Oppenheimer High Income Bond, $191.3
VA
Oppenheimer Champion Income $653.6 .70% on the first $250
Fund million,
.65% on the next $250
million,
.60% on the next $500
million, and
.55% of net assets in
excess of $1 billion
Oppenheimer Limited-Term $627.6 .50% on the first $100
Government Fund million,
.45% on the next $150
million,
.425% on the next $250
million, and
.40% of net assets in
excess of $500 million
Oppenheimer U.S. Government $534 .65% on the first $200
Trust million,
.60% on the next $100
million,
.57% on the next $100
million,
.55% on the next $400
million, and
.50% of net assets in
excess of $800 million
-5-
<PAGE>
Exhibit C
SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER WORLD BOND FUND
FOR CLASS A SHARES
SERVICE PLAN AND AGREEMENT (the "Plan") dated the ____ day of _______, 1998, by
and between OPPENHEIMER WORLD BOND FUND (the "Fund") and OPPENHEIMERFUNDS
DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written service plan for its Class A Shares
described in the Fund's registration statement as of the date this Plan takes
effect, contemplated by and to comply with Article III, Section 26 of the
Conduct Rules of the National Association of Securities Dealers, pursuant to
which the Fund will reimburse the Distributor for a portion of its costs
incurred in connection with the personal service and the maintenance of
shareholder accounts ("Accounts") that hold Class A Shares (the "Shares") of
such series and class of the Fund. The Fund may be deemed to be acting as
distributor of securities of which it is the issuer, pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act"), according to the
terms of this Plan. The Distributor is authorized under the Plan to pay
"Recipients," as hereinafter defined, for rendering services and for the
maintenance of Accounts. Such Recipients are intended to have certain rights as
third-party beneficiaries under this Plan.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other institution
which: (i) has rendered services in connection with the personal service and
maintenance of Accounts; (ii) shall furnish the Distributor (on behalf of the
Fund) with such information as the Distributor shall reasonably request to
answer such questions as may arise concerning such service; and (iii) has been
selected by the Distributor to receive payments under the Plan.
Notwithstanding the foregoing, a majority of the Fund's Board of Trustees (the
"Board") who are not "interested persons" (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of this Plan or
in any agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other institution as a Recipient, whereupon
such entity's rights as a third-party beneficiary hereof shall terminate. (b)
"Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes
of this Plan. In the event that two entities would otherwise qualify as
Recipients as to the same Shares, the Recipient which is the dealer of record
on the Fund's books shall be deemed the Recipient as to such Shares for
purposes of this Plan.
3. Payments.
(a) Under the Plan, the Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the amount of the
lesser of: (i) .0625% (.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of the Shares, computed as
of the close of each business day, or (ii) the Distributor's actual expenses
under the Plan for that quarter of the type approved by the Board. The
Distributor will use such fee received from the Fund in its entirety to
reimburse itself for payments to Recipients and for its other expenditures and
costs of the type approved by the Board incurred in connection with the
personal service and maintenance of Accounts including, but not limited to,
the services described in the following paragraph. The Distributor may make
Plan payments to any "affiliated person" (as defined in the 1940 Act) of the
Distributor if such affiliated person qualifies as a Recipient.
The services to be rendered by the Distributor and Recipients in
connection with the personal service and the maintenance of Accounts may
include, but shall not be limited to, the following: answering routine
inquiries from the Recipient's customers concerning the Fund, providing such
customers with information on their investment in shares, assisting in the
establishment and maintenance of accounts or sub-accounts in the Fund, making
the Fund's investment plans and dividend payment options available, and
providing such other information and customer liaison services and the
maintenance of Accounts as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided services qualifying for
compensation under the Plan if it has Qualified Holdings of Shares to entitle
it to payments under the Plan. In the event that either the Distributor or the
Board should have reason to believe that, notwithstanding the level of
Qualified Holdings, a Recipient may not be rendering appropriate services,
then the Distributor, at the request of the Board, shall require the Recipient
to provide a written report or other information to verify that said Recipient
is providing appropriate services in this regard. If the Distributor still is
not satisfied, it may take appropriate steps to terminate the Recipient's
status as such under the Plan, whereupon such entity's rights as a third-party
beneficiary hereunder shall terminate.
Payments received by the Distributor from the Fund under the Plan will not
be used to pay any interest expense, carrying charges or other financial
costs, or allocation of overhead by the Distributor, or for any other purpose
other than for the payments described in this Section 3. The amount payable to
the Distributor each quarter will be reduced to the extent that reimbursement
payments otherwise permissible under the Plan have not been authorized by the
Board of Trustees for that quarter. Any unreimbursed expenses incurred for any
quarter by the Distributor may not be recovered in later periods.
(b) The Distributor shall make payments to any Recipient quarterly, within
forty-five (45) days of the end of each calendar quarter, at a rate not to
exceed .0625% (.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares computed as of the
close of each business day, of Qualified Holdings owned beneficially or of
record by the Recipient or by its Customers. However, no such payments
shall be made to any Recipient for any such quarter in which its Qualified
Holdings do not equal or exceed, at the end of such quarter, the minimum
amount ("Minimum Qualified Holdings"), if any, to be set from time to time
by a majority of the Independent Trustees. A majority of the Independent
Trustees may at any time or from time to time increase or decrease and
thereafter adjust the rate of fees to be paid to the Distributor or to any
Recipient, but not to exceed the rate set forth above, and/or increase or
decrease the number of shares constituting Minimum Qualified Holdings. The
Distributor shall notify all Recipients of the Minimum Qualified Holdings
and the rate of payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after
any change in these provisions. Inclusion of such provisions or a change
in such provisions in a revised current prospectus shall constitute
sufficient notice.
(c) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include
profits derived from the advisory fee it receives from the Fund), or (ii) by
the Distributor (a subsidiary of OFI), from its own resources.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection or replacement of Independent Trustees and the nomination of those
persons to be Trustees of the Fund who are not "interested persons" of the Fund
shall be committed to the discretion of the Independent Trustees. Nothing herein
shall prevent the Independent Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Independent Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund shall
provide at least quarterly a written report to the Fund's Board for its review,
detailing the amount of all payments made pursuant to this Plan, the identity of
the Recipient of each such payment, and the purposes for which the payments were
made. The report shall state whether all provisions of Section 3 of this Plan
have been complied with. The Distributor shall annually certify to the Board the
amount of its total expenses incurred that year with respect to the personal
service and maintenance of Accounts in conjunction with the Board's annual
review of the continuation of the Plan.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan has been
approved by a vote of the Independent Trustees cast in person at a meeting
called on October 9, 1997 for the purpose of voting on this Plan, and shall take
effect on the date that the Fund's Registration Statement is declared effective
by the Securities and Exchange Commission. Unless terminated as hereinafter
provided, it shall continue in effect until October 31, 1998 and from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance. This Plan may be terminated at any time by vote of a
majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the 1940 Act) of the Fund's outstanding voting
securities of the Class. This Plan may not be amended to increase materially the
amount of payments to be made without approval of the Class A Shareholders, in
the manner described above, and all material amendments must be approved by a
vote of the Board and of the Independent Trustees.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations of the Fund under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Fund.
OPPENHEIMER WORLD BOND FUND
By:____________________________________
Robert G. Zack, Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: _____________________________________
Katherine P. Feld
Vice President & Secretary
-6-
<PAGE>
Exhibit D
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
OPPENHEIMER WORLD BOND FUND
This AMENDED AND RESTATED DECLARATION OF TRUST, made as of ___________,
1998, by and among the individuals executing this Amended and Restated
Declaration of Trust as the Trustees.
WHEREAS, the Trustees established Oppenheimer World Bond Fund (the
"Fund") as a trust fund under the laws of the Commonwealth of Massachusetts, for
the investment and reinvestment of funds contributed thereto, under a
declaration of Trust dated October 5, 1988 (the "DOT") hereby amend the DOT in
its entirety to read as follows:
WHEREAS, the Trustees of the Fund have determined to amend the Fund's
Declaration of Trust pursuant to the provisions thereof;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under this
Amended and Restated Declaration of Trust IN TRUST as herein set forth below.
FIRST: This Trust shall be known as Oppenheimer World Bond Fund. The
address of Oppenheimer World Bond Fund is Two World Trade Center, New York,
New York 10048-0203. The Registered Agent for Service is Massachusetts
Mutual Life Insurance Company, 1295 State Street, Springfield, Massachusetts
01111, Attention: Stephen Kuhn, Esq.
SECOND: Whenever used herein, unless otherwise required by the context
or specifically provided:
1. All terms used in this Declaration of Trust that are defined in the
1940 Act (defined below) shall have the meanings given to them in the 1940 Act.
2. "Board" or "Board of Trustees" or the "Trustees" means the Board of
Trustees of the Trust.
3. "By-Laws" means the By-Laws of the Trust as amended from time to time.
4. "Class" means a class of a series of Shares of the Trust established
and designated under or in accordance with the provisions of Article FOURTH.
5. "Commission" means the Securities and Exchange Commission.
6. "Declaration of Trust" shall mean this Declaration of Trust as it may
be amended or restated from time to time.
7. The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations of the Commission thereunder, all as amended from time
to time.
8. "Series" refers to series of Shares of the Trust established and
designated under or in accordance with the provisions of Article FOURTH.
9. "Shareholder" means a record owner of Shares of the Trust.
10. "Shares" refers to the transferable units of interest into which the
beneficial interest in the Trust or any Series or Class of the Trust (as the
context may require) shall be divided from time to time and includes fractions
of Shares as well as whole Shares.
11. The "Trust" refers to the Massachusetts business trust created by
this Declaration of Trust, as amended or restated from time to time.
12. "Trustees" refers to the individual trustees in their capacity as
trustees hereunder of the Trust and their successor or successors for the time
being in office as such trustees.
THIRD: The purpose or purposes for which the Trust is formed and the
business or objects to be transacted, carried on and promoted by it are as
follows:
1. To hold, invest or reinvest its funds, and in connection therewith to
hold part or all of its funds in cash, and to purchase or otherwise acquire,
hold for investment or otherwise, sell, sell short, assign, negotiate, transfer,
exchange or otherwise dispose of or turn to account or realize upon, securities
(which term "securities" shall for the purposes of this Declaration of Trust,
without limitation of the generality thereof, be deemed to include any stocks,
shares, bonds, financial futures contracts, indexes, debentures, notes,
mortgages or other obligations, and any certificates, receipts, warrants or
other instruments representing rights to receive, purchase or subscribe for the
same, or evidencing or representing any other rights or interests therein, or in
any property or assets) created or issued by any issuer (which term "issuer"
shall for the purposes of this Declaration of Trust, without limitation of the
generality thereof be deemed to include any persons, firms, associations,
corporations, syndicates, business trusts, partnerships, investment companies,
combinations, organizations, governments, or subdivisions thereof) and in
financial instruments (whether they are considered as securities or
commodities); and to exercise, as owner or holder of any securities or financial
instruments, all rights, powers and privileges in respect thereof; and to do any
and all acts and things for the preservation, protection, improvement and
enhancement in value of any or all such securities or financial instruments.
2. To borrow money and pledge assets in connection with any of the
objects or purposes of the Trust, and to issue notes or other obligations
evidencing such borrowings, to the extent permitted by the 1940 Act and by the
Trust's fundamental investment policies under the 1940 Act.
3. To issue and sell its Shares in such Series and Classes and amounts
and on such terms and conditions, for such purposes and for such amount or kind
of consideration (including without limitation thereto, securities) now or
hereafter permitted by the laws of the Commonwealth of Massachusetts and by this
Declaration of Trust, as the Trustees may determine.
4. To purchase or otherwise acquire, hold, dispose of, resell, transfer,
reissue, redeem or cancel its Shares, or to classify or reclassify any unissued
Shares or any Shares previously issued and reacquired of any Series or Class
into one or more Series or Classes that may have been established and designated
from time to time, all without the vote or consent of the Shareholders of the
Trust, in any manner and to the extent now or hereafter permitted by this
Declaration of Trust.
5. To conduct its business in all its branches at one or more offices in
New York, Colorado and elsewhere in any part of the world, without restriction
or limit as to extent.
6. To carry out all or any of the foregoing objects and purposes as
principal or agent, and alone or with associates or to the extent now or
hereafter permitted by the laws of Massachusetts, as a member of, or as the
owner or holder of any stock of, or share of interest in, any issuer, and in
connection therewith or make or enter into such deeds or contracts with any
issuers and to do such acts and things and to exercise such powers, as a natural
person could lawfully make, enter into, do or exercise.
7. To do any and all such further acts and things and to exercise any and
all such further powers as may be necessary, incidental, relative, conducive,
appropriate or desirable for the accomplishment, carrying out or attainment of
all or any of the foregoing purposes or objects.
The foregoing objects and purposes shall, except as otherwise
expressly provided, be in no way limited or restricted by reference to, or
inference from, the terms of any other clause of this or any other Article of
this Declaration of Trust, and shall each be regarded as independent and
construed as powers as well as objects and purposes, and the enumeration of
specific purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the general powers of the
Trust now or hereafter conferred by the laws of the Commonwealth of
Massachusetts nor shall the expression of one thing be deemed to exclude
another, though it be of a similar or dissimilar nature, not expressed;
provided, however, that the Trust shall not carry on any business, or exercise
any powers, in any state, territory, district or country except to the extent
that the same may lawfully be carried on or exercised under the laws thereof.
FOURTH:
1. The beneficial interest in the Trust shall be divided into Shares, all
without par value, but the Trustees shall have the authority from time to time,
without obtaining shareholder approval, to create one or more Series of Shares
in addition to the Series specifically established and designated in part 3 of
this Article FOURTH, and to divide the shares of any Series into two or more
Classes pursuant to Part 2 of this Article FOURTH, all as they deem necessary or
desirable, to establish and designate such Series and Classes, and to fix and
determine the relative rights and preferences as between the different Series of
Shares or Classes as to right of redemption and the price, terms and manner of
redemption, liabilities and expenses to be borne by any Series or Class, special
and relative rights as to dividends and other distributions and on liquidation,
sinking or purchase fund provisions, conversion on liquidation, conversion
rights, and conditions under which the several Series or Classes shall have
individual voting rights or no voting rights. Except as aforesaid, all Shares of
the different Series shall be identical.
(a) The number of authorized Shares and the number of Shares of each
Series and each Class of a Series that may be issued is unlimited, and the
Trustees may issue Shares of any Series or Class of any Series for such
consideration and on such terms as they may determine (or for no consideration
if pursuant to a Share dividend or split-up), all without action or approval of
the Shareholders. All Shares when so issued on the terms determined by the
Trustees shall be fully paid and non-assessable. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any Series into one or more Series or Classes of Series that may be established
and designated from time to time. The Trustees may hold as treasury Shares (of
the same or some other Series), reissue for such consideration and on such terms
as they may determine, or cancel, at their discretion from time to time, any
Shares of any Series reacquired by the Trust.
(b) The establishment and designation of any Series or any Class of any
Series in addition to that established and designated in part 3 of this Article
FOURTH shall be effective with the effectiveness of an instrument setting forth
such establishment and designation and the relative rights and preferences of
such Series or such Class of such Series or as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any particular
Series previously established and designated, the Trustees may by an instrument
executed by a majority of their number abolish that Series and the establishment
and designation thereof. If and to the extent the instrument referred to in this
paragraph shall be an amendment to this Declaration of Trust, the Trustees may
make any such amendment without shareholder approval.
(c) Any Trustee, officer or other agent of the Trust, and any
organization in which any such person is interested may acquire, own, hold and
dispose of Shares of any Series or Class of any Series of the Trust to the same
extent as if such person were not a Trustee, officer or other agent of the
Trust; and the Trust may issue and sell or cause to be issued and sold and may
purchase Shares of any Series or Class of any Series from any such person or any
such organization subject only to the general limitations, restrictions or other
provisions applicable to the sale or purchase of Shares of such Series or Class
generally.
2. The Trustees shall have the authority from time to time, without
obtaining shareholder approval, to divide the Shares of any Series into two or
more Classes as they deem necessary or desirable, and to establish and designate
such Classes. In such event, each Class of a Series shall represent interests in
the designated Series of the Trust and have such voting, dividend, liquidation
and other rights as may be established and designated by the Trustees. Expenses
and liabilities related directly or indirectly to the Shares of a Class of a
Series may be borne solely by such Class (as shall be determined by the
Trustees) and, as provided in Article FIFTH, a Class of a Series may have
exclusive voting rights with respect to matters relating solely to such Class.
The bearing of expenses and liabilities solely by a Class of Shares of a Series
shall be appropriately reflected (in the manner determined by the Trustees) in
the net asset value, dividend and liquidation rights of the Shares of such Class
of a Series. The division of the Shares of a Series into Classes and the terms
and conditions pursuant to which the Shares of the Classes of a Series will be
issued must be made in compliance with the 1940 Act. No division of Shares of a
Series into Classes shall result in the creation of a Class of Shares having a
preference as to dividends or distributions or a preference in the event of any
liquidation, termination or winding up of the Trust, to the extent such a
preference is prohibited by Section 18 of the 1940 Act as to the Trust.
The relative rights and preferences of Shares of different Classes of a
Series shall be the same in all respects except that, and unless and until the
Board of Trustees shall determine otherwise: (i) when a vote of Shareholders is
required under this Declaration of Trust or when a meeting of Shareholders is
called by the Board of Trustees, the Shares of a Class shall vote exclusively on
matters that affect that Class only; (ii) the expenses and liabilities related
to a Class shall be borne solely by such Class (as determined and allocated to
such Class by the Trustees from time to time in a manner consistent with parts 2
and 3 of Article FOURTH); and (iii) pursuant to paragraph 10 of Article NINTH,
the Shares of each Class shall have such other rights and preferences as are set
forth from time to time in the then effective prospectus and/or statement of
additional information relating to the Shares. Dividends and distributions on
one Class of Shares may differ from the dividends and distributions on another
Class of Shares of the Series, and the net asset value of one Class of Shares
may differ from the net asset value of another Class of Shares of the Series.
3. Without limiting the authority of the Trustees set forth in part 1 of
this Article FOURTH to establish and designate any further Series, the Trustees
hereby establish one Series of Shares having the same name as the Trust, and
said Shares shall be divided into such number of Classes as shall be set forth
from time to time in the then effective prospectus and/or statement of
additional information relating to the Fund. The Shares of that Series and any
Shares of any further Series or Classes that may from time to time be
established and designated by the Trustees shall (unless the Trustees otherwise
determine with respect to some further Series or Classes at the time of
establishing and designating the same) have the following relative rights and
preferences:
(a) Assets Belonging to Series. All consideration received by the Trust
for the issue or sale of Shares of a particular Series, together with all assets
in which such consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the rights
of creditors, and shall be so recorded upon the books of account of the Trust.
Such consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any General Items
allocated to that Series as provided in the following sentence, are herein
referred to as "assets belonging to" that Series. In the event that there are
any assets, income, earnings, profits, and proceeds thereof, funds, or payments
which are not readily identifiable as belonging to any particular Series
(collectively "General Items"), the Trustees shall allocate such General Items
to and among any one or more of the Series established and designated from time
to time in such manner and on such basis as they, in their sole discretion, deem
fair and equitable; and any General Items so allocated to a particular Series
shall belong to that Series. Each such allocation by the Trustees shall be
conclusive and binding upon the shareholders of all Series for all purposes.
(b)(1) Liabilities Belonging to Series. The liabilities, expenses, costs,
charges and reserves attributable to each Series shall be charged and allocated
to the assets belonging to each particular Series. Any general liabilities,
expenses, costs, charges and reserves of the Trust which are not identifiable as
belonging to any particular Series shall be allocated and charged by the
Trustees to and among any one or more of the Series established and designated
from time to time in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. The liabilities, expenses, costs, charges
and reserves allocated and so charged to each Series are herein referred to as
"liabilities belonging to" that Series. Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall be conclusive and
binding upon the shareholders of all Series for all purposes.
(2) Liabilities Belonging to a Class. If a Series is divided into more
than one Class, the liabilities, expenses, costs, charges and reserves
attributable to a Class shall be charged and allocated to the Class to which
such liabilities, expenses, costs, charges or reserves are attributable. Any
general liabilities, expenses, costs, charges or reserves belonging to the
Series which are not identifiable as belonging to any particular Class shall be
allocated and charged by the Trustees to and among any one or more of the
Classes established and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and equitable. The
liabilities, expenses, costs, charges and reserves allocated and so charged to
each Class are herein referred to as "liabilities belonging to" that Class. Each
allocation of liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the holders of all Classes for all
purposes.
(c) Dividends. Dividends and distributions on Shares of a particular
Series or Class may be paid to the holders of Shares of that Series or Class,
with such frequency as the Trustees may determine, which may be daily or
otherwise pursuant to a standing resolution or resolutions adopted only once or
with such frequency as the Trustees may determine, from such of the income,
capital gains accrued or realized, and capital and surplus, from the assets
belonging to that Series, as the Trustees may determine, after providing for
actual and accrued liabilities belonging to such Series or Class. All dividends
and distributions on Shares of a particular Series or Class shall be distributed
pro rata to the Shareholders of such Series or Class in proportion to the number
of Shares of such Series or Class held by such Shareholders at the date and time
of record established for the payment of such dividends or distributions, except
that in connection with any dividend or distribution program or procedure the
Trustees may determine that no dividend or distribution shall be payable on
Shares as to which the Shareholder's purchase order and/or payment have not been
received by the time or times established by the Trustees under such program or
procedure. Such dividends and distributions may be made in cash or Shares or a
combination thereof as determined by the Trustees or pursuant to any program
that the Trustees may have in effect at the time for the election by each
Shareholder of the mode of the making of such dividend or distribution to that
Shareholder. Any such dividend or distribution paid in Shares will be paid at
the net asset value thereof as determined in accordance with paragraph 13 of
Article SEVENTH.
(d) Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of each Series and all Classes of each Series that have
been established and designated shall be entitled to receive, as a Series or
Class, when and as declared by the Trustees, the excess of the assets belonging
to that Series over the liabilities belonging to that Series or Class. The
assets so distributable to the Shareholders of any particular Class and Series
shall be distributed among such Shareholders in proportion to the number of
Shares of such Class of that Series held by them and recorded on the books of
the Trust.
(e) Transfer. All Shares of each particular Series or Class shall be
transferable, but transfers of Shares of a particular Class and Series will be
recorded on the Share transfer records of the Trust applicable to such Series or
Class of that Series only at such times as Shareholders shall have the right to
require the Trust to redeem Shares of such Series or Class of that Series and at
such other times as may be permitted by the Trustees.
(f) Equality. Each Share of a Series shall represent an equal
proportionate interest in the assets belonging to that Series (subject to the
liabilities belonging to such Series or any Class of that Series), and each
Share of any particular Series shall be equal to each other Share of that Series
and shares of each Class of a Series shall be equal to each other Share of such
Class; but the provisions of this sentence shall not restrict any distinctions
permissible under this Article FOURTH that may exist with respect to Shares of
the different Classes of a Series. The Trustees may from time to time divide or
combine the Shares of any particular Class or Series into a greater or lesser
number of Shares of that Class or Series without thereby changing the
proportionate beneficial interest in the assets belonging to that Series or
allocable to that Class in any way affecting the rights of Shares of any other
Class or Series.
(g) Fractions. Any fractional Share of any Class and Series, if any such
fractional Share is outstanding, shall carry proportionately all the rights and
obligations of a whole Share of that Class and Series, including those rights
and obligations with respect to voting, receipt of dividends and distributions,
redemption of Shares, and liquidation of the Trust.
(h) Conversion Rights. Subject to compliance with the requirements of the
1940 Act, the Trustees shall have the authority to provide that (i) holders of
Shares of any Series shall have the right to exchange said Shares into Shares of
one or more other Series of Shares, (ii) holders of shares of any Class shall
have the right to exchange said Shares into Shares of one or more other Classes
of the same or a different Series, and/or (iii) the Trust shall have the right
to carry out exchanges of the aforesaid kind, in each case in accordance with
such requirements and procedures as may be established by the Trustees.
(i) Ownership of Shares. The ownership of Shares shall be recorded on the
books of the Trust or of a transfer or similar agent for the Trust, which books
shall be maintained separately for the Shares of each Class and Series that has
been established and designated. No certification certifying the ownership of
Shares need be issued except as the Trustees may otherwise determine from time
to time. The Trustees may make such rules as they consider appropriate for the
issuance of Share certificates, the use of facsimile signatures, the transfer of
Shares and similar matters. The record books of the Trust as kept by the Trust
or any transfer or similar agent, as the case may be, shall be conclusive as to
who are the Shareholders and as to the number of Shares of each Class and Series
held from time to time by each such Shareholder.
(j) Investments in the Trust. The Trustees may accept investments in the
Trust from such persons and on such terms and for such consideration, not
inconsistent with the provisions of the 1940 Act, as they from time to time
authorize. The Trustees may authorize any distributor, principal underwriter,
custodian, transfer agent or other person to accept orders for the purchase or
sale of Shares that conform to such authorized terms and to reject any purchase
or sale orders for Shares whether or not conforming to such authorized terms.
FIFTH: The following provisions are hereby adopted with respect to
voting Shares of the Trust and certain other rights:
1. The Shareholders shall have the power to vote (a) for the election of
Trustees when that issue is submitted to them, (b) with respect to the amendment
of this Declaration of Trust except where the Trustees are given authority to
amend the Declaration of Trust without shareholder approval, (c) to the same
extent as the shareholders of a Massachusetts business corporation, as to
whether or not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, and (d) with respect to those matters relating to the Trust as may
be required by the 1940 Act or required by law, by this Declaration of Trust, or
the By-Laws of the Trust or any registration statement of the Trust filed with
the Commission or any State, or as the Trustees may consider desirable.
2. The Trust will not hold shareholder meetings unless required by the
1940 Act, the provisions of this Declaration of Trust, or any other applicable
law. The Trustees may call a meeting of shareholders from time to time.
3. Except as herein otherwise provided, at all meetings of Shareholders,
each Shareholder shall be entitled to one vote on each matter submitted to a
vote of the Shareholders of the affected Series for each Share standing in his
name on the books of the Trust on the date, fixed in accordance with the
By-Laws, for determination of Shareholders of the affected Series entitled to
vote at such meeting (except, if the Board so determines, for Shares redeemed
prior to the meeting), and each such Series shall vote separately ("Individual
Series Voting"); a Series shall be deemed to be affected when a vote of the
holders of that Series on a matter is required by the 1940 Act; provided,
however, that as to any matter with respect to which a vote of Shareholders is
required by the 1940 Act or by any applicable law that must be complied with,
such requirements as to a vote by Shareholders shall apply in lieu of Individual
Series Voting as described above. If the shares of a Series shall be divided
into Classes as provided in Article FOURTH, the shares of each Class shall have
identical voting rights except that the Trustees, in their discretion, may
provide a Class of a Series with exclusive voting rights with respect to matters
which relate solely to such Classes. If the Shares of any Series shall be
divided into Classes with a Class having exclusive voting rights with respect to
certain matters, the quorum and voting requirements described below with respect
to action to be taken by the Shareholders of the Class of such Series on such
matters shall be applicable only to the Shares of such Class. Any fractional
Share shall carry proportionately all the rights of a whole Share, including the
right to vote and the right to receive dividends. The presence in person or by
proxy of the holders of one-third of the Shares, or of the Shares of any Series
or Class of any Series, outstanding and entitled to vote thereat shall
constitute a quorum at any meeting of the Shareholders or of that Series or
Class, respectively; provided however, that if any action to be taken by the
Shareholders or by a Series or Class at a meeting requires an affirmative vote
of a majority, or more than a majority, of the shares outstanding and entitled
to vote, then in such event the presence in person or by proxy of the holders of
a majority of the shares outstanding and entitled to vote at such a meeting
shall constitute a quorum for all purposes. At a meeting at which is a quorum is
present, a vote of a majority of the quorum shall be sufficient to transact all
business at the meeting, except as otherwise provided in Article NINTH. If at
any meeting of the Shareholders there shall be less than a quorum present, the
Shareholders or the Trustees present at such meeting may, without further
notice, adjourn the same from time to time until a quorum shall attend, but no
business shall be transacted at any such adjourned meeting except such as might
have been lawfully transacted had the meeting not been adjourned.
4. Each Shareholder, upon request to the Trust in proper form determined
by the Trust, shall be entitled to require the Trust to redeem from the net
assets of that Series all or part of the Shares of such Series and Class
standing in the name of such Shareholder. The method of computing such net asset
value, the time at which such net asset value shall be computed and the time
within which the Trust shall make payment therefor, shall be determined as
hereinafter provided in Article SEVENTH of this Declaration of Trust.
Notwithstanding the foregoing, the Trustees, when permitted or required to do so
by the 1940 Act, may suspend the right of the Shareholders to require the Trust
to redeem Shares.
5. No Shareholder shall, as such holder, have any right to purchase or
subscribe for any Shares of the Trust which it may issue or sell, other than
such right, if any, as the Trustees, in their discretion, may determine.
6. All persons who shall acquire Shares shall acquire the same subject to
the provisions of the Declaration of Trust.
7. Cumulative voting for the election of Trustees shall not be allowed.
SIXTH:
1. The persons who shall act as initial Trustees until the first meeting
or until their successors are duly chosen and qualify are the initial trustees
executing this Declaration of Trust or any counterpart thereof.
However, the By-Laws of the Trust may fix the number of Trustees at a number
greater or lesser than the number of initial Trustees and may authorize the
Trustees to increase or decrease the number of Trustees, to fill any vacancies
on the Board which may occur for any reason including any vacancies created by
any such increase in the number of Trustees, to set and alter the terms of
office of the Trustees and to lengthen or lessen their own terms of office or
make their terms of office of indefinite duration, all subject to the 1940 Act.
Unless otherwise provided by the By-Laws of the Trust, the Trustees need not be
Shareholders.
2. A Trustee at any time may be removed either with or without cause by
resolution duly adopted by the affirmative vote of the holders of two-thirds of
the outstanding Shares, present in person or by proxy at any meeting of
Shareholders called for such purpose; such a meeting shall be called by the
Trustees when requested in writing to do so by the record holders of not less
than ten percent of the outstanding Shares. A Trustee may also be removed by the
Board of Trustees as provided in the By-Laws of the Trust.
3. The Trustees shall make available a list of names and addresses of all
Shareholders as recorded on the books of the Trust, upon receipt of the request
in writing signed by not less than ten Shareholders (who have been shareholders
for at least six months) holding in the aggregate shares of the Trust valued at
not less than $25,000 at current offering price (as defined in the then
effective Prospectus and\or Statement of Additional Information relating to the
Shares under the Securities Act of 1933, as amended from time to time) or
holding not less than 1% in amount of the entire amount of Shares issued and
outstanding; such request must state that such Shareholders wish to communicate
with other Shareholders with a view to obtaining signatures to a request for a
meeting to take action pursuant to part 2 of this Article SIXTH and be
accompanied by a form of communication to the Shareholders. The Trustees may, in
their discretion, satisfy their obligation under this part 3 by either making
available the Shareholder list to such Shareholders at the principal offices of
the Trust, or at the offices of the Trust's transfer agent, during regular
business hours, or by mailing a copy of such communication and form of request,
at the expense of such requesting Shareholders, to all other Shareholders, and
the Trustees may also take such other action as may be permitted under Section
16(c) of the 1940 Act.
4. The Trust may at any time or from time to time apply to the Commission
for one or more exemptions from all or part of said Section 16(c) of the 1940
Act, and, if an exemptive order or orders are issued by the Commission, such
order or orders shall be deemed part of said Section 16(c) for the purposes of
parts 2 and 3 of this Article SIXTH.
SEVENTH: The following provisions are hereby adopted for the purpose
of defining, limiting and regulating the powers of the Trust, the Trustees
and the Shareholders.
1. As soon as any Trustee is duly elected by the Shareholders or the
Trustees and shall have accepted this Trust, the Trust estate shall vest in the
new Trustee or Trustees, together with the continuing Trustees, without any
further act or conveyance, and he or she shall be deemed a Trustee hereunder.
2. The death, declination, resignation, retirement, removal, or
incapacity of the Trustees, or any one of them, shall not operate to annul or
terminate the Trust but the Trust shall continue in full force and effect
pursuant to the terms of this Declaration of Trust.
3. The assets of the Trust shall be held separate and apart from any
assets now or hereafter held in any capacity other than as Trustee hereunder by
the Trustees or any successor Trustees. All of the assets of the Trust shall at
all times be considered as vested in the Trustees. No Shareholder shall have, as
a holder of beneficial interest in the Trust, any authority, power or right
whatsoever to transact business for or on behalf of the Trust, or on behalf of
the Trustees, in connection with the property or assets of the Trust, or in any
part thereof.
4. The Trustees in all instances shall act as principals, and are and shall
be free from the control of the Shareholders. The Trustees shall have full power
and authority to do any and all acts and to make and execute, and to authorize
the officers and agents of the Trust to make and execute, any and all contracts
and instruments that they may consider necessary or appropriate in connection
with the management of the Trust. The Trustees shall not in any way be bound or
limited by present or future laws or customs in regard to Trust investments, but
shall have full authority and power to make any and all investments which they,
in their uncontrolled discretion, shall deem proper to accomplish the purpose of
this Trust. Subject to any applicable limitation in this Declaration of Trust or
by the By-Laws of the Trust, the Trustees shall have power and authority:
(a) to adopt By-Laws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve that right to the Shareholders;
(b) to elect and remove such officers and appoint and terminate such
officers as they consider appropriate with or without cause, and to appoint and
designate from among the Trustees such committees as the Trustees may determine,
and to terminate any such committee and remove any member of such committee;
(c) to employ as custodian of any assets of the Trust a bank or trust
company or any other entity qualified and eligible to act as a custodian,
subject to any conditions set forth in this Declaration of Trust or in the
By-Laws;
(d) to retain a transfer agent and shareholder servicing agent, or both;
(e) to provide for the distribution of Shares either through a principal
underwriter or the Trust itself or both;
(f) to set record dates in the manner provided for in the By-Laws of the
Trust;
(g) to delegate such authority as they consider desirable to any officers
of the Trust and to any agent, custodian or underwriter;
(h) to vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property held in Trust hereunder; and to
execute and deliver powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such power and discretion
with relation to securities or property as the Trustees shall deem proper;
(i) to exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities held in trust hereunder;
(j) to hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, either in its own name
or in the name of a custodian or a nominee or nominees, subject in either case
to proper safeguards according to the usual practice of Massachusetts business
trusts or investment companies;
(k) to consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(l) to compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(m) to make, in the manner provided in the By-Laws, distributions of
income and of capital gains to Shareholders;
(n) to borrow money to the extent and in the manner permitted by the
1940 Act and the Trust's fundamental policy thereunder as to borrowing;
(o) to enter into investment advisory or management contracts, subject to
the 1940 Act, with any one or more corporations, partnerships, trusts,
associations or other persons;
(p) to change the name of the Trust or any Class or Series of the Trust
as they consider appropriate without prior shareholder approval;
(q) to establish officers' and Trustees' fees or compensation and fees or
compensation for committees of the Trustees to be paid by the Trust or each
Series thereof in such manner and amount as the Trustees may determine; and
(r) to engage, employ or appoint any person or entities to perform any
act for the Trust or the Trustees and to authorize their compensation.
5. No one dealing with the Trustees shall be under any obligation to make
any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or upon
their order.
6. (a) The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum of money
or assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay by way of subscription to any Shares or otherwise. This
paragraph shall not limit the right of the Trustees to assert claims against any
shareholder based upon the acts or omissions of such shareholder or for any
other reason. There is hereby expressly disclaimed shareholder and Trustee
liability for the acts and obligations of the Trust. Every note, bond, contract
or other undertaking issued by or on behalf of the Trust or the Trustees
relating to the Trust shall include a notice and provision limiting the
obligation represented thereby to the Trust and its assets (but the omission of
such notice and provision shall not operate to impose any liability or
obligation on any Shareholder).
(b) Whenever this Declaration of Trust calls for or permits any action to
be taken by the Trustees hereunder, such action shall mean that taken by the
Board of Trustees by vote of the majority of a quorum of Trustees as set forth
from time to time in the By-Laws of the Trust or as required by the 1940 Act.
(c) The Trustees shall possess and exercise any and all such additional
powers as are reasonably implied from the powers herein contained such as
may be necessary or convenient in the conduct of any business or enterprise
of the Trust, to do and perform anything necessary, suitable, or proper for
the accomplishment of any of the purposes, or the attainment of any one or
more of the objects, herein enumerated, or which shall at any time appear
conducive to or expedient for the protection or benefit of the Trust, and to
do and perform all other acts and things necessary or incidental to the
purposes herein before set forth, or that may be deemed necessary by the
Trustees.
(d) The Trustees shall have the power, to the extent not inconsistent
with the 1940 Act, to determine conclusively whether any moneys, securities,
or other properties of the Trust are, for the purposes of this Trust, to be
considered as capital or income and in what manner any expenses or
disbursements are to be borne as between capital and income whether or not in
the absence of this provision such moneys, securities, or other properties
would be regarded as capital or income and whether or not in the absence of
this provision such expenses or disbursements would ordinarily be charged to
capital or to income.
7. The By-Laws of the Trust may divide the Trustees into classes and
prescribe the tenure of office of the several classes, but no class of Trustee
shall be elected for a period shorter than that from the time of the election
following the division into classes until the next meeting and thereafter for a
period shorter than the interval between meetings or for a period longer than
five years, and the term of office of at least one class shall expire each year.
8. The Shareholders shall have the right to inspect the records,
documents, accounts and books of the Trust, subject to reasonable regulations of
the Trustees, not contrary to Massachusetts law, as to whether and to what
extent, and at what times and places, and under what conditions and regulations,
such right shall be exercised.
9. Any officer elected or appointed by the Trustees or by the
Shareholders or otherwise, may be removed at any time, with or without cause, in
such lawful manner as may be provided in the By-Laws of the Trust.
10. The Trustees shall have power to hold their meetings, to have an
office or offices and, subject to the provisions of the laws of Massachusetts,
to keep the books of the Trust outside of said Commonwealth at such places as
may from time to time be designated by them. Action may be taken by the Trustees
without a meeting by unanimous written consent or by telephone or similar method
of communication.
11. Securities held by the Trust shall be voted in person or by proxy by
the President or a Vice-President, or such officer or officers of the Trust as
the Trustees shall designate for the purpose, or by a proxy or proxies thereunto
duly authorized by the Trustees, except as otherwise ordered by vote of the
holders of a majority of the Shares outstanding and entitled to vote in respect
thereto.
12. (a) Subject to the provisions of the 1940 Act, any Trustee, officer
or employee, individually, or any partnership of which any Trustee, officer or
employee may be a member, or any corporation or association of which any
Trustee, officer or employee may be an officer, partner, director, trustee,
employee or stockholder, or otherwise may have an interest, may be a party to,
or may be pecuniarily or otherwise interested in, any contract or transaction of
the Trust, and in the absence of fraud no contract or other transaction shall be
thereby affected or invalidated; provided that in such case a Trustee, officer
or employee or a partnership, corporation or association of which a Trustee,
officer or employee is a member, officer, director, trustee, employee or
stockholder is so interested, such fact shall be disclosed or shall have been
known to the Trustees including those Trustees who are not so interested and who
are neither "interested" nor "affiliated" persons as those terms are defined in
the 1940 Act, or a majority thereof; and any Trustee who is so interested, or
who is also a director, officer, partner, trustee, employee or stockholder of
such other corporation or a member of such partnership or association which is
so interested, may be counted in determining the existence of a quorum at any
meeting of the Trustees which shall authorize any such contract or transaction,
and may vote thereat to authorize any such contract or transaction, with like
force and effect as if he were not so interested.
(b) Specifically, but without limitation of the foregoing, the Trust may
enter into a management or investment advisory contract or underwriting contract
and other contracts with, and may otherwise do business with any manager or
investment adviser for the Trust and/or principal underwriter of the Shares of
the Trust or any subsidiary or affiliate of any such manager or investment
adviser and/or principal underwriter and may permit any such firm or corporation
to enter into any contracts or other arrangements with any other firm or
corporation relating to the Trust notwithstanding that the Trustees of the Trust
may be composed in part of partners, directors, officers or employees of any
such firm or corporation, and officers of the Trust may have been or may be or
become partners, directors, officers or employees of any such firm or
corporation, and in the absence of fraud the Trust and any such firm or
corporation may deal freely with each other, and no such contract or transaction
between the Trust and any such firm or corporation shall be invalidated or in
any way affected thereby, nor shall any Trustee or officer of the Trust be
liable to the Trust or to any Shareholder or creditor thereof or to any other
person for any loss incurred by it or him solely because of the existence of any
such contract or transaction; provided that nothing herein shall protect any
director or officer of the Trust against any liability to the trust or to its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
(c) As used in this paragraph the following terms shall have the meanings
set forth below:
(i) the term "indemnitee" shall mean any present or
former Trustee, officer or employee of the Trust, any present or former
Trustee, partner, Director or officer of another trust, partnership, corporation
or association whose securities are or were owned by the Trust or of which the
Trust is or was a creditor and who served or serves in such capacity at the
request of the Trust, and the heirs, executors, administrators, successors and
assigns of any of the foregoing; however, whenever conduct by an indemnitee is
referred to, the conduct shall be that of the original indemnitee rather than
that of the heir, executor, administrator, successor or assignee;
(ii) the term "covered proceeding" shall mean any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, to which an indemnitee is or was a
party or is threatened to be made a party by reason of the fact or facts under
which he or it is an indemnitee as defined above;
(iii) the term "disabling conduct" shall mean willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office in question;
(iv) the term "covered expenses" shall mean expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by an indemnitee in connection with a
covered proceeding; and
(v) the term "adjudication of liability" shall mean, as
to any covered proceeding and as to any indemnitee, an adverse determination
as to the indemnitee whether by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent.
(d) The Trust shall not indemnify any indemnitee for any
covered expenses in any covered proceeding if there has been an adjudication of
liability against such indemnitee expressly based on a finding of disabling
conduct.
(e) Except as set forth in paragraph (d) above, the Trust
shall indemnify any indemnitee for covered expenses in any covered proceeding,
whether or not there is an adjudication of liability as to such indemnitee, such
indemnification by the Trust to be to the fullest extent now or hereafter
permitted by any applicable law unless the By-laws limit or restrict the
indemnification to which any indemnitee may be entitled. The Board of Trustees
may adopt By-Law provisions to implement subparagraphs (c), (d) and (e) hereof.
(f) Nothing herein shall be deemed to affect the right of the
Trust and/or any indemnitee to acquire and pay for any insurance covering any or
all indemnitees to the extent permitted by applicable law or to affect any other
indemnification rights to which any indemnitee may be entitled to the extent
permitted by applicable law. Such rights to indemnification shall not, except as
otherwise provided by law, be deemed exclusive of any other rights to which such
indemnitee may be entitled under any statute, By-Law, contract or otherwise.
13. The Trustees are empowered, in their absolute discretion, to
establish bases or times, or both, for determining the net asset value per Share
of any Class and Series in accordance with the 1940 Act and to authorize the
voluntary purchase by any Class and Series, either directly or through an agent,
of Shares of any Class and Series upon such terms and conditions and for such
consideration as the Trustees shall deem advisable in accordance with the 1940
Act.
14. Payment of the net asset value per Share of any Class and Series
properly surrendered to it for redemption shall be made by the Trust within
seven days, or as specified in any applicable law or regulation, after tender of
such stock or request for redemption to the Trust for such purpose together with
any additional documentation that may be reasonably required by the Trust or its
transfer agent to evidence the authority of the tenderor to make such request,
plus any period of time during which the right of the holders of the shares of
such Class of that Series to require the Trust to redeem such shares has been
suspended. Any such payment may be made in portfolio securities of such Class of
that Series and/or in cash, as the Trustees shall deem advisable, and no
Shareholder shall have a right, other than as determined by the Trustees, to
have Shares redeemed in kind.
15. The Trust shall have the right, at any time and without prior
notice to the Shareholder, to redeem Shares of the Class and Series held by such
Shareholder held in any account registered in the name of such Shareholder for
its current net asset value, if and to the extent that such redemption is
necessary to reimburse either that Series or Class of the Trust or the
distributor (i.e., principal underwriter) of the Shares for any loss either has
sustained by reason of the failure of such Shareholder to make timely and good
payment for Shares purchased or subscribed for by such Shareholder, regardless
of whether such Shareholder was a Shareholder at the time of such purchase or
subscription, subject to and upon such terms and conditions as the Trustees may
from time to time prescribe.
EIGHTH: The name "Oppenheimer" included in the name of the Trust and
of any Series shall be used pursuant to a royalty-free, non-exclusive license
from OppenheimerFunds, Inc. ("OFI"), incidental to and as part of any one or
more advisory, management or supervisory contracts which may be entered into by
the Trust with OFI. Such license shall allow OFI to inspect and subject to the
control of the Board of Trustees to control the nature and quality of services
offered by the Trust under such name. The license may be terminated by OFI upon
termination of such advisory, management or supervisory contracts or without
cause upon 60 days' written notice, in which case neither the Trust nor any
Series or Class shall have any further right to use the name "Oppenheimer" in
its name or otherwise and the Trust, the Shareholders and its officers and
Trustees shall promptly take whatever action may be necessary to change its name
and the names of any Series or Classes accordingly.
NINTH:
1. In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his being or having been a Shareholder and
not because of his acts or omissions or for some other reason, the Shareholder
or former Shareholder (or the Shareholders, heirs, executors, administrators or
other legal representatives or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the Trust estate
to be held harmless from and indemnified against all loss and expense arising
from such liability. The Trust shall,
upon request by the Shareholder, assume the defense of any such claim made
against any Shareholder for any act or obligation of the Trust and satisfy any
judgment thereon.
2. It is hereby expressly declared that a trust and not a partnership is
created hereby. No individual Trustee hereunder shall have any power to bind the
Trust, the Trust's officers or any Shareholder. All persons extending credit to,
doing business with, contracting with or having or asserting any claim against
the Trust or the Trustees shall look only to the assets of the Trust for payment
under any such credit, transaction, contract or claim; and neither the
Shareholders nor the Trustees, nor any of their agents, whether past, present or
future, shall be personally liable therefor; notice of such disclaimer shall be
given in each agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. Nothing in this Declaration of Trust shall protect a
Trustee against any liability to which such Trustee would otherwise be subject
by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
3. The exercise by the Trustees of their powers and discretion
hereunder in good faith and with reasonable care under the circumstances then
prevailing, shall be binding upon everyone interested. Subject to the provisions
of paragraph 2 of this Article NINTH, the Trustees shall not be liable for
errors of judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operations of this
Declaration of Trust, applicable laws, contracts, obligations, transactions or
any other business the Trust may enter into, and subject to the provisions of
paragraph 2 of this Article NINTH, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is required.
4. This Trust shall continue without limitation of time but subject to the
provisions of sub-sections (a), (b), (c) and (d) of this paragraph 4.
(a) The Trustees, with the favorable vote of the holders of a
majority of the outstanding voting securities, as defined in the 1940 Act, of
any one or more Series entitled to vote, may sell and convey the assets of that
Series (which sale may be subject to the retention of assets for the payment of
liabilities and expenses) to another issuer for a consideration which may be or
include securities of such issuer. Upon making provision for the payment of
liabilities, by assumption by such issuer or otherwise, the Trustees shall
distribute the remaining proceeds ratably among the holders of the outstanding
Shares of the Series the assets of which have been so transferred.
(b) The Trustees, with the favorable vote of the holders of a
majority of the outstanding voting securities, as defined in the 1940 Act, of
any one or more Series entitled to vote, may at any time sell and convert into
money all the assets of that Series. Upon making provisions for the payment of
all outstanding obligations, taxes and other liabilities, accrued or contingent,
of that Series, the Trustees shall distribute the remaining assets of that
Series ratably among the holders of the outstanding Shares of that Series.
(c) The Trustees, with the favorable vote of the holders of a
majority of the outstanding voting securities, as defined in the 1940 Act, of
any one or more Series entitled to vote, may otherwise alter, convert or
transfer the assets of that Series or those Series.
(d) Upon completion of the distribution of the remaining
proceeds or the remaining assets as provided in sub-sections (a) and (b), and in
subsection (c) where applicable, the Series the assets of which have been so
transferred shall terminate, and if all the assets of the Trust have been so
transferred, the Trust shall terminate and the Trustees shall be discharged of
any and all further liabilities and duties hereunder and the right, title and
interest of all parties shall be canceled and discharged.
5. The original or a copy of this instrument and of each restated
declaration of trust or instrument supplemental hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each supplemental or restated declaration of trust shall be
filed with the Secretary of the Commonwealth of Massachusetts, as well as any
other governmental office where such filing may from time to time be required.
Anyone dealing with the Trust may rely on a certificate by an officer of the
Trust as to whether or not any such supplemental or restated declarations of
trust have been made and as to any matters in connection with the Trust
hereunder, and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such supplemental or restated declaration of trust. In this instrument or in
any such supplemental or restated declaration of trust, references to this
instrument, and all expressions like "herein", "hereof" and "hereunder" shall be
deemed to refer to this instrument as amended or affected by any such
supplemental or restated declaration of trust. This instrument may be executed
in any number of counterparts, each of which shall be deemed an original.
6. The Trust set forth in this instrument is created under and is to
be governed by and construed and administered according to the laws of the
Commonwealth of Massachusetts. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a trust.
7. The Board of Trustees is empowered to cause the redemption of the
Shares held in any account if the aggregate net asset value of such Shares
(taken at cost or value, as determined by the Board) has been reduced to $500 or
less upon such notice to the shareholder in question, with such permission to
increase the investment in question and upon such other terms and conditions as
may be fixed by the Board of Trustees in accordance with the 1940 Act.
8. In the event that any person advances the organizational expenses
of the Trust, such advances shall become an obligation of the Trust subject to
such terms and conditions as may be fixed by, and on a date fixed by, or
determined with criteria fixed by the Board of Trustees, to be amortized over a
period or periods to be fixed by the Board.
9. Whenever any action is taken under this Declaration of Trust
including action which is required or permitted by the 1940 Act or any other
applicable law, such action shall be deemed to have been properly taken if such
action is in accordance with the construction of the 1940 Act or such other
applicable law then in effect as expressed in "no action" letters of the staff
of the Commission or any release, rule, regulation or order under the 1940 Act
or any decision of a court of competent jurisdiction, notwithstanding that any
of the foregoing shall later be found to be invalid or otherwise reversed or
modified by any of the foregoing.
10. Any action which may be taken by the Board of Trustees under
this Declaration of Trust or its By-Laws may be taken by the description thereof
in the then effective prospectus and/or statement of additional information
relating to the Shares under the Securities Act of 1933 or in any proxy
statement of the Trust rather than by formal resolution of the Board.
11. Whenever under this Declaration of Trust, the Board of Trustees
is permitted or required to place a value on assets of the Trust, such action
may be delegated by the Board, and/or determined in accordance with a formula
determined by the Board, to the extent permitted by the 1940 Act.
12. If authorized by vote of the Trustees and, if a vote of
Shareholders is required under this Declaration of Trust, the favorable vote of
the holders of a "majority" of the outstanding voting securities, as defined in
the 1940 Act, entitled to vote, or by any larger vote which may be required by
applicable law in any particular case, the Trustees may amend or otherwise
supplement this instrument, by making a Restated Declaration of Trust or a
Declaration of Trust supplemental hereto, which thereafter shall form a part
hereof; any such Supplemental or Restated Declaration of Trust may be executed
by and on behalf of the Trust and the Trustees by an officer or officers of the
Trust.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of this
________ day of ___________, 1998.
- -------------------------- --------------------------
Leon Levy Benjamin Lipstein
31 West 52nd Street 591 Breezy Hill Road
New York, NY 10019 Hillsdale, NY 12529
- -------------------------- ---------------------------
Donald W. Spiro Elizabeth B. Moynihan
399 Ski Trail 801 Pennsylvania Ave. NW
Smoke Rise, NJ 07405 Washington, DC 20004
- -------------------------- ----------------------------
Bridget A. Macaskill Kenneth A. Randall
160 E. 81st Street 6 Whittaker's Mill
New York, NY 10028 Williamsburg, VA 23185
- -------------------------- ----------------------------
Robert G. Galli Edward V. Regan
19750 Beach Road 40 Park Avenue
Apt. 401 New York, NY 10016
Jupiter Beach, FL 33469
- --------------------------- -----------------------------
Russel S. Reynolds, Jr. Pauline Trigere
8 Sandshore Drive 498 Seventh Avenue
Greenwich, CT 06830 New York, NY 10018
- ---------------------------
Clayton K. Yeutter
1325 Merrie Ridge Road
Mclean, VA 22101
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<PAGE>
OPPENHEIMER WORLD BOND FUND
PROXY FOR SPECIAL SHAREHOLDERS MEETING TO BE HELD April 16, 1998
Your shareholder vote is important!
Your prompt response can save your Fund the expense of another mailing.
Please mark your proxy on the reverse side, date and sign it, and return it
promptly in the accompanying envelope, which requires no postage if mailed in
the United States.
Please detach at perforation before mailing.
- -------------------------------------------------------------------
Oppenheimer World Bond Fund
Proxy for Special Shareholders Meeting to be held April 16, 1998
The undersigned shareholder of Oppenheimer World Bond Fund (the "Fund") does
hereby appoint George C. Bowen, Andrew J. Donohue, Robert J. Bishop and Scott T.
Farrar, and each of them, as attorneys-in-fact and proxies of the undersigned,
with full power of substitution, to attend the Annual Meeting of Shareholders of
the Fund to be held April 16, 1998, at 6803 South Tucson Way, Englewood,
Colorado 80112 at 10:00 A.M., Denver time, and at all adjournments thereof, and
to vote the shares held in the name of the undersigned on the record date for
said meeting for the election of Trustees and on the Proposals specified on the
reverse side. Said attorneys-in-fact shall vote in accordance with their best
judgment as to any other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES, WHICH RECOMMENDS A VOTE FOR
THE ELECTION OF ALL NOMINEES FOR TRUSTEE AND FOR EACH PROPOSAL ON THE REVERSE
SIDE. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED ON THE REVERSE
SIDE OR FOR IF NO CHOICE IS INDICATED.
OVER
675
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<PAGE>
Oppenheimer World Bond Fund/Proxy for Special Shareholders Meeting to be held
April 16, 1997.
Your shareholder vote is important!
Your prompt response can save your Fund money.
Please vote, sign and mail your proxy ballot (this card) in the enclosed
postage-paid envelope today, no matter how many shares you own. A majority of
the Fund's shares must be represented in person or by proxy. Please vote your
proxy so your Fund can avoid the expense of another mailing.
Please detach at perforation before mailing.
- ----------------------------------------------------------------------
1. Approval of a proposal to change the Fund's subclassification under
the Investment Company Act of 1940 from a closed-end
management investment company to an open-end management
investment company (Proposal No. 1)
FOR____ AGAINST____
ABSTAIN____
2. Approval of changes to certain of the Fund's fundamental investment
policies (Proposal No. 2)
- Investment Objective
- Borrowing
- Lending
- Joint Securities Trading Account
- Hedging
- Commodities
FOR____ AGAINST____
ABSTAIN____
3. Approval of a new Investment Advisory Agreement between the Fund and
OppenheimerFunds, Inc.(Proposal No. 3);
FOR____ AGAINST____
ABSTAIN____
4. Approval of a new Service Plan and Agreement with OppenheimerFunds
Distributor, Inc. with respect to Class A shares (Proposal No. 4);
FOR____ AGAINST____
ABSTAIN____
5. Approval of an Amendment and Restatement of the Fund's Declaration
of Trust (Proposal No. 5)
FOR____ AGAINST____
ABSTAIN____
6. Ratification of the selection of KPMG Peat Marwick LLP as the
independent auditors of the Fund for the fiscal year commencing
November 1, 1997 (Proposal No. 6)
FOR____ AGAINST____
ABSTAIN____
7. Election of Trustees
A) Leon Levy
B) Robert G. Galli
C) Benjamin Lipstein
D) Bridget A. Macaskill
E) Elizabeth B. Moynihan
F) Kenneth A. Randall
G) Edward V. Regan
H) Russell S. Reynolds, Jr.
I) Donald W. Spiro
J) Pauline Trigere
K) Clayton K. Yeutter
_______FOR all nominees listed ______WITHHOLD AUTHORITY
except as marked to the contrary to vote for all nominees listed
at left. at left.
Instruction: To withhold authority to vote for any individual nominee, line out
that nominee's name at left.
Dated:___________________________, 1998
(Month) (Day)
-----------------------------------
Signature(s)
-----------------------------------
Signature(s)
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing as
custodian, attorney, executor, administrator, trustee, etc., please give your
full title as such. All joint owners should sign this proxy. If the account is
registered in the name of a corporation, partnership or other entity, a duly
authorized individual must sign on behalf of such entity and give his or her
title.
OVER
Please read both sides of this ballot. 675
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