<PAGE>
Registration No. 33-58383
File No. 811-07255
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. 1 / X /
POST-EFFECTIVE AMENDMENT NO. __ / /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 1 / X /
OPPENHEIMER INTERNATIONAL BOND FUND
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(Exact Name of Registrant as Specified in Charter)
3410 South Galena Street, Denver, Colorado 80231
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(Address of Principal Executive Offices)
303-671-3200
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/ / On _________________, pursuant to paragraph (b)
/ / 60 days after filing, pursuant to paragraph (a)(1)
/ / On _______, pursuant to paragraph (a)(1)
/ / 75 days after filing, pursuant to paragraph (a)(2)
/ / On _______, pursuant to paragraph (a)(2)
of Rule 485.
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Approximate Date of Proposed Offering: As soon as practicable after the
effective date of this Registration Statement and thereafter from day to
day.
The Registrant hereby amends the Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to Section 8(a), shall determine.
<PAGE>
FORM N-1A
OPPENHEIMER INTERNATIONAL BOND FUND
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
1 Cover Page
2 Expenses; Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and Policies
5 Expenses; How the Fund is Managed; Back Cover
5A Performance of the Fund
6 Dividends, Capital Gains and Taxes; How the Fund is Managed -
- Organization and History; The Transfer Agent
7 How to Exchange Shares; Special Investor Services; Service
Plan for Class A shares; Distribution and Service Plan for
Class B Shares; How to Buy Shares; How to Sell Shares;
Shareholder Account Rules and Policies
8 How to Sell Shares; How to Exchange Shares; Special Investor
Services
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information or Prospectus
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Additional Investment Restrictions
14 How the Fund is Managed -- Trustees and Officers of the Fund
15 How the Fund is Managed -- Major Shareholders
16 How the Fund is Managed; Additional Information about the
Fund; Distribution and Service Plans; Back Cover
17 How the Fund is Managed
18 Additional Information about the Fund
19 About Your 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; Additional Information about the
Fund - The Distributor; Distribution and Service Plans
22 Performance of the Fund
23 Financial Statements
_____________
*Not applicable or negative answer.
<PAGE>
OPPENHEIMER INTERNATIONAL BOND FUND
Prospectus dated ______________, 1995
Oppenheimer International Bond Fund (the "Fund") is a mutual fund with
the primary investment objective of seeking total return. As a secondary
objective, the Fund seeks income when consistent with total return. The
Fund seeks to achieve its objectives by investing primarily in foreign
debt securities, with an emphasis on debt securities issued by governments
of developed countries and emerging market countries in Latin America,
Europe and the Pacific Rim, and by companies located in those countries.
The Fund's foreign investments are subject to certain
additional risks, including foreign currency fluctuations, that do not
affect investments in domestic issuers. Many of the Fund's investments
are lower-grade debt securities (often referred to as "junk bonds"), which
are subject to increased risk of default and market fluctuation than
higher rated securities. They may also be difficult to value or sell.
The Fund may also use certain hedging instruments in an effort to reduce
the risks of market fluctuations that affect the value of the securities
the Fund holds, or to enhance total return or income. The Fund may borrow
money from banks to buy securities, which is a speculative investment
method known as "leverage."
This Prospectus explains concisely what you should know before
investing in the Fund. Please read it carefully and keep it for future
reference. You can find more detailed information about the Fund in the
________________, 1995 Statement of Additional Information. For a free
copy, call Oppenheimer Shareholder Services, the Fund's Transfer Agent,
at 1-800-525-7048, or write to the Transfer Agent at the address on the
back cover. The Statement of Additional Information has been filed with
the Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, 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
Overview of the Fund
Investment Objectives and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix: Description of Securities Ratings
<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 values per share. All shareholders therefore pay those expenses
indirectly. Shareholders pay other expenses directly, such as sales
charges and account transaction fees. 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.
-- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to "About Your Account," from
pages __ through __, for an explanation of how and when these charges
apply.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
<S> <C> <C> <C>
Maximum Sales Charge
on Purchases (as a %
of offering price) 4.75% None None
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Sales Charge on
Reinvested Dividends None None None
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Deferred Sales Charge
(as a % of the lower of
the original purchase
price or redemption
proceeds) None(1) 5% in the first 1% if shares
year, declining are redeemed
to 1% in the within 12
sixth year and months of
eliminated purchase(2)
thereafter
- --------------------------------------------------------------------------
Exchange Fee None None None
- --------------------------------------------------------------------------
</TABLE>
(1) If you invest more than $1 million in Class A shares, you may have to
pay a sales charge of up to 1% if you sell your shares within 18 calendar
months from the end of the calendar month during which you purchased those
shares. See "How to Buy Shares - Class A Shares," below.
(2) See "How to Buy Shares", below, for more information on the
contingent deferred sales charges.
-- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (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 its
portfolio securities, audit fees and legal expenses.
The 12b-1 Plan Fees for Class A shares are Service Plan Fees (maximum
of 0.25% of average annual net assets of the class); for Class B and Class
C shares, the 12b-1 Fees are a service fee (0.25% of average annual net
assets of the class) and an annual asset-based sales charge of 0.75%.
These plans are described in greater detail in "How to Buy Shares."
"Other Expenses" in the table below are estimates based on amounts that
would have been payable if the Fund's shares had been outstanding for a
full fiscal year.
The actual expenses for each class of shares in future years may be
more or less than the numbers in the chart, depending on a number of
factors, including the actual value of the Fund's assets represented by
each class of shares.
Class A Shares Class B Shares Class C Shares
Management Fees 0.75% 0.75% 0.75%
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12b-1 Plan Fees 0.25% 1.00% 1.00%
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Other Expenses 0.36% 0.36% 0.35%
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Total Fund Operating
Expenses 1.36% 2.11% 2.10%
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-- 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 the Fund's annual return is 5%, and that its operating
expenses for each class are the ones shown in the Annual Fund Operating
Expenses table above. If you were to redeem your shares at the end of
each period shown below, your investment would incur the following
expenses by the end of 1 and 3 years:
1 year 3 years
- --------------------------------------------
Class A Shares $61 $89
- --------------------------------------------
Class B Shares $71 $96
- --------------------------------------------
Class C Shares $31 $66
- --------------------------------------------
If you did not redeem your investment, it would incur the following
expenses:
Class A Shares $61 $89
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Class B Shares $21 $66
- --------------------------------------------
Class C Shares $21 $66
- --------------------------------------------
Because of the asset-based sales charge and the contingent deferred
sales charge on Class B and Class C shares, long-term Class B and Class
C shareholders could pay the economic equivalent of an amount greater than
the maximum front-end sales charge permitted under applicable regulatory
requirements. The automatic conversion of Class B shares is designed to
minimize the likelihood that this will occur. Refer to "How to Buy
Shares" for more information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which will vary.
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. Keep the Prospectus for
reference after you invest, particularly for information about your
account, such as how to sell or exchange shares.
-- What Is The Fund's Investment Objective? The Fund's primary
investment objective is to seek total return. As a secondary objective,
the Fund seeks income when consistent with total return.
-- What Does the Fund Invest In? Under normal circumstances, the
Fund will invest at least 65% of its total assets in debt securities (also
known as "fixed income" securities). Debt securities, in general,
represent a loan of money to the issuer, who promises to pay back the
amount loaned (the "principal amount") plus interest, which may be at a
fixed rate or a variable rate. The Fund intends to invest primarily in
foreign debt securities, with an emphasis on debt securities issued by
governments of developed countries and emerging market countries located
in Latin America, Europe and the Pacific Rim, and by companies located in
those countries. Many of the Fund's investments are lower-grade debt
securities, which are subject to increased risk of default and market
fluctuations, and may at times be illiquid.
Under normal circumstances, the Fund may invest up to 35% of its
total assets in certain other securities, including common stocks and
other "equity securities" that represent an ownership interest in the
domestic or foreign company issuing the security. The Fund may also use
hedging instruments and some derivative investments in an effort to
protect against market risks. Derivative investments may also be used to
enhance total return or income. These investments are more fully
explained in "Investment Objectives and Policies," starting on page
___.
-- Who Manages the Fund? The Fund's investment advisor is
Oppenheimer Management Corporation, which (including a subsidiary) advises
investment company portfolios having over $29 billion in assets at
December 31, 1994. The Fund's portfolio manager, who is primarily
responsible for the selection of the Fund's securities, is Mr. Ashwin K.
Vasan. The Manager is paid an advisory fee by the Fund, based on its net
assets. The Fund's Board of Trustees, elected by shareholders, oversees
the investment advisor and the portfolio manager. Please refer to "How
the Fund is Managed," starting on page ___ for more information about the
Manager and its fees.
-- How Risky is the Fund? While different types of investments have
risks that differ in type and magnitude, all investments carry risk to
some degree. Changes in overall market movements or interest rates, or
factors affecting a particular industry or issuer, can affect the value
of the Funds' investments and the Fund's net asset values per share.
Equity investments are generally subject to a number of risks including
the risk that values will fluctuate as a result of changing expectations
for the economy and individual issuers. Fixed-income investments are
generally subject to the risk that values will fluctuate with inflation,
with lower-rated, fixed-income investments being subject to a greater risk
that the issuer will default in its interest or principal payment
obligations. For both equity and income investments, foreign investments
are subject to the risk of adverse currency fluctuation and additional
risks and expenses in comparison to domestic investments. Hedging
instruments and derivative investments involve certain risks, as discussed
under "Hedging" and "Derivative Investments," below. The Fund may borrow
money from banks to buy securities, a practice known as leverage that is
subject to certain risks discussed below under "Special Risks - Borrowing
for Leverage."
In the OppenheimerFunds spectrum, the Fund is generally considered
to be the most aggressive fixed-income fund. The Fund has a higher
risk/return profile than the other Oppenheimer fixed-income funds. This
is because the Fund invests primarily in foreign debt securities, which
are subject to special risks.
While the Manager tries to reduce risks by diversifying investments
(particularly geographic diversification among developed countries and
emerging markets countries), 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 success in achieving the
Fund's objectives and your shares may be worth more or less than their
original cost when you redeem them. Please refer to "Investment
Objectives and Policies" starting on page ___ for a more complete
discussion.
-- 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"
on page ___ for more details.
-- Will I Pay a Sales Charge to Buy Shares? The Fund has three
classes of shares. All classes have the same investment portfolio but
different expenses. Class A shares are offered with a front-end sales
charge, starting at 4.75%, and reduced for larger purchases. Class B and
Class C shares are offered without a front-end sales charge, but may be
subject to a contingent deferred sales charge if redeemed within 6 years
or 12 months of purchase, respectively. There is also an annual asset-
based sales charge on Class B shares. Please review "How To Buy Shares"
starting on page ___ for more details, including a discussion about which
class may be appropriate for you.
-- How Can I Sell My Shares? Shares can be redeemed by mail, by
checkwriting, or by telephone call to the Transfer Agent on any business
day, or through your dealer. Please refer to "How To Sell Shares" on page
___.
Investment Objectives and Policies
Objective. The Fund's primary investment objective is to seek total
return. As a secondary objective, the Fund seeks income when consistent
with total return. The Fund seeks to achieve its objectives by investing
primarily in foreign debt securities, with an emphasis on debt securities
issued by governments of developed countries and emerging market countries
located in Latin America, Europe and the Pacific Rim, and by companies
located in those countries. The Fund may also use certain hedging
instruments and some derivative investments (discussed below) in an effort
to protect against market risks. Since market risks are inherent in all
securities to varying degrees, assurance cannot be given that the Fund
will achieve its investment objectives.
Investment Policies and Strategies. Set forth below are the investment
policies and strategies the Fund may use in seeking its investment
objectives. The Manager might not use all of these instruments or all of
these investment strategies to the full extent permitted unless it
believes doing so will help the Fund achieve its investment objectives.
Under normal market conditions, the Fund will invest in at least
three countries other than the United States, and will invest at least 65%
of its total assets (the "65% Policy") in "bonds." The Fund considers the
types of securities identified under "Debt Securities," below to be
"bonds" for purposes of the 65% Policy. "Debt securities," in general,
represent a loan of money to the issuer, who promises to pay back the
amount loaned (the "principal amount") plus interest, which may be at a
fixed rate or a variable rate.
The Fund anticipates that for purposes of the 65% Policy, it will
emphasize foreign debt securities, particularly debt securities issued by
governments of developed countries and emerging market countries in Latin
America, Europe and the Pacific Rim, and by companies located in those
countries. Emerging market countries generally have the following
characteristics: (1) virtually no market for longer-term debt securities
denominated in its local currency, (2) borrowed monies are denominated in
currencies other than its local currency, (3) lack of a developed yield
curve for its local currency, and (4) with the exception of Mexico, is not
a member of the Organization for Cooperation & Development ("OCD").
The Fund may invest without limitation in high-yield, high risk,
"lower-grade" bonds (including both high-yield rated and unrated bonds),
because they generally offer higher income potential than investment grade
bonds. "Lower-grade" bonds are those rated below "investment grade" by
nationally-recognized rating organizations, and are subject to special
risks, discussed below.
Under normal market conditions, the Fund may invest up to 35% of its
total assets in certain securities other than debt securities, including
common stocks, convertible securities, warrants and other equity
securities that generally represent an ownership interest in the company
issuing the security.
-- Can the Fund's Investment Objectives and Policies Change? The
Fund has primary and secondary investment objectives, described above, as
well as investment policies it follows to try to achieve its objective.
Additionally, the Fund uses certain investment techniques and strategies
in carrying out those investment policies. The Fund's investment policies
and techniques are not "fundamental" unless this Prospectus or the
Statement of Additional Information says that a particular policy is
"fundamental." The Fund's primary and secondary investment objectives are
fundamental policies.
The Fund's Board of Trustees may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus. Fundamental policies are those
that cannot be changed without the approval of a "majority" of the Fund's
outstanding voting shares. The term "majority" is defined in the
Investment Company Act to be a particular percentage of outstanding voting
shares (and this term is explained in the Statement of Additional
Information).
-- Temporary Defensive Investment Strategy. Under normal market
conditions, the Fund will invest at least 65% of its total assets in debt
securities. During periods of unusual market volatility, or unusual
economic or business activity, the Fund may invest up to 100% of its
assets in shorter-term debt securities, primarily domestic shorter-term
debt securities, for defensive reasons. Securities selected for defensive
reasons may include: (1) U.S. Treasury bills and other obligations issued
or guaranteed by the U.S. government, its agencies or instrumentalities,
(2) highly-rated commercial paper, or (3) certificates of deposit, bankers
acceptances or other U.S. bank obligations.
-- Debt Securities. Bonds and other debt securities (often referred
to as "fixed-income" securities) are used by issuers to borrow money from
investors. The issuer promises to pay the investor interest at a fixed
or variable rate, and to pay back the amount it borrowed (the "principal")
at maturity. Some debt securities, such as zero coupon bonds, do not pay
current interest.
Debt securities differ in quality and in sensitivity to interest rate
changes. When prevailing interest rates rise, already-issued debt
securities generally decline in value. When interest rates fall, already-
issued debt securities generally rise in value. The magnitude of these
fluctuations will often be greater for longer-term debt securities than
shorter-term debt securities. There are no restrictions on the
anticipated average maturity of either the Fund's portfolio securities or
the portfolio in the aggregate. Debt securities are also subject to
credit risk, which is the ability of the issuer to meet interest or
principal payments or both when they become due. Generally, lower-grade,
higher yielding bonds are subject to greater credit risk than higher
quality bonds. Additional risks of investing in foreign debt securities
are discussed below under "Foreign Securities."
U.S. Government Obligations. U.S. government securities are high
quality securities issued or guaranteed by the U.S. government or by an
agency or instrumentality of the U.S. government. U.S Treasury notes,
bills and bonds are backed by the full faith and credit of the U.S.
government. Some U.S. government agency securities are backed by the full
faith and credit of the U.S. government (for example,"Ginnie Mae's").
Others are supported by the right of the agency to borrow an amount from
the U.S. government limited to a specific line of credit (for example,
"Fannie Mae's"). Others are supported only by the credit of the agency
that issued the security (for example, "Freddie Mac's").
Commercial Paper. Commercial paper is short-term corporate debt.
The Fund's commercial paper investments may include variable amount master
demand notes and floating rate or variable rate notes, described in the
Statement of Additional Information.
Mortgage-Backed Securities and CMOs. The Fund may invest in
securities that represent an interest in a pool of residential mortgage
loans. These include collateralized mortgage-backed obligations (referred
to as "CMOs") issued by the U.S. government, its agencies or
instrumentalities, or by private issuers. The issuer's obligation to make
interest and principal payments on a mortgage-backed security is secured
by the underlying portfolio of mortgages or mortgage-backed securities.
There can be no assurance that private issuers will be able to meet their
obligations. Prepayments on the underlying mortgages may reduce the yield
on mortgage-backed securities or CMOs.
The Fund may also invest in CMOs that are "stripped." That means
that the security is divided into two parts, one of which receives some
or all of the principal payments (and is known as a "P/O") and the other
which receives some or all of the interest (and is known as an "I/O").
P/Os and I/Os are generally referred to as "derivative investments,"
discussed further below.
The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the
underlying mortgages. Principal prepayments increase that sensitivity.
Stripped securities that pay "interest only" are therefore subject to
greater price volatility when interest rates change, and they have the
additional risk that if the underlying mortgages are prepaid, the Fund
will lose the anticipated cash flow from the interest on the prepaid
mortgages. That risk is increased when general interest rates fall, and
in times of rapidly falling interest rates, the Fund might receive back
less than its investment.
The value of "principal only" securities generally increases as
interest rates decline and prepayment rates rise. The price of these
securities is typically more volatile than that of coupon-bearing bonds
of the same maturity.
Stripped securities are generally purchased and sold by institutional
investors through investment banking firms. At present, established
trading markets have not yet developed for these securities. Therefore,
some stripped securities may be deemed "illiquid." If the Fund holds
illiquid stripped securities, the amount it can hold will be subject to
the Fund's investment policy limiting investments in illiquid securities
to 10% of the Fund's assets.
The Fund may also enter into "forward roll" transactions with
mortgage-backed securities. The Fund sells mortgage-backed securities it
holds to banks or other buyers and simultaneously agrees to repurchase a
similar security from that party at a later date at an agreed-upon price.
Forward rolls are considered to be a borrowing. The Fund is required to
place liquid assets in a segregated account with its custodian bank in an
amount equal to its obligation under the forward roll. The main risk of
this investment strategy is risk of default by the counterparty.
Asset-Backed Securities. Asset-backed securities represent interests
in pools of consumer loans (such as credit card loans and automobile
loans) and in other trade receivables. Asset-backed securities may be
supported by a credit enhancement, such as a letter of credit , a
guarantee or a preference right. However, the extent of the credit
enhancement may be different for different securities and generally
applies to only a fraction of the security's value. Prepayments on the
underlying receivables may reduce the yield on asset-backed
securities.
Zero Coupon Securities. These securities, which may be issued by the
U.S. government, its agencies or instrumentalities or by private issuers,
are purchased at a substantial discount from their face value. They are
subject to greater fluctuations in market value as interest rates change
than debt securities that pay interest periodically. Interest accrues on
zero coupon bonds even though cash is not actually received.
Participation Interests. Participation interests are interest in
loans made to U.S. or foreign companies or to foreign governments. These
interests are acquired from banks or brokers that have made the loan or
are members of the lending syndicate. No more than 5% of the Fund's net
assets may be invested in participation interests of the same borrower.
The value of the loan participation depends primarily upon the
creditworthiness of the borrower, and its ability to pay interest and
repay principal. In addition, in the event of a failure by the financial
institution to perform its obligation in connection with the participation
agreement, the Fund might incur certain costs and delays in realizing
payment or may suffer a loss of principal and/or interest. Participation
interests are subject to the Fund's limitations on illiquid securities,
discussed below under "Illiquid and Restricted Securities."
Bank Obligations. These include time deposits, certificates of
deposit and bankers acceptances of a domestic or foreign bank with total
assets of at least U.S. $1 billion.
-- Special Risks of Lower-Grade Securities. The Fund may invest
without limitation in high yield, high risk, "lower-grade" domestic and
foreign debt securities (including both high-yielding rated and unrated
securities), because they generally offer higher income potential than
investment grade securities. "Lower-grade" securities are those rated
below "investment grade." This means they have a rating below "BBB" from
Standard & Poor's Corporation or "Baa" from Moody's Investors Service,
Inc. or similar ratings by other rating organizations. Lower-grade
securities purchased by the Fund may be rated as low as "C" or "D" or may
be in default at the time of purchase. The Manager does not rely solely
on ratings of securities by rating agencies when selecting investments for
the Fund, but evaluates economic and business factors as well. "Lower-
grade" debt securities in which the Fund may invest also include unrated
securities that the Manager judges to be comparable to such lower rated
securities. For a description of these securities ratings, please refer
to the Appendix to this Prospectus.
Lower-grade securities are often called "junk bonds". Whether rated
or unrated, lower-grade securities often have speculative characteristics
and special risks that make them riskier investments than investment grade
securities. They may be subject to greater market fluctuations and a
greater risk of default because of the issuer's low creditworthiness.
Their prices may decline significantly during periods of general economic
difficulty. There may be less of a market for them, they may be more
difficult to value, and they may be harder to sell at an acceptable price.
Further, a decline in the high-yield bond market is likely during an
economic downturn. An economic downturn or an increase in interest rates
could severely disrupt the market for high-yield securities and adversely
affect the value of outstanding securities and the ability of issuers to
repay principal and interest.
These risks mean that the Fund may not achieve the expected income
from lower-grade securities, and that the Fund's net asset value per share
may be affected by declines in value of these securities. The Fund is not
obligated to dispose of securities when issuers are in default or if the
rating of the security is reduced. For foreign lower-grade securities,
these risks are in addition to the risks described in "Foreign
Securities," below.
-- Equity Securities. The Fund may invest in common stocks,
preferred stock, convertible securities, warrants and other equity
securities of domestic or foreign companies of any size. At times, the
stock markets can be volatile and stock prices can change substantially.
This market risk will affect the Fund's net asset values per share. Not
all stock prices change uniformly or at the same time, and other factors
can affect a particular stock's price (for example, poor earnings reports
by an issuer, loss of major customers, major litigation against an issuer,
changes in government regulations affecting an industry). Not all of
these factors can be predicted.
The Fund may invest up to 5% of its net assets in warrants, which are
options to purchase stock at set prices that are valid for a limited
period of time. No more than 2% of the Fund's net assets may be invested
in warrants not listed on the New York or American Stock Exchanges. These
limits do not apply to warrants attached to other securities. Additional
risks of investing in foreign equity securities are discussed below under
"Foreign Securities."
-- Foreign Securities. Foreign securities may be issued or
guaranteed by foreign governments or their agencies, by supranational
entities (such as the World Bank), or by foreign companies.
"Foreign companies" are companies organized under the laws of
countries other than the United States that are traded on foreign
securities exchanges or foreign over-the-counter markets. Securities of
foreign companies (1) represented by American Depository Receipts, (2)
traded in the U.S. over-the-counter markets, or (3) listed on a U.S.
securities exchange are not considered "foreign securities." This is
because they are not subject to many of the special considerations and
risks that apply to investments in foreign securities traded and held
abroad.
Foreign securities may be denominated in U.S. dollars or foreign
currencies. The Fund may invest in "Brady Bonds," which are debt
obligations of foreign entities that are U.S. dollar denominated and
generally collateralized by U.S. Treasury zero coupon bonds. Foreign
securities and foreign currencies may involve additional risks. These
include currency fluctuations and/or devaluations, risks relating to
political or economic conditions in the foreign country, and the generally
less stringent disclosure requirements of foreign markets. Other risks
include changes in U.S. economic or monetary policy that affect
investments abroad. Additional costs may be incurred because foreign
broker commissions are generally higher than U.S. rates, and there are
additional custodial costs associated with holding securities abroad.
The Fund shall not invest 25% or more of its total assets in (1)
government securities of any one foreign country or (2) debt and equity
securities issued by companies organized under the laws of any one foreign
country.
Investments in emerging market countries may involve further risks
in addition to those identified above for investments in foreign
securities. Securities issued by emerging market countries and by
companies located in those countries may be subject to extended settlement
periods, whereby the Fund might not receive principal and/or income on a
timely basis and its net asset values could be affected. Emerging market
countries may have smaller, less well-developed markets and exchanges;
there may be a lack of liquidity for emerging market securities; interest
rates and foreign currency exchange rates may be more volatile; sovereign
limitations on foreign investments may be more likely to be imposed; there
may be significant balance of payment deficits; and their economies and
markets may respond in a more volatile manner to economic changes than
those of developed countries.
In allocating between developed country debt and emerging market
debt, the Manager will consider economic fundamentals and structural
risks. In selecting among developed countries, the Manager will generally
use a business-cycle approach, reviewing economic growth, fiscal deficits,
monetary and fiscal policy, and economic vulnerability to external shocks
and political risks. In contrast, in allocating among emerging market
countries of Latin America, Europe and the Pacific Rim, the Manager will
focus on sovereign credit analysis, considering structural variables such
as capital flows, balance of payments, exchange rate policy, and
indicators of ability and willingness to pay. The Manager expects the
Fund's investments to be geographically well-diversified.
-- Board-Approved Instruments. The Fund may invest in other
investments (including new investments that may be developed in the
future) that the Fund's Board of Trustees (or the Manager, under
guidelines established by the Board) determines are consistent with the
Fund's investment objectives and investment policies.
-- Portfolio Turnover. A change in the securities held by the Fund
is known as "portfolio turnover." The Fund will actively use portfolio
trading to try to benefit from differences in short-term yields among
different issues of debt securities, to try to increase its income. The
Fund's portfolio turnover rate is expected not to exceed 300% per year.
High portfolio turnover of 100% or more may affect the Fund's ability to
qualify as a "regulated investment company" under the Internal Revenue
Code for tax deductions for dividends and capital gains distributions the
Fund pays to shareholders. Portfolio turnover affects brokerage costs,
dealer markups and other transaction costs, and results in the Fund's
realization of capital gains or losses for tax purposes.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below. These techniques
involve certain risks. The Statement of Additional Information contains
more information about these practices, including limitations on their use
that are designed to reduce some of the risks.
-- Special Risks - Borrowing for Leverage. The Fund may borrow money
from banks to buy securities. The Fund will borrow only if it can do so
without putting up assets as security for a loan. This is a speculative
investment method known as "leverage." Leveraging may subject the Fund
to greater risks and costs than funds that do not borrow. These risks may
include the possible reduction of income and increased fluctuation in the
Fund's net asset values per share, since the Fund pays interest on
borrowings. Borrowing is subject to regulatory limits described in more
detail in the Statement of Additional Information.
-- When-Issued and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis, and may purchase or sell
securities on a "delayed delivery" basis. These terms refer to securities
that have been created and for which a market exists, but which are not
available for immediate delivery. There may be a risk of loss if the
value of the security changes prior to the settlement date.
-- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
Repurchase agreements must be fully collateralized. However, if the vendor
fails to pay the resale price on the delivery date, the Fund may incur
costs in disposing of the collateral and may experience losses if there
is any delay in its ability to do so. The Fund will not enter into a
repurchase agreement that causes more than 10% of its net assets to be
subject to repurchase agreements having a maturity beyond seven days.
There is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements of seven days or less.
-- Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments. Investments
may be illiquid because of the absence of an active trading market, making
it difficult to value them or dispose of them promptly at an acceptable
price. A restricted security is one that has a contractual restriction on
its resale or which cannot be sold publicly until it is registered under
the Securities Act of 1933. The Fund will not invest more than 10% of its
net assets in illiquid or restricted securities (that limit may increase
to 15% if certain state laws are changed or the Fund's shares are no
longer sold in those states). The Fund's percentage limitation on these
investments does not apply to certain restricted securities that are
eligible for resale to qualified institutional purchasers.
-- Loans of Portfolio Securities. To attempt to increase its income,
the Fund may lend its portfolio securities to brokers, dealers and other
financial institutions. These loans are limited to not more than 25% of
the Fund's net assets and are subject to other conditions described in the
Statement of Additional Information. The Fund presently does not intend
to lend its portfolio securities, but if it does, the value of securities
loaned is not expected to exceed 5% of the value of its total assets.
-- Derivative Investments. In general, a "derivative investment" is
a specially designed investment whose performance is linked to the
performance of another investment or security, such as an option, future,
index, currency or commodity. The Fund may not purchase or sell physical
commodities; however, the Fund may purchase and sell foreign currency in
hedging transactions. This shall not prevent the Fund from buying or
selling options and futures contracts or from investing in securities or
other instruments backed by physical commodities.
Derivative investments used by the Fund are used in some cases for
hedging purposes and in other cases to attempt to enhance income. In the
broadest sense, exchange-traded options and futures contracts (discussed
in "Hedging," below) may be considered "derivative investments."
The Fund may use derivative investments to seek to enhance total
return or income. Any derivative instrument that is a debt security will
be included for purposes of the Fund's 65% Policy. There are special
risks in investing in derivative investments. The company issuing the
instrument may fail to pay the amount due on the maturity of the
instrument. Also, the underlying investment or security might not perform
the way the Manager expected it to perform. Markets, underlying
securities and indices may move in a direction not anticipated by the
Manager. Performance of derivative investments may also be influenced by
interest rate and stock market changes in the U.S. and abroad. All of
this can mean that the Fund will realize less principal or income from the
investment than expected. Certain derivative investments held by the Fund
may be illiquid. Please refer to "Illiquid and Restricted
Securities."
The Fund may invest in different types of derivatives. "Index-
linked" or "commodity-linked" notes are debt securities of companies that
call for interest payments and/or payment on the maturity of the note in
different terms than the typical note where the borrower agrees to pay a
fixed sum on the maturity of the note. Principal and/or interest payments
on an index-linked note depend on the performance of one or more market
indices, such as the S & P 500 Index or a weighted index of commodity
futures, such as crude oil, gasoline and natural gas. The Fund may invest
in "debt exchangeable for common stock" of an issuer or "equity-linked"
debt securities of an issuer. At maturity, the principal amount of the
debt security is exchanged for common stock of the issuer or is payable
in an amount based on the issuer's common stock price at the time of
maturity. In either case there is a risk that the amount payable at
maturity will be less than the expected principal amount of the debt.
The Fund may also invest in currency-indexed securities. Typically,
these are short-term or intermediate-term debt securities having a value
at maturity, and/or an interest rate, determined by reference to one or
more foreign currencies. The currency-indexed securities purchased by the
Fund may make payments based on a formula. The payment of principal or
periodic interest may be calculated as a multiple of the movement of one
currency against another currency, or against an index. These investments
may entail increased risk to principal and increased price volatility.
-- Hedging. The Fund may purchase and sell certain kinds of futures
contracts, put and call options, forward contracts, and options on
futures, broadly-based stock or bond indices and foreign currency, or
enter into interest rate swap agreements. These are all referred to as
"hedging instruments." The Fund does not use hedging instruments for
speculative purposes, and has limits on the use of them, described below.
The Fund may buy and sell options, futures and forward contracts for
a number of purposes. It may do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or
to establish a position in the securities market as a temporary substitute
for purchasing individual securities. It may do so to try to manage its
exposure to changing interest rates. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the Fund's
portfolio against price fluctuations.
Other hedging strategies, such as buying futures and call options and
writing puts, tend to increase the Fund's exposure to the securities
market. Forward contacts are used to try to manage foreign currency risks
on the Fund's foreign investments. Foreign currency options are used to
try to protect against declines in the dollar value of foreign securities
the Fund owns, or to protect against an increase in the dollar cost of
buying foreign securities. Writing covered call options may also provide
income to the Fund for liquidity purposes, defensive reasons, or to raise
cash to distribute to shareholders.
Futures. The Fund may buy and sell futures contracts that relate to
(1) foreign currencies (these are Forward Contracts), (2) financial
indices, such as U.S. or foreign government securities, corporate debt
securities indices or equity securities indices (these are referred to as
Financial Futures), and (3) interest rates (these are referred to as
Interest Rate Futures). These types of Futures are described in "Hedging"
in the Statement of Additional Information.
Put and Call Options. The Fund may buy and sell certain kinds of put
options (puts) and call options (calls).
The Fund may buy calls on securities, foreign currencies, or Futures,
or to terminate its obligation on a call the Fund previously wrote. The
Fund may write (that is, sell) call options on securities, foreign
currencies or Futures, but only if they are "covered." That means the
Fund must own the security subject to the call while the call is
outstanding (or own other securities acceptable for applicable escrow
requirements). Calls on Futures must be covered by securities or other
liquid assets the Fund owns and segregates to enable it to satisfy its
obligations if the call is exercised. When the Fund writes a call, it
receives cash (called a premium). The call gives the buyer the ability
to buy the investment on which the call was written from the Fund at the
call price during the period in which the call may be exercised. If the
value of the investment does not rise above the call price, it is likely
that the call will lapse without being exercised, while the Fund keeps the
cash premium (and the investment). Up to 100% of the Fund's total assets
may be subject to calls.
The Fund may purchase put options. Buying a put on an investment
gives the Fund the right to sell the investment at a set price to a
seller of a put on that investment. The Fund may buy puts that relate to
securities, Futures, or foreign currencies. The Fund may buy a put on
security whether or not the Fund owns the particular security in its
portfolio. The Fund may sell a put on securities or Futures, but only if
the puts are covered by segregated liquid assets. The Fund will not write
puts if more than 50% of the Fund's net assets would have to be segregated
to cover put obligations.
A call or put may be purchased only if, after the purchase, the value
of all call and put options held by the Fund will not exceed 5% of the
Fund's total assets. The Fund may buy and sell put and call options that
are traded on U.S. or foreign securities or commodity exchanges or are
traded in the over-the-counter markets. In the case of foreign currency
options, they may be quoted by major recognized dealers in those options.
Options traded in the over-the-counter market may be "illiquid," and
therefore may be subject to the Fund's restrictions on illiquid
investments.
Forward Contracts. Forward Contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future
delivery at a fixed price. The Fund uses them to try to "lock in" the
U.S. dollar price of a security denominated in a foreign currency that the
Fund has purchased or sold, or to protect against possible losses from
changes in the relative value of the U.S. dollar and a foreign currency.
The Fund may also use "cross hedging," where the Fund hedges against
changes in currencies other than the currency in which a security it holds
is denominated.
Interest Rate Swaps. In an interest rate swap, the Fund and another
party exchange their right to receive, or their obligation to pay,
interest on a security. For example, they may swap a right to receive
floating rate interest payments for fixed rate payments. The Fund enters
into swaps only on securities it owns. The Fund may not enter into swaps
with respect to more than 25% of its total assets. The Fund will
segregate liquid assets (such as cash or U.S. Government securities) to
cover any amounts it could owe under swaps that exceed the amounts it is
entitled to receive, and it will adjust that amount daily, as needed.
Hedging instruments can be volatile investments and may involve
special risks. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different from what is
required for normal portfolio management. If the Manager uses a hedging
instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce the Fund's return. The Fund could also
experience losses if the prices of its futures and options positions were
not correlated with its other investments or if it could not close out a
position because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. For example, if a covered call written by the Fund is
exercised on an investment that has increased in value, the Fund will be
required to sell the investment at the call price and will not be able to
realize any profit if the investment has increased in value above the call
price. In writing puts, there is a risk that the Fund may be required to
buy the underlying security at a disadvantageous price. The use of
Forward Contracts may reduce the gain that would otherwise result from a
change in the relationship between the U.S. dollar and a foreign currency.
Interest rate swaps are subject to the risk that the other party will fail
to meet its obligations (or that the underlying issuer will fail to pay
on time), as well as interest rate risks. The Fund could be obligated to
pay more under its swap agreements than it receives under them, as a
result of interest rate changes. These risks are described in greater
detail in the Statement of Additional Information.
-- Short Sales "Against-the-Box". The Fund may not sell securities
short except in collateralized transactions referred to as short sales
"against-the-box. No more than 15% of the Fund's net assets will be held
as collateral for such short sales at any one time.
-- Non-Concentration. The Fund shall not invest 25% or more of its
total assets in any industry; however, for the purposes of this
restriction, obligations of the U.S. government, its agencies or
instrumentalities are not considered to be part of any single
industry.
Investment Restrictions. The Fund has other investment restrictions
which are fundamental policies. Under these fundamental policies, the
Fund cannot: (1) with respect to 75% of its assets, purchase securities
issued or guaranteed by any one issuer (other than the U.S. Government or
its agencies or instrumentalities), if more than 5% of the Fund's total
assets would be invested in securities of that issuer or the Fund would
then own more than 10% of that issuer's voting securities; (2) make loans,
except that the Fund may purchase debt securities and enter into
repurchase agreements or when-issued, delayed delivery, forward roll or
similar securities transactions, and may lend its portfolio securities;
or (3) pledge, mortgage or otherwise encumber, transfer or assign any of
its assets to secure a debt; segregation of assets arrangements for
premium and margin payments in connection with hedging instruments are not
deemed to be a pledge of assets.
The percentage restrictions described above and in the Statement of
Additional Information, with the exception of the regulatory limits
applicable to borrowing by the Fund, apply only at the time of investment
and require no action by the Fund as a result of subsequent changes in
value of the investments or the size of the Fund. A supplementary list
of investment restrictions is contained in "Investment Restrictions" in
the Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in February 1995 as a
Massachusetts business trust. The Fund is an open-end, diversified
management investment company, with an unlimited number of authorized
shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
"Trustees and Officers of the Fund" in the Statement of Additional
Information names the Trustees and officers of the Fund and provides more
information about them. 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 three or more classes. The
Board has done so, and the Fund currently has three classes of shares,
Class A, Class B and Class C. Each class has its own dividends and
distributions and pays certain expenses which may be different for the
different classes. Each class may have a different net asset value. Each
share has one vote at shareholder meetings, with fractional shares voting
proportionally. Only shares of a particular class vote on matters that
affect that class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
Oppenheimer Management Corporation, 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 establishes the fees paid by
the Fund to the Manager and describes the expenses that the Fund pays to
conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other OppenheimerFunds, with assets of more than $29 billion as
of December 31, 1994, and with more than 1.8 million shareholder accounts.
The Manager is owned by Oppenheimer Acquisition Corp., a holding company
that is owned in part by senior officers of the Manager and controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company.
-- Portfolio Manager. The Portfolio Manager of the Fund is Mr.
Ashwin K. Vasan, a Vice President of the Manager. He is the person
principally responsible for the day-to-day management of the Fund's
portfolio. Mr. Vasan joined the Manager in January, 1992 as a securities
analyst. Prior to that, he was a securities analyst for Citibank, N.A.
Since June, 1993, he has been an officer and co-portfolio manager of two
other OppenheimerFunds with particular responsibility for managing the
foreign debt component of those portfolios.
-- Fees and Expenses. Under the Investment Advisory Agreement, the
Fund pays the Manager the following annual fees, which are higher than the
rates paid by most other investment companies, and which decline on
additional assets as the Fund grows: 0.75% of the first $200 million of
average net assets, 0.72% of the next $200 million, 0.69% of the next $200
million, 0.66% of the next $200 million, 0.60% of the next $200 million,
and 0.50% of net assets in excess of $1 billion.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, and legal and
auditing costs. Those expenses are paid out of the Fund's assets and are
not paid directly by shareholders. However, those expenses reduce the net
asset value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the Investment Advisory
Agreement and the other expenses paid by the Fund is contained in the
Statement of Additional Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers
are selected for the Fund's portfolio transactions. When deciding which
brokers to use, the Manager is permitted by the investment advisory
agreement to consider whether brokers have sold shares of the Fund or any
other funds for which the Manager serves as investment adviser.
-- The Distributor. The Fund's shares are sold through dealers and
brokers that have a sales agreement with Oppenheimer Funds Distributor,
Inc., a subsidiary of the Manager that acts as the Distributor for the
Fund. The Distributor also distributes the shares of other mutual funds
managed by the Manager (the "OppenheimerFunds") and is sub-distributor for
funds managed by a subsidiary of the Manager.
-- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other OppenheimerFunds
on an "at cost" basis. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free number 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. The performance of each class of shares is calculated
separately, because the performance of each class of shares will usually
be different as a result of the different kinds of expenses each class
bears. This performance information may be useful to help you see how
well your investment has done and to compare it to other funds or market
indices.
It is important to understand that the Fund's total returns and yield
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.
-- Total Returns. There are different types of total returns used
to measure the Fund's performance. Total return is the change in value
of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares. The cumulative total return measures the change in
value over the entire period (for example, ten years). An average annual
total return shows the average rate of return for each year in a period
that would produce the cumulative total return over the entire period.
However, average annual total returns do not show the Fund's actual year-
by-year performance.
When total returns are quoted for Class A shares, they reflect the
payment of the maximum initial sales charge. When total returns are shown
for Class B shares, they reflect the effect of the applicable contingent
deferred sales charge. When total returns are shown for a one-year period
for Class C shares, they reflect the effect at the contingent deferred
sales charge. Total returns may also be calculated based on the change
in net asset value, without considering the effect of either the front-end
or the contingent deferred sales charge, and those returns would be
reduced if sales charges were deducted.
-- Yield. Each class of shares calculates its yield by dividing the
annualized net investment income per share from the portfolio during a 30-
day period by the maximum offering price on the last day of the period.
The yield of each class will differ because of the different expenses of
each class of shares. The yield data represents a hypothetical investment
return on the portfolio, and does not measure an investment return based
on dividends actually paid to shareholders. To show that return, a
dividend yield may be calculated. Dividend yield is calculated by
dividing the dividends of a class derived from net investment income
during a stated period by the maximum offering price on the last day of
the period. Yields and dividend yields for Class A shares reflect the
deduction of the maximum initial sales charge, but may also be shown based
on the Fund's net asset value per share. Yields for Class B and Class C
shares do not reflect the deduction of the contingent deferred sales
charge.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.
-- Class A Shares. If you buy Class A shares, you pay an initial
sales charge (on investments up to $1 million). If you purchase Class A
shares as part of an investment of at least $1 million in shares of one
or more OppenheimerFunds, you will not pay an initial sales charge, but
if you sell any of those shares within 18 months after your purchase, you
may pay a contingent deferred sales charge, which will vary depending on
the amount you invested. Sales charges are described below.
-- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years, you will normally pay a contingent deferred sales charge that
varies depending on how long you own your shares. It is described below.
Long term Class B shareholders could pay the economic equivalent of more
than the maximum front-end sales charge allowed under applicable
regulations, because of the effect of the asset-based sales charge and
contingent deferred sales charge. The automatic conversion of Class B
shares to Class A Shares is designed to minimize the likelihood that this
will occur.
-- Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within 12
months of buying them, you will normally pay a contingent deferred sales
charge of 1%. Long-term Class C shareholders could pay the economic
equivalent of more than the maximum front-end sales charge allowed under
applicable regulations because of the effect of the asset-based sales
charge and contingent deferred sales charge.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisor. The Fund's operating
costs that apply to a class of shares and the effect of the different
types of sales charges on your investment will vary your investment
results over time. The most important factors are how much you plan to
invest, how long you plan to hold your investment, and whether you
anticipate exchanging your shares for shares of other OppenheimerFunds
(not all of which currently offer Class B or Class C shares). If your
goals and objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the
sales charge rates that apply to each class, and considered the effect of
the annual asset-based sales charge on Class B and Class C expenses
(which, like all expenses, will affect your investment return). For the
sake of comparison, we have assumed that there is a 10% rate of
appreciation in the investment each year. Of course, the actual
performance of your investment cannot be predicted and will vary, based
on the Fund's actual investment returns and the operating expenses borne
by each class of shares, and which class you invest in. The factors
discussed below are not intended to be investment advice or
recommendations, because each investor's financial considerations are
different.
-- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long you
expect to hold your investment will assist you in selecting the
appropriate class of shares. The effect of the sales charge over time,
using our assumptions, will generally depend on the amount invested. The
effect of class-based expenses will also depend on how much you invest.
Investing for the Short Term. If you have a short term investment
horizon (that is, you plan to hold your shares less than five years), you
should probably consider purchasing Class C shares rather than Class A or
Class B shares. This is because there is no initial sales charge on Class
C shares, and the contingent deferred sales charge does not apply to
amounts you sell after holding them one year.
However, if you plan to invest more than $250,000 for the shorter
term, Class C shares might not be as advantageous as Class A shares. This
is because the annual asset-based sales charge on Class C shares (and the
contingent deferred sales charge that applies if you redeem Class C shares
within one year of purchase) will have a greater economic impact on your
account during that period than the reduced sales charge available for
larger purchases of Class A shares.
And for most investors who invest $500,000 or more, in most cases
Class A shares will be the most advantageous choice, no matter how long
you intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or more of Class B shares or
purchase orders of $1 million or more of Class C shares from a single
investor.
Investing for the Longer Term. If you are investing for the longer
term, for example, for retirement, and do not expect to need access to
your money for six years or more, Class A shares will likely be more
advantageous than Class B or Class C shares. This is because of the
effect of expected lower expenses for Class A shares and the reduced
initial sales charges available for larger investments in Class A shares
under the Fund's Right of Accumulation. Class B shares may be appropriate
for smaller investments held for the longer term because there is no
initial sales charge on Class B shares, and Class B shares held six years
following their purchase convert into Class A shares.
Of course all of these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical investment
over time, using the assumed annual performance return stated above, and
you should analyze your options carefully.
-- Are There Differences in Account Features That Matter to You?
Because some account features such as checkwriting are not be available
to Class B or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) might not be advisable (because of the effect of the
contingent deferred sales charge) in non-retirement accounts for Class B
or Class C shareholders, you should carefully review how you plan to use
your investment account before deciding which class of shares to buy.
Additionally, dividends payable to Class B and Class C shareholders will
be reduced by the additional expenses borne by those classes that are not
borne by Class A, such as the Class B and Class C asset-based sales
charges described below and in the Statement of Additional Information.
Also, because not all OppenheimerFunds currently offer Class B and Class
C shares, and because exchanges are permitted only to the same class of
shares in other OppenheimerFunds, you should consider how important the
exchange privilege is likely to be for you.
-- How Does It Affect Payments to My Broker? A salesperson, such as
a broker, or any other person who is entitled to receive compensation for
selling Fund shares may receive different compensation for selling one
class than for selling another class. It is important that investors
understand that the purpose of the contingent deferred sales charge and
asset-based sales charge for Class B or Class C shares is the same as the
purpose of the front-end sales charge on sales of Class A shares: to
compensate the Distributor for commissions it pays to dealers and
financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans:
With Asset Builder Plans, Automatic Exchange Plans and military
allotment plans, you can make initial and subsequent investments of as
little as $25. Subsequent purchases of at least $25 can be made by
telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250
(if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other OppenheimerFunds (a list
of them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.
-- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan under
the OppenheimerFunds AccountLink service. When you buy shares, be sure
to specify Class A, Class B or Class C shares. If you do not choose, your
investment will be made in Class A shares.
-- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
-- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "Oppenheimer Funds Distributor, Inc." Mail it to P.O. Box 5270,
Denver, Colorado 80217. If you don't list a dealer on the application,
the Distributor will act as your agent in buying the shares. However, we
recommend that you discuss your investment first with a financial advisor,
to be sure it is appropriate for you.
-- 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,
or to have the Transfer Agent send redemption proceeds or transmit
dividends and distributions to your bank account.
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 the application or dealer settlement
instructions used to establish your account. Please refer to
"AccountLink" below for more details.
-- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other OppenheimerFunds) automatically each month from your account
at a bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
-- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver, Colorado. 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
each class of shares is determined as of that time on each day The New
York Stock Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your
order by 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.
Class A Shares. Class A shares are sold at their offering price, which
is normally net asset value plus an initial sales charge. However, in
some cases, described below, 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 commission. The current sales
charge rates and commissions paid to dealers and brokers
are as follows:
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount of Purchase Front-End Front-End Commission
Sales Charge Sales Charge as
as a as a Percentage
Percentage Percentage of Offering
of Offering of Amount Price
Price Invested
- -------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.98% 4.00%
- -------------------------------------------------------------------
$50,000 or more
but less than
$100,000 4.50% 4.71% 3.75%
- -------------------------------------------------------------------
$100,000 or more
but less than
$250,000 3.50% 3.63% 2.75%
- -------------------------------------------------------------------
$250,000 or more
but less than
$500,000 2.50% 2.56% 2.00%
- -------------------------------------------------------------------
$500,000 or more
but less than
$1 million 2.00% 2.04% 1.60%
- -------------------------------------------------------------------
</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.
-- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more (shares of the Fund and
other OppenheimerFunds that offer only the class of shares that has no
class designation are considered "Class A shares" for this purpose).
However, the Distributor pays dealers of record commissions on such
purchases in an amount equal to the sum of 1.0% of the first $2.5 million,
plus 0.50% of the next $2.5 million, plus 0.25% of share purchases over
$5 million. That commission will be paid only on the amount of those
purchases in excess of $1 million that were not previously subject to a
front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
the aggregate net asset value of either (1) the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate amount of the commissions the Distributor paid to your dealer
on all Class A shares of all OppenheimerFunds you purchased subject to
the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales
charge, including shares purchased by reinvestment of dividends and
capital gains, and then will redeem other shares in the order that you
purchased them. The Class A contingent deferred sales charge is waived
in certain cases described in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges
of shares under the Fund's Exchange Privilege (described below). However,
if the shares acquired by exchange are redeemed within 18 months of the
end of the calendar month of the purchase of the exchanged shares, the
sales charge will apply.
-- Special Arrangements With Dealers. The Distributor may advance
up to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of OppenheimerFunds (other
than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:
-- Right of Accumulation. To qualify for the lower sales charge
rates that apply to larger purchases of Class A shares, you and your
spouse can add together Class A shares you purchase for your individual
accounts, or jointly, or on behalf of your children who are minors, under
trust or custodial accounts. 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 Class A
shares of the Fund and other OppenheimerFunds. You can also include Class
A shares of OppenheimerFunds you previously purchased subject to a sales
charge, provided that you still hold your investment in one of the
OppenheimerFunds. The value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The OppenheimerFunds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from the
Transfer Agent. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
-- Letter of Intent. Under a Letter of Intent, you may purchase
Class A shares of the Fund and other OppenheimerFunds during a 13-month
period at the reduced sales charge rate that applies to the total amount
of intended purchases. 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.
-- Waivers of Class A Sales Charges. No sales charge is imposed on
sales of Class A shares to the following investors: (1) the Manager or its
affiliates; (2) present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced Sales
Charges" in the Statement of Additional Information) of the Fund, the
Manager and its affiliates, and retirement plans established by them for
their employees; (3) registered management investment companies, or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; (4) dealers or brokers that
have a sales agreement with the Distributor, if they purchase shares for
their own accounts or for retirement plans for their employees; (5)
employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered
into sales arrangements with such dealers or brokers (and are identified
to the Distributor) or with the Distributor; the purchaser must certify
to the Distributor at the time of purchase that the purchase is for the
purchaser's own account (or for the benefit of such employee's spouse or
minor children); (6) dealers, brokers or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular investment
products made available to their clients; or (7) dealers, brokers or
registered investment advisers that have entered into an agreement with
the Distributor to sell shares of defined contribution employee retirement
plans for which the dealer, broker or investment adviser provides
administration services.
Additionally, no sales charge is imposed on shares that are (a)
issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which the Fund is a party or (b) purchased by the
reinvestment of loan repayments by a participant in a retirement plan for
which the Manager or its affiliates acts as sponsor, (c) purchased by the
reinvestment of dividends or other distributions reinvested from the Fund
or other OppenheimerFunds (other than Oppenheimer Cash Reserves) or unit
investment trusts for which reinvestment arrangements have been made with
the Distributor, or (d) purchased and paid for with the proceeds of shares
redeemed in the prior 12 months from a mutual fund on which an initial
sales charge or contingent deferred sales charge was paid (other than a
fund managed by the Manager or any of its affiliates); this waiver must
be requested when the purchase order is placed for your shares of the Fund
and the Distributor may require evidence of your qualification for the
waiver. There is a further discussion of this policy in "Reduced Sales
Charges" in the Statement of Additional Information.
The Class A contingent deferred sales charge does not apply to
purchases of Class A shares at net asset value described above and is also
waived if shares are redeemed in the following cases: (1) for retirement
distributions or loans to participants or beneficiaries from qualified
retirement plans, deferred compensation plans or other employee benefit
plans ("Retirement Plans"), (2) to return excess contributions made to
Retirement Plans, (3) to make Automatic Withdrawal Plan payments that are
limited to no more than 12% of the original account value annually, (4)
involuntary redemptions of shares by operation of law or under the
procedures set forth in the Fund's Declaration of Trust or adopted by the
Board of Trustees, and (5) Class A shares that would otherwise be subject
to the Class A contingent deferred sales charge are redeemed, but at the
time the purchase order for your shares was placed, the dealer agreed to
accept the dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month (and that no further
commission would be payable if the shares were redeemed within 18 months
of purchase).
-- Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Reimbursement is made quarterly at an
annual rate that may not exceed 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor uses all of those fees to
compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares and to reimburse itself (if the
Fund's Board of Trustees authorizes such reimbursements) for its other
expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.
Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed
within 6 years of their purchase, a contingent deferred sales charge will
be deducted from the redemption proceeds. That sales charge will not
apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original
purchase price. The contingent deferred sales charge is not imposed on the
amount of your account value represented by the increase in net asset
value over the initial purchase price (including increases due to the
reinvestment of dividends and capital gains distributions). The Class B
contingent deferred sales charge is paid to the Distributor to reimburse
its expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 6 years, and (3) shares held the longest during the
6-year period.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Contingent Deferred Sales Charge
Years Since Beginning of Month in On Redemptions in That Year
which Purchase Order Was Accepted (As % of Amount Subject to Charge)
- -----------------------------------------------------------------------
0-1 5.0%
1-2 4.0%
2-3 3.0%
3-4 3.0%
4-5 2.0%
5-6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made.
-- Waivers of Class B Sales Charge. The Class B contingent deferred
sales charge will be waived if the shareholder requests it for any of the
following redemptions: (1) to make distributions to participants or
beneficiaries from Retirement Plans, if the distributions are made (a)
under an Automatic Withdrawal Plan after the participant reaches age 59-
1/2, as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent receives the request),
or (b) following the death or disability (as defined in the Internal
Revenue Code) of the participant or beneficiary which occurred after the
account was opened; (2) redemptions from accounts other than Retirement
Plans following the death or disability of the shareholder (the disability
must have occurred after the account was established and you must provide
evidence of a determination of disability by the Social Security
Administration), (3) to make returns of excess contributions to Retirement
Plans, and (4) to make distributions from IRAs (including SEP-IRAs and
SAR/SEP accounts) before the participant is age 59-1/2, and distributions
from 403(b)(7) custodial plans or pension or profit sharing plans before
the participant is age 59-1/2 but only after the participant has separated
from service, if the distributions are made in substantially equal
periodic payments over the life (or life expectancy) of the participant
or the joint lives (or joint life and last survivor expectancy) of the
participant and the participant's designated beneficiary (and the
distributions must comply with other requirements for such distributions
under the Internal Revenue Code and may not exceed 10% of the account
value annually, measured from the date the Transfer Agent receives the
request).
The contingent deferred sales charge is also waived on Class B shares
in the following cases: (i) shares sold to the Manager or its affiliates;
(ii) shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or
the Distributor for that purpose; (iii) shares issued in plans of
reorganization to which the Fund is a party; and (iv) shares redeemed in
involuntary redemptions as described below. Further details about this
policy are contained in "Reduced Sales Charges" in the Statement of
Additional Information.
-- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class
B Distribution and Service Plan, described below. The conversion is based
on the relative net asset value of the two classes, and no sales load or
other charge is imposed. When Class B shares convert, any other Class B
shares that were acquired by the reinvestment of dividends and
distributions on the converted shares will also convert to Class A shares.
The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A, Class B and
Class C Shares" in the Statement of Additional Information.
-- Distribution and Service Plan for Class B Shares. The Fund has
adopted a "compensation type" Distribution and Service Plan for Class B
shares to compensate the Distributor for its services and costs in
distributing Class B shares and servicing accounts. Under the Plan, the
Fund pays the Distributor an annual "asset-based sales charge" of 0.75%
per year on Class B shares that are outstanding for 6 years or less. The
Distributor also receives a service fee of 0.25% per year. Both fees are
computed on the average annual net assets of Class B shares, determined
as of the close of each regular business day. The asset-based sales charge
allows investors to buy Class B shares without a front-end sales charge
while allowing the Distributor to compensate dealers that sell Class B
shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class B shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class B expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 3.75% of the
purchase price to dealers from its own resources at the time of sale. The
Distributor retains the asset-based sales charge to recoup the sales
commissions it pays, the advances of service fee payments it makes, and
its financing costs.
If the Plan is terminated by the Fund, the Board of Trustees may
allow the Fund to continue payments of the service fee and/or the asset-
based sales charge to the Distributor as to shares sold before the Plan
was terminated.
Class C Shares. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed
within 12 months of their purchase, a contingent deferred sales charge of
1.0% will be deducted from the redemption proceeds. That sales charge
will not apply to shares purchased by the reinvestment of dividends or
capital gains distributions. The charge will be assessed on the lesser of
the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price (including increases
due to the reinvestment of dividends and capital gains distributions). The
Class C contingent deferred sales charge is paid to the Distributor to
reimburse its expenses of providing distribution-related services to the
Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 12 months, and (3) shares held the longest during the
12-month period.
-- Waivers of Class C Sales Charge. The Class C contingent deferred
sales charge will be waived if the shareholder requests it for any of the
redemptions or circumstances described above under "Waivers of Class B
Sales Charge."
-- Distribution and Service Plan for Class C Shares. The Fund has
adopted a "compensation type" Distribution and Service Plan for Class C
shares to compensate the Distributor for its services and costs in
distributing Class C shares and servicing accounts. Under the Plan, the
Fund pays the Distributor an annual "asset-based sales charge" of 0.75%
per year on Class C shares. The Distributor also receives a service fee
of 0.25% per year. Both fees are computed on the average annual net
assets of Class C shares, determined as of the close of each regular
business day. The asset-based sales charge allows investors to buy Class
C shares without a front-end sales charge while allowing the Distributor
to compensate dealers that sell Class C shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class C shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class C expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class C shares have been sold by the dealer and
retains the service fee paid by the Fund in that year. After the shares
have been held for a year, the Distributor pays the service fee on a
quarterly basis. The Distributor pays sales commissions of 0.75% of the
purchase price to dealers from its own resources at the time of sale. The
total up-front commission paid by the Distributor to the dealer at the
time of sale of Class C shares is 1.00% of the purchase price. The
Distributor retains the asset-based sales charge during the first year
shares are outstanding to recoup the sales commissions it pays, the
advances of service fee payments it makes, and its financing costs. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been outstanding for
a year or more.
If the Plan is terminated by the Fund, the Board of Trustees may
allow the Fund to continue payments of the service fee and/or asset-based
sales charge to the Distributor as to shares sold before the Plan was
terminated.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types
of account transactions. 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 directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges on signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives
written instructions terminating or changing those privileges. After you
establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the
Transfer Agent signed by all shareholders who own the account.
-- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase shares
in amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
-- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be
used on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number: 1-
800-533-3310.
-- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.
-- Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number. Please refer to "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
OppenheimerFunds account on a regular basis:
-- Automatic Withdrawal Plans. If your Fund account is worth $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or annual
basis. The checks may be sent to you or sent automatically to your bank
account on AccountLink. You may even set up certain types of withdrawals
of up to $1,500 per month by telephone. You should consult the
Application and Statement of Additional Information for more details.
-- Automatic Exchange Plans. You can authorize the Transfer Agent
automatically to exchange an amount you establish in advance for shares
of up to five other OppenheimerFunds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each OppenheimerFunds account is $25. These exchanges are subject to
the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your shares, you
have up to 6 months to reinvest all or part of the redemption proceeds in
Class A shares of the Fund or other OppenheimerFunds without paying a
sales charge. This privilege only applies to redemptions of Class A
shares or to redemptions of Class B shares of the Fund that you purchased
by reinvesting dividends or distributions or on which you paid a
contingent deferred sales charge when you redeemed them. This privilege
does not apply to Class C shares. You must be sure to ask the Distributor
for this privilege when you send your payment. Please consult the
Statement of Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for
your retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
-- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
-- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
-- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SARSEP-IRAs
-- Pension and Profit-Sharing Plans for self-employed persons and
other employers
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular business
day by selling (redeeming) some or all of your shares. Your shares will
be sold at the next net asset value calculated after your order is
received and accepted by the Transfer Agent. The Fund offers you a number
of ways to sell your shares in writing or by telephone. You can also set
up an Automatic Withdrawal Plan to redeem shares on a regular basis, as
described above. If you have questions about any of these procedures, and
especially if you are redeeming shares in a special situation, such as due
to the death of the owner, please call the Transfer Agent first, at 1-800-
525-7048, for assistance.
-- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must submit
a withholding form with your request to avoid delay. If your retirement
plan account is held for you by your employer, you must arrange for the
distribution request to be sent by the plan administrator or trustee.
There are additional details in the Statement of Additional Information.
-- Certain Requests Require a Signature Guarantee. To protect you
and the Fund from fraud, certain redemption requests must be in writing
and must include a signature guarantee in the following situations (there
may be other situations also requiring a signature guarantee):
-- You wish to redeem more than $50,000 worth of shares and receive
a check
-- A redemption check is not payable to all shareholders listed on
the account statement
-- A redemption check is not sent to the address of record on your
statement
-- Shares are being transferred to a Fund account with a different
owner or name
-- Shares are redeemed by someone other than the owners (such as an
Executor)
-- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If you
are signing 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, and
-- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell
shares.
Use the following address for requests by mail:
Oppenheimer Shareholder Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by the close of the New York Stock Exchange that day, which is
normally 4:00 P.M., but which may be earlier on some days. You may not
redeem shares held in the OppenheimerFunds retirement plan or under a
share certificate by telephone.
-- To redeem shares through a service representative, call 1-800-852-
8457
-- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address
on the account 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.
-- 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
statement. This service is not available within 30 days of changing the
address on an account.
-- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH wire to your bank is
initiated on the business day after the redemption. You do not receive
dividends on the proceeds of the shares you redeemed while they are
waiting to be wired.
Checkwriting. To be able to write checks against your Fund account, you
may request that privilege on your account Application or you can contact
the Transfer Agent for signature cards, which must be signed (with a
signature guarantee) by all owners of the account and returned to the
Transfer Agent so that checks can be sent to you to use. Shareholders with
joint accounts can elect in writing to have checks paid over the signature
of one owner.
-- Checks can be written to the order of whomever you wish, but may
not be cashed at the Fund's bank or custodian.
-- Checkwriting privileges are not available for accounts holding
Class B or Class C shares, or Class A shares that are subject to a
contingent deferred sales charge.
-- Checks must be written for at least $100.
-- Checks cannot be paid if they are written for more than your
account value. Remember: your shares fluctuate in value and you should
not write a check close to the total account value.
-- You may not write a check that would require the Fund to redeem
shares that were purchased by check or Asset Builder Plan payments within
the prior 10 days.
-- Don't 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 OppenheimerFunds
at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
-- Shares of the fund selected for exchange must be available for
sale in your state of residence
-- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege
-- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day
-- You must meet the minimum purchase requirements for the fund you
purchase by exchange
-- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of the
same class in the other OppenheimerFunds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, not all of the OppenheimerFunds offer the same classes of shares.
If a fund has only one class of shares that does not have a class
designation, they are "Class A" shares for exchange purposes. Certain
OppenheimerFunds offer Class A shares, Class B and/or Class C shares, and
a list can be obtained by calling the Distributor 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:
-- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
-- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same name(s) and address. Shares held under certificates may not
be exchanged by telephone.
You can find a list of OppenheimerFunds currently available for
exchanges in the Statement of Additional Information or obtain one 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 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 portfolio 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.
Shareholder Account Rules and Policies
-- Net Asset Value Per Share is determined for each class of shares
as of the close of the New York Stock Exchange on each regular business
day by dividing the value of the Fund's net assets attributable to a class
by the number of shares of that class that are outstanding. The Fund's
Board of Trustees has established procedures to value the Fund's
securities to determine net asset value. In general, securities values
are based on market value. There are special procedures for valuing
illiquid and restricted securities, obligations for which market values
cannot be readily obtained, and call options and hedging instruments.
These procedures are described more completely in the Statement of
Additional Information.
-- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.
-- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
-- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither it 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.
-- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
-- Dealers that can perform account transactions for their clients
by participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously or improperly.
-- The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B and Class C shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
-- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. The Transfer Agent may
delay forwarding a check or processing a payment via AccountLink for
recently purchased shares, but only until the purchase payment has
cleared. That delay may be as much as 10 days from the date the shares
were purchased. That delay may be avoided if you purchase shares by
certified check or arrange with your bank to provide telephone or written
assurance to the Transfer Agent that your purchase payment has cleared.
-- Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $200 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
-- Under unusual circumstances, shares of the Fund may be redeemed
"in kind," which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to "How to Sell
Shares" in the Statement of Additional Information for more details.
-- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from taxable 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.
-- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A, Class B and Class C shares.
-- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report 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
Dividends. The Fund declares dividends separately for Class A, Class
B and Class C shares from net investment income each regular business day
and pays such dividends to shareholders monthly. Normally, dividends are
paid on or about the last business day of each month, but the Board of
Trustees can change that date. It is expected that distributions paid with
respect to Class A shares will generally be higher than for Class B or
Class C shares because expenses allocable to Class B and Class C shares
will generally be higher. Dividends paid on each class of shares may
generally be less than dividends paid by a conventional bond fund that
seeks income, because the Fund seeks total return as its primary
objective.
The Fund has adopted the practice, to the extent consistent with the
amount of the Fund's net investment income and other distributable income,
of attempting to pay dividends on Class A shares at a constant level,
although the amount of such dividends may be subject to change from time
to time depending on market conditions, the composition of the Fund's
portfolio and expenses borne by the Fund or borne separately by that
Class. The practice of attempting to pay dividends on Class A shares at
a constant level requires the Manager, consistent with the Fund's
investment objective and investment restrictions, to monitor the Fund's
portfolio and select higher yielding securities when deemed appropriate
to maintain necessary net investment income levels. The Fund anticipates
paying dividends at the targeted dividend level from net investment income
and other distributable income without any impact on the Fund's net asset
value per share. The Board of Trustees may change the Fund's targeted
dividend level at any time, without prior notice to shareholders; the Fund
does not otherwise have a fixed dividend rate and there can be no
assurance as to the payment of any dividends or the realization of any
capital gains.
Capital Gains. The Fund may make distributions annually in December
out of any net short or long-term capital gains, and may make supplemental
distributions of dividends and capital gains following the end of its
fiscal year (which ends September 30th). Long-term capital gains will be
separately identified in the tax information the Fund sends you after the
end of the calendar year. Short-term capital gains are treated as
dividends for tax purposes. There can be no assurance that the Fund will
pay any capital gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
-- Reinvest all distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
-- Reinvest long-term capital gains only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or
sent to your bank account on AccountLink.
-- Receive all distributions in cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or have
them sent to your bank on AccountLink.
-- Reinvest your distributions in another OppenheimerFunds account.
You can reinvest all distributions in another OppenheimerFunds account you
have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. It does not matter how long you held your
shares. Dividends paid from short-term capital gains and net investment
income are taxable as ordinary income. Distributions are subject to
federal income tax and may be subject to state or local taxes. Your
distributions are taxable when paid, whether you reinvest them in
additional shares or take them in cash. Every year the Fund will send you
and the IRS a statement showing the amount of each taxable distribution
you received in the previous year.
-- "Buying a Dividend". When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy shares on
or just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.
-- Taxes on Transactions. Share redemptions, including redemptions
for exchanges, are subject to capital gains tax. A capital gain or loss
is the difference between the price you paid for the shares and the price
you receive when you sell them.
-- Returns of Capital. In certain cases distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.
If that occurs, it will be identified in notices to shareholders. A non-
taxable return of capital may reduce your tax basis in your Fund shares.
This information is only a summary of certain Federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.
<PAGE>
Appendix: Description of Ratings Categories of Rating Services
Description of Moody's Investors Service, Inc. Bond Ratings
Aaa: Bonds rated "Aaa" are judged to be the best quality and to carry
the smallest degree of investment risk. Interest payments are protected
by a large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, the changes
that can be expected are most unlikely to impair the fundamentally strong
position of such issues.
Aa: Bonds rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group, they comprise what are generally
known as "high-grade" bonds. They are rated lower than the best bonds
because margins of protection may not be as large as with "Aaa" securities
or fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than those of "Aaa" securities.
A: Bonds rated "A" possess many favorable investment attributes and
are to be considered as upper-medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in
the future.
Baa: Bonds rated "Baa" are considered medium grade obligations, that
is, they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and have speculative characteristics as well.
Ba: Bonds rated "Ba" are judged to have speculative elements; their
future cannot be considered well-assured. Often the protection of
interest and principal payments may be very moderate and not well
safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
B: Bonds rated "B" generally lack characteristics of desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa: Bonds rated "Caa" are of poor standing and may be in default or
there may be present elements of danger with respect to principal or
interest.
Ca: Bonds rated "Ca" represent obligations which are speculative in
a high degree and are often in default or have other marked shortcomings.
C: Bonds rated "C" can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
Description of Standard & Poor's Bond Ratings
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority
of instances they differ from "AAA" issues only in small degree.
A: Bonds rated "A" have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse effects
of change in circumstances and economic conditions.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity
to pay principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for
bonds in this category than for bonds in the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded,
on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms
of the obligation. "BB" indicates the lowest degree of speculation and
"CC" the highest degree. While such bonds will likely have some quality
and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds
rated "D" are in default and payment of interest and/or repayment of
principal is in arrears.
<PAGE>
Oppenheimer International Bond Fund
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048
Investment Advisor
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent OPPENHEIMER
Oppenheimer Shareholder Services International Bond Fund
P.O. Box 5270 Prospectus
Denver, Colorado 80217 Effective _____________, 1995
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway OppenheimerFunds
Denver, Colorado 80202
No dealer, broker, salesperson or any other person
has been authorized to give any information or to
make any representations other than those
contained in this Prospectus or the Statement of
Additional Information and, if given or made, such
information and representations must not be relied
upon as having been authorized by the Fund,
Oppenheimer Management Corporation, Oppenheimer
Funds Distributor, Inc. or any affiliate thereof.
This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any of
the securities offered hereby in any state to any
person to whom it is unlawful to make such an
offer in such state.
* Printed on Recycled Paper
<PAGE>
Oppenheimer International Bond Fund
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048
Investment Advisor
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent OPPENHEIMER
Oppenheimer Shareholder Services International Bond Fund
P.O. Box 5270 Prospectus and
Denver, Colorado 80217 New Account Application
1-800-525-7048 Effective _____________, 1995
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway OppenheimerFunds
Denver, Colorado 80202
No dealer, broker, salesperson or any other person
has been authorized to give any information or to
make any representations other than those
contained in this Prospectus or the Statement of
Additional Information and, if given or made, such
information and representations must not be relied
upon as having been authorized by the Fund,
Oppenheimer Management Corporation, Oppenheimer
Funds Distributor, Inc. or any affiliate thereof.
This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any of
the securities offered hereby in any state to any
person to whom it is unlawful to make such an
offer in such state.
* Printed on Recycled Paper
<PAGE>
Oppenheimer International Bond Fund
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
Statement of Additional Information dated _____________, 1995
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated ___________, 1995. It should be read
together with the Prospectus, which may be obtained by writing to the
Fund's Transfer Agent, Oppenheimer Shareholder Services, at P.O. Box 5270,
Denver, Colorado 80217 or by calling the Transfer Agent at the toll-free
number shown above.
TABLE OF CONTENTS
Page
About the Fund
Investment Objectives and Policies . . . . . . . . . . . . .
Investment Policies and Strategies. . . . . . . . . . .
Other Investment Techniques and Strategies. . . . . . .
Other Investment Restrictions . . . . . . . . . . . . .
How the Fund is Managed. . . . . . . . . . . . . . . . . . .
Organization and History. . . . . . . . . . . . . . . .
Trustees and Officers of the Fund . . . . . . . . . . .
The Manager and Its Affiliates. . . . . . . . . . . . .
Brokerage Policies of the Fund . . . . . . . . . . . . . . .
Performance of the Fund. . . . . . . . . . . . . . . . . . .
Distribution and Service Plans . . . . . . . . . . . . . . .
About Your Account
How To Buy Shares. . . . . . . . . . . . . . . . . . . . . .
How To Sell Shares . . . . . . . . . . . . . . . . . . . . .
How To Exchange Shares . . . . . . . . . . . . . . . . . . .
Dividends, Capital Gains and Taxes . . . . . . . . . . . . .
Additional Information About the Fund. . . . . . . . . . . .
Financial Information About the Fund
Independent Auditors' Report . . . . . . . . . . . . . . . .
Statement of Assets and Liabilities. . . . . . . . . . . . .
Appendix A: Industry Classifications. . . . . . . . . . . .A-1
<PAGE>
ABOUT THE FUND
Investment Objectives and Policies
Investment Policies and Strategies. The investment objectives and
policies of the Fund are discussed in the Prospectus. Set forth below is
supplemental information about those policies. Certain capitalized terms
used in this Statement of Additional Information are defined in the
Prospectus.
In selecting securities for the Fund's portfolio, the Fund's
investment adviser, Oppenheimer Management Corporation (referred to as the
"Manager"), evaluates the investment merits of debt and equity securities
primarily through the exercise of its own investment analysis. This may
include, among other things, consideration of the financial strength of
an issuer, including its historic and current financial condition, the
trading activity in its securities, present and anticipated cash flow,
estimated current value of its assets in relation to their historical
cost, the issuer's experience and managerial expertise, responsiveness to
changes in interest rates and business conditions, debt maturity
schedules, current and future borrowing requirements, and any change in
the financial condition of an issuer and the issuer's continuing ability
to meet its future obligations. The Manager also may consider anticipated
changes in business conditions, levels of interest rates of bonds as
contrasted with levels of cash dividends, industry and regional prospects,
the availability of new investment opportunities and the general economic,
legislative and monetary outlook for specific industries, the nation and
the world. Additional factors considered by the Manager with respect to
the Fund's foreign securities investments are discussed below under
"Foreign Securities."
-- Debt Securities. All debt securities are subject to two types
of risks: credit risk and interest rate risk (these are in addition to
other investment risks that may affect a particular security).
-- Credit Risk. Credit risk relates to the ability of the issuer
to meet interest or principal payments or both as they become due.
Generally, higher yielding bonds are subject to credit risk to a greater
extent than higher quality bonds.
-- Interest Rate Risk. Interest rate risk refers to the
fluctuations in value of fixed-income securities resulting solely from the
inverse relationship between the market value of outstanding fixed-income
securities and changes in interest rates. An increase in interest rates
will generally reduce the market value of fixed-income investments, and
a decline in interest rates will tend to increase their value. In
addition, debt securities with longer maturities, which tend to produce
higher yields, are subject to potentially greater capital appreciation and
depreciation than obligations with shorter maturities. Fluctuations in
the market value of fixed-income securities subsequent to their
acquisition will not affect the interest payable on those securities, and
thus the cash income from such securities, but will be reflected in the
valuations of those securities used to compute the Fund's net asset
values.
-- Government Obligations. The Fund seeks to achieve its objectives
by investing primarily in foreign debt securities, with an emphasis on
foreign government bonds. Foreign securities are discussed below.
-- U.S. Treasury Obligations. These include Treasury Bills (which
have maturities of one year or less when issued), Treasury Notes (which
have maturities of one to ten years when issued) and Treasury Bonds (which
have maturities generally greater than ten years when issued). U.S.
Treasury obligations are backed by the full faith and credit of the United
States.
-- U.S. Government and Agency Obligations. U.S. government
securities are debt obligations issued by or guaranteed by the United
States government or any of its agencies or instrumentalities. Some of
these obligations, including U.S. Treasury notes and bonds, and mortgage-
backed securities (referred to as "Ginnie Maes") guaranteed by the
Government National Mortgage Association, are supported by the full faith
and credit of the United States, which means that the government pledges
to use its taxing power to repay the debt. Other U.S. government
securities issued or guaranteed by Federal agencies or government-
sponsored enterprises are not supported by the full faith and credit of
the United States. They may include obligations supported by the ability
of the issuer to borrow from the U.S. Treasury. However, the Treasury is
not under a legal obligation to make a loan. Examples of these are
obligations of Federal Home Loan Mortgage Corporation (these securities
are often called "Freddie Macs"). Other obligations are supported by the
credit of the instrumentality, such as Federal National Mortgage
Association bonds (these securities are often called "Fannie Maes").
GNMA Certificates. Certificates of Government National Mortgage
Association ("GNMA") are mortgage-backed securities of GNMA that evidence
an undivided interest in a pool or pools of mortgages ("GNMA
Certificates"). The GNMA Certificates that the Fund may purchase are of
the "modified pass-through" type, which entitle the holder to receive
timely payment of all interest and principal payments due on the mortgage
pool, net of fees paid to the "issuer" and GNMA, regardless of whether the
mortgagor actually makes the payments.
The National Housing Act authorizes GNMA to guarantee the timely
payment of principal and interest on securities backed by a pool of
mortgages insured by the Federal Housing Administration ("FHA") or
guaranteed by the Veterans Administration ("VA"). The GNMA guarantee is
backed by the full faith and credit of the U.S. Government. GNMA is also
empowered to borrow without limitation from the U.S. Treasury if necessary
to make any payments required under its guarantee.
The average life of a GNMA Certificate is likely to be substantially
shorter than the original maturity of the mortgages underlying the
securities. Prepayments of principal by mortgagors and mortgage
foreclosures will usually result in the return of the greater part of
principal investment long before the maturity of the mortgages in the
pool. Foreclosures impose no risk to principal investment because of the
GNMA guarantee, except to the extent that the Fund has purchased the
certificates at a premium in the secondary market.
FNMA Securities. The Federal National Mortgage Association ("FNMA")
was established to create a secondary market in mortgages insured by the
FHA. FNMA issues guaranteed mortgage pass-through certificates ("FNMA
Certificates"). FNMA Certificates resemble GNMA Certificates in that each
FNMA Certificate represents a pro rata share of all interest and principal
payments made and owed on the underlying pool. FNMA guarantees timely
payment of interest and principal on FNMA Certificates. The FNMA
guarantee is not backed by the full faith and credit of the U.S.
Government.
FHLMC Securities. The Federal Home Loan Mortgage Corporation
("FHLMC") was created to promote development of a nationwide secondary
market for conventional residential mortgages. FHLMC issues two types of
mortgage pass-through certificates ("FHLMC Certificates"): mortgage
participation certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble GNMA Certificates in that each PC represents a pro
rata share of all interest and principal payments made and owed on the
underlying pool. FHLMC guarantees timely monthly payment of interest on
PCs and the ultimate payment of principal. The FHLMC guarantee is not
backed by the full faith and credit of the U.S. Government.
GMCs also represent a pro rata interest in a pool of mortgages.
However, these instruments pay interest semi-annually and return principal
once a year in guaranteed minimum payments. The expected average life of
these securities is approximately ten years. The FHLMC guarantee is not
backed by the full faith and credit of the U.S. Government.
Mortgage-Backed Security Rolls. The Fund may enter into "forward
roll" transactions with respect to mortgage-backed securities issued by
GNMA, FNMA or FHLMC. In a forward roll transaction, which is considered
to be a borrowing by the Fund, the Fund will sell a mortgage security to
a bank or other permitted entity and simultaneously agree to repurchase
a similar security from the institution at a later date at an agreed upon
price. The mortgage securities that are repurchased will bear the same
interest rate as those sold, but generally will be collateralized by
different pools of mortgages with different prepayment histories than
those sold. Risks of mortgage-backed security rolls include: (i) the risk
of prepayment prior to maturity, (ii) the possibility that the proceeds
of the sale may have to be invested in money market instruments (typically
repurchase agreements) maturing not later than the expiration of the roll,
and (iii) the possibility that the market value of the securities sold by
the Fund may decline below the price at which the Fund is obligated to
purchase the securities. Upon entering into a mortgage-backed security
roll, the Fund will be required to place cash, U.S. Government Securities
or other high-grade debt securities in a segregated account with its
Custodian in an amount equal to its obligation under the roll.
-- Commercial Paper. The Fund's commercial paper investments include
the following:
Variable Amount Master Demand Notes. Master demand notes are
corporate obligations which permit the investment of fluctuating amounts
by the Fund at varying rates of interest pursuant to direct arrangements
between the Fund, as lender, and the borrower. They permit daily changes
in the amounts borrowed. The Fund has the right to increase the amount
under the note at any time up to the full amount provided by the note
agreement, or to decrease the amount, and the borrower may prepay up to
the full amount of the note without penalty. These notes may or may not
be backed by bank letters of credit. Because these notes are direct
lending arrangements between the lender and borrower, it is not generally
contemplated that they will be traded. There is no secondary market for
these notes, although they are redeemable (and thus immediately repayable
by the borrower) at principal amount, plus accrued interest, at any time.
Accordingly, the Fund's right to redeem such notes is dependent upon the
ability of the borrower to pay principal and interest on demand. The Fund
has no limitations on the type of issuer from whom these notes will be
purchased; however, in connection with such purchases and on an ongoing
basis, the Manager will consider the earning power, cash flow and other
liquidity ratios of the issuer, and its ability to pay principal and
interest on demand, including a situation in which all holders of such
notes made demand simultaneously. Investments in master demand notes are
subject to the limitation on investments by the Fund in illiquid
securities, described in the Prospectus.
Floating Rate/Variable Rate Notes. Some of the notes the Fund may
purchase may have variable or floating interest rates. Variable rates are
adjustable at stated periodic intervals; floating rates are automatically
adjusted according to a specified market rate for such investments, such
as the percentage of the prime rate of a bank, or the 91-day U.S. Treasury
Bill rate. Such obligations may be secured by bank letters of credit or
other credit support arrangements.
-- Mortgage-Backed Securities and CMO's. These securities represent
participation interests in pools of residential mortgage loans. Mortgage-
backed securities include collateralized mortgage-backed obligations
(referred to as "CMOs") issued by the U.S. government, its agencies or
instrumentalities, or by private issuers. Mortgage-backed securities and
CMOs securities differ from conventional debt securities which generally
provide for periodic payment of interest in fixed or determinable amounts
(usually semi-annually) with principal payments at maturity or specified
call dates.
Mortgage-Backed Securities. The yield on mortgage-backed securities
is based on the average expected life of the underlying pool of mortgage
loans. The actual life of any particular pool will be shortened by any
unscheduled or early payments of principal and interest. Principal
prepayments generally result from the sale of the underlying property or
the refinancing or foreclosure of underlying mortgages. The occurrence
of prepayments is affected by a wide range of economic, demographic and
social factors and, accordingly, it is not possible to predict accurately
the average life of a particular pool. Yield on such pools is usually
computed by using the historical record of prepayments for that pool, or,
in the case of newly-issued mortgages, the prepayment history of similar
pools. The actual prepayment experience of a pool of mortgage loans may
cause the yield realized by the Fund to differ from the yield calculated
on the basis of the expected average life of the pool.
Prepayments tend to increase during periods of falling interest
rates, while during periods of rising interest rates prepayments will most
likely decline. When prevailing interest rates rise, the value of a pass-
through security may decrease, as do the values of other debt securities,
but, when prevailing interest rates decline, the value of a pass-through
security is not likely to rise to the extent that the value of other debt
securities rise, because of the prepayment feature of pass-through
securities. The Fund's reinvestment of scheduled principal payments and
unscheduled prepayments it receives may occur at times when available
investments offer higher or lower rates than the original investment, thus
affecting the yield of the Fund. Monthly interest payments received by
the Fund have a compounding effect which may increase the yield to the
Fund more than debt obligations that pay interest semi-annually. Because
of those factors, mortgage-backed securities may be less effective than
Treasury bonds of similar maturity at maintaining yields during periods
of declining interest rates. The Fund may purchase mortgage-backed
securities at par or at a premium or at a discount. Accelerated
prepayments adversely affect yields for pass-through securities purchased
at a premium (i.e., at a price in excess of their principal amount) and
may involve additional risk of loss of principal because the premium may
not have been fully amortized at the time the obligation is repaid. The
opposite is true for pass-through securities purchased at a discount.
The Fund may invest in "stripped" mortgage-backed securities, in
which the principal and interest portions of the security are separated
and sold. Stripped mortgage-backed securities usually have at least two
classes each of which receives different proportions of interest and
principal distributions on the underlying pool of mortgage assets. One
common variety of stripped mortgage-backed security has one class that
receives some of the interest and most of the principal, while the other
class receives most of the interest and remainder of the principal. In
some cases, one class will receive all of the interest (the "interest-
only" or "I/O" class), while the other class will receive all of the
principal (the "principal-only" or "P/O" class).
The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the
underlying mortgages. Principal prepayments increase that sensitivity.
Stripped securities that pay "interest only" are therefore subject to
greater price volatility when interest rates change, and they have the
additional risk that if the underlying mortgages are prepaid, the Fund
will lose the anticipated cash flow from the interest on the prepaid
mortgages. That risk is increased when general interest rates fall, and
in times of rapidly falling interest rates, the Fund might receive back
less than its investment.
The value of "principal only" securities generally increases as
interest rates decline and prepayment rates rise. The price of these
securities is typically more volatile than that of coupon-bearing bonds
of the same maturity.
CMOs. CMOs are fully-collateralized bonds that are the general
obligations of the issuer thereof. Such bonds generally are secured by
an assignment to a trustee (under the indenture pursuant to which the
bonds are issued) of collateral consisting of a pool of mortgages.
Payments with respect to the underlying mortgages generally are made to
the trustee under the indenture. Payments of principal and interest on
the underlying mortgages are not passed through to the holders of the CMOs
as such (i.e., the character of payments of principal and interest is not
passed through, and therefore payments to holders of CMOs attributable to
interest paid and principal repaid on the underlying mortgages do not
necessarily constitute income and return of capital, respectively, to such
holders), but such payments are dedicated to payment of interest on and
repayment of principal of the CMOs. CMOs often are issued in two or more
classes with different characteristics such as varying maturities and
stated rates of interest. Because interest and principal payments on the
underlying mortgages are not passed through to holders of CMOs, CMOs of
varying maturities may be secured by the same pool of mortgages, the
payments on which are used to pay interest on each class and to retire
successive maturities (known as "tranches") in sequence. Unlike other
mortgage-backed securities (discussed above), CMOs are designed to be
retired as the underlying mortgages are repaid. In the event of
prepayment on such mortgages, the class of CMO first to mature generally
will be paid down. Therefore, although in most cases the issuer of CMOs
will not supply additional collateral in the event of such prepayment,
there will be sufficient collateral to secure CMOs that remain
outstanding. The value of certain classes or "tranches" may be more
volatile than the value of the pool as a whole, and losses may be more
severe than on other classes.
Mortgage-backed securities may be less effective than debt
obligations of similar maturity at maintaining yields during periods of
declining interest rates. As new types of mortgage-related securities are
developed and offered to investors, the Manager will, subject to the
direction of the Board of Trustees and consistent with the Fund's
investment objectives and policies, consider making investments in such
new types of mortgage-related securities.
-- Asset-Backed Securities. The value of an asset-backed security
is affected by changes in the market's perception of the asset backing the
security, the creditworthiness of the servicing agent for the loan pool,
the originator of the loans, or the financial institution providing any
credit enhancement, and is also affected if any credit enhancement has
been exhausted. The risks of investing in asset-backed securities are
ultimately dependent upon payment of consumer loans by the individual
borrowers. As a purchaser of an asset-backed security, the Fund would
generally have no recourse to the entity that originated the loans in the
event of default by a borrower. The underlying loans are subject to
prepayments, which may shorten the weighted average life of asset-backed
securities and may lower their return, in the same manner as described in
the Prospectus and in "Mortgage-Backed Securities and CMOs", above, for
prepayments of a pool of mortgage loans underlying mortgage-backed
securities.
-- Zero Coupon Securities. The Fund may invest in zero coupon
securities issued by the U.S. Treasury or by private issuers such as
domestic or foreign corporations. Zero coupon U.S. Treasury securities
include: (1) U.S. Treasury bills without interest coupons, (2) U.S.
Treasury notes and bonds that have been stripped of their unmatured
interest coupons and (3) receipts or certificates representing interests
in such stripped debt obligations or coupons. These securities usually
trade at a deep discount from their face or par value and will be subject
to greater fluctuations in market value in response to changing interest
rates than debt obligations of comparable maturities that make current
payments of interest. However, the lack of periodic interest payments
means that the interest rate is "locked in" and the investor avoids the
risk of having to reinvest periodic interest payments in securities having
lower rates. An additional risk of private-issuer zero coupon securities
is the credit risk that the issuer will be unable to make payment at
maturity of the obligation.
Because the Fund accrues taxable income from zero coupon securities
without receiving cash, the Fund may be required to sell portfolio
securities in order to pay dividends or redemption proceeds for its
shares, which require the payment of cash. This will depend on several
factors: the proportion of shareholders who elect to receive dividends in
cash rather than reinvesting dividends in additional shares of the Fund,
and the amount of cash income the Fund receives from other investments and
the sale of shares. In either case, cash distributed or held by the Fund
that is not reinvested by investors in additional Fund shares will hinder
the Fund from seeking current income.
-- Participation Interests. The Fund may invest in participation
interests, subject to the limitation, described in "Illiquid and
Restricted Securities" in the Prospectus on investments by the Fund in
illiquid investments. Participation interests provide the Fund an
undivided interest in a loan made by the issuing financial institution in
the proportion that the Fund's participation interest bears to the total
principal amount of the loan. No more than 5% of the Fund's net assets
can be invested in participation interests of the same borrower. The
issuing financial institution may have no obligation to the Fund other
than to pay the Fund the proportionate amount of the principal and
interest payments it receives. Participation interests are primarily
dependent upon the creditworthiness of the borrowing corporation, which
is obligated to make payments of principal and interest on the loan, and
there is a risk that such borrowers may have difficulty making payments.
In the event the borrower fails to pay scheduled interest or principal
payments, the Fund could experience a reduction in its income and might
experience a decline in the value of that participation interest and in
the net asset value of its shares. In the event of a failure by the
financial institution to perform its obligation in connection with the
participation agreement, the Fund might incur certain costs and delays in
realizing payment or may suffer a loss of principal and/or interest.
-- Bank Obligations and Instruments Secured Thereby. The bank
obligations the Fund may invest in include time deposits, certificates of
deposit, and bankers' acceptances if they are: (i) obligations of a
domestic bank with total assets of at least $1 billion or (ii) obligations
of a foreign bank with total assets of at least U.S. $1 billion. The Fund
may also invest in instruments secured by such obligations (e.g., debt
which is guaranteed by the bank). For purposes of this section, the term
"bank" includes commercial banks, savings banks, and savings and loan
associations which may or may not be members of the Federal Deposit
Insurance Corporation.
Time deposits are non-negotiable deposits in a bank for a specified
period of time at a stated interest rate, whether or not subject to
withdrawal penalties. However, time deposits that are subject to
withdrawal penalties, other than those maturing in seven days or less, are
subject to the limitation on investments by the Fund in illiquid
investments, set forth in the Prospectus under "Illiquid and Restricted
Securities."
Banker's acceptances are marketable short-term credit instruments
used to finance the import, export, transfer or storage of goods. They
are deemed "accepted" when a bank guarantees their payment at maturity.
-- Equity Securities. Additional information about some of the
types of equity securities the Fund may invest in is provided below.
-- Convertible Securities. While convertible securities are a form
of debt security in many cases, their conversion feature (allowing
conversion into equity securities) causes them to be regarded more as
"equity equivalents." As a result, any rating assigned to the security
has less impact on the Manager's investment decision with respect to
convertible securities than in the case of non-convertible debt
securities. To determine whether convertible securities should be
regarded as "equity equivalents," the Manager examines the following
factors: (1) whether, at the option of the investor, the convertible
security can be exchanged for a fixed number of shares of common stock of
the issuer, (2) whether the issuer of the convertible securities has
restated its earnings per share of common stock on a fully diluted basis
(considering the effect of converting the convertible securities), and (3)
the extent to which the convertible security may be a defensive "equity
substitute," providing the ability to participate in any appreciation in
the price of the issuer's common stock.
-- Warrants and Rights. Warrants are options to purchase equity
securities at set prices valid for a specified period of time. The prices
of warrants do not necessarily move in a manner parallel to the prices of
the underlying securities. The price the Fund pays for a warrant will be
lost unless the warrant is exercised prior to its expiration. Rights are
similar to warrants, but normally have a short duration and are
distributed directly by the issuer to its shareholders. Rights and
warrants have no voting rights, receive no dividends and have no rights
with respect to the assets of the issuer.
-- Foreign Securities. As noted in the Prospectus, the Fund may
invest in securities (which may be denominated in U.S. dollars or non-U.S.
currencies) issued or guaranteed by foreign corporations, certain
supranational entities (described below) and foreign governments or their
agencies or instrumentalities, and in securities issued by U.S.
corporations denominated in non-U.S. currencies. The types of foreign
debt obligations and other securities in which the Fund may invest are the
same types of debt and equity securities identified above. Foreign
securities are subject, however, to additional risks not associated with
domestic securities, as discussed below. These additional risks may be
more pronounced as to investments in securities issued by emerging market
countries or by companies located in emerging market countries.
Securities of foreign issuers that are represented by American
depository receipts, or that are listed on a U.S. securities exchange, or
are traded in the U.S. over-the-counter market are not considered "foreign
securities" because they are not subject to many of the special
considerations and risks (discussed below) that apply to foreign
securities traded and held abroad. If the Fund's securities are held
abroad, the countries in which such securities may be held and the sub-
custodians holding must be, in most cases, approved by the Fund's Board
of Trustees under applicable SEC rules.
The Fund may invest in U.S. dollar-denominated, collateralized "Brady
Bonds." These debt obligations of foreign entities may be fixed-rate par
bonds or floating- rate discount bonds and are generally collateralized
in full as to principal due at maturity by U.S. Treasury zero coupon
obligations that have the same maturity as the Brady Bonds. Brady Bonds
are often viewed as having three or four valuation components: (i) the
collateralized repayment of principal at final maturity; (ii) the
collateralized interest payments; (iii) the uncollateralized interest
payments; and (iv) any uncollateralized repayment of principal at maturity
(these uncollateralized amounts constitute the "residual risk"). In the
event of a default with respect to collateralized Brady Bonds as a result
of which the payment obligations of the issuer are accelerated, the zero
coupon Treasury securities held as collateral for the payment of principal
will not be distributed to investors, nor will such obligations be sold
and the proceeds distributed. The collateral will be held by the
collateral agent to the scheduled maturity of the defaulted Brady Bonds,
which will continue to be outstanding, at which time the face amount of
the collateral will equal the principal payments which would have then
been due on the Brady Bonds in the normal course. In addition, in light
of the residual risk of Brady Bonds and, among other factors, the history
of defaults with respect to commercial bank loans to public and private
entities of countries issuing Brady Bonds, investments in Brady Bonds are
to be viewed as speculative.
The obligations of foreign governmental entities may or may not be
supported by the full faith and credit of a foreign government.
Obligations of supranational entities include those of international
organizations designated or supported by governmental entities to promote
economic reconstruction or development and of international banking
institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the "World Bank"),
the European Coal and Steel Community, the Asian Development Bank and the
Inter-American Development Bank. The governmental members, or
"stockholders," of these entities usually make initial capital
contributions to the supranational entity and in many cases are committed
to make additional capital contributions if the supranational entity is
unable to repay its borrowings. Each supranational entity's lending
activities are limited to a percentage of its total capital (including
"callable capital" contributed by members at the entity's call), reserves
and net income. There is no assurance that foreign governments will be
able or willing to honor their commitments.
Investing in foreign securities involves considerations and possible
risks not typically associated with investing in securities in the U.S.
The values of foreign securities will be affected by changes in currency
rates or exchange control regulations or currency blockage, application
of foreign tax laws, including withholding taxes, changes in governmental
administration or economic or monetary policy (in the U.S. or abroad) or
changed circumstances in dealings between nations. Costs will be incurred
in connection with conversions between various currencies. Foreign
brokerage commissions are generally higher than commissions in the U.S.,
and foreign securities markets may be less liquid, more volatile and less
subject to governmental regulation than in the U.S. Investments in foreign
countries could be affected by other factors not generally thought to be
present in the U.S., including expropriation or nationalization,
confiscatory taxation and potential difficulties in enforcing contractual
obligations, and could be subject to extended settlement periods.
Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S.
dollar will result in a change in the U.S. dollar value of the Fund's
assets and its income available for distribution. In addition, although
a portion of the Fund's investment income may be received or realized in
foreign currencies, the Fund will be required to compute and distribute
its income in U.S. dollars, and absorb the cost of currency fluctuations.
The Fund may engage in foreign currency exchange transactions for hedging
purposes to protect against changes in future exchange rates. See "Other
Investment Techniques and Strategies - Hedging," below.
The values of foreign investments and the investment income derived
from them may also be affected unfavorably by changes in currency exchange
control regulations. Although the Fund will invest only in securities
denominated in foreign currencies that at the time of investment do not
have significant government-imposed restrictions on conversion into U.S.
dollars, there can be no assurance against subsequent imposition of
currency controls. In addition, the values of foreign securities will
fluctuate in response to a variety of factors, including changes in U.S.
and foreign interest rates.
Investments in foreign securities offer potential benefits not
available from investing solely in securities of domestic issuers, by
offering the opportunity to invest in foreign issuers that appear to offer
growth potential, or in foreign countries with economic policies or
business cycles different from those of the U.S., or to reduce
fluctuations in portfolio value by taking advantage of foreign bond or
other markets that do not move in a manner parallel to U.S. markets. From
time to time, U.S. government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other
restrictions, and it is possible that such restrictions could be
reimposed.
-- Portfolio Turnover. To the extent that increased portfolio
turnover results in gains from sales of securities held less than three
months, the Fund's ability to qualify as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code") may be affected. Although changes in the value of the Fund's
portfolio securities subsequent to their acquisition are reflected in the
net asset value of the Fund's shares, such changes will not affect the
income received by the Fund from such securities. The dividends paid by
the Fund will increase or decrease in relation to the income received by
the Fund from its investments, which will in any case be reduced by the
Fund's expenses before being distributed to the Fund's shareholders.
Other Investment Techniques and Strategies
-- Borrowing. From time to time, the Fund may increase its
ownership of securities by borrowing from banks on a unsecured basis and
investing the borrowed funds, subject to the restrictions stated in the
Prospectus. Any such borrowing will be made only from banks, and pursuant
to the requirements of the Investment Company Act, will be made only to
the extent that the value of that Fund's assets, less its liabilities
other than borrowings, is equal to at least 300% of all borrowings
including the proposed borrowing and amounts covering the Fund's
obligations under "forward roll" transactions. If the value of the Fund's
assets so computed should fail to meet the 300% asset coverage
requirement, the Fund is required within three days to reduce its bank
debt to the extent necessary to meet such requirement and may have to sell
a portion of its investments at a time when independent investment
judgment would not dictate such sale. Borrowing for investment increases
both investment opportunity and risk. Since substantially all of the
Fund's assets fluctuate in value, but borrowing obligations are fixed,
when the Fund has outstanding borrowings, its net asset value per share
correspondingly will tend to increase and decrease more when portfolio
assets fluctuate in value than otherwise would be the case.
-- When-Issued and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis, and may purchase or sell
such securities on a "delayed delivery" basis. Although the Fund will
enter into such transactions for the purpose of acquiring securities for
its portfolio or for delivery pursuant to options contracts it has entered
into, the Fund may dispose of a commitment prior to settlement. "When-
issued" or "delayed delivery" refers to securities whose terms and
indenture are available and for which a market exists, but which are not
available for immediate delivery, or to securities to be delivered at a
later date. When such transactions are negotiated, the price (which is
generally expressed in yield terms) is fixed at the time the commitment
is made, but delivery and payment for the securities take place at a later
date. The Fund does not intend to make such purchases for speculative
purposes. The commitment to purchase a security for which payment will
be made on a future date may be deemed a separate security and involve
risk of loss if the value of the security declines prior to the settlement
date. During the period between commitment by the Fund and settlement
(generally within two months but not to exceed 120 days), no payment is
made for the securities purchased by the purchaser, and no interest
accrues to the purchaser from the transaction. Such securities are
subject to market fluctuation; the value at delivery may be less than the
purchase price. The Fund will maintain a segregated account with its
Custodian, consisting of cash, U.S. Government securities or other high
grade debt obligations at least equal to the value of purchase commitments
until payment is made.
The Fund will engage in when-issued transactions in order to secure
what is considered to be an advantageous price and yield at the time of
entering into the obligation. When the Fund engages in when-issued or
delayed delivery transactions, it relies on the buyer or seller, as the
case may be, to consummate the transaction. Failure of the buyer or
seller to do so may result in the Fund losing the opportunity to obtain
a price and yield considered to be advantageous. At the time the Fund
makes a commitment to purchase or sell a security on a when-issued or
forward commitment basis, it records the transaction and reflects the
value of the security purchased, or if a sale, the proceeds to be
received, in determining its net asset value. If the Fund chooses to (i)
dispose of the right to acquire a when-issued security prior to its
acquisition or (ii) dispose of its right to deliver or receive against a
forward commitment, it may incur a gain or loss.
To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objectives and policies and not
for the purposes of investment leverage. The Fund enters into such
transactions only with the intention of actually receiving or delivering
the securities, although as noted above, when-issued securities and
forward commitments may be sold prior to settlement date. In addition,
changes in interest rates before settlement in a direction other than that
expected by the Manager will affect the value of such securities and may
cause a loss to the Fund.
When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and prices.
For instance, in periods of rising interest rates and falling prices, the
Fund might sell securities in its portfolio on a forward commitment basis
to attempt to limit its exposure to anticipated falling prices. In
periods of falling interest rates and rising prices, the Fund might sell
portfolio securities and purchase the same or similar securities on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields.
-- Repurchase Agreements. In a repurchase transaction, the Fund
acquires a security from, and simultaneously resells it to, an approved
vendor (a U.S. commercial bank, the U.S. branch of a foreign bank or a
broker-dealer which has been designated a primary dealer in U.S.
government securities, which must meet the credit requirements set by the
Fund's Board of Trustees from time to time), for delivery on an agreed-
upon future date. The resale price exceeds the purchase price by an
amount that reflects an agreed-upon interest rate effective for the period
during which the repurchase agreement is in effect. The majority of these
transactions run from day to day, and delivery pursuant to resale
typically will occur within one to five days of the purchase. Repurchase
agreements are considered "loans" under the Investment Company Act,
collateralized by the underlying security. The Fund's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the collateral's value must equal or exceed the repurchase price
to fully collateralize the repayment obligation. Additionally, the
Manager will impose creditworthiness requirements to confirm that the
vendor is financially sound and will continuously monitor the collateral's
value.
-- Illiquid and Restricted Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the
Fund may have to cause those securities to be registered. The expenses
of registration of restricted securities may be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund, if
such registration is required before such securities may be sold publicly.
When registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the decision
is made to sell the securities and the time the Fund would be permitted
to sell them. The Fund would bear the risks of any downward price
fluctuation during that period. The Fund may also acquire, through
private placements, securities having contractual restrictions on their
resale, which might limit the Fund's ability to dispose of such securities
and might lower the amount realizable upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted and illiquid securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted securities
that are eligible for sale to qualified institutional purchasers pursuant
to Rule 144A under the Securities Act of 1933, provided that those
securities have been determined to be liquid by the Board of Trustees of
the Fund or by the Manager under Board-approved guidelines. Those
guidelines take into account the trading activity for such securities and
the availability of reliable pricing information, among other factors.
If there is a lack of trading interest in a particular Rule 144A security,
the Fund's holding of that security may be deemed to be illiquid.
-- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, at least equal the market value of
the loaned securities and must consist of cash, bank letters of credit,
U.S. government securities, or other cash equivalents in which the Fund
is permitted to invest. To be acceptable as collateral, letters of credit
must obligate a bank to pay amounts demanded by the Fund if the demand
meets the terms of the letter. Such terms and the issuing bank must be
satisfactory to the Fund. In a portfolio securities lending transaction,
the Fund receives from the borrower an amount equal to the interest paid
or the dividends declared on the loaned securities during the term of the
loan as well as the interest on the collateral securities, less any
finders' or administrative fees the Fund pays in arranging the loan. The
Fund may share the interest it receives on the collateral securities with
the borrower as long as it realizes at least a minimum amount of interest
required by the lending guidelines established by its Board of Trustees.
The Fund will not lend its portfolio securities to any officer, trustee,
employee or affiliate of the Fund or its Manager. The terms of the Fund's
loans must meet certain tests under the Internal Revenue Code and permit
the Fund to reacquire loaned securities on five business days' notice or
in time to vote on any important matter.
-- Hedging. As described in the Prospectus, the Fund may employ one
or more types of hedging instruments. When hedging to attempt to protect
against declines in the market value of the Fund's portfolio, to permit
the Fund to retain unrealized gains in the value of portfolio securities
which have appreciated, or to facilitate selling securities for investment
reasons, the Fund may: (i) sell Futures, (ii) buy puts on such Futures
or securities, or (iii) write calls on securities held by it or on
Futures. When hedging to attempt to protect against the possibility that
portfolio securities are not fully included in a rise in value of the debt
securities market, the Fund may: (i) buy Futures, or (ii) buy calls or
write puts on such Futures or on securities. Covered calls and puts may
also be written on debt securities to attempt to increase the Fund's
income. When hedging to protect against declines in the dollar value of
a foreign currency-denominated security, the Fund may: (a) buy puts on
that foreign currency and on foreign currency Futures, (b) write calls on
that currency or on such Futures, or (c) enter into Forward Contracts at
a higher or lower rate than the spot ("cash") rate.
The Fund's strategy of hedging with Futures and options on Futures
will be incidental to the Fund's activities in the underlying cash market.
Additional Information about the hedging instruments the Fund may use is
provided below. In the future, the Fund may employ hedging instruments
and strategies that are not presently contemplated but which may be
developed, to the extent such investment methods are consistent with the
Fund's investment objective, legally permissible and adequately disclosed.
-- Writing Covered Call Options. When the Fund writes a call on a
security, it receives a premium and agrees to sell the callable investment
to a purchaser of a corresponding call on the same security during the
call period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying security),
regardless of market price changes during the call period. The Fund has
retained the risk of loss should the price of the underlying security
decline during the call period, which may be offset to some extent by the
premium.
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." A
profit or loss will be realized, depending upon whether the net of the
amount of the option transaction costs and the premium received on the
call written is more or less than the price of the call subsequently
purchased. A profit may also be realized if the call lapses unexercised,
because the Fund retains the underlying investment and the premium
received. Any such profits are considered short-term capital gains for
Federal income tax purposes, and when distributed by the Fund are taxable
as ordinary income. An option position may be closed out only on a market
that provides secondary trading for option of the same series, and there
is no assurance that a liquid secondary market will exist for a particular
option. If the Fund could not effect a closing purchase transaction due
to lack of a market, it would have to hold the callable investments until
the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a futures
contract or a deliverable security, provided that at the time the call is
written, the Fund covers the call by segregating in escrow an equivalent
dollar amount of liquid assets. The Fund will segregate additional liquid
assets if the value of the escrowed assets drops below 100% of the
obligation under the Future. In no circumstances would an exercise notice
require the Fund to deliver a futures contract; it would simply put the
Fund in a short futures position, which is permitted by the Fund's hedging
policies.
-- Writing Put Options. A put option on securities gives the
purchaser the right to sell, and the writer the obligation to buy, the
underlying investment at the exercise price during the option period.
Writing a put covered by segregated liquid assets equal to the exercise
price of the put has the same economic effect to the Fund as writing a
covered call. The premium the Fund receives from writing a put option
represents a profit, as long as the price of the underlying investment
remains above the exercise price. However, the Fund has also assumed the
obligation during the option period to buy the underlying investment from
the buyer of the put at the exercise price, even though the value of the
investment may fall below the exercise price. If the put lapses
unexercised, the Fund (as the writer of the put) realizes a gain in the
amount of the premium. If the put is exercised, the Fund must fulfill its
obligation to purchase the underlying investment at the exercise price,
which will usually exceed the market value of the investment at that time.
In that case, the Fund may incur a loss, equal to the sum of the current
market value of the underlying investment and the premium received minus
the sum of the exercise price and any transaction costs incurred.
When writing put options on securities, to secure its obligation to
pay for the underlying security, the Fund will deposit in escrow liquid
assets with a value equal to or greater than the exercise price of the put
option. The Fund therefore forgoes the opportunity of investing the
segregated assets or writing calls against those assets. As long as the
obligation of the Fund as the put writer continues, it may be assigned an
exercise notice by the broker-dealer through whom such option was sold,
requiring the Fund to take delivery of the underlying security against
payment of the exercise price. The Fund has no control over when it may
be required to purchase the underlying security, since it may be assigned
an exercise notice at any time prior to the termination of its obligation
as the writer of the put. This obligation terminates upon expiration of
the put, or such earlier time at which the Fund effects a closing
purchase transaction by purchasing a put of the same series as that
previously sold. Once the Fund has been assigned an exercise notice, it
is thereafter not allowed to effect a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize a
profit on an outstanding put option it has written or to prevent an
underlying security from being put. Furthermore, effecting such a closing
purchase transaction will permit the Fund to write another put option to
the extent that the exercise price thereof is secured by the deposited
assets, or to utilize the proceeds from the sale of such assets for other
investments by the Fund. The Fund will realize a profit or loss from a
closing purchase transaction if the cost of the transaction is less or
more than the premium received from writing the option. As above for
writing covered calls, any and all such profits described herein from
writing puts are considered short-term gains for Federal tax purposes, and
when distributed by the Fund, are taxable as ordinary income.
-- Purchasing Calls and Puts. When the Fund purchases a call (other
than in a closing purchase transaction), it pays a premium and, except as
to calls on indices or Futures, has the right to buy the underlying
investment from a seller of a corresponding call on the same investment
during the call period at a fixed exercise price. When the Fund purchases
a call on an index or Future, it pays a premium, but settlement is in cash
rather than by delivery of the underlying investment to the Fund. In
purchasing a call, the Fund benefits only if the call is sold at a profit
or if, during the call period, the market price of the underlying
investment is above the sum of the exercise price plus the transaction
costs and the premium paid and the call is exercised. If the call is not
exercised or sold (whether or not at a profit), it will become worthless
at its expiration date and the Fund will lose its premium payment and the
right to purchase the underlying investment.
When the Fund purchases a put, it pays a premium and, except as to
puts on indices, has the right to sell the underlying investment to a
seller of a corresponding put on the same investment during the put period
at a fixed exercise price. Buying a put on an investment the Fund owns
enables the Fund to protect itself during the put period against a decline
in the value of the underlying investment below the exercise price by
selling such underlying investment at the exercise price to a seller of
a corresponding put. If the market price of the underlying investment is
equal to or above the exercise price and as a result the put is not
exercised or resold, the put will become worthless at its expiration date,
and the Fund will lose its premium payment and the right to sell the
underlying investment. The put may, however, be sold prior to expiration
(whether or not at a profit.)
Buying a put on an investment it does not own, either a put on an
index or a put on a Future not held by the Fund, permits the Fund either
to resell the put or buy the underlying investment and sell it at the
exercise price. The resale price of the put will vary inversely with the
price of the underlying investment. If the market price of the underlying
investment is above the exercise price and as a result the put is not
exercised, the put will become worthless on its expiration date. When the
Fund purchases a put on an index, or on a Future not held by it, the put
protects the Fund to the extent that the index moves in a similar pattern
to the securities held. In the case of a put on an index or Future,
settlement is in cash rather than by delivery by the Fund of the
underlying investment.
Puts and calls on broadly-based indices or Futures are similar to
puts and calls on securities except that all settlements are in cash and
gain or loss depends on changes in the index or Future in question (and
thus on price movements in the securities markets generally) rather than
on price movements in individual securities or futures contracts. When
the Fund buys a calls on an index or Future, it pays a premium. During
the call period, upon exercise of a call by the Fund, a seller of a
corresponding call on the same investment will pay the Fund an amount of
cash to settle the call if the closing level of the index or Future upon
which the call is based is greater than the exercise price of the call.
That cash payment is equal to the difference between the closing price of
the index or Future and the exercise price of the call times a specified
multiple (the "multiplier"), which determines the total dollar value for
each point of difference. When the Fund buys a put on an index or Future,
it pays a premium and has the right during the put period to require a
seller of a corresponding put, upon the Fund's exercise of its put, to
deliver to the Fund an amount of cash to settle the put if the closing
level of the index or Future upon which the put is based is less than the
exercise price of the put. That cash payment is determined by the
multiplier, in the same manner as described above as to calls.
An option position may be closed out only on a market which provides
secondary trading for options of the same series and there is no assurance
that a liquid secondary market will exist for any particular option. The
Fund's option activities may affect its turnover rate and brokerage
commissions. The exercise by the Fund of puts on securities will cause
the sale of related investments, increasing portfolio turnover. Although
such exercise is within the Fund's control, holding a put might cause the
Fund to sell the related investments for reasons which would not exist in
the absence of the put. The Fund will pay a brokerage commission each
time it buys a put or call, sells a put or call, or buys or sells an
underlying investment in connection with the exercise of a put or call.
Such commissions may be higher than those which would apply to direct
purchases or sales of such underlying investments. Premiums paid for
options are small in relation to the market value of the related
investments, and consequently, put or call options offer large amounts of
leverage. The leverage offered by trading in options could result in the
Fund's net asset value being more sensitive to changes in the value of the
underlying investments.
-- Options on Foreign Currencies. The Fund intends to write and
purchase calls and puts on foreign currencies. The Fund may purchase and
write puts and calls on foreign currencies that are traded on a securities
or commodities exchange or over-the-counter markets or are quoted by major
recognized dealers in such options. It does so to protect against
declines in the dollar value of foreign securities and against increases
in the dollar cost of foreign securities to be acquired. If the Manager
anticipates a rise in the dollar value of a foreign currency in which
securities to be acquired are denominated, the increased cost of such
securities may be partially offset by purchasing calls or writing puts on
that foreign currency. If a decline in the dollar value of a foreign
currency is anticipated, the decline in value of portfolio securities
denominated in that currency may be partially offset by writing calls or
purchasing puts on that foreign currency. However, in the event of
currency rate fluctuations adverse to the Fund's position, it would lose
the premium it paid and transaction costs.
A call written on a foreign currency by the Fund is covered if the
Fund owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without
additional cash consideration (or for additional cash consideration held
in a segregated account by its Custodian) upon conversion or exchange of
other foreign currency held in its portfolio. A call may be written by
the Fund on a foreign currency to provide a hedge against a decline in the
U.S. dollar value of a security which the Fund owns or has the right to
acquire and which is denominated in the currency underlying the option due
to an expected adverse change in the exchange rate. This is a cross-
hedging strategy. In such circumstances, the Fund covers the option by
maintaining in a segregated account with the Fund's Custodian, cash or
U.S. government securities or other liquid, high grade debt securities in
an amount equal to the exercise price of the option.
-- Interest Rate Futures. No price is paid or received upon the
purchase or sale of an Interest Rate Future. Interest Rate Futures
obligate one party to deliver and the other party to take a specific debt
security or amount of foreign currency, respectively, at a specified price
on a specified date. Upon entering into a Futures transaction, the Fund
will be required to deposit an initial margin payment with the futures
commission merchant (the "futures broker"). The initial margin will be
deposited with the Fund's Custodian in an account registered in the
futures broker's name; however the futures broker can gain access to that
account only under specified conditions. As the Future is marked to
market to reflect changes in its market value, subsequent margin payments,
called variation margin, will be made to and from the futures broker on
a daily basis. Prior to expiration of the Future, if the Fund elects to
close out its position by taking an opposite position, a final
determination of variation margin is made, additional cash is required to
be paid by or released to the Fund, and any loss or gain is realized for
tax purposes. Although Interest Rate Futures by their terms call for
settlement by delivery or acquisition of debt securities, in most cases
the obligation is fulfilled by entering into an offsetting position. All
futures transactions are effected through a clearinghouse associated with
the exchange on which the contracts are traded.
-- Financial Futures. Financial Futures are similar to Interest
Rate Futures except that settlement is made in cash, and net gain or loss
on options on Financial Futures depends on price movements of the
securities included in the index. The strategies which the Fund employs
regarding Financial Futures are similar to those described above with
regard to Interest Rate Futures.
-- Forward Contracts. A Forward Contract involves bilateral
obligations of one party to purchase, and another party to sell, a
specific currency at a future date (which may be any fixed number of days
from the date of the contract agreed upon by the parties), at a price set
at the time the contract is entered into. These contracts are traded in
the interbank market conducted directly between currency traders (usually
large commercial banks) and their customers.
The Fund may use Forward Contracts to protect against uncertainty in
the level of future exchange rates. The use of Forward Contracts does not
eliminate fluctuations in the prices of the underlying securities the Fund
owns or intends to acquire, but it does fix a rate of exchange in advance.
In addition, although Forward Contracts limit the risk of loss due to a
decline in the value of the hedged currencies, at the same time they limit
any potential gain that might result should the value of the currencies
increase.
The Fund may enter into Forward Contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when
the Fund anticipates receipt of dividend payments in a foreign currency,
the Fund may desire to "lock-in" the U.S. dollar price of the security or
the U.S. dollar equivalent of such payment. To do so, the Fund enters
into a Forward Contract, for a fixed amount of U.S. dollars per unit of
foreign currency, for the purchase or sale of the amount of foreign
currency involved in the underlying transaction ("transaction hedge").
The Fund will thereby be able to protect itself against a possible loss
resulting from an adverse change in the relationship between the currency
exchange rates during the period between the date on which the security
is purchased or sold, or on which the payment is declared, and the date
on which such payments are made or received.
The Fund may also use Forward Contracts to lock in the U.S. dollar
value of portfolio positions ("position hedge"). In a position hedge, for
example, when the Fund believes that foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a forward
sale contract to sell an amount of that foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in
such foreign currency. When the Fund believes that the U.S. dollar may
suffer a substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a fixed
dollar amount. In either situation the Fund may, in the alternative,
enter into a forward contract to sell a different foreign currency for a
fixed U.S. dollar amount where the Fund believes that the U.S. dollar
value of the currency to be sold pursuant to the forward contract will
fall whenever there is a decline in the U.S. dollar value of the currency
in which portfolio securities of the Fund are denominated ("cross hedge").
The Fund will not enter into such Forward Contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of
the value of the Fund's portfolio securities or other assets denominated
in that currency or a closely-correlated currency. The Fund, however, in
order to avoid excess transactions and transaction costs, may maintain a
net exposure to Forward Contracts in excess of the value of the Fund's
portfolio securities or other assets denominated in that currency or a
closely-correlated currency provided the excess amount is "covered" by
liquid, high-grade debt securities, denominated in any currency, at least
equal at all times to the amount of such excess. As an alternative, the
Fund may purchase a call option permitting the Fund to purchase the amount
of foreign currency being hedged by a forward sale contract at a price no
higher than the forward contract price or the Fund may purchase a put
option permitting the Fund to sell the amount of foreign currency subject
to a forward purchase contract at a price as high or higher than the
forward contract price. Unanticipated changes in currency prices may
result in poorer overall performance for the Fund than if it had not
entered into such contracts.
The precise matching of the Forward Contract amounts and the value
of the securities involved will not generally be possible because the
future value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities between
the date the Forward Contract is entered into and the date it is sold.
Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (i.e., cash) market (and bear the expense
of such purchase), if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some
of the foreign currency received upon the sale of the portfolio security
if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-
term hedging strategy is highly uncertain. Forward Contracts involve the
risk that anticipated currency movements will not be accurately predicted,
causing the Fund to sustain losses on these contracts and transactions
costs.
At or before the maturity of a Forward Contract requiring the Fund
to sell a currency, the Fund may either sell a portfolio security and use
the sale proceeds to make delivery of the currency or retain the security
and offset its contractual obligation to deliver the currency by
purchasing a second contract pursuant to which the Fund will obtain, on
the same maturity date, the same amount of the currency that it is
obligated to deliver. Similarly, the Fund may close out a Forward
Contract requiring it to purchase a specified currency by entering into
a second contract entitling it to sell the same amount of the same
currency on the maturity date of the first contract. The Fund would
realize a gain or loss as a result of entering into such an offsetting
Forward Contract under either circumstance to the extent the exchange rate
or rates between the currencies involved moved between the execution dates
of the first contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period
and the market conditions then prevailing. Because Forward Contracts are
usually entered into on a principal basis, no fees or commissions are
involved. Because such contracts are not traded on an exchange, the Fund
must evaluate the credit and performance risk of each particular
counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S. dollars,
it does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may convert foreign currency from time
to time, and investors should be aware of the costs of currency
conversion. Foreign exchange dealers do not charge a fee for conversion,
but they do seek to realize a profit based on the difference between the
prices at which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while offering
a lesser rate of exchange should the Fund desire to resell that currency
to the dealer.
-- Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the Fund
under a swap agreement will have been greater than those received by it.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, the
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor the
creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements.
A master netting agreement provides that all swaps done between the
Fund and that counterparty under the master agreement shall be regarded
as parts of an integral agreement. If on any date amounts are payable in
the same currency in respect of one or more swap transactions, the net
amount payable on that date in that currency shall be paid. In addition,
the master netting agreement may provide that if one party defaults
generally or on one swap, the counterparty may terminate the swaps with
that party. Under such agreements, if there is a default resulting in a
loss to one party, the measure of that party's damages is calculated by
reference to the average cost of a replacement swap with respect to each
swap (i.e., the mark-to-market value at the time of the termination of
each swap). The gains and losses on all swaps are then netted, and the
result is the counterparty's gain or loss on termination. The termination
of all swaps and the netting of gains and losses on termination is
generally referred to as "aggregation."
-- Additional Information About Hedging Instruments and Their Use.
The Fund's Custodian, or a securities depository acting for the Custodian,
will act as the Fund's escrow agent, through the facilities of the Options
Clearing Corporation ("OCC"), as to the investments on which the Fund has
written options traded on exchanges or as to other acceptable escrow
securities, so that no margin will be required for such transactions. OCC
will release the securities on the expiration of the option or upon the
Fund's entering into a closing transaction. An option position may be
closed out only on a market which provides secondary trading for options
of the same series, and there is no assurance that a liquid secondary
market will exist for any particular option.
When the Fund writes an over-the-counter("OTC") option, it will enter
into an arrangement with a primary U.S. Government securities dealer,
which would establish a formula price at which the Fund would have the
absolute right to repurchase that OTC option. That formula price would
generally be based on a multiple of the premium received for the option,
plus the amount by which the option is exercisable below the market price
of the underlying security (that is, the extent to which the option is
"in-the-money"). When the Fund writes an OTC option, it will treat as
illiquid (for purposes of the limit on its assets that may be invested in
illiquid securities, stated in the Prospectus) the mark-to-market value
of any OTC option held by it. The Securities and Exchange
Commission is evaluating whether OTC options should be considered liquid
securities, and the procedure described above could be affected by the
outcome of that evaluation.
The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise of calls written by the Fund may
cause the Fund to sell related portfolio securities, thus increasing its
turnover rate in a manner beyond the Fund's control. The exercise by the
Fund of puts on securities or Futures may cause the sale of related
investments, also increasing portfolio turnover. Although such exercise
is within the Fund's control, holding a put might cause the Fund to sell
the related investments for reasons which would not exist in the absence
of the put. The Fund will pay a brokerage commission each time it buys
or sells a put, a call, or an underlying investment in connection with the
exercise of a put or call. Such commissions may be higher than those
which would apply to direct purchases or sales of the underlying
investments. Premiums paid for options are small in relation to the
market value of the related investments, and consequently, put and call
options offer large amounts of leverage. The leverage offered by trading
in options could result in the Fund's net asset value being more sensitive
to changes in the value of the underlying investments.
-- Regulatory Aspects of Hedging Instruments. The Fund is required
to operate within certain guidelines and restrictions with respect to its
use of Futures and options on Futures established by the Commodity Futures
Trading Commission ("CFTC"). In particular, the Fund is exempted from
registration with the CFTC as a "commodity pool operator" if the Fund
complies with the requirements of the Rule adopted by the CFTC. The Rule
does not limit the percentage of the Fund's assets that may be used for
Futures margin and related options premiums for a bona fide hedging
position. However, under the Rule the Fund must limit its aggregate
Futures margin and related options premiums to no more than 5% of the
Fund's net assets for hedging strategies that are not considered bona fide
hedging strategies under the Rule.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of options
that may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options were written or
purchased on the same or different exchanges or are held in one or more
accounts or through one or more different exchanges or through one or more
brokers. Thus, the number of options which the Fund may write or hold may
be affected by options written or held by other entities, including other
investment companies having the same adviser as the Fund (or an adviser
that is an affiliate of the Fund's adviser. The exchanges also impose
position limits on Futures transactions which apply to Futures. An
exchange may order the liquidation of positions found to be in violation
of those limits and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the Fund
buys or sells a Future, the Fund will maintain, in a segregated account
or accounts with its Custodian, cash or readily-marketable, short-term
(maturing in one year or less) debt instruments in an amount equal to the
net exposure between the market value and the contract price of the
Future, less the margin deposit applicable to it.
-- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code (although it reserves the right not to qualify). That
qualification enables the Fund to "pass through" its income and realized
capital gains to shareholders without having to pay tax on them. This
avoids a "double tax" on that income and capital gains, since shareholders
normally will be taxed on the dividends and capital gains they receive
from the Fund (unless the Fund's shares are held in a retirement account
or the shareholder is otherwise exempt from tax). One of the tests for
the Fund's qualification as a regulated investment company is that less
than 30% of its gross income must be derived from gains realized on the
sale of securities held for less than three months. To comply with this
30% cap, the Fund will limit the extent to which it engages in the
following activities, but will not be precluded from them: (i) selling
investments, including Futures, held for less than three months, whether
or not they were purchased on the exercise of a call held by the Fund;
(ii) purchasing calls or puts which expire in less than three months;
(iii) effecting closing transactions with respect to calls or puts
purchased less than three months previously; (iv) exercising puts or calls
held by the Fund for less than three months; or (v) writing calls on
investments held for less than three months.
Certain foreign currency exchange contracts ("Forward Contracts") in
which the Fund may invest are treated as "section 1256 contracts." Gains
or losses relating to section 1256 contracts generally are characterized
under the Internal Revenue Code as 60% long-term and 40% short-term
capital gains or losses. However, foreign currency gains or losses
arising from certain section 1256 contracts (including Forward Contracts)
generally are treated as ordinary income or loss. In addition, section
1256 contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses are
treated as though they were realized. These contracts also may be marked-
to-market for purposes of the excise tax applicable to investment company
distributions and for other purposes under rules prescribed pursuant to
the Internal Revenue Code. An election can be made by the Fund to exempt
these transactions from this marked-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund on straddle
positions. Generally, a loss sustained on the disposition of a position
making up a straddle is allowed only to the extent such loss exceeds any
unrecognized gain in the offsetting positions making up the straddle.
Disallowed loss is generally allowed at the point where there is no
unrecognized gain in the offsetting positions making up the straddle, or
the offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates that occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition
of debt securities denominated in a foreign currency and on disposition
of foreign currency forward contracts, gains or losses attributable to
fluctuations in the value of a foreign currency between the date of
acquisition of the security or contract and the date of disposition also
are treated as ordinary gain or loss. Currency gains and losses are
offset against market gains and losses on each trade before determining
a net "Section 988" gain or loss under the Internal Revenue Code for that
trade, which may increase or decrease the amount of the Fund's investment
company income available for distribution to its shareholders.
-- Risks of Hedging With Options and Futures. An option position
may be closed out only on a market that provides secondary trading for
options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option. In addition to the
risks associated with hedging that are discussed in the Prospectus and
above, there is a risk in using short hedging by selling Futures to
attempt to protect against decline in value of the Fund's portfolio
securities (due, for example, to an increase in interest rates) that the
prices of such Futures will correlate imperfectly with the behavior of the
cash (i.e., market value) prices of the Fund's securities. The ordinary
spreads between prices in the cash and futures markets are subject to
distortions due to differences in the natures of those markets. First,
all participants in the futures markets are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal relationship between the cash
and futures markets. Second, the liquidity of the futures markets depend
on participants entering into offsetting transactions rather than making
or taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures markets could be reduced, thus
producing distortion. Third, from the point of view of speculators, the
deposit requirements in the futures markets are less onerous than margin
requirements in the securities markets. Therefore, increased
participation by speculators in the futures markets may cause temporary
price distortions.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the
price of the equity securities being hedged and movements in the price of
the hedging instruments, the Fund may use hedging instruments in a greater
dollar amount than the dollar amount of equity securities being hedged if
the historical volatility of the prices of the equity securities being
hedged is more than the historical volatility of the applicable index.
It is also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of equity securities
held in the Fund's portfolio may decline. If that occurred, the Fund would
lose money on the hedging instruments and also experience a decline in
value in its portfolio securities. However, while this could occur for
a very brief period or to a very small degree, over time the value of a
diversified portfolio of equity securities will tend to move in the same
direction as the indices upon which the hedging instruments are based.
If the Fund uses hedging instruments to establish a position in the
debt securities markets as a temporary substitute for the purchase of
individual debt securities (long hedging) by buying Futures and/or calls
on such Futures or on debt securities, it is possible that the market may
decline; if the Fund then concludes not to invest in such securities at
that time because of concerns as to possible further market decline or for
other reasons, the Fund will realize a loss on the hedging instruments
that is not offset by a reduction in the price of the debt securities
purchased.
-- Short Sales "Against-the-Box." In a short sale, the seller does
not own the security that is sold, but normally borrows the security to
fulfill the delivery obligation. The seller later buys the security to
repay the loan, in the expectation that the price of the security will be
lower when the purchase is made, resulting in a gain. In these
transactions, the Fund owns an equivalent amount of the securities sold
short. This technique is primarily used for tax purposes.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth in
the Prospectus. Certain of those restrictions, and the Fund's investment
objective, are identified as fundamental policies. Fundamental policies
cannot be changed without the vote of a "majority" of the Fund's
outstanding voting securities. Under the Investment Company Act, such a
"majority" vote is defined as the vote of the holders of the lesser of:
(1) 67% or more of the shares present or represented by proxy at a
shareholder meeting if the holders of more than 50% of the outstanding
shares are present, or (2) more than 50% of the outstanding shares.
There are additional investment restrictions, as set forth below.
These additional investment restrictions are non-fundamental investment
policies that may be changed by the Fund's Board of Trustees. Under these
additional restrictions, the Fund cannot: (1) buy or sell real estate;
however, the Fund may invest in debt securities secured by real estate or
interests therein or issued by companies, including real estate investment
trusts, which invest in real estate or interests therein; (2) buy
securities on margin, except that the Fund may make margin deposits in
connection with any of the Hedging Instruments which it may use; (3)
underwrite securities issued by other persons except to the extent that,
in connection with the disposition of its portfolio investments, it may
be deemed to be an underwriter for purposes of the Securities Act of 1933;
(4) buy and retain securities of any issuer if those officers, Trustees
or Directors of the Fund or the Manager who beneficially own more than
0.5% of the securities of such issuer together own more than 5% of the
securities of such issuer; (5) invest in oil, gas, or other mineral
exploration or development programs or leases; or (6) buy the securities
of any company for the purpose of exercising management control, except
in connection with a merger, consolidation, reorganization or acquisition
of assets.
For purposes of the Fund's policy not to concentrate described in the
investment restrictions in the Prospectus, the Fund has adopted the
industry classifications set forth in Appendix A to this Statement of
Additional Information.
In connection with the registration of its shares in certain states,
the Fund has made the following undertakings. These undertakings shall
terminate if the Fund ceases to qualify its shares for sale in that state
or if the state's applicable rules or regulations are amended. The Fund
has undertaken that: (1) it will not invest more than 5% of its total
assets in equity securities of issuers that are not readily marketable,
(2) it will not invest more than 5% of its total assets in securities of
issuers that have operated less than three years (including operations of
predecessors), (3) it will not invest in securities of other investment
companies, except by purchase in the open market where no commission or
profit to a sponsor or dealer results from the purchase other than the
customary broker's commission, or (4) it will not invest more than 15% of
its total assets in securities of issuers which are restricted as to
disposition, including securities eligible for resale under Rule 144A of
the Securities Act of 1933.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the Fund is
not required to hold, and does not plan to hold, regular annual meetings
of shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder
meeting is called by the Trustees or upon proper request of the
shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund valued
at $25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the Trustees
will then either make the Fund's shareholder list available to the
applicants or mail their communication to all other shareholders at the
applicants' expense, or the Trustees may take such other action as set
forth under Section 16(c) of the Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides
for indemnification and reimbursement of expenses out of its property for
any shareholder held personally liable for its obligations. The
Declaration of Trust also provides that the Fund shall, upon request,
assume the defense of any claim made against any shareholder for any act
or obligation of the Fund and satisfy any judgment thereon. Thus, while
Massachusetts law permits a shareholder of a business trust (such as the
Fund) to be held personally liable as a "partner" under certain
circumstances, the risk of a Fund shareholder incurring financial loss on
account of shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations
described above. Any person doing business with the Trust, and any
shareholder of the Trust, agrees under the Trust's Declaration of Trust
to look solely to the assets of the Trust for satisfaction of any claim
or demand which may arise out of any dealings with the Trust, and the
Trustees shall have no personal liability to any such person, to the
extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and officers and
their principal occupations and business affiliations during the past five
years are set forth below. Each Trustee is also a Trustee, Director or
Managing General Partner of Daily Cash Accumulation Fund, Inc., Centennial
Money Market Trust, Centennial Tax Exempt Trust, Centennial Government
Trust, Centennial New York Tax Exempt Trust, Centennial California Tax
Exempt Trust, Centennial America Fund, L.P., Oppenheimer Total Return
Fund, Inc., Oppenheimer Equity Income Fund, Oppenheimer Champion High
Yield Fund, Oppenheimer High Yield Fund, Oppenheimer Cash Reserves,
Oppenheimer Variable Account Funds, Oppenheimer Main Street Funds, Inc.,
Oppenheimer Integrity Funds, Oppenheimer Strategic Funds Trust,
Oppenheimer Strategic Income & Growth Fund, Oppenheimer Strategic
Investment Grade Bond Fund, Oppenheimer Strategic Short-Term Income Fund,
Oppenheimer Tax-Exempt Bond Fund, Oppenheimer Limited-Term Government
Fund, and The New York Tax-Exempt Income Fund, Inc. (collectively, the
"Denver-based OppenheimerFunds"). Mr. Fossel is President and Mr. Swain
is Chairman of each of the Denver-based OppenheimerFunds. As of the date
of this Statement of Additional Information, the Trustees and officers of
the Fund as a group owned of record or beneficially less than 1% of each
class of shares of the Fund. The foregoing statement does not reflect
ownership of shares held of record by an employee benefit plan for
employees of the Manager (for which plan two of the officers listed below,
Messrs. Fossel and Donohue, are trustees), other than the shares
beneficially owned under that plan by the officers of the Fund listed
above.
Robert G. Avis, Trustee*, Age: 63
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment
adviser and trust company, respectively).
William A. Baker, Trustee; Age: 80
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Trustee; Age: 64
19411 Merion Circle, Huntington Beach, California 92648
Vice President of McDonnell Douglas Space Systems, Co.; formerly
associated with the National Aeronautics and Space Administration.
Jon S. Fossel, President and Trustee*: Age: 52
Two World Trade Center, New York, New York 10048-0203
Chairman, Chief Executive Officer and a director of the Manager;
President and a director of Oppenheimer Acquisition Corp. ("OAC"),
the Manager's parent holding company; President and a director of
HarbourView Asset Management Corporation ("HarbourView"), a
subsidiary of the Manager; a director of Shareholder Services, Inc.
("SSI") and Shareholder Financial Services, Inc. ("SFSI"), transfer
agent subsidiaries of the Manager; formerly President of the Manager.
Raymond J. Kalinowski, Trustee; Age: 65
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc.; formerly Vice
Chairman and a director of A.G. Edwards, Inc., parent holding company
of A.G. Edwards & Sons, Inc. (a broker-dealer), of which he was a
Senior Vice President.
C. Howard Kast, Trustee; Age: 73
2552 East Alameda, Denver, Colorado 80209
Formerly the Managing Partner of Deloitte, Haskins & Sells (an
accounting firm).
Robert M. Kirchner, Trustee; Age: 73
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Ned M. Steel, Trustee; Age: 79
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting
Nurse Corporation of Colorado; formerly Senior Vice President and a
Director of Van Gilder Insurance Corp. (insurance brokers).
James C. Swain, Chairman and Trustee*; Age: 61
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman and a director of the Manager; President and a director
of Centennial Asset Management Corporation, an investment adviser
subsidiary of the Manager ("Centennial"); formerly Chairman of the
Board of SSI.
Andrew J. Donohue, Vice President; Age: 44
Two World Trade Center, New York, New York 10048-0203
Executive Vice President and General Counsel of Oppenheimer
Management Corporation (the "Manager") and Oppenheimer Funds
Distributor, Inc. (the "Distributor"); an officer of other
OppenheimerFunds; formerly Senior Vice President and Associate
General Counsel of the Manager and the Distributor, prior to which
he was a Partner in Kraft & McManimon (a law firm), prior to which
he was 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 the First
Investors Family of Funds and First Investors Life Insurance Company.
George C. Bowen, Vice President, Secretary and Treasurer; Age: 58
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and SFSI;
an officer of other OppenheimerFunds.
Ashwin Vasan, Vice President and Portfolio Manager; Age: 33
Vice President of the Manager; an officer of other OppenheimerFunds;
formerly a Securities Analyst for the Manager, prior to which he was
a Securities Analyst for Citibank, N.A.
Robert G. Zack, Assistant Secretary; Age: 46
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
Robert J. Bishop, Assistant Treasurer; Age: 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; formerly a Fund Controller for the
Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm, and previously an Accountant and
Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.
Scott Farrar, Assistant Treasurer; Age: 29
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting, an
officer of other OppenheimerFunds; 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,
before which he was a sales representative for Central Colorado
Planning.
[FN]
- --------------------
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
-- Remuneration of Trustees. The officers of the Fund are affiliated
with the Manager; they and the Trustees of the Fund who are affiliated
with the Manager (Messrs. Fossel and Swain, who are both officers and
Trustees) receive no salary or fee from the Fund. The Trustees of the
Fund (excluding Messrs. Fossel and Swain) received the total amounts shown
below from all 22 of the Denver-based OppenheimerFunds (other than the
Fund) listed in the first paragraph of this section, for services in the
positions shown, during the calendar year ended December 31, 1994:
<TABLE>
<CAPTION>
Total
Aggregate Compensation
Compensation From All
From the Denver-based
Name Position Fund2 OppenheimerFunds1
<S> <C> <C> <C>
Robert G. Avis Trustee $214 $53,000.00
William A. Baker Audit and $295 $73,257.01
Review Committee
Chairman
and Trustee
Charles Conrad, Jr.Audit and $275 $68,293.67
Review Committee
Member and
Trustee
Raymond J. KalinowskiTrustee $214 $53,000.00
C. Howard Kast Trustee $214 $53,000.00
Robert M. Kirchner Audit and $275 $68,293.67
Review Committee
Member and
Trustee
Ned M. Steel Trustee $214 $53,000.00
</TABLE>
______________
1 For the 1994 calendar year.
2 Estimated to be received during the current fiscal year ending
December 31, 1995.
-- Major Shareholders. As of the date of this Statement of
Additional Information, the Manager is the sole initial shareholder of the
Fund's Class A, Class B and Class C shares.
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and two of whom (Mr. Swain and Mr. Fossel)
serve as Trustees of the Fund.
-- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributor's Agreement
are paid by the Fund. Certain expenses are allocated to certain classes
of shares as explained in the Prospectus and under "How to Buy Shares,"
below. The advisory agreement lists examples of expenses paid by the
Fund, the major categories of which relate to interest, taxes, brokerage
commissions, fees to certain Trustees, legal and audit expenses, custodian
and transfer agent expenses, share issuance costs, certain printing and
registration costs and non-recurring expenses, including litigation costs.
The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the Manager
has undertaken that the total expenses of the Fund in any fiscal year
(including the management fee but excluding taxes, interest, brokerage
commissions, distribution assistance payments and extraordinary expenses
such as litigation costs) shall not exceed the most stringent expense
limitation imposed under state law applicable to the Fund. Pursuant to the
undertaking, the Manager's fee will be reduced at the end of a month so
that there will not be any accrued but unpaid liability under this
undertaking. Currently, the most stringent state expense limitation is
imposed by California, and limits the Fund's expenses (with specified
exclusions) to 2.5% of the first $30 million of average annual net assets,
2% of the next $70 million of average annual net assets, and 1.5% of
average annual net assets in excess of $100 million. The Manager reserves
the right to terminate or amend the undertaking at any time. Any
assumption of the Fund's expenses under this limitation would lower the
Fund's overall expense ratio and increase its total return during any
period in which expenses are limited.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard for its obligations and duties under the
advisory agreement, the Manager is not liable for any loss resulting from
a good faith error or omission on its part with respect to any of its
duties thereunder. The advisory agreement permits the Manager to act as
investment adviser for any other person, firm or corporation and to use
the name "Oppenheimer" in connection with other investment companies for
which it may act as investment adviser or general distributor. If the
Manager shall no longer act as investment adviser to the Fund, the right
of the Fund to use the name "Oppenheimer" as part of its name may be
withdrawn.
-- The Distributor. Under its General Distributor's Agreement with
the Fund, the Distributor acts as the Fund's principal underwriter in the
continuous public offering of the Fund's Class A, Class B and Class C
shares, but is not obligated to sell a specific number of shares.
Expenses normally attributable to sales (excluding payments 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. For additional information
about distribution of the Fund's shares and the expenses connected with
such activities, please refer to "Distribution and Service Plans," below.
-- The Transfer Agent. Oppenheimer Shareholder Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder servicing
and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company
Act, as may, in its best judgment based on all relevant factors,
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
price obtainable) of such transactions. The Manager need not seek
competitive commission bidding but is expected to minimize the commissions
paid to the extent consistent with the interest and policies of the Fund
as established by its Board of Trustees. Purchases of securities from
underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the bid
and asked price.
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 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 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. Brokerage commissions are paid primarily for effecting
transactions in listed securities and are otherwise paid only if it
appears likely that a better price or execution can be obtained. When the
Fund engages in an option transaction, ordinarily the same broker will be
used for the purchase or sale of the option and any transaction in the
securities to which the option relates. When possible, concurrent orders
to purchase or sell the same security by more than one of the accounts
managed by the 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.
Most purchases of money market instruments and debt obligations are
principal transactions at net prices. Instead of using a broker for those
transactions, the Fund normally deals directly with the selling or
purchasing principal or market maker unless it determines that a better
price or execution can be obtained by using a broker. Purchases of these
securities from underwriters include a commission or concession paid by
the issuer to the underwriter. Purchases from dealers include a spread
between the bid and asked prices. The Fund seeks to obtain prompt
execution of these orders at the most favorable net price.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid in
commission dollars. The Board of Trustees has permitted the Manager to
use concessions on fixed-price offerings to obtain research, in the same
manner as is permitted for agency transactions.
The research services provided by brokers broadens the scope and
supplements the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "independent" Trustees of the Fund (those Trustees
of the Fund who are not "interested persons" as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the advisory agreement or the Distribution Plans described
below) annually reviews information furnished by the Manager as to the
commissions paid to brokers furnishing such services so that the Board may
ascertain whether the amount of such commissions was reasonably related
to the value or benefit of such services.
Performance of the Fund
Yield and Total Return Information. 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 "cumulative
total return at net asset value" of an investment in a class of shares of
the Fund may be advertised. An explanation of how these total returns are
calculated for each class and the components of those calculations is set
forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include the
average annual total returns for each class of shares of the Fund for the
1, 5, and 10-year periods (or the life of the class, if less) ending as
of the most recently-ended calendar quarter prior to the publication of
the advertisement. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices are
not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a prediction or
representation by the Fund of future returns. The returns of Class A,
Class B and Class C shares of the Fund are affected by portfolio quality,
the type of investments the Fund holds and its operating expenses
allocated to the particular class.
-- Standardized Yields.
-- Yield. The Fund's "yield" (referred to as "standardized yield")
for a given 30-day period for a class of shares is calculated using the
following formula set forth in rules adopted by the Securities and
Exchange Commission that apply to all funds (other than money market
funds) that quote yields:
(a-b) 6
Standardized Yield = 2 ((--- + 1) - 1)
( cd)
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of that class on the last
day of the period, adjusted for undistributed net investment
income.
The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The SEC formula assumes that
the standardized yield for a 30-day period occurs at a constant rate for
a six-month period and is annualized at the end of the six-month period.
This standardized yield is not based on actual distributions paid by the
Fund to shareholders in the 30-day period, but is a hypothetical yield
based upon the net investment income from the Fund's portfolio investments
calculated for that period. The standardized yield may differ from the
"dividend yield" of that class, described below. Additionally, because
each class of shares is subject to different expenses, it is likely that
the standardized yields of the Fund's classes of shares will differ.
-- Dividend Yield and Distribution Return. From time to time the
Fund may quote a "dividend yield" or a "distribution return" for each
class. Dividend yield is based on the dividends paid on shares of a class
from net investment income during a stated period. Distribution return
includes dividends derived from net investment income and from realized
capital gains declared during a stated period. Under those calculations,
the dividends and/or distributions for that class declared during a stated
period of one year or less (for example, 30 days) are added together, and
the sum is divided by the maximum offering price per share of that class
on the last day of the period. When the result is annualized for a period
of less than one year, the "dividend yield" is calculated as follows:
Dividend Yield of the Class =
Dividends of the Class
-----------------------------------------------------
Max. Offering Price of the Class (last day of period)
divided by Number of days (accrual period) x 365
The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B or Class C shares, the maximum
offering price is the net asset value per share without considering the
effect of contingent deferred sales charges.
From time to time similar yield or distribution return calculations
may also be made using the Class A net asset value (instead of its
respective maximum offering price) at the end of the period.
-- Total Return Information.
-- Average Annual Total Returns. The "average annual total return"
of each class is an average annual compounded rate of return for each year
in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") to achieve an Ending
Redeemable Value ("ERV") of that investment, according to the following
formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
-- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical investment of
$1,000 over an entire period of years. Its calculation uses some of the
same factors as average annual total return but it does not average the
rate of return on an annual basis. Cumulative total return is determined
as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 4.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as described below). For Class B shares, payment of a contingent
deferred sales charge of 5.0% for the first year, 4.0% for the second
year, 3.0% for the third and fourth years, 2.0% for the fifth year and
1.0% for the sixth year, and none thereafter, is applied as described in
the Prospectus. For Class C shares, payment of the contingent deferred
sales charge of 1% for the first year is applied as described in the
Prospectus. Total returns also assume that all dividends and capital
gains distributions during the period are reinvested to buy additional
shares, at net asset value per share, and that the investment is redeemed
at the end of the period.
-- Total Returns At Net Asset Value. From time to time the Fund may
also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A, Class B or Class
C shares. Each is based on the difference in net asset value per share
at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent
deferred sales charges) and takes into consideration the reinvestment of
dividends and capital gains distributions.
Other Performance Comparisons. From time to time the Fund may publish
the ranking of its Class A, Class B or Class C 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, (ii) all other "international
bond" funds, and (iii) all other fixed-income funds, excluding money
market funds. The Lipper performance rankings are based on total returns
that include the reinvestment of capital gains distributions and income
dividends but do not take sales charges or taxes into consideration.
From time to time, the Fund may include in its advertisements and
sales literature performance information about the Fund cited in other
newspapers and periodicals, such as The New York Times, which may include
performance quotations from other sources, including Lipper.
From time to time the Fund may publish the ranking of the performance
of its Class A, Class B or Class C shares by Morningstar, Inc., an
independent mutual fund monitoring service, that ranks mutual funds,
including the Fund, monthly in broad investment categories (equity,
taxable bond, municipal bond and hybrid) based on risk-adjusted investment
return. Investment return measures a fund's three, five and ten-year
average annual total returns (when 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 may rank
the Class A, Class B and Class C shares of the Fund in relation to other
hybrid funds. Rankings are subject to change.
The total return on an investment in the Fund's Class A, Class B or
Class C shares may be compared with the performance for the same period
of one or more of the following indices, among others: the Consumer Price
Index, the Salomon Brothers Non-U.S. World Government Bond Index, and the
Standard & Poor's 500 Index. The Consumer Price Index is generally
considered to be a measure of inflation. The Salomon Brothers Non-U.S.
World Government Bond Index generally represents the performance of
government debt securities of various markets throughout the world,
excluding the United States. The Standard & Poor's 500 Index is widely
recognized as a general measure of stock performance. Each index includes
a factor for the reinvestment of interest but does not reflect expenses
or taxes.
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B or Class C shares. However,
when comparing total return of an investment in Class A, Class B or Class
C shares of the Fund, a number of factors should be considered before
using such information as a basis for comparison with other investments.
For example, investors may also wish to compare the Fund's Class A, Class
B or Class C return to the returns on fixed income investments available
from banks and thrift institutions, such as certificates of deposit,
ordinary interest-paying checking and savings accounts, and other forms
of fixed or variable time deposits, and various other instruments such as
Treasury bills. However, the Fund's returns and share price are not
guaranteed by the FDIC or any other agency and will fluctuate daily, while
bank depository obligations may be insured by the FDIC and may provide
fixed rates of return, and Treasury bills are guaranteed as to principal
and interest by the U.S. government.
From time to time, the Fund's Manager may publish rankings or ratings
of the Manager or Transfer Agent or the investor services provided by them
to shareholders of the OppenheimerFunds, other than performance rankings
of the OppenheimerFunds 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.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares under Rule
12b-1 of the Investment Company Act pursuant to which the Fund will
compensate the Distributor quarterly for its services in connection with
the distribution and/or servicing of the shares of that class, as
described in the Prospectus. Each Plan has been approved by a vote of (i)
the Board of Trustees of the Fund, including a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on
that Plan, and (ii) the holders of a "majority" (as defined in the
Investment Company Act) of the shares of each class, such votes having
been cast by the Manager as the then-sole initial shareholder.
In addition, under the Plans, the Manager and the Distributor, in
their sole discretion, from time to time, may use their own resources
(which, in the case of the Manager, may include profits from the advisory
fee it receives from the Fund), to make payments to brokers, dealers or
other financial institutions (each is referred to as a "Recipient" under
the Plans) for distribution and administrative services they perform. The
Distributor and the Manager may, in their sole discretion, increase or
decrease the amount of payments they make from their own resources to
Recipients.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as its continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Each Plan may be terminated at any
time by the vote of a majority of the Independent Trustees or by the vote
of the holders of a "majority" (as defined in the Investment Company Act)
of the outstanding shares of that class. None of the Plans may be amended
to increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. In addition, because Class B shares of the Fund automatically
convert into Class A shares after six years, the Fund is required by an
exemptive order issued by the Securities and Exchange Commission to obtain
the approval of Class B as well as Class A shareholders for a proposed
amendment to the Class A Plan that would materially increase the amount
to be paid by Class A shareholders under the Class A Plan. Such approval
must be by a "majority" of the Class A and Class B shares (as defined in
the Investment Company Act), voting separately by class. All material
amendments must be approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at least
quarterly on the amount of all payments made pursuant to each Plan, the
purpose for which each payment was made and the identity of each Recipient
that received any payment. Each report shall also include the
distribution costs for that quarter. Those reports, including the
allocations on which they are based, will be subject to the review and
approval of the Independent Trustees in the exercise of their fiduciary
duty. Each Plan further provides that while it is in effect, the
selection and nomination of those Trustees of the Fund who are not
"interested persons" of the Fund is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of others in
such selection and nomination if the final decision on selection or
nomination is approved by a majority of the Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Trustees. Initially, the Board of Trustees has set the
fees at the maximum rate and set no minimum amount.
Any unreimbursed expenses incurred by the Distributor with respect
to Class A shares for any fiscal year may not be recovered in subsequent
fiscal years. Payments received by the Distributor under the Plan for
Class A shares will not be used to pay any interest expense, carrying
charges, or other financial costs, or allocation of overhead by the
Distributor.
The Class B and Class C Plans allow the service fee payments to be
paid by the Distributor to Recipients in advance for the first year Class
B and Class C shares are outstanding, and thereafter on a quarterly basis,
as described in the Prospectus. The advance payment is based on the net
asset value of the Class B and Class C shares sold. An exchange of shares
does not entitle the Recipient to an advance payment of the service fee.
In the event Class B or Class C shares are redeemed during the first year
such shares are outstanding, the Recipient will be obligated to repay a
pro rata portion of the advance of the service fee payment to the
Distributor.
Although the Class B and the Class C Plans permit the Distributor to
retain both the asset-based sales charges and the service fee, or to pay
Recipients the service fee on a quarterly basis, without payment in
advance, the Distributor presently intends to pay the service fee to
Recipients in the manner described above. A minimum holding period may
be established from time to time under the Class B Plan and the Class C
Plan by the Board. Initially, the Board has set no minimum holding
period. All payments under the Class B Plan and the Class C Plan are
subject to the limitations imposed by the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. The Distributor
anticipates that it will take a number of years for it to recoup (from the
Fund's payments to the Distributor under the Class B or Class C Plan and
from contingent deferred sales charges collected on redeemed Class B or
Class C shares) the sales commissions paid to authorized brokers or
dealers.
Asset-based sales charge payments are designed to permit an investor
to purchase shares of the Fund without the assessment of a front-end sales
load and at the same time permit the Distributor to compensate brokers and
dealers in connection with the sale of Class B and Class C shares of the
Fund. The Distributor's actual distribution expenses for any given year
may exceed the aggregate of payments received pursuant to the Class B or
Class C Plan and from contingent deferred sales charges. The asset-based
sales charge paid to the Distributor by the Fund under the Class B Plan
and the Class C Plan are intended to allow the Distributor to recoup the
cost of sales commissions paid to authorized brokers and dealers at the
time of sale, plus financing costs, as described in the Prospectus. Such
payments may also be used to pay for the following expenses of the
Distributor in connection with the distribution of Class B and Class C
shares: (i) financing the advance of the service fee payment to Recipients
under the Class B Plan and the Class C Plan, (ii) compensation and
expenses of personnel employed by the Distributor to support distribution
of Class B and Class C shares, and (iii) costs of sales literature,
advertising and prospectuses (other than those furnished to current
shareholders) and state "blue sky" registration fees.
About Your Account
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C Shares. The
availability of three classes of shares permits an investor to choose the
method of purchasing shares that is more beneficial to the investor
depending on the amount of the purchase, the length of time the investor
expects to hold shares and other relevant circumstances. Investors should
understand that the purpose and function of the deferred sales charge and
asset-based sales charge with respect to Class B and Class C shares are
the same as those of the initial sales charge with respect to Class A
shares. Any salesperson or other person entitled to receive compensation
for selling Fund shares may receive different compensation with respect
to one class of shares than another. The Distributor normally will not
accept (i) any order for $500,000 or more of Class B shares or (ii) any
order for $1 million or more of Class C shares, on behalf of a single
investor (not including dealer "street name" or omnibus accounts) because
generally it will be more advantageous for that investor to purchase Class
A shares of the Fund instead.
The three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B and Class C shares and the dividends payable on Class B and Class C
shares will be reduced by incremental expenses borne solely by each class,
including the asset-based sales charge to which Class B and Class C shares
are subject.
The conversion of Class B shares to Class A shares after six years
is subject to the continuing availability of a private letter ruling from
the Internal Revenue Service, or an opinion of counsel or tax adviser, to
the effect that the conversion of B shares does not constitute a taxable
event for the holder under Federal income tax law. If such a revenue
ruling or opinion is no longer available, the automatic conversion feature
may be suspended, in which event no further conversions of Class B shares
would occur while such suspension remained in effect. Although Class B
shares could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a sales
charge or fee, such exchange could constitute a taxable event for the
holder, and absent such exchange, Class B shares might continue to be
subject to the asset-based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B and Class C shares recognizes
two types of expenses. General expenses that do not pertain specifically
to a class are allocated pro rata to the shares of each class, based on
the percentage of the net assets of such class to the Fund's total assets,
and then equally to each outstanding share within a given class. Such
general expenses include (i) management fees, (ii) legal, bookkeeping and
audit fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other materials for
current shareholders, (iv) fees to unaffiliated Trustees, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up
costs, (viii) interest, taxes and brokerage commissions, and (ix) non-
recurring expenses, such as litigation costs. Other expenses that are
directly attributable to a class are allocated equally to each outstanding
share within that class. Such expenses include (i) Distribution and
Service Plan fees, (ii) incremental transfer and shareholder servicing
agent fees and expenses, (iii) registration fees and (iv) shareholder
meeting expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Value Per Share. The net asset values per
share of Class A, Class B and Class C shares of the Fund are determined
as of the close of business of The New York Stock Exchange on each day
that the Exchange is open, by dividing the Fund's net assets attributable
to a class by the number of shares of that class that are 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 Exchange's most recent annual
announcement (which is subject to change) states that it will close on New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. It may also close on other
days. Dealers may conduct trading at times when the Exchange is closed
(including weekends and holidays). The Fund anticipates it will invest
a substantial portion of its assets in foreign securities primarily listed
on foreign exchanges or in foreign over-the-counter markets that may trade
on Saturdays or customary U.S. business holidays on which the Exchange is
closed. 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 U.S. securities exchange or on NASDAQ for which
last sale information is regularly reported are valued at the last
reported sale price on their primary exchange or NASDAQ that day (or, in
the absence of sales that day, at values based on the last sales prices
of the preceding trading day, or closing bid and asked prices); (ii)
securities 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 the
"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.
Trading in securities on European and Asian exchanges and over-the-
counter markets is normally completed before the close of The New York
Stock Exchange. Events affecting the values of foreign securities traded
in stock markets that occur between the time their prices are determined
and the close of the Exchange will not be reflected in the Fund's
calculation of net asset value unless the Board of Trustees or the
Manager, under procedures established by the Board of Trustees, determines
that the particular event would materially affect the Fund's net asset
value, in which case an adjustment would be made, if necessary. Foreign
securities priced in a foreign currency as well as foreign currency have
their value converted to U.S. dollars at the closing price on the London
foreign exchange market as provided by a reliable bank, dealer or pricing
service.
Puts, calls and Futures held by the Fund are valued at the last sales
price on the principal exchange on which they are traded, or on NASDAQ as
applicable, as determined by a pricing service approved by the Board of
Trustees or by the Manager, or, if there are no sales that day, in
accordance with (i), above. Forward currency contracts are valued at the
closing price in the London foreign exchange market as provided by a
reliable bank, dealer or pricing service. When the Fund writes an option,
an amount equal to the premium received by the Fund is included in the
Fund's Statement of Assets and Liabilities as an asset, and an equivalent
deferred credit is included in the liability section. The deferred credit
is adjusted ("marked-to-market") to reflect the current market value of
the option. In determining the Fund's gain on investments, if a call
written by the Fund is exercised, the proceeds are increased by the
premium received. If a call or put written by the Fund expires, the Fund
has a gain in the amount of the premium; if the Fund enters into a closing
purchase transaction, it will have a gain or loss depending on whether the
premium was more or less than the cost of the closing transaction. If the
Fund exercises a put it holds, the amount the Fund receives on its sale
of the underlying investment is reduced by the amount of premium paid by
the Fund.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy 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. 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, grandparents, parents, parents-in-law,
sons- and daughters-in-law, siblings, a sibling's spouse and a spouse's
siblings.
-- The OppenheimerFunds. The OppenheimerFunds are those mutual funds
for which the Distributor acts as the distributor or the sub-distributor
and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer International Bond Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A shares
of each of the OppenheimerFunds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a contingent deferred sales charge).
-- Letters of Intent. A Letter of Intent ("Letter") is the
investor's statement of intention to purchase Class A shares of the Fund
(and other eligible OppenheimerFunds) sold with a front-end sales charge
during the 13-month period from the investor's first purchase pursuant to
the Letter (the "Letter of Intent period"), which may, at the investor's
request, include purchases made up to 90 days prior to the date of the
Letter. The Letter states the investor's intention to make the aggregate
amount of purchases (excluding any purchases made by reinvestments of
dividends or distributions or purchases made at net asset value without
sales charge), which together with the investor's holdings of such funds
(calculated at their respective public offering prices calculated on the
date of the Letter) will equal or exceed the amount specified in the
Letter. This enables the investor to obtain the reduced sales charge rate
(as set forth in the Prospectus) applicable to purchases of shares in that
amount (the "intended purchase amount"). Each purchase under the Letter
will be made at the public offering price applicable to a single lump-sum
purchase of shares in the intended purchase amount, as described in the
Prospectus.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual purchases. If total eligible purchases
during the Letter of Intent period exceed the intended purchase amount and
exceed the amount needed to qualify for the next sales charge rate
reduction set forth in the applicable prospectus, the sales charges paid
will be adjusted to the lower rate, but only if and when the dealer
returns to the Distributor the excess of the amount of commissions allowed
or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the investor's
account at the net asset value per share in effect on the date of such
purchase, promptly after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.
-- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in value
to 5% of the intended purchase amount specified in the Letter shall be
held in escrow by the Transfer Agent. For example, if the intended
purchase amount is $50,000, the escrow shall be shares valued in the
amount of $2,500 (computed at the public offering price adjusted for a
$50,000 purchase). Any dividends and capital gains distributions on the
escrowed shares will be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor
an amount equal to the difference between the dollar amount of sales
charges actually paid and the amount of sales charges which would have
been paid if the total amount purchased had been made at a single time.
Such sales charge adjustment will apply to any shares redeemed prior to
the completion of the Letter. If such difference in sales charges is not
paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the
Letter, redeem the number of escrowed shares necessary to realize such
difference in sales charges. Full and fractional shares remaining after
such redemption will be released from escrow. If a request is received
to redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of the Letter) do not include
any shares sold without a front-end sales charge or without being subject
to a Class A contingent deferred sales charge unless (for the purpose of
determining completion of the obligation to purchase shares under the
Letter) the shares were acquired in exchange for shares of one of the
OppenheimerFunds whose shares were acquired by payment of a sales charge.
6. Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as described
in the section of the Prospectus entitled "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
OppenheimerFunds.
There is a front-end sales charge on the purchase of certain
OppenheimerFunds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
How To Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
-- Involuntary Redemptions. The Fund's Board of Trustees has the
right to cause the involuntary redemption of the shares held in any
account if the aggregate net asset value of those shares is less than $200
or such lesser amount as the Board may fix. The Board of Trustees will
not cause the involuntary redemption of shares in an account if the
aggregate net asset value of the shares has fallen below the stated
minimum solely as a result of market fluctuations. Should the Board elect
to exercise this right, it may also fix, in accordance with the Investment
Company Act, the requirements for any notice to be given to the
shareholders in question (not less than 30 days), or the Board may set
requirements for granting permission to the shareholder to increase the
investment, and set other terms and conditions so that the shares would
not be involuntarily redeemed.
-- Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash. However, the
Board of Trustees of the Fund may determine that it would be detrimental
to the best interests of the remaining shareholders of the Fund to make
payment of a redemption order wholly or partly in cash. In that case the
Fund may pay the redemption proceeds in whole or in part by a distribution
"in kind" of securities from the portfolio of the Fund, in lieu of cash,
in conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets
of the Fund during any 90-day period for any one shareholder. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage or
other costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the method
the Fund uses to value its portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of (i)
Class A shares, or (ii) Class B shares that were purchased by reinvesting
dividends or distributions or that were subject to the Class B contingent
deferred sales charge when redeemed. The reinvestment may be made without
sales charge only in Class A shares of the Fund or any of the other
OppenheimerFunds into which shares of the Fund are exchangeable as
described below, at the net asset value next computed after the Transfer
Agent receives the reinvestment order. This privilege is not available
to Class C shareholders. The shareholder must ask the Distributor for
that privilege at the time of reinvestment. Any capital gain that was
realized when the shares were redeemed is taxable, and reinvestment will
not alter any capital gains tax payable on that gain. If there has been
a capital loss on the redemption, some or all of the loss may not be tax
deductible, depending on the timing and amount of the reinvestment. Under
the Internal Revenue Code, if the redemption proceeds of Fund shares on
which a sales charge was paid are reinvested in shares of the Fund or
another of the OppenheimerFunds within 90 days of payment of the sales
charge, the shareholder's basis in the shares of the Fund that were
redeemed may not include the amount of the sales charge paid. That would
reduce the loss or increase the gain recognized from the redemption.
However, in that case the sales charge would be added to the basis of the
shares acquired by the reinvestment of the redemption proceeds. The Fund
may amend, suspend or cease offering this reinvestment privilege at any
time as to shares redeemed after the date of such amendment, suspension
or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of transfer to
the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain subject
to the contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B and Class C
contingent deferred sales charge will be followed in determining the order
in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, or pension or
profit-sharing plans should be addressed to "Trustee, OppenheimerFunds
Retirement Plans," c/o the Transfer Agent at its address listed in "How
To Sell Shares" in the Prospectus or on the back cover of this Statement
of Additional Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if the
distribution is premature; and (iii) conform to the requirements of the
plan and the Fund's other redemption requirements. Participants (other
than self-employed persons) in OppenheimerFunds-sponsored pension or
profit-sharing plans may not directly request redemption of their
accounts. The employer or plan administrator must sign the request.
Distributions from pension and profit sharing plans are subject to special
requirements under the Internal Revenue Code and certain documents
(available from the Transfer Agent) must be completed before the
distribution may be made. Distributions from retirement plans are subject
to withholding requirements under the Internal Revenue Code, and IRS Form
W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed.
Unless the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that tax be
withheld from any distribution even if the shareholder elects not to have
tax withheld. The Fund, the Manager, the Distributor, the Trustee and the
Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price 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.). Payment ordinarily will be made
within seven days after the Distributor's receipt of the required
redemption documents, with signature(s) guaranteed as described in the
Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B and Class C shareholders should not establish
withdrawal plans, because of the imposition of the contingent deferred
sales charge generally on such withdrawals (except where the Class B and
Class C contingent deferred sales charge is waived as described in the
Prospectus under "Class B Contingent Deferred Sales Charge" and "Class C
Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as in the Prospectus. These provisions
may be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
-- Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of shares of
the Fund for shares (of the same class) of other OppenheimerFunds
automatically on a monthly, quarterly, semi-annual or annual basis under
an Automatic Exchange Plan. The minimum amount that may be exchanged to
each other fund account is $25. Exchanges made under these plans are
subject to the restrictions that apply to exchanges as set forth in "How
to Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
-- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. The Transfer Agent 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 Planholder or his or her executor or
guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued
without causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
OppenheimerFunds having more than one class of shares may be exchanged
only for shares of the same class of other OppenheimerFunds. Shares of
the OppenheimerFunds that have a single class without a class designation
are deemed "Class A" shares for this purpose. All OppenheimerFunds offer
Class A shares (except for Oppenheimer Strategic Diversified Income Fund),
but only the following OppenheimerFunds currently offer Class B shares:
Oppenheimer International Bond Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Investment Grade Bond Fund
Oppenheimer Value Stock Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer High Yield Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are available only by
exchange)
Oppenheimer Growth Fund
Oppenheimer Global Fund
Oppenheimer Discovery Fund
The following OppenheimerFunds offer Class C shares:
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Champion High Yield Fund
Oppenheimer U.S. Government Trust
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Target Fund
Oppenheimer Cash Reserves (Class C shares are available only by
exchange)
Oppenheimer Strategic Diversified Income Fund
Oppenheimer Main Street Income & Growth Fund
Class A shares of OppenheimerFunds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
OppenheimerFunds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of
OppenheimerFunds subject to a contingent deferred sales charge). Shares
of this Fund acquired by reinvestment of dividends or distributions from
any other of the OppenheimerFunds or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor may
be exchanged at net asset value for shares of any of the OppenheimerFunds.
No contingent deferred sales charge is imposed on exchanges of shares
of any class purchased subject to a contingent deferred sales charge.
However, when Class A shares acquired by exchange of Class A shares of
other OppenheimerFunds purchased subject to a Class A contingent deferred
sales charge are redeemed within 18 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares, the Class
A contingent deferred sales charge is imposed on the redeemed shares. 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.
When Class B or Class C shares are redeemed to effect an exchange,
the priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class B and Class C contingent deferred sales charge
will be followed in determining the order in which the shares are
exchanged. Shareholders should take into account the effect of any
exchange on the applicability and rate of any contingent deferred sales
charge that might be imposed in the subsequent redemption of remaining
shares. Shareholders owning shares of more than one class must specify
whether they intend to exchange Class A, Class B or 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 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In those
cases, only the shares available for exchange without restriction will be
exchanged.
When exchanging shares by telephone, a shareholder must either have
an existing account in, or obtain and acknowledge receipt of a prospectus
of, the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different OppenheimerFunds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on shares held
of record at the time of the previous determination of net asset value.
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.
Dividends will be declared on shares repurchased by a dealer or broker for
four business days following the trade date (i.e., to and including the
day prior to settlement of the repurchase). If all shares in an account
are redeemed, all dividends accrued on shares of the same class in the
account will be paid together with the redemption proceeds.
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 shares of Oppenheimer Money
Market Fund, Inc., as promptly as possible after the return of such checks
to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio,
and expenses borne by the Fund or borne separately by a class, as
described in "Alternative Sales Arrangements -- Class A, Class B and
Class C," above. Dividends are calculated in the same manner, at the same
time and on the same day for shares of each class. However, dividends on
Class B and Class C shares are expected to be lower than dividends on
Class A shares as a result of the asset-based sales charges on Class B and
Class C shares, and will also differ in amount as a consequence of any
difference in net asset value between the classes.
Tax Status of the Fund's Dividends and Distributions. Distributions
may be made annually in December out of any net short-term or long-term
capital gains realized from the sale of securities, premiums from expired
calls written by the Fund and net profits from Hedging Instruments and
closing purchase transactions realized in the twelve months ending on
October 31 of the current year. Any difference between the net asset
value of Class A, Class B and Class C shares will be reflected in such
distributions. Distributions from net short-term capital gains are
taxable to shareholders as ordinary income and when paid by the Fund are
considered "dividends." The Fund may make a supplemental distribution of
capital gains and ordinary income following the end of its fiscal year.
Any long-term capital gains distributions will be identified separately
when paid and when tax information is distributed by the Fund. If prior
distributions must be re-characterized at the end of the fiscal year as
a result of the effect of the Fund's investment policies, shareholders may
have a non-taxable return of capital, which will be identified in notices
to shareholders. A non-taxable return of capital may reduce a
shareholder's tax basis in his Fund shares. There is no fixed dividend
rate (although the Fund may have a targeted dividend rate for Class A
shares) and there can be no assurance as to the payment of any dividends
or the realization of any capital gains.
The Federal tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption "Dividends,
Capital Gains and Taxes." Special provisions of the Internal Revenue Code
govern the eligibility of the Fund's dividends for the dividends-received
deduction for corporate shareholders. Long-term capital gains
distributions are not eligible for the deduction. In addition, the amount
of dividends paid by the Fund which may qualify for the deduction is
limited to the aggregate amount of qualifying dividends that the Fund
derives from its portfolio investments that the Fund has held for a
minimum period, usually 46 days. A corporate shareholder will not be
eligible for the deduction on dividends paid on Fund shares held for 45
days or less. To the extent the Fund's dividends are derived from gross
income from option premiums, interest income or short-term gains from the
sale of securities or dividends from foreign corporations, those dividends
will not qualify for the deduction.
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on
amounts paid by it as dividends and distributions. The Fund intends to
qualify in future years, but reserves the right not to qualify. The
Internal Revenue Code contains a number of complex tests to determine
whether the Fund will qualify, and the Fund might not meet those tests in
a particular year. For example, if the Fund derives 30% or more of its
gross income from the sale of securities held less than three months, it
may fail to qualify (see "Tax Aspects of Covered Calls and Hedging
Instruments," above). If it does not qualify, the Fund will be treated for
tax purposes as an ordinary corporation and will receive no tax deduction
for payments of dividends and distributions made to shareholders.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute 98% of its taxable investment income earned from January
1 through December 31 of that year and 98% of its capital gains realized
in the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Fund's Board of Trustees and the Manager might
determine in a particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would
reduce the amount of income or capital gains available for distribution
to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or capital gains distributions in shares of
the same class of any of the other OppenheimerFunds listed in "Reduced
Sales Charges," above, at net asset value without sales charge. Class B
and Class C shareholders should be aware that as of the date of this
Statement of Additional Information, not all of the OppenheimerFunds offer
Class B and Class C shares. To elect this option, a shareholder must
notify the Transfer Agent in writing and either have an existing account
in the fund selected for reinvestment or must obtain a prospectus for that
fund and an application from the Distributor to establish an account. The
investment will be made at the net asset value per share in effect at the
close of business on the payable date of the dividend or distribution.
Dividends and/or distributions from shares of other OppenheimerFunds may
be invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities and handling the delivery of
such securities to and from the Fund. The Manager has represented to the
Fund that the banking relationships of the Manager and its affiliates with
the Custodian have been and will continue to be unrelated to and
unaffected by the relationship between the Fund and the Custodian. It
will be the practice of the Fund to deal with the Custodian in a manner
uninfluenced by any banking relationship the Custodian may have with the
Manager and its affiliates. The Fund's cash balances with the Custodian
in excess of $100,000 are not protected by Federal deposit insurance.
Those uninsured balances at times may be substantial.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for the Manager and certain other funds advised
by the Manager and its affiliates.
<PAGE>
Independent Auditors' Report
The Board of Trustees
Oppenheimer International Bond Fund:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer International Bond Fund as of _____________, 1995. This
Financial Statement is the resonsibility of the Fund's management. Our
responsibility is to express an opinion on this Financial Statement based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of assets and
liabilities is free of material misstatement. An audit of a statement of
assets and liabilities includes examining, on a test basis, evidence
supporting the amounts and disclosures in that statement of assets and
liabilities. An audit of a statement of assets and liabilities also
includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audit of the statement of
assets and liabilities provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of
Oppenheimer International Bond Fund as of ______________, 1995, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Denver, Colorado
________________, 1995
<PAGE>
OPPENHEIMER INTERNATIONAL BOND FUND
Statement of Assets and Liabilities
June 5, 1995
<TABLE>
<CAPTION>
ASSETS: Composite Class A Class B Class C
<S> <C> <C> <C> <C>
Cash $102,000
Deferred organization expenses - Note 3 $ 25,000
Total Assets $127,000
LIABILITIES - Payable to Oppenheimer Management_______
Corporation - Note 3 25,000
Net Assets $102,000
NET ASSETS - Applicable to 20,000 Class A shares,
200 Class B shares, and 200 Class C shares of
beneficial interest outstanding $102,000 $100,000 $1,000 $1,000
NET ASSET VALUE PER SHARE (net assets divided by
20,000, 200, and 200 shares of beneficial
interest for Class A, Class B, and Class,
respectively) $5.00 $5.00 $5.00 $5.00
MAXIMUM OFFERING PRICE PER SHARE (net asset
value plus, for Class A shares, sales charge
of 4.75% of offering price) $5.25 $5.00 $5.00
</TABLE>
NOTES:
1.
Oppenheimer International Bond Fund (the "Fund"), a diversified, open-
end management investment company, was formed on February 28, 1995, and
has had no operations through ____________, 1995 other than those
relating to organizational matters and the sale and issuance of 20,000
Class A shares, 200 Class B and 200 Class C shares of beneficial
interest to Oppenheimer Management Corporation (OMC).
2. On February 28, 1995, the Fund's Board approved an Investment Advisory
Agreement with OMC, a Service Plan and Agreement for Class A shares and
Service and Distribution Plans and Agreements for Class B and Class C
shares of the Fund with Oppenheimer Funds Distributor, Inc. (OFDI) and
a General Distributor's Agreement with OFDI as explained in the Fund's
Prospectus and Statement of Additional Information.
3. OMC will advance all organizational and start-up costs of the Fund.
Such expenses will be amortized over a five-year period from the date
operations commence. On the first day that total assets exceed $5
million, the Fund will reimburse OMC for all start-up expenses. In the
event that all or part of OMC's initial investment in shares of the
Fund is withdrawn during the amortization period, by any holder
thereof, the redemption proceeds will be reduced by the proportionate
amount of the unamortized organization costs represented by the ratio
that the number of shares redeemed bears to the number of initial
shares outstanding at the time of such redemption.
4. The Fund intends to comply in its initial fiscal year and thereafter
with provisions of the Internal Revenue Code applicable to regulated
investment companies and as such, will not be subject to federal income
taxes on otherwise taxable income (including net realized capital
gains) distributed to shareholders.
<PAGE>
Appendix A
Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Transmission
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
A-1
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, NY 10015
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202-4918
<PAGE>
OPPENHEIMER INTERNATIONAL BOND FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
(a) Financial Statements:
(1) Financial Highlights (See Part A): To be filed by
Amendment.
(2) Report of Independent Auditors (See Part B): To be filed
by Amendment.
(3) Statement of Investments (See Part B): To be filed by
Amendment.
(4) Statement of Assets and Liabilities (See Part B): To be
filed by Amendment.
(5) Statement of Operations (See Part B): To be filed by
Amendment.
(6) Statement of Changes in Net Assets (See Part B): To be
filed by Amendment.
(7) Notes to Financial Statements (See Part B): To be filed by
Amendment.
(b) Exhibits:
(1) (i) Registrant's Declaration of Trust dated 2/28/95:
Previously filed with Registrant's Registration Statement, 3/3/95, and
incorporated herein by reference.
(ii) Amended and Restated Declaration of Trust dated
5/16/95: Filed herewith.
(2) By-Laws dated 2/28/95: Filed herewith.
(3) Not applicable.
(4) (i) Specimen Class A Share Certificate: Previously filed
with Registrant's Registration Statement, 3/3/95, and incorporated herein
by reference.
(ii) Specimen Class B Share Certificate: Previously filed
with Registrant's Registration Statement, 3/3/95, and incorporated herein
by reference.
(iii) Specimen Class C Share Certificate: Previously filed
with Registrant's Registration Statement, 3/3/95, and incorporated herein
by reference.
(5) Form of Investment Advisory Agreement: Filed herewith.
(6) (i) Form of General Distributor's Agreement: Filed
herewith.
(ii) 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), 9/30/94, and incorporated herein
by reference.
(iii) 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), 9/30/94, and incorporated herein
by reference.
(iv) 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), 9/30/94, and incorporated herein
by reference.
(v) Broker Agreement between Oppenheimer Fund Management, Inc.
and Newbridge Securities, Inc. dated October 1, 1986: Previously filed
with Post-Effective Amendment No. 25 to the Registration Statement of
Oppenheimer Growth Fund (Reg. No. 2-45272), 11/1/86, and refiled with
Post-Effective Amendment No. 45 of Oppenheimer Growth Fund (Reg. No. 2-
45272), 8/22/94 pursuant to Item 102 of Regulation S-T and incorporated
herein by reference.
(7) Not applicable.
(8) Form of Custodian Agreement between Registrant and The Bank
of New York: Previously filed with Registrant's Registration Statement,
3/3/95, and incorporated herein by reference.
(9) Not applicable.
(10) Opinion and Consent of Counsel: To be filed by Amendment.
(11) Independent Auditors' Consent: To be filed by Amendment.
(12) Not applicable.
(13) Investment Letter from Oppenheimer Management Corporation
to Registrant: To be filed by Amendment.
(14) (i) Form of prototype Standardized and Non-Standardized
Profit-Sharing Plans and Money Purchase Plans for self-employed persons
and corporations: Filed with Post-Effective Amendment No. 3 to the
Registration Statement of Oppenheimer Global Growth & Income Fund (Reg.
No. 33-23799), 1/31/92, and refiled with Post-Effective Amendment No. 7
to the Registration Statement of Oppenheimer Global Growth & Income Fund
(Reg. No. 33-23799), 12/1/94, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(ii) Form of Individual Retirement Account Trust
Agreement: Filed with Post-Effective Amendment No. 21 of Oppenheimer U.S.
Government Trust (Reg. No. 2-76645), 8/25/93 and incorporated herein by
reference.
(iii) Form of Tax Sheltered Retirement Plan and Custody
Agreement for employees of public schools and tax-exempt organizations:
Previously filed with Post-Effective Amendment No. 47 of the Registration
Statement of Oppenheimer Growth Fund (Reg. No. 2-45272), 10/21/94, and
incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA: Previously
filed with Post-Effective Amendment No. 42 to the Registration Statement
of Oppenheimer Equity Income Fund (Reg. No. 2-33043), 10/28/94, and
incorporated herein by reference.
(15) (i) Form of Service Plan and Agreement for Class A
shares under Rule 12b-1: Previously filed with Registrant's Registration
Statement, 3/3/95, and incorporated herein by reference.
(ii) Form of Distribution and Service Plan and Agreement
for Class B shares under Rule 12b-1: Filed herewith.
(iii) Form of Distribution and Service Plan and Agreement
for Class C shares under Rule 12b-1: Filed herewith.
(16) Performance Data Computation Schedule: Not applicable.
(17) (i) Financial Data Schedule for Class A shares: Not
applicable.
(ii) Financial Data Schedule for Class B shares: Not
applicable.
(iii) Financial Data Schedule for Class C Shares: Not
applicable.
-- Powers of Attorney: Previously filed with Registrant's
Registration Statement, 3/3/95, and incorporated herein by reference.
Item 25. Persons Controlled by or Under Common Control with Registrant
- -------- -------------------------------------------------------------
None
Item 26. Number of Holders of Securities
- -------- -------------------------------
Number of
Record Holders
as of the date of
this Registration
Title of Class Statement
-------------- --------------------
Class A Shares of Beneficial Interest 1
Class B Shares of Beneficial Interest 1
Class C Shares of Beneficial Interest 1
Item 27. Indemnification
- -------- ---------------
Reference is made to the provisions of Article Seventh of
Registrant's Declaration of Trust filed as Exhibit 24(b)(1) to this
Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing provisions or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or
paid by a trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
(a) Oppenheimer Management Corporation is the investment adviser of
the Registrant; it and 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 Oppenheimer Management Corporation 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
with Oppenheimer Other Business and Connections
Management Corporation 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 OppenheimerFunds
Assistant Vice President (listed below); previously a Fund Controller
for Oppenheimer Management Corporation (the
"Manager").
Christopher O. Blunt, Vice President of Oppenheimer Funds
Vice President Distributor, Inc. Formerly a Vice President
of CIC/DISC Subsidiary.
George Bowen Treasurer of the New York-based
Senior Vice President OppenheimerFunds; Vice President, Secretary
and Treasurer and Treasurer of the Denver-based
OppenheimerFunds. 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 Street
Advisers; formerly Senior Vice President/
Comptroller and Secretary of Oppenheimer
Asset Management Corporation ("OAMC"), an
investment adviser which was a subsidiary of
the OMC.
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
Executive Vice President State Street Research & Management Co.
Robert A. Densen, None.
Vice President
Robert Doll, Jr., Vice President and Portfolio Manager of
Executive Vice President Oppenheimer Growth Fund and Oppenheimer
Target Fund; Senior Vice President and
Portfolio Manager of Strategic Income &
Growth Fund.
John Doney, Vice President Vice President and Portfolio Manager of
Oppenheimer Equity Income Fund.
Andrew J. Donohue, Secretary of the New York-based
Executive Vice President OppenheimerFunds; Vice President of the
& General Counsel Denver-based OppenheimerFunds; 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 Global Securities Fund.
Scott Farrar, Assistant Treasurer of the OppenheimerFunds;
Assistant Vice President previously a Fund Controller for the
Manager.
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
Chief Executive Officer parent holding company; President, CEO and
and Director a director of HarbourView; a director of SSI
and SFSI; President, Director, Trustee, and
Managing General Partner of the Denver-based
OppenheimerFunds; formerly President of the
Manager. President and Chairman of the Board
of Main Street Advisers, Inc.
Robert G. Galli, Trustee of the New York-based
Vice Chairman OppenheimerFunds; 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 OppenheimerFunds 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.
Dorothy Grunwager, None.
Assistant Vice President
Caryn Halbrecht, Vice President and Portfolio Manager of
Vice President Oppenheimer Insured Tax-Exempt Bond Fund and
Oppenheimer Intermediate Tax Exempt Bond
Fund; an officer of other OppenheimerFunds;
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.
Stephen Jobe, None.
Vice President
Avram Kornberg, Formerly a Vice President with Bankers
Vice President Trust.
Paul LaRocco, Portfolio Manager of Oppenheimer Capital
Assistant Vice President Appreciation Fund; Associate Portfolio
Manager of Oppenheimer Discovery Fund and
Oppenheimer Time Fund. Formerly a
Securities Analyst for Columbus Circle
Investors.
Mitchell J. Lindauer, None.
Vice President
Loretta McCarthy, None.
Senior Vice President
Bridget Macaskill, Director of HarbourView; Director of Main
President and Director Street Advisers, Inc.; and Chairman of
Shareholder Services, Inc.
Sally Marzouk, None.
Vice President
Denis R. Molleur, None.
Vice President
Kenneth Nadler, None.
Vice President
David Negri, Vice President and Portfolio Manager of
Vice President Oppenheimer Strategic Bond Fund, Oppenheimer
Multiple Strategies Fund, Oppenheimer
Strategic Investment Grade Bond Fund,
Oppenheimer Asset Allocation Fund,
Oppenheimer Strategic Diversified Income
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Short-Term Income
Fund, Oppenheimer High Income Fund and
Oppenheimer Bond Fund; an officer of other
OppenheimerFunds.
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
Julia O'Neal, None.
Assistant 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
Bond Fund, Oppenheimer Intermediate Tax-
Exempt Bond 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 and
Portfolio Manager for Oppenheimer Variable
Account Funds-Growth Fund; Senior Investment
Officer and Portfolio Manager with Chemical
Bank.
Russell Read, Formerly an International Finance Consultant
Assistant 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
OppenheimerFunds; formerly a Securities
Analyst for the Manager.
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
OppenheimerFunds; 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.
Ellen Schoenfeld, None.
Assistant Vice President
Nancy Sperte, None.
Senior Vice President
Donald W. Spiro, President and Trustee of the New York-based
Chairman Emeritus OppenheimerFunds; formerly Chairman of the
and Director Manager and the Distributor.
Arthur Steinmetz, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Strategic Diversified Income
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Investment Grade Bond
Fund, Oppenheimer Strategic Short-Term
Income Fund; an officer of other
OppenheimerFunds.
Ralph Stellmacher, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Champion High Yield Fund and
Oppenheimer High Yield Fund; an officer of
other OppenheimerFunds.
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 OppenheimerFunds; 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 Time Fund and 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
Ashwin Vasan, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-
Government Trust: an officer of other
OppenheimerFunds.
Valerie Victorson, None.
Vice President
John Wallace, Vice President and Portfolio Manager of
Vice President Oppenheimer Total Return Fund, and
Oppenheimer Main Street Income and Growth
Fund; an officer of other OppenheimerFunds;
formerly a Securities Analyst and Assistant
Portfolio Manager for the Manager.
Dorothy Warmack, Vice President and Portfolio Manager of
Vice President Daily 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
OppenheimerFunds.
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 OppenheimerFunds;
and Assistant Secretary Assistant Secretary of SSI, SFSI; an officer
of other OppenheimerFunds.
Eva A. Zeff, Vice President and Portfolio Manager of
Assistant Vice President Oppenheimer Mortgage Income Fund; an officer
of other OppenheimerFunds; formerly a
Securities Analyst for the Manager.
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
OppenheimerFunds.
The OppenheimerFunds include the New York-based OppenheimerFunds
and the Denver-based OppenheimerFunds set forth below:
New York-based OppenheimerFunds
Oppenheimer Asset Allocation Fund
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 Mortgage Income Fund
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 Time Fund
Oppenheimer U.S. Government Trust
Denver-based OppenheimerFunds
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.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion High Yield Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer International Bond Fund
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Tax-Exempt Bond Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
The address of Oppenheimer Management Corporation, the New York-
based OppenheimerFunds, 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 OppenheimerFunds, 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.
Item 29. Principal Underwriter
(a) Oppenheimer Funds 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 Oppenheimer Management
Corporation 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:
<TABLE>
<CAPTION>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C> <C>
George Clarence Bowen+ Vice President & Treasurer Vice
President,
Secretary &
Treasurer
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
Ronald Corlew Vice President None
1020 Montecito Drive
Los Angeles, CA 90031
Mary Crooks+ Vice President None
Paul Della Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
Andrew John Donohue* Executive Vice Vice President
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
Gregory Farley Vice President - None
1116 Westbury Circle Financial Institution Div.
Eagan, MN 55123
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 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
Terry Lee Kelley Vice President - None
1431 Woodview Lane Financial Institution Div.
Commerce Township, MI 48382
Michael Keogh* Vice President None
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 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* Vice President - None
Director of Key Accounts
Gina Munson Vice President None
120 Fisherville Road
Apt. 136
Concord, NH 03301
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
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
Charles K. Pettit Vice President None
1900 Eight Avenue
San Francisco, CA 94116
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
David Robertson Vice President None
9 Hawks View
Hoeoye Falls, NY 14472
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
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
Paul Stickney Vice President None
1314 Log Cabin Lane
St. Louis, MO 63124
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
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
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and rules promulgated thereunder are in the possession of Oppenheimer
Management Corporation at its offices at 3410 South Galena Street, Denver,
Colorado 80231.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Registrant undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six
months from the effective date of its registration statement under the
Securities Act of 1933.
(c) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this
registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver and State of Colorado on
the 16th day of May, 1995.
OPPENHEIMER INTERNATIONAL BOND FUND
By: /s/ James C. Swain*
----------------------------------------
James C. Swain, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities on the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ James C. Swain* Chairman of the
- ------------------ Board of Trustees May 16, 1995
James C. Swain
/s/ Jon S. Fossel* Chief Executive
- -------------------- Officer and May 16, 1995
Jon S. Fossel Trustee
/s/ George C. Bowen* Chief Financial
- ------------------- and Accounting May 16, 1995
George C. Bowen Officer
Trustee May 16, 1995
- ------------------
Robert G. Avis
/s/ William A. Baker* Trustee May 16, 1995
- --------------------
William A. Baker
/s/ Charles Conrad, Jr.* Trustee May 16, 1995
- -----------------------
Charles Conrad, Jr.
/s/ Raymond J. Kalinowski* Trustee May 16, 1995
- -------------------------
Raymond J. Kalinowski
/s/ C. Howard Kast* Trustee May 16, 1995
- ------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee May 16, 1995
- ----------------------
Robert M. Kirchner
/s/ Ned M. Steel* Trustee May 16, 1995
- ----------------
Ned M. Steel
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER INTERNATIONAL BOND FUND
EXHIBIT INDEX
Form N-1A
Item No. Description
24(b)(1)(ii) Amended and Restated Declaration of Trust
dated 5/16/95
24(b)(2) By-Laws dated 2/28/95
24(b)(5) Form of Investment Advisory Agreement
24(b)(6)(i) Form of General Distributor's Agreement
24(b)(15)(ii) Form of Distribution and Service Plan and Agreement
for Class B Shares
24(b)(15)(iii) Form of Distribution and Service Plan and Agreement
for Class C Shares
<PAGE>
Exhibit 24(b)(1)
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
OPPENHEIMER INTERNATIONAL BOND FUND
This AMENDED AND RESTATED DECLARATION OF TRUST, made this 16th day
of May, 1995, by and among the individuals executing this Declaration of
Trust as the Trustees.
WHEREAS, the Trustees have established a trust fund under the laws
of the Commonwealth of Massachusetts, for the investment and reinvestment
of funds contributed thereto, under a Declaration of Trust dated February
28, 1995; for the benefit of Oppenheimer International Bond Fund.
WHEREAS, the Trustees of the Fund have determined to amend the Fund's
Declaration of Trust pursuant to Article NINTH, part 12 thereof;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under
this Amended and Restated Declaration of Trust IN TRUST as herein set
forth below.
FIRST: This Trust shall be known as OPPENHEIMER INTERNATIONAL BOND
FUND. The address of Oppenheimer International Bond Fund is 3410 South
Galena Street, Denver, Colorado 80231. The Registered Agent for Service
is Massachusetts Mutual Life Insurance Company, 1295 State Street,
Springfield, Massachusetts 01111, Attention: Legal Department.
SECOND: Whenever used herein, unless otherwise required by the
context or specifically provided:
1. All terms used in this Declaration of Trust that are defined in
the 1940 Act (defined below) shall have the meanings given to them in the
1940 Act.
2. "Board" or "Board of Trustees" means the Board of Trustees of the
Trust.
3. "By-Laws" means the By-Laws of the Trust as amended from time to
time.
4. "Class" means a class of a series of Shares of the Trust
established and designated under or in accordance with the provisions of
Article FOURTH.
5. "Commission" means the Securities and Exchange Commission.
6. "Declaration of Trust" shall mean this Declaration of Trust as it
may be amended or restated from time to time.
7. The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations of the Commission thereunder, all as amended
from time to time.
8. "Series" refers to series of Shares of the Trust established and
designated under or in accordance with the provisions of Article FOURTH.
9. "Shareholder" means a record owner of Shares of the Trust.
10. "Shares" refers to the transferable units of interest into
which the beneficial interest in the Trust or any Series or Class of the
Trust (as the context may require) shall be divided from time to time and
includes fractions of Shares as well as whole Shares.
11. The "Trust" refers to the Massachusetts business trust created
by this Declaration of Trust, as amended or restated from time to time.
12. "Trustees" refers to the individual trustees in their capacity
as trustees hereunder of the Trust and their successor or successors for
the time being in office as such trustees. Unless the context otherwise
requires, whenever this Declaration of Trust calls for or permits any
action to be taken by the Trustees hereunder, such action shall mean that
taken by the Board of Trustees by vote of the majority of a quorum of
Trustees as set forth from time to time in the By-Laws of the Trust or as
required by the 1940 Act, or by written consent pursuant to section 10 of
this Part SEVENTH.
THIRD: The purpose or purposes for which the Trust is formed and the
business or objects to be transacted, carried on and promoted by it are
as follows:
1. To hold, invest or reinvest its funds, and in connection
therewith to hold part or all of its funds in cash, and to purchase or
otherwise acquire, hold for investment or otherwise, sell, sell short,
assign, negotiate, transfer, exchange or otherwise dispose of or turn to
account or realize upon, securities (which term "securities" shall for the
purposes of this Declaration of Trust, without limitation of the
generality thereof, be deemed to include any stocks, shares, bonds,
financial futures contracts, indexes, debentures, notes, mortgages or
other obligations, derivative instruments and investments, commodities,
commodity contracts, or any combination of the foregoing, and any
certificates, receipts, warrants or other instruments representing rights
to receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interests therein, or in any property or
assets) created or issued by any issuer (which term "issuer" shall for the
purposes of this Declaration of Trust, without limitation of the
generality thereof be deemed to include any persons, firms, associations,
corporations, syndicates, business trusts, partnerships, other business
entities, limited liability companies, quasi-municipal entities,
investment companies, combinations, organizations, governments, or
subdivisions thereof) and in financial instruments (whether they are
considered as securities or commodities); and to exercise, as owner or
holder of any securities or financial instruments, all rights, powers and
privileges in respect thereof; and to do any and all acts and things for
the preservation, protection, improvement and enhancement in value of any
or all such securities or financial instruments.
2. To borrow money and pledge assets in connection with any of the
objects or purposes of the Trust, and to issue notes or other obligations
evidencing such borrowings, to the extent permitted by the 1940 Act and
by the Trust's fundamental investment policies, if any, under the 1940
Act.
3. To issue and sell its Shares in such Series and Classes and
amounts and on such terms and conditions, for such purposes and for such
amount or kind of consideration (including without limitation thereto,
securities) now or hereafter permitted by the laws of the Commonwealth of
Massachusetts and by this Declaration of Trust, as the Trustees may
determine.
4. To purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue, redeem or cancel its Shares, or to classify or
reclassify any unissued Shares or any Shares previously issued and
reacquired of any Series or Class into one or more Series or Classes that
may have been established and designated from time to time, all without
the vote or consent of the Shareholders of the Trust, in any manner and
to the extent now or hereafter permitted by this Declaration of Trust.
5. To conduct its business in all its branches at one or more
offices in New York, Colorado and elsewhere in any part of the world,
without restriction or limit as to extent.
6. To carry out all or any of the foregoing objects and purposes as
principal or agent, and alone or with associates or to the extent now or
hereafter permitted by the laws of Massachusetts, as a member of, or as
the owner or holder of any securities or financial instruments of, or
share or interest in, any issuer, and in connection therewith or make or
enter into such deeds or contracts with any issuers and to do such acts
and things and to exercise such powers, as a natural person could lawfully
make, enter into, do or exercise.
7. To do any and all such further acts and things and to exercise
any and all such further powers as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out
or attainment of all or any of the foregoing purposes or objects.
The foregoing objects and purposes shall, except as otherwise
expressly provided, be in no way limited or restricted by reference to,
or inference from, the terms of any other clause of this or any other
Article of this Declaration of Trust, and shall each be regarded as
independent and construed as powers as well as objects and purposes, and
the enumeration of specific purposes, objects and powers shall not be
construed to limit or restrict in any manner the meaning of general terms
or the general powers of the Trust now or hereafter conferred by the laws
of the Commonwealth of Massachusetts nor shall the expression of one thing
be deemed to exclude another, though it be of a similar or dissimilar
nature, not expressed; provided, however, that the Trust shall not carry
on any business, or exercise any powers, in any state, territory, district
or country except to the extent that the same may lawfully be carried on
or exercised under the laws thereof.
FOURTH:
1. The beneficial interests in the Trust shall be divided into
Shares, all without par value, but the Trustees shall have the authority
from time to time, without obtaining shareholder approval, to create one
or more Series of Shares in addition to the Series specifically
established and designated in part 3 of this Article FOURTH, and to divide
the shares of any Series into three or more Classes pursuant to Part 2 of
this Article FOURTH, all as they deem necessary or desirable, to establish
and designate such Series and Classes, and to fix and determine the
relative rights and preferences as between the different Series of Shares
or Classes as to right of redemption and the price, terms and manner of
redemption, liabilities and expenses to be borne by any Series or Class,
special and relative rights as to dividends and other distributions and
on liquidation, sinking or purchase fund provisions, conversion on
liquidation, conversion rights, and conditions under which the several
Series or Classes shall have individual voting rights or no voting rights.
Except as aforesaid, all Shares of the different Series shall be
identical.
(a) The number of authorized Shares and the number of Shares
of each Series and each Class of a Series that may be issued is unlimited,
and the Trustees may issue Shares of any Series or Class of any Series for
such consideration and on such terms as they may determine (or for no
consideration if pursuant to a Share dividend or split-up), all without
action or approval of the Shareholders. All Shares when so issued on the
terms determined by the Trustees shall be fully paid and non-assessable.
The Trustees may classify or reclassify any unissued Shares or any Shares
previously issued and reacquired of any Series into one or more Series or
Classes of Series that may be established and designated from time to
time. The Trustees may hold as treasury Shares (of the same or some other
Series), reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Shares
of any Series reacquired by the Trust.
(b) The establishment and designation of any Series or any
Class of any Series in addition to that established and designated in part
3 of this Article FOURTH shall be effective (i) upon the execution by a
majority of the Trustees of a document setting forth such establishment
and designation and the relative rights and preferences of such Series or
such Class of such Series or (ii) as otherwise provided in such document.
At any time that there are no Shares outstanding of any particular Series
previously established and designated, the Trustees may by a document
executed by a majority of their number abolish that Series and the
establishment and designation thereof. Each document referred to in this
paragraph shall be an amendment to this Declaration of Trust, and the
Trustees may make any such amendment without shareholder approval.
(c) Any Trustee, officer or other agent of the Trust, and any
organization in which any such person is interested may acquire, own, hold
and dispose of Shares of any Series or Class of any Series of the Trust
to the same extent as if such person were not a Trustee, officer or other
agent of the Trust; and the Trust may issue and sell or cause to be issued
and sold and may purchase Shares of any Series or Class of any Series from
any such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the sale or
purchase of Shares of such Series or Class generally.
2. The Trustees shall have the authority from time to time, without
obtaining shareholder approval, to divide the Shares of any Series into
three or more Classes as they deem necessary or desirable, and to
establish and designate such Classes. In such event, each Class of a
Series shall represent interests in the designated Series of the Trust and
have such voting, dividend, liquidation and other rights as may be
established and designated by the Trustees. Expenses and liabilities
related directly or indirectly to the Shares of a Class of a Series may
be borne solely by such Class (as shall be determined by the Trustees)
and, as provided in Article FIFTH, a Class of a Series may have exclusive
voting rights with respect to matters relating solely to such Class. The
bearing of expenses and liabilities solely by a Class of Shares of a
Series shall be appropriately reflected (in the manner determined by the
Trustees) in the net asset value, dividend and liquidation rights of the
Shares of such Class of a Series. The division of the Shares of a Series
into Classes and the terms and conditions pursuant to which the Shares of
the Classes of a Series will be issued must be made in compliance with the
1940 Act. No division of Shares of a Series into Classes shall result in
the creation of a Class of Shares having a preference as to dividends or
distributions or a preference in the event of any liquidation, termination
or winding up of the Trust, to the extent such a preference is prohibited
by Section 18 of the 1940 Act as to the Trust.
The relative rights and preferences of Shares of different Classes
of Shares of the same Series shall be the same in all respects except
that, and unless and until the Board of Trustees shall determine
otherwise: (i) when a vote of Shareholders is required under this
Declaration of Trust or when a meeting of Shareholders is called by the
Board of Trustees, the Shares of a Class shall vote exclusively on matters
that affect that Class only; (ii) the expenses and liabilities related to
a Class shall be borne solely by such Class (as determined and allocated
to such Class by the Trustees from time to time in a manner consistent
with parts 2 and 3 of Article FOURTH); and (iii) pursuant to paragraph 10
of Article NINTH, the Shares of each Class shall have such other rights
and preferences as are set forth from time to time in the then effective
prospectus and/or statement of additional information relating to the
Shares. Dividends and distributions on Shares of different classes of
Shares of the same Series may differ from the dividends and distributions
on any other such Class; and the distribution, shareholder services and
other services and the net asset value of Shares of different classes of
Shares of the same Series may differ from the services and net asset value
of any other such Class.
3. Without limiting the authority of the Trustees set forth in part
1 of this Article FOURTH to establish and designate any further Series,
the Trustees hereby establish one Series of Shares having the same name
as the Trust, and said Shares shall be divided into three Classes, which
shall be designated Class A, Class B and Class C. The Shares of that
Series and any Shares of any further Series or Classes that may from time
to time be established and designated by the Trustees shall (unless the
Trustees otherwise determine with respect to some further Series or
Classes at the time of establishing and designating the same) have the
following relative rights and preferences:
(a) Assets Belonging to Series. All consideration received
by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof, including
any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to
that Series for all purposes, subject only to the rights of creditors, and
shall be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of
such proceeds, in whatever form the same may be, together with any General
Items allocated to that Series as provided in the following sentence, are
herein referred to as "assets belonging to" that Series. In the event
that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as
belonging to any particular Series (collectively "General Items"), the
Trustees shall allocate such General Items to and among any one or more
of the Series established and designated from time to time in such manner
and on such basis as they, in their sole discretion, deem fair and
equitable; and any General Items so allocated to a particular Series shall
belong to that Series. Each such allocation by the Trustees shall be
conclusive and binding upon the shareholders of all Series for all
purposes.
(b) (1) Liabilities Belonging to Series. The
liabilities, expenses, costs, charges and reserves attributable to each
Series shall be charged and allocated to the assets belonging to each
particular Series. Any general liabilities, expenses, costs, charges and
reserves of the Trust which are not identifiable as belonging to any
particular Series shall be allocated and charged by the Trustees to and
among any one or more of the Series established and designated from time
to time in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. The liabilities, expenses, costs,
charges and reserves allocated and so charged to each Series are herein
referred to as "liabilities belonging to" that Series. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the shareholders of all Series for
all purposes.
(2) Liabilities Belonging to a Class. If a Series is
divided into more than one Class, the liabilities, expenses, costs,
charges and reserves attributable to a Class shall be charged and
allocated to the Class to which such liabilities, expenses, costs, charges
or reserves are attributable. Any general liabilities, expenses, costs,
charges or reserves belonging to the Series which are not identifiable as
belonging to any particular Class shall be allocated and charged by the
Trustees to and among any one or more of the Classes established and
designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. The
liabilities, expenses, costs, charges and reserves allocated and so
charged to each Class are herein referred to as "liabilities belonging to"
that Class. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the holders
of all Classes for all purposes.
(c) Dividends. Dividends and distributions on Shares of a
particular Series or Class may be paid to the holders of Shares of that
Series or Class, with such frequency as the Trustees may determine, which
may be daily or otherwise pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Trustees may determine,
from such of the income, capital gains accrued or realized, and capital
and surplus, from the assets belonging to that Series, as the Trustees may
determine, after providing for actual and accrued liabilities belonging
to such Series or Class. All dividends and distributions on Shares of a
particular Series or Class shall be distributed pro rata to the
Shareholders of such Series or Class in proportion to the number of Shares
of such Series or Class held by such Shareholders at the date and time of
record established for the payment of such dividends or distributions,
except that in connection with any dividend or distribution program or
procedure the Trustees may determine that no dividend or distribution
shall be payable on Shares as to which the Shareholder's purchase order
and/or payment have not been received by the time or times established by
the Trustees under such program or procedure. Such dividends and
distributions may be made in cash or Shares or a combination thereof as
determined by the Trustees or pursuant to any program that the Trustees
may have in effect at the time for the election by each Shareholder of the
mode of the making of such dividend or distribution to that Shareholder.
Any such dividend or distribution paid in Shares will be paid at the net
asset value thereof as determined in accordance with section 13 of Article
SEVENTH.
(d) Liquidation. In the event of the liquidation or
dissolution of the Trust, the Shareholders of each Series and all Classes
of each Series that have been established and designated shall be entitled
to receive, as a Series or Class, when and as declared by the Trustees,
the excess of the assets belonging to that Series over the liabilities
belonging to that Series or Class. The assets so distributable to the
Shareholders of any particular Class and Series shall be distributed among
such Shareholders in proportion to the number of Shares of such Class of
that Series held by them and recorded on the books of the Trust.
(e) Transfer. All Shares of each particular Series or Class
shall be transferable, but transfers of Shares of a particular Class and
Series will be recorded on the Share transfer records of the Trust
applicable to such Series or Class of that Series only at such times as
Shareholders shall have the right to require the Trust to redeem Shares
of such Series or Class of that Series and at such other times as may be
permitted by the Trustees.
(f) Equality. Each Share of a Series shall represent an equal
proportionate interest in the assets belonging to that Series (subject to
the liabilities belonging to such Series or any Class of that Series), and
each Share of any particular Series shall be equal to each other Share of
that Series and shares of each Class of a Series shall be equal to each
other Share of such Class; but the provisions of this sentence shall not
restrict any distinctions permissible under this Article FOURTH that may
exist with respect to Shares of the different Classes of a Series. The
Trustees may from time to time divide or combine the Shares of any
particular Class or Series into a greater or lesser number of Shares of
that Class or Series without thereby changing the proportionate beneficial
interest in the assets belonging to that Series or allocable to that Class
and without in any way affecting the rights of Shares of any other Class
or Series.
(g) Fractions. Any fractional Share of any Class and Series,
if any such fractional Share is outstanding, shall carry proportionately
all the rights and obligations of a whole Share of that Class and Series,
including those rights and obligations with respect to voting, receipt of
dividends and distributions, redemption of Shares, and liquidation of the
Trust.
(h) Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to
provide that (i) holders of Shares of any Series shall have the right to
exchange said Shares into Shares of one or more other Series of Shares,
(ii) holders of shares of any Class shall have the right to exchange said
Shares into Shares of one or more other Classes of the same or a different
Series, and/or (iii) the Trust shall have the right to carry out exchanges
of the aforesaid kind, in each case in accordance with such requirements
and procedures as may be established by the Trustees.
(i) Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for
the Trust, which books shall be maintained separately for the Shares of
each Class and Series that has been established and designated. No
certification certifying the ownership of Shares need be issued except as
the Trustees may otherwise determine from time to time. The Trustees may
make such rules as they consider appropriate for the issuance of Share
certificates, the use of facsimile signatures, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or
any transfer or similar agent, as the case may be, shall be conclusive as
to who are the Shareholders and as to the number of Shares of each Class
and Series held from time to time by each such Shareholder.
(j) Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as
they from time to time authorize. The Trustees may authorize any
distributor, principal underwriter, custodian, transfer agent or other
person to accept orders for the purchase or sale of Shares that conform
to such authorized terms and to reject any purchase or sale orders for
Shares whether or not conforming to such authorized terms.
FIFTH: The following provisions are hereby adopted with respect to
voting Shares of the Trust and certain other rights:
1. The Shareholders shall have the power to vote (a) for the
election of Trustees when that issue is submitted to them, (b) with
respect to the amendment of this Declaration of Trust except where the
Trustees are given authority to amend the Declaration of Trust without
shareholder approval, (c) to the same extent as the shareholders of a
Massachusetts business corporation, as to whether or not a court action,
proceeding or claim should be brought or maintained derivatively or as a
class action on behalf of the Trust or the Shareholders, and (d) with
respect to those matters relating to the Trust as may be required by the
1940 Act or required by law, by this Declaration of Trust, or the By-Laws
of the Trust or any registration statement of the Trust filed with the
Commission or any State, or as the Trustees may consider desirable.
2. The Trust will not hold shareholder meetings unless required by
the 1940 Act, the provisions of this Declaration of Trust, or any other
applicable law or unless the Trustees determine to call a meeting of
shareholders from time to time.
3. Except as herein otherwise provided, at all meetings of
Shareholders, each Shareholder shall be entitled to one vote on each
matter submitted to a vote of the Shareholders of the affected Series for
each Share standing in his name on the books of the Trust on the date,
fixed in accordance with the By-Laws, for determination of Shareholders
of the affected Series entitled to vote at such meeting (except, if the
Board so determines, for Shares redeemed prior to the meeting), and each
such Series shall vote separately ("Individual Series Voting"); a Series
shall be deemed to be affected when a vote of the holders of that Series
on a matter is required by the 1940 Act; provided, however, that as to any
matter with respect to which a vote of Shareholders is required by the
1940 Act or by any applicable law that must be complied with, such
requirements as to a vote by Shareholders shall apply in lieu of
Individual Series Voting as described above. If the shares of a Series
shall be divided into Classes as provided in Article FOURTH, the shares
of each Class shall have identical voting rights and, unless otherwise
provided by the Board of Trustees acting pursuant to the provisions of
this Declaration of Trust, a Class shall have 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. The presence in person or by
proxy of the holders of one-third of the Shares, or of the Shares of any
Series or Class of any Series, outstanding and entitled to vote thereat
shall constitute a quorum at any meeting of the Shareholders or of that
Series or Class, respectively; provided however, that if any action to be
taken by the Shareholders or by a Series or Class at a meeting requires
an affirmative vote of a majority, or more than a majority, of the shares
outstanding and entitled to vote, then in such event the presence in
person or by proxy of the holders of a majority of the shares outstanding
and entitled to vote at such a meeting shall constitute a quorum for all
purposes. At a meeting at which is a quorum is present, a vote of a
majority of the quorum shall be sufficient to transact all business at the
meeting, except as otherwise provided in Article NINTH. If at any meeting
of the Shareholders there shall be less than a quorum present, the
Shareholders or the Trustees present at such meeting may, without further
notice, adjourn the same from time to time until a quorum shall attend,
but no business shall be transacted at any such adjourned meeting except
such as might have been lawfully transacted had the meeting not been
adjourned.
4. Each Shareholder, upon request to the Trust in proper form
determined by the Trust, shall be entitled to require the Trust to redeem
from the net assets of that Series all or part of the Shares of such
Series and Class standing in the name of such Shareholder. The method of
computing such net asset value, the time at which such net asset value
shall be computed and the time within which the Trust shall make payment
therefor, shall be determined as hereinafter provided in Article SEVENTH
of this Declaration of Trust. Notwithstanding the foregoing, the
Trustees, when permitted or required to do so by the 1940 Act, may suspend
the right of the Shareholders to require the Trust to redeem Shares.
5. No Shareholder shall, as such holder, have any right to purchase
or subscribe for any Shares of the Trust which it may issue or sell, other
than such right, if any, as the Trustees, in their discretion, may
determine.
6. All persons who shall acquire Shares shall acquire the same
subject to the provisions of the Declaration of Trust.
7. Cumulative voting for the election of Trustees shall not be
allowed.
SIXTH:
1. The persons who shall act as initial Trustees until the first
meeting or until their successors are duly chosen and qualify are the
initial trustees executing this Declaration of Trust or any counterpart
thereof. However, the By-Laws of the Trust may fix the number of Trustees
at a number greater or lesser than the number of initial Trustees and may
authorize the Trustees to increase or decrease the number of Trustees, to
fill any vacancies on the Board which may occur for any reason including
any vacancies created by any such increase in the number of Trustees, to
set and alter the terms of office of the Trustees and to lengthen or
lessen their own terms of office or make their terms of office of
indefinite duration, all subject to the 1940 Act. Unless otherwise
provided by the By-Laws of the Trust, the Trustees need not be
Shareholders.
2. A Trustee at any time may be removed either with or without cause
by resolution duly adopted by the affirmative vote of the holders of two-
thirds of the outstanding Shares, present in person or by proxy at any
meeting of Shareholders called for such purpose; such a meeting shall be
called by the Trustees when requested in writing to do so by the record
holders of not less than ten per centum of the outstanding Shares
entitled to vote thereon. A Trustee may also be removed by the Board of
Trustees as provided in the By-Laws of the Trust.
3. The Trustees shall make available a list of names and addresses
of all Shareholders as recorded on the books of the Trust, upon receipt
of the request in writing signed by not less than ten Shareholders (who
have been shareholders for at least six months) holding in the aggregate
shares of the Trust valued at not less than $25,000 at net asset value (as
defined in the then effective Prospectus and/or Statement of Additional
Information relating to the Shares under the Securities Act of 1933, as
amended from time to time) or holding not less than 1% in amount of the
entire amount of Shares issued and outstanding; such request must state
that such Shareholders wish to communicate with other Shareholders with
a view to obtaining signatures to a request for a meeting to take action
pursuant to part 2 of this Article SIXTH and be accompanied by a form of
communication to the Shareholders. The Trustees may, in their discretion,
satisfy their obligation under this part 3 by either making available the
Shareholder list to such Shareholders at the principal offices of the
Trust, or at the offices of the Trust's transfer agent, during regular
business hours, or by mailing a copy of such communication and form of
request, at the expense of such requesting Shareholders, to all other
Shareholders, and the Trustees may also take such other action as may be
permitted under Section 16(c) of the 1940 Act.
4. The Trust may at any time or from time to time apply to the
Commission for one or more exemptions from all or part of said Section
16(c) of the 1940 Act, and, if an exemptive order or orders are issued by
the Commission, such order or orders shall be deemed part of said Section
16(c) for the purposes of parts 2 and 3 of this Article SIXTH.
SEVENTH: The following provisions are hereby adopted for the purpose
of defining, limiting and regulating the powers of the Trust, the Trustees
and the Shareholders.
1. As soon as any Trustee is duly elected by the Shareholders or the
Trustees and shall have accepted this Trust, the Trust estate shall vest
in the new Trustee or Trustees, together with the continuing Trustees,
without any further act or conveyance, and he or she shall be deemed a
Trustee hereunder.
2. The death, declination, resignation, retirement, removal, or
incapacity of the Trustees, or any one of them, shall not operate to annul
or terminate the Trust but the Trust shall continue in full force and
effect pursuant to the terms of this Declaration of Trust.
3. The assets of the Trust shall be held separate and apart from any
assets now or hereafter held in any capacity other than as Trustee
hereunder by the Trustees or any successor Trustees. All of the assets
of the Trust shall at all times be considered as vested in the Trustees.
No Shareholder shall have, as a holder of beneficial interest in the
Trust, any authority, power or right whatsoever to transact business for
or on behalf of the Trust, or on behalf of the Trustees, in connection
with the property or assets of the Trust, or in any part thereof.
4. The Trustees in all instances shall act as principals, and are
and shall be free from the control of the Shareholders. The Trustees
shall have full power and authority to do any and all acts and to make and
execute, and to authorize the officers and agents of the Trust to make and
execute, any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust.
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 any
other party to any contract entered into pursuant to paragraph 12(b) of
Article SEVENTH. The Trustees shall not in any way be bound or limited
by present or future laws or customs in regard to Trust investments, but
shall have full authority and power to make any and all investments which
they, in their uncontrolled discretion, shall deem proper to accomplish
the purpose of this Trust. Subject to any applicable limitation in this
Declaration of Trust or by the By-Laws of the Trust, the Trustees shall
have power and authority:
(a) to adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business of the Trust and to
amend and repeal them to the extent that they do not reserve that right
to the Shareholders;
(b) to elect and remove such officers and appoint and
terminate such officers as they consider appropriate with or without
cause, and to appoint and designate from among the Trustees such
committees as the Trustees may determine, and to terminate any such
committee and remove any member of such committee;
(c) to employ as custodian of any assets of the Trust a bank
or trust company or any other entity qualified and eligible to act as a
custodian, subject to any conditions set forth in this Declaration of
Trust or in the By-Laws;
(d) to retain a transfer agent and shareholder servicing
agent, or both;
(e) to provide for the distribution of Shares either through
a principal underwriter or the Trust itself or both;
(f) to set record dates in the manner provided for in the By-
Laws of the Trust;
(g) to delegate such authority as they consider desirable to
any officers of the Trust and to any agent, custodian or underwriter;
(h) to vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property held in
Trust hereunder; and to execute and deliver powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation to securities
or property as the Trustees shall deem proper;
(i) to exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities held in trust
hereunder;
(j) to hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form,
either in its own name or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to the
usual practice of Massachusetts business trusts or investment companies;
(k) to consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern, any
security of which is held in the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or concern,
and to pay calls or subscriptions with respect to any security held in the
Trust;
(l) to compromise, arbitrate, or otherwise adjust claims in
favor of or against the Trust or any matter in controversy including, but
not limited to, claims for taxes;
(m) to make, in the manner provided in the By-Laws,
distributions of income and of capital gains to Shareholders;
(n) to borrow money to the extent and in the manner permitted
by the 1940 Act and the Trust's fundamental policy thereunder, if any, as
to borrowing;
(o) to enter into investment advisory or management contracts,
subject to the 1940 Act, with any one or more corporations, partnerships,
trusts, associations or other persons;
(p) to change the name of the Trust or any Class or Series of
the Trust as they consider appropriate without prior shareholder approval;
(q) to establish officers' and Trustees' fees or compensation
and fees or compensation for committees of the Trustees to be paid by the
Trust or each Series thereof in such manner and amount as the Trustees may
determine;
(r) to invest all or substantially all of the Trust's assets
in another registered investment company;
(s) to determine whether a minimum and/or maximum value should
apply to accounts holding shares, to fix such values and establish the
procedures to cause the involuntary redemption of accounts that do not
satisfy such criteria; and
(t) to engage, employ or appoint any person or entities to
perform any act for the Trust or the Trustees and to authorize their
compensation.
5. No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see to
the application of any payments made or property transferred to the
Trustees or upon their order.
6. (a) The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription to any Shares or
otherwise. This paragraph shall not limit the right of the Trustees to
assert claims against any shareholder based upon the acts or omissions of
such shareholder or for any other reason. There is hereby expressly
disclaimed shareholder and Trustee liability for the acts and obligations
of the Trust. Every note, bond, contract or other undertaking issued by
or on behalf of the Trust or the Trustees relating to the Trust shall
include a notice and provision limiting the obligation represented thereby
to the Trust and its assets (but the omission of such notice and provision
shall not operate to impose any liability or obligation on any Shareholder
or Trustee).
(b) Whenever this Declaration of Trust calls for or permits
any action to be taken by the Trustees hereunder, such action shall mean
that taken by the Board of Trustees by vote of the majority of a quorum
of Trustees as set forth from time to time in the By-Laws of the Trust or
as required by the 1940 Act, or by written consent pursuant to section 10
of this Article SEVENTH.
(c) The Trustees shall possess and exercise any and all such
additional powers as are reasonably implied from the powers herein
contained such as may be necessary or convenient in the conduct of any
business or enterprise of the Trust, to do and perform anything necessary,
suitable, or proper for the accomplishment of any of the purposes, or the
attainment of any one or more of the objects, herein enumerated, or which
shall at any time appear conducive to or expedient for the protection or
benefit of the Trust, and to do and perform all other acts and things
necessary or incidental to the purposes herein set forth, or that may be
deemed necessary by the Trustees.
(d) The Trustees shall have the power, to the extent not
inconsistent with the 1940 Act, to determine conclusively whether any
moneys, securities, or other properties of the Trust are, for the purposes
of this Trust, to be considered as capital or income and in what manner
any expenses or disbursements are to be borne as between capital and
income whether or not in the absence of this provision such moneys,
securities, or other properties would be regarded as capital or income and
whether or not in the absence of this provision such expenses or
disbursements would ordinarily be charged to capital or to income.
7. The By-Laws of the Trust may divide the Trustees into classes and
prescribe the tenure of office of the several classes, but no class of
Trustee shall be elected for a period shorter than that from the time of
the election following the division into classes until the next meeting
and thereafter for a period shorter than the interval between meetings or
for a period longer than five years, and the term of office of at least
one class shall expire each year.
8. The Shareholders shall have the right to inspect the records,
documents, accounts and books of the Trust, subject to reasonable
regulations of the Trustees, not contrary to Massachusetts law, as to
whether and to what extent, and at what times and places, and under what
conditions and regulations, such right shall be exercised.
9. Any officer elected or appointed by the Trustees or by the
Shareholders or otherwise, may be removed at any time, with or without
cause, in such lawful manner as may be provided in the By-Laws of the
Trust.
10. The Trustees shall have power to hold their meetings, to have
an office or offices and, subject to the provisions of the laws of
Massachusetts, to keep the books of the Trust outside of said Commonwealth
at such places as may from time to time be designated by them. The Board
of Trustees may permit any Trustee to participate in a meeting of the
Board of Trustees by, or conduct the meeting through the use of, any means
of communication by which all Trustees participating may hear each other
during the meeting. The Board of Trustees may also take action without
a meeting if all Trustees consent to such action in writing.
11. Securities held by the Trust shall be voted in person or by
proxy by the President or a Vice-President, or such officer or officers
of the Trust as the Trustees shall designate for the purpose, or by a
proxy or proxies thereunto duly authorized by the Trustees, except as
otherwise ordered by vote of the holders of a majority of the Shares
outstanding and entitled to vote in respect thereto.
12. (a) Subject to the provisions of the 1940 Act, any
Trustee, officer or employee, individually, or any partnership of which
any Trustee, officer or employee may be a member, or any corporation or
association of which any Trustee, officer or employee may be an officer,
partner, director, trustee, employee or stockholder, or otherwise may have
an interest, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of the Trust, and in the
absence of fraud no contract or other transaction shall be thereby
affected or invalidated; provided that in such case a Trustee, officer or
employee or a partnership, corporation or association of which a Trustee,
officer or employee is a member, officer, director, trustee, employee or
stockholder is so interested, such fact shall be disclosed or shall have
been known to the Trustees including those Trustees who are not so
interested and who are neither "interested" nor "affiliated" persons as
those terms are defined in the 1940 Act; and any Trustee who is so
interested, or who is also a director, officer, partner, trustee, employee
or stockholder of such other corporation or a member of such partnership
or association which is so interested, may be counted in determining the
existence of a quorum at any meeting of the Trustees which shall authorize
any such contract or transaction, and may vote thereat to authorize any
such contract or transaction, with like force and effect as if he were not
so interested.
(b) Specifically, but without limitation of the foregoing, the
Trust may enter into a management or investment advisory contract or
underwriting contract and other contracts with, and may otherwise do
business with any manager or investment adviser for the Trust and/or
principal underwriter of the Shares of the Trust or any subsidiary or
affiliate of any such manager or investment adviser and/or principal
underwriter and may permit any such firm or corporation to enter into any
contracts or other arrangements with any other firm or corporation
relating to the Trust notwithstanding that the Trustees of the Trust may
be composed in part of partners, directors, Trustees, managers, members,
officers or employees of any such firm or corporation, and officers of the
Trust may have been or may be or become partners, directors, officers or
employees of any such firm or corporation, and in the absence of fraud the
Trust and any such firm or corporation may deal freely with each other,
and no such contract or transaction between the Trust and any such firm
or corporation shall be invalidated or in any way affected thereby, nor
shall any Trustee or officer of the Trust be liable to the Trust or to any
Shareholder or creditor thereof or to any other person for any loss
incurred by it or him solely because of the existence of any such contract
or transaction; provided that nothing herein shall protect any director
or officer of the Trust against any liability to the trust or to its
security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
(c) As used in this paragraph the following terms shall have
the meanings set forth below:
(i) the term "indemnitee" shall mean any present or former
Trustee, officer or employee of the Trust, and the heirs, executors,
administrators, successors and assigns of any of the foregoing; however,
whenever conduct by an indemnitee is referred to, the conduct shall be
that of the original indemnitee rather than that of the heir, executor,
administrator, successor or assignee;
(ii) the term "covered proceeding" shall mean any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, to which an indemnitee
is or was a party or is threatened to be made a party by reason of the
fact or facts under which he or it is an indemnitee as defined above;
(iii) the term "disabling conduct" shall mean willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office in question;
(iv) the term "covered expenses" shall mean expenses
(including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by an indemnitee in connection
with a covered proceeding; and
(v) the term "adjudication of liability" shall mean, as
to any covered proceeding and as to any indemnitee, an adverse
determination as to the indemnitee whether by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent.
(d) The Trust shall not indemnify any indemnitee for any
covered expenses in any covered proceeding if there has been an
adjudication of liability against such indemnitee expressly based on a
finding of disabling conduct.
(e) Except as set forth in paragraph (d) above, the Trust
shall indemnify any indemnitee for covered expenses in any covered
proceeding, whether or not there is an adjudication of liability as to
such indemnitee, such indemnification by the Trust to be to the fullest
extent now or hereafter permitted by any applicable law unless the By-laws
limit or restrict the indemnification to which any indemnitee may be
entitled. The Board of Trustees may adopt by-law provisions to implement
subparagraphs (c), (d) and (e) hereof.
(f) Nothing herein shall be deemed to affect the right of the
Trust and/or any indemnitee to acquire and pay for any insurance covering
any or all indemnitees to the extent permitted by applicable law or to
affect any other indemnification rights to which any indemnitee may be
entitled to the extent permitted by applicable law. Such rights to
indemnification shall not, except as otherwise provided by law, be deemed
exclusive of any other rights to which such indemnitee may be entitled
under any statute now or hereafter enacted, By-Law, contract or otherwise.
13. The Trustees are empowered, in their absolute discretion, to
establish bases or times, or both, for determining the net asset value per
Share of any Class and Series in accordance with the 1940 Act and to
authorize the voluntary purchase by any Class and Series, either directly
or through an agent, of Shares of any Class and Series upon such terms and
conditions and for such consideration as the Trustees shall deem advisable
in accordance with the 1940 Act.
14. Payment of the net asset value per Share of any Class and
Series properly surrendered to it for redemption shall be made by the
Trust within seven days, or as specified in any applicable law or
regulation, after tender of such stock or request for redemption to the
Trust for such purpose together with any additional documentation that may
be reasonably required by the Trust or its transfer agent to evidence the
authority of the tenderor to make such request, plus any period of time
during which the right of the holders of the shares of such Class of that
Series to require the Trust to redeem such shares has been suspended. Any
such payment may be made in portfolio securities of that Series and/or in
cash, as the Trustees shall deem advisable, and no Shareholder shall have
a right, other than as determined by the Trustees, to have Shares redeemed
in kind.
15. The Trust shall have the right, at any time and without prior
notice to the Shareholder, to redeem Shares of the Class and Series
registered in the name of such Shareholder for its current net asset
value, if and to the extent that such redemption is necessary to reimburse
either that Series or Class of the Trust or the principal underwriter of
the Shares for any loss either has sustained by reason of the failure of
such Shareholder to make timely and good payment for Shares purchased or
subscribed for by such Shareholder, regardless of whether such Shareholder
was a Shareholder at the time of such purchase or subscription, subject
to and upon such terms and conditions as the Trustees may from time to
time prescribe.
EIGHTH: The name "Oppenheimer" included in the name of the Trust and
of any Series shall be used pursuant to a royalty-free, non-exclusive
license from Oppenheimer Management Corporation ("OMC"), incidental to and
as part of any one or more advisory, management or supervisory contracts
which may be entered into by the Trust with OMC. Such license shall allow
OMC to inspect and subject to the control of the Board of Trustees to
control the nature and quality of services offered by the Trust under such
name. The license may be terminated by OMC upon termination of such
advisory, management or supervisory contracts or without cause upon 60
days' written notice, in which case neither the Trust nor any Series or
Class shall have any further right to use the name "Oppenheimer" in its
name or otherwise and the Trust, the Shareholders and its officers and
Trustees shall promptly take whatever action may be necessary to change
its name and the names of any Series or Classes accordingly.
NINTH:
1. In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of said shareholder's being or having
been a Shareholder and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder and successors and
assigns, the Shareholders, heirs, executors, administrators or other legal
representatives, shall be entitled out of the Trust estate to be held
harmless from and indemnified against all loss and expense arising from
such liability. The Trust shall, upon request by the Shareholder, assume
the defense of any such claim made against any Shareholder for any act or
obligation of the Trust and satisfy any judgment thereon.
2. It is hereby expressly declared that a trust and not a
partnership is created hereby. No individual Trustee hereunder shall have
any power to bind the Trust, the Trust's officers or any Shareholder. All
persons extending credit to, doing business with, contracting with or
having or asserting any claim against the Trust or the Trustees shall look
only to the assets of the Trust for payment under any such credit,
transaction, contract or claim; and neither the Shareholders nor the
Trustees, nor any of their agents, whether past, present or future, shall
be personally liable therefor; notice of such disclaimer shall be given
in each agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. Nothing in this Declaration of Trust shall
protect a Trustee against any liability to which such Trustee would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
the office of Trustee hereunder.
3. The exercise by the Trustees of their powers and discretion
hereunder in good faith and with reasonable care under the circumstances
then prevailing, shall be binding upon everyone interested. Subject to
the provisions of section 2 of this Article NINTH, the Trustees shall not
be liable for errors of judgment or mistakes of fact or law. The Trustees
may take advice of counsel or other experts with respect to the meaning
and operations of this Declaration of Trust, applicable laws, contracts,
obligations, transactions or any other business the Trust may enter into,
and subject to the provisions of section 2 of this Article NINTH, shall
be under no liability for any act or omission in accordance with such
advice or for failing to follow such advice. The Trustees shall not be
required to give any bond as such, nor any surety if a bond is required.
4. This Trust shall continue without limitation of time but subject
to the provisions of sub-sections (a), (b), (c) and (d) of this section
4.
(a) The Trustees, with the favorable vote of the holders of
a majority of the outstanding voting securities, as defined in the 1940
Act, of any one or more Series entitled to vote, may sell and convey the
assets of that Series (which sale may be subject to the retention of
assets for the payment of liabilities and expenses) to another issuer for
a consideration which may be or include securities of such issuer. Upon
making provision for the payment of liabilities, by assumption by such
issuer or otherwise, the Trustees shall distribute the remaining proceeds
ratably among the holders of the outstanding Shares of the Series the
assets of which have been so transferred.
(b) The Trustees, with the favorable vote of the holders of
a majority of the outstanding voting securities, as defined in the 1940
Act, of any one or more Series entitled to vote, may at any time sell and
convert into money all the assets of that Series. Upon making provisions
for the payment of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of that Series, the Trustees shall
distribute the remaining assets of that Series ratably among the holders
of the outstanding Shares of that Series.
(c) The Trustees, with the favorable vote of the holders of
a majority of the outstanding voting securities, as defined in the 1940
Act, of any one or more Series entitled to vote, may otherwise alter,
convert or transfer the assets of that Series or those Series.
(d) Upon completion of the distribution of the remaining
proceeds or the remaining assets as provided in sub-sections (a) and (b),
and in subsection (c) where applicable, the Series the assets of which
have been so transferred shall terminate, and if all the assets of the
Trust have been so transferred, the Trust shall terminate and the Trustees
shall be discharged of any and all further liabilities and duties
hereunder and the right, title and interest of all parties shall be
cancelled and discharged.
5. The original or a copy of this instrument and of each restated
declaration of trust or instrument supplemental hereto shall be kept at
the office of the Trust where it may be inspected by any Shareholder. A
copy of this instrument and of each supplemental or restated declaration
of trust shall be filed with the Secretary of the Commonwealth of
Massachusetts, as well as any other governmental office where such filing
may from time to time be required. Anyone dealing with the Trust may rely
on a certificate by an officer of the Trust as to whether or not any such
supplemental or restated declarations of trust have been made and as to
any matters in connection with the Trust hereunder, and, with the same
effect as if it were the original, may rely on a copy certified by an
officer of the Trust to be a copy of this instrument or of any such
supplemental or restated declaration of trust. In this instrument or in
any such supplemental or restated declaration of trust, references to this
instrument, and all expressions like "herein", "hereof" and "hereunder"
shall be deemed to refer to this instrument as amended or affected by any
such supplemental or restated declaration of trust. This instrument may
be executed in any number of counterparts, each of which shall be deemed
an original.
6. The Trust set forth in this instrument is created under and is to
be governed by and construed and administered according to the laws of the
Commonwealth of Massachusetts. The Trust shall be of the type commonly
called a Massachusetts business trust, and without limiting the provisions
hereof, the Trust may exercise all powers which are ordinarily exercised
by such a trust.
7. The Board of Trustees is empowered to cause the redemption of the
Shares held in any account if the aggregate net asset value of such Shares
has been reduced to $200 or less upon such notice to the shareholder in
question, with such permission to increase the investment in question and
upon such other terms and conditions as may be fixed by the Board of
Trustees in accordance with the 1940 Act.
8. In the event that any person advances the organizational expenses
of the Trust, such advances shall become an obligation of the Trust which
obligation shall be subject to such terms and conditions as may be fixed
by, or determined with criteria fixed by the Board of Trustees.
9. Whenever any action is taken under this Declaration of Trust
including action which is required or permitted by the 1940 Act or any
other applicable law, such action shall be deemed to have been properly
taken if such action is in accordance with the construction of the 1940
Act or such other applicable law then in effect as expressed in "no
action" letters of the staff of the Commission or any release, rule,
regulation or order under the 1940 Act or any decision of a court of
competent jurisdiction, notwithstanding that any of the foregoing shall
later be found to be invalid or otherwise reversed or modified by any of
the foregoing.
10. Any action which may be taken by the Board of Trustees under
this Declaration of Trust or its By-Laws may be taken by the description
thereof in the then effective prospectus and/or statement of additional
information relating to the Shares under the Securities Act of 1933 or in
any proxy statement of the Trust rather than by formal resolution of the
Board.
11. Whenever under this Declaration of Trust, the Board of
Trustees is permitted or required to place a value on assets of the Trust,
such action may be delegated by the Board, and/or determined in accordance
with a formula determined by the Board, to the extent permitted by the
1940 Act.
12. If authorized by vote of the Trustees and, if a vote of
Shareholders is required under this Declaration of Trust, the favorable
vote of the holders of a "majority" of the outstanding voting securities,
as defined in the 1940 Act, entitled to vote, or by any larger vote which
may be required by applicable law in any particular case, the Trustees may
amend or otherwise supplement this instrument, by making a Restated
Declaration of Trust or a Declaration of Trust supplemental hereto, which
thereafter shall form a part hereof; any such Supplemental or Restated
Declaration of Trust may be executed by and on behalf of the Trust and the
Trustees by an officer or officers of the Trust. Amendments having the
purpose of changing the name of the Trust or of supplying any omission,
curing any ambiguity or curing, correcting or supplementing any provision
which is defective or inconsistent with the 1940 Act or with the
requirements, of the Internal Revenue Code and the regulations thereunder
for the trusts obtaining the most favorable treatment thereunder available
to regulated investment companies or of establishing and designating or
abolishing any Series of Shares in accordance with Article FOURTH hereof
shall require authorization by Shareholder vote.
ORGZN\880#2DUP
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as
of the 16th day of May, 1995.
/s/ Robert G. Avis /s/ Charles Conrad, Jr.
- -------------------------- ----------------------------------
Robert G. Avis, Trustee Charles Conrad, Jr., Trustee
One North Jefferson Avenue 19411 Merion Court
St. Louis, Missouri 63103 Huntington Beach, California 92648
/s/ William A. Baker /s/ Robert M. Kirchner
- ------------------------------ ---------------------------------
William A. Baker, Trustee Robert M. Kirchner, Trustee
197 Desert Lakes Drive 2800 S. University Boulevard
Palm Springs, California 92264 Denver, Colorado 80210
/s/ Ned M. Steel /s/ C. Howard Kast
- ------------------------------ ---------------------------------
Ned M. Steel, Trustee C. Howard Kast, Trustee
3236 S. Steele Street 2552 East Alameda
Denver, Colorado Denver, Colorado 80209
/s/ Raymond J. Kalinowski /s/ Jon S. Fossel
- ------------------------------ ------------------------------
Raymond J. Kalinowski, Trustee Jon S. Fossel, Trustee
44 Portland Drive Box 44 - Mead Street
St. Louis, Missouri Waccabuc, New York 10597
/s/ James C. Swain
- ----------------------------
James C. Swain, Trustee
23554 Wayne's Way
Golden, California 80401
ORGZN\880#2DUP
<PAGE>
Exhibit 24(b)(2)
OPPENHEIMER INTERNATIONAL BOND FUND
(the "Trust")
BY-LAWS
ARTICLE I
SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the Shareholders
(which term as used herein shall, together with all other terms defined
in the Declaration of Trust, have the same meaning as in the Declaration
of Trust) shall be held at the principal office of the Trust or at such
other place as may from time to time be designated by the Board of
Trustees and stated in the notice of meting.
Section 2. Shareholder Meetings. Meetings of the Shareholders for
any purpose or purposes may be called by the Chairman of the Board of
Trustees, or by the President or by the Board of Trustees and shall be
called by the Secretary upon receipt of the request in writing signed by
Shareholders holding not less than one third of the entire number of
Shares issued and outstanding and entitled to vote thereat. Such request
shall state the purpose or purposes of the proposed meeting. In addition,
meetings of the Shareholders shall be called by the Board of Trustees upon
receipt of the request in writing signed by Shareholders that hold not
less than ten percent of the entire number of Shares issued and
outstanding and entitled to vote thereat, stating that the purpose of the
proposed meeting is the removal of a Trustee.
Section 3. Notice of Meetings of Shareholders. Not less than ten
days' and not more than 120 days' written notice of every meeting of
Shareholders, stating the time and place thereof (and the general nature
of the business proposed to be transacted at any special or extraordinary
meeting), shall be given to each Shareholder entitled to vote thereat by
leaving the same with him or at his residence or usual place of business
or by mailing it, postage prepaid and addressed to him at his address as
it appears upon the books of the Trust.
No notice of the time, place or purpose of any meeting of
Shareholders need be given to any Shareholder who attends in person or by
proxy or to any Shareholder who, in writing executed and filed with the
records of the meeting, either before or after the holding thereof, waives
such notice.
Section 4. Record Dates. The Board of Trustees may fix, in advance
or from time to time, a record date not exceeding 120 days and not less
than 10 days preceding the date of any meeting of Shareholders or of the
shareholders of any Series or Class for the determination of the
Shareholders of record entitled to notice of and to vote at a
Shareholders' meeting; for the determination of shareholders entitled to
receive dividends, distributions, rights or allotments of rights; or for
any other purpose requiring the fixing of a record date. Only such
Shareholders of record on such date shall be entitled to notice of and to
vote at such meeting, receive such dividends, rights or allotments, or
otherwise participate as the case may be.
Section 5. Access to Shareholder List. The Board of Trustees shall
make available a list of the names and addresses of all shareholders as
recorded on the books of the Trust, upon receipt of the request in
writing signed by not less than ten Shareholders (who have been such for
at least 6 months) holding Shares of the Trust valued at $25,000 or more
at current net asset value (as defined in the Trust's Prospectus) or
holding not less than one percent in amount of the entire number of shares
of the Trust issued and outstanding; such request must state that such
Shareholders wish to communicate with other Shareholders with a view to
obtaining signatures to a request for a meeting to remove one or more
trustees pursuant to this Section 5 or Section 2 of Article II of these
By-Laws and be accompanied by a form of communication to the Shareholders.
The Board of Trustees may, in its discretion, satisfy its obligation under
this Section 5 by either, as required by Section 16(c) of the Investment
Company Act, making available the Shareholder List to such Shareholders
at the principal offices of the Trust, or at the offices of the Trust's
transfer agent, during regular business hours, or by mailing a copy of
such Shareholders' proposed communication and form of request, at their
expense, to all other Shareholders. Notwithstanding the foregoing, the
Board of Trustees may also take such other action as may be permitted
under Section 16(c) of the Investment Company Act.
Section 6. Quorum, Adjournment of Meetings. The presence in person
or by proxy of the holders of record of more than one-third of the Shares,
or of the shares of any Series or Class, of the Trust issued and
outstanding and entitled to vote thereat, shall constitute a quorum,
respectively, at all meetings of the Shareholders; provided, however, that
if any action to be taken by the Shareholders or by a Series or Class at
a meeting requires an affirmative vote of a majority, or more than a
majority, of the shares outstanding and entitled to vote, then in such
event the presence in person or by proxy of the holders of a majority of
the shares outstanding and entitled to vote at such a meeting shall
constitute a quorum for all purposes. At a meeting at which a quorum is
present, a vote of a majority of the quorum shall be sufficient to
transact all business at the meeting. If at any meeting of the
Shareholders there shall be less than a quorum present, the Shareholders
or Trustees present at such meeting may, without further notice, adjourn
the same from time to time until a quorum shall attend, but no business
shall be transacted at any such adjourned meeting except such as might
have been lawfully transacted had the meeting not been adjourned.
Section 7. Voting and Inspectors. At all meetings of Shareholders,
each Shareholder shall be entitled to one vote on each matter submitted
to a vote of the Shareholders or to a vote of the Shareholders of the
affected Series or Class for each Share standing in his name on the books
of the Trust on the date fixed for determination of Shareholders or the
Shareholders of the affected Series or Class entitled to vote at such
meeting (except, if the Board so determines, for Shares redeemed prior to
the meeting), and each such Series shall vote as an individual class
("Individual Class Voting"); a Series or Class shall be deemed to be
affected when a vote of the holders of that Series or Class on a matter
is required by the Investment Company Act of 1940; provided, however, that
as to any matter with respect to which a vote of Shareholders is required
by the Investment Company Act of 1940 or by any applicable law that must
be complied with, such requirements as to a vote by Shareholders shall
apply in lieu of Individual Class Voting as described above. Any
fractional Share shall carry proportionately all the rights of a whole
Share, including the right to vote and the right to receive dividends.
Any Shareholder thus entitled to vote at any such meeting of Shareholders
shall be entitled to vote either in person or by proxy appointed by an
instrument in writing subscribed by such Shareholder or his duly
authorized attorney-in-fact.
All elections of Trustees shall be had by a majority of the votes
cast and all questions shall be decided by a majority of the votes cast,
in each case at a duly constituted meeting, except as otherwise provided
in the Declaration of Trust or in these By-Laws or by specific statutory
provision superseding the restrictions and limitations contained in the
Declaration of Trust or in these By-Laws.
At any election of Trustees, the Board of Trustees prior thereto may,
or, if they have not so acted, the Chairman of the meeting may, and upon
the request of the holders of ten percent (10%) of the Shares entitled to
vote at such election shall, appoint two inspectors of election who shall
first subscribe an oath or affirmation to execute faithfully the duties
of inspectors at such election with strict impartiality and according to
the best of their ability, and shall after the election make a certificate
of the result of the vote taken. No candidate for the office of Trustee
shall be appointed such Inspector.
The Chairman of the meeting may cause a vote by ballot to be taken
upon any election or matter, and such vote shall be taken upon the request
of the holders of ten percent (10%) of the Shares entitled to vote on such
election or matter.
Section 8. Conduct of Shareholders' Meetings. The meetings of the
Shareholders shall be presided over by the Chairman of the Board of
Trustees, if any, or if he shall not be present, by the President, or if
he shall not be present, by a Vice-President, or if none of the Chairman
of the Board of Trustees, the President or any Vice-President is present,
by a chairman to be elected at the meeting. The Secretary of the Trust,
if present, shall act as Secretary of such meetings, or if he is not
present, an Assistant Secretary shall so act, or if neither the Secretary
nor an Assistant Secretary is present, than the meeting shall elect its
secretary.
Section 9. Concerning Validity of Proxies, Ballots, Etc. At every
meeting of the Shareholders, all proxies shall be received and taken in
charge of and all ballots shall be received and canvassed by the secretary
of the meeting, who shall decide all questions touching the qualification
of voters, the validity of the proxies, and the acceptance or rejection
of votes, unless inspectors of election shall have been appointed as
provided in Section 7, in which event such inspectors of election shall
decide all such questions.
ARTICLE II
BOARD OF TRUSTEES
Section 1. Number and Tenure of Office. The business and affairs
of the Trust shall be conducted and managed by a Board of Trustees
consisting of the number of initial Trustees, which number may be
increased or decreased as provided in Section 2 of this Article. Each
Trustee shall, except as otherwise provided herein, hold office until the
next meeting of Shareholders of the Trust following his election called
for the purpose of electing Trustees or until his successor is duly
elected and qualifies. Trustees need not be Shareholders.
Section 2. Increase or Decrease in Number of Trustees; Removal. The
Board of Trustees, by the vote of a majority of the entire Board, may
increase the number of Trustees to a number not exceeding fifteen, and may
elect Trustees to fill the vacancies created by any such increase in the
number of Trustees until the next meeting called for the purpose of
electing Trustees or until their successors are duly elected and qualify;
the Board of Trustees, by the vote of a majority of the entire Board, may
likewise decrease the number of Trustees to a number not less than three
but the tenure of office of any Trustee shall not be affected by any such
decrease. Vacancies occurring other than by reason of any such increase
shall be filled by a vote of a majority of the entire Board then sitting.
In the event that after the proxy material has been printed for a meeting
of Shareholders at which Trustees are to be elected and any one or more
nominees named in such proxy material should die, become incapacitated or
fail to stand for election, the authorized number of Trustees shall be
automatically reduced by the number of such nominees, unless the Board of
Trustees prior to the meeting shall otherwise determine.
A Trustee at any time may be removed either with or without cause by
resolution duly adopted by the affirmative votes of the holders of not
less than two-thirds of the outstanding Shares of the Trust, present in
person or by proxy at any meeting of Shareholders at which such vote may
be taken. Any Trustee at any time may be removed for cause by resolution
duly adopted at any meeting of the Board of Trustees provided that notice
thereof is contained in the notice of such meeting and that such
resolution is adopted by the vote of at least two thirds of the Trustees
whose removal is not proposed. As used herein, "for cause" shall mean any
cause which under Massachusetts law would permit the removal of a Trustee
of a business trust.
Section 3. Place of Meeting. The Trustees may hold their meetings,
have one or more offices, and keep the books of the Trust outside
Massachusetts, at any office or offices of the Trust or at any other place
as they may from time to time by resolution determine, or, in the case of
meetings, as they may from time to time by resolution determine or as
shall be specified or fixed in the respective notices or waivers of notice
thereof.
Section 4. Regular Meetings. Regular meetings of the Board of
Trustees shall be held at such time and on such notice, if any, as the
Trustees may from time to time determine.
Section 5. Special Meetings. Special meetings of the Board of
Trustees may be held from time to time upon call of the Chairman of the
Board of Trustees, the President or two or more of the Trustees, by oral,
telegraphic or written notice duly served on or sent or mailed to each
Trustee not less than one day before such meeting. No notice need be given
to any Trustee who attends in person or to any Trustee who in writing
executed and filed with the records of the meeting either before or after
the holding thereof, waives such notice. Such notice or waiver of notice
need not state the purpose or purposes of such meeting.
Section 6. Quorum. A majority of the Trustees then in office shall
constitute a quorum for the transaction of business, provided that a
quorum shall in no case be less than two Trustees. If at any meeting of
the Board there shall be less than a quorum present (in person or by open
telephone line, to the extent permitted by the Investment Company Act of
1940 (the "1940 Act")), a majority of those present may adjourn the
meeting from time to time until a quorum shall have been obtained. The
act of the majority of the Trustees present at any meeting at which there
is a quorum shall be the act of the Board, except as may be otherwise
specifically provided by statute, by the Declaration of Trust or by these
By-Laws.
Section 7. Executive Committee. The Board of Trustees may, by the
affirmative vote of a majority of the entire Board, elect from the
Trustees an Executive Committee to consist of such number of Trustees
(but not less than two) as the Board may from time to time determine. The
Board of Trustees by such affirmative vote shall have power at any time
to change the members of such Committee and may fill vacancies in the
Committee by election from the Trustees. When the Board of Trustees is
not in session, the Executive Committee shall have and may exercise any
or all of the powers of the Board of Trustees in the management of the
business and affairs of the Trust (including the power to authorize the
seal of the Trust to be affixed to all papers which may require it) except
as otherwise provided by law and except the power to increase or decrease
the size of, or fill vacancies on, the Board. The Executive Committee may
fix its own rules of procedure, and may meet, when and as provided by such
rules or by resolution of the Board of Trustees, but in every case the
presence of a majority shall be necessary to constitute a quorum. In the
absence of any member of the Executive Committee, the members thereof
present at any meeting, whether or not they constitute a quorum, may
appoint a member of the Board of Trustees to act in the place of such
absent member.
Section 8. Other Committees. The Board of Trustees, by the
affirmative vote of a majority of the entire Board, may appoint other
committees which shall in each case consist of such number of members of
the Board (not less than two) and shall have and may exercise such powers
as the Board may determine in the resolution appointing them. A majority
of all members of any such committee may determine its action, and fix the
time and place of its meetings, unless the Board of Trustees shall
otherwise provide. The Board of Trustees shall have power at any time to
change the members and powers of any such committee, to fill vacancies,
and to discharge any such committee.
Section 9. Informal Action by and Telephone Meetings of Trustees and
Committees. Any action required or permitted to be taken at any meeting
of the Board of Trustees or any committee thereof may be taken without a
meeting, if a written consent to such action is signed by all members of
the Board, or of such committee, as the case may be. Trustees or members
of a committee of the Board of Trustees may participate in a meeting by
means of a conference telephone or similar communications equipment; such
participation shall, except as otherwise required by the 1940 Act, have
the same effect as presence in person.
Section 10. Compensation of Trustees and Committee Members.
Trustees and members of the Committees appointed by the Board shall be
entitled to receive such compensation from the Trust for their services
as may from time to time be voted by the Board of Trustees.
Section 11. Dividends. Dividends or distributions payable on the
Shares of any Series or Class of the Trust may, but need not be, declared
by specific resolution of the Board as to each dividend or distribution;
in lieu of such specific resolutions, the Board may, by general
resolution, determine the method of computation thereof, the method of
determining the Shareholders of the Series or Class to which they are
payable and the methods of determining whether and to which Shareholders
they are to be paid in cash or in additional Shares.
Section 12. Indemnification. Before an indemnitee shall be
indemnified by the Trust, there shall be a reasonable determination upon
review of the facts that the person to be indemnified was not liable by
reason of disabling conduct as defined in the Declaration of Trust. Such
determination may be made either by vote of a majority of a quorum of the
Board who are neither "interested persons" of the Trust or the investment
adviser nor parties to the proceeding or by independent legal counsel in
a written opinion. The Trust may advance attorneys' fees and expenses
incurred in a covered proceeding to the indemnitee if the indemnitee
undertakes to repay the advance unless it is determined that he is
entitled to indemnification under the Declaration of Trust. Also at least
one of the following conditions must be satisfied: (1) the indemnitee
provides security for his undertaking, or (2) the Trust is insured against
losses arising by reason of lawful advances, or (3) a majority of the
disinterested nonparty Trustees or independent legal counsel in a written
opinion shall determine, based upon review of all of the facts, that there
is reason to believe that the indemnitee will ultimately be found entitled
to indemnification.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of the Trust
shall include a Chairman of the Board of Trustees, a President, one or
more Vice-Presidents (the number thereof to be determined by the Board of
Trustees), a Secretary and a Treasurer. The Chairman of the Board and the
President shall be selected from among the Trustees. The Board of
Trustees may also in its discretion appoint Assistant Secretaries,
Assistant Treasurers, and other officers, agents and employees, who shall
have authority and perform such duties as the Board or the Executive
Committee may determine. The Board of Trustees may fill any vacancy which
may occur in any office. Any two offices, except those of Chairman of the
Board and Secretary, and President and Secretary, may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument
in more than one capacity, if such instrument is required by law or these
By-Laws to be executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. The term of office of all officers shall
be until their respective successors are chosen and qualify; however, any
officer may be removed from office at any time with or without cause by
the vote of a majority of the entire Board of Trustees.
Section 3. Powers and Duties. The officers of the Trust shall have
such powers and duties as generally pertain to their respective offices,
as well as such powers and duties as may from time to time be conferred
by the Board of Trustees or the Executive Committee. Unless otherwise
ordered by the Board of Trustees, the Chairman of the Board shall be the
Chief Executive Officer.
ARTICLE IV
SHARES
Section 1. Share Certificates. The Board of Trustees has discretion
to determine from time to time whether (i) all of the Shares of the Trust
or any Series or Class shall be issued without certificates, or (ii) if
certificates are to be issued for any Shares, the extent and conditions
for such issuance, and the form(s) of such certificates.
Section 2. Transfer of Shares. Shares of any Series or Class shall
be transferable on the books of the Trust by the holder thereof in person
or by his duly authorized attorney or legal representative, upon surrender
and cancellation of certificates, if any, for the same number of Shares
of that Series or Class, duly endorsed or accompanied by proper
instruments of assignment and transfer, with such proof of the
authenticity of the signature as the Trust or its transfer agent may
reasonably require; in the case of shares not represented by certificates,
the same or similar requirements may be imposed by the Board of Trustees.
Section 3. Share Ledgers. The share ledgers of the Trust,
containing the names and addresses of the Shareholders of each Series or
Class of the Trust and the number of shares of that Series or Class, held
by them respectively, shall be kept at the principal offices of the Trust
or at the offices of the transfer agent of the Trust.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
Trustees may determine the conditions upon which a new certificate may be
issued in place of a certificate which is alleged to have been lost,
stolen or destroyed; and may, in their discretion, require the owner of
such certificate or his legal representative to give bond, with sufficient
surety to the Trust and the transfer agent, if any, to indemnify it and
such transfer agent against any and all loss or claims which may arise by
reason of the issue of a new certificate in the place of the one so lost,
stolen or destroyed.
ARTICLE V
SEAL
The Board of Trustees shall provide a suitable seal of the Trust, in
such form and bearing such inscriptions as it may determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Trust shall be fixed by the Board of Trustees.
ARTICLE VII
AMENDMENT OF BY-LAWS
The By-Laws of the Trust may be altered, amended, added to or
repealed by the Shareholders or by majority vote of the entire Board of
Trustees, but any such alteration, amendment, addition or repeal of the
By-Laws by action of the Board of Trustees may be altered or repealed by
the Shareholders.
ORGZN\880DUP
<PAGE>
Exhibit 24(b)(5)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the __ day of ________, 1995, by and between OPPENHEIMER
INTERNATIONAL BOND FUND (hereinafter referred to as the "Fund"), and
OPPENHEIMER MANAGEMENT CORPORATION (hereinafter referred to as "OMC").
WHEREAS, the Fund is a open-end, diversified management investment company
registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the
"Investment Company Act"), and OMC is an investment adviser registered as
such with the Commission under the Investment Advisors Act of 1940;
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 Provision.
The Fund hereby employs OMC and OMC hereby undertakes to act as the
investment adviser of the Fund and to perform for the Fund such other
duties and functions as are hereinafter set forth. OMC shall, in all
matters, give to the Fund and its Board of Trustees the benefit of its
best judgment, effort, advice and recommendations and shall, at all times
conform to, and use its best efforts to enable the Fund to conform to (i)
the provisions of the Investment Company Act and any rules or regulations
thereunder; (ii) any other applicable provisions of state or Federal law;
(iii) the provisions of the Declaration of Trust and By-Laws of the Fund
as amended from time to time; (iv) policies and determinations of the
Board of Trustees of the Fund; (v) the fundamental policies and investment
restrictions of the Fund as reflected in its registration statement under
the Investment Company Act or as such policies may, from time to time, be
amended by the Fund's shareholders; and (vi) the Prospectus and Statement
of Additional Information of the Fund in effect from time to time. The
appropriate officers and employees of 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 Fund's
Board of Trustees, (i) regularly provide investment advice and
recommendations to the Fund with respect to its investments, investment
policies and the purchase and sale of securities; (ii) supervise
continuously the investment program of the Fund and the composition of its
portfolio and determine what securities shall be purchased or sold by the
Fund; and (iii) arrange, subject to the provisions of paragraph 7 hereof,
for the purchase of securities and other investments for the Fund and the
sale of securities and other investments held in the Fund's portfolio.
(b) Provided that the Fund shall not be required to pay any
compensation for services under this Agreement other than as provided by
the terms of this Agreement and subject to the provisions of paragraph 7
hereof, OMC may obtain investment information, research or assistance from
any other person, firm or corporation to supplement, update or otherwise
improve its investment management services.
(c) Provided that nothing herein shall be deemed to protect 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 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 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 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 expense, provide such officers for the Fund as the
Board of Trustees may request.
4. Allocation of Expenses.
All other costs and expenses of the Fund not expressly assumed by 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 and taxes; (ii) brokerage commissions; (iii) insurance premiums
for fidelity and other coverage requisite to its operations; (iv)
compensation and expenses of its trustees other than those affiliated with
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 from
the Fund 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
aggregate net asset value of the shares of the Fund as of the close of
each business day and payable monthly at the following annual rate:
.75% of the first $200 million of net assets;
.72% of the next $200 million;
.69% of the next $200 million;
.66% of the next $200 million;
.60% of the next $200 million; and
.50% of net assets in excess of $1 billion.
6. Use of Name "Oppenheimer."
OMC hereby grants to the Fund a royalty-free, non-exclusive license
to use the name "Oppenheimer" in the name of the Fund for the duration of
this Agreement and any extensions or renewals thereof. To the extent
necessary to protect OMC's rights to the name "Oppenheimer" under
applicable law, such license shall allow OMC to inspect and, subject to
control by the Fund's Board, control the nature and quality of services
offered by the Fund under such name 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" in the name of the Fund or
otherwise. The name "Oppenheimer" 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 is authorized, in arranging the purchase and sale of the
Fund's portfolio securities, to employ or deal with such members of
securities or commodities exchanges, brokers or dealers (hereinafter
"broker-dealers"), including "affiliated" broker-dealers (as that term is
defined in the Investment Company Act), as may, in its best judgment,
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
security price obtainable) of the Fund's portfolio transactions as well
as to obtain, consistent with the provisions of subparagraph (c) of this
paragraph 7, the benefit of such investment information or research as
will be of significant assistance to the performance by OMC of its
investment management functions.
(b) OMC shall select broker-dealers to effect the Fund's portfolio
transactions on the basis of its estimate of their ability to obtain best
execution of particular and related portfolio transactions. The abilities
of a broker-dealer to obtain best execution of particular portfolio
transaction(s) will be judged by OMC on the basis of all relevant factors
and considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the ability and
willingness of the broker-dealer to facilitate the Fund's portfolio
transactions by participating therein for its own account; the importance
to the Fund of speed, efficiency or confidentiality; the broker-dealer's
apparent familiarity with sources from or to whom particular securities
might be purchased or sold; as well as any other matters relevant to the
selection of a broker-dealer for particular and related transactions of
the Fund.
(c) OMC shall have discretion, in the interests of the Fund, to
allocate brokerage on the Fund's portfolio transactions to broker-dealers,
other than an affiliated broker-dealer, qualified to obtain best execution
of such transactions who provide brokerage and/or research services (as
such services are defined in Section 28(e)(3) of the Securities Exchange
Act of 1934) for the Fund and/or other accounts for which OMC or its
affiliates exercise "investment discretion" (as that term is defined in
Section 3(a)(35) of the Securities Exchange Act of 1934) and to cause the
Fund to pay such broker-dealers a commission for effecting a portfolio
transaction for the Fund that is in excess of the amount of commission
another broker-dealer adequately qualified to effect such transaction
would have charged for effecting that transaction, if OMC 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 with respect to the accounts as
to which they exercise investment discretion. In reaching such
determination, OMC 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 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 shall have no duty or obligation to seek advance competitive
bidding for the most favorable commission rate applicable to any
particular portfolio transactions or to select any broker-dealer on the
basis of its purported or "posted" commission rate but will, to the best
of its ability, endeavor to be aware of the current level of the charges
of eligible broker-dealers and to minimize the expense incurred by the
Fund for effecting its portfolio transactions to the extent consistent
with the interests and policies of the Fund as established by the
determinations of the Board of Trustees of the Fund and the provisions of
this paragraph 7.
(e) The Fund recognizes that an affiliated broker-dealer: (i) may
act as one of the Fund's regular brokers for the Fund so long as it is
lawful for it so to act; (ii) may be a major recipient of brokerage
commissions paid by the Fund; and (iii) may effect portfolio transactions
for the Fund only if the commissions, fees or other remuneration received
or to be received by it are determined in accordance with procedures
contemplated by any rule, regulation or order adopted under the Investment
Company Act for determining the permissible level of such commissions.
(f) Subject to the foregoing provisions of this paragraph 7, OMC 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 until December 31, 1996, and thereafter will
continue in effect from year to year, so long as such continuance shall
be approved at least annually by the Fund's Board of Trustees, including
the vote of the majority of the trustees of the Fund who are not parties
to this Agreement or "interested persons" (as defined in the Investment
Company Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval, or by the holders of a "majority" (as
defined in the Investment Company Act) of the outstanding voting
securities of the Fund and by such a vote of the Fund's Board of Trustees.
9. Disclaimer of Shareholder or Trustee Liability.
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 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.
OPPENHEIMER INTERNATIONAL BOND FUND
Attest:
- ------------------------ ---------------------------------------
Mitchell J. Lindauer Robert G. Zack, Assistant Secretary
OPPENHEIMER MANAGEMENT CORPORATION
Attest:
- --------------------- ------------------------------------
Katherine P. Feld Andrew J. Donohue,
Senior Vice President
ADVISORY\880DUP
<PAGE>
Exhibit 24(b)(6)
GENERAL DISTRIBUTOR'S AGREEMENT
BETWEEN
OPPENHEIMER INTERNATIONAL BOND FUND
AND
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
Date: ______________, 1995
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
Two World Trade Center, Suite 3400
New York, NY 10048
Dear Sirs:
OPPENHEIMER INTERNATIONAL BOND FUND, 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 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 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 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.
(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 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 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
(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 registration 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 and for registering such shares
under state blue sky laws pursuant to paragraph 8.
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, 1996. 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 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 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 by the Fund, the General Distributor shall
be entitled to be paid the CDSC under 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.
OPPENHEIMER INTERNATIONAL BOND FUND
By_________________________________
Chairman
Accepted:
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By_______________________________
Vice President
OFMI\880DUP
<PAGE>
Exhibit 24(b)(15)(ii)
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS B SHARES OF
OPPENHEIMER INTERNATIONAL BOND FUND
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the ___ day
of ________, 1995, by and between OPPENHEIMER INTERNATIONAL BOND FUND (the
"Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service
plan for Class B shares of the Fund (the "Shares"), contemplated by Rule
12b-1 (the "Rule") under the Investment Company Act of 1940 (the "1940
Act"), pursuant to which the Fund will compensate the Distributor for its
services in connection with the distribution of Shares, and the personal
service and maintenance of shareholder accounts that hold Shares
("Accounts"). The Fund may act as distributor of securities of which it
is the issuer, pursuant to the Rule, according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative support
services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms
and provisions of this Plan shall be interpreted and defined in a manner
consistent with the provisions and definitions contained in (i) the 1940
Act, (ii) the Rule, (iii) Article III, Section 26, of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., or its
successor (the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the
Fund relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have
the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person
or entity which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by
Customers (defined below) of the Recipient; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning the sale of Shares; and (iii) has been selected by
the Distributor to receive payments under the Plan. Notwithstanding
the foregoing, a majority of the Fund's Board of Trustees (the
"Board") who are not "interested persons" (as defined in the 1940
Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreements relating to this Plan
(the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or
entity's rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed
owned by more than one Recipient for purposes of this Plan. In the
event that 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 as determined by the Distributor shall
be deemed the Recipient as to such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, (i) within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the
Shares computed as of the close of each business day (the "Service
Fee"), plus (ii) within ten (10) days of the end of each month, in
the aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of Shares
computed as of the close of each business day (the "Asset-Based Sales
Charge") outstanding for six years or less (the "Maximum Holding
Period"). Such Service Fee payments received from the Fund will
compensate the Distributor and Recipients for providing
administrative support services with respect to Accounts. Such
Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution
assistance in connection with the sales of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in the establishment and maintenance of accounts
or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services
in connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may
reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and Recipients may include,
but shall not be limited to, the following: distributing sales
literature and prospectuses other than those furnished to current
holders of the Fund's Shares ("Shareholders"), and providing such
other information and services in connection with the distribution
of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment
under the Plan if it has Qualified Holdings of Shares to entitle it
to payments under the Plan. In the event that either the Distributor
or the Board should have reason to believe that, notwithstanding the
level of Qualified Holdings, a Recipient may not be rendering
appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the
Distributor, at the request of the Board, shall require the Recipient
to provide a written report or other information to verify that said
Recipient is providing appropriate distribution assistance and/or
services in this regard. If the Distributor or the Board of Trustees
still is not satisfied, either 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.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed 0.0625% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate net asset
value of Shares computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by
the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from
time to time by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate
net asset value of Shares computed as of the close of each business
day, constituting Qualified Holdings owned beneficially or of record
by the Recipient or by its Customers for a period of more than one
(1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to
Recipients that are, or may be, imposed by Article III, Section 26,
of the NASD Rules of Fair Practice. In the event Shares are redeemed
less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand
a pro rata portion of such Advance Service Fee Payments, based on the
ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar
quarter. However, no such payments shall be made to any Recipient
for any such quarter in which its Qualified Holdings do not equal
or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rate set forth above, and/or direct the Distributor to increase or
decrease the Maximum Holding Period, the Minimum Holding Period or
the Minimum Qualified Holdings. The Distributor shall notify all
Recipients of the Minimum Qualified Holdings, Maximum Holding Period
and Minimum Holding Period, if any, and the rate of payments
hereunder applicable to Recipients, and shall provide each Recipient
with written notice within thirty (30) days after any change in these
provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute
sufficient notice. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor
if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are
subject to reduction or elimination of such amounts under the limits
to which the Distributor is, or may become, subject under Article
III, Section 26, of the NASD Rules of Fair Practice. The
distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may
include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity
that sells Shares, and\or paying such persons Advance Service Fee
Payments in advance of, and\or greater than, the amount provided for
in Section 3(b) of this Agreement; (ii) paying compensation to and
expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such
financing from its own resources, or from an affiliate, for the
interest and other borrowing costs of the Distributor's unreimbursed
expenses incurred in rendering distribution assistance and
administrative support services to the Fund; (iv) paying other direct
distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished
to current Shareholders) and state "blue sky" registration expenses;
and (v) providing any service rendered by the Distributor that a
Recipient may render pursuant to part (a) of this Section 3. Such
services include distribution assistance and administrative support
services rendered in connection with Shares acquired by the Fund (i)
by purchase, (ii) in exchange for shares of another investment
company for which the Distributor serves as distributor or sub-
distributor, or (ii) pursuant to a plan of reorganization to which
the Fund is a party. In the event that the Board should have reason
to believe that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in
connection with the sale of Shares, then the Distributor, at the
request of the Board, shall provide the Board with a written report
or other information to verify that the Distributor is providing
appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC),
from its own resources, from Asset-Based Sales Charge payments or
from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does
not obligate or in any way make the Fund liable to make any payment
whatsoever to any person or entity other than directly to the
Distributor. In no event shall the amounts to be paid to the
Distributor exceed the rate of fees to be paid by the Fund to the
Distributor set forth in paragraph (a) of this section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of those persons to be Trustees of the Fund
who are not "interested persons" of the Fund ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees.
Nothing herein shall prevent the Disinterested Trustees from soliciting
the views or the involvement of others in such selection or nomination if
the final decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund
shall provide written reports to the Fund's Board for its review,
detailing services rendered in connection with the distribution of the
Shares, the amount of all payments made and the purpose for which the
payments were made. The reports shall be provided quarterly and shall
state whether all provisions of Section 3 of this Plan have been complied
with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at
any time, without payment of any penalty, by a vote of a majority of the
Independent Trustees or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act); (iii) it shall go
into effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan
has been approved by a vote of the Board and its Independent Trustees cast
in person at a meeting called on April 18, 1995, for the purpose of voting
on this Plan, and shall take effect on the date that the Fund's
Registration Statement is declared effective by the Securities and
Exchange Commission. Unless terminated as hereinafter provided, it shall
continue in effect until October 31, 1995 and from year to year thereafter
or as the Board may otherwise determine only so long as such continuance
is specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance. This Plan may not be amended to increase
materially the amount of payments to be made without approval of the Class
B Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor shall be
entitled to payment from the Fund of the Service Fee and/or the Asset-
Based Sales Charge in respect of Shares sold prior to the effective date
of such termination.
8. Disclaimer of Shareholder Liability. The Distributor understands
that the obligations of the Fund under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and
the Fund's property. The Distributor represents that it has notice of the
provisions of the Declaration of Trust of the Fund disclaiming shareholder
and Trustee liability for acts or obligations of the Fund.
OPPENHEIMER INTERNATIONAL BOND FUND
By:------------------------------------
Andrew J. Donohue, Vice President
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:------------------------------------
Katherine P. Feld, Vice President
& Secretary
OFMI\880BDUP
<PAGE>
Exhibit 24(b)(15)(iii)
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS C SHARES OF
OPPENHEIMER INTERNATIONAL BOND FUND
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the --- day
of _______, 1995, by and between OPPENHEIMER INTERNATIONAL BOND FUND (the
"Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution plan for
Class C shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"),
pursuant to which the Fund will compensate the Distributor for a portion
of its costs incurred in connection with the distribution of Shares, and
the personal service and maintenance of shareholder accounts that hold
Shares ("Accounts"). The Fund may act as distributor of securities of
which it is the issuer, pursuant to the Rule, according to the terms of
this Plan. The Distributor is authorized under the Plan to pay
"Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended
to have certain rights as third-party beneficiaries under this Plan. The
terms and provisions of this Plan shall be interpreted and defined in a
manner consistent with the provisions and definitions contained in (i) the
1940 Act, (ii) the Rule, (iii) Article III, Section 26, of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., or
its successor (the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the
Fund relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have
the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person
or entity which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by
Customers (defined below) of the Recipient; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning the sale of Shares; and (iii) has been selected by
the Distributor to receive payments under the Plan. Notwithstanding
the foregoing, a majority of the Fund's Board of Trustees (the
"Board") who are not "interested persons" (as defined in the 1940
Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreements relating to this Plan
(the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or
entity's rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed
owned by more than one Recipient for purposes of this Plan. In the
event that 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 as determined by the Distributor shall
be deemed the Recipient as to such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, within forty-
five (45) days of the end of each calendar quarter, in the aggregate
amount (i) of 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the
Shares computed as of the close of each business day (the "Service
Fee"), plus (ii) 0.1875% (0.75% 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 (the "Asset
Based Sales Charge"). Such Service Fee payments received from the
Fund will compensate the Distributor and Recipients for providing
administrative support services with respect to Accounts. Such Asset
Based Sales Charge payments received from the Fund will compensate
the Distributor and Recipients for providing distribution assistance
in connection with the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning the
Fund, assisting in establishing and maintaining accounts or sub-
accounts in the Fund and processing Share redemption transactions,
making the Fund's investment plans and dividend payment options
available, and providing such other information and services in
connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may
reasonably request.
The distribution assistance in connection with the sale of Shares to
be rendered by Recipients may include, but shall not be limited to,
the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares
("Shareholders"), and providing such other information and services
in connection with the distribution of Shares as the Distributor or
the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment
under the Plan if it has Qualified Holdings of Shares to entitle it
to payments under the Plan. In the event that either the Distributor
or the Board should have reason to believe that, notwithstanding the
level of Qualified Holdings, a Recipient may not be rendering
appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient
to provide a written report or other information to verify that said
Recipient is providing appropriate distribution assistance and/or
services in this regard. If the Distributor or the Board of Trustees
still is not satisfied, either 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.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed 0.0625% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate net asset
value of Shares, computed as of the close of each business day
constituting Qualified Holdings owned beneficially or of record by
the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from
time to time by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make service
fee payments ("Advance Service Fee Payments") to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed (i) 0.25% of the average during the
calendar quarter of the aggregate net asset value of Shares, computed
as of the close of business on the day such Shares are sold,
constituting Qualified Holdings sold by the Recipient during that
quarter and owned beneficially or of record by the Recipient or by
its Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value
of Shares computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient
or by its Customers for a period of more than one (1) year, subject
to reduction or chargeback so that the Advance Service Fee Payments
do not exceed the limits on payments to Recipients that are, or may
be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice. In the event Shares are redeemed less than one year after
the date such Shares were sold, the Recipient is obligated and will
repay to the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares were
held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor shall make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.1875% (0.75% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares computed as of the
close of each business day constituting Qualified Holdings owned
beneficially or of record by the Recipient or its Customers for a
period of more than one (1) year. However, no such service fee or
asset-based sales charge payments (collectively, the "Recipient
Payments") shall be made to any Recipient for any such quarter in
which its Qualified Holdings do not equal or exceed, at the end of
such quarter, the minimum amount ("Minimum Qualified Holdings"), if
any, to be set from time to time by a majority of the Independent
Trustees.
A majority of the Independent Trustees may at any time or from time
to time decrease and thereafter adjust the rate of fees to be paid
to the Distributor or to any Recipient, but not to exceed the rates
set forth above, and/or direct the Distributor to increase or
decrease the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the Minimum
Qualified Holdings or Minimum Holding Period, if any, and the rates
of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days
after any change in these provisions. Inclusion of such provisions
or a change in such provisions in a revised current prospectus shall
constitute sufficient notice. The Distributor may make Plan payments
to any "affiliated person" (as defined in the 1940 Act) of the
Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are
subject to reduction or elimination of such amounts under the limits
to which the Distributor is, or may become, subject under Article
III, Section 26, of the NASD Rules of Fair Practice. The
distribution assistance and administrative support services in
connection with the sale of Shares to be rendered by the Distributor
may include, but shall not be limited to, the following: (i) paying
sales commissions to any broker, dealer, bank or other person or
entity that sell Shares, and\or paying such persons Advance Service
Fee Payments in advance of, and\or greater than, the amount provided
for in Section 3(b) of this Agreement; (ii) paying compensation to
and expenses of personnel of the Distributor who support distribution
of Shares by Recipients; (iii) obtaining financing or providing such
financing from its own resources, or from an affiliate, for the
interest and other borrowing costs of the Distributor's unreimbursed
expenses incurred in rendering distribution assistance and
administrative support services to the Fund; (iv) paying other direct
distribution costs of the type approved by the Board, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders) and
state "blue sky" registration expenses; and (v) providing any service
rendered by the Distributor that a Recipient may render pursuant to
part (a) of this Section 3. Such services include distribution
assistance and administrative support services rendered in connection
with Shares acquired (i) by purchase, (ii) in exchange for shares of
another investment company for which the Distributor serves as
distributor or sub-distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the
Board should have reason to believe that the Distributor may not be
rendering appropriate distribution assistance or administrative
support services in connection with the sale of Shares, then the
Distributor, at the request of the Board, shall provide the Board
with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC),
from its own resources, from Asset Based Sales Charge payments or
from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does
not obligate or in any way make the Fund liable to make any payment
whatsoever to any person or entity other than directly to the
Distributor. In no event shall the amounts to be paid to the
Distributor exceed the rate of fees to be paid by the Fund to the
Distributor set forth in paragraph (a) of this section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of those persons to be Trustees of the Fund
who are not "interested persons" of the Fund ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees.
Nothing herein shall prevent the Disinterested Trustees from soliciting
the views or the involvement of others in such selection or nomination if
the final decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund
shall provide written reports to the Fund's Board for its review,
detailing services rendered in connection with the distribution of Shares,
the amount of all payments made and the purpose for which the payments
were made. The reports shall be provided quarterly and shall state
whether all provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at
any time, without payment of any penalty, by a vote of a majority of the
Independent Trustees or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act); (iii) it shall go
into effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan
has been approved by a vote of the Board and its Independent Trustees cast
in person at a meeting called on April 18, 1995 for the purpose of voting
on this Plan, and takes effect as of the date first set forth above.
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 a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such continuance. This Plan may not be amended to increase materially the
amount of payments to be made without approval of the Class C
Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor is entitled
to payment from the Fund of all or a portion of the Service Fee and/or the
Asset-Based Sales Charge in respect of Shares sold prior to the effective
date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Fund under this Plan are not
binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property. The Distributor represents that
it has notice of the provisions of the Declaration of Trust of the Fund
disclaiming shareholder and Trustee liability for acts or obligations of
the Fund.
OPPENHEIMER INTERNATIONAL BOND FUND
By:____________________________________
Andrew J. Donohue, Vice President
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:____________________________________
Katherine P. Feld
Vice President and Secretary
OFMI/880CDUP
