As filed with the Securities and Exchange Commission on January 11, 1996
Registration No. 33-3692
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 16
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 21
(Check appropriate box or boxes.)
ROCHESTER FUND MUNICIPALS
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(Exact Name of Registrant as Specified in Charter)
350 Linden Oaks, Rochester, New York 14625
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (716) 383-1300
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Andrew J. Donohue, Esq.
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
(Name and Address of Agent for Service)
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With a copy to:
Robert J. Zutz, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue NW
Washington, D.C. 20036
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement. It is proposed that this filing
become effective:
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On (date) pursuant to paragraph (b)
[X] Sixty days after filing pursuant to paragraph (a)(i)
[ ] On (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph a(ii)
[ ] On (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
[ ] this post effective amendment designates a new effective date for a
previously filed post-effective amendment Registrant's Rule 24f-2 Notice for the
most recent fiscal year was filed with the Securities and Exchange Commission on
February 17, 1995.
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<PAGE>
Rochester Fund Muncipals
Cross Reference Sheet
Form N-1A
Part A of
Form N-1A
Item No. Heading in Prospectus
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1 Front Cover Page
2 Expenses; A Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; How the Fund is Managed--Organization
and History; Investment Objective, Policies and
Considerations
5 About the Fund--Expenses; How the Fund is Managed;
Back Cover
5A *
6 How the Fund is Managed--Organization and History;
The Transfer Agent; Dividends, Capital Gains and Taxes;
Investment Objective, Policies and Considerations
7 Shareholder Account Rules and Policies; How to Buy Shares;
How to Sell Shares; How to Exchange Shares; Special
Investor Services; Service Plan for Shares
8 How to Sell Shares; Special Investor Services
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information
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10 Cover Page
11 Cover Page
12 *
13 Investment Objectives and Policies--Other Investment
Techniques and Strategies; Investment Objectives and
Policies--Investment Considerations/Risks
14 How the Fund is Managed--Trustees and Officers of the Fund
15 How the Fund is Managed--Major Shareholders
16 How the Fund is Managed--The Adviser and its Affiliates;
Distribution and Service Plans
17 Brokerage Policies of the Fund
18 About Your Account--Determination of Net Asset Value Per
Share; Dividends, Capital Gains and Taxes
19 Your Investment Account--How to Buy Shares; How to
Sell Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the Fund
22 Performance of the Fund
23 Financial Statements
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* Not applicable or negative answer.
<PAGE>
ROCHESTER FUND MUNICIPALS
Prospectus dated March 11, 1996
Rochester Fund Municipals is a mutual fund with the investment objective of
providing shareholders with as high a level of interest income exempt from
Federal, New York State and New York City personal income taxes as is consistent
with its investment policies and prudent investment management while seeking
preservation of shareholders' capital. The Fund intends to achieve its objective
by investing primarily in New York State municipal and public authority debt
obligations exempt from such taxes. Except for temporary defensive purposes, at
least 80% of the Fund's net assets will be invested in tax exempt municipal
securities. There can be no assurance that the Fund will achieve its objective.
This Prospectus explains concisely what you should know before investing in
the Fund. Please read this Prospectus carefully and keep it for future
reference. You can find more detailed information about the Fund in the March
11, 1996 Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Fund's Transfer Agent, at 1-800-525-7048, or
write to the Transfer Agent at the address on the back cover. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference (which means
that it is legally part of this Prospectus).
[Logo]
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT
GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE F.D.I.C. OR ANY OTHER AGENCY,
AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
EXPENSES
A BRIEF OVERVIEW OF THE FUND
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVE, POLICIES AND CONSIDERATIONS
HOW THE FUND IS MANAGED
PERFORMANCE OF THE FUND
ABOUT YOUR ACCOUNT
HOW TO BUY SHARES
SPECIAL INVESTOR SERVICES
AccountLink
Automatic Withdrawal and Exchange
Plans
Reinvestment Privilege
HOW TO SELL SHARES
By Mail
By Telephone
By Checkwriting
HOW TO EXCHANGE SHARES
SHAREHOLDER ACCOUNT RULES AND POLICIES
DIVIDENDS, CAPITAL GAINS AND TAXES
APPENDIX: SPECIAL FACTORS AFFECTING AN INVESTMENT IN THE FUND
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<PAGE>
ABOUT THE FUND
EXPENSES
The Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services, and those
expenses are subtracted from the Fund's assets to calculate the Fund's net asset
value per share. All shareholders therefore pay those expenses indirectly.
Shareholders pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you understand
your direct expenses of investing in the Fund and your share of the Fund's
business operating expenses that you will bear indirectly. The calculations are
based on the Fund's expenses during its last fiscal year ended December 31,
1995.
o SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of the Fund. Please refer to "About Your Account," for an explanation of
how and when these charges apply.
Maximum Sales Charge on Purchase
(as a % of offering price) .................... 4.00%
o ANNUAL FUND OPERATING EXPENSES are paid out of the Fund's assets and
represent the Fund's expenses in operating its business. For example, the Fund
pays management fees to its investment adviser, OppenheimerFunds,Inc.(which is
referred to in this Prospectus as the "Manager"). The rates of the Manager's
fees are set forth in "How the Fund is Managed" below. The Fund has other
regular expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds the Fund's portfolio securities, audit fees and legal
expenses. Those expenses are detailed in the Fund's Financial Statements in the
Statement of Additional Information.
The numbers in the table below are projections of the Fund's business
expenses based on the Fund's expenses in its last fiscal year. These amounts are
shown as a percentage of the average net assets for that year. The 12b-1
Distribution Plan Fees for shares are Service Plan Fees (which are a maximum of
0.25% for the service fee ). This plan is described in greater detail in "How to
Buy Shares."
The actual expenses for shares in future years may be more or less than the
numbers in the table, depending on a number of factors, including the actual
value of the Fund's assets.
Management Fees
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12b-1 Distribution Plan
Fees
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Other Expenses
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Total Fund Operating Expenses
o EXAMPLES. To try to show the effect of these expenses on an investment
over time, we have created the hypothetical examples shown below. Assume that
you make a $1,000 investment in each class of shares of the Fund, and that the
Fund's annual return is 5%, and that its operating expenses are the ones shown
in the Annual Fund Operating Expenses table above. If you were to redeem your
shares at the
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<PAGE>
end of each period shown below, your investment would incur the following
expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years
------ ------- ------- --------
If you did not redeem your investment, it would incur the following expenses:
1 year 3 years 5 years 10 years
------ ------- ------- --------
These examples show the effect of expenses on an investment, but are not
meant to state or predict actual or expected costs or investment returns of the
Fund, all of which will vary.
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<PAGE>
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete information can
be found. You should carefully read the entire Prospectus before making a
decision about investing in the Fund. Keep the Prospectus for reference after
you invest, particularly for information about your account, such as how to sell
or exchange shares.
o WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund's investment objective
is to provide shareholders with as high a level of interest income exempt from
Federal, New York State and New York City personal income taxes as is consistent
with its investment policies and prudent investment management while seeking
preservation of shareholders' capital. There can be no assurance that the Fund
will acheive its objective.
o WHAT DOES THE FUND INVEST IN? The Fund seeks to achieve its objective by
investing primarily in New York State municipal and public authority debt
obligations the interest from which is exempt from such taxes. In addition, the
Fund may also invest its assets in obligations of municipal issuers located in
U.S. territories. See "Dividends, Captial Gains and Taxes". Investments will be
made without regard to maturity. The lack of maturity restrictions, however, may
result in greater fluctuation of bond prices in the Fund's portfolio and greater
fluctuation in the Fund's net asset value because the prices of long-term bonds
are more affected by changes in interest rates than prices of short-term bonds.
As a fundamental policy, at least 80% of the Fund's net assets will be
invested in tax-exempt securities except when the Manager determines that market
conditions could cause serious erosion of portfolio value, in which case assets
may be temporarily invested in short-term taxable obligations as a defensive
measure to preserve net asset value. Such temporary investments will be limited
substantially to: obligations issued or guaranteed by the United States
government, its agencies, instrumentalities or authorities; highly-rated
corporate debt securities; prime commercial paper; or certificates of deposit of
domestic banks with assets of at least $1 billion.
o WHO MANAGES THE FUND? The Fund's investment adviser is OppenheimerFunds,
Inc. The Manager (including a subsidiary) advises investment company portfolios
having over $__ billion in assets at December 31, 1995. The Manager is paid an
advisory fee by the Fund, based on its assets. The Fund's portfolio manager, who
is employed by the Manager and who is primarily responsible for the selection of
the Fund's securities, is Ronald H. Fielding. The Fund's Board of Trustees,
which is elected by shareholders, oversees the investment adviser and the
portfolio manager. Please refer to "How the Fund is Managed," for more
information about the Manager and its fees.
o HOW RISKY IS THE FUND? All investments carry risks to some degree. The
Fund's investments are subject to changes in their value from a number of
factors such as changes in general bond market movements, the change in value of
particular bonds because of an event affecting the issuer, or changes in
interest rates that can affect bond prices. These changes affect the value of
the Fund's investments and its price per share. The Fund may invest in "inverse
floater" variable rate bonds, a type of derivative investment whose yields move
in the opposite direction as short-term interest rates change. While the Manager
tries to reduce risks by diversifying investments and by carefully researching
securities before they are purchased for the portfolio, and in some cases by
using hedging techniques, there is no guarantee of
-5-
<PAGE>
success in achieving the Fund's objective and your shares may be worth more or
less than their original cost when you redeem them. Please refer to "Investment
Objective and Policies" for a more complete discussion.
o HOW CAN I BUY SHARES? You can buy shares through your dealer or financial
institution, or you can purchase shares directly through the Distributor by
completing an Application or by using an Automatic Investment Plan under
AccountLink. Please refer to "How to Buy Shares" for more details.
o WILL I PAY A SALES CHARGE TO BUY SHARES? The Fund offers the investor one
class of shares with a maximum front-end sales load of 4%. There is no
contingent deferred sales charge nor asset based sales charge on the shares.
Please refer to "How to Buy Shares" for more details.
o HOW CAN I SELL MY SHARES? Shares can be redeemed by mail or by telephone
call to the Transfer Agent on any business day, or through your dealer or by
writing a check against your current account. Please refer to "How to Sell
Shares". The Fund also offers exchange privileges to other Oppenheimer funds,
described in "How To Exchange Shares".
o HOW HAS THE FUND PERFORMED? The Fund measures its performance by quoting
its yield, tax equivalent yield, average annual total return and cumulative
total return, which measure historical performance. Those yields and returns can
be compared to the yields and returns (over similar periods) of other funds. Of
course, other funds may have different objectives, investments, and levels of
risk. Please remember that past performance does not guarantee future results.
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<PAGE>
FINANCIAL HIGHLIGHTS
The table on the following pages presents selected financial information
about the Fund, including per share data and expense ratios and other data based
on the Fund's average net assets. This information has been audited by Price
Waterhouse LLP, the Fund's independent auditors, whose report on the Fund's
financial statements for the fiscal year ended December 31, 1995, is included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987* 1986*
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value
beginning of year .............. $19.00 $17.65 $17.01 $16.24 $16.29 $16.14 $15.31 $16.06 $16.14
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income .......... 1.13 1.17 1.20 1.20 1.20 1.20 1.20 1.13 .88
Net realized and unrealized
gain (loss) on investments ... (2.68) 1.35 .64 .81 (.05) .15 .83 (.57) .16
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations ..................... (1.55) 2.52 1.84 2.01 1.15 1.35 2.03 .56 1.04
------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income ............ (1.13) (1.17) (1.20) (1.20) (1.20) (1.20) (1.20) (1.20) (1.12)
net investment income--prior
year ......................... (0.01) -- -- -- -- -- -- -- --
Distributions from capital
gains ........................ -- -- -- (.04) -- -- -- (.11) --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions ............ (1.14) (1.17) (1.20) (1.24) (1.20) (1.20) (1.20) (1.31) (1.12)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year ... $16.31 $19.00 $17.65 $17.01 $16.24 $16.29 $16.14 $15.31 $16.06
====== ====== ====== ====== ====== ====== ====== ====== ======
Total return (excludes
sales load) .................... (8.35%) 14.60% 11.19% 12.79% 7.28% 8.67% 13.72% 3.69% 6.89%
Ratios/supplemental data:
Net assets, end of year
(000 omitted) ................ $1,791,299 $1,794,096 $997,030 $497,440 $260,553 $98,095 $39,277 $16,567 $7,096
Ratio of total expenses
to average net assets ........ 0.84% 0.75% 0.84% 0.87% 0.88% 1.11% 1.13% 1.2% 0.8%
Ratio of total expenses
(excluding interest) to
average net assets(Y) ........ 0.73% 0.64% 0.70% 0.74% 0.72% 0.91% 1.10% 1.2% 0.8%
Ratio to net investment income
to average net assets ........ 6.43% 6.21% 6.79% 7.12% 7.21% 7.19% 7.40% 7.3% 5.5%
Portfolio turnover rate ........ 34.39% 18.27% 29.99% 48.54% 51.63% 34.76% 61.50% 72.8% 110.0%
- --------------
</TABLE>
Per share information has been determined on the basis of a weighted daily
average number of shares outstanding during the period.
* Includes a voluntary reimbursement of expenses by Fielding Management
Company, Inc. which amounted to $.04 per share in 1986 and $.01 per share
in 1987. Without reimbursement, the ratio of total expenses to average net
assets would have been 1.1% in 1986 and 1.2% in 1987. Fielding Management
Company, Inc. was the Fund's investment adviser from inception through
April 30, 1994.
(Y) During the periods shown above, the Fund's interest expense was
substantially offset by the incremental interest income generated on bonds
purchased with borrowed funds.
<TABLE>
Information On Bank Loans
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bank loans outstanding at end of year (000) ...... $ 15,083 $30,886 $22,644 $18,292 $ 3,067 $1,139 $ 430
Monthly average amount of bank loans
outstanding during the year (000) .............. $ 28,131 $27,137 $17,060 $ 5,317 $ 2,587 $ 990 $ 20
Monthly average number of shares of the
Fund outstanding during the year (000) ......... 105,753 77,472 41,429 22,445 10,327 3,980 1,554
Average amount of bank loans per share
outstanding during the year .................... $ .27 $ .35 $ .41 $ .24 $ .25 $ .25 $ .01
</TABLE>
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<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND CONSIDERATIONS
OBJECTIVE. The Fund's investment objective is to provide as high a level of
interest income exempt from Federal, New York State and New York City personal
income taxes as is consistent with prudent investing while seeking preservation
of shareholders' capital. There is no assurance that the Fund will achieve its
objective and there can be no guarantee that the value of an investment in Fund
Shares might not decline.The Fund will seek to achieve its objective by
investing primarily in New York State municipal and public authority debt
obligations exempt from such taxes. In addition, the Fund may also invest its
assets in obligations of municipal issuers located in U.S. territories. See
"Dividends, Capital Gains and Taxes". Investments will be made without regard to
maturity. The lack of maturity restrictions, however, may result in greater
fluctuation of bond prices in the Fund's portfolio and greater fluctuation in
the Fund's net asset value because the prices of long term bonds are more
affected by changes in interest rates than prices of short-term bonds.
As a fundamental policy, at least 80% of the Fund's net assets will be invested
in tax-exempt securities except when the Fund's investment adviser determines
that market conditions could cause serious erosion of portfolio value, in which
case assets may be temporarily invested in short-term taxable obligations as a
defensive measure to preserve net asset value. Such temporary investments will
be limited substantially to: obligations issued or guaranteed by the United
States government, its agencies, instrumentalities or authorities; highly-rated
corporate debt securities; prime commercial paper; or certificates of deposit of
domestic banks with assets of at least $1 billion.
CAN THE FUND'S INVESTMENT OBJECTIVES AND POLICIES CHANGE? The investment
objective and fundamental policies of the Fund is a fundamental policy which
cannot be changed without shareholder approval.
INVESTMENT POLICIES AND STRATEGIES.
o CREDIT QUALITY. At least 80% of the Fund's net assets which are invested in
tax-exempt obligations will be invested in securities which have received
investment grade ratings from a nationally recognized statistical rating
organization ("NRSRO"), or in securities which are not rated, provided that, in
the opinion of the Manager, such securities are of equivalent quality to
securities so rated. Such securities may have speculative characteristics. A
description of rating categories is contained in Appendix A to the Statement of
Additional Information. The remaining 20% of the Fund's assets which are
invested in tax-exempt obligations may be invested in lower rated securities or
in securities which are unrated. Investments in these securities present
different risks than investments in higher rated securities, including an
increased sensitivity to adverse economic changes or individual developments and
a higher rate of default. The Manager will attempt to reduce the risks inherent
in investments in lower rated securities through active portfolio management,
diversification, credit analysis and attention to current developments and
trends in the economy and financial markets. Such securities are regarded as
speculative securities. See "Investment Objectives and Policies" for a
discussion of the risks associated with investments in high yield, high risk
securities.
o MUNICIPAL OBLIGATIONS. Municipal securities include debt obligations issued to
obtain funds for various public purposes, including the construction of a wide
range of public facilities such as bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which municipal securities or bonds may be issued include the
refunding of outstanding obligations, obtaining funds for general operating
expenses and the obtaining of funds to loan to other public institutions and
facilities. In addition, certain types of private activity bonds are issued by
or on behalf of public authorities to obtain funds to provide housing
facilities, sports facilities, manufacturing facilities, convention or trade
show facilities,
-8-
<PAGE>
airport, mass transit, port or parking facilities, air or water pollution
control facilities and certain local facilities for water supply, gas,
electricity or sewage or solid waste disposal.
The interest on bonds issued to finance essential state and local government
operations is fully tax-exempt. However, the interest on certain private
activity bonds (including those for housing and student loans) issued after
August 15, 1986, while still tax-exempt for regular tax purposes, constitutes a
preference item for taxpayers in determining their alternative minimum tax under
the Internal Revenue Code of 1986, as amended (the "Code"). See "Taxes". The
Code also imposes certain limitations and restrictions on the use of tax-exempt
bond financing for non-government business activities, such as non-essential
private activity bonds. The Fund intends to purchase private activity bonds only
to the extent that the interest paid by such bonds is exempt from Federal, New
York State and New York City taxes for regular tax purposes pursuant to the
Code.
The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. There are variations in the security of
municipal bonds, both within a particular classification and between
classifications. General obligation bonds are secured by the issuer's pledge of
its faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or specific revenue source. One type of revenue bond common to
New York State (the "State") is a "moral obligation" bond. A moral obligation
bond is a bond which is issued by revenue authorities under circumstances where
the State provides a moral pledge of payment in the event that an authority is
unable to make timely debt service. Unlike a general obligation pledge, however,
the moral pledge does not constitute the State's official pledge of its full
faith and credit. Accordingly, the Manager would consider precedents established
in the State with respect to the honoring of such moral pledges in its credit
analyses of moral obligation bonds. Private activity bonds, which are municipal
bonds, are in most cases revenue bonds and do not generally constitute the
pledge of the credit of the issuer of such bonds.
The values of outstanding municipal bonds will vary as a result of changing
evaluations of the ability of their issuers to meet the interest and principal
payments. Such values will also change in response to changes in the interest
rates payable on new issues of municipal bonds. Should such interest rates rise,
the values of outstanding bonds, including those held in the Fund's portfolio,
will decline and (if purchased at principal amount) would sell at a discount. If
such interest rates fall, the values of outstanding bonds will increase and (if
purchased at principal amount) would sell at a premium. Changes in the value of
municipal bonds held in the Fund's portfolio arising from these or other factors
will cause changes in the net asset value per share of the Fund. As an
operational policy, however, the Fund will not invest more than 5% of its assets
in securities where the principal and interest are the responsibility of an
industrial user with less than three years' operational history.
In determining the issuer of a tax-exempt security, each state and each
political subdivision, agency and instrumentality of each state and each
multistate agency of which such state is a member is a separate issuer. Where
securities are backed only by assets and revenues of a particular
instrumentality, facility or subdivision, such entity is considered the issuer.
The percentage limitations referred to herein and elsewhere in this Prospectus
are determined as of the time an investment or purchase is made.
o INVESTMENTS IN ILLIQUID SECURITIES. The Fund may purchase securities, in
private placements or in other transactions, the disposition of which would be
subject to legal restrictions, or in securities for which there is no regular
trading market (collectively, "Illiquid Securities"). No more than an aggregate
of 15% of the value of the Fund's net assets at the time of acquisition may be
invested in Illiquid Securities. The Fund's policy with respect to investments
in illiquid securities is a non-fundamental policy and, as such, may be changed
by action of the Fund's Board of Trustees.
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<PAGE>
Such investments may include lease obligations or installment purchase contract
obligations (hereinafter collectively called "municipal leases") of municipal
authorities or entities. Subject to the percentage limitation on investments in
Illiquid Securities, the Fund may invest only a maximum of 5% of assets which
are invested in tax-exempt obligations in unrated or illiquid tax-exempt
municipal leases. Investments in tax-exempt municipal leases will be subject to
the 15% limitation on investments in Illiquid Securities unless, in the judgment
of the Manager, a particular municipal lease is liquid and unless the lease has
received an investment grade rating from an NRSRO. The Board of Trustees has
adopted guidelines to be utilized by the Manager in making determinations
concerning the liquidity and valuation of municipal lease obligations. See the
Statement of Additional Information for a description of the guidelines which
will be utilized by the Manager in making such determinations. Under
circumstances where the Fund proposes to purchase unrated municipal lease
obligations, the Fund's Board of Trustees will be responsible for determining
the credit quality of such obligations and will be responsible for assessing on
an ongoing basis the likelihood that the lease will not be cancelled.
Investment in tax-exempt lease obligations presents certain special risks which
are not associated with investments in other tax-exempt obligations such as
general obligation bonds or revenue bonds. Although municipal leases do not
constitute general obligations of the municipality for which the municipality's
taxing power is pledged, a municipal lease may be backed by the municipality's
covenant to budget for, appropriate and make the payments due under the
municipal lease. Most municipal leases, however, contain "non-appropriation"
clauses which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated for
such purpose on a yearly basis. Although "non-appropriation" municipal leases
are generally secured by the leased property, disposition of the property in the
event of default might prove difficult.
A further discussion of such risks and the manner in which the Fund will seek to
minimize such risks is contained in the Statement of Additional Information.
Investments in Illiquid Securities may also include, but are not limited to,
securities which have not been registered under the Securities Act of 1933, as
amended (the "1933 Act"). Rule 144A under the 1933 Act permits certain resales
of such unregistered securities, provided that such securities have been
determined to be eligible for resale to certain qualified institutional buyers
("Rule 144A Securities"). Rule 144A Securities which are determined to be liquid
by the Fund's Manager pursuant to certain guidelines which have been adopted by
the Board of Trustees will be excluded from the 15% limitation on investments in
Illiquid Securities.
o BORROWING FOR INVESTMENT PURPOSES. The Fund may borrow money, but only from
banks, in amounts up to 5% of its total assets to purchase additional portfolio
securities. Borrowing for investment purposes increases both investment
opportunity and investment risk. Such borrowings in no way affect the Federal or
New York State tax status of the Fund or its dividends. If the investment income
on securities purchased with borrowed money exceeds the interest paid on the
borrowing, the net asset value of the Fund's shares will rise faster than would
otherwise be the case. On the other hand, if the investment income fails to
cover the Fund's costs, including the interest on borrowings or if there are
losses, the net asset value of the Fund's shares will decrease faster than would
otherwise be the case.
The Investment Company Act of 1940, as amended (the "Act"), requires the Fund to
maintain asset coverage of at least 300% for all such borrowings, and should
such asset coverage at any time fall below 300%, the Fund would be required to
reduce its borrowings within three days to the extent necessary to meet the
requirements of the Act. The Fund might be required to sell securities at a time
when it would be disadvantageous to do so in order to reduce its borrowing. The
Fund may also borrow for temporary and emergency purposes. See "Investment
Restrictions" in the Statement of Additional Information.
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<PAGE>
In addition, because interest on money borrowed is an expense that the Fund
would not otherwise incur, the Fund may have less net investment income during
periods when its borrowings are substantial. The interest paid by the Fund on
borrowings may be more or less than the yield on the securities purchased with
borrowed funds, depending on prevailing market conditions.
o DESCRIPTION OF ADDITIONAL INVESTMENT POLICIES AND PERMITTED SECURITIES
Except as otherwise noted, the investment policies described below and elsewhere
in this prospectus are non-fundamental investment policies and, as such, may be
changed by action of the Fund's Board of Trustees.
[ ] PORTFOLIO DIVERSIFICATION. As a fundamental policy, as to 75% of the value
of the Fund's gross assets, no more than 5% of the value thereof will be
invested in the securities of any one issurer. This limitation does not apply to
investments issued or guaranteed by the U.S. Government, its agencies, or its
instrumentalities or authorities. As part of that policy, the Fund may invest
more than 25% of its assets in industrial development bonds but no more than 5%
of the assets will be invested in such bonds for which the underlying credit is
one business or one charitable entity. As to the balance of 25% of the Fund's
gross assets not covered by this policy, the Fund would not invest more than 10%
thereof in the securities of any one issuer. In no case, however, will the Fund
invest more than 5% of its assets in the securities of any one issuer where such
securities are rated B or below. The Fund is not a diversified fund for purposes
of the Act.
[ ] INVESTING IN OTHER INVESTMENT COMPANIES. The Fund also may invest on a
short-term basis up to 5% of its net assets in other investment companies which
have a similar objective of obtaining income exempt from Federal, New York
State, and New York City income taxes. Such investing involves similar expenses
by the Fund and by other investment companies involved, and the Fund intends to
make such investments only on a short-term basis and only when the Manager
reasonably anticipates that the net after-tax return to the Fund's shareholders
will be improved, as compared to the return available from other short-term
investments. See the Statement of Additional Information.
[ ] INVERSE FLOATERS. The Fund may also invest in municipal obligations on which
the interest rates typically decline as market rates increase and increase as
market rates decline (commonly referred to as "inverse floaters"). Changes in
the market interest rate or in the floating rate security inversely affect the
residual interest rate paid on the inverse floater, with the result that the
inverse floater's price will be considerably more volatile than that of a
fixed-rate bond. For example, a municipal issuer may decide to issue two
variable rate instruments instead of a single long-term, fixed-rate bond. Such
securities have the effect of providing a degree of investment leverage, since
the interest rate on one instrument reflects short-term interest rates, while
the interest rate on the other instrument (the inverse floater) reflects the
approximate rate the issuer would have paid on a fixed-rate bond, multiplied by
two, minus the interest rate paid on the short-term instrument. The two portions
may be recombined to form a fixed-rate municipal bond. To seek to limit the
volatility of the securities, the Manager may acquire both portions in an effort
to reduce risk and preserve capital. The market for inverse floaters is
relatively new. The Manager believes that inverse floating obligations represent
a flexible portfolio management instrument for the Fund which allows the Manager
to vary the degree of investment leverage efficiently under different market
conditions. Certain investments in such obligations may be illiquid and, as
such, are subject to the Fund's limitation on investments in Illiquid
Securities. The Fund may not invest in such illiquid obligations if such
investments, together with other Illiquid Securities, would exceed 15% of the
Fund's net assets.
[ ] PUT OPTIONS. The Fund, for liquidity purposes only, may purchase from banks
municipal securities together with the right to resell ("put") the securities to
the seller. A separate put option may not be marketable or otherwise assignable,
and the sale of the security to a third-party or a lapse of time during
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which the put is unexercised may terminate the right to exercise the put. The
Fund does not expect to assign any value to any separate put option which may be
acquired to facilitate portfolio liquidity inasmuch as the value, if any, of the
put will be reflected in the value assigned to the associated security.
[ ] VARIABLE RATE DEMAND NOTES. The Fund may purchase variable rate demand notes
("VRDNs") which are tax-exempt obligations that contain a floating or variable
interest rate adjustment formula and an unconditional right of demand to receive
payment of the unpaid principal balance plus accrued interest upon a short
notice period. The Fund may also invest in VRDNs in the form of participation
interests in variable rate tax-exempt obligations held by a financial
institution, typically a commercial bank.
[ ] WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may also purchase
and sell municipal securities on a "when issued" and "delayed delivery" basis.
These transactions are subject to market fluctuation and the value at delivery
may be more or less than the purchase or sale price. Since the Fund relies on
the buyer or seller, as the case may be, to consummate the transaction, failure
by the other party to complete the transaction may result in the Fund missing
the opportunity of obtaining a price or yield considered to be advantageous.
When the Fund is the buyer in such a transaction, however, it will maintain, in
a segregated account with its custodian, cash or high grade marketable
securities having an aggregate value equal to the amount of such purchase
commitments until payment is made. In addition, the Fund would mark the "when
issued" security to market each day for purposes of portfolio valuation. To the
extent the Fund engages in "when issued" and "delayed delivery" transactions, it
will do so for the purpose of acquiring securities for the Fund's portfolio
consistent with its investment objective and policies and not for the purpose of
investment leverage. As a fundamental policy, securities purchased on a "when
issued" and "delayed delivery" basis may not constitute more than 10% of the
Fund's net assets.
[ ] ZERO COUPON SECURITIES. The Fund may invest without limitation as to amount
in zero coupon securities. Zero coupon securities are debt obligations that do
not entitle the holder to any periodic payment of interest prior to maturity or
a specified date when the securities begin paying current interest. They are
issued and traded at a discount from their face amount or par value, which
discount varies depending on the time remaining until cash payments begin,
prevailing interest rates, liquidity of the security and the perceived credit
quality of the issuer. Original issue discount earned on zero coupon securities
is included in the Fund's income. The market prices of zero coupon securities
generally are more volatile than the prices of securities that pay interest
periodically and in cash and are likely to respond to changes in interest rates
to a greater degree than do other types of debt securities having similar
maturities and credit quality.
In addition, the Fund is subject to certain investment restrictions, some of
which may be changed only with the approval of shareholders. See the Statement
of Additional Information for a list of these additional restrictions and for
additional information concerning the characteristics of municipal securities.
PORTFOLIO TRANSACTIONS
The Board of Trustees of the Fund monitors the composition of, and purchases in,
the Fund's portfolio to insure consistency with the stated investment objective
and policies of the Fund. Among the responsibilities of the Adviser under the
Investment Advisory Agreement is the selection of broker-dealers through whom
transactions in the Fund's portfolio securities will be effected. The primary
aim in allocation by the Adviser of portfolio transactions to brokers is the
attainment of the best execution of all such transactions. If more than one
broker is able to provide the best execution, securities may be purchased from
or sold to brokers who have furnished research to the Adviser. Although such
research may be used by the Adviser in servicing accounts other than the Fund,
the receipt of such research will be taken into account in the selection of
brokers only to the extent that such
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<PAGE>
research is primarily intended to benefit the Fund. The Fund and the Adviser
also may take into account the sale of Fund shares in selecting broker-dealers
to execute transactions. For further information see "Brokerage Policies of the
Fund" in the Statement of Additional Information.
A change in securities held by the Fund is known as "portfolio turnover." See
"Financial Highlights" for the Fund's portfolio turnover rate for the past ten
fiscal years. Municipal bonds may be purchased or sold without regard to the
length of time they have been held, to attempt to take advantage of short-term
differentials in yields with the objective of seeking income while conserving
capital. While short-term trading increases portfolio turnover, the Fund incurs
little or no brokerage costs with respect to such transactions since most
purchases made by the Fund are principal transactions at net prices.
RISK CONSIDERATIONS
In addition to those considerations discussed in "How Risky is the Fund?",
investing in the Fund includes the following considerations.
o CONCENTRATION IN NEW YORK ISSUERS. Because the Fund will ordinarily invest 80%
or more of its assets in the obligations of New York State, its municipalities,
agencies and instrumentalities (collectively, "New York Issuers") which are
exempt from Federal, New York State and New York City personal income taxes, it
is more susceptible to factors affecting the State and other New York Issuers
than is a comparable municipal bond fund whose investments are not concentrated
in the obligations of issuers located in a single state. See "Appendix A" to
this Prospectus for additional information relating to the risks associated with
concentration of investments in New York municipal securities.
o CREDIT QUALITY. At least 80% of the Fund's net assets which are invested in
tax-exempt obligations will be invested in securities which have received
investment grade ratings from an NRSRO or in unrated securities, which in the
opinion of the Manager, are of comparable quality. Tax-exempt obligations which
are in the lowest categories of investment grade ratings (e.g. those rated BBB
by Standard and Poor's Ratings Group ["S&P"] or Baa by Moody's Investors
Services, Inc. ["Moody's"]) have speculative characteristics and a weakened
capacity to repay principal and pay interest. The Fund may invest up to 20% of
its net assets in high-yield, lower-rated tax exempt securities or in such lower
rated securities. Investments in these securities present different risks than
investments in higher-rated securities, including an increased sensitivity to
adverse economic changes or individual developments and a higher rate of
default. Certain risks are associated with applying credit ratings as a method
for evaluating high yield securities. Credit ratings evaluate the safety of
scheduled payments, not market value risk of high yield securities. Since credit
rating agencies may fail to timely change the credit ratings to reflect
subsequent events, the Manager must monitor the issuers of high yield securities
in its portfolio to determine if the issuers will have sufficient cash flow and
profits to meet required payments, and to attempt to assure the liquidity of the
securities so the Fund can meet redemption requests. The Fund may retain a
portfolio security whose rating has been changed.
The dollar weighted average of credit ratings of all bonds rated by NRSROs held
by the Fund during the year ended December 31, 1995, computed on a monthly
basis, as a percentage of the Fund's total portfolio, separated into each rating
category established by S&P, Fitch Investor Services, Inc.("Fitch") and Duff &
Phelps ("D&P") (AAA,AA, A,BBB,BB,B or lower), and Moody's (Aaa,Aa,A,Baa,Ba,B or
lower), were, respectively,__%, __%, __%, __%, _% and _%. Unrated bonds
comprised 20% of the Fund's total investments. Unrated bonds, which are backed
by a letter of credit or guaranteed by financial institutions or agencies, may
be deemed by the Manager or by the Board of Trustees to be comparable in quality
to securities as to which quality ratings have been ascribed by S & P, Moody's,
Fitch or D&P based upon quality or upon an existing rating of the issuer of the
letter of credit, institution, or agency. Unrated bonds also may be deemed to be
comparable in quality to investment
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<PAGE>
grade securities by the Trustees under circumstances where such unrated bonds
have credit characteristics which are comparable to those of similar rated
issuers. Based upon the weighted average of credit ratings of those bonds which
were rated by an NRSRO and unrated securities of comparable quality as
determined by either the Manager or the Trustees, as the case may be, which were
held by the Fund during the year ended December 31, 1995 computed on a monthly
basis, the percentages of the Fund's assets which were invested either in bonds
rated by an NRSRO or in bonds which, although unrated by an NRSRO, are
considered by the Manager or the Trustees to be of comparable quality to rated
securities, as separated into each rating category established by S&P, Moody's,
Fitch or D&P as described above, were respectively __%, __%, __%, __%, _% and
_%. Bonds which were neither rated by an NRSRO nor considered by the Manager or
the Trustees to be comparable to rated securities constituted __% of the Fund's
total assets.
o MANAGEMENT OF CREDIT RISK. Because 20% of the Fund's assets which are invested
in tax-exempt obligations may be invested in securities which are rated below
the lowest investment grade categories rated by an NRSRO, or in securities which
are unrated, the Fund is dependent on the Manager's judgment, analysis and
experience in evaluating the quality of such obligations. In evaluating the
credit quality of a particular issue, whether rated or unrated, the Manager will
normally take into consideration, among other things, the financial resources of
the issuer (or, as appropriate, of the underlying source of the funds for debt
service), its sensitivity to economic conditions and trends, any operating
history of and the community support for the facility financed by the issue, the
ability of the issuer's management and regulatory matters. The Manager will
attempt to reduce the risks inherent in investments in such obligations through
active portfolio management, diversification, credit analysis and attention to
current developments and trends in the economy and the financial markets.
o DEFAULT. The Fund will also take such action as it considers appropriate in
the event of anticipated financial difficulties, default or bankruptcy of either
the issuer of any such obligation or of the underlying source of funds for debt
service. Such action may include retaining the services of various persons and
firms to evaluate or protect any real estate, facilities or other assets
securing any such obligation or acquired by the Fund as a result of any such
event. The Fund will incur additional expenditures in taking protective action
with respect to portfolio obligations in default and assets securing such
obligations, and, as a result, the Fund's net asset value could be adversely
affected. Any income derived from the Fund's ownership or operation of assets
acquired as a result of such actions would not be tax-exempt.
HOW THE FUND IS MANAGED
ORGANIZATION AND HISTORY. Rochester Fund Municipals conducted operations as a
close-end investment company from December 1982 until May 1986, at which time it
commenced operations as an open-end investment company. The Fund is a
non-diversified management investment company with an unlimited number of
authorized shares of beneficial interest.
The Fund is a Massachuestts business trust and is governed by a Board of
Trustees, which is responsible under Massachusetts law for protecting the
interests of shareholders. The Trustees meet periodically to oversee the Fund's
activities, review its performance, and review the actions of the Manager. The
"Trustees and Officers of the Fund" section in the Statement of Additional
Information lists the Trustees and provides more information about them and the
officers of the Fund. Although the Fund is not required by law to hold annual
meetings, it may hold shareholder meetings from time to time on important
matters, and shareholders have the right to call a meeting to remove a Trustee
or to take other action described in the Fund's Declaration of Trust. The Board
of Trustees has the power, without shareholder approval, to divide unissued
shares of the Fund into two or more classes. The Board has not done so as of
this date. Please refer to "How the Fund is Managed" in the Statement of
Additional Information on voting of shares.
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<PAGE>
THE MANAGER AND ITS AFFILIATES. The Fund is managed by OppenheimerFunds, Inc.,
which is responsible for selecting the Fund's investments and handles its
day-to-day business. The Manager carries out its duties, subject to the policies
established by the Board of Trustees, under an Investment Advisory Agreement
which states the Manager's responsibilities. The Agreement sets forth the fees
paid by the Fund to the Manager and describes the expenses that the Fund is
responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The Manager and
its affiliates currently manages investment companies, including other
Oppenheimer funds, with assets of more than $__ billion as of December 31, 1995,
and with more than __ million shareholder accounts. The Manager is owned by
Oppenheimer Acquisition Corp., a holding company that is owned in part by senior
officers of the Manager and controlled by Massachusetts Mutual Life Insurance
Company.
o PORTFOLIO MANAGER. The Portfolio Manager of the Fund is Ronald H. Fielding. He
has been the person principally responsible for the day-to-day management of the
Fund's portfolio since the Fund's inception. Mr. Fielding is Vice President of
the Fund and has also served as an officer and director of the Fund's previous
investment advisers and their affiliates.
o FEES AND EXPENSES. Under the Investment Advisory Agreement, the Fund pays the
Manager the following annual fees: 0.54% of the first $100 million of average
daily net assets, 0.52% of the next $150 million of average daily net assets,
0.47% of the next $1,750 million of average daily net assets, 0.46% of the next
$3 billion of average daily net assets and 0.45% of average daily net assets
over $5 billion. The Fund's management fee for its last fiscal year ended
December 31, 1995 was ___% of average annual net assets for its shares.
The Fund pays expenses related to its daily operations, such as custodian fees,
Trustees' fees, transfer agency fees, legal and auditing costs. Those expenses
are paid out of the Fund's assets and are not paid directly by shareholders.
However, those expenses reduce the net asset value of shares, and therefore are
indirectly borne by shareholders through their investment. More information
about the Investment Advisory Agreement and the other expenses paid by the Fund
is contained in the Statement of Additional Information.
There is also information about the Fund's brokerage policies and practices in
"Brokerage Policies of the Fund" in the Statement of Additional Information.
That section discusses how brokers and dealers are selected for the Fund's
portfolio transactions. When deciding which brokers to use, the Manager is
permitted to consider whether brokers have sold shares of the Fund or any other
funds for which the Manager serves as investment adviser.
o THE DISTRIBUTOR. The Fund's shares are sold through dealers and brokers that
have a sales agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Distributor. The Distributor also distributes the
shares of other mutual funds managed by the Manager (the "Oppenheimer funds")
and is sub-distributor for funds managed by a subsidiary of the Manager.
o THE TRANSFER AGENT. The Fund's transfer agent is OppenheimerFunds Services, a
division of the Manager, which acts as the shareholder servicing agent for the
Fund and the other Oppenheimer funds. Shareholders should direct inquiries about
their account to the Transfer Agent at the address and toll-free numbers shown
below in this Prospectus and on the back cover.
PERFORMANCE OF THE FUND
EXPLANATION OF PERFORMANCE TERMINOLOGY. The Fund uses the terms "total return",
"average annual total return" and "yield" to illustrate its performance. This
performance information may be useful to
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help you see how well your investment has done and to compare it to other funds
or market indices, as we have done below. It is important to understand that the
Fund's total returns represent past performance and should not be considered to
be predictions of future returns or performance. This performance data is
described below, but more detailed information about how total returns are
calculated is contained in the Statement of Additional Information, which also
contains information about other ways to measure and compare the Fund's
performance. The Fund's investment performance will vary over time, depending on
market conditions, the composition of the portfolio, expenses and which class of
shares you purchase.
o TOTAL RETURNS. There are different types of total returns used to measure the
Fund's performance. Total return is the change in value of a hypothetical
investment in the Fund over a given period, assuming that all dividends and
capital gains distributions are reinvested in additional shares. The cumulative
total return measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate of return for
each year in a period that would produce the cumulative total return over the
entire period. However, average annual total returns do not show the Fund's
actual year-by-year performance.
When total returns are quoted, normally they include the payment of the current
maximum initial sales charge. Total returns may also be quoted "at net asset
value," without including the sales charge, and those returns would be reduced
if sales charges were deducted.
o YIELD. The Fund calculates its yield by dividing the annualized net investment
income per share on the portfolio during a 30-day period by the maximum offering
price on the last day of the period. The yield data represents a hypothetical
investment return on the portfolio, and does not measure an investment return
based on dividends actually paid to shareholders. To show that return, a
dividend yield may be calculated. Dividend yield is calculated by dividing the
dividends derived from net investment income during a stated period by the
maximum offering price on the last day of the period. Yields and dividend yields
for shares reflect the deduction of the maximum initial sales charge, but may
also be shown based on the Fund's net asset value per share.
For additional information regarding the calculation of yield and total return,
see "Performance of the Fund" in the Statement of Additional Information.
Further information about the Fund's performance is set forth in the Fund's
Annual Report to Shareholders, which may be obtained upon request at no charge.
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ABOUT YOUR ACCOUNT
HOW TO BUY SHARES
If you buy shares, you pay an initial sales charge on investments. If you
purchase shares as part of an investment of at least $1 million in shares of one
or more Oppenheimer funds, you will not pay an initial sales charge but if you
sell any of those shares within 18 months of buying them, you may pay a
contingent deferred sales charge. The amount of that sales charge will vary
depending on the amount you invested. Sales charge rates are described in
"Buying Shares" below.
How Much Must You Invest? You can open a Fund account with a minimum initial
investment of $2,000 and make additional investments at any time with as little
as $100. There are reduced minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7) custodial plans
and military allotment plans, you can make initial and subsequent investments
for as little as $25; and subsequent purchases of at least $25 can be made by
telephone through AccountLink.
There is no minimum investment requirement if you are buying shares by
reinvesting dividends from the Fund or other Oppenheimer funds (a list of them
appears in the Statement of Additional Information, or you can ask your dealer
or call the Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
o HOW ARE SHARES PURCHASED? You can buy shares several ways -- through any
dealer, broker or financial institution that has a sales agreement with the
Distributor, or directly through the Distributor, or automatically from your
bank account through an Asset Builder Plan under the OppenheimerFunds
AccountLink service.
o BUYING SHARES THROUGH YOUR DEALER. Your dealer will place your order with the
Distributor on your behalf.
o BUYING SHARES THROUGH THE DISTRIBUTOR. Complete an OppenheimerFunds New
Account Application and return it with a check payable to "OppenheimerFunds
Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If you do
not list a dealer on the application, the Distributor will act as your agent in
buying the shares. However, we recommend that you discuss your investment first
with a financial advisor to be sure it is appropriate for you.
o BUYING SHARES THROUGH OPPENHEIMERFUNDS ACCOUNTLINK. You can use AccountLink to
link your Fund account with an account at a U.S. bank or other financial
institution that is an Automated Clearing House (ACH) member. You can then
transmit funds electronically to purchase shares, to have the Transfer Agent
send redemption proceeds, or to transmit dividends and distributions.
Shares are purchased for your account on AccountLink on the regular business day
the Distributor is instructed by you to initiate the ACH transfer to buy shares.
You can provide those instructions automatically, under an Asset Builder Plan,
described below, or by telephone instructions using OppenheimerFunds PhoneLink,
also described below. You should request AccountLink privileges on
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the application or dealer settlement instructions used to establish your
account. Please refer to "AccountLink" below for more details.
o ASSET BUILDER PLANS. You may purchase shares of the Fund (and up to four other
Oppenheimer funds) automatically each month from your account at a bank or other
financial institution under an Asset Builder Plan with AccountLink. Details are
on the Application and in the Statement of Additional Information.
o AT WHAT PRICE ARE SHARES SOLD? Shares are sold at the public offering price
based on the net asset value (and any initial sales charge that applies) that is
next determined after the Distributor receives the purchase order in Denver. In
most cases, to enable you to receive that day's offering price, the Distributor
must receive your order by the time of day the New York Stock Exchange closes,
which is normally 4:00 P.M., New York time, but may be earlier on some days (all
references to time in this Prospectus mean "New York time"). The net asset value
of shares is determined as of that time on each day The New York Stock Exchange
is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your order by the
close of the New York Stock Exchange on a regular business day and transmit it
to the Distributor so that it is received before the Distributor's close of
business that day, which is normally 5:00 P.M. The Distributor may reject any
purchase order for the Fund's shares, in its sole discretion.
BUYING SHARES. Shares are sold at their offering price, which is normally net
asset value plus an initial sales charge. However, in some cases, described
below, purchases are not subject to an initial sales charge, and the offering
price will be the net asset value. In some cases, reduced sales charges may be
available, as described below. Out of the amount you invest, the Fund receives
the net asset value to invest for your account. The sales charge varies
depending on the amount of your purchase. A portion of the sales charge may be
retained by the Distributor and allocated to your dealer as a commission. The
current sales charge rates and commissions paid to dealers and brokers are as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Front End Sales Charge Commission as a
as a Percentage of: Percentage of:
Amount Offering Price Amount Invested Offering Price
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.00% 4.17% 3.50%
$100,000 or more but
less than $250,000 3.35% 3.47% 3.00%
$250,000 or more but
less than $500,000 2.75% 2.83% 2.50%
$500,000 or more but
less than $1,000,000 2.25% 2.30% 2.00%
$1,000,000 or more but
less than $4,000,000 1.25% 1.27% 1.00%
Over $4,000,000 0.75% 0.76% 0.60%
- -----------------------------------------------------------------------------------------
</TABLE>
The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.
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o SPECIAL ARRANGEMENTS WITH DEALERS. The Distributor may advance up to 13
months' commissions to dealers that have established special arrangements with
the Distributor for Asset Builder Plans for their clients. Dealers whose sales
of Class A shares of Oppenheimer funds (other than money market funds) under
OppenheimerFunds-sponsored 403(b)(7) custodial plans exceed $5 million per year
(calculated per quarter) will receive monthly one-half of the Distributor's
retained commissions on those sales, and if those sales exceed $10 million per
year, those dealers will receive the Distributor's entire retained commission on
those sales.
REDUCED SALES CHARGES FOR PURCHASES. You may be eligible to buy shares at
reduced sales charge rates in one or more of the following ways:
o RIGHT OF ACCUMULATION. To qualify for the lower sales charge rates that apply
to larger purchases of shares, you and your spouse can add together shares you
purchase for your individual accounts, or jointly, or for trust or custodial
accounts on behalf of your children who are minors. A fiduciary can count all
shares purchased for a trust, estate or other fiduciary account (including one
or more employee benefit plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of shares of the Fund and
other Oppenheimer funds to reduce the sales charge rate that applies to current
purchases of shares. You can also count Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or contingent
deferred sales charge to reduce the sales charge rate for current purchases of
shares, provided that you still hold your investment in one of the Oppenheimer
funds. The value of those shares will be based on the greater of the amount you
paid for the shares or their current value (at offering price). The Oppenheimer
funds are listed in "Reduced Sales Charges" in the Statement of Additional
Information, or a list can be obtained from the Distributor. The reduced sales
charge will apply only to current purchases and must be requested when you buy
your shares.
o LETTER OF INTENT. Under a Letter of Intent, you may purchase shares or Class A
shares and Class B shares of other Oppenheimer funds during a 13-month period,
you can reduce the sales charge rate that applies to your purchases of Fund
shares. The total amount of your intended purchases will determine the reduced
sales charge rate for the shares purchased during that period. This can include
purchases made up to 90 days before the date of the Letter. More information is
contained in the Application and in "Reduced Sales Charges" in the Statement of
Additional Information.
o GROUP PURCHASES. An individual who is a member of a qualified group may also
purchase shares of the Fund at the reduced sales load applicable to the group
taken as a whole. The sales load is based upon the aggregate amount of shares
previously purchased and still owned by the group, plus the securities currently
being purchased. A "qualified group" is one with more than 10 members and which
(i) has been in existence for more than six months, (ii) has a purpose other
than acquiring shares of the Fund at a discount and (iii) has satisfied uniform
criteria which enables the Distributor to realize economies of scale in its
costs of distributing shares.
o WAIVERS OF SALES CHARGES. The sales charges are not imposed in the
circumstances described below. There is an explanation of this policy in
"Reduced Sales Charges" in the Statement of Additional Information.
Waivers of Sales Charges for Certain Purchasers. Shares purchased by the
following investors are not subject to any sales charges:
[ ] the Manager or its affiliates;
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[ ] present or former officers, directors, trustees and employees (and their
"immediate families" as defined in "Reduced Sales Charges" in the Statement of
Additional Information) of the Fund, the Manager and its affiliates, and
retirement plans established by them for their employees;
[ ] registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
[ ] dealers or brokers that have a sales agreement with the Distributor, if they
purchase shares for their own accounts or for retirement plans for their
employees;
[ ] employees and registered representatives (and their spouses) of dealers or
brokers described above or financial institutions that have entered into sales
arrangements with such dealers or brokers (and are identified to the
Distributor) or with the Distributor; the purchaser must certify to the
Distributor at the time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor children);
[ ] dealers, brokers or registered investment advisers that have entered into an
agreement with the Distributor providing specifically for the use of shares of
the Fund in particular investment products made available to their clients
(those clients may be charged a transaction fee by their dealer, broker or
adviser on the purchase or sale of Fund shares);
[ ] dealers, brokers or registered investment advisers that have entered into an
agreement with the Distributor to sell shares to defined contribution employee
retirement plans for which the dealer, broker or investment adviser provides
administrative services, and
[ ] trust companies and bank trust departments for funds held in a fiduciary,
agency, custodial or similar capacity.
o SERVICE PLAN FOR SHARES. The Fund has adopted a Service Plan for shares to
reimburse the Distributor for a portion of its costs incurred in connection with
the personal service and maintenance of accounts that hold shares. Reimbursement
is made quarterly at an annual rate that may not exceed 0.25% of the average
annual net assets of shares of the Fund. The Distributor uses all of those fees
to compensate dealers, brokers, banks and other financial institutions quarterly
for providing personal service and maintenance of accounts of their customers
that hold shares and to reimburse itself (if the Fund's Board of Trustees
authorizes such reimbursements, which it has not yet done) for its other
expenditures under the Plan.
Services to be provided include, among others, answering customer inquiries
about the Fund, assisting in establishing and maintaining accounts in the Fund,
making the Fund's investment plans available and providing other services at the
request of the Fund or the Distributor. Payments are made by the Distributor
quarterly at an annual rate not to exceed 0.25% of the average annual net assets
of shares held in accounts of the dealer or its customers. The payments under
the Plan increase the annual expenses of shares. For more details, please refer
to "Distribution and Service Plans" in the Statement of Additional Information.
SPECIAL INVESTOR SERVICES
ACCOUNTLINK. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send money
electronically between those accounts to perform a number of types of account
transactions. These include purchases of shares by telephone (either through a
service representative or by PhoneLink, described below), automatic investments
under Asset Builder Plans, and sending dividends and distributions or Automatic
Withdrawal Plan payments
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directly to your bank account. Please refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use to buy
shares, or on your dealer's settlement instructions if you buy your shares
through your dealer. After your account is established, you can request
AccountLink privileges on signature-guaranteed instructions to the Transfer
Agent. AccountLink privileges will apply to each shareholder listed in the
registration on your account as well as to your dealer representative of record
unless and until the Transfer Agent receives written instructions terminating or
changing those privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-guaranteed
instructions to the Transfer Agent signed by all shareholders who own the
account.
o USING ACCOUNTLINK TO BUY SHARES. Purchases may be made by telephone only after
your account has been established. To purchase shares in amounts up to $250,000
through a telephone representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
o PHONELINK. PhoneLink is the Oppenheimer funds automated telephone system that
enables shareholders to perform a number of account transactions automatically
using a touch-tone phone. PhoneLink may be used on already-established Fund
accounts after you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
[ ] Purchasing Shares. You may purchase shares in amounts up to $100,000 by
phone, by calling 1-800-533-3310. You must have established AccountLink
privileges to link your bank account with the Fund, to pay for these purchases.
[ ] Exchanging Shares. With the Oppenheimer funds exchange privilege, described
below, you can exchange shares automatically by phone from your Fund account to
another Oppenheimer funds account you have already established by calling the
special PhoneLink number. Please refer to "How to Exchange Shares," below, for
details.
[ ] Selling Shares. You can redeem shares by telephone automatically by calling
the PhoneLink number and the Fund will send the proceeds directly to your
AccountLink bank account. Please refer to "How to Sell Shares," below, for
details.
AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. The Fund has several plans that enable
you to sell shares automatically or exchange them to another Oppenheimer funds
account on a regular basis:
o AUTOMATIC WITHDRAWAL PLANS. If your Fund account is $5,000 or more, you can
establish an Automatic Withdrawal Plan to receive payments of at least $50 on a
monthly, quarterly, semi-annual or annual basis. The checks may be sent to you
or sent automatically to your bank account on AccountLink. You may even set up
certain types of withdrawals of up to $1,500 per month by telephone. You should
consult the Application and Statement of Additional Information for more
details.
o AUTOMATIC EXCHANGE PLANS. You can authorize the Transfer Agent to exchange an
amount you establish in advance automatically for shares of up to five other
Oppenheimer funds on a monthly, quarterly, semi-annual or annual basis under an
Automatic Exchange Plan. The minimum purchase for each Oppenheimer funds account
is $25. These exchanges are subject to the terms of the Exchange Privilege,
described below.
REINVESTMENT PRIVILEGE. If you redeem some or all of your shares of the Fund,
you have up to 90 days to reinvest all or part of the redemption proceeds in
shares of the Fund or other Oppenheimer funds without paying a sales charge.
This privilege applies to shares that you purchased subject to an initial
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sales charge. You must be sure to ask the Distributor for this privilege when
you send your payment. Please consult the Statement of Additional Information
for more details.
HOW TO SELL SHARES
You can arrange to take money out of your account on any regular business day by
selling (redeeming) some or all of your shares. Your shares will be sold at the
next net asset value calculated after your order is received and accepted by the
Transfer Agent. The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal Plans to
redeem shares on a regular basis, as described above. If you have questions
about any of these procedures, and especially if you are redeeming shares in a
special situation, such as due to the death of the owner, or from a retirement
plan, please call the Transfer Agent first, at 1-800-525-7048, for assistance.
o CERTAIN REQUESTS REQUIRE A SIGNATURE GUARANTEE. To protect you and the Fund
from fraud, certain redemption requests must be in writing and must include a
signature guarantee in the following situations (there may be other situations
also requiring a signature guarantee):
[ ] You wish to redeem more than $50,000 worth of shares and receive a check
[ ] The redemption check is not payable to all shareholders listed on the
account statement
[ ] The redemption check is not sent to the address of record on your account
statement
[ ] Shares are being transferred to a Fund account with a different owner or
name
[ ] Shares are redeemed by someone other than the owners (such as an executor)
o WHERE CAN I HAVE MY SIGNATURE GUARANTEED? The Transfer Agent will accept a
guarantee of your signature by a number of financial institutions, including: a
U.S. bank, trust company, credit union or savings association, or by a foreign
bank that has a U.S. correspondent bank, or by a U.S. registered dealer or
broker in securities, municipal securities or government securities, or by a
U.S. national securities exchange, a registered securities association or a
clearing agency. If you are signing on behalf of a corporation, partnership or
other business, or as a fiduciary, you must also include your title in the
signature.
SELLING SHARES BY MAIL. Write a "letter of instructions" that includes:
[ ] Your name
[ ] The Fund's name
[ ] Your Fund account number (from your account statement)
[ ] The dollar amount or number of shares to be redeemed
[ ] Any special payment instructions
[ ] Any share certificates for the shares you are selling
[ ] The signatures of all registered owners exactly as the account is
registered, and
[ ] Any special requirements or documents requested by the Transfer Agent to
assure proper authorization of the person asking to sell shares.
USE THE FOLLOWING ADDRESS FOR REQUESTS BY MAIL:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
SEND COURIER OR EXPRESS MAIL REQUESTS TO:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
SELLING SHARES BY TELEPHONE. You and your dealer representative of record may
also sell your shares by telephone. To receive the redemption price on a regular
business day, your call must be received by
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the Transfer Agent by the close of The New York Stock Exchange that day, which
is normally 4:00 P.M., but may be earlier on some days. Shares held in an
OppenheimerFunds retirement plan or under a share certificate may not be
redeemed by telephone.
[ ] To redeem shares through a service representative, call 1-800-852-8457
[ ] To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds wired to that bank account.
o TELEPHONE REDEMPTIONS PAID BY CHECK. Up to $50,000 may be redeemed by
telephone in any 7-day period. The check must be payable to all owners of record
of the shares and must be sent to the address on the account. This service is
not available within 30 days of changing the address on an account.
o TELEPHONE REDEMPTIONS THROUGH ACCOUNTLINK. There are no dollar limits on
telephone redemption proceeds sent to a bank account designated when you
establish AccountLink. Normally the ACH wire to your bank is initiated on the
business day after the redemption. You do not receive dividends on the proceeds
of the shares you redeemed while they are waiting to be wired.
CHECKWRITING. To be able to write checks against your Fund account, you may
request that privilege on your account Application or you can contact the
Transfer Agent for signature cards, which must be signed (with a signature
guarantee) by all owners of the account and returned to the Transfer Agent so
that checks can be sent to you to use. Shareholders with joint accounts can
elect in writing to have checks paid over the signature of one owner.
[ ] Checks can be written to the order of whomever you wish, but may not be
cashed at the Fund's bank or custodian.
[ ] Checks must be written for at least $100.
[ ] Checks cannot be paid if they are written for more than your account value.
Remember: your shares fluctuate in value and you should not write a check close
to the total account value.
[ ] You may not write a check that would require the Fund to redeem shares that
were purchased by check or Asset Builder Plan payments within the prior 15
days.
[ ] Do not use your checks if you changed your Fund account number.
SELLING SHARES THROUGH YOUR DEALER. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. Please refer to "Special
Arrangements for Repurchase of Shares from Dealers and Brokers" in the Statement
of Additional Information for more details.
HOW TO EXCHANGE SHARES
Shares of the Fund may be exchanged for shares of certain Oppenheimer funds at
net asset value per share at the time of exchange, without sales charge.
[ ] Shares of the fund selected for exchange must be available for sale in your
state of residence.
[ ] The prospectuses of this Fund and the fund whose shares you want to buy must
offer the exchange privilege.
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[ ] You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7 days, you
can exchange shares every regular business day.
[ ] You must meet the minimum purchase requirements for the fund you purchase by
exchange.
[ ] Before exchanging into a fund, you should obtain and read its prospectus.
Shares of a particular class may be exchanged only for shares of the same class
in the other Oppenheimer funds. For example, you can exchange shares of this
Fund only for Class A shares of another fund. At present, not all of the
Oppenheimer funds offer Class B and Class C shares. If a fund has only one class
of shares that does not have a class designation such as the Fund, they are
"Class A" shares for exchange purposes. A list showing which funds offer which
classes can be obtained by calling the Agent at 1-800-525-7048. In some cases,
sales charges may be imposed on exchange transactions. Please refer to "How to
Exchange Shares" in the Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
o WRITTEN EXCHANGE REQUESTS. Submit an OppenheimerFunds Exchange Request form,
signed by all owners of the account. Send it to the Transfer Agent at the
addresses listed in "How to Sell Shares."
o TELEPHONE EXCHANGE REQUESTS. Telephone exchange requests may be made either by
calling a service representative at 1-800-852-8457 or by using PhoneLink for
automated exchanges, by calling 1-800-533-3310. Telephone exchanges may be made
only between accounts that are registered with the same name(s) and address.
Shares held under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available for exchanges in
the Statement of Additional Information or by calling a service representative
at 1-800-525-7048. Exchanges of shares involve a redemption of the shares of the
fund you own and a purchase of shares of the other fund.
There are certain exchange policies you should be aware of:
[ ] Shares are normally redeemed from one fund and purchased from the other fund
in the exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that is in proper form by the close
of The New York Stock Exchange that day, which is normally 4:00 P.M. but may be
earlier on some days. However, either fund may delay the purchase of shares of
the fund you are exchanging into up to 7 days if it determines it would be
disadvantaged by a same-day transfer of the proceeds to buy shares. For example,
the receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might require the disposition of securities at a time or price
disadvantageous to the Fund.
[ ] Because excessive trading can hurt fund performance and harm shareholders,
the Fund reserves the right to refuse any exchange request that will
disadvantage it, or to refuse multiple exchange requests submitted by a
shareholder or dealer.
[ ] The Fund may amend, suspend or terminate the exchange privilege at any time.
Although the Fund will attempt to provide you notice whenever it is reasonably
able to do so, it may impose these changes at any time.
[ ] If the Transfer Agent cannot exchange all the shares you request because of
a restriction cited above, only the shares eligible for exchange will be
exchanged.
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The Distributor has entered into agreements with certain dealers and investment
advisers permitting them to exchange their clients' shares by telephone. These
privileges are limited under those agreements and the Distributor has the right
to reject or suspend those privileges. As a result, those exchanges may be
subject to notice requirements, delays and other limitations that do not apply
to shareholders who exchange their shares directly by calling or writing to the
Transfer Agent.
SHAREHOLDER ACCOUNT RULES AND POLICIES
o NET ASSET VALUE PER SHARE is determined for the shares as of the close of The
New York Stock Exchange, which is normally 4:00 P.M. but may be earlier on some
days, on each day the Exchange is open by dividing the value of the Fund's net
assets by the number of shares that are outstanding. The Fund's Board of
Trustees has established procedures to value the Fund's securities to determine
net asset value. In general, securities values are based on market value. There
are special procedures for valuing illiquid and restricted securities,
obligations for which market values cannot be readily obtained, and call options
and hedging instruments. These procedures are described more completely in the
Statement of Additional Information.
o THE OFFERING OF SHARES may be suspended during any period in which the
determination of net asset value is suspended, and the offering may be suspended
by the Board of Trustees at any time the Board believes it is in the Fund's best
interest to do so.
o TELEPHONE TRANSACTION PRIVILEGES for purchases, redemptions or exchanges may
be modified, suspended or terminated by the Fund at any time. If an account has
more than one owner, the Fund and the Transfer Agent may rely on the
instructions of any one owner. Telephone privileges apply to each owner of the
account and the dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner of the
account.
o THE TRANSFER AGENT WILL RECORD ANY TELEPHONE CALLS to verify data concerning
transactions and has adopted other procedures to confirm that telephone
instructions are genuine, by requiring callers to provide tax identification
numbers and other account data or by using PINs, and by confirming such
transactions in writing. If the Transfer Agent does not use reasonable
procedures it may be liable for losses due to unauthorized transactions, but
otherwise neither the Transfer Agent nor the Fund will be liable for losses or
expenses arising out of telephone instructions reasonably believed to be
genuine. If you are unable to reach the Transfer Agent during periods of unusual
market activity, you may not be able to complete a telephone transaction and
should consider placing your order by mail.
o REDEMPTION OR TRANSFER REQUESTS WILL NOT BE HONORED UNTIL THE TRANSFER AGENT
RECEIVES ALL REQUIRED DOCUMENTS IN PROPER FORM. From time to time, the Transfer
Agent in its discretion may waive certain of the requirements for redemptions
stated in this Prospectus.
o DEALERS THAT CAN PERFORM ACCOUNT TRANSACTIONS FOR THEIR CLIENTS BY
PARTICIPATING IN NETWORKING through the National Securities Clearing Corporation
are responsible for obtaining their clients' permission to perform those
transactions and are responsible to their clients who are shareholders of the
Fund if the dealer performs any transaction erroneously.
o THE REDEMPTION PRICE FOR SHARES WILL VARY from day to day because the value of
the securities in the Fund's portfolio fluctuates. The redemption price is the
net asset value per share. Therefore, the redemption value of your shares may be
more or less than their original cost.
o PAYMENT FOR REDEEMED SHARES is made ordinarily in cash and forwarded by check
or through AccountLink (as elected by the shareholder under the redemption
procedures described above) within 7 days after the Transfer Agent receives
redemption instructions in proper form, except under unusual
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circumstances determined by the Securities and Exchange Commission delaying or
suspending such payments. For accounts registered in the name of a
broker-dealer, payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via AccountLink for
recently purchased shares, but only until the purchase payment has cleared. That
delay may be as much as 10 days from the date the shares were purchased. That
delay may be avoided if you purchase shares by certified check or arrange to
have your bank provide telephone or written assurance to the Transfer Agent that
your purchase payment has cleared.
o INVOLUNTARY REDEMPTIONS OF SMALL ACCOUNTS may be made by the Fund if the
account value has fallen below $200 for reasons other than the fact that the
market value of shares has dropped, and in some cases involuntary redemptions
may be made to repay the Distributor for losses from the cancellation of share
purchase orders.
o UNDER UNUSUAL CIRCUMSTANCES, shares of the Fund may be redeemed "in kind",
which means that the redemption proceeds will be paid with securities from the
Fund's portfolio. Please refer to "How to Sell Shares" in the Statement of
Additional Information for more details.
o "BACKUP WITHHOLDING" of Federal income tax may be applied at the rate of 31%
from dividends, distributions and redemption proceeds (including exchanges) if
you fail to furnish the Fund a certified Social Security or Employer
Identification Number when you sign your application, or if you violate Internal
Revenue Service regulations on tax reporting of income.
o THE FUND DOES NOT CHARGE A REDEMPTION FEE, but if your dealer or broker
handles your redemption, they may charge a fee. That fee can be avoided by
redeeming your Fund shares directly through the Transfer Agent.
o TO AVOID SENDING DUPLICATE COPIES OF MATERIALS TO HOUSEHOLDS, the Fund will
mail only one copy of each annual and semi-annual report to shareholders having
the same last name and address on the Fund's records. However, each shareholder
may call the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
DIVIDENDS, CAPITAL GAINS AND TAXES
There are two types of distributions which the Fund may make to its
shareholders, income dividends and capital gain distributions.
o INCOME DIVIDENDS. The Fund receives income in the form of interest paid by its
investments. This income, less the expenses incurred in the Fund's operations,
is referred to as net investment income. Income dividends are declared and
recorded each day based on estimated net investment income. Such dividends are
paid monthly. Investors earn such dividends beginning on the day payment for
shares is received to the day prior to the settlement date of redemption. For
federal tax purposes, all distributions declared in the fourth quarter of any
calendar year are deemed paid in that calendar year even if they are distributed
in January of the following year. Any net gain the Fund may realize from
transactions in securities held less than the period required for long term
capital gain recognition (taking into account any carryover of capital losses
from previous years), while technically a distribution from capital gains, is
taxed as an income dividend under the Code.
o CAPITAL GAIN DISTRIBUTIONS. If, during any fiscal year, the Fund realizes a
net gain on transactions in securities held more than the period required for
long-term capital gain recognition, it has a net long term capital gain. After
deduction of the amount of any net short-term loss, the balance may be used to
offset any carryover of capital losses from previous years, or, if there is no
loss carryover, will be
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paid out to shareholders as a capital gain distribution. Capital gain
distributions, if any, will be paid to shareholders of record prior to the end
of each calendar year.
Because the value of Fund shares is based directly on the amount of net assets,
rather than on the principle of supply and demand, any distribution of income or
capital gains will result in a decrease in the value of Fund shares equal to the
amount of the distribution.
All dividends and capital gain distributions are paid in additional full and
fractional shares at net asset value for each shareholder's account unless
otherwise requested on the Account Application or by notifying the Fund in
writing or by telephone. Notice will be effective for the current dividend or
distribution only if it is received by the Fund at least five business days
before the record date. Notice received thereafter will be effective commencing
with the next dividend or distribution. Income dividends and capital gain
distributions will be credited to a shareholder's account in additional shares
valued at the closing net asset value (without a sales load).
If the U.S. Postal Service cannot deliver a shareholder's check, or if a
shareholder's check remains uncashed for six months, the Fund reserves the right
to credit the shareholder's account with additional shares of the Fund at the
then current net asset value in lieu of the cash payment and to thereafter issue
such shareholder's dividends in additional shares of the Fund.
Stock certificates will not be issued in connection with distributions which are
paid in additional shares unless a written request is received and certain other
procedures are followed. Call the Transfer Agent for more information.
Shareholders will be advised of the nature of a distribution, the number of
shares issued and the price following distribution.
In certain circumstances, dividends received from the Fund may cause a portion
of Social Security benefits to be subject to federal income tax. See the
Statement of Additional Information.
DISTRIBUTION OPTIONS. When you open your account, specify on your application
how you want to receive your distributions. For OppenheimerFunds retirement
accounts, all distributions are reinvested. For other accounts, you have four
options:
o REINVEST ALL DISTRIBUTIONS IN THE FUND. You can elect to reinvest all
dividends and long-term capital gains distributions in additional shares of the
Fund.
o REINVEST LONG TERM CAPITAL GAINS ONLY. You can elect to reinvest long-term
capital gains in the Fund while receiving dividends by check or sent to your
bank account on AccountLink.
o RECEIVE ALL DISTRIBUTIONS IN CASH. You can elect to receive a check for all
dividends and long-term capital gains distributions or have them sent to your
bank on AccountLink.
o REINVEST YOUR DISTRIBUTIONS IN ANOTHER OPPENHEIMER FUNDS ACCOUNT. You can
reinvest all distributions in another Oppenheimer funds account you have
established.
TAXES
o TAXATION OF THE FUND
During the taxable year ended December 31, 1995, the Fund qualified for
treatment as a regulated investment company under Subchapter M of the Code. The
Fund generally intends to continue to so qualify for future taxable years. The
Fund intends to avoid incurring liability for federal income tax and a 4% excise
tax on its investment company taxable income (consisting generally of taxable
net
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investment income and net short-term capital gains) and net capital gains by
distributing all of that income and gain and by meeting other applicable
requirements of the Code.
o TAXATION OF SHAREHOLDERS
By meeting certain requirements of the Code, including the requirement that at
the close of each quarter of its taxable year at least 50% of the value of its
total assets consists of obligations the interest on which is excludable from
gross income under section 103(a) of the Code, the Fund intends to continue to
qualify to pay "exempt" interest dividends to its shareholders. Exempt interest
dividends designated as such by the Fund may be excluded from a shareholder's
gross income for federal income tax purposes. To the extent that dividends are
derived from earnings on interest attributable to obligations of New York and
its political subdivisions, Puerto Rico, or other U.S. possessions, they will
also be excluded from a New York shareholder's gross income for New York State
and New York City personal income tax purposes.
Although exempt-interest dividends will not be subject to federal income tax for
Fund shareholders, a portion of such dividends which is derived from interest on
certain "private activity" bonds, will give rise to a tax preference item which
could subject a shareholder to, or increase a shareholder's liability under, the
Federal alternative minimum tax, depending on the shareholder's individual tax
situation.
To the extent dividends are derived from options trading, temporary taxable
investments, an excess of net short-term capital gain over net long-term capital
loss or accretion of market discount those dividends are taxable as ordinary
income for federal income tax purposes whether a shareholder has elected to
receive dividends in cash or additional Fund shares. Such dividends will not
qualify for the dividends-received deduction for corporations. Interest on
indebtedness incurred or continued to purchase or carry shares of the Fund is
not deductible to the extent the Fund's distributions consist of exempt-interest
dividends. Distributions, if any, of net capital gain, when designated as such,
will be treated as long-term capital gains by each shareholder regardless of the
length of time the shareholder has owned Fund shares and whether the shareholder
received them in cash or additional Fund shares.
Information as to the tax status of Fund distributions will be provided annually
including information as to which portions are taxable or tax exempt. In
addition, information will be provided annually identifying the portion of
exempt-interest dividends that constitutes a tax preference item for
shareholders in determining their liability for alternative minimum tax.
Shareholders who have not been in the Fund for a full fiscal year may get
distributions of income and/or capital gains which are not equivalent to the
actual amount applicable to the period for which they have held shares.
For individuals and certain other noncorporate shareholders, including those who
fail to certify their taxpayer identification number, taxable dividends, capital
gain distributions and proceeds of redemptions will be subject to 31%
withholding. Withholding at that rate from taxable dividends and capital gain
distributions also is required for such shareholders who otherwise are subject
to backup withholding. If the withholding requirements are applicable to a
shareholder, any such dividend, distribution or redemption proceeds would be
reduced by the amount required to be withheld. Backup withholding from
redemption orders requested for shareholders by broker-dealers is the
responsibility of those broker-dealers.
Up to 85% of a social security recipient's benefits may be included in federal
gross income for benefit recipients whose adjusted gross income (including
income from tax-exempt sources such as the Fund) plus 50% of their benefits
exceeds certain base amounts. Income from the Fund is still tax-exempt to the
extent described above; it is only included in the calculation of whether or not
a recipient's Social Security benefits are to be included in Federal gross
income.
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A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending on whether the redemption proceeds are more or less than
the shareholder's adjusted basis for the redeemed shares (which normally
includes any sales load paid). An exchange of Fund shares for Class A shares of
any Eligible Fund generally will have similar tax consequences. However, special
rules apply when a shareholder (1) disposes of Fund shares through an exchange
or redemption within 90 days after purchase thereof and (2) subsequently
acquires shares of an Eligible Fund or reacquires Fund shares without paying a
sales load due to the exchange privilege or 90 day reinvestment privilege. (See
"How to Exchange Shares" and "Reinvestment Privilege".) In these cases, any gain
on the disposition of the Fund shares would be increased, or loss decreased, by
the amount of the sales load paid when those shares were acquired, and that
amount will increase the basis of the subsequently acquired shares. In addition,
if a shareholder purchases Fund shares (whether pursuant to the reinvestment
privilege or otherwise) within 30 days before or after redeeming other Fund
shares at a loss, all or a portion of that loss will not be deductible and will
increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its shareholders--see the
Statement of Additonal Informaniton for a further discussion--and is not
intended to be a substitute for careful tax planning. There may be other
federal, state or local tax considerations applicable to a particular investor;
for example, the Fund's distributions may be wholly or partly taxable under
state and/or local laws other than New York State and New York City. PROSPECTIVE
INVESTORS THEREFORE ARE URGED TO CONSULT THEIR OWN TAX ADVISERS.
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APPENDIX A
SPECIAL FACTORS AFFECTING AN INVESTMENT IN THE FUND
The following information as to certain risk factors is provided to investors in
view of the Fund's policy of concentrating its investments in securities issued
by public entities in New York State ("State") and New York City ("City") and,
to a lesser extent, in U.S. territories and possessions. This information, which
does not purport to be a complete description of such risks and is based on
information obtained from official statements relating to securities offerings
of issuers located in New York, from independent municipal credit reports and
other sources believed to be reliable has not been independently verified by the
Fund. This section should be read in the context of the Fund's other investment
policies (see "About the Fund--Investment Objective").
RISK FACTORS FOR NEW YORK ISSUERS
NEW YORK STATE. A substantial principal amount of bonds issued by various State
agencies and authorities are either guaranteed by the State or supported by the
State through lease-purchase arrangements, other contractual obligations or
moral obligation provisions, which impose no immediate financial obligations on
the State and require appropriations by the legislature before any payments can
be made. Failure of the State to appropriate necessary amounts or to take other
action to permit the authorities and agencies to meet their obligations could
result in default. If a default were to occur, it would be likely to have a
significant adverse impact on the market price of obligations of the state and
its authorities and agencies. While debt service is normally paid out of
revenues generated by projects of the authorities and agencies, the State has
had to appropriate large amounts of funds in recent years to enable State
agencies to meet their financial obligations and, in some cases, prevent
default. Additional assistance is expected to be required in current and future
fiscal years since certain localities and authorities continue to experience
financial difficulties.
Certain State agencies, authorities and subdivisions, such as the New York State
Urban Development Corporation ("UDC"), the New York State Dormitory Authority
and the Housing Finance Agency ("HFA") are dependent upon continued financial
support from the State in order to meet their bond obligations.
To the extent State agencies and local governments require State assistance to
meet their financial obligations, the ability of the State to meet its own
obligations as they become due or to obtain additional financing could be
adversely affected. This financial situation could result not only in defaults
of State and agency obligations but also impairment of the marketability of
securities issued by the State, its agencies and local governments.
Constitutional challenges to State laws or appropriations could limit the amount
of taxes which political subdivisions may impose on real property or the amount
these entities may borrow. In 1979, the State's highest court declared
unconstitutional a State law allowing localities and school districts to impose
a special increase in real estate property taxes in order to raise funds for
pensions and other uses. New However, in 1994, the State's highest court
rejected a taxpayer challenge to the constitutionality of certain debt incurred
by State agencies without voter approval. Final adverse decisions in such cases
could require extraordinary appropriations or expenditure reductions, or both,
and could have a material adverse effect upon the financial condition of the
State and various of its agencies and subdivisions.
New York State's fiscal year begins April 1 of each year. The fiscal 1995-96
budget, adopted over two months late, attempted to make important changes to the
State's fiscal policies. For the first time in over 50 years, the State's budget
called for a reduction in year to year expenditures. At the same time,
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the budget attempted to close a $4.8 billion gap identified at the beginning of
the budget process by, in part, significantly reducing expenditures on certain
services. Through the first six months of the 1995-96 year, the State has made
no significant revisions to the budget and still projects it to be balanced for
the year. However, with the projected slow down of the national and State
economies along with the sizes of the additional tax reductions expected to be
phased in over the next two years, the State's fiscal outlook remains stressed.
On October 2, 1995, the State Comptroller released a report entitled
"Comptroller's Report on the Financial Condition of New York State 1995" in
which he identified several risks to the State Financial Plan and reaffirmed his
estimate that the State faces a potential imbalance in receipts and
disbursements of at least $2.7 billion for the State's 1996-97 fiscal year and
at least $3.9 billion for the State's 1997-98 fiscal year.
Uncertainties with regard to both the economy and potential decisions at the
federal level add further pressure on future budget balance in New York State.
Specific budget proposals being discussed at the federal level but not included
in the State's current economic forecast would (if enacted) have a
disproportionately negative impact on the long term outlook for the State's
economy as compared to other states.
The State's economy, which was adversely affected by the recession in the early
1990s, has improved over the last several years; however, the rate of job growth
has significantly lagged as compared to previous recoveries. Unemployment in the
State remains considerably higher than national rates. Future growth, if any, is
likely to be modest because of corporate downsizing of major employers in the
State and cutbacks in defense spending. Income and population growth in the
State remain among the slowest in the nation, although per capita income remains
high. Slow growth in the economy has also increased the disparity in income,
which could lead to increased service demands.
NEW YORK CITY. In 1975, the City suffered several financial crises which
impaired the borrowing ability of both the City and the State. In that year, the
City lost its access to public credit markets and it was not able to sell
short-term notes to the public until 1979 nor long-term notes to the public
until 1981. To help the City out of its financial difficulties, the State
legislature created the Municipal Assistance Corporation ("MAC") in 1975. MAC
has the authority to issue bonds and notes and pay or lend the proceeds to the
City. MAC also has the authority to exchange its obligations for City
obligations. MAC bonds are payable out of certain State sales and use taxes
imposed by the City, State stock transfer taxes and per capita State aid to the
City. The State is not, however, obligated to continue these taxes, nor to
continue appropriating revenues from these taxes, nor to continue the
appropriation of per capita State aid to pay MAC obligations. MAC does not have
taxing powers, and its bonds are not obligations enforceable against either the
City or the State.
In addition, since 1975, the City's financial condition has been subject to
oversight and review by the New York State Financial Control Board (the "Control
Board") and since 1978 its financial statements have been audited by independent
accounting firms. To be eligible for guarantees and assistance, the City was
required to submit annually to the Control Board a financial plan for the next
four fiscal years, covering the City and certain agencies showing balanced
budgets determined in accordance with generally accepted accounting principles.
Although the Control Board's powers of prior approval were suspended effective
June 30, 1986, because the City had satisfied certain statutory conditions, the
City continues to submit four-year plans to the Control Board for its review. In
the event the City cannot obtain a balanced budget, there are concerns as to
whether any deficit in the City budget can be financed by MAC bonds, federal
guarantees, federal and State aid and increased revenues. Neither the State nor
the federal government is obligated to provide financial assistance of any kind
to the City in the event of future financial difficulties. The City is also a
defendant in numerous legal actions which relate to material matters.
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On July 10, 1995, Standard & Poor's lowered its rating on the City's general
obligation bonds to BBB+ from A-. The City faces continuing and recurring
problems of economic sluggishness compounded by reductions in State aid.
Moreover, large budget gaps projected over the next three years, further
indicate the City's lack of financial flexibility. Despite Mayor Giuliani's
efforts at reform, many industry analysts expect further downgrades by the
credit agencies rating in the future.
CONCLUSION. Both the State and the City face potential economic problems which
could seriously affect their ability to meet financial obligations. The economic
problems of the City adversely affect the State in numerous ways. In addition,
for decades the State economy has grown more slowly than that of the nation as a
whole, resulting in a decline in the position of the State as one of the
country's wealthiest states. The causes of this decline are varied and complex
and some causes reflect international and national trends beyond the State's and
City's control. Some analysts believe that this long term decline is the result
of State and local taxation, which is among the highest in the nation, and which
may cause corporations to locate outside the State. The current high level of
taxes may limit the ability of the State and City to impose higher taxes in the
event of future difficulties.
RISK FACTORS AFFECTING UNITED STATES TERRITORIES
Other securities that provide state tax-free income include general obligations
of U.S. territories and possessions such as Guam, the Virgin Islands, Puerto
Rico, and their political subdivisions and public corporations. The economies of
United States territories are closely linked to the U.S. economy, and will
depend on many variables, some of which include the strength of the U.S. dollar,
interest rates, the price stability of oil imports, and the continued existence
of favorable tax incentives. Recent legislation reduced these incentives, but it
is impossible to predict what impact the changes will have.
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<PAGE>
LOGO OppenheimerFunds
PRO365.001.0196 Item #ROC512452
Logo Oppenheimer Funds.
<PAGE>
ROCHESTER FUND MUNICIPALS
350 Linden Oaks, Rochester, New York 14625
1-800-525-7048
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 11, 1996
This Statement of Additional Information of Rochester Fund Municipals (the
"Fund") is not a Prospectus. This document contains additional information about
the Fund and supplements information in the Prospectus dated March 11, 1996. It
should be read together with the Prospectus, which may be obtained by writing to
the Fund's transfer agent, OppenheimerFunds Services (the "Transfer Agent"), at
P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer Agent at the
toll-free number shown above.
TABLE OF CONTENTS
PAGE
ABOUT THE FUND
Investment Objectives and Policies .................................... 2
Investment Policies and Strategies ............................... 2
Other Investment Techniques and Strategies ....................... 6
Other Investment Restrictions .................................... 8
Investment Considerations/Risk Factors ........................... 10
How the Fund is Managed ............................................... 15
Organization and History ......................................... 15
Trustees and Officers of the Fund ................................ 16
Major Shareholders ............................................... 20
The Manager and Its Affiliates ................................... 20
Brokerage Policies of the Fund ........................................ 21
Performance of the Fund ............................................... 23
Distribution and Service Plans ........................................ 26
ABOUT YOUR ACCOUNT
How To Buy Shares ..................................................... 27
How To Sell Shares .................................................... 28
How To Exchange Shares ................................................ 29
Dividends, Capital Gains and Taxes .................................... 30
Additional Information About the Fund ................................. 32
FINANCIAL INFORMATION ABOUT THE FUND
Financial Statements .................................................. 34
Independent Auditors' Report .......................................... 34
Appendix A: Description of Municipal Securities Ratings .............. A-1
<PAGE>
ABOUT THE FUND
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT POLICIES AND STRATEGIES. The investment objective of the Fund is to
provide shareholders with as high a level of income exempt from federal income
tax and New York State and New York City personal income taxes as is consistent
with its investment policies and prudent investment management while seeking
preservation of shareholders' capital. The investment objective of the Fund
cannot be changed without shareholder approval. The Fund will seek to achieve
its objective by investing primarily in New York State municipal and public
authority debt obligations exempt from such taxes. In addition, the Fund may
also invest its assets in obligations of municipal issuers located in U.S.
territories. Investments will be made without regard to maturity. The lack of
maturity restrictions, however, may result in greater fluctuation of bond prices
in the Fund's portfolio and greater fluctuation in net asset value because the
prices of long term bonds are more affected by changes in interest rates than
prices of short term bonds. There can be no assurance that the investment
objective of the Fund will be realized.
The Fund is classified as non-diversified within the meaning of the
Investment Company Act of 1940, as amended, (the "Investment Company Act"),
which means that the Fund is not limited by the Investment Company Act in the
proportion of its assets that it may invest in obligations of a single issuer.
The Fund intends to continue to qualify as a "regulated investment company,"
however, under the Internal Revenue Code of 1986, as amended (the "Code"). See
Dividends, Capital Gains and Taxes. In addition to satisfying other requirements
to so qualify, the Fund will limit its investments so that, at the close of each
quarter of its taxable year, (i) not more than 25% of the market value of its
total assets will be invested in the securities of a single issuer and (ii) with
respect to 50% of its total assets, not more than 5% will be invested in the
securities of a single issuer. In contrast, a fund which elects to be classified
as "diversified" under the Investment Company Act must satisfy the foregoing 5%
requirement with respect to 75% of its assets at all times. To the extent that
the Fund assumes large positions in the obligations of a small number of
issuers, the Fund's total return may fluctuate to a greater extent than that of
a diversified company as a result of changes in the financial condition or in
the market's assessment of the issuers.
MUNICIPAL OBLIGATIONS
-- MUNICIPAL BONDS. Municipal bonds include debt obligations issued to
obtain funds for various public purposes, including the construction of a wide
range of public facilities such as bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which municipal securities or bonds may be issued include the
refunding of outstanding obligations, the obtaining of funds for general
operating expenses and the obtaining of funds to loan to other public
institutions and facilities. In addition, certain types of private activity
bonds are issued by or on behalf of public authorities to obtain funds to
provide housing facilities, sports facilities, convention or trade show
facilities, airport, mass transit, port or parking facilities, manufacturing
facilities, air or water pollution control facilities and certain local
facilities for water supply, gas, electricity or sewage or solid waste disposal.
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-- GENERAL OBLIGATION BONDS. Issuers of general obligation bonds include
states, counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. General obligation bonds are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest. The
taxes that can be levied for the payment of debt service may be limited or
unlimited as to the rate or amount of special assessments.
-- REVENUE BONDS. Revenue Bonds are not secured by the full faith, credit
and taxing power of an issuer. Rather, the principal security for revenue bonds
is generally the net revenue derived from a particular facility, group of
facilities or, in some cases, the proceeds of a special excise tax or other
specific revenue source. Revenue bonds are issued to finance a wide variety of
capital projects including: electric, gas, water, and sewer systems; highways,
bridges, and tunnels; port and airport facilities; colleges and universities,
and hospitals. Although the principal security behind these bonds may vary, many
provide additional security in the form of a debt service reserve fund, from
which money may be used to make principal and interest payments on the issuer's
obligations. Housing finance authorities have a wide range of security,
including partially or fully insured mortgages, rent subsidized and/or
collateralized mortgages, and/or the net revenues from housing or other public
projects. Some authorities are provided with further security in the form of
state assurance (although without obligation) to make up deficiencies in the
debt service reserve fund.
-- INDUSTRIAL DEVELOPMENT BONDS. Industrial development bonds are, in
most cases, revenue bonds and are issued by or on behalf of public authorities
to raise money for the financing of various privately-operated facilities such
as manufacturing, housing, and pollution control. These bonds are also used to
finance public facilities such as airports, mass transit systems, ports and
parking. The payment of the principal and interest on such bonds is solely
dependent on the ability of the facilities user to meet its financial
obligations and the pledge, if any, of the real and personal property so
financed as security for such payment. The Fund will purchase industrial
development bonds only to the extent that the interest paid by a particular bond
is tax-exempt pursuant to the Code, which limits the types of facilities that
may be financed with tax-exempt industrial development and private activity
bonds and the amounts of such bonds each state may issue.
-- PRIVATE ACTIVITY BONDS. The Fund will invest only in those private
activity bonds which are, in the opinion of issuer's counsel, tax exempt.
Interest on obligations which are classified as non-qualified private activity
bonds under Section 141, arbitrage bonds under Section 148 and bonds not in
registered form under Section 149 of the Code is not exempt from federal income
tax. Such obligations are excluded from the definition of municipal bonds. The
Fund will not invest in them. However, Sections 141 through 150 of the Code
provide that interest on certain types of private activity bonds will be exempt
from federal income tax except when such interest is received by "substantial
users" or persons related to substantial users as defined in Section 147 of the
Code. The Fund may invest periodically in these bonds, and therefore, the Fund
may not be an appropriate investment for entities which are substantial users of
facilities financed by private activity bonds or for investors who are "related
persons". Generally, an individual will not be a related person under the Code
unless such investor or his immediate family (spouse, brothers, sisters and
lineal descendants) own directly or indirectly in the aggregate more than 50% in
value of the equity of a corporation or partnership which is a substantial user
of a facility financed from the proceeds of
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private activity bonds. A "substantial user" of such facilities is defined
generally by Treasury regulations as a non-exempt person who regularly uses a
part of a facility financed from the proceeds of private activity bonds.
-- MUNICIPAL NOTES. Municipal notes generally fund short-term capital needs
and have maturities of one year or less. The Fund may invest in municipal notes
which include:
-- TAX ANTICIPATION NOTES. Tax anticipation notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenues, such as income, sales, use and
business taxes, and are payable from these specific future taxes.
-- REVENUE ANTICIPATION NOTES. Revenue anticipation notes are issued in
expectation of receipt of other types of revenue, such as federal revenues
available under the Federal Revenue Sharing Programs.
-- BOND ANTICIPATION NOTES. Bond anticipation notes are issued to provide
interim financing until long-term financing can be arranged. In most cases, the
long-term bonds then provide the money for the repayment of the notes.
-- MISCELLANEOUS, TEMPORARY AND ANTICIPATORY INSTRUMENTS. These instruments
may include notes issued to obtain interim financing pending entering into
alternate financial arrangements such as receipt of anticipated federal, state
or other grants or aid, passage of increased legislative authority to issue
longer term instruments or obtaining other refinancing.
-- CONSTRUCTION LOAN NOTES. Construction loan notes are sold to provide
construction financing. Permanent financing, the proceeds of which are applied
to the payment of the Construction Loan Notes, is sometimes provided by a
commitment of the Government National Mortgage Association ("GNMA") to purchase
the loan, accompanied by a commitment by the Federal Housing Administration to
insure mortgage advances thereunder. In other instances, permanent financing is
provided by commitments of banks to purchase the loan. The Fund will only
purchase Construction Loan Notes that are subject to permanent GNMA or bank
purchase commitments.
-- TAX-EXEMPT COMMERCIAL PAPER. Tax-exempt commercial paper is a short-term
obligation with a stated maturity of 365 days or less. It is issued by agencies
of state and local governments to finance seasonal working capital needs or as
short-term financing in anticipation of longer term financing.
-- MUNICIPAL LEASES. Municipal lease obligations or installment purchase
contract obligations (collectively, "Municipal Leases") have special risks not
normally associated with Municipal Obligations. Although Municipal Leases do not
constitute general obligations of the municipality for which the municipality's
taxing power is pledged, a Municipal Lease may be backed by the municipality's
covenant to budget for, appropriate and make the payments due under the lease
obligations. However, most lease obligations contain "non-appropriation" clauses
which provide that the municipality has no obligation to make lease or
installment purchase payments in future years
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<PAGE>
unless money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" Municipal Leases are generally secured by the leased
property, the Fund's ability to recover under the lease in the event of
non-appropriation or default will be limited solely to repossession of the
leased property without recourse to the general credit of the lessee, and
disposition of the property in the event of foreclosure might prove difficult.
In addition, Municipal Leases may be subject to an "abatement" risk. The leases
underlying certain municipal lease obligations may provide that lease payments
are subject to partial or full abatement if, because of material damage or
destruction of the leased property, there is substantial interference with the
lessee's use or occupancy of such property. The "abatement" risk may be reduced
by the existence of insurance covering the leased property, the maintenance by
the lessee of reserve funds or the provision of credit enhancements such as
letters of credit.
In addition to the "non-appropriation" and "abatement" risks, investments
in Municipal Leases represent a relatively new type of financing. As such,
Municipal Leases have not yet developed the depth of marketability associated
with more conventional Municipal Obligations. The Fund will seek to minimize
these risks by investing not more than 10% of its total assets in Municipal
Leases that contain "non-appropriation" clauses, and by investing only in those
"non-appropriation" lease obligations where (1) the nature of the leased
equipment or property is such that its ownership or use is essential to a
governmental function of the municipality, (2) the lease payments will commence
amortization of principal at an early date resulting in an average life of seven
years or less for the lease obligation, (3) appropriate covenants will be
obtained from the municipal obligor prohibiting the substitution or purchase of
similar equipment if lease payments are not appropriated, (4) the lease obligor
has maintained good market acceptability in the past, (5) the investment is of a
size that will be attractive to institutional investors, and (6) the underlying
leased equipment has elements of portability and/or use that to enhance its
marketability in the event foreclosure on the underlying equipment is ever
required.
Investments in Municipal Leases will be subject to the Fund's 15%
limitation on investments in Illiquid Securities as described in the Fund's
Prospectus unless, in the judgment of OppenheimerFunds, Inc. ("the Manager"), a
particular Municipal Lease is liquid and has received an investment grade rating
from a nationally recognized statistical rating organization ("NRSRO"). The
Board of Trustees has adopted guidelines to be utilized by the Manager in making
determinations concerning the liquidity and valuation of a municipal lease
obligation. Such determinations will be based on all relevant factors including
among others: (1) the frequency of trades and quotes for the obligation; (2) the
number of dealers willing to purchase or sell the security and the number of
other potential buyers; (3) the willingness of dealers to undertake to make a
market in the security; (4) the nature of the marketplace trades, including, the
time needed to dispose of the security, the method of soliciting offers, and the
mechanics of transfer; (5) the likelihood that the marketability of the
obligation will be maintained throughout the time the Fund holds the obligation;
and (6) the likelihood that the municipality will continue to appropriate
funding for the leased property. As noted in the Fund's Prospectus, no more than
an aggregate of 15% of the value of the Fund's net assets at the time of
acquisition may be invested in Illiquid Securities. Of that amount, no more than
5% of the Fund's assets which are invested in tax-exempt obligations may be
invested in unrated or "illiquid" municipal leases.
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Subject to the foregoing percentage limitations on investments in Illiquid
Securities, the Fund may invest in tax-exempt leases, provided that: (i) the
Fund receives in each instance the opinion of issuer's legal counsel experienced
in such transactions that the tax-exempt obligation will generate interest
income which is exempt from Federal and New York State income tax; (ii) the Fund
receives in all instances an opinion that as of the effective date of the lease
or at the date of the Fund's purchase, if other than on the effective date, the
lease is the valid and binding obligation of the governmental issuer; (iii) the
Fund receives in each instance an opinion of issuer's legal counsel that such
obligation has been issued in compliance with all applicable Federal and State
securities laws; (iv) the Adviser of the Fund performs its own credit analysis
in instances where a credit rating has not been provided by a recognized credit
rating agency; (v) that if a particular exempt obligation is unrated and, in the
opinion of the Manager, not of investment grade quality (i.e. within one of the
four highest ratings of an NRSRO, the Manager at the time of making such
investment, shall include such investment within the Fund's overall percentage
limitation on investments in illiquid securities as well as the 5% limitation on
investments in unrated tax-exempt leases. In instances where the Manager is
required to perform its own credit analysis with respect to a particular
tax-exempt lease obligation, the Manager will evaluate current information
furnished by the issuer or obtained from other sources considered by it to be
reliable.
-- DEFINITION OF ISSUER
For purposes of diversification under the Investment Company Act,
identification of the "issuer" of a Municipal Obligation depends on the terms
and conditions of the obligation. If the assets and revenues of an agency,
authority, instrumentality or other political subdivision are separate from
those of the government creating the subdivision and the obligation is backed
only by the assets and revenues of the subdivision, such subdivision would be
regarded as the sole issuer. Similarly, in the case of an industrial development
revenue bond, if the bond is backed only by the assets and revenues of the
non-governmental user, the non-governmental user would be deemed to be the sole
issuer.
If, however, in either case, the creating government or some other
entity guarantees the security, such a guarantee would not be a separate
security which must be included in the Fund's limitation on investments in a
single issuer, provided the value of all securities guaranteed by a guarantor is
not greater than 10% of the Fund's total assets.
OTHER INVESTMENT TECHNIQUES AND STRATEGIES
-- STAND-BY COMMITMENTS.
The Fund may purchase municipal securities together with the right to
resell the securities to the seller at an agreed upon price or yield within a
specified period prior to the maturity date of the securities. Although it is
not a put option in the technical sense, such a right to resell is commonly
known as a "put" and is also referred to as a "stand-by commitment."
-- WHEN-ISSUED SECURITIES.
Municipal bonds are frequently offered on a "when-issued" basis. When so
offered, the price, which is generally expressed in yield terms, is fixed at the
time the commitment to purchase
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<PAGE>
is made, but delivery and payment for the when-issued securities take place
at a later date. Normally, the settlement date occurs within six months of the
purchase of municipal bonds and notes; during the period between purchase and
settlement, no payment is made by the Fund to the issuer and no interest accrues
to the Fund. To the extent that assets of the Fund are held in cash pending the
settlement of a purchase of securities, the Fund would earn no income; however,
it is the Fund's intention to be fully invested to the extent practicable and
subject to the policies stated above. While when-issued securities may be sold
prior to the settlement date, the Fund intends to purchase such securities with
the purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Fund makes the commitment to purchase a
municipal bond on a when-issued basis, it will record the transaction and
reflect the value of the security in determining its net asset value. The Fund
does not believe that its net asset value or income will be adversely affected
by its purchase of municipal bonds on a when-issued basis. The Fund will
establish a segregated account in which it will maintain cash and marketable
securities equal in value to commitment for when-issued securities.
-- OPTIONS TRANSACTIONS
The Fund may engage in options transactions in order to provide additional
income (the writing of covered call options) or in order to afford protection
against adverse market conditions (the buying of put options). Such transactions
may, however, limit the amount of possible capital appreciation which might
otherwise be realized. The Fund may only write covered call options or purchase
put options which are listed for trading on a national securities exchange and
purchase call options and sell put options to the extent necessary to cancel
options previously written. As an operational policy, no more than 5% of the
Fund's total assets will be invested in options transactions.
Unless otherwise noted, the foregoing investment objectives and policies
are not designated as fundamental policies within the meaning of the Investment
Company Act. New forms of Municipal Obligations in which the Fund may desire to
invest are continuing to evolve. Accordingly, the descriptions herein as to
certain types of existing Municipal Obligations should be viewed as illustrative
and not exclusive. The Fund may invest in new forms of instruments or variations
of existing instruments, subject only to the Fund's criteria of investment
quality and tax exemption and to the restrictions specified in this Statement of
Additional Information. As new forms of instruments or variations of existing
instruments evolve, the Fund will revise its prospectus to reflect such
evolution prior to investing.
-- VARIABLE RATE DEMAND NOTES.
The Fund may purchase variable rate demand notes ("VRDNs") which are
tax-exempt obligations that contain a floating or variable interest rate
adjustment formula and an unconditional right of demand to receive payment of
the unpaid principal balance plus accrued interest upon a short notice period,
generally not to exceed seven days. The interest rates are adjustable at
intervals ranging from daily up to six months to some prevailing market rate for
similar investments, such adjustment formula being calculated to maintain the
market value of the VRDN at approximately the par value of the VRDN upon the
adjustment date. The adjustments are typically based upon the prime rate of a
bank or some other appropriate interest rate adjustment index.
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<PAGE>
The Fund may also invest in VRDNs in the form of participation interests
("Participating VRDNs") in variable rate tax-exempt obligations held by a
financial institution, typically a commercial bank ("institution").
Participating VRDNs provide the Fund with a specified undivided interest (up to
100%) of the underlying obligation and the right to receive payment of the
unpaid principal balance plus accrued interest on the Participating VRDNs from
the institution upon a specified number of days' notice, not to exceed seven
days (repurchase agreement). In addition, the Participating VRDN is backed by an
irrevocable letter of credit of the institution guaranteeing the timely payment
of principal and interest. In such instances the Fund has an undivided interest
in the underlying obligations and thus participates on the same basis as the
institution in such obligations except that the institution typically retains
fees out of the interest paid on the obligation for servicing the obligation,
for providing the letter of credit and issuing the repurchase commitment. To the
extent that investments in VRDNs are concentrated in a small number of issuers,
the inability of such issuers to meet their payment obligations could adversely
affect the Fund's liquidity.
OTHER INVESTMENT RESTRICTIONS
-- FUNDAMENTAL INVESTMENT RESTRICTIONS.
The Fund operates under certain investment restrictions which are
fundamental investment policies of the Fund and which cannot be changed without
approval of a majority of the outstanding voting securities of the Fund (defined
for purposes of the Prospectus and this Statement as the lesser of: (i) 67% of
the shares present or represented by proxy at a meeting at which more than 50%
of the outstanding shares are present or represented by proxy; or (ii) more than
50% of the outstanding shares). These restrictions provide that the Fund may
not:
1. Borrow money or mortgage or pledge any of its assets, except that
the Fund may borrow from a bank for temporary or emergency purposes or
for investment purposes in amounts not exceeding 5% of its total net
assets. Where borrowings are made for a purpose other than temporary or
emergency purposes, the Investment Company Act, requires that the Fund
maintain asset coverage of at least 300% for all such borrowings.
Should such asset coverage at any time fall below 300%, the Fund will
be required to reduce its borrowings within three (3) days to the
extent necessary to meet such asset coverage. To reduce its borrowings,
the Fund may have to sell investments at a time when it would be
disadvantageous to do so. Additionally, interest paid by the Fund on
its borrowings will decrease the net earnings of the Fund.
2. Buy any securities on margin or sell any securities short.
3. Lend any of its funds or other assets, except by the purchase of a
portion of an issue of publicly distributed bonds, debentures, notes or
other debt securities.
4. Act as underwriter of securities issued by other persons except
insofar as the Fund may technically be deemed an underwriter under the
federal securities laws in connection with the disposition of portfolio
securities.
5. Purchase the securities of any issuer which would result in the
Fund owning more than 10% of the voting securities of such issuer.
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6. Purchase from or sell to its officers and trustees, or any firm of
which any officer or trustee is a member, as principal, any securities,
but may deal with such persons or firms as brokers and pay a customary
brokerage commission; retain securities of any issuer, if to the
knowledge of the Fund, one or more of its officers, trustees or
investment adviser, own beneficially more than 1/2 of 1% of the
securities of such issuer and all such officers and trustees together
own beneficially more than 5% of such securities.
7. Acquire, lease or hold real estate, except such as may be necessary
or advisable for (a) the maintenance of its offices, or (b) to enable
the Fund to take such action as may be appropriate in the event of
financial difficulties, default or bankruptcy of either the issuer of
or the underlying source of funds for debt service for any obligations
in the Fund's portfolio.
8. Invest in commodities and commodity contracts, puts, calls,
straddles, spreads or any combination thereof, or interests in oil, gas
or other mineral exploration or development programs. The Fund may,
however, write covered call options (or purchase put options) listed
for trading on a national securities exchange and purchase call options
(and sell put options) to the extent necessary to close out call
options previously written or put options previously purchased. At
present there are no options listed for trading on a national
securities exchange covering the types of securities which are
appropriate for investment by the Fund, and, therefore, there are no
option transactions currently available for the Fund.
9. Invest in companies for the purpose of exercising control or
management.
10. Invest more than 25% of the Fund's total assets in securities of
issuers of a particular industry, although for purposes of this
limitation, tax-exempt securities and United States government
obligations are not considered to be part of an industry, except that,
with respect to industrial development bonds and other revenue
obligations for which the underlying credit is a business or charitable
entity, the industry of that entity will be considered for purposes of
this 25% limitation.
11. Issue Senior Securities.
-- NON-FUNDAMENTAL INVESTMENT RESTRICTIONS.
The Fund operates under certain investment restrictions which are
non-fundamental investment policies of the Fund and which can be changed by the
Board without shareholder approval. These restrictions provide that the Fund may
not acquire more than 3% of the voting securities issued by any one investment
company (except where the acquisition results from a dividend or a merger,
consolidation or other reorganization) or invest more than 5% of the Fund's
assets in securities issued by any one investment company or invest more than 5%
of the Fund's assets in securities of other investment companies.
The percentage limitations (fundamental and non-fundamental) on investments
which are set forth above are applied at the time an investment is made. No
violation of the percentage limitation will occur unless the limitation is
exceeded immediately after an investment is made and as a result thereof (except
for the limitations on borrowing which are in effect at all times).
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INVESTMENT CONSIDERATIONS/RISK FACTORS
-- CONCENTRATION OF INVESTMENTS IN NEW YORK STATE ISSUERS
In view of the Fund's policy of concentrating its investments in the
obligations of New York State (the "State"), its municipalities, agencies and
instrumentalities (collectively "New York Issuers"), the following information
is provided to investors. This represents only a brief summary of the
corresponding risks inherent in the Fund and does not purport to be a complete
description. It is based on information obtained from official statements
relating to securities offerings of the State, from independent municipal credit
reports and from other sources. This information is believed to be accurate but
has not been independently verified by the Fund. Additional information may be
obtained from official statements and prospectuses issued by, and other
information reported by the State and its various public bodies and other
entities located within the State in connection with the issuance of their
respective securities.
As noted in the Fund's Prospectus, as a fundamental policy, at least 80% of
the Fund's net assets will ordinarily be invested in New York State, municipal
and public authority debt obligations, the interest from which is exempt from
Federal income tax, New York State income tax and New York City personal income
tax ("New York State Tax Exempt Securities"). Therefore, the Fund is more
susceptible to political, economic or regulatory factors and/or events affecting
the State and its political subdivisions than would a more diverse portfolio of
securities relating to a number of different states. In addition, the value of
the Fund's shares may fluctuate more widely than the value of shares of a
diversified portfolio of securities relating to a number of different states.
A national recession commenced in mid-1990. The nation then experienced a
period of weak economic growth during 1991 and 1992. In 1993, the nation's
economy grew faster than in 1992, but still at a very moderate rate, as compared
to other recoveries. The rate of economic expansion accelerated considerably in
1994. National employment and income growth in 1994 were substantial. In
response, the Federal Reserve Board shifted to a policy of monetary tightening
by raising interest rates throughout most of the year. As a result, expansion of
the economy slowed sharply during the first half of 1995 as higher interest
rates reduced the growth of consumer spending and business investment.
The economic recession was more severe in State and its recovery started
later than in the nation as a whole due in part to the significant downsizing in
the banking and financial services industries, defense related industries and
other major corporations as well as an overbuilt commercial real estate market.
The State recovery, as measured by employment, began near the start of calendar
year 1993. During the calendar year 1993, employment began to increase, though
sporadically, and the unemployment rate declined. Moderate employment growth
continued into the first half of 1994 but then came to a virtual halt in the
middle of the year. Employment growth once again picked up in 1995, though as of
September, 1995, unemployment in New York State was 6.8%.
New York State's fiscal year begins April 1 of each year. The 1995-1996
budget, adopted over two months later than the April 1, 1995 deadline, attempted
to make important changes to the State's fiscal policies. For the first time in
50 years, the State's budget called for a reduction in year to year
expenditures. At the same time, the budget attempted to close a $4.8 billion gap
identified at the beginning
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of the budget process by, in part, significantly reducing expenditures on
certain services. Through the first six months of the 1995-1996 fiscal year, the
State has made no significant revisions to the budget and still projects a
balanced budget for the year. However, with the projected slow down of the
national and State economies along with the sizes of the additional tax
reductions expected to be phased in over the next two years, the State's fiscal
outlook remains stressed.
On October 2, 1995, the State Comptroller released a report entitled
"Comptroller's Report on the Financial Condition of New York State 1995" in
which he identified several risks to the State Financial Plan and reaffirmed his
estimate that the State faces a potential imbalance in receipts and
disbursements of at least $2.7 billion for the State's 1996-1997 fiscal year and
at least $3.9 billion for the State's 1997-1998 fiscal year.
Uncertainties with regard to both the economy and potential decisions at
the federal level add further pressure on future budget balance in New York
State. Specific budget proposals being discussed at the federal level but not
included in the State's current economic forecast would, if enacted, have a
disproportionately negative impact on the longer-term outlook for the State's
economy as compared to other states.
To the extent that the State's municipalities, agencies and authorities
require State assistance to meet their financial obligations, the ability of the
State of New York to meet its own obligations as they become due or to obtain
additional financing could be adversely affected and any reduction in such
assistance and subsidies by the State could adversely affect the ability of such
issuers to meet their debt obligations. Any reduction in the actual or perceived
ability of any issuer of New York State Tax Exempt Securities to meet its
obligations (including a reduction in the rating of its outstanding securities)
would be likely to adversely affect the market value and marketability of its
obligations and could adversely affect the values of New York Tax Exempt
Securities as well.
A substantial principal amount of bonds issued by various municipalities,
agencies and authorities are either guaranteed by the State through
lease-purchase arrangements, other contractual obligations or moral obligation
provisions, which impose no immediate financial obligation on the State and
require appropriations by the legislature before any payments can be made.
Failure of the State to appropriate necessary amounts or to take other action to
permit such municipalities, agencies or authorities to meet their obligations
could result in their default. If a default were to occur, it would likely have
a significant adverse impact on the market price of obligations of the State and
its municipalities, agencies and authorities. While debt service is normally
paid out of revenues generated by projects of such issuers, the State has had to
appropriate large amounts of funds in recent years to enable such
municipalities, agencies and authorities to meet their financial obligations and
in some cases, prevent default. Additional financial assistance is expected to
be required in the current and in the future fiscal years since certain
municipalities, agencies and authorities continue to experience financial
difficulties.
The combination of state and local taxes in the State has been among the
highest in the nation for many years. The burden of state and local taxation, in
combination with the many other causes of regional economic dislocation, has
contributed to the decisions of some businesses and individuals to relocate
outside, or not relocate within, the State. The current high level of taxes
limits the ability of New York State, New York City and other municipalities to
impose higher taxes in the event of future difficulties. In addition,
constitutional challenges to State laws have limited the amount of taxes which
political subdivisions can
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<PAGE>
impose on real property, which may have an adverse effect on the ability of
issuers to meet obligations supported by such taxes. A variety of additional
court actions have been brought against the State and certain agencies and
municipalities relating to financing, amount of real estate tax, use of tax
revenues and other matters, which could adversely affect the ability of the
State or such agencies or municipalities to pay their obligations.
The fiscal health of the State is closely related to the fiscal health of
it localities, particularly New York City (the "City"), which has required and
continues to require significant financial assistance from the State. Both the
State and the City face potential economic problems which could seriously affect
the ability of both the State and the City to meet their respective financial
obligations. On July 10, 1995, Standard & Poor's lowered its rating on the
City's general obligation bonds to BBB+ from A-. The City faces continuing and
recurring problems of economic sluggishness compounded by reductions in State
aid. Moreover, large budget gaps projected over the next three years further
indicate the City's lack of financial flexibility. Despite Mayor Giuliani's
efforts at reform, many industry analysts expect further downgrades by the
credit agencies rating in the future.
Beginning in early 1975, the State, the City and other State entities faced
serious financial difficulties which jeopardized the credit standing and
impaired the borrowing abilities of such entities and contributed to higher
interest rates on, and lower market prices for, debt obligations issued by them.
A recurrence of such financial difficulties or failure of certain financial
recovery programs could result in defaults or declines in the market values of
numerous New York obligations in which the Fund may invest.
Since 1990, S&P and Moody's Investor Service, Inc. ("Moody's") each lowered
its credit rating on New York State's general obligation bonds and certain other
obligations issued by New York State. Ratings of New York State's general
obligation bonds are among the lowest of all states. As a result, there are
special risks inherent in the Fund's concentration of investments in New York
Tax Exempt Securities.
The foregoing information as to certain New York risk factors is given
to investors in view of the Fund's policy of concentrating its investments in
New York issuers. Such information constitutes only a brief summary and does not
purport to be a complete description. See Appendix A to this Statement.
-- CREDIT QUALITY
The following special considerations are risk factors associated with the Fund's
investments in high yield (lower rated) securities:
-- RISK FACTORS OF HIGH YIELD SECURITIES. The Fund may invest up to 20% of
its assets in securities of lower rated categories or in securities which are
unrated but deemed to be of comparable quality by the Adviser. These high yield,
high risk securities (commonly referred to as "junk bonds") are subject to
certain risks that may not be present with investments of higher grade
securities. The following supplements the disclosure in the Fund's prospectus.
-- EFFECT OF INTEREST RATE AND ECONOMIC CHANGES. The prices of high yield
securities tend to be less sensitive to interest rate changes than higher-rated
investments, but may be more sensitive to adverse economic changes or individual
corporate developments. Periods of economic uncertainty and changes generally
result in increased volatility in market prices and yields of high yield
securities and thus in the
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Fund's net asset value. A strong economic downturn or a substantial period
of rising interest rates could severely affect the market for high yield
securities. In these circumstances, highly leveraged companies might have
difficulty in making principal and interest payments, meeting projected business
goals, and obtaining additional financing. Thus, there could be a higher
incidence of default. This would affect the value of such securities and thus
the Fund's net asset value. Further, if the issuer of a security owned by the
Fund defaults, the Fund might incur additional expenses to seek recovery.
Generally, when interest rates rise, the value of fixed rate debt
obligations, including high yield securities, tends to decrease; when interest
rates fall, the value of fixed rate debt obligations tends to increase. If an
issuer of a high yield security containing a redemption or call provision
exercises either provision in a declining interest rate market, the Fund would
have to replace the security, which could result in a decreased return for
shareholders. Conversely, if the Fund experiences unexpected net redemptions in
a rising interest rate market, it might be forced to sell certain securities,
regardless of investment merit. This could result in decreasing the assets to
which the Fund's expenses could be allocated and in a reduced rate of return for
the Fund. While it is impossible to protect entirely against this risk,
diversification of the Fund's portfolio and the careful analysis of prospective
portfolio securities by OppenheimerFunds, Inc. (the "Adviser") should minimize
the impact of a decrease in value of a particular security or group of
securities in the Fund's portfolio.
-- THE HIGH YIELD SECURITIES MARKET. The market for below investment grade
bonds expanded rapidly in the 1980's and its growth paralleled a long economic
expansion. During that period, the yields on below investment grade bonds rose
dramatically. Such higher yields did not reflect the value of the income stream
that holders of such bonds expected, but rather the risk that holders of such
bonds could lose a substantial portion of their value as a result of the
issuer's financial restructuring or default. In fact, from 1989 to 1991 during a
period of economic recession, the percentage of lower quality securities that
defaulted rose significantly, although the default rate decreased in subsequent
years. There can be no assurance that such declines in the below investment
grade market will not reoccur. The market for below investment grade bonds
generally is thinner and less active than that for higher quality bonds, which
may limit the Fund's ability to sell such securities at fair market value in
response to changes in the economy or the financial markets. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and liquidity of lower rated securities, especially in a
thinly traded market.
-- CREDIT RATINGS. The credit ratings issued by credit rating services may
not fully reflect the true risks of an investment. For example, credit ratings
typically evaluate the safety of principal and interest payments, not market
value risk, of high yield securities. Also, credit rating agencies may fail to
change timely a credit rating to reflect changes in economic or company
conditions that affect a security's market value. Although the Manager considers
ratings of recognized rating services such as Moody's Investors Services, Inc.,
Standard & Poor's Rating Group, Fitch Investors Services, Inc and Duff & Phelps,
("NRSRO" or "NRSROs") the Manager primarily relies on its own credit analysis,
which includes a study of existing debt, capital issuer's sensitivity to
economic conditions, its operating history and the current trend of earnings.
the Manager continually monitors the investments in the Fund's portfolio and
carefully evaluates whether to dispose of or retain high yield securities whose
credit ratings have changed. See Appendix A for a description of corporate bond
ratings.
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<PAGE>
-- LIQUIDITY AND VALUATION. Lower-rated bonds typically are traded among a
smaller number of broker-dealers than in a broad secondary market. Purchasers of
high yield securities tend to be institutions, rather than individuals, which is
a factor that further limits the secondary market. To the extend that no
established retail secondary market exists, many high yield securities may not
be as liquid as higher-grade bonds. A less active and thinner market for high
yield securities than that available for higher quality securities may limit the
Fund's ability to sell such securities at that fair market value in response to
changes in the economy or the financial markets. The ability of the Fund to
value or sell high yield securities also will be adversely affected to the
extent that such securities are thinly traded or illiquid. During such periods,
there may be less reliable objective information available and thus the
responsibility of the Fund's Board of Trustees (the "Board of Trustees" or the
"Board") to value high yield, high risk securities becomes more difficult, with
judgement playing a greater role. Further, adverse publicity about the economy
or a particular issuer may adversely affect the public's perception of the
value, and thus liquidity, of a high yield security, whether or not such
perceptions are based on a fundamental analysis. See How to Buy Shares.
-- LEGISLATION. Provisions of the Revenue Reconciliation Act of 1989 limit
a corporate issuer's deduction for a portion of the original issue discount on
"high yield discount" obligations (including certain pay-in-kind securities).
This limitation could have a materially adverse impact on the market for certain
high yield securities. From time to time, legislators and regulators have
proposed other legislation that would limit the use of high yield debt
securities in leveraged buyouts, mergers and acquisitions. It is not certain
whether such proposals, which could also adversely affect high yield securities,
will be enacted into law.
- -- INVESTMENT IN MUNICIPAL LEASES
Investments in tax-exempt lease obligations, which are commonly referred to as
"municipal leases," present certain special risks which are not associated with
investments in other tax-exempt obligations such as general obligation bonds or
revenue bonds. The principal risks involved in investments in tax-exempt lease
obligations are the following:
-- LIMITED LIQUIDITY. An investment in tax-exempt lease obligations is
generally less liquid than an investment in comparable tax-exempt obligations
such as general obligation bonds or revenue bonds because (i) tax-exempt lease
obligations (other than Certificate of Participation Leases) are usually issued
in private placements and contain legal restrictions on transfer and (ii) there
is only a limited secondary trading market for such obligations.
-- RELIANCE ON ADVISER'S CREDIT ANALYSIS. Tax-exempt lease obligations are
generally not rated by national credit rating firms, which places the burden for
credit analysis upon the Manager.
-- NON-APPROPRIATION. The ability of a purchaser to perform a meaningful
credit analysis is limited by the inclusion in most tax-exempt leases of
"non-appropriation" clauses which provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless funds are
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis.
-- LIMITED REMEDIES. The remedies of a purchaser of a tax-exempt lease
obligation may be limited solely to repossession of the collateral for such
obligation for resale upon failure of a municipality
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to make necessary appropriations or upon default by the governmental issuer
of such obligation without any recourse to the general credit of the
governmental issuer or to acceleration of the rental payments due solely for the
remaining fiscal year of the governmental issuer. In addition, the resale value
of the collateral may be significantly reduced at the time of repossession due
to depreciation.
-- REDUCTION IN YIELD. Prepayments on underlying leases due to loss or
destruction of equipment or exercise of an option of the lessee to purchase such
equipment may reduce the purchaser's yield to the extent that interest rates
have declined below the level prevailing when the tax-exempt lease obligation
was initially purchased. This reduction in yield may occur because the purchaser
might be required to invest such prepayments in obligations yielding a lower
rate of interest.
HOW THE FUND IS MANAGED
ORGANIZATION AND HISTORY. Rochester Fund Municipals, a Massachusetts business
trust, is an open-end, management investment company which currently has one
class of shares outstanding. As a Massachusetts business trust, the Fund is not
required to hold, and does not plan to hold, regular annual meetings of
shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder meeting is
called by the Trustees. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to remove a
Trustee. The Trustees will call a meeting of shareholders to vote on the removal
of a Trustee upon the written request of the record holders of 10% of its
outstanding shares. In addition, if the Trustees receive a request from at least
10 shareholders (who have been shareholders for at least six months) holding
shares of the Fund valued at $25,000 or more or holding at least 1% of the
Fund's outstanding shares, whichever is less, stating that they wish to
communicate with other shareholders to request a meeting to remove a Trustee,
the Trustees will then either make the Fund's shareholder list available to the
applicants or mail their communication to all other shareholders at the
applicants' expense, or the Trustees may take such other action as set forth
under Section 16(c) of the Investment Company Act.
Each Share of the Fund represents an interest in the Fund proportionately
equal to the interest of each other share and entitles the holder to one vote
per share (and a fractional vote for a fractional share) on matters submitted to
their vote at shareholders' meetings. The Trustees are authorized to create new
series and classes of series. The Trustees may reclassify unissued shares of the
Fund or its series or classes into additional series or classes of shares. The
Trustees may also divide or combine the shares of a class into a greater or
lesser number of shares without thereby changing the proportionate beneficial
interest of a shareholder in the Fund. Shares do not have cumulative voting
rights or preemptive or subscription rights. Shares may be voted in person or by
proxy.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides for
indemnification and reimbursement of expenses out of its property for any
shareholder held personally liable for its obligations. The Declaration of Trust
also provides that the Fund shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Fund and satisfy
any judgment thereon. Thus, while Massachusetts law permits a shareholder of a
business trust (such as the Fund) to be held personally liable as a "partner"
under certain circumstances, the risk of a Fund shareholder incurring financial
loss on account of shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its
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obligations described above. Any person doing business with the Trust, and
any shareholder of the Trust, agrees under the Trust's Declaration of Trust to
look solely to the assets of the Trust for satisfaction of any claim or demand
which may arise out of any dealings with the Trust, and the Trustees shall have
no personal liability to any such person, to the extent permitted by law.
TRUSTEES AND OFFICERS OF THE FUND. The Fund's Trustees and officers, one of
which is the Fund's portfolio manager, are listed below, together with principal
occupations and business affiliations during the past five years. The address of
each is Two World Trade Center, New York, New York 10048, except as noted. As of
January 5, 1996 the Trustees and officers of the Fund as a group owned less than
1% of the outstanding shares of class of the Fund.
BRIDGET A. MACASKILL, CHAIRMAN OF THE BOARD OF TRUSTEES AND PRESIDENT*; AGE: 47.
Chairman of the Board, President and Trustee of the Fund, Rochester Portfolio
Series-Limited Term New York Municipal Fund and Rochester Fund Series-The Bond
Fund For Growth; Chief Executive Officer of the Manager; President and Chief
Operating Officer of the Manager; prior thereto, Chief Operating Officer of the
Adviser and Executive Vice President of the Manager from 1987-1989. Vice
President and a Director of Oppenheimer Acquisition Corp., Director of
Oppenheimer Partnership Holdings, Inc., Chairman and a Director of Oppenheimer
Shareholder Services, Director of Main Street Advisers, Inc., and Director of
HarbourView Asset Management Corporation, all of which are subsidiaries of the
Adviser; a Trustee of the New York-based Oppenheimer funds.
JOHN CANNON, TRUSTEE; AGE: 65
620 Sentry Parkway West, Suite 220, Blue Bell, Pennsylvania 19422
Chairman and Treasurer, CDC Associates, Inc., registered investment adviser,
1993-present; prior thereto, President, AMA Investment Advisers, Inc., a mutual
fund investment adviser, 1976-1991; Senior Vice President AMA Investment
Advisers, Inc., 1991-1993; Director, Neuberger & Berman Income Managers Trust,
Neuberger & Berman Income Funds and Neuberger & Berman Income Trust,
1995-present; Trustee of Rochester Portfolio Series-Limited Term New York
Municipal Fund and Rochester Fund Series-The Bond Fund For Growth since 1992.
PAUL Y. CLINTON, DIRECTOR; AGE: 64
946 Morris Avenue, Bryn Mawr, Pennsylvania 19010
Director, External Affairs, Kravco Corporation, a national real estate owner and
property management corporation; formerly President of Essex Management
Corporation, a management consulting company; Trustee of Capital Cash Management
Trust, Prime Cash Fund and Short Term Asset Reserves, each of which is a
money-market fund; Director of Oppenheimer Quest Value Fund, Inc., Oppenheimer
Quest Global Value Fund, Inc., and Quest Cash Reserves, Inc. and Trustee of
Quest For Value Accumulation Trust, all of which are open-end investment
companies. Formerly a general partner of Capital Growth Fund, a venture capital
partnership; formerly a general partner of Essex Limited Partnership, an
investment partnership; formerly President of Geneve Corp., a venture capital
fund; formerly Chairman of Woodland Capital Corp., a small business investment
company; formerly Vice President of W.R. Grace & Co. Trustee of Rochester
Portfolio Series-Limited Term New York Municipal Fund and Rochester Fund
Series-The Bond Fund For Growth.
- ---------
* A Trustee who is an "interested person" as defined in the Investment Company
Act.
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THOMAS W, COURTNEY, DIRECTOR; AGE: 62
P.O. Box 580, Sewickley, Pennsylvania 15143
Principal of Courtney Associates, Inc., a venture capital firm; former
General Partner of Trivest Venture Fund, a private venture capital fund; former
President of Investment Counseling Federated Investors, Inc.; Trustee of Cash
Assets Trust, a money market fund; Director of Quest Cash Reserves, Inc.,
Oppenheimer Quest Value Fund, Inc. and Oppenheimer Quest Global Value Fund, Inc.
and Trustee of Quest for Value Accumulation Trust, all of which are open-end
investment companies; former President of Boston Company Institutional
Investors; Trustee of Hawaiian Tax-Free Trust and Tax Free Trust of Arizona,
tax-exempt bond funds; Director of several privately owned corporations; former
Director of Financial Analysts Federation; Trustee of Rochester Portfolio
Series-Limited Term New York Municipal Fund and Rochester Fund Series-The Bond
Fund For Growth.
LACY B. HERRMANN, DIRECTOR; AGE: 66
380 Madison Avenue, Suite 2300, New York, New York 10017
President and Chairman of the Board of Aquila Management Corporation, the
sponsoring organization and Administrator and/or Sub-Adviser to the following
open-end investment companies, and Chairman of the Board of Trustees and
President of each: Churchill Cash Reserves Trust, Short Term Asset Reserves,
Pacific Capital Cash Assets Trust, Pacific Capital U.S. Treasuries Cash Assets
Trust, Pacific Capital Tax-Free Cash Assets Trust, Prime Cash Fund, Narragansett
Insured Tax-Free Income Fund, Tax-Free Fund For Utah, Churchill Tax-Free Fund of
Kentucky, Tax-Free Fund of Colorado, Tax-Free Trust of Oregon, Tax-Free Trust of
Arizona, Hawaiian Tax-Free Trust, and Aquila Rocky Mountain Equity Fund; Vice
President, Director, Secretary, and formerly Treasurer of Aquila Distributors,
Inc., distributor of the above funds; President and Chairman of the Board of
Trustees of Capital Cash Management Trust ("CCMT"), and an Officer and
Trustee/Director of its predecessors; President and Director of STCM Management
Company, Inc., sponsor and adviser to CCMT; Chairman, President and a Director
of InCap Management Corporation, formerly sub-adviser and administrator of Prime
Cash Fund and Short Term Asset Reserves; Director or Trustee of Quest Cash
Reserves, Inc., Oppenheimer Quest Global Value Fund, Inc. and Oppenheimer Quest
Value Fund, Inc. and Trustee of Quest for Value Accumulation Trust and The
Saratoga Advantage Trust, each of which is an open-end investment company;
Trustee of Rochester Portfolio Series-Limited Term New York Municipal Fund and
Rochester Fund Series-The Bond Fund For Growth; Trustee of Brown University.
GEORGE LOFT, DIRECTOR, AGE: 80
51 Herrick Road
Sharon, Connecticut 06069
Private Investor; Director of Quest Cash Reserves, Inc., Oppenheimer Quest for
Value Fund, Inc. and Oppenheimer Quest Global Value Fund, Inc. and Trustee of
Quest for Value Accumulation Trust and The Saratoga Advantage Trust, all of
which are open-end investment companies, and Director of the Quest for Value
Dual Purpose Fund, Inc., a closed-end investment company; Trustee of Rochester
Portfolio Series-Limited Term New York Municipal Fund and Rochester Fund
Series-The Bond Fund For Growth.
RONALD H. FIELDING, VICE PRESIDENT; AGE: 46
350 Linden Oaks, Rochester, New York 14625
Vice President of the Fund and Rochester Portfolio Series-Limited Term New York
Municipal Fund, January 5, 1996-present; Senior Vice President and Portfolio
Manager of the Manager, January 5, 1996-present; President of the Rochester
Division of the Manager, January 4, 1996-present; President and Trustee of the
Fund, 1986-January 5, 1996; Portfolio Manager of the Fund, 1986-present;
President and Trustee of
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Rochester Portfolio Series - Limited Term New York Municipal Fund,
1991-January 4, 1996; President and Trustee of Rochester Fund Series - The Bond
Fund For Growth, 1986-January 4, 1996; President and Director of Rochester Tax
Managed Fund, Inc., 1985-1995; President and a director, Fielding Management
Company, Inc. (1988-present); President and a director, Rochester Fund
Distributors, Inc. (1990-present); President and a director, Rochester Capital
Advisors, Inc. (1993-present); President and a director, Rochester Fund
Services, Inc. (1986-present).
ANDREW J. DONOHUE, SECRETARY; AGE: 45
Secretary of the Fund, Rochester Portfolio Series-Limited Term New York
Municipal Fund and Rochester Fund Series-The Bond Fund For Growth; Executive
Vice President and General Counsel of the Manager and the Distributor; an
officer of other Oppenheimer funds; formerly Senior Vice President and Associate
General Counsel of the Manager and the Distributor, partner in Kraft & McManimon
(a law firm), an officer of First Investors Corporation (a broker-dealer) and
First Investors Management Company, Inc. (broker-dealer and investment adviser),
and a director and an officer of First Investors Family of Funds and First
Investors Life Insurance Company.
GEORGE C. BOWEN, TREASURER; AGE: 59
3410 South Galena Street Denver, Colorado 80231
Treasurer of the Fund, Rochester Portfolio Series-Limited Term New York
Municipal Fund and Rochester Fund Series-The Bond Fund For Growth; Senior Vice
President and Treasurer of the Manager; Vice President and Treasurer of the
Distributor and HarbourView Asset Management Corporation; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial Asset Management
Corporation, an investment advisory subsidiary of the Manager; Vice President,
Treasurer and Secretary of the Agent and Shareholder Financial Services, Inc., a
transfer agent subsidiary of the Manager; an officer of other Oppenheimer funds.
ROBERT G. ZACK, ASSISTANT SECRETARY; AGE: 47
Assistant Secretary of the Fund, Rochester Portfolio Series-Limited Term New
York Municipal Fund and Rochester Fund Series-The Bond Fund For Growth; Senior
Vice President and Associate General Counsel of the Manager; Assistant Secretary
of SSI and SFSI; an officer of other Oppenheimer funds.
ROBERT BISHOP, ASSISTANT TREASURER; AGE: 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Treasurer of the Fund, Rochester Portfolio Series-Limited Term New
York Municipal Fund and Rochester Fund Series-The Bond Fund For Growth;
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; previously a Fund Controller for the Manager, prior to
which he was an Accountant for Yale & Seffinger, P.C., an accounting firm, and
previously an Accountant and Commissions Supervisor for Stuart James Company
Inc., a broker-dealer.
SCOTT FARRAR, ASSISTANT TREASURER; AGE: 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Treasurer of the Fund, Rochester Portfolio Series-Limited Term New
York Municipal Fund and Rochester Fund Series-The Bond Fund For Growth;
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; previously a Fund Controller for the Manager, prior to
which he was an International Mutual Fund Supervisor for Brown Brothers Harriman
& Co., a bank, and previously a Senior Fund Accountant for State Street Bank &
Trust Company.
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<PAGE>
-- REMUNERATION OF TRUSTEES. All officers of the Fund and Ms. Macaskill,
a Trustee and President, are officers or directors of the Manager and receive no
salary or fee from the Fund. The following table sets forth the aggregate
compensation received by the non-interested Trustees from the Fund during the
fiscal year ended December 31, 1995.
<TABLE>
<CAPTION>
Pension or
Retirement
Aggregate Benefits Estimated Total
Compensation Accrued as Annual Compensation
from the Part of Fund Benefits Upon From Fund
Name of Person Fund(1) Expenses(2) Retirement(2) Complex(3)
<S> <C> <C> <C> <C>
John Cannon ................ $19,900 $43,667 $13,500 $29,400
Paul Y. Clinton ............ $ $
Thomas W. Courtney ......... $ $
Lacy B. Herrmann ........... $ $
George Loft ................ $ $
</TABLE>
- -----------
(1) During the fiscal year ended December 31, 1995, only one of the Fund's
current trustees, John Cannon, served as a Trustee of the Fund.
(2) The Board of Rochester Fund Municipals has adopted a Retirement Plan for
Independent Trustees of that Fund. Under the terms of the Retirement Plan, as
amended and restated on October 16, 1995, an eligible Trustee (an Independent
Trustee who has served as such for at least three years prior to retirement) may
receive an annual benefit equal to the product of $1,500 multiplied by the
number of years of service as an Independent Trustee up to a maximum of nine
years. The maximum annual benefit which may be paid to an eligible Trustee under
the Retirement Plan is $13,500. The Retirement Plan will be effective for all
eligible Trustees who have dates of retirement occurring on or after December
31, 1995. Subject to certain exceptions, retirement is mandatory at age 72 in
order to qualify for the Retirement Plan. Although the Retirement Plan permits
Eligible Trustees to elect early retirement at age 63, retirement benefits are
not payable to Eligible Trustees who elect early retirement until age 65. The
Retirement Plan provides that no Independent Trustee who is elected as a Trustee
of Rochester Fund Municipals after September 30, 1995, will be eligible to
receive benefits thereunder. Mr. Cannon is the only current Independent Trustee
who may be eligible to receive benefits under the Retirement Plan. The estimate
of annual benefits payable to Mr. Cannon under the Retirement Plan is based upon
the assumption that Mr. Cannon, who was first elected as a Trustee of the Fund
in 1992, will serve as an Independent Trustee for nine years.
(3) Includes compensation received during the fiscal year ended December 31,
1995, from all registered investment companies within the Fund Complex during
that year which consisted of the Fund Rochester Portfolio Series-Limited Term
New York Municipal Fund, Rochester Fund Series - The Bond Fund For Growth, and
Rochester Tax Managed Fund, Inc. On June 28, 1995, Rochester Fund Series - The
Bond Fund For Growth acquired all of the assets and assumed all of the
liabilities of Rochester Tax Managed Fund, Inc.
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<PAGE>
- --MAJOR SHAREHOLDERS. As of December 15, 1995, no person owned of record or was
known by the Fund to own beneficially 5% or more of outstanding voting
securities of the Fund except Merrill Lynch Pierce Fenner & Smith, 4800 Deer
Lake Drive, EFL 3, Jacksonville, Florida 32246 which was the record owner of 15%
of the outstanding shares of the Fund.
the Manager AND ITS AFFILIATES. the Manager is wholly-owned by Oppenheimer
Acquisition Corp. ("OAC"), a holding company controlled by Massachusetts Mutual
Life Insurance Company. OAC is also owned in part by certain of the Manager's
directors and officers, some of whom serve as officers of the Fund and one of
whom (Ms. Macaskill) serves as a Trustee of the Fund. On January 4, 1996, the
manager acquired substantially all of the assets of Rochester Capital Advisers,
L.P. and Fielding Management Company, Inc. and was appointed investment adviser
to the Fund.
the Manager and the Fund have a Code of Ethics. It is designed to detect
and prevent improper personal trading by certain employees, including portfolio
managers, that would compete with or take advantage of the Fund's portfolio
transactions. Compliance with the Code of Ethics is carefully monitored and
strictly enforced by the Manager.
- --THE INVESTMENT ADVISORY AGREEMENT. The Investment Advisory Agreement between
the Manager and the Fund which was entered into on January 4, 1996 ("Advisory
Agreement") requires the Manager, at its expense, to provide the Fund with
adequate office space, facilities and equipment, and to provide and supervise
the activities of all administrative and clerical personnel required to provide
effective corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and the composition of proxy materials and
registration statements for continuous public sale of shares of the Fund. For
these services, the Manager will receive from the Fund an annual fee, computed
and payable monthly as a percentage of average daily net assets, as follows:
0.54% of average daily net assets up to $100 million; 0.52% of average daily net
assets on the next $150 million; 0.47% of average daily net assets on the next
$1,750 million; 0.46% of the next $3 billion; and 0.45% of average daily net
assets over $5 billion.
Expenses not expressly assumed by the Manager under the Advisory Agreement
or by the Distributor are paid by the Fund. The Advisory Agreement lists
examples of expenses paid by the Fund, the major categories of which relate to
interest, taxes, brokerage commissions, fees to certain Trustees, legal and
audit expenses, custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs, and non-recurring expenses, including
litigation. For the Fund's fiscal year ended December 31, 1995, the management
fees paid by the Fund to its previous investment adviser, Rochester Capital
Advisors, L.P. During the fiscal year ended December 31, 1994, management fees
paid by the Fund consisted of $5,010,516 paid to Rochester Capital Advisors,
L.P. for the period from May 1, 1994 to December 31, 1994, and $2,552,432 paid
to Fielding Management Company, Inc. for the period from January 1, 1994 to
April 30, 1994. During the fiscal year ended December 31, 1993, the Fund paid
investment advisory fees of $5,955,268 to Fielding Management Company, Inc.
Fielding Management Company, Inc. served as investment adviser to the Fund from
the commencement of its operations as an open-end investment company on May 15,
1986 through April 30, 1994. Rochester Capital Advisors, Inc. is the general
partner of Rochester Capital Advisors, L.P.
The Advisory Agreement contains no expense limitation. However,
independently of the Agreement, the Manager has voluntarily undertaken that the
total expenses of the Fund in any fiscal year (exclusive of
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<PAGE>
taxes, interest, brokerage commissions, and any extraordinary non-recurring
expenses, such as litigation costs) shall not exceed the most stringent state
regulatory limitation on Fund expenses applicable to the Fund. The payment of
the management fee will be reduced so that at no time will there be any accrued
but unpaid liability under the above expense limitation. the Manager reserves
the right to amend or terminate this expense limitation at any time.
The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties thereunder, the Manager shall not be liable for any loss
sustained by reason of good faith errors or omissions on its part with respect
to any matters to which the Advisory Agreement relates. The Agreement permits
the Manager to act as investment adviser for any other person, firm or
corporation and to use the name "Oppenheimer" in connection with other
investment companies for which it may act as investment adviser. If the Manager
shall no longer act as investment adviser to the Fund, the right of the Fund to
use the name "Oppenheimer" as part of its name may be withdrawn.
- --THE DISTRIBUTOR. Under its General Distributor's Agreement with the Fund,
which was entered into on January 4, 1996, the Distributor acts as the Fund's
principal underwriter in the continuous public offering of the Fund's shares of
beneficial interest, but is not obligated to sell a specific number of shares.
Expenses normally attributable to sales (other than those paid under the
Distribution and Service Plans, but including advertising and the cost of
printing and mailing prospectuses, other than those furnished to existing
shareholders) are borne by the Distributor. During the Fund's fiscal years ended
December 31, 1993, 1994 and 1995, the aggregate amount of sales charge on sales
of the Fund's shares was $26,603,566, $16,039,947, and $8,868,211, respectively,
of which Rochester Fund Distributors, Inc., the Fund's previous principal
underwriter, retained $3,347,397, $2,015,030 and $1,086,283 in those respective
years. For additional information about distribution of the Fund's shares and
the payments made by the Fund to the Distributor in connection with such
activities, please refer to "The Fund's Service Plan," below.
--THE TRANSFER AGENT. OppenheimerFunds Services, the Fund's transfer agent,
a division of the Manager, is responsible for maintaining shareholder accounting
records, and for shareholder servicing and administrative functions. The Agent
is compensated on the basis of a fixed fee per account. The compensation paid by
the Fund for such services under a comparable arrangement with Rochester Fund
Services, Inc., the Fund's previous shareholder services agent, for the fiscal
years ending December 31, 1993, 1994 and 1995 was $724,431, $1,152,456 and
$1,267,809, respectively.
- --ACCOUNTING AND RECORDKEEPING SERVICES. the Manager also provides certain
accounting and recordkeeping services to the Fund pursuant to an Accounting and
Administration Agreement entered into on January 4, 1996. The services provided
pursuant to the Fund thereunder include the maintenance of general ledger
accounts and records relating to the business of the Fund in the form required
to comply with the Investment Company Act and the calculation of the daily net
asset value of the Fund. The compensation paid by the Fund for such services to
Rochester Fund Services, Inc. its previous shareholder services agent, for the
fiscal years ended December 31, 1993, 1994 and 1995 was $442,850, $556,700 and
$607,025.
BROKERAGE POLICIES OF THE FUND
BROKERAGE PROVISIONS OF THE INVESTMENT ADVISORY AGREEMENT. One of the duties of
the Manager under
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<PAGE>
the Advisory Agreement is to arrange the portfolio transactions for the
Fund. The Advisory Agreement contains provisions relating to the employment of
broker-dealers ("brokers") to effect the Fund's portfolio transactions. In doing
so, the Manager is authorized by the Advisory Agreement to employ
broker-dealers, including "affiliated" brokers, as that term is defined in the
Investment Company Act, as may, in its best judgment based on all relevant
factors, implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable price
obtainable) of such transactions. the Manager need not seek competitive
commission bidding but is expected to minimize the commissions paid to the
extent consistent with the interest and policies of the Fund as established by
its Board of Trustees.
Under the Advisory Agreement, the Manager is authorized to select brokers
that provide brokerage and/or research services for the Fund and/or the other
accounts over which the Manager or its affiliates have investment discretion.
The commissions paid to such brokers may be higher than another qualified broker
would have charged if a good faith determination is made by the Manager that the
commission is fair and reasonable in relation to the services provided. Subject
to the foregoing considerations, the Manager may also consider sales of shares
of the Fund and other investment companies managed by the Manager or its
affiliates as a factor in the selection of brokers for the Fund's portfolio
transactions.
DESCRIPTION OF BROKERAGE PRACTICES FOLLOWED BY the Manager. Subject to the
provisions of the Advisory Agreement and the procedures and rules described
above, allocations of brokerage are generally made by the Manager's portfolio
traders based upon recommendations from the Manager's portfolio managers. In
certain instances, portfolio managers may directly place trades and allocate
brokerage, also subject to the provisions of the Advisory Agreement and the
procedures and rules described above. In either case, brokerage is allocated
under the supervision of the Manager's executive officers. Transactions in
securities other than those for which an exchange is the primary market are
generally done with principals or market makers. As stated in the prospectus,
the portfolio securities of the Fund are generally traded on a net basis and, as
such, do not involve the payment of brokerage commissions. It is the policy of
the Manager to obtain the best net results in conducting portfolio transactions
for the Fund, taking into account such factors as price (including the
applicable dealer spread) and the firm's general execution capabilities. Where
more than one dealer is able to provide the most competitive price, both the
sale of Fund shares and the receipt of research may be taken into consideration
as factors in the selection of dealers to execute portfolio transactions for the
Fund. The transaction costs associated with such transactions consist primarily
of the payment of dealer and underwriter spreads. Brokerage commissions are paid
primarily for effecting transactions in listed securities and or for certain
fixed-income agency transactions, in the secondary market, otherwise only if it
appears likely that a better price or execution can be obtained. When possible,
concurrent orders to purchase or sell the same security by more than one of the
accounts managed by the Manager or its affiliates are combined. The transactions
effected pursuant to such combined orders are averaged as to price and allocated
in accordance with the purchase or sale orders actually placed for each account.
The research services provided by a particular broker may be useful in one
or more of the advisory accounts of the Manager and its affiliates. The research
services provided by brokers broaden the scope and supplement the research
activities of the Manager, by making available additional views for
consideration and comparisons. The Board of Trustees, including the
"independent" Trustees of the Fund (those Trustees of the Fund who are not
"interested persons" as defined in the Investment Company Act, and who have no
direct or indirect financial interest in the operation of the Advisory Agreement
or the Distribution Plans described below) annually reviews information
furnished by the Manager as to the commissions paid to
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<PAGE>
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 Fund did not incur costs for brokerage commissions in
connection with its portfolio transactions during the fiscal years ended
December 31, 1993, 1994 and 1995.
A change in securities held by the Fund is known as "portfolio
turnover". As portfolio turnover increases, the Fund can be expected to incur
brokerage commission expenses and transaction costs which will be borne by the
Fund. In any particular year, however, market conditions could result in
portfolio activity at a greater or lesser rate than anticipated. For the fiscal
years ended December 31, 1993, 1994, and 1995 the Fund's portfolio turnover
rates were and 18.27%, 34.39% and 14.54%, respectively.
PERFORMANCE OF THE FUND
YIELD AND TOTAL RETURN INFORMATION. As described in the Prospectus, from time to
time the "standardized yield," "dividend yield," "average annual total return,"
"cumulative total return," "average annual total return at net asset value" and
"total return at net asset value" of an investment in shares of the Fund may be
advertised. An explanation of how these total returns are calculated and the
components of those calculations is set forth below.
The Fund's advertisements of its performance data must, under applicable
rules of the Securities and Exchange Commission, include the average annual
total returns of the Fund for the 1, 5, and 10-year periods ending as of the
most recently-ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare the Fund's performance to the
performance of other funds for the same periods. However, a number of factors
should be considered before using such information as a basis for comparison
with other investments. An investment in the Fund is not insured; its returns
and share prices are not guaranteed and normally will fluctuate on a daily
basis. When redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a prediction or
representation by the Fund of future returns.
- -- STANDARDIZED YIELDS
-- YIELD. The Fund's "yield" (referred to as "standardized yield") for a
given 30-day period is calculated using the following formula set forth in rules
adopted by the Securities and Exchange Commission that apply to all funds that
quote yields:
2-b 6
Standardized Yield = 2[( --- + 1) - 1]
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense reimbursements).
c = the average daily number of shares outstanding during the
30-day period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period,
adjusted for undistributed net investment income.
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<PAGE>
The standardized yield for a 30-day period may differ from its yield for
any other period. The SEC formula assumes that the standardized yield for a
30-day period occurs at a constant rate for a six-month period and is annualized
at the end of the six-month period. This standardized yield is not based on
actual distributions paid by the Fund to shareholders in the 30-day period, but
is a hypothetical yield based upon the net investment income from the Fund's
portfolio investments calculated for that period. The standardized yield may
differ from the "dividend yield", described below. For the 30-day period ended
December 31, 1995, the standardized yields for the Fund's shares was 5.50%.
-- TAX-EQUIVALENT YIELD. The Fund's "tax-equivalent yield" adjusts the
Fund's current yield, as calculated above, by a stated combined Federal, state
and city tax rate. The tax-equivalent yield is based on a 30-day period, and is
computed by dividing the tax-exempt portion of the Fund's current yield (as
calculated above) by one minus a stated income tax rate and adding the result to
the portion (if any) of the Fund's current yield that is not tax exempt. The tax
equivalent yield may be used to compare the tax effects of income derived from
the Fund with income from taxable investments at the tax rates stated. The
Fund's tax-equivalent yield (after expense assumptions by the Manager) for the
30-day period ended December 31, 1995, for an individual New York City resident
in the 42.7% combined tax bracket was 9.6%.
-- DIVIDEND YIELD AND DISTRIBUTION RETURN. From time to time the Fund may
quote a "dividend yield" or a "distribution return". Dividend yield is based on
the dividends paid on shares of a class from dividends derived from net
investment income during a stated period. Distribution return includes dividends
derived from net investment income and from realized capital gains declared
during a stated period. Under those calculations, the dividends and/or
distributions for that class declared during a stated period of one year or less
(for example, 30 days) are added together, and the sum is divided by the maximum
offering price per share of that class on the last day of the period. When the
result is annualized for a period of less than one year, the "dividend yield" is
calculated as follows:
Dividend Yield Dividends of the Class
of the Class = ----------------------- / Number of Days (accrual period) X 365
Max. Offering Price of
the Class (last day of
period)
The maximum offering price includes the maximum front-end sales charge.
From time to time similar yield or distribution return calculations may
also be made using the net asset value (instead of its maximum offering price)
at the end of the period. The dividend yield for the 30-day period ended
December 31, 1995 were 5.31% and 5.43% when calculated at maximum offering price
and at net asset value, respectively.
- -- TOTAL RETURN INFORMATION
-- Average Annual Total Returns. The "average annual total return" is an
average annual compounded rate of return for each year in a specified number of
years. It is the rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a number of
years ("n") to achieve an Ending Redeemable Value ("ERV") of that investment,
according to the following formula:
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<PAGE>
( ERV )(1/n)
(-----) -1 = Average Annual Total Return
( P )
-- CUMULATIVE TOTAL RETURNS. The cumulative "total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as average
annual total return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total return, the current maximum sales charge of 4.0% (as a
percentage of the offering price) is deducted from the initial investment ("P")
(unless the return is shown at net asset value, as described below). Total
returns also assume that all dividends and capital gains distributions during
the period are reinvested to buy additional shares at net asset value per share,
and that the investment is redeemed at the end of the period. The "average
annual total returns" on an investment in shares of the Fund for the one and
five year periods ended December 31, 1995 and for the period from May 15, 1986
through December 31, 1995, were 13.83%, 8.44% and 8.36%, respectively. The
cumulative "total return" on shares of the Fund for the period from May 15, 1986
through December 31, 1995 was 115.97%.
-- TOTAL RETURNS AT NET ASSET VALUE. From time to time the Fund may also
quote an average annual total return at net asset value or a cumulative total
return at net asset value. Each is based on the difference in net asset value
per share at the beginning and the end of the period for a hypothetical
investment in shares of the Fund (without considering the front-end sales
charge) and takes into consideration the reinvestment of dividends and capital
gains distributions. The Fund's cumulative total return at net asset value for
the one year period ended December 31, 1995 and the period from May 15, 1986
through December 31, 1995 was 18.58% and 124.92%, respectively.
OTHER PERFORMANCE COMPARISONS. From time to time the Fund may publish the
ranking of its shares by Lipper Analytical Services, Inc. ("Lipper"), a
widely-recognized independent service. Lipper monitors the performance of
regulated investment companies, including the Fund, and ranks their performance
for various periods based on categories relating to investment objectives. The
performance of the Fund is ranked against (i) all other funds (excluding money
market funds) and (ii) all other New York municipal bond funds. The Lipper
performance rankings are based on total returns that include the reinvestment of
capital gain distributions and income dividends but do not take sales charges or
taxes into consideration.
From time to time the Fund may publish the ranking of its performance by
Morningstar, Inc., an independent mutual fund monitoring service that ranks
mutual funds, including the Fund, monthly in broad investment categories
(equity, taxable bond, municipal bond and hybrid) based on risk-adjusted
investment return. Investment return measures a fund's three, five and ten-year
average annual total returns (when
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<PAGE>
available) in excess of 90-day U.S. Treasury bill returns after considering
sales charges and expenses. Risk reflects fund performance below 90-day U.S.
Treasury bill monthly returns. Risk and return are combined to produce star
rankings reflecting performance relative to the average fund in a fund's
category. Five stars is the "highest" ranking (top 10%), four stars is "above
average" (next 22.5%), three stars is "average" (next 35%), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%). Morningstar ranks
the performance of the Fund in relation to that of other New York State
municipal bond funds. Rankings are subject to change.
The total return on an investment in the Fund may be compared with
performance for the same period of comparable indices, including but not limited
to The Bond Buyer Municipal Bond Index and the Lehman Brothers Municipal Long
Bond Index. The Bond Buyer Municipal Bond Index is an unmanaged index which
consists of 40 long-term municipal bonds. The index is based on price quotations
provided by six municipal bond dealer-to-dealer brokers. The Lehman Brothers
Municipal Bond Index is a broadly based, widely recognized unmanaged index of
municipal bonds. Whereas the Fund's portfolio comprises bonds principally from
New York State, the Indices are comprised of bonds from all 50 states and many
jurisdictions. Index performance reflects the reinvestment of income but does
not consider the effect of capital gains or transaction costs. Any other index
selected for comparison would be similar in composition to one of these two
indices.
Investors may also wish to compare the return on the Fund's shares to the
returns on fixed income investments available from banks and thrift
institutions, such as certificates of deposit, ordinary interest-paying checking
and savings accounts, and other forms of fixed or variable time deposits, and
various other instruments such as Treasury bills. However, the Fund's returns
and share price are not guaranteed by the FDIC or any other agency and will
fluctuate daily, while bank depository obligations may be insured by the FDIC
and may provide fixed rates of return, and Treasury bills are guaranteed as to
principal and interest by the U.S. government.
From time to time, the Fund's Adviser may publish rankings or ratings of
the Manager (or other service providers) or the investor services provided by
them to shareholders of the Oppenheimer funds, other than performance rankings
of the Oppenheimer funds themselves. Those ratings or rankings of
shareholder/investor services by third parties may compare the OppenheimerFunds'
services to those of other mutual fund families selected by the rating or
ranking services and may be based upon the opinions of the rating or ranking
service itself, based on its research or judgment, or based upon surveys of
investors, brokers, shareholders or others.
The performance of the Fund's shares may also be compared in publications
to (i) the performance of various market indices or to other investments for
which reliable performance data is available, and (ii) to averages, performance
rankings or other benchmarks prepared by recognized mutual fund statistical
services.
THE FUND'S SERVICE PLAN
The Fund has adopted a Service Plan under Rule 12b-1 of the Investment
Company Act, pursuant to which the Fund makes payments to the Distributor in
connection with the distribution and/or servicing of shares as described in the
Prospectus. The Service Plan permits the Fund to pay its Distributor a service
fee in connection with the distribution of shares of the Fund in an amount of up
to 0.25% per annum of the
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<PAGE>
Fund's average daily net assets (the "Service Fee"). The Service Fee is
utilized to compensate broker-dealers and financial institutions, including the
Distributor (collectively, "Recipients"), for services performed and/or expenses
incurred in servicing shareholder accounts. Although the terms of the Service
Plan permit aggregate payments thereunder of up to 0.25% per annum of the Fund's
average daily net assets, the Board of Trustees of the Fund has approved
aggregate payments thereunder of only 0.15% per annum.
The Service Plan has been approved by a vote of (i) the Board of Trustees
of the Fund, including a majority of the "Independent Trustees", cast in person
at a meeting called for the purpose of voting on that Plan, and (ii) the holders
of a "majority of the outstanding voting securities" of the Fund (as defined in
the Investment Company Act). Unless terminated as described below, the Service
Plan will continue in effect from year to year but only as long as such
continuance is specifically approved at least annually by the Fund's Board of
Trustees, including the Independent Trustees, by a vote cast in person at a
meeting called for the purpose of voting on such continuance. The Service Plan
may be terminated at any time by the vote of a majority of the Independent
Trustees or by the vote of the holders of a "majority of the outstanding voting
securities" of the Fund (as defined in the Investment Company Act). The Service
Plan may not be amended to increase materially the amount of payments to be made
unless such amendment is approved by the holders of a "majority of the
outstanding voting securities" of the Fund (as defined in the Investment Company
Act).
While the Service Plan is in effect, the Treasurer of the Fund shall
provide written reports to the Fund's Board of Trustees at least quarterly for
its review, detailing the amount of all payments made pursuant to the Service
Plan, the identity of each Recipient that received any such payment, and the
purpose of the payments. Those reports will be subject to the review and
approval of the Independent Trustees in the exercise of their fiduciary duty.
The Service Plan further provides that while it is in effect, the selection or
replacement 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 as to any such selection or nomination is approved by a
majority of such Independent Trustees.
For the fiscal year ended December 31, 1995, payments under the Fund's
previous Distribution Plan, which was in effect during that year, totalled
$3,452,348, which consisted of Service Fee payments to Recipients of $2,757,558
and asset based sales charge payments of $694,790. The aggregate Service Fee
payments to Recipients included an amount of $2,503,608 paid to Rochester Fund
Distributors, Inc., the Fund's previous principal underwriter for its services
in maintaining shareholder accounts as to which it was the dealer of record.
Rochester Fund Distributors, Inc. paid a total of $2,698,619 to broker dealers
in service fees in 1995. The aggregate asset based sales charge payments
consisted of $____. The Fund's previous Distribution Plan was amended, effective
as of May 1, 1995, to eliminate the asset based sales charge component of the
Distribution Plan.
ABOUT YOUR ACCOUNT
HOW TO BUY SHARES
See How to Buy Shares in the Prospectus for a description of how shares of
the Fund are offered to the Public and how the excess of the public offering
price over the net amount invested is allocated to authorized dealers. The
Prospectus also describes several special purchase plans and methods by which
shares may be purchased at reduced sales loads, including certain classes of
persons who may purchase
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shares at net asset value. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for the purchase of shares under Right of
Accumulation and Letters of Intent because of the economies of sales efforts and
expenses realized by the Distributor, dealers and brokers making such sales. No
sales charge is imposed in certain circumstances described in the Prospectus
because the Distributor or dealer or broker incurs little or no selling
expenses. The term "immediate family" refers to one's spouse, children,
grandchildren, parents, grandparents, parents-in-law, brothers and sisters,
sons- and daughters-in-law, siblings, a sibling's spouse and a spouse's
siblings.
DETERMINATION OF NET ASSET VALUE PER SHARE. The net asset value per share of
shares of the Fund is determined as of the close of business of The New York
Stock Exchange on each day that the Exchange is open, by dividing the value of
the Fund's net assets attributable to that class by the number of shares of that
class outstanding. The Exchange normally closes at 4:00 P.M., New York time, but
may close earlier on some days (for example, in case of weather emergencies or
on days falling before a holiday). The Exchanges most recent annual holiday
schedule (which is subject to change) states that it will close on New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. It may also close on other days. Trading may
occur in debt securities and in foreign securities when the Exchange is closed
(including weekends and holidays). Because the Fund's net asset value will not
be calculated on those days, the Fund's net asset value per share may be
significantly affected on such days when shareholders may not purchase or redeem
shares.
The Fund's Board of Trustees has established procedures for the valuation
of the Fund's securities, generally as follows: (i) equity securities traded on
a securities exchange or on the Nasdaq National Market System ("Nasdaq") are
valued at the last reported sale prices on their primary exchange or Nasdaq that
day (or, in the absence of sales that day, at values based on the last sale
prices of the preceding trading day, or closing bid and asked prices); (ii)
securities actively traded on a foreign securities exchange are valued at the
last sales price available to the pricing service approved by the Fund's Board
of Trustees or to the Manager as reported by the principal exchange on which the
security is traded; (iii) unlisted foreign securities or listed foreign
securities not actively traded are valued as in (i) above, if available, or at
the mean between "bid" and "asked" prices obtained from active market makers in
the security on the basis of reasonable inquiry; (iv) long-term debt securities
having a remaining maturity in excess of 60 days are valued at the mean between
the "bid" and "asked" prices determined by a portfolio pricing service approved
by the Fund's Board of Trustees or obtained from active market makers in the
security on the basis of reasonable inquiry; (v) debt instruments having a
maturity of more than one year when issued, and non-money market type
instruments having a maturity of one year or less when issued, which have a
remaining maturity of 60 days or less are valued at the mean between "bid" and
"asked" prices determined by a pricing service approved by the Fund's Board of
Trustees or obtained from active market makers in the security on the basis of
reasonable inquiry; (vi) money market-type debt securities having a maturity of
less than one year when issued that having a remaining maturity of 60 days or
less are valued at cost, adjusted for amortization of premiums and accretion of
discounts; and (vii) securities (including restricted securities) not having
readily-available market quotations are valued at fair value under the Board's
procedures.
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ACCOUNTLINK. When shares are purchased through AccountLink, each purchase must
be at least $25.00. Shares will be purchased on the regular business day the
Distributor is instructed to initiate the Automated Clearing House transfer to
buy shares. Dividends will begin to accrue on shares purchased by the proceeds
of ACH transfers on the business day the Fund receives Federal Funds for the
purchase through the ACH system before the close of The New York Stock Exchange.
The Exchange normally closes at 4:00 P.M., but may close earlier on certain
days. If Federal Funds are received on a business day after the close of the
Exchange, the shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are normally received
by the Fund 3 days after the transfers are initiated. The Distributor and the
Fund are not responsible for any delays in purchasing shares resulting from
delays in ACH transmissions.
REDUCED SALES CHARGES. See How to Purchase Shares in the Prospectus for a
description of how Shares of each class are offered to the public and how the
excess of public offering price over the net amount invested, if any, is
allocated to authorized dealers. The Prospectus describes several special
purchase plans and methods by which Shares of each class may be purchased. As
discussed in the Prospectus, a reduced sales charge rate may be obtained for
Class A shares under Right of Accumulation and Letters of Intent because of the
economies of sales efforts and expenses realized by the Distributor, dealers and
brokers making such sales. No sales charge is imposed in certain circumstances
described in the Prospectus because the Distributor or dealer or broker incurs
little or no selling expenses. The term "immediate family" refers to one's
spouse, children, grandchildren, parents, grandparents, parents-in-law, brothers
and sisters, sons-and daughters-in-law, siblings, a sibling's spouse and a
spouse's siblings.
-- THE OPPENHEIMER FUNDS. The Oppenheimer funds are those mutual funds for
which the Distributor acts as the distributor or the sub-distributor and include
the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
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Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Bond Fund
Oppenheimer International Bond Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of each
of the Oppenheimer funds except Money Market Funds (under certain circumstances
described herein, redemption proceeds of Money Market Fund shares may be subject
to a contingent deferred sales charge).
-- LETTERS OF INTENT. A Letter of Intent (referred to as a "Letter") is an
investor's statement in writing to the Distributor of the intention to purchase
shares of the Fund (and Class A Shares of other Oppenheimer funds) during a
13-month period (the "Letter of Intent period"), which may, at the investor's
request, include purchases made up to 90 days prior to the date of the Letter.
The Letter states the investor's intention to make the aggregate amount of
purchases of shares which, when added to the investor's holdings of shares of
those funds, will equal or exceed the amount specified in the Letter. Purchases
made by reinvestment of dividends or distributions of capital gains and
purchases made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to count the
shares of the Fund and the Class A Shares of other Oppenheimer funds purchased
under the Letter to obtain the reduced sales charge rate on purchases of shares
of the Fund (and Class A Shares other Oppenheimer funds) that applies under the
Right of Accumulation to current purchases of such shares. Each purchase of
shares of the Fund and Class A Shares under the Letter will be made at the
public offering price (including the sales charge) that applies to a single
lump-sum purchase of shares in the amount intended to be purchased under the
Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of Intent
period, when added to the value (at offering
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price) of the investor's holdings of shares on the last day of that period, do
not equal or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set forth in
"Terms of Escrow," below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended purchase amount
will be held in escrow by the Transfer Agent subject to the Terms of Escrow.
Also, the investor agrees to be bound by the terms of the Prospectus, this
Statement of Additional Information and the Application used for such Letter of
Intent, and if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing Letters of
Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the Transfer
Agent will not hold shares in escrow. If the intended purchase amount under the
Letter entered into by an OppenheimerFunds prototype 401(k) plan is not
purchased by the plan by the end of the Letter of Intent period, there will be
no adjustment of commissions paid to the broker-dealer or financial institution
of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of Intent period do
not equal or exceed the intended purchase amount, the commissions previously
paid to the dealer of record for the account and the amount of sales charge
retained by the Distributor will be adjusted to the rates applicable to actual
purchases. If total eligible purchases during the Letter of Intent period exceed
the intended purchase amount and exceed the amount needed to qualify for the
next sales charge rate reduction set forth in the applicable prospectus, the
sales charges paid will be adjusted to the lower rate, but only if and when the
dealer returns to the Distributor the excess of the amount of commissions
allowed or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the Distributor
will be used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly after the
Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter, shares
redeemed by the investor prior to the termination of the Letter of Intent period
will be deducted. It is the responsibility of the dealer of record and/or the
investor to advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All of such
purchases must be made through the Distributor.
-- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary) made
pursuant to a Letter, shares of the Fund equal in value up to 5% of the intended
purchase amount specified in the Letter shall be held in escrow by the Transfer
Agent. For example, if the intended purchase amount is $50,000, the escrow shall
be shares valued in the amount of $2,500 (computed at the public offering price
adjusted for a $50,000 purchase). Any dividends and capital gains distributions
on the escrowed shares will be credited to the investor's account.
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<PAGE>
2. If the intended purchase amount specified under the Letter is completed
within the thirteen-month Letter of Intent period, the escrowed shares will be
promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the total
purchases pursuant to the Letter are less than the intended purchase amount
specified in the Letter, the investor must remit to the Distributor an amount
equal to the difference between the dollar amount of sales charges actually paid
and the amount of sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge adjustment will
apply to any shares redeemed prior to the completion of the Letter. If such
difference in sales charges is not paid within twenty days after a request from
the Distributor or the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares necessary to
realize such difference in sales charges. Full and fractional shares remaining
after such redemption will be released from escrow. If a request is received to
redeem escrowed shares prior to the payment of such additional sales charge, the
sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and appoints
the Transfer Agent as attorney-in-fact to surrender for redemption any or all
escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding of
which may be counted toward completion of a Letter) include (a) Class A shares
sold with a front-end sales charge or subject to a Class A contingent deferred
sales charge, (b) Class B shares of other Oppenheimer funds acquired subject to
a contingent deferred sales charge, and (c) Class A shares or Class B shares
acquired in exchange for either (i) Class A shares of one of the other
Oppenheimer funds that were acquired subject to a Class A initial or contingent
deferred sales charge or (ii) Class B shares of one of the other Oppenheimer
funds that were acquired subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectus entitled "How to Exchange Shares," and the escrow will
be transferred to that other fund.
ASSET BUILDER PLANS. To establish an Asset Builder Plan from a bank account, a
check (minimum $25) for the initial purchase must accompany the application.
Shares purchased by Asset Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in "How To Sell
Shares," in the Prospectus. Asset Builder Plans also enable shareholders of
Oppenheimer Cash Reserves to use those accounts for monthly automatic purchases
of shares of up to four other Oppenheimer funds.
There is a front-end sales charge on the purchase of certain Oppenheimer
funds, or a contingent deferred sales charge may apply to shares purchased by
Asset Builder payments. An application should be obtained from the Distributor,
completed and returned, and a prospectus of the selected fund(s) should be
obtained from the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may be changed or
the automatic investments may be terminated at any time by writing to the
Transfer Agent. A reasonable period (approximately 15 days) is required after
the Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue
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offering such plans at any time without prior notice.
CANCELLATION OF PURCHASE ORDERS. Cancellation of purchase orders for the Fund's
shares (for example, when a purchase check is returned to the Fund unpaid)
causes a loss to be incurred when the net asset value of the Fund's shares on
the cancellation date is less than on the purchase date. That loss is equal to
the amount of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is responsible for that
loss. If the investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by redeeming
shares from any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
HOW TO SELL SHARES
Information on how to sell shares of the Fund is stated in the Prospectus.
The information below supplements the terms and conditions for redemptions set
forth in the Prospectus.
-- CHECKWRITING. When a check is presented to the Bank for clearance, the
Bank will ask the Fund to redeem a sufficient number of full and fractional
shares in the shareholder's account to cover the amount of the check. This
enables the shareholder to continue receiving dividends on those shares until
the check is presented to the Fund. Checks may not be presented for payment at
the offices of the Bank or the Fund's Custodian. This limitation does not affect
the use of checks for the payment of bills or to obtain cash at other banks. The
Fund reserves the right to amend, suspend or discontinue offering checkwriting
privileges at any time without prior notice.
-- INVOLUNTARY REDEMPTIONS. The Fund's Board of Trustees has the right
to cause the involuntary redemption of the shares held in any account if the
aggregate net asset value of those shares is less than $________ or such lesser
amount as the Board may fix. The Board of Trustees will not cause the
involuntary redemption of shares in an account if the aggregate net asset value
of the shares has fallen below the stated minimum solely as a result of market
fluctuations. Should the Board elect to exercise this right, it may also fix, in
accordance with the Investment Company Act, the requirements for any notice to
be given to the shareholders in question (not less than 30 days), or the Board
may set requirements for granting permission to the Shareholder to increase the
investment, and set other terms and conditions so that the shares would not be
involuntarily redeemed.
REINVESTMENT PRIVILEGE. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds at net asset value as described
herein. The reinvestment may be made without sales charge only in shares of the
Fund or in Class A Shares any of the other Oppenheimer funds into which shares
of the Fund are exchangeable as described below, at the net asset value next
computed after the Transfer Agent receives the reinvestment order. The
shareholder must ask the Distributor for that privilege at the time of
reinvestment. Any capital gain that was realized when the shares were redeemed
is taxable, and reinvestment will not alter any capital gains tax payable on
that gain. If there has been a capital loss on the redemption, some or all of
the loss may not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption proceeds of
Fund shares on which a sales charge was paid are reinvested in shares of the
Fund or another of the
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Oppenheimer funds within 90 days of payment of the sales charge, the
shareholder's basis in the shares of the Fund that were redeemed may not include
the amount of the sales charge paid. That would reduce the loss or increase the
gain recognized from the redemption. However, in that case the sales charge
would be added to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering this
reinvestment privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.
SPECIAL ARRANGEMENTS FOR REPURCHASE OF SHARES FROM DEALERS AND BROKERS. The
Distributor is the Fund's agent to repurchase its shares from authorized dealers
or brokers. The repurchase price per share will be the net asset value next
computed after the Distributor receives the order placed by the dealer or
broker, except that if the Distributor receives a repurchase order from a dealer
or broker after the close of The New York Stock Exchange on a regular business
day, it will be processed at that day's net asset value if the order was
received by the dealer or broker from its customers prior to the time the
Exchange closes (normally, that is 4:00 P.M., but may be earlier on some days)
and the order was transmitted to and received by the Distributor prior to its
close of business that day (normally 5:00 P.M.). Ordinarily, for accounts
redeemed by a broker-dealer under this procedure, payment will be made within
three business days after the shares have been redeemed upon the Distributor's
receipt the required redemption documents in proper form, with the signature(s)
of the registered owners guaranteed on the redemption document as described in
the Prospectus.
AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. Investors owning shares of the Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(minimum $50) automatically on a monthly, quarterly, semi-annual or annual basis
under an Automatic Withdrawal Plan. Shares will be redeemed three business days
prior to the date requested by the shareholder for receipt of the payment.
Automatic withdrawals of up to $1,500 per month may be requested by telephone if
payments are to be made by check payable to all shareholders of record and sent
to the address of record for the account (and if the address has not been
changed within the prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this basis.
Payments are normally made by check, but shareholders having AccountLink
privileges (see "How To Buy Shares") may arrange to have Automatic Withdrawal
Plan payments transferred to the bank account designated on the OppenheimerFunds
New Account Application or signature-guaranteed instructions. The Fund cannot
guarantee receipt of a payment on the date requested and reserves the right to
amend, suspend or discontinue offering such plans at any time without prior
notice.
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated below and
in the provisions of the OppenheimerFunds Application relating to such Plans, as
well as the Prospectus. These provisions may be amended from time to time by the
Fund and/or the Distributor. When adopted, such amendments will automatically
apply to existing Plans.
-- AUTOMATIC EXCHANGE PLANS. Shareholders can authorize the Transfer Agent
(on the OppenheimerFunds Application or signature-guaranteed instructions) to
exchange a pre-determined amount of shares of the Fund for shares (of the same
class) of other Oppenheimer funds automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange
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<PAGE>
Plan. The minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the restrictions that apply
to exchanges as set forth in "How to Exchange Shares" in the Prospectus and
below in this Statement of Additional Information.
-- AUTOMATIC WITHDRAWAL PLANS. Fund shares will be redeemed as necessary to
meet withdrawal payments. Shares acquired without a sales charge will be
redeemed first and shares acquired with reinvested dividends and capital gains
distributions will be redeemed next, followed by shares acquired with a sales
charge, to the extent necessary to make withdrawal payments. Depending upon the
amount withdrawn, the investor's principal may be depleted. Payments made under
withdrawal plans should not be considered as a yield or income on your
investment.
The Transfer Agent will administer the investor's Automatic Withdrawal Plan
(the "Plan") as agent for the investor (the "Planholder") who executed the Plan
authorization and application submitted to the Transfer Agent. The Transfer
Agent and the Fund shall incur no liability to the Planholder for any action
taken or omitted by the Transfer Agent in good faith to administer the Plan.
Certificates will not be issued for shares of the Fund purchased for and held
under the Plan, but the Transfer Agent will credit all such shares to the
account of the Planholder on the records of the Fund. Any share certificates
held by a Planholder may be surrendered unendorsed to the Transfer Agent with
the Plan application so that the shares represented by the certificate may be
held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done at
net asset value without a sales charge. Dividends on shares held in the account
may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made at
the net asset value per share determined on the redemption date. Checks or
AccountLink payments of the proceeds of Plan withdrawals will normally be
transmitted three business days prior to the date selected for receipt of the
payment (receipt of payment on the date selected cannot be guaranteed),
according to the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the address to
which checks are to be mailed or AccountLink payments are to be sent may be
changed at any time by the Planholder by writing to the Transfer Agent. The
Planholder should allow at least two weeks' time in mailing such notification
for the requested change to be put in effect. The Planholder may, at any time,
instruct the Transfer Agent by written notice (in proper form in accordance with
the requirements of the then-current Prospectus of the Fund) to redeem all, or
any part of, the shares held under the Plan. In that case, the Transfer Agent
will redeem the number of shares requested at the net asset value per share in
effect in accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing to the
Transfer Agent. A Plan may also be terminated at any time by the Transfer Agent
upon receiving directions to that effect from the Fund. The Transfer Agent will
also terminate a Plan upon receipt of evidence satisfactory to it of the death
or legal incapacity of the Planholder. Upon termination of a Plan by the
Transfer Agent or the Fund, shares that have not been redeemed from the account
will be held in uncertificated form in the name of the Planholder, and the
account will continue as a dividend-reinvestment, uncertificated account unless
and until proper instructions are received from the
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Planholder or his or her executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the Planholder
may request issuance of a portion of the shares in certificated form. Upon
written request from the Planholder, the Transfer Agent will determine the
number of shares for which a certificate may be issued without causing the
withdrawal checks to stop because of exhaustion of uncertificated shares needed
to continue payments. However, should such uncertificated shares become
exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent to act
as agent in administering the Plan.
HOW TO EXCHANGE SHARES
As stated in the Prospectus, shares of a particular class of Oppenheimer
funds having more than one class of shares may be exchanged only for shares of
the same class of other Oppenheimer funds. Shares of the Oppenheimer funds that
have a single class without a class designation are deemed "Class A" shares for
this purpose. All of the Oppenheimer funds offer Class A shares, but certain
[other] Oppenheimer funds do not presently offer either or both of Class B or
Class C shares. A list showing which funds offer which class can be obtained by
calling the Distributor at 1-800-525-7048.
Class A shares of Oppenheimer funds may be exchanged at net asset value for
shares of any Money Market Fund. Shares of any Money Market Fund purchased
without a sales charge may be exchanged for shares of Oppenheimer funds offered
with a sales charge upon payment of the sales charge (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge). However, shares of Oppenheimer Money Market Fund, Inc. purchased
with the redemption proceeds of shares of other mutual funds (other than funds
managed by the Manager or its subsidiaries) redeemed within the 12 months prior
to that purchase may subsequently be exchanged for shares of other Oppenheimer
funds without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or the
investor's dealer must notify the Distributor of eligibility for this privilege
at the time the shares of Oppenheimer Money Market Fund, Inc. are purchased,
and, if requested, must supply proof of entitlement to this privilege. No
contingent deferred sales charge is imposed on exchanges of shares of either
class purchased subject to a contingent deferred sales charge. However, when
Class A shares acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are redeemed
within 18 months of the end of the calendar month of the initial purchase of the
exchanged Class A shares, the Class A contingent deferred sales charge is
imposed on the redeemed shares (see "Class A Contingent Deferred Sales Charge"
in the Prospectus). The Class B contingent deferred sales charge is imposed on
Class B shares acquired by exchange if they are redeemed within 6 years of the
initial purchase of the exchanged Class B shares. The Class C contingent
deferred sales charge is imposed on Class C shares acquired by exchange if they
are redeemed within 12 months of the initial purchase of the exchanged Class C
shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The Fund
may accept requests for exchanges of up to
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50 accounts per day from representatives of authorized dealers that qualify for
this privilege. In connection with any exchange request, the number of shares
exchanged may be less than the number requested if the exchange or the number
requested would include shares subject to a restriction cited in the Prospectus
or this Statement of Additional Information or would include shares covered by a
share certificate that is not tendered with the request. In those cases, only
the shares available for exchange without restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either have an
existing account in, or obtain and acknowledge receipt of a prospectus of, the
fund to which the exchange is to be made. For full or partial exchanges of an
account made by telephone, any special account features such as Asset Builder
Plans, Automatic Withdrawal Plans, Checkwriting, if available, and retirement
plan contributions will be switched to the new account unless the Transfer Agent
is instructed otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations), shareholders might
not be able to request exchanges by telephone and would have to submit written
exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the "Redemption
Date"). Normally, shares of the fund to be acquired are purchased on the
Redemption Date, but such purchases may be delayed by either fund up to five
business days if it determines that it would be disadvantaged by an immediate
transfer of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it (for
example, if the receipt of multiple exchange requests from a dealer might
require the disposition of portfolio securities at a time or at a price that
might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure that
the Fund selected is appropriate for his or her investment and should be aware
of the tax consequences of an exchange. For federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above, discusses some
of the tax consequences of reinvestment of redemption proceeds in such cases.
The Fund, the Distributor, and the Transfer Agent are unable to provide
investment, tax or legal advice to a shareholder in connection with an exchange
request or any other investment transaction.
DIVIDENDS, CAPITAL GAINS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. Dividends will be payable on shares held of record
at the time of the previous determination of net asset value. However, daily
dividends on newly purchased shares will not be declared or paid until such time
as Federal Funds (funds credited to a member bank's account at the Federal
Reserve Bank) are available from the purchase payment for such shares. Normally,
purchase checks received from investors are converted to Federal Funds on the
next business day. If all shares in an account are redeemed, all dividends
accrued on shares in the account will be paid together with the redemption
proceeds. Dividends will be declared on shares repurchased by a dealer or broker
for three business days following the trade date (i.e., to and including the day
prior to settlement of the repurchase).
Dividends, distributions and the proceeds of the redemption of Fund shares
represented by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be invested in
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<PAGE>
shares of Oppenheimer Money Market Fund, Inc., as promptly as possible after the
return of such checks to the Transfer Agent, in order to enable the investor to
earn a return on otherwise idle funds.
TAX STATUS OF THE FUND'S DIVIDENDS AND DISTRIBUTIONS. The Federal tax treatment
of the Fund's dividends and distributions is explained in the Prospectus under
the caption Dividends, Distributions and Taxes. In order to continue to qualify
for treatment as a regulated investment company ("RIC") under the Code, the Fund
must distribute to its shareholders for each taxable year at least 90% of the
sum of its investment company taxable income (consisting generally of taxable
net investment income and net short-term capital gain) plus its interest income
excludable from gross income under Section 103(a) of the Code ("tax-exempt
income") and must meet several additional requirements. These requirements
include the following: (1) the Fund must derive at least 90% of its gross income
each taxable year from dividends, interest and payments with respect to
securities loans and gains from the sale or other disposition of securities, or
other income (including gains from options) derived with respect to its business
of investing in securities ("Income Requirement"); (2) the Fund must derive less
than 30% of its gross income each taxable year from the sale or other
disposition of securities or options that were held for less than three months
("Short-Short Limitation"); and (3) at the close of each quarter of the Fund's
taxable year, (i) at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other RICs and other securities that are limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of the Fund's total assets and
does not represent more than 10% of the issuer's outstanding voting securities,
and (ii) not more than 25% of the value of its total assets may be invested in
securities (other than U.S. Government securities or the securities of other
RICs) of any one issuer.
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<PAGE>
Dividends paid by the fund will qualify as exempt-interest dividends, and
thus will be excludable from gross income by its shareholders, if the Fund
satisfied the additional requirement that, at the close of each quarter of its
taxable year, at least 50% of the value of its total assets consists of
securities the interest on which is tax-exempt income; the Fund intends to
continue to satisfy this requirement. The aggregate exempt-interest dividends
may not be greater than the excess of the Fund's tax-exempt income over certain
amounts disallowed as deductions. The shareholders' treatment of dividends from
the Fund under local and state income tax laws may differ from the treatment
thereof under the Code.
As noted in the Prospectus, the Fund annually reports to its shareholders
regarding the amounts and status of distributions paid during the year. Such
report allocates dividends among tax-exempt, taxable and alternative minimum
taxable income in approximately the same proportions as they bear to the Fund's
total income for the year. Accordingly, income derived from each of these
sources by the Fund in any particular distribution period may vary substantially
from the allocation reported to shareholders annually. The proportion of
dividends that constitute taxable income will depend on the relative amounts of
assets invested in taxable securities, the yield relationships between taxable
and tax-exempt securities, and the period of time for which such securities are
held.
Because the taxable portion of the Fund's investment income consists
primarily of interest and income from options transactions, its dividends,
whether or not treated as "exempt-interest dividends", generally will not
qualify for the dividends-received deduction available to corporations.
Dividends and other distributions declared by the Fund, and payable to
shareholders of record on a date, in the last quarter of any calendar year, are
deemed to have been paid by the Fund and received by the shareholders on
December 31 of that year if the distributions are paid by the Fund during the
following January. Accordingly, those distributions will be taxed to
shareholders for the year in which that December 31 falls.
Interest on indebtedness incurred or continued by shareholders to purchase
or carry shares of the Fund is usually not deductible for federal income tax
purposes. Under rules applied by the Internal Revenue Service to determine
whether borrowed funds are used for the purpose of purchasing or carrying
particular assets, the purchase of Fund shares may, depending upon the
circumstances, be considered to have been made with borrowed funds even though
the borrowed funds are not directly traceable to the purchase of those shares.
If you redeem shares of the Fund held for six months or less at a loss,
that loss will not be recognized for federal income tax purposes to the extent
of exempt-interest dividends you have received with respect to those shares. If
any such loss exceeds the amount of the exempt-interest dividends you received,
that excess loss will be treated as a long-term capital loss to the extent you
receive any capital gain distribution with respect to those shares.
Persons who are "substantial users" (or persons related thereto) of
facilities financed by industrial development bonds should consult their own tax
advisers before purchasing shares. Such persons may find investment in the Fund
unsuitable for tax reasons. Generally, an individual will not be a "related
person" under the Code unless he or his immediate family (spouse, brothers,
sisters, ancestors, and lineal descendants) owns, directly or indirectly, in the
aggregate more than 50% of the equity of a corporation or partnership that is a
"substantial user" of a facility financed from the proceeds of industrial
development
-39-
<PAGE>
bonds. "Substantial user" of such facilities is defined generally as a
non-exempt person who regularly uses a part of such facility in his trade or
business.
The Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on December 31 of that year, plus certain other amounts.
The use of hedging strategies, such as writing (selling) and purchasing
options, involves complex rules that will determine for income tax purposes the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Income from transactions in options derived by the Fund
with respect to its business of investing in securities will qualify as
permissible income under the Income Requirement. However, income from the
disposition of options will be subject to the Short-Short Limitation if they are
held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
will consider whether it should seek to qualify for this treatment for its
hedging transactions. To the extent the Fund does not so qualify, it may be
forced to defer the closing out of certain options beyond the time when it
otherwise would be advantageous to do so, in order for the Fund to continue to
qualify as RIC.
Corporate investors may wish to consult their own tax advisers before
purchasing Fund shares. Corporations may find investment in the Fund unsuitable
for tax reasons, because the interest on all Municipal Obligations held by the
Fund passed through to corporate shareholders will be includible in calculating
adjusted current earnings for purposes of both the alternative minimum tax and
the environmental tax. In addition, certain property and casualty insurance
companies, financial institutions, and U.S. branches of foreign corporations may
be adversely affected by the tax treatment of the interest on municipal
securities.
ADDITIONAL INFORMATION ABOUT THE FUND
THE CUSTODIAN. Investors Bank & Trust Company ("Custodian"), whose principal
business address is 89 South Street Boston, MA 02111 is the Custodian of the
Fund's assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities and handling the delivery of such
securities to and from the Fund. It will be the practice of the Fund to deal
with the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates.
INDEPENDENT AUDITORS. Price Waterhouse LLP, 1900 Chase Square, Rochester, NY
14604, serves as the Fund's independent accountants. The services provided by
Price Waterhouse LLP include auditing services and review and consultations on
various filings by the Fund with the Securities and Exchange Commission and tax
authorities. They also act as auditors for certain other funds advised by the
Adviser and its affiliates.
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<PAGE>
INVESTMENT ADVISER
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
TRANSFER AGENT
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
CUSTODIAN OF PORTFOLIO SECURITIES
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
INDEPENDENT AUDITORS
Price Waterhouse LLP
1900 Chase Square
Rochester, NY 14604
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
-41-
<PAGE>
FINANCIAL STATEMENTS [TO BE PROVIDED]
ROCHESTER
[ARTWORK] FUND
MUNICIPALS
<PAGE>
APPENDIX A
DESCRIPTION OF MUNICIPAL SECURITIES RATINGS
STANDARD & POOR'S RATING GROUP
A brief description of the applicable Standard & Poor's Corporation rating
symbols and their meanings (as published by Standard & Poor's Corporation)
follows:
A Standard & Poor's corporate or municipal debt rating is a current assessment
of the creditworthiness of an obligator with respect to a specific debt
obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees.
The rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer and
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform an audit in connection with any rating and may, on
occasion rely on unaudited financial information. The ratings may be changed,
suspended, or withdrawn as a result of changes in, or unavailability of, such
information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default--capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization or other arrangements under
the laws of bankruptcy and other laws affecting creditors' rights.
Long-Term Municipal Bonds
AAA Bonds rated AAA have the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small
degree.
A Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in higher rated categories.
A-1
<PAGE>
BBB Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds
in higher rated categories.
BB-D Debt rated "BB", "B", "CCC" and "CC" is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation. "BB"
indicates the lowest degree of speculation and "CC" the highest degree
of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions. The "C" is reserved for
income bonds on which no interest is being paid. Debt rated "D" is in
default, and payment of interest and/or repayment of principal is in
arrears.
Plus (+) or minus (-): The ratings from "AA" to "BBB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional Ratings: The letter "P" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the bonds being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit quality
subsequent to completion of the project, makes no comment on the likelihood of,
or the risk of default upon failure of, such completion. The investors should
exercise his own judgement with respect to such likelihood and risk.
Short-Term Tax-Exempt Notes
Standard & Poor's tax exempt note ratings are generally given to such notes that
mature in three years or less. The three rating categories are as follows:
SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will
be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal interest.
SP-3 Speculative capacity to pay principal and interest.
Tax-Exempt Commercial Paper
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
165 days. Ratings are graded into four categories, ranging from "A" for the
highest quality obligations to "D" for the lowest. The four categories are as
follows:
A Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further
refined with the designation 1, 2, and 3 to indicate the relative
degree of safety. These issues determined to posses overwhelming safety
characteristics are denoted with a plus (+) sign designation.
A-2
<PAGE>
A-1 This designation indicates that the degree of safety regarding timely
payment is very strong.
A-2 Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as overwhelming as for
issues designated "A-1".
A-3 Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying
the higher designation.
B Issues rated "B" are regarded as having only an adequate capacity for
timely payment. However, such capacity may be damaged by changing
conditions or short-term adversities.
C & D These ratings indicate that the issue is either in default or
expected to be in default upon maturity.
MOODY'S INVESTORS SERVICE, INC.
A brief description of the applicable Moody's Investors Service, Inc. rating
symbols and their meanings follow:
Long-Term Municipal Bonds
Aaa Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edge". Interest payments are protected by a large, or by an
exceptionally stable, margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are more unlikely to impair the fundamentally strong
position of such issues. With the occasional exception of oversupply in
a few specific instances, the safety of obligations of this class is so
absolute that their market value is affected solely by money market
fluctuations.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuations of protective elements may be of greater amplitude or
there may be other elements present which make the one-term risks
appear somewhat larger than the Aaa securities. These Aa bonds are high
grade, their market value virtually immune to all but money market
fluctuations.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as higher medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to A-rated bonds
may be influenced to some degree by credit circumstances during a
sustained period of depressed business conditions. During periods of
normalcy, bonds of this quality frequently move in parallel with Aaa
and Aa obligations, with the occasional exception of oversupply in a
few specific instances.
A-3
<PAGE>
Baa Bonds which are rated Baa are considered as lower medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments but certain protective elements may be
lacking or may be characteristically unreliable or over any great
length of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well. The market value
of Baa-rated bonds is more sensitive to change in economic
circumstances, and aside from occasional speculative factors applying
to some bonds of this class, Baa market valuations move in parallel
with Aaa, Aa and A obligations during periods of economic normalcy,
except in instances of oversupply.
Ba-C Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often, the protection of
interest and principal payments may be very moderate, and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class. Bonds which
are rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small. Bonds
which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest. Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings. Bonds which are rated C are the lowest rated
of bonds, and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
Moody's bond rating symbols may contain numerical modifiers of a generic rating
classification. The modifier 1 indicates that the bond ranks at the high end of
its category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
Con. Bonds for which the security depends upon the completion of some act or
the fulfillment of some conditions are rated conditionally. These are
bonds secured by (a) earnings of projects under construction, (b)
earnings of projects unseasoned in operating experience, (c) rentals
which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes
probable credit status upon completion of construction or elimination
of basis of condition.
Short-Term Tax-Exempt Notes
The four ratings of Moody's for short-term notes are MIG 1, MIG 2, MIG 3, and
MIG 4; MIG 1 denotes "best quality, enjoying strong protection from established
cash flows"; MIG 2 denotes "high quality" with "ample margins of protection";
MIG 3 notes are of "favorable quality... but lacking the undeniable strength of
the preceding grades"; MIG 4 notes are of "adequate quality, carrying specific
risk but having protection...and not distinctly or predominantly speculative".
Tax-Exempt Commercial Paper
Moody's commercial paper ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
nine months. Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment capacity of rated issuers:
A-4
<PAGE>
Issuers rated Prime 1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime 2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations.
Issuers rated Prime 3 (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations.
Issuers rated Not Prime do not fall within any of the Prime rating
categories.
FITCH INVESTORS SERVICE, INC.
A brief description of the applicable Fitch Investors Service rating symbols and
their meanings follow:
Long Term Municipal Bonds
AAA Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA Bonds considered to be investment grade and of very high quality. "The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bond rating "AAA".
A Bonds considered to be investment grade and of high quality. The obligor's
ability to pay interest and repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic conditions and circumstances
than bonds with higher ratings.
BBB Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have an adverse impact on these bonds, and therefore impair
timely payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB-C BB bonds are considered speculative. The obligor's ability to pay interest
and repay principal may be affected over time by adverse economic changes,
however, business and financial alternatives can be identified which could
assist the obligor in satisfying debt service requirements. B bonds are
considered highly speculative. While debt service payments are currently being
met, the probability of continued timely payment of principal and interest
reflects the obligor's limited margin of safety. CCC bonds have certain
identifiable characteristics which, if not remedied, may lead to default; CC
bonds are minimally protected and default in payment of interest and/or
principal seems probable over time; C bonds are in imminent default in payment
of interest or principal.
DDD Bonds rated DDD, DD, D are in default on interest and/or principal payments.
Such bonds are extremely speculative. "DDD" represents the highest probability
for recovery on these bonds, "D" represents the lowest probability for recovery.
A-5
<PAGE>
Plus (+) Minus(-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs are not used in the "AAA", "DDD", "DD", or "D" categories.
Conditional: A conditional rating is premised on the successful completion of a
project or the occurrence of a specific event.
A-6
<PAGE>
ROCHESTER FUND MUNICIPALS
PART C. OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements: None
(b) Exhibits:
(1) Amended and Restated Declaration of Trust as filed with the
Commonwealth of Massachusetts on February 8, 1995, as amended on November 7,
1995 ("Amended and Restated Declaration of Trust"--filed herewith
(2) Bylaws--filed with Registrant's Post Effective Amendment No. 13 filed
May 1, 1993--incorporated by reference
(3) Not Applicable
(4) Specimen Share Certificate--filed with Registrant's Post Effective
Amendment No. 11 filed March 1, 1992--incorporated by reference
(5) Investment Advisory Agreement dated January 4, 1996 with Oppenheimer
Management Corporation--filed herewith
(6) (a) General Distributor's Agreement dated January 4, 1996 with
Oppenheimer Funds Distributor, Inc.--filed herewith
(b) Form of Oppenheimer Funds Distributor Inc. Dealer Agreement--Filed
with Post-Effective Amendment No. 14 of Oppenheimer Main Street Funds, Inc.
(Reg. No. 33-17850) filed September 30, 1994--incorporated by reference
(c) Form of Oppenheimer Funds Distributor Inc. Broker Agreement--Filed
with Post-Effective Amendment No. 14 of Oppenheimer Main Street Funds, Inc.
(Reg. No. 33-17850) filed September 30, 1994--incorporated by reference
(d) Form of Oppenheimer Funds Distributor Inc. Agency Agreement--Filed
with Post-Effective Amendment No. 14 of Oppenheimer Main Street Funds, Inc.
(Reg. No. 33-17850) filed September 30,1994--incorporated by reference
(7) Amended and Restated Retirement Plan for Independent Trustees of
Registrant adopted on January 26, 1995, as amended and restated October 16, 1995
- --filed herewith
(8) Acknowledgement of Assignment of Custodian Agreement between Registrant
and Investors Bank & Trust Company--filed with Registrant's Post Effective
Amendment No. 9 filed March 11, 1991--incorporated by reference
(9) (a) Accounting, Administration and Recordkeeping Agreement with
Rochester Fund Services Inc. dated April 15, 1994 as assigned to Oppenheimer
Management Corporation--filed herewith
(b) Form of Service Contract with Oppenheimer Shareholder Services--
filed herewith
(10) Consent of Counsel--incorporated by reference to the Registrant's
Rule 24f-2 Notice filed on February 17, 1995
C-1
<PAGE>
(11) Independent Auditor's Consent--filed herewith
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Amended and Restated Service Plan and Agreement with Oppenheimer Funds
Distributor, Inc. dated January 4, 1996 for Class A Shares--filed herewith
(16) Performance Computation Schedule--to be filed
(17) Financial Data Schedule--to be filed
(18) Oppenheimer Fund Multiple Class Plan under Rule 18f-3 dated January 5,
1996--filed herewith
-- Powers of Attorney
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
The Board of Trustees of the Registrant is identical to the Boards of
Trustees of The Bond Fund For Growth ("RCVGX"), and Limited Term New York
Municipal Fund ("LTNYX"), both business trusts organized under the laws of the
Commonwealth of Massachusetts (collectively, "The Rochester Funds").
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
TITLE OF CLASS NUMBER OF RECORD HOLDERS AS OF JANUARY 3, 1996
Shares of Beneficial Interest
$.01 par value 117,936,363.1510
ITEM 27. INDEMNIFICATION.
Registrant's Amended and Restated Agreement and Declaration of Trust, which
is incorporated herein, as Exhibit 1 contains certain provisions relating to the
indemnification of Registrant's officers and trustees. Section 6.4 of
Registrant's Agreement and Declaration of Trust provides that Registrant shall
indemnify (from the assets of the Series or Class in question) each of its
trustees and officers (including persons who served at Registrant's request as
directors, officers or trustees of another organization in which Registrant has
any interest as a shareholder, creditor or otherwise hereinafter referred to as
a "Covered Person") against all liabilities, including but not limited to,
amounts paid for satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil criminal, before any court
or administrative or legislative body, in which such Covered Person may be or
may have been involved as a party or otherwise or with which such person may be
or may have been threatened, while in office or thereafter, by reason of being
or having been such a trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined in one of the manners
described below, that such Covered Person (i) did not act in good faith in the
reasonable belief that such Covered Person's action was in or not opposed to the
best interest of Registrant or (ii) had acted with willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct described in (i) and (ii) being referred to hereafter as "Disabling
Conduct".
Section 6.4 provides that a determination that the covered conduct may be
made by (i) a final
C-2
<PAGE>
decision on the merits by a court or other body before whom the proceeding was
brought that the person to be indemnified was not liable by reason of Disabling
Conduct, (ii) dismissal of a court action or an administrative proceeding
against a Covered Person for insufficiency of evidence of Disabling Conduct, or
(iii) a reasonable determination, based upon a review of the facts, that the
indemnitee was not liable by reason of Disabling Conduct by (a) a vote of a
majority of a quorum of trustees who are neither "interested persons" of
Registrant as defined in Section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion.
In addition, Section 6.4 provides that expenses, including accountants' and
counsel fees so incurred by any such Covered Person (but excluding amounts paid
in satisfaction of judgments, in compromise or as fines or penalties), may be
paid from time to time in advance of the final disposition of any such action,
suit or proceeding, providing that the Covered Person shall have undertaken to
repay the amounts so paid to the Fund in question if it is ultimately determined
that indemnification of such expenses is not authorized under Article 6 and (i)
the Covered Person shall have provided security for such undertaking, (ii)
Registrant shall be insured against losses arising by reason of any lawful
advances, or (iii) a majority of a quorum of disinterested trustees who are not
a party to the proceeding, by an independent legal counsel in a written opinion,
based upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the Covered Person ultimately
will be found entitled to indemnification.
Section 6.1 of Registrant's Agreement and Declaration of Trust provides,
among other things, that nothing in the Agreement and Declaration of Trust shall
protect any trustee or officer against any liability to Registrant or the
shareholders to which such trustee or officer 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 or such officer.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
During the last two fiscal years, all other business, profession, vocation
or employment of a
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<PAGE>
substantial nature in which the investment adviser of Registrant and each
director, officer or partner of that investment adviser have been engaged for
their own account or in the capacity of director, officer, employee, partner or
trustee is as follows:
(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant; it
and certain subsidiaries and affiliates act in the same capacity to other
registered investment companies as described in Parts A and B hereof and listed
in Item 28(b) below.
(b) There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each officer
and director of OppenheimerFunds, Inc. is, or at any time during the past two
fiscal years has been, engaged for his/her own account or in the capacity of
director, officer, employee, partner or trustee.
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
Lawrence Apolito, None.
Vice President
James C. Ayer, Jr., Vice President and Portfolio Manager of
Assistant Vice President Oppenheimer Gold & Special Minerals Fund and
Oppenheimer Global Emerging Growth Fund.
Victor Babin, None.
Senior Vice President
Robert J. Bishop Assistant Treasurer of the Oppenheimer Funds
Assistant Vice President listed below); previously a Fund Controller for
Oppenheimer Management Corporation (the
"Manager").
Bruce Bartlett Vice President and Portfolio Manager of
Vice President Oppenheimer Total Return Fund, Inc.,
Oppenheimer Main Street Funds, Inc. and
Oppenheimer Variable Account Funds; formerly a
Vice President and Senior Portfolio Manager at
First of America Investment Corp.
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<PAGE>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
George Bowen Treasurer of the New York-based
Senior Vice President Oppenheimer Funds; Vice President, Secretary
and Treasurer and Treasurer of the Denver-based Oppenheimer
Funds. Vice President and Treasurer of
Oppenheimer Funds Distributor, Inc. (the
"Distributor") and HarbourView Asset Management
Corporation ("HarbourView"), an investment
adviser subsidiary of OMC; Senior Vice
President, Treasurer, Assistant Secretary and a
director of Centennial Asset Management
Corporation ("Centennial"), an investment
adviser subsidiary of the Manager; Vice
President, Treasurer and Secretary of
Shareholder Services, Inc. ("SSI") and
Shareholder Financial Services, Inc. ("SFSI"),
transfer agent subsidiaries of OMC; President,
Treasurer and Director of Centennial Capital
Corporation; Vice President and Treasurer of
Main StreetAdvisers.
Michael A. Carbuto, Vice President and Portfolio Manager of
Vice President Oppenheimer Tax-Exempt Cash Reserves,
Centennial California Tax Exempt Trust,
Centennial New York Tax Exempt Trust and
Centennial Tax Exempt Trust; Vice President
of Centennial.
William Colbourne, Formerly, Director of Alternative Staffing
Assistant Vice President Resources, and Vice President of Human
Resources, American Cancer Society.
Lynn Coluccy, Vice President Formerly Vice President\Director of Internal
Audit of the Manager.
O. Leonard Darling, Formerly Co-Director of Fixed Income for State
Executive Vice President Street Research & Management Co.
Robert A. Densen, None.
Senior Vice President
Robert Doll, Jr., Vice President and Portfolio Manager of
Executive Vice President Oppenheimer Growth Fund, Oppenheimer Variable
Account Funds, Oppenheimer Main Street Funds,
Inc. and Oppenheimer Target Fund; Senior Vice
President and Portfolio Manager of Oppenheimer
Strategic Income & Growth Fund.
John Doney, Vice President Vice President and Portfolio Manager of
Oppenheimer Equity Income Fund.
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<PAGE>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
Andrew J. Donohue, Secretary of the New York-based Oppenheimer
Executive Vice President Funds; Vice President of the Denver-based
& General Counsel Oppenheimer Funds; Executive Vice President,
Director and General Counsel of the
Distributor; formerly Senior Vice President and
Associate General Counsel of the Manager and
the Distributor.
Kenneth C. Eich, Treasurer of Oppenheimer Acquisition
Executive Vice President/ Corporation
Chief Financial Officer
George Evans, Vice President Vice President and Portfolio Manager of
Oppenheimer Variable Account Funds and
Oppenheimer Global Securities Fund.
Scott Farrar, Assistant Treasurer of the Oppenheimer Funds;
Assistant Vice President previously a Fund Controller for the Manager.
Ronald H. Fielding Vice President and Portfolio Manager of
Senior Vice President Rochester Fund Municipals and Limited Term New
York Municipal Fund
Katherine P. Feld Vice President and Secretary of Oppenheimer
Vice President and Funds Distributor, Inc.; Secretary of
Secretary HarbourView, Main Street Advisers, Inc. and
Centennial; Secretary, Vice President and
Director of Centennial Capital Corp.
Jon S. Fossel, President and director of Oppenheimer
Chairman of the Board Acquisition Corp. ("OAC"), the Manager's
and Director parent holding company; President, CEO and a
director of HarbourView; a director of SSI and
SFSI; President, Director, Trustee, and
Managing General Partner of the Denver-based
Oppenheimer Funds; President and Chairman of
the Board of Main Street Advisers, Inc.;
formerly Chief Executive Officer of the
Manager.
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<PAGE>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
Robert G. Galli, Trustee of the New York-based Oppenheimer
Vice Chairman Funds; Vice President and Counsel of OAC;
formerly he held the following positions: a
director of the Distributor, Vice President and
a director of HarbourView and Centennial, a
director of SFSI and SSI, an officer of other
Oppenheimer Funds and Executive Vice President
& General Counsel of the Manager and the
Distributor.
Linda Gardner, None.
Assistant Vice President
Ginger Gonzalez, Formerly 1st Vice President/Director of
Vice President Creative Services for Shearson Lehman Brothers.
Mildred Gottlieb Formerly served as a Strategy Consultant for
Assistant Vice President the Private Client Division of Merrill Lynch.
Dorothy Grunwager, None.
Assistant Vice President
Caryn Halbrecht, Vice President and Portfolio Manager of
Vice President Oppenheimer Insured Tax-Exempt Fund and
Oppenheimer Intermediate Tax Exempt Fund; an
officer of other Oppenheimer Funds; formerly
Vice President of Fixed Income Portfolio
Management at Bankers Trust.
Barbara Hennigar, President and Director of Shareholder
President and Chief Financial Service, Inc.
Executive Officer of
Oppenheimer Shareholder
Services, a division of OMC.
Alan Hoden, Vice President None.
Merryl Hoffman, None.
Vice President
Scott T. Huebl, None.
Assistant Vice President
Jane Ingalls, Formerly a Senior Associate with Robinson,
Assistant Vice President Lake/Sawyer Miller.
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<PAGE>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
Bennett Inkeles, Formerly employed by Doremus & Company, an
Assistant Vice President advertising agency.
Frank Jennings Portfolio Manager of Oppenheimer Global
Vice President Growth & Income Fund. Formerly a Managing
Director of Global Equities at Paine Webber's
Mitchell Hutchins division.
Stephen Jobe, None.
Vice President
Heidi Kagan, None.
Assistant Vice President
Avram Kornberg, Formerly a Vice President with Bankers Trust.
Vice President
Paul LaRocco, Portfolio Manager of Oppenheimer Capital
Assistant Vice President Appreciation Fund and Oppenheimer Variable
Account Funds; Associate Portfolio Manager of
Oppenheimer Discovery Fund. Formerly a
Securities Analyst for Columbus Circle
Investors.
Mitchell J. Lindauer, None.
Vice President
Loretta McCarthy, None.
Senior Vice President
Bridget Macaskill, Director and Trustee of the New York based
President, Chief Executive Oppenheimer funds; Vice President and a
Officer and Director Director of OAC; Director of HarbourView;
Director of Main Street Advisers, Inc.; and
Chairman of Shareholder Services, Inc.
Sally Marzouk, None.
Vice President
Marilyn Miller, Formerly a Director of marketing for
Vice President TransAmerica Fund Management Company.
Denis R. Molleur, None.
Vice President
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<PAGE>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
Kenneth Nadler, None.
Vice President
David Negri, Vice President and Portfolio Manager of
Vice President Oppenheimer Strategic Bond Fund, Oppenheimer
Multiple Strategies Fund, Oppenheimer Asset
Allocation Fund, Oppenheimer Strategic Income
Fund, Oppenheimer Strategic Income & Growth
Fund, Oppenheimer High Income Fund, Oppenheimer
Variable Account Funds and Oppenheimer Bond
Fund; an officer of other Oppenheimer Funds.
Barbara Niederbrach, None.
Assistant Vice President
Stuart Novek, Formerly a Director Account Supervisor for
Vice President J. Walter Thompson.
Robert A. Nowaczyk, None.
Vice President
Robert E. Patterson, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Main Street California Tax-Exempt
Fund, Oppenheimer Insured Tax-Exempt Fund,
Oppenheimer Intermediate Tax-Exempt Fund,
Oppenheimer Florida Tax-Exempt Fund,
Oppenheimer New Jersey Tax-Exempt Fund,
Oppenheimer Pennsylvania Tax-Exempt Fund,
Oppenheimer California Tax-Exempt Fund,
Oppenheimer New York Tax-Exempt Fund and
Oppenheimer Tax-Free Bond Fund; Vice President
of the New York Tax-Exempt Income Fund, Inc.;
Vice President of Oppenheimer Multi-Sector
Income Trust.
Tilghman G. Pitts III, Chairman and Director of the Distributor.
Executive Vice President
and Director
Jane Putnam, Associate Portfolio Manager of Oppenheimer
Assistant Vice President Growth Fund and Oppenheimer Target Fund. Vice
President and Portfolio Manager for Oppenheimer
Variable Account Funds. Formerly Fund; Senior
Investment Officer and Portfolio Manager with
Chemical Bank.
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<PAGE>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
Russell Read, Formerly an International Finance Consultant
Vice President for Dow Chemical.
Thomas Reedy, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-Government
Trust; an officer of other Oppenheimer Funds;
formerly a Securities Analyst for the Manager.
David Robertson, None.
Vice President
Adam Rochlin, Formerly a Product Manager for Metropolitan
Assistant Vice President Life Insurance Company.
Michael S. Rosen Vice President and Portfolio Manager of the
Vice President Rochester Fund Series--The Bond Fund For Growth
David Rosenberg, Vice President and Portfolio Manager of
Vice President Oppenheimer Limited-Term Government Fund and
Oppenheimer U.S. Government Trust. Formerly
Vice President and Senior Portfolio Manager for
Delaware Investment Advisors.
Richard H. Rubinstein, Vice President and Portfolio Manager of
Vice President Oppenheimer Asset Allocation Fund, Oppenheimer
Fund and Oppenheimer Multiple Strategies Fund;
an officer of other Oppenheimer Funds; formerly
Vice President and Portfolio Manager/Security
Analyst for Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick, Formerly Vice President of Dollar Dry Dock
Assistant Vice President Bank.
James Ruff, None.
Executive Vice President
Ellen Schoenfeld, None.
Assistant Vice President
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<PAGE>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
Diane Sobin, Vice President and Portfolio Manager of
Vice President Oppenheimer Total Return Fund, Inc.,
Oppenheimer Main Street Funds, Inc. and
Oppenheimer Variable Account Funds; formerly a
Vice President and Senior Portfolio Manager for
Dean Witter InterCapital, Inc.
Nancy Sperte, None.
Senior Vice President
Donald W. Spiro, President and Trustee of the New York-based
Chairman Emeritus Oppenheimer Funds; formerly Chairman of the
and Director Manager and the Distributor.
Arthur Steinmetz, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Strategic Income Fund, Oppenheimer
Strategic Income & Growth Fund; an officer of
other Oppenheimer Funds.
Ralph Stellmacher, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Champion Income Fund and
Oppenheimer High Yield Fund; an officer of
other Oppenheimer Funds.
John Stoma, Vice President Formerly Vice President of Pension Marketing
with Manulife Financial.
James C. Swain, Chairman, CEO and Trustee, Director or
Vice Chairman of the Managing Partner of the Denver-based
Board of Directors Oppenheimer Funds; President and a Director
and Director of Centennial; formerly President and Director
of OAMC, and Chairman of the Board of SSI.
James Tobin, Vice President None.
Jay Tracey, Vice President Vice President of the Manager; Vice President
and Portfolio Manager of Oppenheimer Discovery
Fund. Formerly Managing Director of Buckingham
Capital Management.
Gary Tyc, Vice President, Assistant Treasurer of the Distributor and
Assistant Secretary SFSI.
and Assistant Treasurer
Jeffrey Van Giesen Formerly employed by Kidder Peabody Asset
Vice President Management.
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<PAGE>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
Ashwin Vasan, Vice President and Portfolio Manager of
Vice President Oppenheimer Multi-Sector Income Trust,
Oppenheimer Multi-Government Trust and
Oppenheimer International Bond Fund; an officer
of other Oppenheimer Funds.
Valerie Victorson, None.
Vice President
Dorothy Warmack, Vice President and Portfolio Manager of Daily
Vice President Cash Accumulation Fund, Inc., Oppenheimer Cash
Reserves, Centennial America Fund, L.P.,
Centennial Government Trust and Centennial
Money Market Trust; Vice President of
Centennial.
Christine Wells, None.
Vice President
William L. Wilby, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Global Fund and Oppenheimer Global
Growth & Income Fund; Vice President of
HarbourView; an officer of other Oppenheimer
Funds.
Susan Wilson-Perez, None.
Vice President
Carol Wolf, Vice President and Portfolio Manager of
Vice President Oppenheimer Money Market Fund, Inc., Centennial
America Fund, L.P., Centennial Government
Trust, Centennial Money Market Trust and Daily
Cash Accumulation Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income Trust; Vice
President of Centennial.
Robert G. Zack, Associate General Counsel of the Manager;
Senior Vice President Assistant Secretary of the Oppenheimer
and Assistant Secretary Funds; Assistant Secretary of SSI, SFSI; an
officer of other Oppenheimer Funds.
Eva A. Zeff, An officer of certain Oppenheimer Funds;
Assistant Vice President Assistant Vice President formerly a Securities
Analyst for the Manager.
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<PAGE>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
Arthur J. Zimmer, Vice President and Portfolio Manager of
Vice President Centennial America Fund, L.P., Oppenheimer
Money Fund, Centennial Government Trust,
Centennial Money Market Trust and Daily Cash
Accumulation Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income Trust; Vice
President of Centennial; an officer of other
Oppenheimer Funds.
The Oppenheimer Funds include the New York-based Oppenheimer Funds, the
Denver-based Oppenheimer Funds and the Rochester based OppenheimerFunds set
forth below:
New York-based Oppenheimer Funds
--------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer Bond Fund For Growth
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
Denver-based Oppenheimer Funds
------------------------------
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
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<PAGE>
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Rochester-based OppenheimerFunds
--------------------------------
Rochester Fund Series--The Bond Fund For Growth
Rochester Fund Municipals
Rochester Portfolio Series--Limited Term New York Municipal Fund
(b) The address of OppenheimerFunds, Inc. the New York-based Oppenheimer
Funds, Oppenheimer Funds Distributor, Inc., Harbourview Asset Management Corp.,
Oppenheimer Partnership Holdings, Inc., and Oppenheimer Acquisition Corp. is Two
World Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., Oppenheimer Shareholder Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and Main
Street Advisers, Inc. is 3410 South Galena Street, Denver, Colorado 80231.
The address of the Rochester OppenheimerFunds is 350 Linden Oaks,
Rochester, New York 14625.
Item 29. PRINCIPAL UNDERWRITERS
(a) OppenheimerFunds Distributor, Inc. is the Distributor of Registrant's
shares. It is also the Distributor of each of the other registered open-end
investment companies for which OppenheimerFunds,Inc. is the investment adviser,
as described in Part A and B of this Registration Statement and listed in Item
28(b) above.
(b) The directors and officers of the Registrant's principal underwriter
are:
Positions
and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- ------------
George Clarence Bowen+ Vice President & Treasurer Treasurer
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<PAGE>
Positions
and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- ------------
Christopher Blunt Vice President None
6 Baker Avenue
Westport, CT 06880
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Mary Ann Bruce* Senior Vice President - None
Financial Institution Div.
Robert Coli Vice President None
12 Whitetail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Mary Crooks+ Vice President None
Paul Delli Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
Andrew John Donohue* Executive Vice Secretary
President & Director
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
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<PAGE>
Positions
and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- ------------
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Wendy Fishler* Vice President - None
Financial Institution Div.
Wayne Flanagan Vice President - None
36 West Hill Road Financial Institution Div.
Brookline, NH 03033
Ronald R. Foster Senior Vice President - None
11339 Avant Lane Eastern Division Manager
Cincinnati, OH 45249
Patricia Gadecki Vice President None
6026 First Ave. South,
Apt. 10
St. Petersburg, FL 33707
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
609 Chimney Bluff Drive
Mt. Pleasant, SC 29464
Michael Keogh* Vice President None
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<PAGE>
Positions
and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- ------------
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Hans Klehmet II Vice President None
26542 Love Lane
Ramona, CA 92065
Ilene Kutno* Assistant Vice President None
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Joseph Norton Vice President None
1550 Bryant Street
San Francisco, CA 94103
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
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<PAGE>
Positions
and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- ------------
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
664 Circuit Road
Portsmouth, NH 03801
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.
Minnie Ra Vice President - None
109 Peach Street Financial Institution Div.
Avenel, NJ 07001
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Robert Romano Vice President None
1512 Fallingbrook Drive
Fishers, IN 46038
James Ruff* President None
Timothy Schoeffler Vice President None
3118 N. Military Road
Arlington, VA 22207
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
James A. Shaw Vice President - None
5155 West Fair Place Financial Institution Div.
Littleton, CO 80123
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<PAGE>
Positions
and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- ------------
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker Vice President - None
2017 N. Cleveland, #2 Financial Institution Div.
Chicago, IL 60614
Michael Stenger Vice President None
C/O America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
Dave Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
Bernard J. Wolocko Vice President None
33915 Grand River
Farmington, MI 48335
William Harvey Young+ Vice President None
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<PAGE>
- --------
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND BOOKS.
All accounts, books or other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the General Rules and Regulation
as promulgated thereunder, are maintained in possession of OppenheimerFunds,
Inc. at its offices at 3410 South Galena Street, Denver, Colorado 80231, except
that records with regard to items covered by Registrant's Custodian Agreement,
are maintained by, or under agreement with, it Custodian, Investors Bank & Trust
Company, 89 South Street, Boston, MA 02111.
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes to furnish each person to whom a
Prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and State of New York on the 10th day of
January, 1996
ROCHESTER FUND MUNICIPALS
By: /s/ Bridget A. Macaskill
-------------------------------
Bridget A. Macaskill,
Chairman of the Board and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ Bridget A. Macaskill Chairman of the Board, January 10, 1996
- ------------------------ President (Principal
Bridget A. Macaskill Executive Officer) and
Trustee
/s/ George C. Bowen Treasurer (Principal January 10, 1996
- ------------------------ Financial and Accounting
George C. Bowen Officer)
/s/ John Cannon Trustee January 10, 1996
- ------------------------
John Cannon
/s/ Paul Y. Clinton Trustee January 10, 1996
- ------------------------
Paul Y. Clinton
/s/ Thomas W. Courtney Trustee January 10, 1996
- ------------------------
Thomas W. Courtney
/s/ Lacy B. Herrmann Trustee January 10, 1996
- ------------------------
Lacy B. Herrmann
/s/ George Loft Trustee January 10, 1996
- -------------------------
George Loft
EXHIBIT 1
ROCHESTER FUND MUNICIPALS
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE 1
Name and Definitions ................................................... 1
Section 1.1: Name .................................................. 1
Section 1.2: Definitions ........................................... 1
Section 1.3: Resident Agent ........................................ 2
Section 1.4: Principal Place of Business ........................... 2
ARTICLE 2
Purpose of the Trust ................................................... 2
Section 2.1 ........................................................ 2
Section 2.2 ........................................................ 3
Section 2.3 ........................................................ 3
Section 2.4 ........................................................ 3
Section 2.5 ........................................................ 3
Section 2.6 ........................................................ 3
Section 2.7 ........................................................ 3
ARTICLE 3
The Trustees............................................................ 4
Section 3.1: Number, Designation, Election, Term, etc.............. 4
Section 3.2: Power of Trustees..................................... 5
Section 3.3: Certain Contracts..................................... 7
Section 3.4: Payment of Trust Expenses and Compensation of
Trustees ............................................ 9
Section 3.5: Assets and Liabilities of the Trust .................. 9
ARTICLE 4
Shares ................................................................. 10
Section 4.1: Description of Shares ................................ 10
Section 4.2: Establishment and Designation of Classes of Shares ... 11
Section 4.3: Establishment and Designation of Series .............. 11
Section 4.4: Ownership of Shares .................................. 15
Section 4.5: Investments in the Trust ............................. 15
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 4.6: No Preemptive Rights ................................. 15
Section 4.7: Status of Shares and Limitation of
Personal Liability .................................. 15
ARTICLE 5
Shareholders' Voting Powers and Meetings............................... 16
Section 5.1: Voting Powers....................................... 16
Section 5.2: Meetings............................................ 16
Section 5.3: Record Dates........................................ 17
Section 5.4: Quorum and Required Vote............................ 17
Section 5.5: Action by Written Consent........................... 17
Section 5.6: Inspection of Record................................ 17
Section 5.7: Additional Provisions............................... 17
Section 5.8: Shareholder Communications ......................... 17
ARTICLE 6
Limitation of Liability, Indemnification .............................. 18
Section 6.1: Trustees, Shareholders, etc.
Not Personally Liable; Notice..................... 18
Section 6.2: Trustee's Good Faith Action;
Expert Advice; No Bond or Surety.................. 19
Section 6.3: Indemnification of Shareholders..................... 19
Section 6.4: Indemnification of Trustees, Officers, etc.......... 19
Section 6.5: Compromise Payment.................................. 20
Section 6.6: Indemnification Not Exclusive, etc.................. 20
Section 6.7: Liability of Third Persons
Dealing with Trustees............................. 20
ARTICLE 7
Miscellaneous ......................................................... 21
Section 7.1: Duration and Termination of Trust................... 21
Section 7.2: Reorganization...................................... 21
Section 7.3: Amendments.......................................... 22
Section 7.4: Filing of Copies; References; Headings.............. 22
Section 7.5: Applicable Law...................................... 23
ii
</TABLE>
<PAGE>
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
OF
ROCHESTER FUND MUNICIPALS
This AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made this 26th day
of January, 1995, by and among the individuals executing this Amended and
Restated Declaration of Trust as the Trustees.
WHEREAS, the Trustees established Rochester Fund Municipals (the "Trust"), a
business trust under the laws of the Commonwealth of Massachusetts, for the
investment and reinvestment of funds contributed thereto, under an Agreement and
Declaration of Trust (the "Declaration of Trust") dated February 15, 1991 and
filed with the Commonwealth of Massachusetts on May 21, 1991:
WHEREAS, The Trustees desire to make permitted changes to said Declaration of
Trust; and
WHEREAS, such changes have been approved by the Trustees by a unanimous consent;
NOW, THEREFORE, the Trustees declare that all money and property contributed to
the Trust hereunder shall henceforth be held and managed under this Amended and
Restated Declaration of Trust IN TRUST as herein set forth below.
ARTICLE 1
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as Rochester Fund Municipals
and the Trustees shall conduct the business of the Trust under that name or any
other name or names as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established by
this Amended and Restated Agreement and Declaration of Trust, as amended from
time to time, inclusive of each and every Series and Class established
hereunder;
(b) "Trustees" refers to the Trustees of the Trust and of each Series
hereunder named herein or elected in accordance with Article 3;
(c) "Shares" refers to the equal, proportionate, transferable units of
interest into which the beneficial interest of the Trust and each 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 consistent with
the requirements of federal and/or state securities laws;
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(d) "Series" refers to Series of Shares established and designated under or
in accordance with the provisions of Article 4;
(e) "Class" means a class of a series of shares established and designated
under or in accordance with the provisions of Article 4;
(f) "Shareholder" means a record owner of Shares;
(g) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(h) The term "Commission" shall have the meaning given it in the 1940 Act;
(i) "Declaration of Trust" shall mean this Amended and Restated Agreement
and Declaration of Trust as amended or restated from time to time; and
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from time to
time.
Section 1.3 Resident Agent. The name and address of the Trust's Resident
Agent is CT Corporation, 2 Oliver Street, Boston, Massachusetts 02109.
Section 1.4 Principal Place of Business. The Trust's principal place of
business is 350 Linden Oaks, Rochester, New York 14625. The Trust is in
compliance with and will continue to comply with Massachusetts' law.
ARTICLE 2
PURPOSE OF TRUST
The purpose or purposes for which the Trust is formed and the business or
objects to be transacted, carried on and prompted by it are as follows:
Section 2.1 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 purpose 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 an issuer (which term "issuer"
shall for the purpose of this Declaration of Trust, without limitation of the
generality thereof be deemed to any 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 and all acts and things
for the preservation,
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protection, improvement and enhancement in value of any or all such securities
or financial instruments.
Section 2.2 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.
Section 2.3 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.
Section 2.4 To purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue 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.
Section 2.5 To conduct its business at one or more offices within the State
of New York and elsewhere in any part of the world, without restriction or limit
as to extent.
Section 2.6 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 shares 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.
Section 2.7 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 accomplishments, 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.
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ARTICLE 3
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Number. The Trustees serving as such, in accordance with the provisions
of this Declaration of Trust, may increase or decrease the number of Trustees to
a number other than the number theretofore determined. No decrease in the number
of Trustees shall have the effect of removing any Trustee from office prior to
the expiration of his or her term, but the number of Trustees may be decreased
in conjunction with the removal of a Trustee pursuant to subsection (d) of this
Section 3.1.
(b) Election and Term. The Trustees shall be elected by Shareholders of the
Trust. Each Trustee, whether named above or hereafter becoming a trustee, shall
serve as a Trustee of the Trust and of each Series of the Trust hereunder during
the lifetime of this Trust and until its termination as hereinafter provided
except as such Trustee sooner dies, resigns or is removed. Subject to Section
16(a) of the 1940 Act, the Trustees may elect their own successors and may,
pursuant to Section 3.1(e) hereof appoint Trustees to fill vacancies.
(c) Resignation and Retirement. Any Trustee may resign his trust or retire
as Trustee, by written instrument signed by him and delivered to the other
Trustees or to any officer of the Trust, and such resignation or retirement
shall take effect upon such a delivery or upon such later date as is specified
in such instrument and shall be effective as to the Trust and each Series of the
Trust hereunder.
(d) Removal. Any Trustee may be removed with or without cause at any time:
(i) by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal, specifying the date upon which such removal
shall become effective; or (ii) by vote of Shareholders holding not less than
two-thirds of the Shares then outstanding, cast in person or by proxy at any
meeting called for the purpose; or (iii) by a written declaration signed by
Shareholders holding not less than two-thirds of the Shares then outstanding and
filed with the Trust's Custodian. Any such removal shall be effective as to the
Trust and each Series or Class hereunder.
(e) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement,
removal, or incapacity of any of the Trustees, or resulting from an increase in
the number of Trustees by the other Trustees may (but need not unless required
by the 1940 Act) be filled either by a majority of the remaining Trustees,
subject to the provisions of Section 16(a) of the 1940 Act, through the
appointment in writing of such other person as such remaining Trustees in their
discretion shall determine and such appointment shall be effective upon the
written acceptance of the person named therein to serve as a Trustee and
agreement by such person to be bound by the provisions of this Declaration of
Trust, except that any such appointment in anticipation of a vacancy to occur by
reason of retirement, resignation, or increase in number of Trustees to be
effective at a later date shall become effective only at or after the effective
date of said retirement, resignation, or increase in number of Trustees. As soon
as any Trustee so appointed shall have accepted such appointment and shall have
agreed in writing to be bound by this Declaration of Trust and the appointment
is effective, the Trust estate
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shall vest in the new Trustee, together with the continuing Trustees, without
any further act or conveyance.
(f) Effect of Death, Resignation, etc. The death, resignation, retirement,
removal, or incapacity of the Trustees, or any one of them, shall not operate to
annul or terminate the Trust or any Series hereunder or to revoke or terminate
any existing agency or contract created or entered into pursuant to the terms of
this Declaration of Trust.
(g) No Accounting. Except to the extent required by the 1940 Act or under
circumstances which would justify his removal for cause, no person ceasing to be
a Trustee as a result of his death, resignation, retirement, removal or
incapacity (nor the estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.
Section 3.2 Power of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by Trustees,
and they shall have all powers necessary or convenient to carry out that
responsibility and the purpose of the Trust.
Without limiting the foregoing and to the extent not inconsistent with the
1940 Act or other applicable law, the Trustees shall have power and authority
for and on behalf of the Trust and each separate Series or Class established
hereunder, and the Trustees may:
(a) adopt By-Laws not inconsistent with this Declaration of Trust
providing for the conduct of the business and affairs of the Trust and may amend
and repeal them to the extent that such By-Laws do not reserve that right to the
Shareholders;
(b) from time to time in accordance with the provisions of Section 4.3
hereof establish Series, each Series to operate as a separate and distinct
investment medium and with separately defined investment objectives and policies
and distinct investment purposes and to allocate assets, liabilities and
expenses of the Trust to a particular Series of Shares or to apportion the same
among two or more Series, provided that any liability or expense incurred by a
particular Series of Shares shall be payable solely out of the assets of that
Series;
(c) as they consider appropriate elect and remove officers and appoint and
terminate agents and consultants and hire and terminate employees, and one or
more the foregoing of whom may be a Trustee, and may provide for the
compensation of all of the foregoing;
(d) appoint from their own number, and terminate, any one or more
committees consisting of two or more Trustees, including without implied
limitation an executive committee, which may, when the Trustees are not in
session and subject to the 1940 Act, exercise some or all of the power and
authority of the Trustees as the Trustees may determine;
(e) in accordance with Section 3.3, employ one or more advisers,
administrators, depositories and custodians and may authorize any depository or
custodian to employ subcustodians or agents and to deposit all or any part of
such assets in a system or systems for the central handling of securities and
debt instruments;
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<PAGE>
(f) retain transfer, dividend, accounting or shareholder servicing agents
or any of the foregoing, provide for the distribution of Shares by the Trust
through one or more distributors, principal underwriters or otherwise;
(g) set record dates or times for the determination of Shareholders or
various of them with respect to various matters;
(h) compensate or provide for the compensation of the Trustees, officers,
advisers, administrators, custodians, other agents, consultants and employees of
the Trust or the Trustees on such terms as they deem appropriate;
(i) in general, delegate to any officer of the Trust, to any committee of
the Trustees and to any employee, adviser, administrator, distributor,
depository, custodian, transfer and dividend disbursing agent, or any other
agent or consultant of the Trust such authority, powers, functions and duties as
they consider desirable or appropriate for the conduct of the business and
affairs of the Trust, including without implied limitation, the power and
authority to act in the name of the Trust and of the Trustees, to sign documents
and to act as an attorney-in-fact for the Trustees.
(j) invest and reinvest cash or other property, and to hold cash or other
property uninvested without in any event being bound or limited by any present
or future law or custom in regard to investments by Trustees;
(k) sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust;
(l) vote or give assent, or exercise any rights of ownership, with respect
to stock or other securities, debt instruments or property; and to execute and
deliver proxies or powers of attorney to such person or persons as Trustees
shall deem proper, granting to such person or persons such power and discretion
with relation to securities, debt instruments or property as the Trustees shall
deem proper;
(m) exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities or debt instruments;
(n) hold any security, debt instrument or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form, or in the
name of the Trustees or of the Trust or of any Series or Class or in the name of
a custodian, subcustodian or other depository or a nominee or nominees or
otherwise;
(o) consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security or debt
instrument of which is or was held in the Trust; to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or issuer, and
to pay calls or subscriptions with respect to any security or debt instrument
held in the Trust;
(p) join with other holders of any securities or debt instruments in acting
through a committee, depository, voting trustee or otherwise, and in that
connection to deposit any security or debt instrument
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<PAGE>
with, or transfer any security or debt instrument to, any such committee,
depository or trustee, and to delegate to them such power and authority with
relation to any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee, depository or
trustee as the Trustees shall deem proper;
(q) compromise, arbitrate or otherwise adjust claims in favor of or against
the Trust or any Series or Class or any matter in controversy, including, but
not limited to, claims for taxes;
(r) enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(s) borrow funds and to mortgage and pledge the assets of the Trust or any
part thereof to secure obligations arising in connection with such borrowing;
(t) endorse or guarantee the payment of any notes or other obligations of
any person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust property or
any part thereof to secure any or all of such obligations;
(u) purchase and pay for entirely out of Trust property such insurance as
they may deem necessary or appropriate for the conduct of the business of the
Trust, including, without limitation, insurance policies insuring the assets of
the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, consultants, investment advisers, managers,
administrators, distributors, principal underwriter, or independent contractors,
or any thereof (or any person connected therewith), of the Trust individually
against all claims and liabilities of every nature arising by reason of holding,
being or having held any such office or position, or by reason of any action
alleged to have been taken or omitted by any such person in any such capacity,
including any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify such
person against such liability; and
Except as otherwise provided by the 1940 Act or other applicable law, this
Declaration of Trust or the By-Laws, any action to be taken by the Trustees on
behalf of the Trust or any Series or Class may be taken by a majority of the
Trustees present at a meeting of Trustees (a quorum, consisting of at least a
majority of the Trustees then in office, being present), within and without
Massachusetts, including any meeting held by means of conference telephone or
other communications equipment by means of which all persons participation in
the meeting can hear such other at the same time and participation by such means
shall constitute presence in person at a meeting, or by the unanimous written
consent of the Trustees then in office.
Section 3.3 Certain Contracts. Subject to compliance with the provisions of
the 1940 Act, but notwithstanding any limitations of present and future law or
custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time and without limiting the generality of
their powers and authority otherwise set forth herein, enter into one or more
contracts with any one or more corporations, trusts, associations, partnerships,
limited partnerships, other type of organizations, or individuals ("Contracting
Party"), to provide for the performance and assumption of some or all of the
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following services, duties and responsibilities to, for or on behalf or the
Trust and/or any Sub-Trust, and/or the Trustees, and to provide for the
performance and assumption of such other services, duties and responsibilities
in addition to those set forth below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees and in
conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Series of the Trust
(as that phrase is defined in subsection (a) of Section 4.3), to manage such
investments and assets, make investment decisions with respect thereto, and to
place purchase and sale orders for portfolio transactions relating to such
investments and assets;
(b) Administration. Subject to the general supervision of the Trustees and
in conformity with any policies of the Trustees with respect to the operations
of the Trust and each Series or Class, to supervise all or any part of the
operations of the Trust and each Series or Class, and to provide all or any part
of the administrative and clerical personnel, office space and office equipment
and service appropriate for the efficient administration and operations of the
Trust and each Series or Class;
(c) Distribution. To distribute the Shares of the Trust and each Series or
Class, to the principal underwriter of such Shares, and/or to act as agent of
the Trust and each Series or Class in the sale of Shares and the acceptance or
rejection of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to maintain
custody of the property of the Trust and each Series or Class and accounting
records in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain records of the
ownership of outstanding Shares, the issuance and redemption and the transfer
thereof, and to disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties, Shareholders
or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into sub-contractual arrangements relative to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
The fact that:
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(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager, advisor,
principal underwriter or distributor or agent of or for any Contracting Party,
or of or for any parent or affiliate of any Contraction Party or that the
Contracting Party or any parent or affiliate thereof is a Shareholder or has an
interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for the rendering
of any similar services to one or more other corporations, trusts, associations,
partnerships, limited partnerships or other organizations, or have other
business or interests,shall not affect the validity of any contract for the
performance and assumption of services, duties and responsibilities to, for or
of the Trust or any Series and/or the Trustees or disqualify any Shareholder,
Trustee or officer of the Trust form voting upon or executing the same or create
any liability or accountability to the Trust, any Series or its Shareholders,
provided that in the case of any relationship or interest referred to in the
preceding clause (i) on the part of any Trustee or officer of the Trust either
(A) the material facts as known to such relationship or interest have been
disclosed to or are known by the Trustees not having any such relationship or
interest and the contract involved is approved in good faith by a majority of
such Trustees not having any such relationship or interest (even though such
unrelated or disinterested Trustees are less than a quorum of all of the
Trustees, or (B) the material facts as to such relationship or interest and as
to the contract have been disclosed to or are known by the Shareholders, and (C)
the specific contract involved is fair to the Trust as of the time it is
authorized, approve or ratified by the Trustees or by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust or any Series or Class, or partly out of principal and
partly out income, and to charge or allocate the same to, between or among such
one or more of the Series or Class that may be established and designated
pursuant to Article 4, as the Trustees deem fair, all expenses, fees, charges,
taxes and liabilities incurred or arising in connection with the Trust or any
Series or Class, or in connection with the management thereof, including, but
not limited to, the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser, administrator,
distributor, principal underwriter, auditor, counsel, depository, custodian,
transfer agent, dividend disbursing agent, accounting agent, Shareholder
servicing agent, and such other agents, consultants, and independent contractors
and such other expenses and charges as the Trustees may deem necessary or proper
to incur. Without limiting the generality of any other provision hereof, the
Trustees shall be entitled to reasonable compensation from the Trust for their
services as Trustees and may fix the amount of such compensation.
Section 3.5 Assets and Liabilities of the Trust. 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 be deemed to have a severable
ownership in any individual asset of the Trust or any right of partition or
possession thereof, but each Shareholder of a Series or Class of Shares of the
Trust shall have a proportionate undivided beneficial interest in the assets
belonging to the Series of Class of Shares of the Trust held by the Shareholders
of such Series or Class of Shares in the Trust.
All consideration received by the Trust for the issue or sale of Shares of
a particular Series or Class, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits,
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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 be
referred to as "assets belonging to" that Series or Class and shall be held by
the Trustees in Trust for the benefit of the Shareholders of that Series or
Class. The assets belonging to each particular Series or Class shall be charged
with the liabilities of that Series or Class and all expenses, costs, charges
and reserves attributable to that Series or Class. In addition, any assets,
income, earnings, profits, and proceeds thereof, funds, or payments or any
general liabilities, expenses, costs, charges or reserves of the Trust which are
not readily identifiable as belonging to or chargeable to any particular Series
shall be allocated by the Trustees between and among one or more of the Series
in such a manner as they, in their sole discretion, deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders of
all Series for all purposes, and shall be referred to as assets belonging to
that Series. Any creditor of any Series may look only to the assets of that
Series to satisfy such creditor's debt. Certain expenses also may be allocated
to a particular Class of Shares. All such Class expenses will be charged
directly to the net assets of the particular Class and thus will be borne on a
pro rata basis by the outstanding Shares of the Class.
ARTICLE 4
SHARES
Section 4.1 Description of Shares. The Shares of the Trust shall be issued
in one or more separate and distinct Series and/or classes as the Trustees may,
without shareholder approval, authorize. Each Series shall be preferred over all
other Series in respect of the assets allocated to that Portfolio. The
beneficial interest of each Series shall at all times be divided into an
unlimited number of transferable Shares, each of which shall represent an equal
proportionate interest in the Series with each other Shares of the same Series,
none having priority or preference over another. Each such share shall be fully
paid and nonassessable. Each Series shall be represented by one or more classes
of Shares, with each class possessing such rights (including, notwithstanding
any contrary provision herein, voting rights) as the Trustees, without
shareholder approval, authorize. The number of shares authorized shall be
unlimited, and the Shares so authorized may be represented in part by fractional
shares. The Trustees may from time to time and without shareholder approval
divide or combine the Shares of any Series or class into a greater or lesser
number without thereby changing the proportionate beneficial interest in the
Series.
(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 (but may be subject to mandatory redemption by the Trust
as provided in subsection (g) of Section 4.3). The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any Series or 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, reissue for such consideration and on such terms as they many determine,
or cancel, at their discretion from time to time, any Shares of any Series
reacquired by the Trust.
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The Trustees may from time to time close the transfer books or establish
record dates and times for the purposes of determining the holders of Shares
entitled to be treated as such, to the extent provided or referred to in Section
5.3.
(b) The establishment and designation of any Series or any Class of any
Series in addition to those established and designated in Section 4.2 and 4.3
shall be effective upon the execution by a majority of the Trustees of an
instrument setting forth such establishment and designation and the relative
rights and preferences of the Shares of such Series or such Class of such
Series, or as otherwise proved 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. Each
instrument referred to in this paragraph shall have the status of an amendment
to this Declaration of Trust.
(c) Any Trustee, officer of 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 of the Trust to the same extent as if such person were not
a Trustee, officer of 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 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 generally.
Section 4.2 Establishment and Designation of Classes of Shares. The
Trustees shall have the authority without shareholder approval from time to time
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 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 Section 4.3,
a Class of a Series may have exclusive voting rights with respect to matters
relating solely to such Class. The bearing of expenses solely by a Class of
Shares or 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 1940 Act and other
federal securities laws.
Section 4.3 Establishment and Designation of Series. Without limiting the
authority of the Trustees set forth Section 4.1 to establish and designate any
further Series, the Trustees hereby establish and designate one Series: Limited
Term New York Municipal Fund and any Shares of any further Series 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 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
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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 be held by
the Trustees in trust for the benefit of the holders of Shares of the Series and
shall irrevocably belong to that Series for all purposes, 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 Trustee 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. 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 assets belonging to each
particular Series shall be charged with the liabilities in respect of that
Series and all expenses, costs, charges and reserves attributable to that
Series, and any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily 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 a
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. Any creditor of any Series may look only to the assets of that Series
to satisfy such creditor's debt.
(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 may 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 a basis as the Trustees
in their sole discretion deem fair and equitable. The liabilities, expenses,
costs, charges and reserves allocated and so charges 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.
(3) Income and Capital Items. The Trustees shall have full discretion, to
the extent not inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a particular Series
or Class may be paid 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, to the
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holders of Shares of that Series or Class, from such of the income and capital
gains, accrued or realized, 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 holders of
Shares of such Series or Class in proportion to the number of Shares of such
Series or Class held by such holders 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 of that Series or
Class 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 subsection (h)
of Section 4.3.
(d) Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of all Classes of each Series that has 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 such Series or
Class over the liabilities belonging to that Series or Class. The assets so
distributable to the Shareholders of any particular Series or Class 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.
The liquidation of any particular Series or Class may be authorized by vote of a
majority of the Trustees then in office subject to the approval of a majority of
the outstanding voting Shares of that Series or Class, as defined in the 1940
Act.
(e) Voting. On each matter submitted to a vote of the Shareholders, each
holder of a Share of each Series shall be entitled to one vote for each whole
Share and for a proportionate fractional vote for each fractional Share standing
in his name on the books of the Trust and all shares of each Series shall vote
as a separate class, except as to voting for Trustees and as otherwise required
by the 1940 Act. As to any matter which does not affect the interest of a
particular Series , only the holders of Shares of one or more of the affected
Series shall be entitled to vote. If the shares of a Series shall be divided
into Classes as provided in Section 4.2, 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 Class. 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.
(f) Redemption by Shareholders. In case any Shareholder of record of a
particular Series desires to dispose of Shares, that shareholder may deposit at
the office of the transfer agent or other authorized agent of the Trust a
written request or such other form of request as the Trustees may from time to
time authorize, requesting that the Trust purchase said Shares in accordance
with this Section 4.3; and the Shareholder so requesting shall be entitled to
require the Trust to purchase, and the Trust or the principal
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underwriter of the Trust shall purchase said Series, but only at the Net Asset
Value thereof (as described in Section 4.3(h) hereof). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash to the extent
required by Federal law, and securities from such Series' assets, and payment
for such Shares shall be made by the Series or the principal underwriter to the
Shareholder of record within seven (7) days after the date upon which the
request is effective, provided, however, that if Shares being redeemed have been
purchased by check, the Series may postpone payment until the Trust has
assurance that good payment has been collected for the purchase of the Shares.
The Trust may require Shareholders to pay a sales charge to the Trust, the
underwriter or any other person designated by the Trustees upon redemption or
repurchase of Shares of any Portfolio in such amount as shall be determined from
time to time by the Trustees. The amount of such sales charge may but need not
vary depending on various factors, including without limitation the holding
period of the redeemed or repurchased Shares. The Trustees may also charge a
redemption or repurchase fee in such amount as may be determined from time to
time by the Trustees.
(g) Redemption by Trust. Each Share of each Series or Class that has been
established and designated is subject to redemption by the Trust at the
redemption price which would be applicable if such Share was then being redeemed
by the Shareholder pursuant to subsection (f) of this Section 4.3: (a) at any
time, if the Trustees determine in their sole discretion that failure to so
redeem may have materially adverse consequences to the holders of the Shares of
the Trust or any Series or Class thereof, or (b) upon such other conditions as
may from time to time be determined by the Trustees and set forth in the then
current Prospectus of the Trust with respect to maintenance of Shareholder
accounts of a minimum amount. Upon such redemption of the holders of the Shares
so redeemed shall have no further right with respect thereto other than to
receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any Series or Class
shall be the quotient obtained by dividing the value of the net assets of that
Series or Class (being the value of the assets belonging to that Series or Class
less the liabilities belonging to that Series or Class) by the total number of
Shares of that Series or Class outstanding, all determined in accordance with
the methods and procedures, including without limitation those with respect to
rounding, established by the Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share of any
Series or Class at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for the
continuing declarations of income attributable to that Series or Class as
dividends payable in additional Shares of that Series or Class at the designated
constant dollar amount and for the handling of any losses attributable to that
Series or Class. Such procedures may provide that in the event of any loss each
Shareholder shall be deemed to have contributed to the capital of the Trust
attributable to that Series or Class his pro rata portion of the total number of
Shares required to be cancelled in order to permit the net asset value per Share
of that Series or Class to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each shareholder of the Trust shall be deemed
to have agreed, by his investment in any Series or Class with respect to which
the Trustees shall have adopted any such procedure, to make the contribution
referred to in the preceding sentence in the event of any such loss.
(i) Transfer. All Shares of each particular Series shall be transferable,
but transfers of Shares of a particular Series and Class will be recorded on the
Share transfer records of the Trust applicable to such
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Class of that Series only at such times as Shareholders shall have the right to
require the Trust to redeem Shares of such Class of that Series and at such
other times as may be permitted by the Trustees.
(j) Equality. All Shares of all Series shall represent an equal
proportionate interest in the assets belonging to that Series (subject to the
liabilities belonging to such Class of that Series), and each Share of any
particular Series shall be equal to each other Share of that Series; but the
provisions of this sentence shall not restrict any distinctions permissible
under subsection (c) of this Section 4.3 that may exist with respect to
dividends and distributions on Shares of the different Classes of a Series. The
Trustees may from time to time without shareholder approval divide or combine
the Shares of that 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 Class or Series or in any way affecting
the rights of Shares of any other Class or Series.
(k) 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 rights and
obligations with respect to voting, receipt of dividends and distributions,
redemption of Shares, and liquidation of the Trust.
(l) 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 the aforesaid exchanges, in each case in accordance with such
requirements and procedures as may be established by the Trustees.
Section 4.4 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 certificate 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.
Section 4.5 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 of
Shares that conform to such authorized terms and to reject any purchase orders
for Shares whether or not conforming to such authorized terms.
Section 4.6 No Preemptive Rights. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust.
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Section 4.7 Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the Trust or any Series or Class thereof
nor entitle the representative of any decreased Shareholder to an accounting or
to take any action in court or elsewhere against the Trust or the Trustees, but
only to the rights of said decedent under this Trust. Ownership of Shares shall
not entitle the Shareholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the same or for
an accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein 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.
ARTICLE 5
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Section 3.1, (ii)
with respect to any contract with a Contracting Party as provided in Section 3.3
as to which Shareholder approval is required by the 1940 Act, (iii) with respect
to any termination or reorganization of the Trust or any Series to the extent
and as provided in Sections 7.1 and 7.2, (iv) with respect to any amendment of
this Declaration of Trust, to the extent and as provided in Section 7.3, (v) to
the same extent as the stockholders of a Massachusetts business corporation as
to whether or not a court action, proceeding or claim would or should not be
brought or maintained derivatively as a class action on behalf of the Trust or
any Series or Class thereof or the Shareholders (provided, however, that a
shareholder of a particular Series or Class shall not be entitled to initiate a
derivative or class action on behalf of any other Series or Class (or
shareholder of any other Series or Class) of the Trust) and (vi) with respect to
such additional matters relating to the Trust as may be required by the 1940
Act, this Declaration of Trust, the By-Laws or any registration of the Trust
with the Commission (or successor agency) or any state, or as the Trustees may
consider necessary or desirable. There shall be no cumulative voting on the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to shares held in the name of two or more persons shall be valued if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until shares are issued, the Trustees
may exercise all rights of Shareholders and may take any action required by law,
this Declaration of Trust or the By-Laws to be taken by the Shareholders.
Section 5.2 Meetings. No annual or regular meeting of Shareholders is
required. Special meetings of Shareholders may be called by the Trustees from
time to time for the purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or upon any other matter
deemed by the Trustees to be necessary or desirable. Written notice of any
meeting of Shareholders
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shall be given or caused to be given by the Trustees by mailing such notice at
least seven days before such meeting, postage prepaid, stating the time, place
and purpose of the meeting, to each Shareholder at the Shareholder's address as
it appears on the records of the Trust. The Trustees shall promptly call and
give notice of a meeting of Shareholders for the purpose of voting upon removal
of any Trustee of the Trust when requested to do so in writing by Shareholders
holding not less than 10% of the Shares then outstanding. If the Trustees shall
fail to call or give notice of any meeting of Shareholders for a period of 30
days after written application by Shareholders holding at least 10% of the
Shares then outstanding requesting a meeting be called for a purpose requiring
action by the Shareholders as provided herein or in the By-Laws, then
Shareholders holding at least 10% of the Shares then outstanding may call and
give notice of such meeting and thereupon the meeting shall be held in the
manner provided for herein in case of call thereof by the Trustee.
Section 5.3 Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 60 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or to be treated as a Shareholder of record
for purposes of such other action, even though he has since that date and time
disposed of his Shares, and no Shareholder becoming such after that date and
time shall be so entitled to vote as such meeting or any adjournment thereof or
to be treated as a Shareholder of record for purposes of such other action.
Section 5.4 Quorum and Required Vote. A majority of the Shares, or of the
Shares of any Series or Class of any Series with respect to matters as to which
only shareholders of said Series or Class of Series, respectively, entitled to
vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting without the necessity of further notice. A
majority of the Shares voted, at a meeting of which a quorum is present shall
decide any questions and a plurality shall elect a Trustee, except when a
different vote is required or permitted by any provision of the 1940 Act or
other applicable law or by this Declaration of Trust or the By-Laws.
Section 5.5 Action by Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if the holders of all outstanding shares entitled to vote on
the matter consent to the action in writing and such written consents are filed
with the records of the meetings of Shareholders. Such consent shall be treated
for all purposes as a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Record. The records of the Trust shall be open to
inspection by Shareholders to the same extent as is permitted stockholders of a
Massachusetts business corporation under the Massachusetts Business Corporation
Law.
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Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
Section 5.8 Shareholder Communications. Whenever ten or more Shareholders
of record have been such for at least six months preceding the date of
application, and who hold in the aggregate either Shares having a net asset
value of at least $25,000 or at least 1% of the outstanding Shares, whichever is
less, shall apply to the Trustees in writing, stating that they wish to
communicate with other Shareholders with a view to obtaining signatures to a
request for a Shareholder meeting and accompanied by a form of communication and
request which they wish to transmit, the Trustees shall within five business
days after receipt of such application either (1) afford to such applicants
access to a list of the names and addresses of all Shareholders as recorded on
the books of the Trust or Series, as applicable; or (2) inform such applicants
as to the approximate number of Shareholders of record, and the approximate cost
of mailing to them the proposed communication and form of request.
If the Trustees elect to follow the course specified in paragraph (2) above
the Trustees, upon the written request of such applicants, accompanied by a
tender of the material to be mailed and of the reasonable expenses of mailing,
shall, with reasonable promptness, mail such material to all Shareholders of
record of their addresses as recorded on the books, unless within five business
days after such tender the Trustees shall mail to such applicants and file with
the Commission, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the Trustees to the effect that in
their opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the basis
of such opinion. The Trustees shall thereafter comply with the requirements of
the 1940 Act.
ARTICLE 6
LIMITATION OF LIABILITY, INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice. All
persons extending credit to, contracting with or having any claim against the
Trust shall look only to the assets of the Series or Class with which such
person dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Series or Class nor the Trustees, nor any of the Trust's
officers, employees or agents, whether past, present of future, nor any other
Series shall be personally liable therefor. Every note, bond, contract,
instrument, certificate or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust, and Series or Class or the
Trustees or any of them in connection with the
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Trust shall be conclusively deemed to have been executed or done only by or for
the Trust (or the Series or Class) or the Trustees and not personally. Nothing
in this Declaration of Trust shall protect any Trustee or officer against any
liability to the Trust or the Shareholders to which such Trustee or officer
would otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of the
office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that this
Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust or by them as Trustees or Trustee or as officers or officer
and not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, or the particular Series or Class in question,
as the case may be, but the omission thereof shall not operate to bind any
Trustees or Trustee or officers or officer of Shareholders or Shareholder
individually.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety.
The exercise by the Trustees of their powers and discretion hereunder shall be
binding upon everyone interested. A Trustee shall be liable for his own wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing else, and
shall not be liable for errors in judgement or mistakes of fact or law. Subject
to the foregoing, (a) the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, consultant,
adviser, administrator, distributor or principal underwriter, custodian or
transfer, dividend disbursing, Shareholder servicing or accounting agent of the
Trust, nor shall any Trustee be responsible for the act or omission of any other
Trustee; (b) the Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust and their
duties as Trustees, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice; and (c) in
discharging their duties, the Trustees, when acting in good faith, shall be
entitled to rely upon the books of account of the Trust and upon written reports
made to the Trustees by any officer appointed by them, any independent public
accountant, and (with respect to the subject matter of the contract involved)
any officer, partner or responsible employee of a Contracting Party appointed by
the Trustees pursuant to Section 3.3. The Trustees as such shall not be required
to give any bond or surety or any other security for the performance of their
duties.
Section 6.3 Indemnification of Shareholders.In case any Shareholder (or
former Shareholder) shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, said Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (or his 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 assets of said Trust estate to be held harmless from and indemnified against
all loss and expense arising from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify (from the assets of the Series or Class or Series or Classes in
question) each of its Trustees and officers (including persons who serve at the
Trust's request as directors, officers or trustees of another organization in
which the Trust
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has any interest as a Shareholder, creditor or otherwise (hereinafter referred
to as "Covered Person") against all liabilities, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person may be
or may have been involved as a party or otherwise or with which such person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined in one of the manners
described below, that such Covered Person (i) did not act in good faith in the
reasonable belief that such Covered Person's action was in or not opposed to the
best interests of the Trust or (ii) had acted with wilful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct described in (i) and (ii) being referred to hereafter as "Disabling
Conduct." A determination that the Covered Person is not entitled to
indemnification due to Disabling Conduct may be made by (i) a final decision on
the merits by a court or other body before whom the proceeding was brought that
the person to be indemnified was not liable by reason of Disabling Conduct, (ii)
dismissal of a court action or an administrative proceeding against a Covered
Person for insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the indemnitee was not
liable by reason of the facts, that the indemnitee was not liable by reason of
Disabling Conduct by (a) a vote of a majority of a quorum of Trustees who are
neither "interested persons" of the Trust as defined in section 2(a)(19) of the
1940 Act nor parties to the proceeding, or (b) an independent legal counsel in a
written opinion. Expenses, including accountants' and counsel fees so incurred
by any such Covered Person (but excluding amounts paid in satisfaction of
judgements, in compromise or as fines or penalties), may be paid from time to
time in advance of the final disposition of any such action, suit or proceeding,
provided that the Covered Person shall have undertaken to repay the amounts so
paid to the Series or Class in question if it is ultimately determined that
indemnification of such expenses is not authorized under this Article 6 and (i)
the Covered Person shall have provided security for such undertaking, (ii) the
Trust shall be insured against losses arising by reason of any lawful advances,
or (iii) a majority of a quorum of the disinterested Trustees who are not a
party to the proceeding, or an independent legal counsel in a written opinion,
shall have determined, based on a review of readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the Covered
Party ultimately will be found entitled to indemnification.
Section 6.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not a party to the proceeding or (b) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (a) or
by independent legal counsel pursuant to clause (b) shall not prevent the
recovery from any Covered Person of any amount paid to such Covered Person in
accordance with any of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction not to have acted
in good faith in the reasonable belief that such Covered Person's action was in
or not opposed to the best interests of the Trust or to have been liable to the
Trust or its Shareholders by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this
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Article 6 shall not be exclusive of or affect any other rights to which any such
Covered Person may be entitled. As used in this Article 6, "Covered Person"
shall include such person's heirs, executors and administrators, an "interested
Covered Person" is one against whom the action, suit or other proceeding in
question or another action, suit or other proceeding on the same or similar
grounds is then or has been pending or threatened, and a "disinterested" person
is a person against whom none of such actions, suits or other proceedings or
another action, suit or other proceeding on the same or similar grounds is then
or has been pending or threatened. Nothing contained in this article shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees and officers, and other persons may be entitled by contract or
otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE 7
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Series or Class shall operate to terminate the
Trust. The Trust may be terminated at any time by a majority of the Trustees
then in office subject to a favorable vote of a majority of the outstanding
voting securities, as defined in the 1940 Act, Shares of each Series or Class
voting separately by Series or Class.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 4.3.
Section 7.2 Reorganization. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or more
Series or Classes, to another trust, partnership, association or corporation
organized under the laws of any state of the United States, or to the Trust to
be held as assets belonging to another Series or Class of the Trust, in exchange
for cash, shares or other securities (including, in the case of a transfer to
another Series or Class of the Trust, Shares of such other Series or Class) with
such transfer either (1) being made subject to, or with the assumption by the
transferee of, the liabilities belonging to each Series or Class the assets of
which are so transferred, or (2) not being made subject to, or not with the
assumption of, such liabilities; provided, however, that no assets belonging to
any particular Series or Class shall be so transferred unless the terms of such
transfer shall have first been approved at a meeting called for the purpose by
the affirmative vote of the holders of a majority of the outstanding voting
Shares, as defined in the 1940 Act, of that Series or Class. Following
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such transfer, the Trustees shall distribute such cash, shares or other
securities (giving due effect to the assets and liabilities belonging to and any
other differences among the various Series or Classes the assets belonging to
which have been so transferred) among the Shareholders of the Series or Class
the assets belonging to which have been so transferred; and if all of the assets
of the Trust have been so transferred, the Trust shall be terminated.
The Trust, or any one or more Series or Classes, may either as the
successor, survivor, or non-survivor, (1) consolidate with one or more other
trusts, partnerships, associations or corporations organized under the laws of
the Commonwealth of Massachusetts or any other state of the United States, to
form a new consolidated trust, partnership, association or corporation under the
laws of which any one of the constituent entities is organized, or (2) merge
into one or more other trusts, partnerships, associations or corporations
organized under the laws of the Commonwealth of Massachusetts or any other state
of the United States, or have one or more such trusts, partnerships,
associations or corporations merge into it, any such consolidation or merger to
be upon such terms and conditions as are specified in an agreement and plan of
reorganization entered into by the Trust, or one or more Series or Classes as
the case may be, in connection therewith. The terms "merge" or "merger" as used
herein shall also include the purchase or acquisition of any assets of any other
trust, partnership, association or corporation which is an investment company
organized under the laws of the Commonwealth of Massachusetts or any other state
of the United States. Any such consolidation or merger shall require the
affirmative vote of the holders of a majority of the outstanding voting Shares,
as defined in the 1940 Act, of each Sub-Trust affected thereby.
Section 7.3 Amendments. All rights granted to the Shareholders under this
Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time, so long as such
amendment does not adversely affect the rights of any Shareholder with respect
to which such amendment is or purports to be applicable and so long as such
amendment is not in contravention of applicable law, including the 1940 Act, by
an instrument in writing signed by a majority of the then Trustees (or by an
officer of the Trust pursuant to the vote of a majority of such Trustees). Any
amendment to this Declaration of Trust that adversely affects the rights of
Shareholders may be adopted at any time by an instrument in writing signed by a
majority of the then Trustees (or by an officer of the Trust pursuant to the
vote of a majority of such Trustees) when authorized to do so by the vote in
accordance with subsection (e) of Section 4.3 of Shareholders holding a majority
of the Shares entitled to vote. Subject to the foregoing, any such amendment
shall be effective as provided in the instrument containing the terms of such
amendment or, if there is no provision therein with respect to effectiveness
upon the execution of such instrument and of a certificate (which may be a part
of such instrument) executed by a Trustee or officer of the Trust to the effect
that such amendment has been duly adopted.
Section 7.4 Filing of Copies; References; Headings. The original or a copy
of this instrument and of each restated declaration of trust or amendment 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 restated declaration of trust
or amendment or hereto shall be filed with the Secretary of the Commonwealth of
Massachusetts and with
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any other governmental office where such filing may from time to time be
required, but the failure to make any such filing shall not impair the
effectiveness of this instrument or any such restatement or amendment. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such restatements or amendments have been made, as to the
identities of the Trustees and officers, 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 restatements or amendments. In this instrument and in
any such restatement or amendment, references to this instrument, and all
expressions like "herein", "hereof" and "hereunder" shall be deemed to refer to
this instrument as a whole as the same may be amended or affected by any such
restatements or amendments. The masculine gender shall include the feminine and
neuter genders. Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control of affect the meaning,
construction or effect of this instrument. This instrument may be executed in
any number of counterparts each of which shall be deemed an original.
Section 7.5 Applicable Law. This Agreement and Declaration of Trust is
created under and is to be governed by and construed and administered according
to the laws of the Commonwealth of Massachusetts, including the Massachusetts
Business Corporation Law as the same may be amended from time to time, to which
reference is made with the intention that matters not specifically covered
herein or as to which an ambiguity may exist shall be resolved as if the Trust
were a business corporation organized in Massachusetts, but the reference to
said Business Corporation Law is not intended to give the Trust, the Trustee,
the Shareholders or any other person any right, power, authority or
responsibility available only to or in connection with an entity organized in
corporate form. The Trust shall be of the type referred to in Section 1 of
Chapter 182 of the Massachusetts General Laws and of a 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.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals
for themselves and their assigns, as of the day and year first above written.
/s/Robert E. Brown /s/Ronald H. Fielding
- --------------------- ------------------------
ROBERT E. BROWN RONALD H. FIELDING
/s/Elton J. Burgett /s/Marvin J. Hoffman
- --------------------- -------------------------
ELTON J. BURGETT MARVIN J. HOFFMAN, M.D.
/s/Joseph A. Burnett /s/Michael S. Rosen
- --------------------- -------------------------
JOSEPH A BURNETT MICHAEL S. ROSEN
/s/John Cannon /s/Eric W. Zaenglein
- --------------------- -------------------------
JOHN CANNON ERIC W. ZAENGLEIN
/s/Angelo Costanza
- ---------------------
ANGELO COSTANZA
23
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AMENDMENT TO THE AGREEMENT AND DECLARATION OF TRUST
This amendment to the Amended and Restated Agreement and Declaration of Trust
of Rochester Fund Municipals (the "Restated Declaration of Trust") executed this
1st day of November, 1995.
WHEREAS, the Trustees established Rochester Fund Municipals (the "Trust"), a
business trust under the laws of the Commonwealth of Massachusetts, for the
investment and reinvestment of funds contributed thereto, under an Agreement and
Declaration of Trust dated February 15, 1991 and filed with the Commonwealth of
Massachusetts on May 21, 1991; and
WHEREAS, the Restated Declaration of Trust dated January 26, 1995 was filed by
the Trust with the Commonwealth of Massachusetts on February 8, 1995; and
WHEREAS, Section 7.3 of the Restated Declaration of Trust requires that
amendments thereto be by an instrument in writing signed by an officer of the
Trust pursuant to a majority vote of the Trustees and filed with the
Commonwealth of Massachusetts; and
WHEREAS, the Trustees now desire to amend the Restated Declaration of Trust and
such amendments and filing thereof have been approved by the unanimous written
consent of the Trustees.
NOW, THEREFORE,
1. The Restated Declaration of Trust is hereby amended to revise Section 5.1
entitled "Voting Powers"
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and Section 5.3 entitled "Record Date".
2. Section 5.1 shall read in its entirety as follows:
Section 5.1 Voting Powers. The Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act,
(iii) with respect to any termination or reorganization of the Trust or any
Series to the extent and as provided in Sections 7.1 and 7.2, (iv) with
respect to any amendment of this Declaration of Trust, to the extent and as
provided in Section 7.3, (v) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim would or should not be brought or maintained
derivatively as a class action on behalf of the Trust or any Series or
Class thereof or the Shareholders (provided, however, that a shareholder of
a particular Series or Class shall not be entitled to initiate a derivative
or class action on behalf of any other Series or Class (or shareholder of
any other Series or Class) of the Trust) and (vi) with respect to such
additional matters relating to the Trust as may be required by the 1940
Act, this Declaration of Trust, the By-Laws or any registration of the
Trust with the Commission (or successor agency) or any state, or as the
Trustees may consider necessary or desirable. There shall be no cumulative
voting on the election of Trustees. Shares may be voted in person or by
proxy. Proxy votes may be recorded by telephone in accordance with such
procedures as may be established by the Trustees from time to time. A
shareholder may designate by telephone a person as his or her attorney-in-
fact to vote his or her proxy in written form. A proxy with respect to
shares held in the name of two or more persons shall be valid if executed
by any one of them unless at or prior to exercise of the proxy the Trust
receives specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the burden
of proving invalidity shall rest on the challenger. Until shares are
issued, the Trustees may exercise all rights of Shareholders and may take
any action required by law, this Declaration of Trust or the By-Laws to be
taken by the Shareholders.
3. Section 5.3 shall read in its entirely as follows:
Section 5.3 Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof,
or who are entitled to participate in any dividend or distribution, or for
the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may
determine; or without closing the transfer books the Trustees may fix a
date and time not more than 60 days prior to the date of any meeting of
Shareholders or other action as the date and time of record for the
determination of Shareholders entitled to vote at such
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meeting or any adjournment thereof, whether or not the date to which a
meeting is adjourned is a date in excess of 60 days of the Record Date, or
to be treated as Shareholders of record for purposes of such other action,
and any Shareholder who was a Shareholder at the date and time so fixed
shall be entitled to vote at such meeting or any adjournment thereof or to
be treated as a Shareholder of record for purposes of such other action,
even though he has since that date and time disposed of his Shares, and no
Shareholder becoming such after that date and time shall be so entitled to
vote as such meeting or any adjournment thereof or to be treated as a
Shareholder of record for purposes of such other action.
4. These revisions to the Restated Declaration of Trust shall be effective upon
filing of this amendment with the Secretary of State of the Commonwealth of
Massachusetts.
5. All other terms and conditions of the Restated Declaration of Trust shall
remain the same.
IN WITNESS WHEREOF, the undersigned has caused this Amendment to be executed on
the day and year first set forth above.
ROCHESTER FUND MUNICIPALS
/s/ Ronald H. Fielding
-------------------------------
Ronald H. Fielding, President
26
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the 4th day of January, 1996, by and between ROCHESTER FUND
MUNICIPALS, a Massachusetts business trust (hereinafter referred to as the
"Fund"), and OPPENHEIMER MANAGEMENT CORPORATION (hereinafter referred to as
"OMC").
WHEREAS, the Fund is an open-end, non-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 OMC is an investment adviser registered as such with the
Commission under the Investment Advisers Act of 1940;
WHEREAS, the Fund has Shares of beneficial interest to be issued by the
Fund ("Shares") pursuant to the Fund's registration statement;
WHEREAS, the Fund desires that OMC 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 PROVISIONS:
The Fund hereby employs OMC and OMC hereby undertakes to act as the
investment adviser of the Fund in connection with, and for the benefit of, the
Fund and to perform for the Fund such other duties and functions in connection
with the Fund for the period and on such terms as set forth in this Agreement.
OMC shall, in all matters, give to the Fund and its Board of Trustees (the
"Trustees") the benefit of its best judgment, effort, advice and recommendations
and
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shall, at all times conform to, and use its best efforts to enable the Fund to
conform to (i) the provisions of the Investment Fund 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 Trustees; (v)
the fundamental policies and investment restrictions of the Fund as reflected in
the registration statement of the Fund under the Investment Company Act or as
such policies may, from time to time, be amended and (vi) the Prospectus and
Statement of Additional Information of the Fund in effect from time to time. The
appropriate officers and employees of OMC 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) OMC shall, subject to the direction and control by the Trustees, (i)
regularly provide investment advise and recommendations to the Fund with respect
to the investments, investment policies and the purchase and sale of securities
and other investments for the Fund; (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 portfolio of the Fund.
(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 the
Agreement and subject to the provisions of paragraph 7 hereof, OMC may obtain
investment information, research or
2
<PAGE>
assistance from any other person, firm or corporation to supplement, update or
otherwise improve its investment management services including entering into
sub-advisory agreements with other affiliated or unaffiliated registered
investment advisors to obtain specialized services.
(c) Provided that nothing herein shall be deemed to protect OMC 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, OMC 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 OMC or any entity controlling,
controlled by or under common control with OMC or any officer thereof from
acting as investment adviser for any other person, firm or corporation or in any
way limit or restrict OMC or any of its directors, officers, stockholders or
employees from buying, selling or trading any securities or other investments
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 OMC of its duties and obligations under this
Agreement.
3. OTHER DUTIES OF OMC:
OMC 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
3
<PAGE>
required by Federal and state securities laws for continuous public sale of
Shares of the Fund. OMC shall, at its own cost and expense, also provide the
Fund with adequate office space, facilities and equipment. OMC shall, at its own
expenses, 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 OMC 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, taxes
and governmental fees; (ii) brokerage commissions and other expenses incurred in
acquiring or disposing of the portfolio securities and other investments of the
Fund; (iii) insurance premiums for fidelity and other coverage requisite to its
operations; (iv) compensation and expenses of its Trustees other than those
affiliated with OMC; (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 OMC (or any entity controlling,
controlled by, or under common control with OMC) who also serve as officers,
Trustees or employees of the Fund shall not receive any compensation
4
<PAGE>
from the Fund thereof for their services.
5. COMPENSATION OF OMC:
The Fund agrees to pay OMC and OMC 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 total net asset value
of the Fund as of the close of each business day and payable monthly at the
annual rate for each Series set forth on Schedule A hereto.
6. USE OF NAME "OPPENHEIMER" OR "ROCHESTER":
OMC hereby grants to the Fund a royalty-free, non-exclusive license to use
the name "Oppenheimer" or "Rochester" in the name of the Fund for the duration
of this Agreement and any extensions or renewals thereof. To the extent
necessary to protect OMC's rights to the name "Oppenheimer" or "Rochester" under
applicable law, such license shall allow OMC to inspect and, subject to control
by the Fund's Board, control the nature and quality of services offered by the
Fund under such name and may, upon termination of this Agreement, be terminated
by OMC, 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" or "Rochester" in the name of the Fund or otherwise. The name
"Oppenheimer" and "Rochester" may be used or licensed by OMC in connection with
any of its activities, or licensed by OMC to any other party.
7. PORTFOLIO TRANSACTIONS AND BROKERAGE:
(a) OMC (and any Sub Advisor) is authorized, in arranging the purchase and
sale of the portfolio securities and other investments of the Fund 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
5
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execution" (prompt and reliable execution at the most favorable security price
obtainable) of the portfolio transactions of the Fund 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 OMC (and any Sub Advisor) of its (their)
investment management functions.
(b) OMC (and any Sub Advisor) shall select broker-dealers to effect the
portfolio transactions of the Fund 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 OMC (or any Sub Advisor) 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 portfolio transactions of
the Fund 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 or other
investments 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) OMC (and any Sub Advisor) shall have discretion, in the interests of
the Fund, to allocate brokerage on the portfolio transactions of the Fund 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 OMC or its affiliates (or
any Sub Advisor) 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
6
<PAGE>
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 OMC (or
any Sub Advisor) 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 OMC or its affiliates (or any Sub Advisor) with
respect to accounts as to which they exercise investment discretion. In reaching
such determination, OMC (or any Sub Advisor) 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, OMC (and any Sub Advisor) 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) OMC (or any Sub Advisor) 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
7
<PAGE>
the Fund only if the commissions, fees or other renumeration 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 to be within
the permissible level of such commissions.
(f) Subject to the foregoing provisions of this paragraph 7, OMC (and any
Sub Advisor) may also consider sales of Shares of the Fund and the other funds
advised by OMC 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 for a period of two (2) years and thereafter 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 Fund 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 Fund 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:
OMC 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; OMC 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 OMC 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
8
<PAGE>
at any time without penalty upon sixty days' written notice to OMC (which notice
may be waived by OMC) 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 OMC 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.
13. ACCOUNTING, ADMINISTRATION AND RECORDKEEPING AGREEMENT:
Notwithstanding any provision of this Agreement to the contrary, OMC is not
required under this Agreement to perform for the Fund any duties or functions
set forth in the Accounting, Administration and Recordkeeping Agreement between
the Fund and OMC.
ROCHESTER FUND MUNICIPALS
/s/ RONALD H. FIELDING
--------------------------
Title: Vice President
9
<PAGE>
OPPENHEIMER MANAGEMENT
CORPORATION
By: /s/ ANDREW J. DONOHUE
--------------------------
Andrew J. Donohue
Executive Vice President
10
<PAGE>
SCHEDULE A
TO
INVESTMENT ADVISORY AGREEMENT
BETWEEN
ROCHESTER FUND MUNICIPALS
AND
OPPENHEIMER MANAGEMENT CORPORATION
- --------------------------------------------------------------------------------
ANNUAL FEE AS A PERCENTAGE OF DAILY TOTAL NET ASSETS
================================================================================
0.54% of the first $100 million of average daily net assets
- --------------------------------------------------------------------------------
0.52% of the next $150 million of average daily net assets
- --------------------------------------------------------------------------------
0.47% of the next $1,750 million of average daily net assets
- --------------------------------------------------------------------------------
0.46% of the next $3 billion of average daily net assets
- --------------------------------------------------------------------------------
0.45% of average daily net assets over $5 billion
- --------------------------------------------------------------------------------
rochester\madvisor
11
EXHIBIT 6(a)
GENERAL DISTRIBUTOR'S AGREEMENT
BETWEEN
ROCHESTER FUND MUNICIPALS
AND
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
Date: January 4, 1996
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
Two World Trade Center, Suite 3400
New York, NY 10048-0203
Dear Sirs:
ROCHESTER FUND MUNICIPALS, a Massachusetts business trust (the "Fund"), is
registered as an investment company under the Investment Company Act of 1940
(the "1940 Act"), and an indefinite number of one or more classes of its shares
of beneficial interest ("Shares") have been registered under the Securities Act
of 1933 (the "1933 Act") to be offered for sale to the public in a continuous
public offering in accordance with the terms and conditions set forth in the
Prospectus and Statement of Additional Information ("SAI") included in the
Fund's Registration Statement as it may be amended from time to time (the
"current Prospectus and/or SAI").
In this connection, the Fund desires that your firm (the "General
Distributor") act in a principal capacity as General Distributor for the sale
and distribution of Shares which have been registered as described above and of
any additional Shares which may become registered during the term of this
Agreement. You have advised the Fund that you are willing to act as such General
Distributor, and it is accordingly agreed by and between us as follows:
1. APPOINTMENT OF THE DISTRIBUTOR. The Fund hereby appoints you as the sole
General Distributor, pursuant to the aforesaid continuous public offering of its
Shares, and the Fund further agrees from and after the date of this Agreement,
that it will not, without your consent, sell or agree to sell any Shares
otherwise than through you, except (a) the Fund may itself sell Shares without
sales charge as an investment to the officers, trustees or directors and bona
fide present and former full-time employees of the Fund, the Fund's Investment
Adviser and affiliates thereof, and to other investors who are identified in the
current Prospectus and/or SAI as having the privilege to buy Shares at net asset
value; (b) the Fund may issue Shares in connection with a merger, consolidation
or acquisition of assets on such basis as may be authorized or permitted under
the 1940 Act; (c) the Fund may issue Shares for the reinvestment of dividends
and other distributions
<PAGE>
of the Fund or of any other Fund if permitted by the current Prospectus and/or
SAI; and (d) the Fund may issue Shares as underlying securities of a unit
investment trust if such unit investment trust has elected to use Shares as an
underlying investment; provided that in no event as to any of the foregoing
exceptions shall Shares be issued and sold at less than the then-existing net
asset value.
2. SALE OF SHARES. You hereby accept such appointment and agree to use your
best efforts to sell Shares, provided, however, that when requested by the Fund
at any time because of market or other economic considerations or abnormal
circumstances of any kind, or when agreed to by mutual consent of the Fund and
the General Distributor, you will suspend such efforts. The Fund may also
withdraw the offering of Shares at any time when required by the provisions of
any statute, order, rule or regulation of any governmental body having
jurisdiction. It is understood that you do not undertake to sell all or any
specific number of Shares.
3. SALES CHARGE. Shares shall be sold by you at net asset value plus a
front-end sales charge not in excess of 8.5% of the offering price, but which
front-end sales charge shall be proportionately reduced or eliminated for larger
sales and under other circumstances, in each case on the basis set forth in the
Fund's current Prospectus and/or SAI. The redemption proceeds of shares offered
and sold at net asset value with or without a front-end sales charge may be
subject to a contingent deferred sales charge ("CDSC") under the circumstances
described in the current Prospectus and/or SAI. You may reallow such portion of
the front-end sales charge to dealers or cause payment (which may exceed the
front-end sales charge, if any) of commissions to brokers through which sales
are made, as you may determine, and you may pay such amounts to dealers and
brokers on sales of shares from your own resources (such dealers and brokers
shall collectively include all domestic or foreign institutions eligible to
offer and sell the Shares), and in the event the Fund has more than one class of
Shares outstanding, then you may impose a front-end sales charge and/or a CDSC
on Shares of one class that is different from the charges imposed on Shares of
the Fund's other class(es), in each case as set forth in the current Prospectus
and/or SAI, provided the front-end sales charge and CDSC to the ultimate
purchaser do not exceed the respective levels set forth for such category of
purchaser in the Fund's current Prospectus and/or SAI.
4. PURCHASE OF SHARES.
(a) As General Distributor, you shall have the right to accept or
reject orders for the purchase of Shares at your discretion. Any
consideration which you may receive in connection with a rejected
purchase order will be returned promptly.
(b) You agree promptly to issue or to cause the duly appointed
transfer or shareholder servicing agent of the Fund to issue as
your agent confirmations of all accepted purchase orders and to
transmit a copy of such confirmations to the Fund. The net asset
value of all Shares which are the subject of such confirmations,
computed in accordance with the applicable rules under the 1940
Act, shall be a liability of the General Distributor to the
2
<PAGE>
Fund to be paid promptly after receipt of payment from the
originating dealer or broker (or investor, in the case of direct
purchases) and not later than eleven business days after such
confirmation even if you have not actually received payment from
the originating dealer or broker or investor. In no event shall
the General Distributor make payment to the Fund later than
permitted by applicable rules of the National Association of
Securities Dealers, Inc.
(c) If the originating dealer or broker shall fail to make timely
settlement of its purchase order in accordance with applicable
rules of the National Association of Securities Dealers, Inc., or
if a direct purchaser shall fail to make good payment for shares
in a timely manner, you shall have the right to cancel such
purchase order and, at your account and risk, to hold responsible
the originating dealer or broker, or investor. You agree promptly
to reimburse the Fund for losses suffered by it that are
attributable to any such cancellation, or to errors on your part
in relation to the effective date of accepted purchase orders,
limited to the amount that such losses exceed contemporaneous
gains realized by the Fund for either of such reasons with
respect to other purchase orders.
(d) In the case of a canceled purchase for the account of a directly
purchasing shareholder, the Fund agrees that if such investor
fails to make you whole for any loss you pay to the Fund on such
canceled purchase order, the Fund will reimburse you for such
loss to the extent of the aggregate redemption proceeds of any
other shares of the Fund owned by such investor, on your demand
that the Fund exercise its right to claim such redemption
proceeds. The Fund shall register or cause to be registered all
Shares sold to you pursuant to the provisions hereof in such
names and amounts as you may request from time to time and the
Fund shall issue or cause to be issued certificates evidencing
such Shares for delivery to you or pursuant to your direction if
and to the extent that the shareholder account in question
contemplates the issuance of such certificates. All Shares when
so issued and paid for, shall be fully paid and non-assessable by
the Fund (which shall not prevent the imposition of any CDSC that
may apply) to the extent set forth in the current Prospectus
and/or SAI.
5. REPURCHASE OF SHARES.
(a) In connection with the repurchase of Shares, you are appointed
and shall act as Agent of the Fund. You are authorized, for so
long as you act as General Distributor of the Fund, to
repurchase, from authorized dealers, certificated or
uncertificated shares of the Fund ("Shares") on the basis of
orders received from each dealer ("authorized dealer") with which
you have a dealer agreement for the sale of Shares and permitting
resales of Shares to you, provided that such authorized dealer,
at the time of placing such
3
<PAGE>
resale order, shall represent (i) if such Shares are represented
by certificate(s), that certificate(s) for the Shares to be
repurchased have been delivered to it by the registered owner
with a request for the redemption of such Shares executed in the
manner and with the signature guarantee required by the
then-currently effective Prospectus of the Fund, or (ii) if such
Shares are uncertificated, that the registered owner(s) has
delivered to the dealer a request for the redemption of such
Shares executed in the manner and with the signature guarantee
required by the then-currently effective Prospectus of the Fund.
(b) You shall (a) have the right in your discretion to accept or
reject orders for the repurchase of Shares; (b) promptly transmit
confirmations of all accepted repurchase orders; and (c) transmit
a copy of such confirmation to the Fund, or, if so directed, to
any duly appointed transfer or shareholder servicing agent of the
Fund. In your discretion, you may accept repurchase requests made
by a financially responsible dealer which provides you with
indemnification in form satisfactory to you in consideration of
your acceptance of such dealer's request in lieu of the written
redemption request of the owner of the account; you agree that
the Fund shall be a third party beneficiary of such
indemnification.
(c) Upon receipt by the Fund or its duly appointed transfer or
shareholder servicing agent of any certificate(s) (if any has
been issued) for repurchased Shares and a written redemption
request of the registered owner(s) of such Shares executed in the
manner and bearing the signature guarantee required by the
then-currently effective Prospectus or SAI of the Fund, the Fund
will pay or cause its duly appointed transfer or shareholder
servicing agent promptly to pay to the originating authorized
dealer the redemption price of the repurchased Shares (other than
repurchased Shares subject to the provisions of part (d) of
Section 5 of this Agreement) next determined after your receipt
of the dealer's repurchase order.
(d) Notwithstanding the provisions of part (c) of Section 5 of this
Agreement, repurchase orders received from an authorized dealer
after the determination of the Fund's redemption price on a
regular business day will receive that day's redemption price if
the request to the dealer by its customer to arrange such
repurchase prior to the determination of the Fund's redemption
price that day complies with the requirements governing such
requests as stated in the current Prospectus and/or SAI of the
Fund.
(e) You will make every reasonable effort and take all reasonably
available measures to assure the accurate performance of all
services to be performed by you hereunder within the requirements
of any statute, rule or regulation pertaining to the redemption
of shares of a regulated investment company and any requirements
set forth in the then-current Prospectus
4
<PAGE>
and/or SAI of the Fund. You shall correct any error or omission
made by you in the performance of your duties hereunder of which
you shall have received notice in writing and any necessary
substantiating data; and you shall hold the Fund harmless from
the effect of any errors or omissions which might cause an over-
or under-redemption of the Fund's Shares and/or an excess or
non-payment of dividends, capital gains distributions, or other
distributions.
(f) In the event an authorized dealer initiating a repurchase order
shall fail to make delivery or otherwise settle such order in
accordance with the rules of the National Association of
Securities Dealers, Inc., you shall have the right to cancel such
repurchase order and, at your account and risk, to hold
responsible the originating dealer. In the event that any
cancellation of a Share repurchase order or any error in the
timing of the acceptance of a Share repurchase order shall result
in a gain or loss to the Fund, you agree promptly to reimburse
the Fund for any amount by which any loss shall exceed
then-existing gains so arising.
6. 1933 ACT REGISTRATION. The Fund has delivered to you a copy of its
current Prospectus and SAI. The Fund agrees that it will use its best efforts to
continue the effectiveness of the Registration Statement under the 1933 Act. The
Fund further agrees to prepare and file any amendments to its Registration
Statement as may be necessary and any supplemental data in order to comply with
the 1933 Act. The Fund will furnish you at your expense with a reasonable number
of copies of the Prospectus and SAI and any amendments thereto for use in
connection with the sale of Shares.
7. 1940 ACT REGISTRATION. The Fund has already registered under the 1940
Act as an investment company, and it will use its best efforts to maintain such
registration and to comply with the requirements of the 1940 Act.
8. STATE BLUE SKY QUALIFICATION. At your request, the Fund will take such
steps and pay such fees and expenses as may be necessary and feasible to qualify
Shares for sale in states, territories or dependencies of the United States, the
District of Columbia, the Commonwealth of Puerto Rico and in foreign countries,
in accordance with the laws thereof, and to renew or extend any such
qualification; provided, however, that the Fund shall not be required to qualify
shares or to maintain the qualification of shares in any jurisdiction where it
shall deem such qualification disadvantageous to the Fund.
9. DUTIES OF DISTRIBUTOR. YOU AGREE THAT:
(a) Neither you nor any of your officers will take any long or short
position in the Shares, but this provision shall not prevent you
or your officers from acquiring Shares for investment purposes
only; and
5
<PAGE>
(b) You shall furnish to the Fund any pertinent information required
to be inserted with respect to you as General Distributor within
the purview of the Securities Act of 1933 in any reports or
registrations required to be filed with any governmental
authority; and
(c) You will not make any representations inconsistent with the
information contained in the current Prospectus and/or SAI; and
(d) You shall maintain such records as may be reasonably required for
the Fund or its transfer or shareholder servicing agent to
respond to shareholder requests or complaints, and to permit the
Fund to maintain proper accounting records, and you shall make
such records available to the Fund and its transfer agent or
shareholder servicing agent upon request; and
(e) In performing under this Agreement, you shall comply with all
requirements of the Fund's current Prospectus and/or SAI and all
applicable laws, rules and regulations with respect to the
purchase, sale and distribution of Shares.
10. ALLOCATION OF COSTS. The Fund shall pay the cost of composition and
printing of sufficient copies of its Prospectus and SAI as shall be required for
periodic distribution to its shareholders and the expense of registering Shares
for sale under federal securities laws. You shall pay the expenses normally
attributable to the sale of Shares, other than as paid under the Fund's
distribution plans under Rule 12b-1 of the 1940 Act, including the cost of
printing and mailing of the Prospectus (other than those furnished to existing
shareholders) and any sales literature used by you in the public sale of the
Shares.
11. DURATION. This Agreement shall take effect on the date first written
above, and shall supersede any and all prior General Distributor's Agreements by
and among the Fund and you. Unless earlier terminated pursuant to paragraph 12
hereof, this Agreement shall remain in effect until September 30, 1997. This
Agreement shall continue in effect from year to year thereafter, provided that
such continuance shall be specifically approved at least annually: (a) by the
Fund's Board of Trustees or by vote of a majority of the voting securities of
the Fund; and (b) by the vote of a majority of the Trustees, who are not parties
to this Agreement or "interested persons" (as defined in the 1940 Act) of any
such person, cast in person at a meeting called for the purpose of voting on
such approval.
12. TERMINATION. This Agreement may be terminated (a) by the General
Distributor at any time without penalty by giving sixty days' written notice
(which notice may be waived by the Fund); (b) by the Fund at any time without
penalty upon sixty days' written notice to the General Distributor (which notice
may be waived by the General Distributor); or (c) by mutual consent of the Fund
and the General Distributor, provided that such termination by the Fund pursuant
to part (b) of this Section 12 shall be directed or approved by the Board of
Trustees of the Fund or by the vote of the holders of a "majority" of the
outstanding voting securities of the Fund. In the event this Agreement is
terminated, the General Distributor shall be entitled to be paid the CDSC under
6
<PAGE>
paragraph 3 hereof on the redemption proceeds of Shares sold prior to the
effective date of such termination.
13. ASSIGNMENT. This Agreement may not be amended or changed except in
writing and shall be binding upon and shall enure to the benefit of the parties
hereto and their respective successors; however, this Agreement shall not be
assigned by either party and shall automatically terminate upon assignment.
14. DISCLAIMER OF SHAREHOLDER LIABILITY. The General Distributor
understands and agrees that the obligations of the Fund under this Agreement are
not binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property; the General Distributor represents that
it has notice of the provisions of the Declaration of Trust of the Fund
disclaiming Trustee and shareholder liability for acts or obligations of the
Fund.
15. SECTION HEADINGS. The heading of each section is for descriptive
purposes only, and such headings are not to be construed or interpreted as part
of this Agreement.
If the foregoing is in accordance with your understanding, so indicate by
signing in the space provided below.
ROCHESTER FUND MUNICIPALS
By: /s/ RONALD H. FIELDING
-------------------------------------
Ronald H. Fielding, Vice President
Accepted:
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By /s/ ANDREW J. DONOHUE
- -------------------------------
Andrew J. Donohue
Executive Vice President
rochester\mgendis
7
EXHIBIT 7
AMENDED AND RESTATED
RETIREMENT PLAN
FOR
INDEPENDENT TRUSTEES
OF
ROCHESTER FUND MUNICIPALS
In recognition of the benefits derived by Rochester Fund Municipals (the
"Fund") from having experienced persons serve as trustees, the Fund has adopted
this Retirement Plan as of January 26, 1995, for the benefit of members of the
Board of Trustees of the Fund who, as of such date, are not "interested persons"
(as that term is defined in the Investment Company Act of 1940, as amended) of
either the Fund's investment adviser or the Fund's principal underwriter
("Independent Trustees"). In anticipation of a possible transaction affecting
the Fund and to assure that no "unfair burden" (within the meaning of Section
15(f) of the Investment Company Act of 1940, as amended) is imposed on the Fund
as a result of such transaction, the Retirement Plan for the Independent
Trustees of the Fund as adopted on January 26, 1995 has been amended and
restated as of October 16, 1995 (the "Amended and Restated Plan").
SECTION 1. ELIGIBILITY
1.1 Eligible Trustees; Eligible Service. Each Independent Trustee who at
the time of Retirement (as defined in Section 4.4 herein) has served as an
Independent Trustee for at least three years ("Eligible Service") will be an
"Eligible Trustee" and, as such, will be eligible to receive retirement benefits
under the Amended and Restated Plan. An Eligible Trustee's period of Eligible
Service begins on the date of election to the Board of Trustees of the Fund (or
its predecessor). Notwithstanding the foregoing, no members of the Board who
first became Trustees on or after September 30, 1995 shall be subject to or
eligible to receive benefits under the provisions of the Amended and Restated
Plan.
SECTION 2. RETIREMENT DATE; AMOUNT OF BENEFIT
2.1 MANDATORY RETIREMENT. Each Independent Trustee will retire not later
than the last day of the calendar month in which such Independent Trustee's
seventy-second birthday occurs,
<PAGE>
which day is referred to hereinafter as such Independent Trustee's "Base
Retirement Date". The Base Retirement Date of an Eligible Trustee may be
extended for a period which shall not exceed the last day of the calendar month
in which such Independent Trustee's seventy-sixth birthday occurs, provided that
such extension of the Base Retirement Date (referred to herein as the "Alternate
Retirement Date") is approved by the unanimous vote by secret ballot of all
Independent Trustees then serving on the Board of Trustees of the Fund.
Notwithstanding the foregoing, any Eligible Trustee who is 70 years of age or
older on the date of the adoption of this Amended and Restated Plan may elect a
date of retirement which date shall be a date no later than the third
anniversary of the adoption of this Amended and Restated Plan, which date is
also referred to hereinafter as such Independent Trustee's Elective Retirement
Date.
2.2 EARLY RETIREMENT. An Eligible Trustee may elect to retire from service
on the Board of Trustees on the last day of the calendar month in which such
Eligible Trustee's sixtythird birthday occurs or at any time thereafter, which
day is referred to hereinafter as the "Early Retirement Date", by providing
written notice of his or her intention to do so no less than two months in
advance of the Early Retirement Date. Notwithstanding the foregoing, an Eligible
Trustee who elects Early Retirement prior to his or her sixty-fifth birthday
shall not be eligible to receive benefits under the Amended and Restated Plan
prior to his or her sixty-fifth birthday.
2.3 RETIREMENT BENEFIT. Upon retirement, whether such retirement commences
upon the Base Retirement Date, the Alternative Retirement Date or the Elected
Retirement Date as provided in Section 2.1, or the Early Retirement Date as
provided in Section 2.2, each Eligible Trustee will receive an Annual Retirement
Benefit as defined herein for a period of 10 years or the remainder of the
Trustee's life, whichever is less. The amount of the Annual Retirement Benefit
shall be equal to the product of $1500 multiplied by the number of years which
such Eligible Trustee served as such on the Board of Trustees of the Fund (not
to exceed nine years). The maximum Annual Retirement Benefit which may be paid
to a retired Eligible Trustee under the Amended and Restated Plan is $13,500.
2.4 PAYMENT OF BENEFIT; ALLOCATION OF COSTS. The Fund shall be responsible
for the payment of the Annual Retirement Benefit to each Eligible Trustee
hereunder, as well as for all expenses of administration of the Amended and
Restated Plan, including, without limitation, all accounting and legal fees and
expenses. The obligation of the Fund to pay such benefits and such expenses will
not be secured or funded in any matter, and such obligations will not have any
preferences over the lawful claims of the Fund's creditors and shareholders. To
the extent that the Fund consists of one or more portfolios, such costs and
expenses will be allocated among such portfolios by the Board of Trustees in a
manner that is determined by such Board to be fair and equitable under the
circumstances.
SECTION 3. ADMINISTRATION
3.1 THE COMMITTEE. Any questions involving entitlement to payments under
the
<PAGE>
Amended and Restated Plan or the administration of the Amended and Restated Plan
will be referred to a committee consisting of Independent Trustees designated by
the Board of Trustees of the Fund. Except as otherwise provided herein, the
Committee will make all interpretations and determinations necessary or
desirable for the administration of the Amended and Restated Plan, and such
interpretations and determinations will be final and conclusive.
3.2 POWERS OF THE COMMITTEE. The Committee will represent and act on behalf
of the Fund in respect of the Amended and Restated Plan and, subject to the
other provisions of the Amended and Restated Plan, the Committee may adopt,
amend or repeal procedures relating to the administration of the Amended and
Restated Plan, the conduct of the Committee's affairs, its rights or powers or
the rights or powers of its members. The Committee will report to the Board of
Trustees from time to time on its activities in respect of the Amended and
Restated Plan. The Committee or persons designated by it will cause such records
to be kept as may be necessary for the administration of the Amended and
Restated Plan.
SECTION 4. MISCELLANEOUS AND TRANSITION PROVISIONS
4.1 RIGHTS NOT ASSIGNABLE. The right of an Eligible Trustee to receive any
payment under the Amended and Restated Plan is not assignable or transferable.
Nothing in the Amended and Restated Plan shall create any benefit, cause of
action, right of sale, transfer, assignment, pledge, encumbrance or other such
right in any spouse or heirs or the estate of any Eligible Trustee.
4.2 AMENDMENTS, ETC. The Committee, with the concurrence of the Board of
Trustees, may at any time amend or terminate the Amended and Restated Plan or
waive any provision of the Amended and Restated Plan, provided that no
amendment, termination or waiver will impair the rights of an Eligible Trustee
to receive upon retirement the payments which would have been made to such
Eligible Trustee had there been no such amendment, termination or waiver (based
upon such Eligible Trustee's Eligible Service to the date of such amendment,
termination or waiver) or the rights of a retired Eligible Trustee to receive
any benefit due under the Amended and Restated Plan, without the consent of such
Eligible Trustee or retired Eligible Trustee, as the case may be. An Eligible
Trustee or a retired Eligible Trustee may elect to waive receipt of his or her
Annual Retirement Benefit by so advising the Committee in writing of such
waiver.
4.3 NO RIGHT TO RE-ELECTION. Nothing contained herein shall be construed to
create any obligation on the part of the Board of Trustees of the Fund to
nominate any Independent Trustee for re-election to the Board.
4.4 RETIREMENT DEFINED. The term "retirement" for purposes of this Amended
and Restated Plan shall include any termination of service (other than by reason
of the death of the Eligible Trustee) of an Eligible Trustee except any
termination which the Committee determines
3
<PAGE>
to have resulted from the Eligible Trustee's willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
the office of Independent Trustee.
4.6 TRANSITION PROVISIONS. The Amended and Restated Plan will be effective
for all Eligible Trustees who have dates of retirement occurring on or after
December 31, 1995. Periods of Eligible Service shall include periods commencing
prior to such date. The Amended and Restated Plan will become effective on the
date (the "Effective Date") when the Committee determines that any regulatory
approvals or advice that may be necessary or appropriate in connection with the
Amended and Restated Plan have been obtained.
IN WITNESS WHEREOF, this Retirement Plan for Independent Trustees of
Rochester Fund Municipals adopted on January 26, 1995, has been amended and
restated as of 16th day of October, 1995.
/s/ RONALD H. FIELDING
-------------------------------
Ronald H. Fielding, President
Rochester Fund Municipals
4
EXHIBIT 9(a)
ROCHESTER FUND MUNICIPALS
350 Linden Oaks
Rochester, N.Y. 14625
Rochester Fund Services, Inc.
350 Linden Oaks
Rochester, NY 14625
Attn: Mr. Michael S. Rosen, Vice President
Oppenheimer Management Corporation
2 World Trade Center
New York, NY 10048-0203
Attn: Andrew Donohue
Re: ACCOUNTING, ADMINISTRATION & RECORDKEEPING AGREEMENT
Pursuant to Section 20 of the Accounting, Administration and Recordkeeping
Agreement between Rochester Fund Municipals and Rochester Fund Services, Inc.,
this will serve as the funds written consent to the assignment of that agreement
from Rochester Fund Services, Inc. to Oppenheimer Management Corporation.
ROCHESTER FUND MUNICIPALS
By: /s/ RONALD H. FIELDING
--------------------------------
Ronald H. Fielding, President
<PAGE>
EXHIBIT 9(a)
ACCOUNTING, ADMINISTRATION AND RECORDKEEPING AGREEMENT
BETWEEN
ROCHESTER FUND SERIES
AND
ROCHESTER FUND SERVICES, INC.
THIS AGREEMENT is made as of the 15th day of April, 1994, by and between
ROCHESTER FUND SERIES ("Fund"), a Massachusetts business trust, and ROCHESTER
FUND SERVICES, INC. ("Agent"), a New York corporation.
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"), and
as a transfer agent under the Securities Exchange Act of 1934, as amended ("1934
Act"); and
WHEREAS, the Fund wishes to retain the Agent to provide certain Fund
accounting, administration and shareholder recordkeeping services other than
those services specified in Section 3(a)(25) of the 1934 Act, and the Agent is
willing to furnish such services;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints the Agent to provide certain accounting
services for the Fund and to provide certain administration and recordkeeping
services for the holders of common stock ("Shares") of the Fund ("Shareholders")
for the period and on the terms set forth in this Agreement. The Agent accepts
such appointment and agrees to furnish the services herein set forth in return
for the compensation as provided in Paragraph 12 of this Agreement. The Fund and
the Agent agree that nothing contained in this Agreement is intended to require
the Agent to perform any activity specified in Section 3(a)(25) of the 1934 Act.
2. DELIVERY OF DOCUMENTS. The Fund has made available to the Agent (or has
furnished the Agent with) properly certified or authenticated copies, with all
amendments or supplements thereto, of the following documents:
(a) Agreement and Declaration of Trust of the Fund;
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(b) By-Laws of the Fund;
(c) Resolutions of the Fund's Board of Trustees appointing the Agent and
approving the form of this Agreement; and
(d) Resolutions of the Fund's Board of Trustees designating certain of its
officers to give instructions on behalf of the Fund to the Agent and authorizing
the Agent to rely upon Proper Instructions (as hereinafter defined).
3. AUTHORIZED PERSONS. Concurrently with the execution of this Agreement, the
Fund shall deliver to the Agent a certificate, or such other certificate as
may be received by the Agent from time to time, setting forth the names, titles
and signatures of such persons authorized to give Proper Instructions or any
other notice, request, direction, instruction, certificate or instrument on
behalf of the Fund ("Authorized Persons"). Such certificate may be accepted and
reasonably relied upon by the Agent as conclusive evidence of the facts set
forth therein and shall be considered to be in full force and effect until
delivery to the Agent of a similar certificate to the contrary. Upon delivery of
a certificate that deletes the name of a person previously authorized to give
Proper Instructions, such person shall no longer be considered an Authorized
Person.
4. PROPER INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, the Agent shall act only
upon Proper Instructions. "Proper Instructions" shall mean: (i) a tested telex
from the Fund; (ii) other communications effected directly between
electro-mechanical or electronic devices or systems, provided that the Agent and
the Fund agree to the use of such device or system; (iii) a written request,
direction, instruction or certification signed or initialed on behalf of the
Fund by one or more Authorized Persons; or (iv) telephonic or other oral
instructions given by any Authorized Person that the Agent reasonably believes
to have been given by a person authorized to give such instructions. Proper
Instructions may be in the form of standing instructions.
(b) Oral instructions will be confirmed by tested telex or in writing in
the manner set forth above by the close of business on the same day that oral
instructions are given to the Agent, but the lack of such confirmation shall in
no way affect any action taken by the Agent in reasonable reliance upon such
oral instructions.
(c) The Agent may assume that any Proper Instructions received hereunder
are not in any way inconsistent with any provisions of the Agreement and
Declaration of Trust or By-Laws or any vote, resolution or proceeding of the
Fund's
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Shareholders, or of the Board of Trustees or of any committees thereof. The
Agent shall be entitled reasonably to rely upon any Proper Instructions
actually received by it pursuant to this Agreement. The sole obligation of
the Agent with respect to any follow-up or confirmatory instruction shall
be to make reasonable efforts to detect any discrepancy between said
instruction and the original Proper Instruction and to advise the Fund
accordingly.
5. FUND ACCOUNTING SERVICES.
(a) Daily Activities. The Agent will perform the following accounting
functions on a daily basis:
(1) Journalize the Fund's investment, capital share and income and
expense activities;
(2) Verify investment buy/sell trade tickets received from the Fund's
investment adviser and transmit trades to the Fund for transmittal
for proper settlement;
(3) Maintain individual ledgers for investment securities;
(4) Maintain historical tax lots for each security;
(5) Reconcile Share activity and outstanding Share balances with the
transfer agent;
(6) Update the cash availability throughout the day as required by the
Fund's investment adviser;
(7) Post to and prepare the Fund's Statement of Assets and Liabilities
and the Statement of Operations;
(8) Calculate various contractual expenses (e.g., advisory and custody
fees);
(9) Monitor the expense accruals and notify Fund management of any
proposed adjustments;
(10) Calculate capital gains and losses;
(11) Determine the Fund's net income;
(12) Obtain security market quotations from Quotron Financial
Information Services or such other services approved by the Fund's
investment adviser, or if such quotes are unavailable, then obtain
such prices from the Fund's investment adviser, and in either case
calculate the market value of the Fund's investments;
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(13) Value the assets of the Fund and compute the net asset value per
share of the Fund at such times and dates and in the manner specified
in the Fund's current prospectus;
(14) Provide a copy of the daily portfolio valuation to the Fund's
investment adviser; and
(15) Compute the Fund's yield, total return, expense ratio, portfolio
turnover rate and daily dividend factor and disseminate as agreed upon
by the parties hereto.
(b) Monthly Activities. On the first business day following the end of each
month, the Fund shall cause the Fund's custodian to prepare and forward to the
Agent, within three business days following the end of each such month, a
monthly statement of cash and portfolio transactions, which the Agent will
reconcile with the Agent's accounts and records maintained for the Fund. Within
three business days following the Agent's receipt of the monthly statement
provided by the Fund's custodian, the Agent will provide a written report of any
discrepancies to the Fund's custodian, and will provide a written report of any
unreconciled items to the Fund.
(c) Other Activities. In addition to the foregoing accounting services, the
Agent will:
(1) Prepare monthly financial statements, which will include a (i)
schedule of investments, (ii) statement of assets and liabilities,
(iii) statement of operations, (iv) statement of changes in net
assets, (v) cash statement, and (vi) schedule of capital gains and
losses;
(2) Prepare quarterly broker security transactions summaries;
(3) Supply various Fund statistical data as reasonably requested by
the Fund on an ongoing basis;
(4) Assist in the preparation of support schedules necessary for
completion of the Fund's federal, state and, if applicable, excise tax
returns;
(5) Assist in the preparation of the Fund's semi-annual reports with
the Securities and Exchange Commission ("SEC") on Form N-SAR;
(6) Assist in the preparation of the Fund's annual and semi-annual
Shareholder reports and any proxy statements;
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(7) Assist in the preparation of registration statements on Form N-1A
and other filings relating to the registration of the Fund's Shares;
(8) Act as liaison with the Fund's independent certified public
accountants and provide account analyses, fiscal year summaries, and
other audit related schedules, and take all reasonable action in the
performance of its obligations under this Agreement to assure that the
necessary information is made available to such accountants for the
expression of their opinion, as such may be required by the Fund from
time to time; and
(9) Render such other similar services as may be reasonably requested
by the Fund.
6. ADMINISTRATION AND SHAREHOLDER RECORDKEEPING SERVICES. The Agent shall
perform the following administration and recordkeeping services:
(a) General. The Agent will establish one or more accounts with the
Fund's custodian for the prompt deposit of funds received in
connection with the Agent's activities hereunder.
(b) Purchases. The Agent shall act as agent for the Fund and/or the
Fund's principal underwriter for the purpose of receiving and
accepting orders and payment for the purchase of Shares in accordance
with the Fund's prospectus as amended from time to time. If such
purchase orders comply with the procedures as may be described in the
Fund's current prospectus or as set forth in Proper Instructions, the
Agent shall promptly deliver payment and appropriate documentation
therefor to the Fund. If any check or other order for the purchase of
Shares is returned to the Agent unpaid for any reason, the Agent shall
promptly deliver such check or order to the Fund for further action.
(c) Redemptions. The Agent shall act as agent for the Fund and/or the
Fund's principal underwriter for purposes of receiving and accepting
redemption requests and redemption directions in accordance with the
Fund's prospectus as amended from time to time. If such redemption
requests and directions comply with the procedures as may be described
in the Fund's current prospectus or as set forth in Proper
Instructions, the Agent shall deliver the appropriate instructions
therefor to the Fund. If any such request for redemption does not
comply with the procedures for redemption approved by the Fund, the
Agent shall promptly notify the Shareholder and the Fund of such fact,
together with the reason therefor.
(d) Exchanges and Transfers. The Agent shall act as agent for the Fund
and/or the Fund's principal underwriter for
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purposes of receiving and accepting exchange and transfer requests and
exchange and transfer directions in accordance with the Fund's
prospectus, as amended from time to time. If such requests and
directions comply with the procedures as may be described in the
Fund's current prospectus or as set forth in Proper Instructions, the
Agent shall deliver the appropriate instructions therefor to the Fund.
If any such request for exchange or transfer does not comply with the
procedures for exchange or transfer as approved by the Fund, the Agent
shall promptly notify the Shareholder and the Fund of such fact,
together with the reason therefor.
(e) Recordkeeping.
(1) The Agent shall record the issuance, transfer, redemption and
exchange of Shares and the issuance and transfer of Share
certificates, and shall maintain pursuant to applicable rules and
regulations of the SEC a record of the total number of Shares of
the Fund that are authorized, based upon data provided to it
by the Fund as transfer agent, and issued and outstanding. The
Agent shall also maintain an account entitled "Unissued
Certificate Account" in which it will record the Shares issued
and outstanding from time to time for which the issuance of Share
certificates by the Fund is deferred. The Agent shall provide the
Fund on a regular basis or upon reasonable request the total
number of Shares that are authorized and issued and outstanding,
but shall have no obligation, when recording the issuance of
Shares, except as otherwise set forth herein, to monitor the
issuance of such Shares or to take cognizance of any laws
relating to the issue or sale of such Shares, which functions
shall be the sole responsibility of the Fund.
(2) The Agent shall establish and maintain records pursuant to
applicable rules and regulations of the SEC relating to the
services to be performed hereunder in the form and manner agreed
to by the Fund, including a record for each Shareholder's account
of the following:
(i) Name, address and tax identifying number;
(ii) Number of Shares and fractional Shares held;
(iii) Historical information as to the account, including
dividends paid and date and price for all transactions;
(iv) Any stop or restraining order placed against the
account;
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(v) Information with respect to withholdings in the case of
a foreign account or an account for which withholding is
required by the Internal Revenue Code;
(vi) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the current
maintenance of the account;
(vii) Certificate numbers and denominations for any
Shareholder holding certificates; and
(viii) Any information required in order for the Agent to
perform the calculations contemplated or required by this
Agreement.
(f) Reports.
(1) The Agent shall furnish periodically to the Fund, as well as
to the appropriate agent of the Fund designated by the Fund
for the receipt of such information, the following information:
(i) The total number of Shares issued and outstanding
(including a breakdown of the total number of Shares issued
and outstanding in each state for Blue Sky purposes) as
determined according to Proper Instructions delivered from
time to time by the Fund to the Agent;
(ii) Shareholder lists and statistical information; and
(iii) Such other information as may be agreed upon from time
to time.
(2) The Agent shall prepare and file with the Internal Revenue
Service and appropriate state agencies, and, if required, mail to
Shareholders, such forms or notices for reporting dividends and
distributions paid as are required to be so filed and mailed.
(g) Other Duties. In addition to and not in lieu of the services set
forth above, the Agent shall prepare Shareholder meeting lists, mail
proxies and other material supplied to it by the Fund in connection
with Shareholder meetings, receive and tabulate proxies, mail
Shareholder reports and prospectuses to current Shareholders, prepare
and mail confirmation forms and statements of account to Shareholders
for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, prepare and mail activity
statements for Shareholders, provide Shareholder
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account information, answer inquiries from Shareholders regarding
their Share accounts or the Fund (or, if more properly responded to by
the transfer agent or distributor, refer the inquiry to the
appropriate person), and supervise the activities of the Fund's
custodian and the Fund's activities as transfer agent.
7. RECORDS. The Agent shall create and maintain all necessary books and records
in accordance with all applicable laws, rules and regulations, including, but
not limited, to records required by Section 31(a) of the 1940 Act and the rules
thereunder, as the same may be amended from time to time, pertaining to the
services performed by it and not otherwise created and maintained by another
party pursuant to contract with the Fund. Such books and records which are in
the possession of the Agent shall be the property of the Fund. The Fund, or the
Fund's authorized representatives, shall have access to such books and records
at all times during the Agent's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records shall be provided by
the Agent to the Fund or the Fund's authorized representatives at the Fund's
expense.
8. INFORMATION TO BE PROVIDED TO AGENT. The Fund shall provide, and shall
require each of its agents (including, without limitation, its custodian and
distributor) to provide, to the Agent, in a timely fashion all data and
information necessary for the Agent to maintain the Fund's accounts, books and
records as required by this Agreement.
9. CONFIDENTIALITY. The Agent agrees on behalf of itself and its employees to
treat confidentially and as proprietary information of the Fund all books,
records and other information relative to the Fund and the Fund's prior, present
or potential Shareholders, and not to use such books, records and other
information for any purpose other than performance of the Agent's
responsibilities and duties hereunder, except, after prior notification to and
approval by the Fund, which approval shall not be unreasonably withheld and may
not be withheld where the Agent may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Fund.
10. RIGHT TO RECEIVE ADVICE.
(a) Advice of the Fund. If the Agent shall be in doubt as to any action to
be taken or omitted by it, it may request, and shall promptly receive, from
the Fund directions or advice, including Proper Instructions where
appropriate.
(b) Advice of Counsel. If the Agent shall be in doubt as to any question of
law involved in any action to be taken or omitted by the Agent, it may
request advice from qualified
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legal counsel of its own choosing, who is acceptable to the Fund.
(c) Protection of the Agent. The Agent shall be protected in any action
that it takes or determines not to take in reasonable reliance on any
directions, advice or Proper Instructions received pursuant to subsections
(a) or (b) of this paragraph. However, nothing in this paragraph shall be
construed as imposing upon the Agent any obligation to seek such
directions, advice or Proper Instructions, or to act in accordance with
such directions, advice or Proper Instructions when received, unless, under
the terms of another provision of this Agreement, the same is a condition
to the Agent's properly taking or omitting to take such action. Nothing in
this subsection shall excuse the Agent when an action or omission on the
part of the Agent constitutes willful misfeasance, willful misconduct,
negligence or reckless disregard by the Agent of its duties under this
Agreement.
11. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its obligations.
under this Agreement, the Agent shall at all times conform with all applicable
provisions of the Securities Act of 1933, as amended, the 1934 Act and the 1940
Act; any other applicable provisions of state and federal laws, rules and
regulations; and the provisions of the Fund's current prospectus, Agreement and
Declaration of Trust and By-Laws, all as amended from time to time.
12. FEES AND EXPENSES.
(a) As compensation for the accounting services rendered by the Agent
during the term of this Agreement, the Fund will pay to the Agent a minimum
annual fee of $16,500, an additional $12,000 for accounting services
performed with respect to the first $30,000,000 in net assets and an
additional $9,000 for accounting services performed with respect to each
$30,000,000 in net assets thereafter. As compensation for administration
and Shareholder recordkeeping services rendered by the Agent during the
term of this Agreement, the Fund will pay to the Agent monthly account
maintenance fees of $2.01 per account.
(b) In addition to the fees paid pursuant to Paragraph 12(a), the Fund
agrees to reimburse the Agent for its cash disbursements, expenses and
charges in connection with the Agreement (excluding salaries and usual
overhead expenses).
(c) The Agent will, on a timely basis, bill the Fund with respect to fees
and all amounts for which the Agent is to be reimbursed. The Fund will
promptly pay to the Agent the amount of such billing.
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(d) The Agent in its sole discretion may from time to time employ or
associate with itself such person or persons as the Agent may believe to be
particularly suited to assist it in performing services under this
Agreement. Such person or persons may be officers and employees who are
employed by both the Fund and the Agent. The compensation of such person or
persons shall be paid by the Agent and no obligation shall be incurred on
behalf of the Fund.
13. RESPONSIBILITY OF THE AGENT. The Agent shall be under no duty to take any
action on behalf of the Fund except as specifically set forth herein or as may
be specifically agreed to by the Agent in writing. The Agent shall not be liable
for any error in judgment or mistake at law for any loss suffered by the Fund in
connection with any matters to which this Agreement relates, but nothing herein
contained shall be construed to protect the Agent against any liability by
reason of willful misfeasance, willful misconduct, or negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement. Without limiting the generality of
the foregoing or of any other provision of this Agreement, the Agent in
connection with its duties under this Agreement shall not be under any duty or
obligation to inquire into and shall not be liable for or in respect of:
(a) the validity or invalidity or authority or lack thereof of any Proper
Instruction, notice or other instrument which conforms to the applicable
requirements of this Agreement, and which the Agent reasonably believes to
be genuine;
(b) delays or errors or loss of data occurring by reason of circumstances
beyond the Agent's control, including, without limitation, acts of civil or
military authority, national emergencies, labor difficulties, fire,
mechanical breakdowns, flood or catastrophe, acts of God, insurrection,
war, riots or failure of the mails, transportation, communication or power
supply; or
(c) the accuracy of security market quotations provided to Agent by Quotron
Financial Information Services or such other service or source designated
by the Fund's investment adviser, except when the Fund or investment
adviser has given or caused the Agent to be given instructions to utilize a
different market value.
In addition, nothing herein shall require the Agent to perform any duties under
this Agreement on any day on which the Agent or the New York Stock Exchange,
Inc. is closed for business.
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14. STANDARD OF CARE; INDEMNIFICATION.
(a) Standard of Care. The Agent shall be held to a standard of reasonable
care in carrying out the provisions of this Agreement; provided, however,
that the Agent shall be held to any higher standard of care that would be
imposed upon the Agent by any applicable law, rule or regulation even
though such standard of care was not part of the Agreement.
(b) Indemnification by the Fund. The Fund agrees to indemnify and hold
harmless the Agent and its nominees from all losses, damages, costs,
charges, payments, expenses (including reasonable counsel fees), and
liabilities arising directly or indirectly from any action or thing that
the Agent takes or does or omits to take to do (i) at the request or on the
direction of or in reasonable reliance on the written advice of the Fund or
(ii) upon Proper Instructions, provided, that neither the Agent nor any of
its nominees shall be indemnified against any liability to the Fund or to
its Shareholders (or any expenses incident to such liability) arising out
of the Agent's own willful misfeasance, willful misconduct, negligence or
reckless disregard of its duties and obligations specifically described in
this Agreement or its failure to meet the standard of care set forth in
Paragraph 14(a).
(c) Indemnification by the Agent. The Agent agrees to indemnify and hold
harmless the Fund and its nominees from all losses, damages, costs,
charges, payments, expenses (including reasonable counsel fees), and
liabilities arising out of or attributed to any action or failure or
omission to act by the Agent as a result of the Agent's own willful
misfeasance, willful misconduct, negligence or reckless disregard of its
duties and obligations specifically described in this Agreement.
15. INSURANCE. The Agent will at all times maintain in effect insurance
coverage, including, without limitation, Fidelity Bond and Electronic Data
coverage, at levels of coverage consistent with those customarily maintained by
other high quality investor servicing agents for registered investment companies
and with such policies as the Board of Trustees of the Fund may from time to
time adopt.
16. DURATION AND TERMINATION. This Agreement shall continue until termination by
either the Agent or the Fund on sixty days' written notice. In the event that in
connection with any such termination a successor to any of the Agent's duties or
responsibilities hereunder is designated by the Fund by written notice to the
Agent, the Agent will cooperate fully in the transfer of such duties and
obligations, including provision for assistance by the Agent's personnel in the
establishment of books, records and other data by
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such successor. The Fund will reimburse the Agent for all reasonable expenses
incurred by the Agent in connection with such transfer.
17. NOTICES. All notices and other communications, including Proper Instructions
(collectively referred to as "Notice" or "Notices" in this paragraph), hereunder
shall be in writing or by confirming telegram, cable, telex or facsimile sending
device. Notices to the Agent shall be addressed to the Agent at 70 Linden Oaks,
Rochester, New York 14625-2804. Notices to the Fund shall also be addressed to
the Fund at 70 Linden Oaks, Rochester, New York 14625-2804. All postage, cable,
telex, or facsimile sending device charges arising from the sending of a Notice
hereunder shall be paid by the sender.
18. FURTHER ACTIONS. Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
19. AMENDMENT; MODIFICATION;. WAIVER. This Agreement or any part hereof may be
amended, modified or waived only by an instrument in writing signed by both
parties hereto.
20. ASSIGNMENT. Neither this Agreement nor any rights or obligations hereunder
may be assigned by either party without the written consent of the other party.
21. COUNTERPARTS. This Agreement may be executed in two counterparts, each of
which shall be deemed an original. This Agreement shall become effective when
one or two counterparts have been signed and delivered by each of the parties.
22. LIMITATION ON LIABILITY. A copy of the Agreement and Declaration of Trust
(including any amendments thereto) of the Fund is on file with the Secretary of
the Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Fund as trustees and not
individually and that the parties agree that obligations of or arising out of
this instrument are not binding upon any of the Trustees or officers or
Shareholders individually, but binding only upon the assets and property of the
Fund.
23. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties thereto, and supersedes all prior agreements
and understandings, relating to the subject matter hereof, provided that the
parties hereto may embody in one or more separate documents their agreement, if
any, with respect to Proper Instructions. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. This
Agreement shall be deemed to be a contract made in New York and governed by New
York law. If any provision of this
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Agreement shall be held or made invalid by a court decision, statute, rule,
regulation or otherwise, the remainder of this Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the benefits of the
parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
ROCHESTER FUND SERIES
By: /s/ RONALD H. FIELDING
---------------------------
Ronald H. Fielding
President
ROCHESTER FUND SERVICES, INC.
By: /s/ MICHAEL S. ROSEN
-------------------------
Michael S. Rosen
Vice President
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1. Appointment .............................................. 1
2. Delivery of Documents .................................... 1
3. Authorized Persons ....................................... 2
4. Proper Instructions ...................................... 2
5. Fund Accounting Services ................................. 3
6. Administration and Shareholder Recordkeeping Services .... 5
7. Records .................................................. 8
8. Information to Be Provided to Agent ...................... 8
9. Confidentiality .......................................... 8
10. Right to Receive Advice .................................. 8
11. Compliance with Applicable Requirements .................. 9
12. Fees and Expenses ........................................ 9
13. Responsibility of the Agent .............................. 10
14. Standard of Care; Indemnification ........................ 11
15. Insurance ................................................ 11
16. Duration and Termination ................................. 11
17. Notices .................................................. 12
18. Further Actions .......................................... 12
19. Amendment; Modification; Waiver .......................... 12
20. Assignment ............................................... 12
21. Counterparts ............................................. 12
22. Limitation on Liability .................................. 12
23. Miscellaneous ............................................ 12
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EXHIBIT 9(b)
SERVICE CONTRACT
THIS AGREEMENT is signed this ___th day of January, 1996, between ROCHESTER
FUND MUNICIPALS (hereinafter referred to as the "Fund"), a Massachusetts
business trust, having its principal place of business at 350 Linden Oaks,
Rochester, New York 14625, and OPPENHEIMER SHAREHOLDER SERVICES, (hereinafter
referred to as "OSS"), a division of Oppenheimer Management Corporation -- a
Colorado corporation, having its principal place of business at 3410 South
Galena Street, Denver, Colorado 80231.
WITNESSETH:
WHEREAS, Oppenheimer Management Corporation ("OMC") doing business as OSS,
a division of OMC, is a registered transfer agent under Section 17A(c)(1) of the
Securities Exchange Act of 1934 and provides registrar and transfer agent,
dividend and distribution disbursing agent, redemption agent, clearing agent and
exchange agent and service agent services to mutual funds, and
WHEREAS, the Fund desires that OSS perform certain registrar and transfer
agency services for the Fund, as more specifically set forth in Schedule A to
this Agreement.
THEREFORE, the parties hereto agree as follows:
1. SERVICES TO BE PERFORMED BY OSS
The services to be performed for the Fund by OSS are set forth in Schedule
A to this Agreement, which Schedule is incorporated as part of this Agreement.
OSS shall perform such services as registrar, transfer agent, dividend and
distribution disbursing agent, redemption agent, clearing agent and exchange
agent or as service agent for the Fund.
2. FEES AND EXPENSES
A. For performance by OSS pursuant to this Agreement, the Fund agrees on
behalf of each of the Portfolios of the Fund to pay OSS the annual basic charge
for each shareholder account and the out-of-pocket expenses incurred by OSS as
set out in Schedule B attached hereto.
B. The Fund agrees on behalf of each of the Portfolios to pay all fees and
reimbursable expenses within five days following the mailing of the respective
billing notice.
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C. After the third year anniversary of this Agreement, OSS may increase the
fees and charges set forth on the attached fee schedule in the following
circumstances:
(i) At any time but no more than once a year, OSS may, upon at least
ninety (90) days prior written notice, increase its fees or charges to the
Fund or change the manner of payment;
(ii) Irrespective of (i) above, for new Fund features that are not
consistent with OSS's current processing requirements; and
(iii) Irrespective of (i) above, if changes in existing laws, rules or
regulations: (a) require substantial system modifications or (b) increase
cost of performance hereunder.
In the event of (i) above, if the Fund does not agree to the revised fees
and charges or manner of payment, the Fund shall notify OSS thereof in writing
(the "Refusal Notice") within thirty (30) days of receipt of OSS's notice. If
the parties are unable to agree to a rate or manner within the next thirty (30)
days after OSS's receipt of the Refusal Notice, this Agreement shall terminate
ninety (90) days from the date on which OSS received the Refusal Notice.
In the event of (ii) above, the parties shall confer, diligently and in
good faith, and agree upon a new fee to cover such new fund feature.
In the event of (iii) above, fees shall increase by the amount necessary,
but not more than such amount, to reimburse OSS for the cost of developing or
acquiring the new software to comply with regulatory changes and for the
increased cost of operating its shareholder system.
3. EFFECTIVE DATE AND TERM.
This Agreement shall become effective on the Conversion Date, shall
supersede any prior agreements among the parties hereto relating to the subject
matter hereof, and shall continue in full force and effect until terminated by
any party upon six months' prior written notice of termination addressed to all
other parties. The Conversion Date shall be March 8, 1996, or such other date as
the parties may agree to for OSS to assume the functions of transfer agent for
the Fund pursuant to the terms herein.
4. STANDARD OF CARE.
OSS will make every reasonable effort and take all reasonably available
measures to assure the adequacy of its personnel and facilities as well as the
accurate
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<PAGE>
performance of all services to be performed by it hereunder within, at a
minimum, the time requirements of any statute, rule or regulation pertaining to
investment companies and any time requirements set forth in the then-current
prospectus of the Fund. OSS shall promptly correct any error or omission made by
it in the performance of its duties hereunder provided that it shall have
received notice in writing of such error or omission and any necessary
substantiating data or has otherwise become aware of such error or omission. In
effecting any such corrections, OSS shall take all reasonable steps necessary to
trace and to correct any related errors or omissions, including, without
limitation, those which might cause an over-issue of the Fund's shares and/or
the excess payment of dividends or distributions. The allocable costs of
corrections shall be charged to the Fund and the liability of OSS under this
Section shall be subject to the limitations provided in Section 9 hereof.
5. RECORDS RETENTION AND CONFIDENTIALITY.
OSS shall keep and maintain on behalf of the Fund all records which the
Fund or its transfer agent is, or may be required, to keep and maintain pursuant
to any applicable statutes, rules and regulations relating to the maintenance of
records in connection with the services to be performed hereunder. OSS also
shall maintain, for a period of at least 6 years, all records and documents
which may be needed or required to support or document the actions taken by OSS
in its performance of services hereunder. OSS recognizes and agrees that all
such records and documents (but not the computer data processing programs and
any related documentation used or prepared by, or on behalf of, OSS for the
performance of its services hereunder) are the property of the Fund; shall be
open to audit or inspection by the Fund or its agents during OSS's normal
business hours; shall be maintained in such fashion as to preserve the
confidentiality thereof and to comply with applicable federal and/or state laws
and regulations; and shall, in whole or any specified part, be surrendered and
turned over to the Fund or its duly authorized agents at any time upon OSS's
receipt of an appropriate written request.
6. CLEARING ACCOUNTS.
The Fund shall open and/or maintain such bank account or accounts as shall
reasonably be required by OSS for controlling payments, the disbursement of
dividends, capital gains distributions and share redemption payments pursuant to
the provisions hereof, and any other accounts deemed necessary by OSS or the
Fund to carry out the provisions of this Agreement, with a bank or banks
selected by OSS with the prior approval of the Fund's Board. Such account may be
an omnibus account used for all Funds for which OSS or one of its subsidiaries
acts as transfer agent. The Fund shall authorize officers or employees of OSS to
act as authorized signatories to disburse funds held in such accounts. OSS shall
be accountable to the Fund for the management of such accounts by OSS (and the
funds at any time on deposit therein).
3
<PAGE>
7. REPORTS.
OSS will furnish to the Fund, at the Fund's cost, and to such other persons
or parties as are designated herein or shall be designated in writing by an
authorized officer of the Fund, such reports at such times as are required for
the performance of the services referred to in Schedule A.
8. INDEMNIFICATION OF OSS AND OMC.
The Fund shall indemnify OSS and OMC and hold OSS and OMC and each of their
officers, directors, employees and agents harmless from and against any and all
claims, demands, actions and suits, whether groundless or otherwise, and from
and against all judgments, liabilities, losses, damages, costs, charges, counsel
fees and other expenses arising from or relating to any action taken or omitted
to be taken by it in good faith or as a result of ordinary negligence in
reliance upon:
(a) The authenticity of any letter or any other instrument or
communication reasonably believed by it to be genuine and to have been
properly made or signed by an authorized officer or agent of the Fund
or by a shareholder or the authorized agent of a shareholder, as the
case may be and which complies with the terms of this Agreement which
pertain thereto;
(b) The accuracy of any records or information provided to it by the Fund
except to the extent the same may contain patently obvious errors or
omissions;
(c) Any certificate by an authorized officer of the Fund or any other
person authorized by the Fund's Board as conclusive proof of any fact
or matter required to be ascertained by OSS hereunder;
(d) Instructions at any time given by an authorized officer of the Fund
with respect to OSS's duties and responsibilities hereunder,
including, as to legal matters pertaining to the performance of its
duties hereunder, such advice or instructions as may be given to OSS
by the Fund's general counsel or any legal counsel appointed by such
counsel or by any authorized officer of the Fund;
(e) Instructions regarding redemptions, exchanges or other treatment of
the shares of the Fund, together with all dividends and capital gain
distributions thereon and any reinvestment thereof, held or shown to
the credit of any shareholder account, if such instructions satisfy
the requirements of the Fund as contained in its then current
prospectus, or the Fund's policies or as communicated in writing to
OSS, its subcontractors or agents by the Fund; or
4
<PAGE>
(f) The advice or opinion of legal counsel furnished to OSS pursuant to
Section 10 hereof.
9. LIMITATIONS OF OSS'S AND OMC'S LIABILITY.
In addition to the limitations on OSS's and OMC's liability stated in
Sections 8 and 10 hereof, neither OSS nor OMC assumes any liability hereunder
and shall not be liable hereunder for any damage, loss of data, delay or other
loss caused by circumstances or events beyond its control which it could not
reasonably have anticipated. OSS shall not have any liability beyond the
insurance coverage it has obtained for loss or damage arising from its own
errors or omissions, except to the extent such errors or omissions are
attributable to gross negligence or purposeful fault on the part of OSS, its
officers, agents and/or employees; and in no event will OSS be liable to the
Fund for punitive damages. The Fund shall indemnify and hold OSS and OMC
harmless from and against any liabilities and defense expenses arising by reason
of claims of third parties, based on errors or omissions of OSS, which are
greater in amount than the limitations of liability described above, except to
the extent such errors or omissions are attributable to gross negligence or
purposeful fault on the part of OSS, its officers, directors, agents and/or
employees.
10. LEGAL ADVICE AND INSTRUCTIONS.
OSS at any time may request instructions from any authorized officer of the
Fund with respect to the performance of its duties and responsibilities
hereunder and may consult with counsel for the Fund or counsel of its own
choosing, who is acceptable to the Fund, relative to any such matter and shall
not be liable hereunder for any action taken or omitted by it in good faith in
accordance with such instructions or with an opinion of such counsel or of
counsel appointed by an authorized officer of the Fund to deal with inquiries or
requests for instructions by OSS. Nothing in this section shall be construed as
imposing upon OSS any obligation to seek such instructions or counseling or to
act in accordance with such instructions or counsel.
11. DOCUMENTS AND INFORMATION.
As soon as feasible prior to the effective date of the Agreement, and if
not heretofore provided, the Fund will supply to OSS a statement, certified by
the treasurer of the Fund, stating the number of shares of the Fund authorized,
issued, held in treasury, outstanding and reserved as of such date, together
with copies of specimen signatures of the Fund's officers and such other
documents and information, including without limitation the then-current
prospectus of the Fund, which OSS may determine in its reasonable discretion to
be necessary or appropriate to enable it to perform the services to be performed
hereunder, and the Fund thereafter will supply all amendments or supplemental
documents with respect thereto as soon as the same shall be effective or
available for distribution. The Fund assumes full responsibility for
5
<PAGE>
the preparation, accuracy, content and clearance of its prospectus under federal
and/or state securities laws and any rules or regulations thereunder. If the
Fund shall make any change in its prospectus affecting the services and
functions to be performed by OSS hereunder, such additional services and
functions shall be deemed to be incorporated in Schedule A.
12. ADDITIONAL FUNDS.
In the event that the Fund established one or more series of shares in
addition to the Oppenheimer/Rochester Fund Municipals Portfolio with respect to
which it desires to have OSS render services as transfer agent under the terms
hereof, it shall so notify OSS in writing, and if OSS agrees in writing to
provide such services, such series of shares shall become a Portfolio hereunder.
13. TERMINATION.
This Agreement may be terminated by any party only upon written notice as
provided in Section 3 hereof, except that the Fund may terminate this Agreement
without prior notice to preserve the integrity of its shareholder records from
material and continuing errors and omissions on the part of OSS. In the event of
any termination, OSS will provide full cooperation, assistance and documentation
within its capabilities as shall be necessary or desirable, in the reasonable
judgment of the Fund, to ensure that any transfer of the duties and
responsibilities of OSS is accomplished with maximum efficiency and with minimum
cost and disruption to the Fund's activities. Such cooperation will include the
delivery of all files, documents and records used, kept or maintained by OSS in
the performance of its services hereunder (except records or documents destroyed
when consistent with the provisions hereof or with the approval of the Fund or
which relate solely to the documentation of the computer data processing
programs of OSS) together with, in machine-readable form, such of the Fund's
records as may be maintained by OSS in a form other than written form, as well
as such summary and/or control data relating thereto used by or available to OSS
as may be requested by the Fund. The cost of all such termination services on
the part of OSS shall be paid by the Fund without prejudice, however, to the
rights of the Fund to recover any amounts so paid in the event that OSS shall be
liable to the Fund under Section 9 hereof. In the course of its performance of
the services set forth in Schedule A hereto, as such services may from time to
time be modified or amended, OSS will enter into leases for equipment. If this
Agreement is terminated by the Fund, and if, as a result of such termination,
such equipment specifically leased by OSS to perform such services can no longer
be utilized economically by OSS in its performance of services for any other
entities with which OSS has continuing transfer agency or other service
contracts, OSS may in its discretion cancel such leases. However, the Fund shall
not have any responsibility for termination penalties, if any, which may be
payable under the terms of such equipment leases, unless otherwise agreed by the
Fund prior to the time such lease is entered into.
6
<PAGE>
14. NOTICES.
Any notice hereunder shall be sufficiently given when sent by registered or
certified mail, return receipt requested, to any party hereto at the address of
such party set forth above or at such other address as such party may from time
to time specify in writing to the other parties.
15. CONSTRUCTION; GOVERNING LAW.
The headings used in this Agreement are for convenience only and shall not
be deemed to constitute a part hereof. This Agreement, and the rights and
obligations of the parties hereunder, shall be governed by and construed and
interpreted under and in accordance with the laws of the State of New York
applicable to contracts made and to be performed in that state.
16. ASSIGNMENT; DELEGATION.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, their successors and assigns, including without limitation, any
successor to any party resulting by reason of corporate merger or consolidation;
provided, however, that this Agreement and the rights and duties hereunder shall
not be assigned by any of the parties hereto except upon the specific prior
written consent of all parties hereto.
OSS may, without further consent on the part of the Fund, subcontract for
the performance hereof with any entity which is duly registered as a transfer
agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of 1934,
provided, however, that OSS shall be as fully responsible to the Fund for the
acts and omissions of any subcontractors or agent as it is for its own acts and
omissions.
17. INTERPRETIVE PROVISIONS.
OSS and the Fund may agree from time to time in writing on provisions
interpretative of, or supplemental to, the provisions of this Agreement.
18. OTHER AGREEMENTS.
This Agreement shall not preclude the Fund from entering into transfer
agency agreements or sub-transfer agency agreements with others.
19. DISCLAIMER OF LIABILITY.
OSS understands and agrees that the obligations of the Fund under this
Agreement are not binding upon any shareholder of the Fund or member of its
Board of Trustees personally, but only the Fund and the Fund's property; OSS
represents that it has notice of the provisions of the Declaration of Trust of
the Fund disclaiming liability for acts or obligations of the Fund.
7
<PAGE>
20. SEVERABILITY.
If any clause or provision of this Agreement is determined to be illegal,
invalid or unenforceable under present or future laws effective during the term
of this Agreement, then such clause or provision shall be considered severed
herefrom, and the remainder of this Agreement shall continue in full force and
effect.
21. ENTIRE AGREEMENT.
Except as otherwise provided herein, this Agreement, including Schedule A
and Schedule B annexed hereto, constitutes the entire and complete Agreement
between the parties hereto relating to the subject matter hereof; supersedes and
merges all prior contracts and discussions between the parties hereto; and may
not be modified or amended except by written document signed by all parties
hereto against whom such modification or amendment is to be enforced.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
OPPENHEIMER SHAREHOLDER SERVICES
(a division of Oppenheimer Management
Corporation)
ATTEST:
______________________ By:__________________________________
Barbara Hennigar, President and Chief
Executive Officer
ROCHESTER FUNDS MUNICIPALS
ATTEST:
_______________________ By:__________________________________
Name: ____________________________
Title: ___________________________
8
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 16 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
January 20, 1995, relating to the financial statements and schedule of financial
highlights of Rochester Fund Municipals which appears in such Statement of
Additional Information, and to the incorporation by reference of our report into
the Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Financial Highlights" in such
Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Rochester, New York
January 11, 1996
EXHIBIT 15
AMENDED AND RESTATED
SERVICE PLAN AND AGREEMENT
BETWEEN
ROCHESTER FUND MUNICIPALS AND
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS A SHARES
AMENDED AND RESTATED SERVICE PLAN AND AGREEMENT dated the 4th day of January,
1996, by and between ROCHESTER FUND MUNICIPALS (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. THE PLAN. This Plan is the Fund's written service plan for its Class A Shares
described in the Fund's registration statement as of the date this Plan takes
effect, contemplated by and to comply with Article III, Section 26 of the Rules
of Fair Practice of the National Association of Securities Dealers, Inc.,
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 person or
entity 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 person or
entity as a Recipient, whereupon such person or entity's rights as a
third party beneficiary hereof shall terminate.
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<PAGE>
(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 more than one person or entity would otherwise qualify as
Recipients as to the same Shares, the Recipient which is the dealer of
record on the Fund's books shall be deemed the Recipient as to such
Shares for purposes of this Plan.
3. PAYMENTS FOR DISTRIBUTION ASSISTANCE.
(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 Recipient'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 charge or other
financial costs, or allocation of overhead of 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
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<PAGE>
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
(excluding Shares acquired in reorganizations with investment
companies for which Oppenheimer Management Corporation or an affiliate
acts as investment adviser and which have not adopted a distribution
plan at the time of reorganization with the Fund). 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
such 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 be sufficient
notice.
(c) Under the Plan, payments may be made to Recipients: (i) by Oppenheimer
Management Corporation ("OMC") from its own resources (which may
include profits derived from the advisory fee it receives from the
Fund), or (ii) by the Distributor (a subsidiary of OMC), from its own
resources.
4. SELECTION AND NOMINATION OF TRUSTEES. While this Plan is in effect, the
selection or replacement of Independent Trustees and the nomination of those
persons to be Trustees of the Fund who are not "interested persons" of the Fund
shall be committed to the discretion of the Independent Trustees. Nothing herein
shall prevent the Independent Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Independent Trustees.
5. REPORTS. While this Plan is in effect, the Treasurer of the Fund shall
provide at least quarterly a written report to the Fund's Board for its review,
detailing the amount of all payments made pursuant to this Plan, the identity of
the Recipient of each such payment, and the purposes for which the payments were
made. The report shall state whether all provisions of Section 3 of this Plan
have been complied with. The Distributor shall annually certify to the Board the
amount of its total expenses incurred that year with respect to the personal
service and maintenance of Accounts in conjunction with the Board's annual
review of the continuation of the Plan.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by vote of
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<PAGE>
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 Shares 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 16, 1995 for the purpose of voting on this Plan, and shall
take effect after approved by Class A shareholders of the Fund, at which time it
shall replace the Fund's Distribution Plan adopted May 1, 1992 and amended on
May 1, 1993, July 22, 1993, May 1, 1994 and May 1, 1995. Unless terminated as
hereinafter provided, it shall continue in effect from year to year from the
date first set forth above 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. SHAREHOLDER AND TRUSTEE LIABILITY DISCLAIMER. The Distributor understands and
agrees that the obligations of the Fund under this Plan are not binding upon any
shareholder or Trustee of the Fund personally, but 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.
ROCHESTER FUND MUNICIPALS
By: /s/ RONALD H. FIELDING
------------------------------------------
Ronald H. Fielding, Vice President
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By /s/ ANDREW J. DONOHUE
-------------------------------------------
Andrew J. Donohue, Executive Vice President
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EXHIBIT 18
OPPENHEIMER FUNDS MULTIPLE CLASS PLAN
January 5, 1996
1. THE PLAN. This Plan is the written multiple class plan for each of the
open-end management investment companies (individually the "Fund" and
collectively the "Funds") named on Exhibit A hereto, which exhibit may be
revised from time to time, for OppenheimerFunds Distributor, Inc. (the
"Distributor"), the general distributor of shares of the Funds and for
OppenheimerFunds, Inc. (the "Advisor"), the investment advisor of the Funds. In
instances where such investment companies issue shares representing interests in
different portfolios ("Series"), the term "Fund" and "Funds" shall separately
refer to each Series. It is the written plan contemplated by Rule 18f-3 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"), pursuant to
which the Funds may issue multiple classes of shares. The terms and provisions
of this Plan shall be interpreted and defined in a manner consistent with the
provisions and definitions contained in the Rule.
2. SIMILARITIES AND DIFFERENCES AMONG CLASSES. Each Fund offering shares of more
than one class agrees that each class of that Fund:
(1)(i) shall have a separate service plan or distribution and service plan
("12b-1 Plan"), and shall pay all of the expenses incurred pursuant to that
arrangement; and (ii) may pay a different share of expenses ("Class Expenses")
if such expenses are actually incurred in a different amount by that class, or
if the class receives services of a different kind or to a different degree than
that of other classes. Class Expenses are those expenses specifically
attributable to the particular class of shares, namely (a) 12b-1 Plan fees, (b)
transfer and shareholder servicing agent fees and administrative service fees,
(c) shareholder meeting expenses, (d) blue sky and SEC registration fees and (e)
any other incremental
<PAGE>
expenses subsequently identified that should be allocated to one class which
shall be approved by a vote of that Fund's Board of Directors, Trustees or
Managing General Partners (the "Directors"). Expenses identified in Items (c)
through (e) may involve issues relating either to a specific class or to the
entire Fund; such expenses constitute Class Expenses only when they are
attributable to a specific class. Because Class Expenses may be accrued at
different rates for each class of a single Fund, dividends distributable to
shareholders and net asset values per share may differ for shares of different
classes of the same Fund.
(2) shall have exclusive voting rights on any matters that relate solely to that
class's arrangements, including without limitation voting with respect to a
12b-1 Plan for that class;
(3) shall have separate voting rights on any matter submitted to shareholders in
which the interests of one class differ from the interests of any other class;
(4) may have a different arrangement for shareholder services, including
different sales charges, sales charge waivers, purchase and redemption features,
exchange privileges, loan privileges, the availability of certificated shares
and/or conversion features; and
(5) shall have in all other respects the same rights and obligations as each
other class.
3. ALLOCATIONS OF INCOME, CAPITAL GAINS AND LOSSES AND EXPENSES. The
methodologies and procedures for allocating expenses, as set forth in
"Methodology for Net Asset Value (NAV) and Dividend and Distribution
Determinations for Oppenheimer Funds with Multiple Classes of Shares" are
re-approved. Income, realized and unrealized capital gains and losses, and
expenses of each Fund other than Class Expenses allocated to a particular class
shall be allocated to each class on the basis of the net asset value of that
class in relation to the net asset value of that Fund, except as follows: For
Funds operating under 1940 Act Rule 2a-7, such allocations shall be made on the
basis of relative net
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<PAGE>
assets (settled shares) [net assets valued in accordance with generally accepted
accounting principles but excluding the value of subscriptions receivable] in
relation to the net assets of that Fund.
4. EXPENSE WAIVERS AND REIMBURSEMENTS. From time to time the Advisor may
voluntarily undertake to (i) waive any portion of the management fee charged to
a Fund, and/or (ii) reimburse any portion of the expenses of a Fund or of one or
more of its classes, but is not required to do so or to continue to do so for
any period of time. The quarterly report by the Advisor to the Directors of Fund
expense reimbursements shall disclose any reimbursements that are not equal for
all classes of the same Fund.
5. CONVERSIONS OF SHARES. Any Fund may offer a conversion feature whereby shares
of one class ("Purchase Class Shares") will convert automatically to shares of
another class ("Target Class Shares") of that Fund, after being held for a
requisite period ("Matured Purchase Class Shares"), pursuant to the terms and
conditions of that Fund's Prospectus and/or Statement of Additional Information.
Upon conversion of Matured Purchase Class Shares, all Purchase Class Shares of
that Fund acquired by reinvestment of dividends or distributions of such Matured
Purchase Class Shares shall also be converted at that time. Purchase Class
Shares will convert into Target Class Shares of that Fund on the basis of the
relative net asset values of the two classes, without the imposition of any
sales load, fee or other charge. The conversion feature shall be offered for so
long as (i) the expenses to which Target Class Shares of a Fund are subject,
including payments authorized under that Fund's Target Class 12b-1 plan, are not
higher than the expenses of Purchase Class Shares of that Fund, including
payments authorized under that Fund's Purchase Class 12b-1 plan; (ii) there
continues to be available a ruling from the Internal Revenue Service, or of an
opinion of counsel or of an opinion of an auditing firm serving as tax adviser,
to the effect that the conversion of Purchase Class Shares to Target Class
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<PAGE>
Shares does not constitute a taxable event for the holder; and (iii) if the
amount of expenses to which Target Class Shares of a Fund are subject, including
payments authorized under that Fund's Target Class 12b-1 plan, is increased
materially without approval of the shareholders of Purchase Class Shares of that
Fund, that Fund will establish a new class of shares ("New Target Class Shares")
and shall take such other action as is necessary to provide that existing
Purchase Class Shares are exchanged or converted into New Target Class Shares,
identical in all material respects to Target Class Shares as they existed prior
to implementation of the proposal to increase expenses, no later than the date
such shares previously were scheduled to convert into Target Class Shares.
6. DISCLOSURE. The classes of shares to be offered by each Fund, and the
initial, asset-based or contingent deferred sales charges and other material
distribution arrangements with respect to such classes, shall be disclosed in
the prospectus and/or statement of additional information used to offer that
class of shares. Such prospectus or statement of additional information shall be
supplemented or amended to reflect any change(s) in classes of shares to be
offered or in the material distribution arrangements with respect to such
classes.
7. INDEPENDENT AUDIT. The methodology and procedures for calculating the net
asset value, dividends and distributions of each class shall be reviewed by an
independent auditing firm (the "Expert"). At least annually, the Expert, or an
appropriate substitute expert, will render a report to the Funds on policies and
procedures placed in operation and tests of operating effectiveness as defined
and described in SAS 70 of the AICPA.
8. OFFERS AND SALES OF SHARES. The Distributor will maintain compliance
standards as to when each class of shares may appropriately be sold to
particular investors, and will require all persons selling shares of the Funds
to agree to conform to such standards.
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<PAGE>
9. RULE 12B-1 PAYMENTS. The Treasurer of each Fund shall provide to the
Directors of that Fund, and the Directors shall review, at least quarterly, the
written report required by that Fund's 12b-1 Plan, if any. The report shall
include information on (i) the amounts expended pursuant to the 12b-1 Plan, (ii)
the purposes for which such expenditures were made and (iii) the amount of the
Distributor's unreimbursed distribution costs (if recovery of such costs in
future periods is permitted by that 12b-1 Plan), taking into account 12b-1 Plan
payments and contingent deferred sales charges paid to the Distributor.
10. CONFLICTS. On an ongoing basis, the Directors of the Funds, pursuant to
their fiduciary responsibilities under the 1940 Act and otherwise, will monitor
the Funds for the existence of any material conflicts among the interests of the
classes. The Advisor and the Distributor will be responsible for reporting any
potential or existing conflicts to the Directors. In the event a conflict
arises, the Directors shall take such action as they deem appropriate.
11. EFFECTIVENESS AND AMENDMENT. This Plan takes effect for each Fund as of the
date of adoption shown below for that Fund, whereupon the Funds are released
from the terms and conditions contained in their respective exemptive
applications pursuant to which orders were issued exempting the respective Funds
from the provisions of Sections 2(a)(32), 2(a)(35), 18(f), 18(g), 18(i), 22(c)
and 22(d) of the 1940 Act and Rule 22c-1 thereunder, or from their respective
previous multiple class plan.(1) This Plan has been approved by a majority vote
of the Board of each Fund and of each Fund's Board members who are not
"interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plan or any agreements
- -----------------
(1) Oppenheimer Management Corp. et al., Release IC-19821, 10/28/93 (notice) and
Release IC-19894, 11/23/93 (order), and Quest for Value Fund, Inc. et al.,
Release IC-19605, 7/30/93 (notice) and Release IC-19656, 8/25/93 (order);
Rochester Funds Multiple Class Plan.
-5-
<PAGE>
relating to the Plan (the "Independent Trustees") of each Fund at meetings
called for (i) the Denver Oppenheimer Funds listed on Exhibit A on October 24,
1995, (ii) the New York Oppenheimer Funds listed on Exhibit A on October 5,
1995, (iii) the Quest Oppenheimer Funds listed on Exhibit A on November 28,
1995, and (iv) the Rochester Oppenheimer Funds listed on Exhibit A on January
10, 1996, in each case for the purpose of voting on this Plan. Prior to that
vote, (i) each Board was furnished by the methodology used for net asset value
and dividend and distribution determinations for the Funds, and (ii) a majority
of each Board and its Independent Trustees determined that the Plan as proposed
to be adopted, including the expense allocation, is in the best interests of
each Fund as a whole and to each class of each Fund individually. Prior to any
material amendment to the Plan, each Board shall request and evaluate, and OFDI
shall furnish, such information as may be reasonably necessary to evaluate such
amendment, and a majority of each Board and its Independent Trustees shall find
that the Plan as proposed to be amended, including the expense allocation, is in
the best interest of each class, each Fund as a whole and each class of each
Fund individually.
12. Disclaimer of Shareholder and Trustee Liability. The Distributor understands
that the obligations under this Plan of each Fund that is organized as a
Massachusetts business trust are not binding upon any Trustee or shareholder of
such Fund personally, but bind only that Fund and the Fund's property. The
Distributor represents that it has notice of the provisions of the Declarations
of
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<PAGE>
Trust of such Funds disclaiming shareholder and Trustee liability for acts or
obligations of the Funds.
Adopted by the Boards of the Denver Oppenheimer Funds on October 24, 1995.
/s/ Andrew J. Donohue
---------------------------------
Andrew J. Donohue, Vice President
Denver Oppenheimer Funds
Adopted by the Boards of the New York Oppenheimer Funds on October 5, 1995.
/s/ Andrew J. Donohue
---------------------------------
Andrew J. Donohue, Secretary
New York Oppenheimer Funds
Adopted by the Boards of the Quest Oppenheimer Funds on November 28, 1995.
/s/ Andrew J. Donohue
---------------------------------
Andrew J. Donohue, Secretary
Quest Oppenheimer Funds
Adopted by the Boards of the Rochester Oppenheimer Funds on January 10, 1996.
/s/ Andrew J. Donohue
---------------------------------
Andrew J. Donohue, Secretary
Rochester Oppenheimer Funds
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<PAGE>
EXHIBIT A
1. DENVER OPPENHEIMER FUNDS
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Integrity Funds (consisting of the following 2 series):
Oppenheimer Bond Fund
Oppenheimer Value Stock Fund
Oppenheimer High Yield Fund
Oppenheimer Main Street Funds, Inc.
(consisting of the following 2 series):
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Strategic Funds Trust
(consisting of the following series):
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
(consisting of the following 2 series):
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
2. NEW YORK OPPENHEIMER FUNDS
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Fund
Oppenheimer International Equity Fund
Oppenheimer Multi-State Tax-Exempt Trust
(consisting of the following 3 series):
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
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<PAGE>
Oppenheimer U.S. Government Trust
3. QUEST OPPENHEIMER FUNDS
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
(consisting of the following 4 series:)
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Value Growth & Income Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Global Value Fund, Inc.
4. ROCHESTER OPPENHEIMER FUNDS
Rochester Fund Series - The Bond Fund for Growth
Rochester Fund Municipals
Rochester Portfolio Series - Limited Term New York Municipal Fund
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EXHIBIT 19
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue, Robert G. Zack or Merryl Hoffman, and each of them,
her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for her and in her capacity as Chairman of the
Board of Trustees, President (Principal Executive Officer) and Trustee of
ROCHESTER FUND MUNICIPALS, a Massachusetts business trust (the "Fund"), to sign
on her behalf any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 10th day of January, 1996.
/s/ BRIDGET A. MACASKILL
- --------------------------------
Bridget A. Macaskill
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue, Robert G. Zack or Merryl Hoffman, and each of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his capacity as Trustee of
ROCHESTER FUND MUNICIPALS, a Massachusetts business trust (the "Fund"), to sign
on his behalf any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 10th day of January, 1996.
/s/ PAUL Y. CLINTON
- --------------------------------
Paul Y. Clinton
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue, Robert G. Zack or Merryl Hoffman, and each of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his capacity as Treasurer
(Principal Financial and Accounting Officer) of ROCHESTER FUND MUNICIPALS, a
Massachusetts business trust (the "Fund"), to sign on his behalf any and all
Registration Statements (including any post-effective amendments to Registration
Statements) under the Securities Act of 1933, the Investment Company Act of 1940
and any amendments and supplements thereto, and other documents in connection
thereunder, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully as to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, and each of them, may lawfully do or cause to be
done by virtue hereof.
Dated this 10th day of January, 1996.
/s/ GEORGE C. BOWEN
- --------------------------------
George C. Bowen
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue, Robert G. Zack or Merryl Hoffman, and each of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his capacity as Trustee of
ROCHESTER FUND MUNICIPALS, a Massachusetts business trust (the "Fund"), to sign
on his behalf any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 10th day of January, 1996.
/s/ THOMAS W. COURTNEY
- --------------------------------
Thomas W. Courtney
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue, Robert G. Zack or Merryl Hoffman, and each of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his capacity as Trustee of
ROCHESTER FUND MUNICIPALS, a Massachusetts business trust (the "Fund"), to sign
on his behalf any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 10th day of January, 1996.
/s/ GEORGE LOFT
- --------------------------------
George Loft
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue, Robert G. Zack or Merryl Hoffman, and each of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his capacity as Trustee of
ROCHESTER FUND MUNICIPALS, a Massachusetts business trust (the "Fund"), to sign
on his behalf any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 10th day of January, 1996.
/s/ LACY B. HERRMANN
- --------------------------------
Lacy B. Herrmann
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue, Robert G. Zack or Merryl Hoffman, and each of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his capacity as Trustee of
ROCHESTER FUND MUNICIPALS, a Massachusetts business trust (the "Fund"), to sign
on his behalf any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 10th day of January, 1996.
/s/ JOHN CANNON
- --------------------------------
John Cannon
