-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, hjZdYXDf3aIAA656Z7NakqmjyahUalD9BqiRXq34RzE4dyWrLy9B6FUboe8/8aCf LM1QOO4hP7F7nDCnPe6vvg== 0000829801-95-000001.txt : 19950301 0000829801-95-000001.hdr.sgml : 19950301 ACCESSION NUMBER: 0000829801-95-000001 CONFORMED SUBMISSION TYPE: N-2/A PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 19950227 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER MULTI SECTOR INCOME TRUST CENTRAL INDEX KEY: 0000829801 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133448960 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-2/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-05473 FILM NUMBER: 95515663 BUSINESS ADDRESS: STREET 1: MITCHELL HUTCHINS ASSET MANAGEMENT INC STREET 2: 1285 AVENUE OF THE AMERICAS 16TH FLR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127138392 MAIL ADDRESS: STREET 1: MITCHELL HUTCHINS ASSET MANAGEMENT STREET 2: 1285 AVE OF THE AMERICAS 16TH FLR CITY: NEW YORK STATE: NY ZIP: 10019 N-2/A 1 As Filed with the Securities and Exchange Commission on February 27, 1995. Registration No. 811-5473 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-2 REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X Amendment No. 8 X OPPENHEIMER MULTI-SECTOR INCOME TRUST (Exact Name of Registrant as Specified in Charter) Two World Trade Center Suite 3400 New York, New York 10048-0203 (Address of Principal Executive Offices) 212-323-0200 (Registrant's Telephone Number) ANDREW J. DONOHUE, ESQ. Oppenheimer Management Corporation Two World Trade Center New York, New York 10048-0203 (Name and Address of Agent for Service) FORM N-2 OPPENHEIMER MULTI-SECTOR INCOME TRUST Cross Reference Sheet Part A of Form N-2 Item No. Prospectus Heading - -------- ------------------ 1 * 2 * 3 * 4 * 5 * 6 * 7 * 8 General Description of the Registrant 9 Management 10 Capital Stock, Long-Term Debt, and Other Securities 11 * 12 * 13 See Item 15 of the Statement of Additional Information Part B of Form N-2 Item No. Heading In Statement of Additional Information - -------- ---------------------------------------------- 14 Cover Page 15 Table of Contents 16 * 17 See Item 8 of the Prospectus 18 Management 19 Control Persons and Principal Holders of Securities 20 See Item 9 of the Prospectus 21 Brokerage Allocation and Other Practices 22 See Item 10 of the Prospectus 23 Financial Statements - ---------------- * Not applicable or negative answer. OPPENHEIMER MULTI-SECTOR INCOME TRUST PART A INFORMATION REQUIRED IN A PROSPECTUS Item 1. Outside Front Cover. Inapplicable. Item 2. Inside Front and Outside Back Cover Page. Inapplicable. Item 3. Fee Table and Synopsis Inapplicable. Item 4. Financial Highlights. Inapplicable. Item 5. Plan of Distribution. Inapplicable. Item 6. Selling Shareholders. Inapplicable. Item 7. Use of Proceeds. Inapplicable. Item 8. General Information and History. 1. Oppenheimer Multi-Sector Income Trust (the "Fund" or "Registrant") is a closed-end diversified management investment company organized as a Massachusetts business trust on February 22, 1988. 2, 3, and 4. The Fund's primary investment objective is high current income consistent with preservation of capital. Its secondary objective is capital appreciation. In seeking those objectives, the Fund will allocate its assets among seven sectors of the fixed-income securities market to take advantage of opportunities anticipated by Oppenheimer Management Corporation, the Fund's investment adviser (the "Adviser"), to arise in particular sectors in various economic environments. The Adviser's opinion as to such opportunities will be based on various factors which may affect the levels of income which can be obtained from the different sectors, such as (i) the effect of interest rate changes, on a relative and absolute basis, on yields of securities in the particular sectors, (ii) the effect of changes in tax laws and other legislation affecting securities in the various sectors, (iii) changes in the relative values of foreign currencies, and (iv) perceived strengths of the abilities of issuers in the various sectors to repay their obligations. The sectors in which the Fund invests are not divided by industry but instead differ by type of security and issuer and includes U.S. Government, Corporate, International, Asset-Backed (including Mortgage-Backed), Municipal, Convertible and Money Market sectors. The Adviser believes that investing the Fund's assets in a portfolio comprised of three or more sectors, as opposed to limiting investments to only one such sector, will enhance the Fund's ability to achieve high current income consistent with preservation of capital or seek capital appreciation. The range of yields of the securities in each sector will differ from securities in the others both on an absolute and a relative basis. It is not the intention of the Fund to always allocate its assets to the sector with the highest range of yields as this may not be consistent with preservation of capital. The Adviser will, however, monitor changes in relative yields of securities in the various sectors to formulate its decisions on which sectors present attractive investment opportunities at a particular time. Historically, the markets for the sectors identified below on pages 5 and 6 have tended to behave somewhat independently and have at times moved in opposite directions. For example, U.S. Government Securities (defined below) have generally been affected negatively by concerns about inflation that might result from increased economic activity. Corporate debt securities and convertible securities, on the other hand, have generally benefited from increased economic activity due to the resulting improvement in the credit quality of corporate issuers which, in turn, has tended to cause a rise in the prices of common stock underlying convertible securities. The converse has generally been true during periods of economic decline. Similarly, U.S. Government Securities may be negatively affected by a decline in the value of the dollar against foreign currencies, while the non-dollar denominated securities of foreign issuers held by U.S. investors have generally benefited from such decline. Investments in short-term money market securities tend to decline less in value than long-term debt securities in periods of rising interest rates but do not rise as much in periods of declining rates. At times the difference between yields on municipal securities and taxable securities does not fully reflect the tax advantage of municipal securities. At such times investments in municipal securities tend to fare better in value than taxable investments because the yield differential generally may be expected to increase again to reflect the tax advantage. The Adviser believes that when financial markets exhibit this lack of correlation, an active allocation of investments among these seven sectors may permit greater preservation of capital over the long term than would be obtained by investing permanently in any one sector. To the extent that active allocation of investments among market sectors by the Adviser is successful in preserving or increasing capital, the Fund's capacity to meet its primary objective of high current income should be enhanced over the longer term. The Adviser also will utilize certain other investment techniques, including options and futures, intended to enhance income and reduce market risk. The Fund may invest in securities in the Corporate Sector which are in the lowest rating category of each of Standard & Poor's Corporation ("Standard & Poor's") or Moody's Investors Service, Inc. ("Moody's"), or which are unrated. The description and characteristics of the lowest rating category are discussed in the description of the Corporate Sector. In all other sectors, the Fund will not invest in securities rated lower than those considered investment grade, i.e. "Baa" by Moody's or "BBB" by Standard & Poor's. See "Investment Sectors in Which the Fund Invests" and Appendix B (Securities Ratings) to the Prospectus. Unrated securities will be of comparable quality to those that are rated, in the opinion of the Adviser. The seven sectors of the fixed-income securities market in which the Fund may invest are: - The U.S. Government Sector, consisting of debt obligations of the U.S. Government and its agencies and instrumentalities ("U.S. Government Securities"); - The Corporate Sector, consisting of non-convertible debt obligations or preferred stock of U.S. corporate issuers and participation interests in senior, fully-secured loans made primarily to U.S. companies; - The International Sector, consisting of debt obligations (which may be denominated in foreign currencies) of foreign governments and their agencies and instrumentalities, certain supranational entities and foreign and U.S. companies; - The Asset-Backed Sector, consisting of undivided fractional interests in pools of consumer loans and participation interests in pools of residential mortgage loans guaranteed by agencies or instrumentalities of the U.S. Government; - The Municipal Sector, consisting of debt obligations of states, territories or possessions of the United States and the District of Columbia or their political subdivisions, agencies, instrumentalities or authorities; - The Convertible Sector, consisting of debt obligations and preferred stock of U.S. corporations which are convertible into common stock; and - The Money Market Sector, consisting of U.S. dollar-denominated debt obligations having a maturity of 397 days or less and issued by the U.S. Government or its agencies, certain domestic banks or corporations; or certain foreign governments, agencies or banks; and repurchase agreements. Current income, preservation of capital and, secondarily, possible capital appreciation will be considerations in the allocation of assets among the seven investment sectors described above. The Adviser anticipates that at all times Fund assets will be spread among three or more sectors. Securities in the first six sectors above have maturities in excess of 397 days. All securities denominated in foreign currencies will be considered as part of the International Sector, regardless of maturity. The maximum assets that may be allocated at any one time to specific sectors are: U.S. Government - 90%, Corporate and Money Market - 50%, all others - 25%. The Fund may also invest in options and futures related to securities in each of the sectors. INVESTMENT SECTORS IN WHICH THE FUND INVESTS The Fund's assets allocated to each of the sectors will be managed in accordance with the investment policies described above. The U.S. Government Sector Assets in this sector will be invested in U.S. Government Securities, which are obligations issued by or guaranteed by the United States government or its agencies or instrumentalities. Certain of these obligations, including U.S. Treasury notes and bonds, and Federal Housing Administration debentures, are supported by the full faith and credit of the United States. Certain 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. These latter securities include obligations supported by the right of the issuer to borrow from the U.S. Treasury, such as obligations of Federal Home Loan Banks, and obligations supported by the credit of the instrumentality, such as Federal National Mortgage Association bonds. The Adviser will adjust the average maturity of the investments held in this sector from time to time, depending on its assessment of relative yields of securities of different maturities and its expectations of future changes in interest rates. U.S. Government Securities are considered among the most creditworthy of fixed-income investments. Because of this, the yields available from U.S. Government Securities are generally lower than the yields available from corporate debt securities. Nevertheless, the values of U.S. Government Securities (like those of fixed-income securities generally) will change as interest rates fluctuate. See Appendix A hereto for a description of obligations issued by certain U.S. Government agencies or instrumentalities. Zero Coupon Treasury Securities. The Fund may invest in "zero coupon" Treasury securities which are (a) U.S. Treasury notes and bonds which have been stripped of their unmatured interest coupons and receipts or (b) certificates representing interests in such stripped debt obligations and coupons. A zero coupon security pays no interest to its holder during its life. Accordingly, such securities usually trade at a deep discount from their face or par value and will be subject to greater fluctuations of market value in response to changing interest rates than debt obligations of comparable maturities which make current distribution of interest. Current Federal tax law requires that a holder of a zero coupon security accrue a portion of the discount at which the security was purchased as income each year even though the holder receives no interest payment in cash on the security during the year. The Fund will not invest more than 10% of its assets at the time of purchase in zero coupon Treasury securities. The Corporate Sector Assets allocated to this sector will be invested in secured or unsecured non-convertible preferred stock and corporate debt obligations, such as bonds, debentures and notes. The Fund may also acquire participation interests, as described below. Ratings. Certain corporate fixed income securities in which the Fund may invest may be unrated or in the lower rating categories of recognized rating agencies, i.e., ratings of "Baa" or lower by Moody's or "BBB" or lower by Standard & Poor's. Lower-rated securities will involve greater volatility of price and risk of principal and income (including the possibility of default or bankruptcy of the issuer of such securities) than securities in the higher rating categories. Although the Fund retains the right to invest in securities in the lowest rating category (those rated "C" by Moody's or "C" and "D" by Standard & Poor's), it will not invest in more than 5% of its assets at the time of purchase in such securities and will do so only if, in the Adviser's opinion, the financial condition of the issuer or protection afforded to the particular securities is stronger than otherwise be suggested by such ratings. No assurance can be given that the Adviser's opinion as to these securities will be accurate. Therefore, these securities should nevertheless be consider highly speculative. Those rated "C" by Moody's generally lack characteristics of desirable investment, are considered highly speculative and may be in default. Securities rated "C" by Standard & Poor's are regarded as presenting the highest degree of speculation with respect to the issuers capacity to pay interest and repay principal in accordance with the terms of the obligation. Those rated "D" are in default or are issued by companies in bankruptcy. Such securities pay no current interest but may present an appreciation opportunity if, in the opinion of the Adviser, their current price does not reflect the reasonable possibility that they may resume payment of interest or be exchanged as a part of a corporate reorganization for securities that will pay interest. Participation Interests. The Fund may acquire participation interests in loans that are made to U.S. or foreign companies (the "borrower"). They may be interests in, or assignments of, the loan and 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 can be invested in participation interests of the same issuer. The Manager has set certain creditworthiness standards for issuers of loan participations, and monitors their creditworthiness. The value of loan participation interests depends primarily upon the creditworthiness of the borrower, and its ability to pay interest and principal. Borrowers may have difficulty making payments. If the borrower fails to make scheduled principal or interest payments, the Fund may experience a decline in net asset value of its shares. Some borrowers may have senior securities rated as low as "C" by Moody's or "D" by Standard & Poor's, but may be deemed acceptable credit risks. Participation interests are subject to the Fund's limitations on investments in illiquid securities. The International Sector The assets allocated to this sector will be invested in debt obligations which may either be denominated in U.S. dollars or in non-U.S. currencies, issued by foreign corporations, certain supranational entities described below, and foreign governments (including political subdivisions having taxing authority) or their agencies or instrumentalities, and debt obligations issued by U.S. corporations denominated in non-U.S. currencies. At the time of purchase, all securities in this sector will be either securities rated "A" or better by Moody's or Standard & Poor's or unrated securities which are of comparable quality in the opinion of the Adviser. The Fund may invest in any country where the Adviser believes there is a potential to achieve the Fund's investment objectives. The percentage of the Fund's assets that will be allocated to this sector will vary on the relative yields of foreign and U.S. securities, the economies of foreign countries, the condition of such countries' financial markets, the interest rate climate of such countries and the relationship of such countries' currencies to the U.S. dollar. These factors are judged on the basis of fundamental economic criteria (e.g., relative inflation levels and trends, growth rate forecasts, balance of payments status, and economic policies) as well as technical and political data. The Fund's portfolio of foreign securities may include those of a number of foreign countries or, depending upon market conditions, those of a single country. The obligations of foreign governmental entities, including supranational entities, have various kinds of government support, and may or may not be supported by the full faith and credit of a foreign government. Supranational entities include international organizations designated or supported by governmental entities to promote economic reconstruction or development and 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," 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 can be no assurance that foreign governments will be willing or able 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 investments 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 supervision 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, lack of uniform accounting and auditing standards, and potential difficulties in enforcing contractual obligations, and could be subject to extended settlement periods. There may be less information publicly available about foreign issuers than about U.S. issuers. 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 the Fund's 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. 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 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 fixed-income investments will fluctuate in response to changes in U.S. and foreign interest rates. The Asset-Backed Sector Asset-Backed Securities. The Fund may invest in securities that represent undivided fractional interests in pools of consumer loans, similar in structure to the mortgage-backed securities in which the Fund may invest described below. Payments of principal and interest are passed through to holders of asset-backed securities and are typically supported by some form of credit enhancement, such as a letter of credit, surety bond, limited guarantee by another entity or having a priority to certain of the borrower's other obligations. The degree of credit enhancement varies and generally applies, until exhausted, to only a fraction of the asset-backed security's par value. If the credit enhancement of any asset-backed security held by the Fund has been exhausted, and if any required payments of principal and interest are not made with respect to the underlying loans, the Fund may then experience losses or delays in receiving payment and a decrease in the value of the asset-backed security. The value of asset-backed securities 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 is exhausted. The risks of investing in asset-backed securities are ultimately dependent upon payment of the underlying consumer loans by the individuals, and 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 that shorten the weighted average life of asset- backed securities and may lower their return in the same manner as described below for prepayments of a pool of mortgage loans underlying mortgage-backed securities. Mortgage-Backed Securities. The Fund's investments may include securities which represent participation interests in pools of residential mortgage loans which are guaranteed by agencies or instrumentalities of the U.S. Government. Such securities differ from conventional debt securities which 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 provide monthly payments which are, in effect, a "pass-through" of the monthly interest and principal payments (including any prepayments) made by the individual borrowers on the pooled mortgage loans. The yield on mortgage-backed securities is based on the average expected life of the underlying pool of mortgage loans, which is computed on the basis of the maturities of the underlying instruments. The actual life of any particular pool will be shortened by unscheduled or early payments of principal and interest. 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. The 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 other debt securities, but, when prevailing interest rates decline, the value of pass-through securities is not likely to rise on a comparable basis with other debt securities because of the pre-payment feature of pass-through securities. The Fund's reinvestment of scheduled principal payments and unscheduled prepayments it receives may occur at 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 shareholders 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. Accelerated prepayments adversely affect yields for pass-through securities purchased at a premium (i.e., a price in excess of 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 purchase mortgage-backed securities at a premium or at a discount. The Fund will acquire only those mortgage-backed securities which are issued or guaranteed by U.S. Government agencies or instrumentalities. Some of those securities are backed by the full faith and credit of the U.S. Treasury (e.g., direct pass-through certificates of the Government National Mortgage Association); some are supported by the right of the issuer to borrow from the U.S. Government (e.g., obligations of Federal Home Loan Banks); and some are backed by only the credit of the issuer itself (e.g., obligations of the Federal National Mortgage Association). Such guarantees do not extend to the value or yield of the mortgage-backed securities themselves or to the value of the Fund's Shares. The Fund may invest in collateralized mortgage obligations ("CMOs") that are issued or guaranteed by the U.S. Government or its agencies or instrumentalities, or that are collateralized by a portfolio of mortgages or mortgage-related securities guaranteed by such an agency or instrumentality. Payment of the interest and principal generated by the pool of mortgages is passed through to the holders as the payments are received by the issuer of the CMO. CMOs may be issued in a variety of classes or series ("tranches") that have different maturities. The principal value of certain CMO tranches may be more volatile than other types of mortgage-related securities, because of the possibility that the principal value of the CMO may be prepaid earlier than the maturity of the CMO as a result of prepayments of the underlying mortgage loans by the borrowers. The Fund may invest in "stripped" mortgage-backed securities or CMOs or other securities issued by agencies or instrumentalities of the U.S. Government. Stripped mortgage-backed securities usually have two classes. The classes receive different proportions of the interest and principal distributions on the pool of mortgage assets that act as collateral for the security. In certain cases, one class will receive all of the interest payments (and is known as an "I/O"), while the other class will receive all of the principal value on maturity (and is known as a "P/O"). 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 limitations set forth under "Direct Placements and Other Illiquid Securities." GNMA Certificates. Certificates of the Government National Mortgage Association ("GNMA Certificates") are mortgage-backed securities which evidence an undivided interest in a pool or pools of mortgages. 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 payment. 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. 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 securities ("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. FHMLC guarantees timely monthly payment of interest on PCs and the ultimate payment of principal. 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 United States. 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 United States. The Municipal Sector The assets of this sector will be invested in obligations issued by or on behalf of states, territories or possessions of the United States and the District of Columbia or their political subdivisions, agencies, instrumentalities or authorities ("Municipal Bonds"). At the time of purchase, all securities in this sector will be rated within the four highest grades assigned by Moody's or Standard & Poor's ("Baa" or better by Moody's or "BBB" or better by Standard & Poor's), or unrated securities which are of comparable quality in the opinion of the Adviser. Any income earned on Municipal Bonds which the Fund distributes to shareholders would be treated as taxable income to such shareholders. The Fund does not expect to invest in Municipal Bonds for tax- exempt income to distribute to shareholders, but to take advantage of yield differentials with other debt securities, which may be reflected in bond prices, and thus reflect potential for capital appreciation. Because Municipal Bonds are generally exempt from Federal taxation they normally yield much less than taxable fixed-income securities. At times, however, the yield differential narrows from its normal range. This can occur, for example, when the demand for U.S. Government securities substantially increases in times of economic stress, when investors seeking safety are willing to pay more for such securities thereby reducing the yield. It also can occur when investors perceive a threat to the continuation of the tax-exempt status of Municipal Bonds through possible Congressional or State action. When this happens, investors are not willing to pay as much for Municipal Bonds, thereby reducing prices and increasing their yield compared to taxable obligations. If such situations occur, investments in the Municipal Sector may be more attractive than other sectors even though such investments continue to offer lower yields than taxable securities because if the yield differential returns to normal ranges, the value of Municipal Bonds relative to taxable fixed-income securities will have increased, i.e. depreciated less or appreciated more. Such an investment would help the Fund achieve its objective of capital preservation or capital appreciation. It would also help achieve its objective of high income because the Fund's net asset value per Share would be higher than it otherwise would have been, thereby permitting it to earn additional income on those assets. Municipal Bonds include debt obligations issued to obtain funds for various public purposes, including the construction of a wide range of public facilities such as airports, highways, bridges, schools, hospitals, housing, mass transportation, streets, and water and sewer works. Other public purposes for which Municipal Bonds may be issued include the refunding of outstanding obligations, obtaining funds for general operating expenses and obtaining funds to lend to other public institutions and facilities. The two principal classifications of Municipal Bonds are (1) "general obligation" and (2) "revenue" (or "special tax") bonds. General obligation bonds are secured by the issuer's pledge of its full faith, credit and unlimited taxing power for the payment of principal and interest. Revenue or special tax bonds are payable only from the revenues derived from a particular facility or class of facilities or project or, in a few cases, from the proceeds of a special excise or other tax but are not supported by the issuer's power to levy general taxes. There are variations in the security of Municipal Bonds, both within a particular classification and between classifications, depending on numerous factors. The yields of Municipal Bonds depend on, among other things, general money market conditions, general conditions of the Municipal Bond market, size of a particular offering, the maturity of the obligation and rating of the issue, and are generally lower than those of taxable investments. The Convertible Sector Assets allocated to this sector will be invested in securities (bonds, debentures, corporate notes, preferred stocks and units with warrants attached) which are convertible into common stock. Common stock received upon conversion may be retained in the Fund's portfolio to permit orderly disposition or to establish a holding period to avoid possible adverse Federal income tax consequences to the Fund or shareholders. Convertible securities can provide a potential for current income through interest and dividend payments and at the same time provide an opportunity for capital appreciation by virtue of their convertibility into common stock. The rating requirements to which the Fund is subject when investing in corporate fixed income securities and foreign securities (see above) also apply to the Fund's investments in domestic and foreign convertible securities, respectively. Convertible securities rank senior to common stock in a corporation's capital structure and, therefore, may entail less risk than the corporation's common stock. The value of a convertible security is a function of its "investment value" (its value without considering its conversion privilege) and its "conversion value" (the security's worth if it were to be exchanged pursuant to its conversion privilege for the underlying security at the market value of the underlying security). To the extent that a convertible security's investment value is greater than its conversion value, its price will be primarily a reflection of such investment value and its price will be likely to increase when interest rates fall and decrease when interest rates rise as with other fixed-income securities (the credit standing of the issuer and other factors may also have an effect on the convertible security's value). If the conversion value exceeds the investment value, the price of the convertible security will rise above its investment value and, in addition, will sell at some premium over its conversion value, which represents the price investors are willing to pay for the privilege of purchasing a fixed-income security with a possibility of capital appreciation due to the conversion privilege. At such times the price of the convertible security will tend to fluctuate directly with the price of the underlying equity security. Convertible securities may be purchased by the Fund at varying price levels above their investment values and/or their conversion values in keeping with the Fund's objectives. The Money Market Sector Assets in this sector will be invested in the following U.S. dollar-denominated debt obligations maturing in 397 days or less: (1) U.S. Government Securities: Obligations issued or guaranteed by the U.S. Government or its agencies or instrumentalities. (2) Bank Obligations: Certificates of deposit, bankers' acceptances, loan participation agreements, time deposits, and letters of credit if they are payable in the United States or London, England, and are issued or guaranteed by a domestic or foreign bank having total assets in excess of $1 billion. (3) Commercial Paper: Obligations rated "A-1," "A-2" or "A-3" by Standard & Poor's or Prime-1, Prime-2 or Prime-3 by Moody's or if not rated, issued by a corporation having an existing debt security rated "A" or better by Standard & Poor's or "A" or better by Moody's. (4) Corporate Obligations: Corporate debt obligations (including master demand notes but not including commercial paper) if they are issued by domestic corporations and are rated "A" or better by Standard & Poor's or "A" or better by Moody's or unrated securities which are of comparable quality in the opinion of the Adviser. (5) Other Obligations: Obligations of the type listed in (1) through (4) above, but not satisfying the standards set forth therein, if they are (a) subject to repurchase agreements or (b) guaranteed as to principal and interest by a domestic or foreign bank having total assets in excess of $1 billion, by a corporation whose commercial paper may be purchased by the Fund, or by a foreign government having an existing debt security rated "AA" or "Aa" or better. (6) Board-Approved Instruments: Other short-term investments of a type which the Board determines presents minimal credit risks and which are of "high quality" as determined by any major rating service or, in the case of an instrument that is not rated, of comparable quality as determined by the Board. Bank time deposits may be non-negotiable until expiration and may impose penalties for early withdrawal. 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, and there is no secondary market for them, although they are redeemable (and thus immediately repayable by the borrower) at principal amount, plus accrued interest, at any time. The Fund has no limitation on the type of issuer from whom these notes will be purchased; however, in connection with such purchase and on an ongoing basis, subject to policies established by the Board of Trustees, the Adviser 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 bank time deposits and master demand notes are subject to the investment limitation on securities that are not readily marketable set forth under "Special Investment Techniques - -- Direct Placements and Other Illiquid Securities." Because the Fund may invest in U.S. dollar-denominated securities of foreign banks and foreign branches of U.S. banks, the Fund may be subject to additional investment risks which may include future political and economic developments of the country in which the bank is located, possible imposition of withholding taxes on interest income payable on the securities, possible seizure or nationalization of foreign deposits, the possible establishment of exchange control regulations or the adoption of other governmental restrictions that might affect the payment of principal and interest on such securities. Additionally, not all of the U.S. Federal and state banking laws and regulations applicable to domestic banks relating to maintenance of reserves, loan limits and promotion of financial soundness apply to foreign branches of domestic banks, and none of them apply to foreign banks. SPECIAL INVESTMENT TECHNIQUES In conjunction with the investments in the seven sectors described above, the Fund may use the following special investment techniques. Direct Placements and Other Illiquid Securities The Fund may invest up to 20% of its assets in securities purchased in direct placements which are subject to statutory or contractual restrictions and delays on resale (restricted securities). Such securities may generally be resold only in privately-negotiated transactions with a limited number of purchasers or in a public offering registered under the Securities Act of 1933 and are, therefore, unlike securities which are traded in the open market and can be expected to be sold immediately if the market demand is adequate. If restricted securities are substantially comparable to registered securities of the same issuer which are readily marketable, the Fund may not purchase them unless they are offered at a discount from the market price of the registered securities. No restricted securities will be purchased unless the issuer has agreed to register the securities at its expense within a specific time period. Adverse conditions in the public securities market at certain times may preclude a public offering of an issuer's unregistered securities. There may be undesirable delays in selling restricted securities at prices representing fair value. The Fund may invest up to an additional 10% of its assets in securities which, although not restricted, are not readily marketable. Such securities may include bank time deposits, master demand notes described in the Money Market Sector and certain puts and calls which are traded in the over-the-counter markets. Repurchase Agreements Any of the securities permissible for purchase for one of its sectors may be acquired by the Fund subject to repurchase agreements with commercial banks with total assets in excess of $1 billion or securities dealers with a net worth in excess of $50 million. In a repurchase transaction, at the time the Fund acquires a security, it simultaneously resells it to the vendor and must deliver that security to the vendor on a specific future date. The repurchase 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 the resale typically will occur within one to five days of the purchase. the Fund will not enter into a repurchase transaction of more than seven days. Repurchase agreements are considered "loans" under the Investment Company Act of 1940 (the "1940 Act"), collateralized by the underlying security. The Fund's repurchase agreements will require that at all times while the repurchase agreement is in effect, the collateral's value must equal or exceed the repurchase price to collateralize the loan fully. The Adviser will monitor the collateral daily and, in the event its value declines below the repurchase price, will immediately demand additional collateral be deposited. If such demand is not met within one day, the existing collateral will be sold. Additionally, the Adviser will consider the creditworthiness of the vendor. If the vendor fails to pay the agreed- upon resale price on the delivery date, the Fund's risks in such event may include any decline in value of the collateral to an amount which is less than 100% of the repurchase price, any costs of disposing of such collateral, and loss from any delay in foreclosing on the collateral. There is no limit on the amount of the Fund's assets that may be subject to repurchase agreements. When-Issued and Delayed Delivery Transactions The Fund may purchase asset-backed securities, municipal bonds and other debt securities on a "when-issued" basis, and may purchase or sell such securities on a "delayed delivery" basis. "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. Although the Fund will enter into such transactions for the purpose of acquiring securities for its portfolio for delivery pursuant to option contracts it has entered into, the Fund may dispose of a commitment prior to settlement. The Fund does not intend to make such purchases for speculative purposes. 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. During the period between commitment by the Fund and settlement (generally between two months and 120 days), no payment is made for the securities purchased, and no interest accrues to the Fund from the transaction. Such securities are subject to market fluctuations; the value at delivery may be less than the purchase price. The Fund will maintain a segregated account with its custodian, consisting of cash, short-term U.S. Government Securities or other high-grade debt obligations at least equal to the value of purchase commitments until payment is made. Such securities may bear interest at a lower rate than longer term securities. The commitment to purchase a security for which payment will be made on a future date may be deemed a separate security and involve a risk of loss if the value of the security declines prior to the settlement date, which risk is in addition to the risk of decline of the Fund's other assets. Hedging The Fund may use Interest Rate Futures; Bond Index Futures (together with Interest Rate Futures, "Futures"); Forward Contracts (defined below); and call and put options on debt securities, Futures, bond indices and foreign currencies (all of the foregoing are referred to as "Hedging Instruments"). Hedging Instruments may be used to attempt to protect against possible declines in the market value of the Fund's portfolio from downward trends in debt securities markets (generally due to a rise in interest rates), to protect the Fund's unrealized gains in the value of its debt securities which have appreciated, to facilitate selling debt securities for investment reasons, to establish a position in the debt securities markets as a temporary substitute for purchasing particular debt securities, or to reduce the risk of adverse currency fluctuations. 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. Covered calls and puts may also be written on debt securities to attempt to increase the Fund's income. A call or put may be purchased only if, after such purchase, the value of all call and put options held by the Fund would not exceed 5% of the Fund's total assets. The Fund will not use Futures and options on Futures for speculation. The Hedging Instruments the Fund may use are described below. As of the date of this Registration Statement, the Fund does not intend to enter into Futures, Forward Contracts and options on Futures if after any such purchase, the sum of margin deposits on Futures and premiums paid on Futures options would exceed 5% of the value of the Fund's total assets. Interest Rate Futures and Bond Index Futures. The Fund may buy and sell Futures. An Interest Rate Future obligates the seller to deliver and the purchaser to take a specific type of debt security at a specific future date for a fixed price. That obligation may be satisfied by actual delivery of the debt security or by entering into an offsetting contract. A bond index assigns relative values to the bonds included in that index and is used as a basis for trading long-term Bond Index Futures contracts. Bond Index Futures reflect the price movements of bonds included in the index. They differ from Interest Rate Futures in that settlement is made in cash rather than by delivery; or settlement may be made by entering into an offsetting contract. Calls on Securities and Futures. The Fund may write (i.e., sell) or purchase call options ("calls") on debt securities that were traded on U.S. and foreign securities and over-the-counter markets. All such calls written by the Fund must be "covered" while the call is outstanding (i.e., the Fund must own the securities subject to the call or other securities acceptable for applicable escrow requirements). Calls on Futures must be covered by deliverable securities or by liquid assets segregated to satisfy the Futures contract. If a call written by the Fund is exercised, the Fund foregoes any possible profit from an increase in the market price of the underlying security over the exercise price. Puts on Securities and Futures. The Fund may purchase put options ("puts") which relate to debt securities (whether or not it holds such securities in its portfolio) or Futures. It may also write puts on debt securities or Futures if such puts are covered by segregated liquid assets. The Fund will not write puts if, as a result, more than 50% of the Fund's assets would be required to be segregated liquid assets. In writing puts, there is the risk that the Fund may be required to buy the underlying security at a disadvantageous price. Foreign Currency Options. The Fund may purchase and write puts and calls on foreign currencies that are traded on a securities or commodities exchange or quoted by major recognized dealers in such options, for the purpose of protecting against declines in the dollar value of foreign securities and against increases in the dollar cost of foreign securities to be acquired. If a rise is anticipated 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 either lose the premium it paid and incur transaction costs, or purchase or sell the foreign currency at a disadvantageous price. Forward Contracts. The Fund may enter into foreign currency exchange contracts ("Forward Contracts"), which obligate the seller to deliver and the purchaser to take a specific foreign currency at a specific future date for a fixed price. The Fund may enter into a Forward Contract in order to "lock in" the U.S. dollar price of a security denominated in a foreign currency, or to protect against a possible loss resulting from an adverse change in the relationship between the U.S. dollar and a foreign currency. There is a risk that 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. Forward contracts include standardized foreign currency futures contracts which are traded on exchanges and are subject to procedures and regulations applicable to other Futures. The Fund may also enter into a Forward Contract to sell a foreign currency denominated in a currency other than that in which the underlying security is denominated. This is done in the expectation that there is a greater correlation between the foreign currency of the Forward Contract and the foreign currency of the underlying investment than between the U.S. dollar and the currency of the underlying investment. This technique is referred to as "cross hedging". The success of cross hedging is dependent on many factors, including the ability of the Adviser to correctly identify and monitor the correlation between foreign currencies and the U.S. dollar. To the extent that the correlation is not identical, the Fund may experience losses or gains on both the underlying security and the cross currency hedge. The Fund will not speculate in foreign currency exchange contracts. There is no limitation as to the percentage of the Fund's assets that may be committed to foreign currency exchange contracts. The Fund does not enter into such Forward Contracts or maintain a net exposure in such contracts to the extent that the Fund would be obligated to deliver an amount of foreign currency in excess of the value of the Fund's assets denominated in that currency or enter into a cross hedge unless it is denominated in a currency or currencies that the Adviser believes will have price movements that tend to correlate closely with the currency in which the investment being hedged is denominated. There are certain risks in writing calls. If a call written by the Fund is exercised, the Fund foregoes any profit from any increase in the market price above the call price of the underlying investment on which the call was written. In addition, the Fund could experience capital losses that might cause previously distributed short-term capital gains to be re-characterized as non-taxable return of capital to shareholders. In writing puts, there is the risk that the Fund may be required to buy the underlying security at a disadvantageous price. The principal risks relating to the use of Futures are: (a) possible imperfect correlation between the prices of the Futures and the market value of the debt securities in the Fund's portfolio; (b) possible lack of a liquid secondary market for closing out a Futures position; (c) the need for additional skills and techniques beyond those required for normal portfolio management; and (d) losses on Futures resulting from interest rate movements not anticipated by the Adviser. 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 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. Also, the Fund will segregate liquid assets (such as cash or U.S. Government securities or other appropriate high grade debt obligations) 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. Derivative Investments. The Fund can invest in a number of different kinds of "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 or currency. In the broadest sense, derivative investments include exchange-traded options and futures contracts. The risks of investing in derivative investments include not only the ability of the company issuing the instrument to pay the amount due on the maturity of the instrument, but also the risk that the underlying investment or security might not perform the way the Manager expected it to perform. The performance of derivative investments may also be influenced by interest rate changes in the U.S. and abroad. All of this can mean that the Fund will realize less principal and/or income than expected. Certain derivative investments held by the Fund may trade in the over-the-counter market and may be illiquid. Examples of derivative investments the Fund may invest in include, among others, "index-linked" notes. These are debt securities of companies that call for payment on 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. The payment on maturity of an index-linked note depends on the performance of one or more market indices, such as the S&P 500 Index. Further examples of derivative investments the Fund may invest in include "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 principal amount of the debt. Other examples of derivative investments the Fund may invest in are currency-indexed securities. These are typically short-term or intermediate-term debt securities whose maturity values or interest rates are determined by reference to one or more specified foreign currencies. Certain currency-indexed securities purchased by the Fund may have a payout factor tied to a multiple of the movement of the U.S. dollar (or the foreign currency in which the security is denominated) against the movement in the U.S. dollar, the foreign currency, another currency, or an index. Such securities may be subject to increased principal risk and increased volatility than comparable securities without a payout factor in excess of one, but the Manager believes the increased yield justifies the increased risk. Loans of Portfolio Securities To attempt to increase its income, the Fund may lend its portfolio securities if, after any loan, the value of the securities loaned does not exceed 25% of the total value of its assets. Under applicable regulatory requirements (which are subject to change), the loan collateral must, on each business day, be at least equal to the value of the loaned securities and must consist of cash, bank letters of credit or U.S. Government Securities. 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. The Fund receives an amount equal to the dividends or interest on loaned securities and also receives one or more of (a) negotiated loan fees, (b) interest on securities used as collateral, or (c) interest on short-term debt securities purchased with such loan collateral; either type of interest may be shared with the borrower. The Fund may also pay reasonable finder's, custodian and administrative fees. The terms of the Fund's loans must meet certain tests under the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code" or the "Code"), and permit the Fund to reacquire loaned securities on five days' notice or in time to vote on any important matter. The Fund will make such loans only to banks and securities dealers with whom it may enter into repurchase transactions. If the borrower fails to return this loaned security the Fund's risks include: (1) any costs in disposing of the collateral; (2) loss from a decline in value of the collateral to an amount less than 100% of the securities loaned; (3) being unable to exercise its voting or consent rights with respect to the security; and (4) any loss arising from the Fund being unable to timely settle a sale of such securities. Borrowing From time to time, the Fund may increase its ownership of securities by borrowing up to 10% of the value of its net assets from banks and investing the borrowed funds (on which the Fund will pay interest), subject to compliance with the 300% asset coverage requirement of the 1940 Act. Subject to those limits (which are fundamental policies), the Fund may also borrow to finance repurchases and/or tenders of its Shares and may also borrow for temporary purposes in an amount not exceeding 5% of the value of the Fund's total assets. Any investment gains made with the proceeds obtained from borrowings in excess of interest paid on the borrowings will cause the net income per share or the net asset value per share of the Fund's Shares to be greater than would otherwise be the case. On the other hand, if the investment performance of the securities purchased fails to cover their cost (including any interest paid on the money borrowed) to the Fund, then the net income per share or net asset value per share of the Fund's Shares will be less than would otherwise have been the case. This speculative factor is known as "leverage." Although such borrowings would therefore involve additional risk to the Fund, the Fund will only borrow if such additional risk of loss of principal is considered by the Adviser to be appropriate in relation to the Fund's primary investment objective of high current income consistent with preservation of capital. The Adviser will make this determination by examining both the market for securities in which the Fund invests and interest rates in general to ascertain that the climate is sufficiently stable to warrant borrowing. Portfolio Turnover Because the Fund will actively use trading to benefit from short-term yield disparities among different issues of fixed-income securities or otherwise to achieve its investment objective and policies, the Fund may be subject to a greater degree of portfolio turnover than might be expected from investment companies which invest substantially all of their assets on a long-term basis. The Fund cannot accurately predict its portfolio turnover rate, but it is anticipated that its annual turnover rate generally will not exceed 400% (excluding turnover of securities having a maturity of one year or less). The Adviser will monitor the Fund's tax status under the Internal Revenue Code during periods in which the Fund's annual turnover rate exceeds 100%. Higher portfolio turnover results in increased Fund expenses, including brokerage commissions, dealer mark-ups and other transaction costs on the sale of securities and on the reinvestment in other securities. To the extent that increased portfolio turnover results in sales of securities held less than three months, the Fund's ability to qualify as a "regulated investment company" under the Internal Revenue Code may be affected. Defensive Strategies There may be times when, in the Adviser's judgment, conditions in the securities markets would make pursuing the Fund's primary investment strategy inconsistent with the best interests of its shareholders. At such times, the Fund may employ alternative strategies primarily seeking to reduce fluctuations in the value of the Fund's assets. In implementing these defensive strategies, the Fund may invest all or any portion of its assets in nonconvertible high-grade debt securities, or U.S. government and agency obligations. The Fund may also hold a portion of its assets in cash or cash equivalents. It is impossible to predict when, or for how long, alternative strategies will be utilized. Effects of Interest Rate Changes During periods of falling interest rates, the values of outstanding long term fixed-income securities generally rise. Conversely, during periods of rising interest rates, the values of such securities generally decline. The magnitude of these fluctuations will generally be greater for securities with longer maturities. If the Adviser's expectation of changes in interest rates or its evaluation of the normal yield relationships in the fixed-income markets proves to be incorrect, the Fund's income, net asset value and potential capital gain may be decreased or its potential capital loss may be increased. 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. INVESTMENT RESTRICTIONS The Fund has adopted the following investment restrictions, which together with its investment objectives, are fundamental policies changeable only with the approval of the holders of a "majority" of the Fund's outstanding voting securities, defined in the 1940 Act as the affirmative vote of the lesser of (a) more than 50% of the outstanding Shares of the Fund, or (b) 67% or more of the Shares present or represented by proxy at a meeting if more than 50% of the Fund's outstanding Shares are represented at the meeting in person or by proxy. The percentage limitations set forth below, as well as those described elsewhere, apply only at the time of investment and require no action by the Fund as a result of subsequent changes in the value or size of the Fund. Under these restrictions, the Fund will not: 1. As to 75% of its total assets, invest in securities of any one issuer (other than the United States Government, its agencies or instrumentalities) if after any such investment either (a) more than 5% of the Fund's total assets would be invested in the securities of that issuer, or (b) the Fund would then own more than 10% of the voting securities of that issuer; 2. Concentrate investments to the extent of more than 25% of its total assets in securities of issuers in the same industry; provided that this limitation shall not apply with respect to investments in U.S. Government Securities. 3. Make loans except through (a) the purchase of debt securities in accordance with its investment objectives and policies; (b) the lending of portfolio securities as described above; or (c) the acquisition of securities subject to repurchase agreements; 4. Borrow money, except in conformity with the restrictions stated above under "Borrowing." 5. Pledge, hypothecate, mortgage or otherwise encumber its assets, except to secure permitted borrowings or for the escrow arrangements contemplated in connection with the use of Hedging Instruments; 6. Participate on a joint or joint and several basis in any securities trading account; 7. Invest in companies for the purpose of exercising control or management thereof; 8. Make short sales of securities or maintain a short position, unless at all times when a short position is open it owns an equal amount of such securities or by virtue of ownership of other securities has the right, without payment of any further consideration, to obtain an equal amount of the securities sold short ("short sales against the box"); short sales may be made to defer realization of gain or loss for Federal income tax purposes; 9. Invest in (a) real estate, except that it may purchase and sell securities of companies which deal in real estate or interests therein; (b) commodities or commodity contracts (except that the Fund may purchase and sell Hedging Instruments whether or not they are considered to be a commodity or commodity contract); or (c) interests in oil, gas or other mineral exploration or development programs; 10. Act as an underwriter of securities, except insofar as the Fund might be deemed to be an underwriter for purposes of the Securities Act of 1933 in the resale of any securities held for its own portfolio; or 11. Purchase securities on margin, except that the Fund may make margin deposits in connection with any of the Hedging Instruments it may use. 5. The shares of beneficial interest of the Fund, $.01 par value per share (the "Shares"), are listed and traded on The New York Stock Exchange (the "NYSE"). The following table sets forth for the Shares for the periods indicated: (a) the per Share high sales price on the NYSE, the net asset value per Share as of the last day of the week immediately preceding such day and the premium or discount (expressed as a percentage of net asset value) represented by the difference between such high sales price and the corresponding net asset value and (b) the per Share low sales price on the NYSE, the net asset value per Share as of the last day of the week immediately preceding such day and the premium or discount (expressed as a percentage of net asset value) represented by the difference between such low sales price and the corresponding net asset value.
Market Price High;(1) Market Price Low; (1) NAV and Premium/ NAV and Premium/ Quarter Ended (Discount) That Day (2) (Discount) That Day (2) 1/31/93 Market: $11.000 Market: $10.000 NAV: $10.43 NAV: $10.36 Premium/(Discount):5.47 Premium/(Discount):-3.66 4/30/93 Market: $11.250 Market: $10.750 NAV: $10.58 NAV: $10.66 Premium/(Discount):6.33 Premium/(Discount):0.84 7/31/93 Market: $11.375 Market: $11.000 NAV: $10.77 NAV: $10.80 Premium/(Discount):5.62 Premium/(Discount):1.85 10/31/93 Market: $11.375 Market: $11.000 NAV: $10.88 NAV: $10.82 Premium/(Discount):4.55 Premium/(Discount):1.66 1/31/94 Market: $11.375 Market: $10.625 NAV: $11.18 NAV: $10.97 Premium/(Discount):1.74 Premium/(Discount):-3.14 4/30/94 Market: $11.375 Market: $10.000 NAV: $11.18 NAV: $10.32 Premium/(Discount):1.74 Premium/(Discount):-3.10 7/31/94 Market: $10.625 Market: $10.000 NAV: $10.40 NAV: $10.42 Premium/(Discount):2.16 Premium/(Discount):-4.03 10/31/94 Market: $10.375 Market: $9.125 NAV: $10.30 NAV: $10.24 Premium/(Discount):0.73 Premium/(Discount): -10.89 1/31/95 Market: $10.000 Market: $8.875 NAV: $10.06 NAV: $10.09 Premium/(Discount):-0.60 Premium/(Discount): -12.04 _______________ 1. As reported by the NYSE. 2. The Fund's computation of net asset value (NAV) is as of the close of trading on the last day of the week immediately preceding the day for which the high and low market price is reported and the premium or discount (expressed as a percentage of net asset value) is calculated based on the difference between the high or low market price and the corresponding net asset value for that day, divided by the net asset value.
On February 3, 1995, the net asset value per share of the Fund was $9.77, the closing sales price on the NYSE was $9.75; the discount to net asset value $0.02 (or 0.2% of market value). Since the Fund's inception in 1988, the Fund's shares have from time to time traded for an amount less than the Fund's net asset value. The Board of Trustees of the Fund has determined that it may be in the interests of Fund shareholders for the Fund to take action to attempt to reduce or eliminate a market value discount from net asset value. To that end, the Fund may, from time to time, either repurchase Shares in the open market or, subject to conditions imposed from time to time by the Board, make a tender offer for a portion of the Fund's Shares at their net asset value per Share. Subject to the Fund's fundamental policy with respect to borrowings, the Fund may incur debt to finance repurchases and/or tenders. Interest on any such borrowings will reduce the Fund's net income. In addition, the acquisition of Shares by the Fund will decrease the total assets of the Fund and therefore will have the effect of increasing the Fund's expense ratio. If the Fund must liquidate portfolio securities to purchase Shares tendered, the Fund may be required to sell portfolio securities for other than investment purposes and may realize gains and losses. Gains realized on securities held for less than three months may affect the Fund's ability to retain its status as a regulated investment company under the Internal Revenue Code. In addition to open-market Share purchases and tender offers, the Board could also seek shareholder approval to convert the Fund to an open- end investment company if the Fund's Shares trade at a substantial discount. If the Fund's Shares have traded on the NYSE at an average discount from net asset value of more than 10%, determined on the basis of the discount as of the end of the last trading day in each week during the period of 12 calendar weeks ending October 31 in such year, the Trustees will consider recommending to shareholders a proposal to convert the Fund to an open-end company. If during a year in which the Fund's Shares trade at the average discount stated, and for the period described, in the preceding sentence the Fund also receives written requests from the holders of 10% or more of the Fund's outstanding Shares that a proposal to convert to an open end company be submitted to the Fund's shareholders, within six months the Trustees will submit a proposal to the Fund's shareholders, to the extent consistent with the 1940 Act, to amend the Fund's Declaration of Trust to convert the Fund from a closed-end to an open-end investment company. If the Fund converted to an open-end investment company, it would be able continuously to issue and offer its Shares for sale, and each Share of the Fund could be tendered to the Fund for redemption at the option of the shareholder, at a redemption price equal to the current net asset value per Share. To meet such redemption request, the Fund could be required to liquidate portfolio securities. It Shares would no longer be listed on the NYSE. The Fund cannot predict whether any repurchase of Shares made while the Fund is a closed-end investment company would decrease the discount from net asset value at which the Shares trade. To the extent that any such repurchase decreased the discount from net asset value to an amount below 10% during the measurement period described above, the Fund would not be required to submit to shareholders a proposal to convert the Fund to an open-end investment company. Item 9. Management 1(a). The Fund is governed by a Board of Trustees, which is responsible under Massachusetts law for protecting the interests of shareholders. The Trustees meet periodically throughout the year to oversee the Fund's activities, review its performance, and review the actions of the Adviser. The Fund is required to hold annual shareholder meetings for the election of trustees and the ratification of its independent auditors. The Fund may also hold shareholder meetings from time to time for other 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. 1(b). The Adviser, a Colorado corporation with its principal offices at Two World Trade Center, New York, New York 10048-0203, acts as investment manager for the Fund under an investment advisory agreement (the "Advisory Agreement") under which it provides ongoing investment advice and conducts the investment operations of the Fund, including purchases and sales of its portfolio securities, under the general supervision and control of the Trustees of the Fund. The Adviser also acts as accounting agent for the Fund. The Adviser has operated as an investment company adviser since April 30, 1959. It and its affiliates currently manage investment companies with assets of more than $29 billion as of December 31, 1994, and having more than 2.4 million shareholder accounts. The Adviser is owned by Oppenheimer Acquisition Corp., a holding company owned in part by senior management of the Adviser, and ultimately controlled by Massachusetts Mutual Life Insurance Company, a mutual life insurance company. The Adviser provides office space and investment advisory services for the Fund and pays all compensation of those Trustees and officers of the Fund who are affiliated persons of the Adviser. Under the Advisory Agreement, the Fund pays the Adviser an advisory fee computed and paid weekly at an annual rate of .65 of 1% of the net assets of the Fund at the end of that week. The Fund also pays the Adviser an annual fee of $24,000, plus out-of-pocket costs and expenses reasonably incurred, for performing limited accounting services for the Fund. During the fiscal years ended October 31, 1992, 1993 and 1994, the Fund paid management fees to the Adviser of $1,974,433, $1,947,081, and $1,995,015, respectively. The Fund incurred approximately $38,252 in expenses for the fiscal year ended October 31, 1994 for services provided by SFSI. Under the Advisory Agreement, the Fund pays certain of its other costs not paid by the Adviser, including (a) brokerage and commission expenses, (b) Federal, state, local and foreign taxes, including issue and transfer taxes, incurred by or levied on the Fund, (c) interest charges on borrowings, (d) the organizational and offering expenses of the Fund, whether or not advanced by the Adviser, (e) fees and expenses of registering the Shares of the Fund under the appropriate Federal securities laws and of qualifying Shares of the Fund under applicable state securities laws, (f) fees and expenses of listing and maintaining the listings of the Fund's Shares on any national securities exchange, (g) expenses of printing and distributing reports to shareholders, (h) costs of shareholder meetings and proxy solicitation, (i) charges and expenses of the Fund's Administrator, custodian and Registrar, Transfer and Dividend Disbursing Agent, (j) compensation of the Fund's Trustees who are not interested persons of the Adviser, (k) legal and auditing expenses, (l) the cost of certificates representing the Fund's Shares, (m) costs of stationery and supplies, and (n) insurance premiums. The Adviser has advanced certain of the Fund's organizational and offering expenses, which were repaid by the Fund. There is no expense limitation provision. 1(c). The Portfolio Managers of the Fund are Thomas Reedy, David Rosenberg and Ashwin Vasan, who also serve as Vice Presidents of the Fund and of the Adviser, and are officers of certain mutual funds managed by the Adviser ("Oppenheimer Funds"). Messrs. Reedy, Rosenberg and Vasan have been the persons principally responsible for the day-to-day management of the Trust's portfolio since June 1993, June 1994 and June 1993, respectively. During the past five years, Mr. Reedy served as a securities analyst for the Manager, and, prior to joining the Manager, Mr. Rosenberg served as an officer and portfolio manager for Delaware Investment Advisors and one of its mutual funds and Mr. Vasan served as a securities analyst for Citibank, N.A. 1(d). The Administrator for the Fund is Mitchell Hutchins Asset Management Inc. (the "Administrator"), a Delaware corporation with principal offices at 1285 Avenue of the Americas, New York, New York 10019 and an affiliate of PaineWebber Incorporated. Because of the services rendered to the Fund by the Administrator and the Adviser, the Fund itself requires no employees other than its officers, none of whom receives compensation from the Fund and all of whom are employed by the Adviser or the Administrator. In connection with its responsibilities as Administrator and in consideration of its administrative fee, subject to the supervision of the Board of Trustees the Administrator will: (i) prepare all quarterly, semi-annual and annual reports required to be sent to Fund shareholders, and arrange for the printing and dissemination of such reports to shareholders; (ii) assemble and file all reports required to be filed by the Fund with the Securities and Exchange Commission ("SEC") on Form N-SAR, or such other form as the SEC may substitute for Form N-SAR; (iii) review the provision of services by the Fund's independent accountants, including but not limited to the examination by such accountants of financial statements of the Fund and the review of the Fund's Federal, state and local tax returns; and make such reports and recommendations to the Board of Trustees concerning the performance of the independent accountants as the Board reasonably requests or as it deems appropriate; (iv) file with the appropriate authorities all required Federal, state and local tax returns; (v) arrange for the dissemination to shareholders of the Fund's proxy materials, and oversee the tabulation of proxies by the Fund's transfer agent; (vi) negotiate the terms and conditions under which custodian services will be provided to the Fund and the fees to be paid by the Fund in connection therewith; (vii) recommend an accounting agent (which may or may not be the Fund's custodian or its affiliate) to the Board, which agent would be responsible for computing the Fund's net asset value in accordance with the Fund's registration statement under the 1940 Act and the Securities Act of 1933, as amended; (vii) negotiate the terms and conditions under which such accounting agent would compute the Fund's net asset value, and the fees to be paid by the Fund in connection therewith; review the provision of such accounting services to the Fund and make such reports and recommendations to the Board concerning the provisions of such services as the Board reasonably requests or the Administrator deems appropriate; (ix) negotiate the terms and conditions under which the transfer agency and dividend disbursing services will be provided to the Fund, and the fees to be paid by the Fund in connection therewith; review the provision of transfer agency and dividend disbursing services to the Fund; and make such reports and recommendations to the Board concerning the performance of the Fund's transfer and dividend disbursing agent as the Board reasonably requests or the Administrator deems appropriate; (x) establish the accounting policies of the Fund; reconcile accounting issues which may arise with respect to the Fund's operations; consult with the Fund's independent accountants, legal counsel, custodian, accounting agent and transfer and dividend disbursing agent as necessary in connection therewith; (xi) determine the amounts available for distribution as dividends and distributions to shareholders; prepare and arrange for the printing of dividend notices to the shareholders; and provide the Fund's transfer and dividend disbursing agent and custodian with such information as is required for such parties to effect the payment of dividends and distributions and to implement the Fund's dividend reinvestment plan; (xii) review the Fund's bills and authorize payments of such bills by the Fund's custodian; and (xiii) if requested by the Board, designate one of its employees to serve as an officer of the Fund, and such person shall not be compensated by the Fund for so serving. For the services rendered to the Fund and related expenses borne by the Administrator, the Fund pays the Administrator a fee, calculated and paid weekly, at the annualized rate of .20% of the Fund's net assets at the end of that week. During the fiscal years ended October 31, 1992, 1993 and 1994, the Fund paid administration fees to the Administrator of $608,233, $614,792 and $613,851, respectively. 1(e). The Bank of New York, 48 Wall Street, New York, New York, acts as the custodian (the "Custodian") for the Fund's assets held in the United States. The Adviser and its affiliates have banking relationships with the Custodian. The Adviser has represented to the Fund that its banking relationships with the Custodian have been and will continue to be unrelated to and unaffected by the relationship between the Fund and the Custodian. It will be the practice of the Fund to deal with the Custodian in a manner uninfluenced by any banking relationship the Custodian may have with the Adviser and its affiliates. Rules adopted under the 1940 Act permit the Fund to maintain its securities and cash in the custody of certain eligible banks and securities depositories. Pursuant to those Rules, the Fund's portfolio of securities and cash, when invested in foreign securities, will be held in foreign banks and securities depositories approved by the Trustees of the Fund in accordance with the rules of the Securities and Exchange Commission. SFSI, a subsidiary of the Adviser, acts as primary transfer agent, shareholder servicing agent and dividend paying agent for the Fund. Fees paid to SFSI are based on the number of shareholder accounts and the number of shareholder transactions, plus out-of-pocket costs and expenses. United Missouri Trust Company of New York acts as co-transfer agent and co-registrar with SFSI to provide such services as SFSI may request. 1(f). See 1(b) above. 1(g). Inapplicable. 2. Inapplicable. 3. None as of February 15, 1995. Item 10.Capital Stock, Long-Term Debt, and Other Securities. 1. The Fund is authorized to issue an unlimited number of Shares of beneficial interest, $.01 par value. The Fund's Shares have no preemptive, conversion, exchange or redemption rights. Each Share has equal voting, dividend, distribution and liquidation rights. All Shares outstanding are, and, when issued, those offered hereby will be, fully paid and nonassessable. Shareholders are entitled to one vote per Share. All voting rights for the election of Trustees are noncumulative, which means that the holders of more than 50% of the Shares can elect 100% of the Trustees then nominated for election if they choose to do so and, in such event, the holders of the remaining Shares will not be able to elect any Trustees. Under the rules of the NYSE applicable to listed companies, the Fund is required to hold an annual meeting of shareholders in each year. Under Massachusetts law, under certain circumstances shareholders could be held personally liable for the obligations of the Fund. However, the Declaration of Trust disclaims shareholder liability for actions or obligations of the Fund and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Fund. The Declaration of Trust provides for indemnification by the Fund for all losses and expenses of any shareholder held personally liable for obligations of the Fund. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund would be unable to meet its obligations. The likelihood of such circumstances is remote. Pursuant to the Trust's Dividend Reinvestment and Cash Purchase Plan (the "Plan"), all dividends and capital gains distributions ("Distributions") declared by the Trust will be automatically reinvested in additional full and fractional shares of the Trust ("Shares") unless (i) a shareholder elects to receive cash or (ii) Shares are held in nominee name, in which event the nominee should be consulted as to participation in the Plan. Shareholders that participate in the Plan ("Participants") may, at their option, make additional cash investments in Shares, semi-annually in amounts of at least $100, through payment to Shareholder Financial Services, Inc., the agent for the Plan (the "Agent"), and a service fee of $.75. Depending upon the circumstances hereinafter described, Plan Shares will be acquired by the Agent for the Participant's account through receipt of newly issued Shares or the purchase of outstanding Shares on the open market. If the market price of Shares on the relevant date (normally the payment date) equals or exceeds their net asset value, the Agent will ask the Trust for payment of the Distribution in additional Shares at the greater of the Trust's net asset value determined as of the date of purchase or 95% of the then-current market price. If the market price is lower than net asset value, the Distribution will be paid in cash, which the Agent will use to buy Shares on The New York Stock Exchange (the "NYSE"), or otherwise on the open market to the extent available. If the market price exceeds the net asset value before the Agent has completed its purchases, the average purchase price per Share paid by the Agent may exceed the net asset value, resulting in fewer Shares being acquired than if the Distribution had been paid in Shares issued by the Trust. Participants may elect to withdraw from the Plan at any time and thereby receive cash in lieu of Shares by sending appropriate written instructions to the Agent. Elections received by the Agent will be effective only if received more than ten days prior to the record date for any Distribution; otherwise, such termination will be effective shortly after the investment of such Distribution with respect to any subsequent Distribution. Upon withdrawal from or termination of the Plan, all Shares acquired under the Plan will remain in the Participant's account unless otherwise requested. For full Shares, the Participant may either: (1) receive without charge a share certificate for such Shares; or (2) request the Agent (after receipt by the Agent of signature guaranteed instructions by all registered owners) to sell the Shares acquired under the Plan and remit the proceeds less any brokerage commissions and a $2.50 service fee. Fractional Shares may either remain in the Participant's account or be reduced to cash by the Agent at the current market price with the proceeds remitted to the Participant. Shareholders who have previously withdrawn from the Plan may rejoin at any time by sending written instructions signed by all registered owners to the Agent. There is no direct charge for participation in the Plan; all fees of the Agent are paid by the Trust. There are no brokerage charges for Shares issued directly by the Trust. However, each Participant will pay a pro rata share of brokerage commissions incurred with respect to open market purchases of Shares to be issued under the Plan. Participants will receive tax information annually for their personal records and to assist in Federal income tax return preparation. The automatic reinvestment of Distributions does not relieve Participants of any income tax that may be payable on Distributions. The Plan may be terminated or amended at any time upon 30 days' prior written notice to Participants which, with respect to a Plan termination, must precede the record date of any Distribution by the Trust. Additional information concerning the Plan may be obtained by shareholders holding Shares registered directly in their names by writing the Agent, Shareholder Financial Services, Inc., P.O. Box 173673, Denver, CO, 80217-3673 or by calling 1-800-647-7374. Shareholders holding Shares in nominee name should contact their brokerage firm or other nominee for more information. The Fund presently has provisions in its Declaration of Trust and By-Laws (together, the "Charter Documents") which could have the effect of limiting (i) the ability of other entities or persons to acquire control of the Fund, (ii) the Fund's freedom to engage in certain transactions or (iii) the ability of the Fund's Trustees or shareholders to amend the Charter Documents or effect changes in the Fund's management. Those provisions of the Charter Documents may be regarded as "anti- takeover" provisions. Specifically, under the Fund's Declaration of Trust, the affirmative vote of the holders of not less than two thirds (66-2/3%) of the Fund's Shares outstanding and entitled to vote is required to authorize the consolidation of the Fund with another entity, a merger of the Fund with or into another entity (except for certain mergers in which the Fund is the successor), a sale or transfer of all or substantially all of the Fund's assets, the dissolution of the Fund, the conversion of the Fund to an open-end company, and any amendment of the Fund's Declaration of Trust that would affect any of the other provisions requiring a two-thirds vote. However, a "majority" shareholder vote, as defined in the Charter Documents, shall be sufficient to approve any of the foregoing transactions that have been recommended by two-thirds of the Trustees. Notwithstanding the foregoing, if a corporation, person or entity is directly, or indirectly through its affiliates, the beneficial owner of more than 5% of the outstanding shares of the Fund, the affirmative vote of 80% (which is higher than that required under the 1940 Act) of the outstanding Shares of the Fund is required generally to authorize any of the following transactions or to amend the provisions of the Declaration of Trust relating to transactions involving: (i) a merger or consolidation of the Fund with or into any such corporation or entity, (ii) the issuance of any securities of the Fund to any such corporation, person or entity for cash; (iii) the sale, lease or exchange of all or any substantial part of the assets of the Fund to any such corporation, entity or person (except assets having an aggregate market value of less than $1,000,000); or (iv) the sale, lease or exchange to the Fund, in exchange for securities of the Fund, of any assets of any such corporation, entity or person (except assets having an aggregate fair market value of less than $1,000,000). If two-thirds of the Board of Trustees has approved a memorandum of understanding with such beneficial owner, however, a majority shareholder vote will be sufficient to approve the foregoing transactions. Reference is made to the Charter Documents of the Fund, on file with the Securities and Exchange Commission, for the full text of these provisions. 2. Inapplicable. 3. Inapplicable. 4.The Fund qualified for treatment as, and elected to be, a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code for its taxable year ended October 31, 1992, and intends to continue to qualify as a RIC for each subsequent taxable year. However, the Fund reserves the right not to qualify under Subchapter M as a RIC in any year or years. For each taxable year that the Fund qualifies for treatment as a RIC, the Fund (but not its shareholders) will not be required to pay Federal income tax. Shareholders will normally have to pay Federal income taxes, and any state income taxes, on the dividends and distributions they receive from the Fund. Such dividends and distributions derived from net investment income or short-term capital gains are taxable to the shareholder as ordinary dividend income regardless of whether the shareholder receives such distributions in additional Shares or in cash. Since the Fund's income is expected to be derived primarily from interest rather than dividends, only a small portion, if any, of such dividends and distributions is expected to be eligible for the Federal dividends- received deduction available to corporations. The Fund does not anticipate that any portion of its dividends or distributions will qualify for pass-through treatment as "exempt-interest dividends" since less than 50% of its assets is permitted to be invested in municipal obligations. Long-term or short-term capital gains may be generated by the sale of portfolio securities and by transactions in options and futures contracts. Distributions of long-term capital gains, if any, are taxable to shareholders as long-term capital gains regardless of how long a shareholder has held the Fund's shares and regardless of whether the distribution is received in additional shares or in cash. For Federal income tax purposes, if a capital gain distribution is received with respect to Shares held for six months or less, any loss on a subsequent sale or exchange of such Shares will be treated as long-term capital loss to the extent of such long-term capital gain distribution. Capital gains distributions are not eligible for the dividends-received deduction. Any dividend or capital gains distribution received by a shareholder from an investment company will have the effect of reducing the net asset value of the shareholder's stock in that company by the exact amount of the dividend or capital gains distribution. Furthermore, capital gains distributions and dividends are subject to Federal income taxes. If the net asset value of the Shares should be reduced below a shareholder's cost as a result of the payment of dividends or realized long-term capital gains, such payment would be a return of the shareholder's investment capital to the extent of such reduction below the shareholder's cost, but nonetheless could be fully taxable. The tax treatment of listed put and call options written or purchased by the Fund on debt securities and of future contracts entered into by the Fund will be governed by Section 1256 of the Internal Revenue Code. Absent a tax election to the contrary, each such position held by the Fund will be marked-to-market (i.e., treated as if it were closed out) on the last business day of each taxable year of the Fund, and all gain or loss associated with transactions in such positions will be treated as 60% long-term capital gain or loss and 40% short-term capital gain or loss. Positions of the Fund which consist of at least one debt security and at least one option or futures contract which substantially diminishes the Fund's risk of loss with respect of such debt security could be treated as "mixed straddles" which are subject to the straddle rules of Section 1092 of the Code, the operation of which may cause deferral of losses, adjustments in the holding periods of debt securities and conversion of short-term capital losses into long-term capital losses. Certain tax elections exist for mixed straddles which reduce or eliminate the operation of the straddle rules. Furthermore, as a regulated investment company, the Fund would be subject to the requirement that less than 30% of its gross income be derived from gains on the sale or other disposition of securities held for less than three months. This requirement may limit the Fund's ability to engage in options and futures transactions. The Fund will monitor its transactions in options and futures contracts and may make certain tax elections in order to mitigate the effect of these rules and prevent disqualification of the Fund as a regulated investment company under Subchapter M of the Code. Such tax election may result in an increase in distribution of ordinary income (relative to long-term capital gains) to shareholders. The Internal Revenue Code requires that a holder (such as the Fund) of a zero coupon security accrue a portion of the discount at which the security was purchased as income each year even though the Fund receives no interest payment in cash on the security during the year. As an investment company, the Fund must pay out substantially all of its net investment income each year. Accordingly, the Fund may be required to pay out as an income distribution each year an amount which is greater than the total amount of cash interest the Fund actually received. Such distributions will be made from the cash assets of the Fund or by liquidation of portfolio securities, if necessary. If a distribution of cash necessitates the liquidation of portfolio securities, the Adviser will select which securities to sell. The Fund may realize a gain or loss from such sales. In the event the Fund realizes net capital gains from such transactions, its shareholders may receive a larger capital gain distribution than they would in the absence of such transactions. It is the Fund's present policy, which may be changed by the Board of Trustees, to pay monthly dividends to shareholders from net investment income of the Fund. The Fund intends to distribute all of its net investment income on an annual basis. The Fund will distribute all of its net realized long-term and short-term capital gains, if any, at least once per year. The Fund may, but is not required to, make such distributions on a more frequent basis to the extent permitted by applicable law and regulations. Under the Internal Revenue Code, by December 31 each year, the Fund must distribute a specified minimum percentage (currently 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 that year, or else the Fund must pay an excise tax on amounts not distributed. While it is presently anticipated that the Fund will meet those requirements, the Fund's Board and the Adviser might determine in a particular year it would be in the best interests of the Fund not to make such distributions at the mandated level and to pay the excise tax which would reduce the amount available for distributions to shareholders. If the Fund pays a dividend in January which was declared in the previous December to shareholders of record on a date in December, then such dividend or distribution will be treated for tax purposes as being paid in December and will be taxable to shareholders as if received in December. Under the Fund's Dividend Reinvestment Plan (the "Plan"), all of the Fund's dividends and distributions to shareholders will be reinvested in full and fractional Shares. With respect to distributions made in Shares issued by the Fund pursuant to the Plan, the amount of the distribution for tax purposes is the fair market value of the Shares issued on the reinvestment date. In the case of Shares purchased on the open market, a participating shareholder's tax basis in each Share is its cost. In the case of Shares issued by the Fund, the shareholder's tax basis in each Share received is its fair market value on the reinvestment date. Distributions of investment company taxable income to shareholders who are nonresident alien individuals or foreign corporations will generally be subject to a 30% United States withholding tax under provisions of the Internal Revenue Code applicable to foreign individuals and entities, unless a reduced rate of withholding or a withholding exemption is provided under an applicable treaty. Under Section 988 of the Code, foreign currency gain or loss with respect to foreign currency-denominated debt instruments and other foreign currency-denominated positions held or entered into by the Fund will be ordinary income or loss. In addition, foreign currency gain or loss realized with respect to certain foreign currency "hedging" transactions will be treated as ordinary income or loss. 5.The following information is provided as of February 3, 1995: (1) (2) (3) (4) Amount Held Amount Outstanding by Registrant Exclusive of Amount or for its Amount Shown Title of Class Authorized Account Under (3) Shares of Beneficial Unlimited None 29,064,849 Interest, $.01 par value Item 11. Defaults and Arrears on Senior Securities. Inapplicable. Item 12. Legal Proceedings. Inapplicable. Item 13. Table of Contents of the Statement of Additional Information. Reference is made to Item 15 of the Statement of Additional Information. Oppenheimer Multi-Sector Income Trust Two World Trade Center, New York, New York 10048-0203 1-800-525-7048 Statement of Additional Information dated February 27, 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 February 27, 1995. It should be read together with the Prospectus, and the Registration Statement on Form N-2, of which the Prospectus and this Statement of Additional Information are a part, can be inspected and copied at public reference facilities maintained by the Securities and Exchange Commission (the "SEC") in Washington, D.C. and certain of its regional offices, and copies of such materials can be obtained at prescribed rates from the Public Reference Branch, Office of Consumer Affairs and Information Services, SEC, Washington, D.C., 20549. TABLE OF CONTENTS Page Investment Objective and Policies * Management 35 Control Persons and Principal Holders of Securities 40 Investment Advisory and Other Services * Brokerage Allocation and Other Practices 40 Tax Status * Financial Statements 43 ______________________ *See Prospectus PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION Item 14. Cover Page. Reference is made to the preceding page. Item 15. Table of Contents. Reference is made to the preceding page and to Items 16 through 23 of the Statement of Additional Information set forth below. Item 16. General Information and History. Inapplicable. Item 17. Investment Objective and Policies. Reference is made to Item 8 of the Prospectus. Item 18. Management. 1 and 2. The Fund's Trustees and officers and their principal occupations and business affiliations during the past five years are listed below. The address of each Trustee and officer is Two World Trade Center, New York, New York 10048-0203, unless another address is listed below. All of the Trustees are also trustees of Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer Time Fund, Oppenheimer Growth Fund, Oppenheimer Target Fund, Oppenheimer Discovery Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer Global Emerging Growth Fund, Oppenheimer Tax-Free Bond Fund, Oppenheimer New York Tax-Exempt Fund, Oppenheimer California Tax-Exempt Fund, Oppenheimer Multi-State Tax-Exempt Trust, Oppenheimer Asset Allocation Fund, Oppenheimer Mortgage Income Fund, Oppenheimer U.S. Government Trust, Oppenheimer Multi-Government Trust and Oppenheimer Multi-Government Trust (the "New York-based OppenheimerFunds"). Messrs. Spiro, Bishop, Bowen, Donohue, Farrar and Zack respectively hold the same offices with the other New York-based OppenheimerFunds as with the Fund. Leon Levy, Chairman of the Board of Trustees; Age: 69 General Partner of Odyssey Partners, L.P. (investment partnership) and Chairman of Avatar Holdings, Inc. (real estate development). Leo Cherne, Trustee; Age: 82 386 Park Avenue South, New York, New York 10016 Chairman Emeritus of the International Rescue Committee (philanthropic organization); formerly Executive Director of The Research Institute of America. Robert G. Galli, Trustee*; Age: 61 Vice Chairman of the Adviser and Vice President and Counsel of Oppenheimer Acquisition Corp., the Adviser's parent holding company; formerly he held the following positions: a director of the Adviser and Oppenheimer Funds Distributor, Inc. (the "Distributor"), Vice President and a director of HarbourView Asset Management Corporation ("HarbourView") and Centennial Asset Management Corporation ("Centennial"), investment advisory subsidiaries of the Adviser, a director of Shareholder Financial Services, Inc. ("SFSI") and Shareholder Services, Inc. ("SSI"), transfer agent subsidiaries of the Adviser, an officer of other OppenheimerFunds and Executive Vice President and General Counsel of the Adviser and the Distributor. Benjamin Lipstein, Trustee; Age: 71 591 Breezy Hill Road, Hillsdale, New York 12529 Professor Emeritus of Marketing, Stern Graduate School of Business Administration, New York University; Director of Sussex Publishers, Inc. (Publishers of Psychology Today and Mother Earth News); and Director of Spy Magazine, L.P. Elizabeth B. Moynihan, Trustee; Age: 65 801 Pennsylvania Avenue, N.W., Washington, DC 20004 Author and architectural historian; a trustee of the Freer Gallery of Art (Smithsonian Institution), the Institute of Fine Arts (New York University), National Building Museum; a member of the Trustees Council, Preservation League of New York State; a member of the Indo- U.S. Sub-Commission on Education and Culture. Kenneth A. Randall, Trustee; Age: 67 6 Whittaker's Mill, Williamsburg, Virginia 23185 A director of Dominion Resources, Inc. (electric utility holding company), Dominion Energy, Inc. (electric power and oil and gas producer), Enron-Dominion Cogen Corp. (cogeneration company), Kemper Corporation (insurance and financial services company), Fidelity Life Association (mutual life insurance company); formerly Chairman of the Board of ICL, Inc. (information systems) and President and Chief Executive Officer of the Conference Board, Inc. (international economic and business research). Edward V. Regan, Trustee; Age: 64 40 Park Avenue, New York, New York 10016 President of Jerome Levy Economics Institute; a member of the U.S. Competitiveness Policy Council; a director or GranCare, Inc. (healthcare provider); formerly New York State Comptroller and trustee, New York State and Local Retirement Fund. _____________________________________ * A Trustee who is an "interested person" of the Fund as defined in the Investment Company Act. Russell S. Reynolds, Jr., Trustee; Age: 63 200 Park Avenue, New York, New York 10166 Founder Chairman of Russell Reynolds Associates, Inc. (executive recruiting); Chairman of Directors Publication, Inc. (consulting and publishing); a trustee of Mystic Seaport Museum, International House, Greenwich Hospital and the Greenwich Historical Society. Sidney M. Robbins, Trustee; Age: 82 50 Overlook Road, Ossining, New York 10562 Chase Manhattan Professor Emeritus of Financial Institutions, Graduate School of Business, Columbia University; Visiting Professor of Finance, University of Hawaii; a director of The Korea Fund, Inc. and The Malaysia Fund, Inc. (closed-end investment companies); a member of the Board of Advisors, Olympus Private Placement Fund, L.P.; Professor Emeritus of Finance, Adelphi University. Donald W. Spiro, President and Trustee*; Age: 69 Chairman Emeritus and a director of the Adviser; formerly Chairman of the Adviser and the Distributor. Pauline Trigere, Trustee; Age: 82 498 Seventh Avenue, New York, New York 10018 Chairman and Chief Executive Officer of Trigere, Inc. (design and sale of women's fashions). Clayton K. Yeutter, Trustee; Age: 64 1325 Merrie Ridge Road, McLean, Virginia 22101 Of Counsel to Hogan & Hartson (a law firm); a director of B.A.T. Industries, Ltd. (tobacco and financial services), Caterpillar, Inc. (machinery), ConAgra, Inc. (food and agricultural products), Farmers Insurance Company (insurance), FMC Corp. (chemicals and machinery), Lindsay Manufacturing Co. (irrigation equipment), Texas Instruments, Inc. (electronics) and The Vigoro Corporation (fertilizer manufacturer); formerly (in descending chronological order) Counsellor to the President (Bush) for Domestic Policy, Chairman of the Republican National Committee, Secretary of the U.S. Department of Agriculture, and U.S. Trade Representative. Thomas P. Reedy, Vice President and Portfolio Manager; Age: 32 Vice President of the Manager; an officer of other OppenheimerFunds; formerly a Securities Analyst for the Manager. David Rosenberg, Vice President and Portfolio Manager; Age: 36 Vice President of the Adviser; an officer of other OppenheimerFunds; formerly an officer and Portfolio Manager for Delaware Investment Advisors and for one of its mutual funds. __________________________ * A Trustee who is an "interested person" of the Fund as defined in the Investment Company Act. Ashwin Vasan, Vice President and Portfolio Manager; Age: 32 Vice President of the Adviser; an officer of other OppenheimerFunds; formerly a Securities Analyst for the Adviser, prior to which he was a Securities Analyst for Citibank, N.A. Andrew J. Donohue, Secretary; Age: 44 Executive Vice President and General Counsel of the Adviser and the Distributor; an officer of other OppenheimerFunds; formerly Senior Vice President and Associate General Counsel of the Adviser and the Distributor, prior to which he was a partner in Kraft & McManimon (a law firm), an officer of First Investors Corporation (a broker- dealer) and First Investors Management Company, Inc. (broker-dealer and investment adviser), and a director and an officer of First Investors Family of Funds and First Investors Life Insurance Company. George C. Bowen, Treasurer; Age: 58 3410 South Galena Street, Denver, Colorado 80231 Senior Vice President and Treasurer of the Adviser; 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. Robert G. Zack, Assistant Secretary; Age: 46 Senior Vice President and Associate General Counsel of the Adviser; Assistant Secretary of SSI and SFSI; an officer of other OppenheimerFunds. Robert Bishop, Assistant Treasurer; Age: 36 3410 South Galena Street, Denver, Colorado 80231 Assistant Vice President of the Adviser/Mutual Fund Accounting; an officer of other OppenheimerFunds; previously a Fund Controller for the Adviser, 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 Adviser/Mutual Fund Accounting; an officer of other OppenheimerFunds; previously a Fund Controller for the Adviser, 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. The Board of Trustees does not have an executive or investment committee. The Trustees of the Fund have appointed a study committee consisting of Messrs. Robbins (Chairman) and Lipstein and Mrs. Moynihan, none of whom is an "interested person" of the Adviser or the Fund. The study committee's function is to report to the Board on matters that include (i) legal and regulatory developments, (ii) periodic renewals of the Advisory Agreement, (iii) review of the transfer agent and registrar agreement, (iv) review of the administrative services provided by Mitchell Hutchins Asset Management, Inc., (v) portfolio management, (vi) valuation of portfolio securities, (vii) custodian relationships and use of foreign subcustodians, (viii) code of ethics matters, policy on use of insider information, (ix) consideration of tender offers and other repurchases of fund shares and possible conversion to open-end status, and (x) indemnification and insurance of the Fund's officers and trustees. 3. Inapplicable. 4. The officers of the Fund are affiliated with the Manager; they and the Trustees of the Fund who are affiliated with the Adviser (Messrs. Galli and Spiro; Mr. Spiro is also an officer) receive no salary or fee from the Fund. The Trustees of the Fund (including Mr. Delaney, a former Trustee, but excluding Messrs. Galli and Spiro) received the total amounts shown below from all 19 of the New York-based OppenheimerFunds (including the Fund) listed in the first paragraph of Item 18, parts 1 and 2 (and from Oppenheimer Global Environment Fund, a former New York-based OppenheimerFund), for services in the positions shown:
Total Compensation From All Name Position New York-based OppenheimerFunds1 Leon Levy Chairman and Trustee $141,000.00 Leo Cherne Audit Committee Member and $ 68,800.00 Trustee Edmund T. Delaney Study Committee Member and $ 86,200.00 Trustee2 Benjamin Lipstein Study Committee Member and $ 86,200.00 Trustee Elizabeth B. MoynihanStudy Committee Member3 and $ 60,625.00 Trustee Kenneth A. Randall Audit Committee Member and $ 78,400.00 Trustee Edward V. Regan Audit Committee Member3 and $ 56,275.00 Trustee Russell S. Reynolds Trustee $ 52,100.00 Jr. Sidney M. Robbins Study Committee Chairman, $122,100.00 Audit Committee Vice-Chairman and Trustee Pauline Trigere Trustee $ 52,100.00 Clayton K. Yeutter Trustee $ 52,100.00 ______________________ 1 For the 1994 calendar year. 2 Board and committee positions held during a portion of the period shown. 3 Committee position held during a portion of the period shown.
The Fund has adopted a retirement plan that provides for payment to a retired Trustee of up to 80% of the average compensation paid during that Trustee's five years of service in which the highest compensation was received. A Trustee must serve in that capacity for any of the New York- based OppenheimerFunds for at least 15 years to be eligible for the maximum payment. No payments have been made by the Fund under the plan as of October 31, 1994. The total accrual by all the New York-based OppenheimerFunds referred to in the preceding paragraph for their collective projected benefit obligations under the plan was $117,741 as of October 31, 1994. Item 19. Control Persons and Principal Holders of Securities. 1. Inapplicable. 2. As of February 15, 1995, the only persons owning of record or known by the Fund to own beneficially 5% or more of the outstanding Shares were: (i) Cede & Co., c/o Depository Trust Co., 7 Hanover Square, 22nd Floor Dividend Department, New York, New York 10004, a nominee which owned of record 22,574,793.9385 Shares (approximately 77.67% of the Shares then outstanding) and (ii) Kray & Co., One Financial Place, 440 South LaSalle Street, Chicago, Illinois 60605-1028, a nominee which owned of record 552,448.00 Shares (approximately 1.9% of the Shares then outstanding). 3. As of February 15, 1995, the trustees and officers of the Fund as a group owned less than 1% of the outstanding Shares. Item 20. Investment Advisory and Other Services. Reference is made to Item 9 of the Prospectus. Item 21. Brokerage Allocation and Other Practices. 1 and 2. During the fiscal years ended October 31, 1992, 1993 and 1994, the Fund paid approximately $3,032, $25,643 and $16,685, respectively, in brokerage commissions. The Fund will not effect portfolio transactions through any broker (i) which is an affiliated person of the Fund, (ii) which is an affiliated person of such affiliated person or (iii) an affiliated person of which is an affiliated person of the Fund or its Adviser. There is no principal underwriter of shares of the Fund. As most purchases of portfolio securities made by the Fund are principal transactions at net prices, the Fund incurs little or no brokerage costs. The Fund deals directly with the selling or purchasing principal or market maker without incurring charges for the services of a broker on its behalf unless it is determined that a better price or execution may be obtained by using the services of a broker. Purchases of portfolio securities from underwriters include a commission or concession paid by the issuer to the underwriter, and purchases from dealers include a spread between the bid and asked price. Transactions in foreign securities markets generally involve the payment of fixed brokerage commissions, which are usually higher than those in the United States. The Fund seeks to obtain prompt execution of orders at the most favorable net price. 3. The Advisory Agreement between the Fund and the Advisor (the "Advisory Agreement") contains provisions relating to the selection of brokers, dealers and futures commission merchants (collectively referred to as "brokers") for the Fund's portfolio transactions. The Adviser is authorized by the Advisory Agreement to employ brokers as may, in its best judgment based on all relevant factors, implement the policy of the Fund to obtain, at reasonable expense, the "best execution" (prompt and reliable execution at the most favorable price obtainable) of such transactions. The Adviser need not seek competitive bidding but is expected to minimize the commissions paid to the extent consistent with the interests and policies of the Fund. The Fund will not effect portfolio transactions through affiliates of the Adviser. Certain other investment companies advised by the Adviser and its affiliates have investment objectives and policies similar to those of the Fund. If possible, concurrent orders to purchase or sell the same security by more than one of the accounts managed by the Adviser or its affiliates are combined. The transactions effected pursuant to such combined orders are averaged as to price and allocated in accordance with the purchase or sale orders actually placed for each account. If transactions on behalf of more than one fund during the same period increase the demand for securities being purchased or the supply of securities being sold, there may be an adverse effect on price or quantity. 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 transactions in the security to which the option relates. Under the Advisory Agreement, if brokers are used for portfolio transactions, the Adviser may select brokers for their execution and/or research services, on which no dollar value can be placed. Information received by the Adviser for those other accounts may or may not be useful to the Fund. The commissions paid to such dealers may be higher than another qualified dealer would have charged if a good faith determination is made by the Adviser that the commission is reasonable in relation to the services provided. Subject to applicable regulations, sales of shares of the Fund and/or investment companies advised by the Adviser or its affiliates may also be considered as a factor in directing transactions to brokers, but only in conformity with the price, execution and other considerations and practices discussed above. Such research, which may be provided by a broker through a third party, includes information on particular companies and industries as well as market, economic or institutional activity areas. It serves to broaden the scope and supplement the research activities of the Adviser, to make available additional views for consideration and comparisons, and to enable the Adviser to obtain market information for the valuation of securities held in the Fund's portfolio or being considered for purchase. 4. During the fiscal years ended October 31, 1992, 1993 and 1994, $0, $12,852 and $2,689 were paid to brokers as commissions in return for research services. 5. Inapplicable. Item 22. Tax Status. Reference is made to Item 10 of the Prospectus. Item 23. Financial Statements. 1. Statement of Investments 2. Statement of Assets and Liabilities 3. Statement of Operations 4. Statements of Changes in Net Assets 5. Financial Highlights 6. Notes to Financial Statements 7. Independent Auditors' Report 8. Independent Auditors' Consent INDEPENDENT AUDITORS' REPORT Oppenheimer Multi-Sector Income Trust The Board of Trustees and Shareholders of Oppenheimer Multi-Sector Income Trust: We have audited the accompanying statements of investments and assets and liabilities of Oppenheimer Multi-Sector Income Trust as of October 31, 1994, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the six-year period then ended and the period from March 24, 1988 (commencement of operations) to October 31, 1988. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1994 by correspondence with the custodian and brokers; and where confirmations were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Multi-Sector Income Trust as of October 31, 1994, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the six-year period then ended and the period from March 24, 1988 (commencement of operations) to October 31, 1988, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Denver, Colorado November 21, 1994 STATEMENT OF INVESTMENTS October 31, 1994 Oppenheimer Multi-Sector Income Trust
Market Value Face Amount See Note 1 -------------- ------------ MONEY MARKET SECTOR -- 3.6% Repurchase agreement with The First Boston Corp., 4.75%, dated 10/31/94, to be repurchased at $10,501,385 on 11/1/94, collateralized by U.S. Treasury Nts., 4.75%, 2/15/97, with a value of $10,717,578 (Cost $10,500,000).......................... $ 10,500,000 $ 10,500,000 -------------- ------------ U.S. GOVERNMENT SECTOR -- 6.9% U.S. Treasury Bonds: 8.875%, 7/15/95.................................................. 3,500,000 3,571,092 12%, 8/15/13..................................................... 4,000,000 5,301,248 8.125%, 8/15/21.................................................. 5,000,000 5,020,309 U.S. Treasury Nts., 9.25%, 1/15/96................................. 6,300,000 6,506,715 ------------ Total U.S. Government Sector (Cost $21,096,633).................... 20,399,364 ------------ Units -------------- CONVERTIBLE SECTOR -- 1.3% RIGHTS, WARRANTS AND CERTIFICATES -- 0.2% Ames Department Stores, Inc.: Excess Cash Flow Payment Ctfs. .................................. 40,300 403 Litigation Trust................................................. 128,889 1,289 Becker Gaming, Inc. Wts., Exp. 11/00 (5)........................... 25,000 50,000 Eye Care Centers of America, Inc. Wts., Exp. 10/03................. 1,800 9,000 Gaylord Container Corp. Wts., Exp. 7/96............................ 90,000 630,000 Purity Supreme, Inc. Wts., Exp. 8/97 (5)........................... 7,797 156 Terex Corp. Rts., Exp. 7/96 (5).................................... 186 233 ------------ 691,081 Shares -------------- PREFERRED STOCKS -- 1.1% AMR Corp., $3.00 Cum. Cv. Depositary Shares, Series A (5).......... 20,000 842,500 First Nationwide Bank, FSB, 11.50%................................. 13,000 1,339,000 Southdown, Inc., Cv., Series D..................................... 25,000 931,250 ------------ 3,112,750 ------------ Total Convertible Sector (Cost $3,664,045)......................... 3,803,831 ------------
3 4 STATEMENT OF INVESTMENTS October 31, 1994 (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Shares See Note 1 -------------- ------------ CORPORATE SECTOR -- 36.6% COMMON STOCKS -- 1.3% Capital Gaming, Inc. (6)........................................... 7,198 $ 51,286 Hollywood Casino Corp. ............................................ 63,333 383,956 Leaseway Transportation Corp. ..................................... 28,000 371,000 Petrolane, Inc., Cl. B. ........................................... 152,712 2,137,968 Triangle Wire & Cable, Inc. (5).................................... 84,444 759,996 ------------ 3,704,206 Face Amount -------------- CORPORATE BONDS AND NOTES -- 34.8% BASIC MATERIALS -- 7.8% Chemicals -- 2.0% Carbide/Graphite Group, Inc., 11.50% Sr. Nts., 9/1/03.............. $ 3,000,000 3,067,500 OSI Specialities Holdings Co., Units............................... 500,000 307,500 Rexene Corp., 10% 2nd Priority Nts., 11/15/02 (6).................. 2,743,000 2,593,660 ------------ 5,968,660 Metals -- 2.2% Acme Metals, Inc.: 12.50% Sr. Sec. Nts., 8/1/02..................................... 1,500,000 1,511,250 0%/13.50% Sr. Sec. Disc. Nts., 8/1/04............................ 750,000 517,500 Kaiser Aluminum & Chemical Corp.: 9.875% Sr. Nts., 2/15/02......................................... 1,650,000 1,513,875 12.75% Sr. Sub. Nts., 2/1/03..................................... 200,000 199,500 NL Industries, Inc.: 11.75% Sr. Sec. Nts., 10/15/03................................... 500,000 511,250 0%/13% Sr. Sec. Disc. Nts., 10/15/05 (3)......................... 500,000 312,500 Republic Engineered Steels, Inc., 9.875% Fst. Mtg. Nts., 12/15/01......................................................... 900,000 830,250 Weirton Steel Corp., 11.50% Sr. Nts., 3/1/98....................... 1,000,000 1,038,750 ------------ 6,434,875 Paper and Forest Products -- 3.6% Gaylord Container Corp., 11.50% Sr. Nts., 5/15/01.................. 2,000,000 2,085,000 Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03........................ 1,000,000 925,000 Rainy River Forest Products, 10.75% Sr. Sec. Nts., 10/15/01........ 800,000 802,000
4 5 STATEMENT OF INVESTMENTS October 31, 1994 (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount See Note 1 -------------- ------------ Paper and Forest Products (Continued) Repap Wisconsin, Inc., 9.25% Fst. Priority Sr. Sec. Nts., 2/1/02... $ 1,000,000 $ 905,000 Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00........... 1,100,000 1,080,750 Stone Container Corp.: 9.875% Sr. Nts., 2/1/01.......................................... 2,250,000 2,115,000 10.75% Fst. Mtg. Nts., 10/1/02................................... 1,720,000 1,702,800 Stone Savannah River Pulp & Paper Corp., 14.125% Sr. Sub Nts., 12/15/00......................................................... 900,000 965,250 ------------ 10,580,800 CONSUMER CYCLICALS -- 11.2% Automotive -- 1.4% Envirotest Systems Corp.: 9.125% Sr. Nts., 3/15/01......................................... 700,000 635,250 9.625% Sr. Sub. Nts., 4/1/03..................................... 1,500,000 1,348,125 Foamex LP/JPS Automotive Corp., Units (5).......................... 1,750,000 953,750 JPS Automotive Products Corp., 11.125% Sr. Nts., 6/15/01........... 1,000,000 1,000,000 SPX Corp., 11.75% Sr. Sub. Nts., 6/1/02............................ 250,000 256,250 ------------ 4,193,375 Construction Supplies and Development -- 2.5% NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03.............................. 1,500,000 1,305,000 Triangle Pacific Corp., 10.50% Sr. Nts., 8/1/03.................... 2,000,000 1,970,000 USG Corp.: 10.25% Sr. Sec. Nts., 12/15/02................................... 1,900,000 1,945,125 8.75% Debs., 3/1/17.............................................. 2,450,000 2,137,625 ------------ 7,357,750 Consumer Goods and Services -- 3.1% Coleman Holdings, Inc., 0% Sr. Sec. Disc. Nts., Series B, 5/27/98.......................................................... 3,000,000 2,021,250 Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series B, 10/1/03... 2,500,000 2,337,500 Insilco Corp., 10.375% Sr. Sec. Nts., 7/1/97....................... 2,087,000 2,118,305 PT Polysindo Eka Perkasa, 13% Sr. Nts., 6/15/01.................... 1,000,000 990,000 WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05........... 2,000,000 1,795,000 ------------ 9,262,055 Entertainment -- 0.6% Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00 (5)..................................................... 550,000 464,750 Capitol Queen & Casino, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00 (5)..................................................... 400,000 340,000 Empress River Casino Finance Corp., 10.75% Gtd. Sr. Nts., 4/1/02... 750,000 652,500
5 6 STATEMENT OF INVESTMENTS October 31, 1994 (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount See Note 1 -------------- ------------ Entertainment (Continued) Lady Luck Gaming Finance Corp., 10.50% Fst. Mtg. Nts., Series B, 3/1/01........................................................... $ 500,000 $ 182,500 Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03................ 250,000 213,125 ------------ 1,852,875 Media -- 0.5% Univision Television Group, Inc., 11.75% Sr. Sub. Nts., 1/15/01.... 1,300,000 1,365,000 ------------ Real Estate Development -- 0.3% Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Nts., 4/1/02........................................................... 1,000,000 895,000 ------------ Retail -- 2.8% Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts., Series B, 9/1/03................................................. 1,500,000 1,432,500 Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01................ 2,000,000 1,970,000 Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03........... 1,800,000 1,449,000 Finlay Enterprises, Inc., 0%/12% Sr. Disc. Debs., 5/1/05 (3)....... 500,000 291,250 Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03................ 1,250,000 1,187,500 Musicland Group, Inc. (The), 9% Sr. Sub. Nts., 6/15/03............. 700,000 622,125 R.H. Macy & Co., Inc., 14.50% Sr. Sub. Debs., 10/15/98 (2)......... 1,800,000 1,269,000 ------------ 8,221,375 CONSUMER NON-CYCLICALS -- 3.3% Food -- 0.5% Kash 'N Karry Food Stores, Inc., 14% Sub. Debs., 2/1/01 (2)........ 600,000 183,000 Royal Crown Corp., 9.75% Sr. Sec. Nts., 8/1/00..................... 1,500,000 1,380,000 ------------ 1,563,000 Food and Drug Distribution -- 2.3% Di Giorgio Corp., 12% Sr. Nts., 2/15/03............................ 2,050,000 2,060,250 Grand Union Co.: 11.25% Sr. Nts., 7/15/00......................................... 400,000 360,000 12.25% Sr. Sub. Nts., 7/15/02.................................... 3,000,000 2,115,000 Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99....... 1,400,000 1,190,000 Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03.................... 1,000,000 992,500 ------------ 6,717,750 Healthcare -- 0.5% American Medical International, Inc., 9.50% Sr. Sub. Nts., Series B, 4/15/06................................................ 800,000 808,000 Total Renal Care, Inc., Units...................................... 1,000,000 735,000 ------------ 1,543,000
6 7 STATEMENT OF INVESTMENTS October 31, 1994 (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount See Note 1 -------------- ------------ ENERGY -- 2.6% Aftermarket Technology Corp., 12% Sr. Sub. Nts., 8/1/04 (5)........ $ 1,100,000 $ 1,116,500 Ferrellgas LP/Ferrellgas Finance Corp., 10% Sr. Nts., 8/1/01....... 500,000 496,250 Mesa Capital Corp., 0%/12.75% Sec. Disc. Nts., 6/30/98 (3)......... 1,411,000 1,213,460 OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02............ 1,000,000 1,135,000 Presidio Oil Co.: 11.50% Sr. Sec. Nts., Series B, 9/15/00.......................... 1,000,000 950,000 13.90% Sr. Sub. Gas Indexed Nts., Series B, 7/15/02 (4).......... 1,800,000 1,611,000 Wainoco Oil Corp., 12% Sr. Nts., 8/1/02............................ 1,000,000 1,035,000 ------------ 7,557,210 FINANCIAL -- 1.1% American Life Holding Co., 11.25% Sr. Sub. Nts., 9/15/04........... 940,000 944,700 Card Establishment Services, Inc., 10% Sr. Sub. Nts., Series B, 10/1/03................................................ 2,500,000 2,325,000 ------------ 3,269,700 INDUSTRIAL -- 4.2% Containers -- 0.9% Calmar, Inc., 12% Sr. Sec. Nts., 12/15/97.......................... 1,500,000 1,500,000 Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04.......... 1,300,000 1,267,500 ------------ 2,767,500 General Industrial -- 2.5% American Standard, Inc.: 9.875% Sr. Sub. Nts., 6/1/01..................................... 1,650,000 1,637,625 0%/10.50% Sr. Sub. Disc. Debs., 6/1/05 (3)....................... 300,000 199,500 Farley, Inc., 0% Sub. Debs., 12/30/12.............................. 115,000 12,075 Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97............... 2,600,000 2,629,250 Southdown, Inc., 14% Sr. Sub. Nts., Series B, 10/15/01............. 2,650,000 2,994,500 ------------ 7,472,950 Transportation -- 0.8% Kloster Cruise Ltd., 13% Sr. Sec. Nts., 5/1/03..................... 500,000 485,000 Tiphook Financial Corp.: 7.125% Gtd. Nts., 5/1/98......................................... 1,000,000 697,500 8% Gtd. Nts., 3/15/00............................................ 200,000 136,000 Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr. Disc. Nts., Series B, 12/15/03 (3)................ 2,000,000 1,095,000 ------------ 2,413,500
7 8 STATEMENT OF INVESTMENTS October 31, 1994 (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount See Note 1 -------------- ------------ TECHNOLOGY -- 4.6% Aerospace/Defense -- 0.6% GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98...................... $ 1,750,000 $ 1,443,750 Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02.................... 200,000 193,000 ------------ 1,636,750 Cable Television -- 1.0% Echostar Communications Corp., Units............................... 1,350,000 644,625 Helicon Group LP/Helicon Capital Corp., 9% Sr. Sec. Nts., Series B, 11/1/03 (4)............................................ 1,500,000 1,357,500 International CableTel, Inc., 0%/10.875% Sr. Def. Cpn. Nts., 10/15/03 (3)..................................................... 1,500,000 828,750 ------------ 2,830,875 Communications -- 2.2% Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03 (3).......... 2,250,000 1,518,750 GS Technologies Operating Co., Inc., 12% Sr. Gtd. Nts., 9/1/04..... 900,000 920,250 Horizon Cellular Telephone LP/Horizon Finance Corp., 0%/11.375% Sr. Sub. Disc. Nts., 10/1/00 (3)................................. 2,500,000 1,812,500 Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub. Disc. Nts., 8/1/03 (3)...................................... 3,500,000 2,362,500 ------------ 6,614,000 Technology -- 0.8% Bell & Howell Holdings Co., 0%/11.5% Sr. Disc. Debs., Series B, 3/1/05 (3)............................................. 4,700,000 2,373,500 ------------ STRUCTURED INSTRUMENTS -- 0.5% Lehman Brothers Holdings, Inc., 5.225% Standard & Poor's 500 Index-Linked Nts., 12/8/94 (5)................................... 500,000 526,650 Salomon Brothers, Inc., Standard & Poor's 500 Index-Linked Nts.: 5.3125%, 12/13/94 (5)............................................ 500,000 545,000 5.625%, 1/12/95 (5).............................................. 500,000 585,000 ------------ 1,656,650 ------------ Total Corporate Sector (Cost $111,074,393)......................... 108,252,356 ------------
8 9 STATEMENT OF INVESTMENTS October 31, 1994 (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount See Note 1 -------------- ------------ INTERNATIONAL SECTOR -- 38.1% FOREIGN GOVERNMENT OBLIGATIONS -- 31.8% Argentina (Republic of): Bonds, 8.375%, 12/20/03.......................................... $ 5,000,000 $ 4,062,540 Bonds, 4.25%, 3/31/23............................................ 1,000,000 465,625 Past Due Interest Bonds, 5%, 3/31/05 (4)(6)...................... 3,000,000 2,172,187 Brazil (Federal Republic of): Interest Due and Unpaid Bonds, 6.606%, 1/1/01 (4)................ 980,000 801,150 Nts., Banco Estado Minas Gerais: 10%, 1/15/96................................................... 750,000 728,437 8.25%, 2/10/00................................................. 1,000,000 812,500 Par Bonds, 4%, 4/15/24........................................... 4,000,000 1,612,000 Canada (Government of) Debs., 10.50%, 7/1/00 (CAD) (1)............. 4,140,000 3,310,450 Denmark (Kingdom of) Bonds: 9%, 11/15/98 (DKK)(1)............................................ 4,880,000 837,753 6%, 12/10/99 (DKK) (1)........................................... 13,000,000 1,965,807 Ecuador (Republic of) Bonds, 0%, 12/29/49 (5)(7)................... 2,500,000 1,471,875 First Australia National Mortgage Acceptance Corp. Ltd. Bonds, Series 22, 11.40%, 12/15/01 (AUD) (1)............................ 4,834,380 3,624,050 International Bank for Reconstruction and Development Bonds, 12.50%, 7/25/97 (NZD)(1)......................................... 10,730,000 7,139,831 International Finance Corp., Sr. Nts., 10.65%, 4/26/99 (ITL) (1)... 1,000,000,000 639,352 Morocco (Kingdom of): Loan Participation Agreement: Tranche A, 5.934%, 1/1/09 (4)(5)............................... 4,000,000 2,835,000 Tranche B, 5.938%, 1/1/04 (4)(5)............................... 1,000,000 754,375 New South Wales Treasury Corp., 7% Gtd. Exch. Bonds, 4/1/04........ 3,740,000 2,170,234 New Zealand (Government of) Bonds, 10%, 7/15/97 (NZD) (1).......... 1,560,000 985,959 Nobra Euro Brazil (Federal Republic of) Sr. Debs., Banco Do Nordeste, 9%, 11/12/96.................................. 5,430,000 5,178,862 Oesterreich Kontrollbank Sr. Gtd. Nts., 10%, 8/10/99 (ITL) (1)..... 1,000,000,000 624,766 Repackaged Argentina Domestic Securities Trust I, 14.75%, 9/1/02 (5)....................................................... 3,000,000 2,842,500 South African (Republic of) Loan Participation Agreement, Electricity Supply Commission, 7.25%, 10/14/98 (4)(5)............ 8,025,158 7,583,774 Spain (Kingdom of): Bonds, 11.45%, 8/30/98 (ESP) (1)................................. 1,073,500,000 8,677,604 Gtd. Bonds, Bonos y Obligacion del Estadi, 12.25%, 3/25/00 (ESP) (1)............................................................ 200,000,000 1,655,756 Treasury Corp. of Victoria Gtd. Nts., 12.50%, 7/15/00 (AUD) (1).... 2,700,000 2,170,111
9 10 STATEMENT OF INVESTMENTS October 31, 1994 (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount See Note 1 -------------- ------------ FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED) United Kingdom Treasury Nts.: 12%, 11/20/98 (GBP)(1)........................................... $ 2,465,000 $ 4,466,592 12.25%, 3/26/99 (GBP)(1)......................................... 1,500,000 2,753,167 United Mexican States: Gtd. Petroleos Mexicanos, 7.60%, 6/15/00......................... 1,000,000 893,300 Mexico UMS Combined Facility 3, Loan Participation Agreement, 5.6875%, 3/20/00 (4)(5)........................................ 583,617 513,583 New New Money Loan Participation Agreement, Tranche A, 6.0625%, 3/25/05 (4)(5)................................................. 6,480,050 5,301,491 Petacalco Topolobampo Trust: 8.125% Sr. Nts., 12/15/03 (5).................................. 600,000 504,000 8.125% Sr. Sec. Unsub. Nts., 12/15/03.......................... 2,000,000 1,680,000 Treasury Bills: 0%, 1/19/95 (MXP) (1).......................................... 12,385,490 3,494,438 0%, 4/6/95 (MXP) (1)........................................... 7,278,440 1,994,809 0%, 5/4/95 (MXP) (1)........................................... 3,685,070 999,735 Venezuela (Republic of): Debs., 6.75%, 9/20/95 (5)........................................ 3,500,000 3,338,125 Debs., 9%, 5/27/96............................................... 3,000,000 2,823,750 ------------ 93,885,488 FOREIGN CORPORATE BONDS AND NOTES -- 0.9% Bayerische Landesanstalt Sr. Nts., 10.625%, 5/12/00 (ITL) (1)(9)... 1,000,000,000 628,818 General Electric Capital Corp., 10.375% Nts., 6/14/00 (ITL) (1).... 2,440,000,000 1,518,497 PT Polysindo Eka Perkasa Promissory Note, 0%, 10/23/96 (IDR) (1)... 2,000,000,000 650,374 ------------ 2,797,689 PUT OPTIONS PURCHASED -- 0.0% Date/Price European OTC Deutsche Mark/U.S. Dollar.............Nov.2/1.60DEM 21,930,474 1,455 European OTC Deutsche Mark/U.S. Dollar Put.........Nov.8/1.60DEM 10,965,237 727 ------------ 2,182
10 11 STATEMENT OF INVESTMENTS October 31, 1994 (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount See Note 1 -------------- ------------ STRUCTURED INSTRUMENTS -- 5.4% Argentina Local Market Securities Trust, Series 1994-II, 11.30%, 4/1/00 (5)....................................................... $ 2,869,565 $ 2,865,978 Bayerische Landesbank, N.Y. Branch, Mexican Peso Linked Confidence Nts., Girozentrale Branch, 35.50%, 12/30/94 (5)....... 1,500,000 1,470,000 Citibank CD: 17.20%, 12/2/94 (CLP) (1)(9)..................................... 2,074,000,000 5,047,611 16.75%, 12/27/94 (CLP) (1)(9).................................... 1,279,661,812 3,109,518 16.25%, 5/30/95 (CLP) (1)(9)..................................... 462,456,598 1,125,507 10.50%, 7/14/95 (ARA) (1)(9)..................................... 1,500,000 1,500,276 Morgan Guaranty Trust Co. of New York (Singapore Branch) CD, 12.15%, 2/3/95 (9)............................................. 2,113,250,000 899,629 ------------ Total Structured Instruments....................................... 16,018,519 ------------ Total International Sector (Cost $114,000,901)..................... 112,703,878 ------------ MORTGAGE-BACKED SECTOR -- 13.0% AGENCY-FULL FAITH AND CREDIT -- 5.3% Government National Mortgage Assn.: 12%, 11/20/13.................................................... 427,220 473,381 12%, 2/20/15..................................................... 332,119 369,492 12%, 9/20/15..................................................... 350,271 388,812 8%, 5/15/24...................................................... 2,480,667 2,383,746 8%, 5/15/24...................................................... 627,061 602,560 8%, 8/15/24...................................................... 891,209 856,388 8%, 9/15/24...................................................... 11,211,871 10,773,824 ------------ 15,848,203 AGENCY-GOVERNMENT SPONSORED -- 7.7% Federal Home Loan Mortgage Corp: Certificates of Participation: 12%, 5/1/10.................................................... 1,002,360 1,099,779 12%, 10/1/11................................................... 675,390 741,639 12%, 8/1/13.................................................... 46,282 50,823 12%, 8/1/14.................................................... 1,113,976 1,225,540 12%, 10/1/14................................................... 312,237 342,865 12%, 6/1/15.................................................... 468,437 515,617 13%, 6/1/15.................................................... 2,218,916 2,492,930 6.65%, 4/15/21................................................. 4,700,000 4,170,873
11 12 STATEMENT OF INVESTMENTS October 31, 1994 (Continued) Oppenheimer Multi-Sector Income Trust
Market Value Face Amount See Note 1 -------------- ------------ MORTGAGE-BACKED SECTOR (CONTINUED) AGENCY GOVERNMENT SPONSORED (CONTINUED) Interest-Only Stripped Mtg.-Backed Security: Trust 221, 7.50%, 5/25/23 (8).................................. $ 29,195,033 $ 11,249,211 Trust 240, 7%, 9/25/23 (8)..................................... 2,113,469 807,411 ------------ 22,696,688 ------------ Total Mortgage-Backed Sector (Cost $38,158,057).................... 38,544,891 ------------ Total Investments, at Value (Cost $298,494,029).................... 99.5% 294,204,320 Other Assets Net of Liabilities.................................... 0.5 1,453,809 ------ ------------ Net Assets......................................................... 100.0% $295,658,129 ====== ============
(1) Face amount is reported in foreign currency. Currency abbreviations are as follows: ARA -- Argentine Austral AUD -- Australian Dollar CAD -- Canadian Dollar CLP -- Chilean Peso DKK -- Danish Krone ESP -- Spanish Peseta GBP -- British Pound IDR -- Indonesian Rupiah ITL -- Italian Lira MXP -- Mexican Peso NZD -- New Zealand Dollar
(2) Non-Income producing security. (3) Represents a zero coupon bond that converts to a fixed rate of interest at a designated date in the future. (4) Represents the current interest rate for a variable rate security. (5) Restricted security -- see Note 6 of Notes to Financial Statements. (6) Interest or dividend is paid in kind. (7) When-issued security to be delivered and settled after October 31, 1994. (8) Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed-income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). (9) Indexed instrument for which the principal amount due at maturity is affected by the relative value of a foreign currency. See accompanying Notes to Financial Statements. 12 13 STATEMENT OF ASSETS AND LIABILITIES October 31, 1994 Oppenheimer Multi-Sector Income Trust
ASSETS: Investments, at value (cost $298,494,029) -- see accompanying statement................. $294,204,320 Cash.................................................................................... 2,237,788 Receivables: Investments sold...................................................................... 2,793,040 Interest and dividends................................................................ 7,511,808 Other................................................................................... 213,820 ------------ Total assets........................................................................ 306,960,776 ------------ LIABILITIES: Payables and other liabilities: Investments purchased................................................................. 10,077,634 Currency payable...................................................................... 664,138 Dividend payable...................................................................... 245,882 Management and administrative fees -- Note 5.......................................... 92,320 Other................................................................................. 222,673 ------------ Total liabilities................................................................... 11,302,647 ------------ NET ASSETS.............................................................................. $295,658,129 ============ COMPOSITION OF NET ASSETS: Par value of shares of beneficial interest.............................................. $ 290,648 Additional paid-in capital.............................................................. 318,777,657 Overdistributed net investment income................................................... (3,324,611) Accumulated net realized loss from investment, written option and foreign currency transactions.......................................................................... (15,862,506) Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies..................................................... (4,223,059) ------------ NET ASSETS -- Applicable to 29,064,849 shares of beneficial interest outstanding........ $295,658,129 ============ NET ASSET VALUE PER SHARE............................................................... $10.17 ======
See accompanying Notes to Financial Statements. 13 14 STATEMENT OF OPERATIONS For the Year Ended October 31, 1994 Oppenheimer Multi-Sector Income Trust
INVESTMENT INCOME: Interest (net of withholding tax of $234,664)........................................... $ 30,828,264 Dividends............................................................................... 410,652 ------------ Total income................................................................... 31,238,916 ------------ EXPENSES: Management fees -- Note 5............................................................... 1,995,015 Administrative fees -- Note 5........................................................... 613,851 Custodian fees and expenses............................................................. 158,933 Shareholder reports..................................................................... 93,870 Transfer agent and accounting services fees -- Note 5................................... 62,252 Trustees' fees and expenses............................................................. 49,963 Legal and auditing fees................................................................. 40,854 Registration and filing fees............................................................ 30,377 Other................................................................................... 70,449 ------------ Total expenses................................................................. 3,115,564 ------------ NET INVESTMENT INCOME................................................................... 28,123,352 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS WRITTEN AND FOREIGN CURRENCY TRANSACTIONS: Net realized loss from: Investments........................................................................... (4,799,403) Closing of option contracts written -- Note 4......................................... (473,712) Foreign currency transactions......................................................... (2,420,098) ------------ Net realized loss.............................................................. (7,693,213) ------------ Net change in unrealized appreciation or depreciation on: Investments and options written....................................................... (20,087,086) Translation of assets and liabilities denominated in foreign currencies............... 5,018,614 ------------ Net change..................................................................... (15,068,472) ------------ NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS, OPTIONS WRITTEN AND FOREIGN CURRENCY TRANSACTIONS.......................................................................... (22,761,685) ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... $ 5,361,667 ============
See accompanying Notes to Financial Statements. 14 15 STATEMENTS OF CHANGES IN NET ASSETS Oppenheimer Multi-Sector Income Trust
Year Ended October 31, 1994 1993 ------------ --------------- OPERATIONS: Net investment income.................................................. $ 28,123,352 $ 31,130,734 Net realized gain (loss) on investments, options written and foreign currency transactions................................................ (7,693,213) 3,643,426 Net change in unrealized appreciation or depreciation on investments, options written and translation of assets and liabilities denominated in foreign currencies................................................ (15,068,472) 8,632,776 ------------ --------------- Net increase in net assets resulting from operations............... 5,361,667 43,406,936 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment income ($.845 and $1.01 per share, respectively)........................................................ (24,512,388) (29,034,475) Tax return of capital distribution ($.126 per share)................... (3,638,975) -- BENEFICIAL INTEREST TRANSACTIONS: Proceeds from shares issued to shareholders in reinvestment of dividends -- Note 2.................................................. 1,801,323 2,906,011 ------------ --------------- Total increase (decrease) in net assets ........................... (20,988,373) 17,278,472 NET ASSETS: Beginning of year...................................................... 316,646,502 299,368,030 ------------ --------------- End of year (including undistributed (overdistributed) net investment income of $(3,324,611) and $2,722,769, respectively)................. $295,658,129 $316,646,502 ============ ===============
See accompanying Notes to Financial Statements. 15 16 FINANCIAL HIGHLIGHTS Oppenheimer Multi-Sector Income Trust
Year Ended October 31, ------------------------------------------------------------------------------------- 1994 1993 1992 1991 1990 1989 1988(1) -------- -------- -------- -------- -------- -------- -------- PER SHARE OPERATING DATA: Net asset value, beginning of period...... $ 10.96 $ 10.46 $ 10.64 $ 9.88 $ 10.63 $ 11.17 $ 11.16 -------- -------- -------- -------- -------- -------- -------- Income from investment operations: Net investment income.................... 1.00 1.08 1.06 1.11 1.15 1.12 .64 Net realized and unrealized gain (loss) on investments, options written and foreign currency transactions.......... (.82) .43 (.08) .82 (.78) (.52) .05 -------- -------- -------- -------- -------- -------- -------- Total income from investment operations........................... .18 1.51 .98 1.93 .37 .60 .69 -------- -------- -------- -------- -------- -------- -------- Dividends and distributions to shareholders: Dividends from net investment income..... (.84) (1.01) (1.16) (1.07) (1.10) (1.13) (.59) Distributions from net realized gain on investments, options written and foreign currency transactions.......... -- -- -- (.10) (.02) (.01) (.06) Tax return of capital.................... (.13) -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- -------- Total dividends and distributions to shareholders......................... (.97) (1.01) (1.16) (1.17) (1.12) (1.14) (.65) Offering costs........................... -- -- -- -- -- -- (.03) -------- -------- -------- -------- -------- -------- -------- Net asset value, end of period............ $ 10.17 $ 10.96 $ 10.46 $ 10.64 $ 9.88 $ 10.63 $ 11.17 ======== ======== ======== ======== ======== ======== ======== Market value, end of period............... $ 9.50 $ 11.25 $ 11.13 $ 11.13 $ 9.38 $ 10.13 $ 11.50 TOTAL RETURN, AT MARKET VALUE(2).......... (7.46)% 11.10% 11.48% 33.05% 4.09% (1.86)% 6.08% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands)............................... $295,658 $316,647 $299,368 $301,568 $278,511 $299,673 $314,656 Average net assets (in thousands)......... $306,686 $307,244 $303,773 $289,681 $290,533 $307,735 $311,254 Number of shares outstanding at end of period (in thousands).................... 29,065 28,896 28,625 28,347 28,194 28,194 28,162 Ratios to average net assets: Net investment income.................... 9.17% 10.13% 9.95% 10.80% 11.16% 10.28% 9.80%(3) Expenses................................. 1.02% 1.00% 1.11% 1.16%(4) 1.03% 1.03% 1.01%(3) Portfolio turnover rate(5)................ 187.6% 131.3% 95.9% 59.7% 85.7% 162.0% 60.1%
(1) For the period from March 24, 1988 (commencement of operations) to October 31, 1988. (2) Assumes a hypothetical purchase at the current market price on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and a sale at the current market price on the last business day of the period. Total return does not reflect sales charges or brokerage commissions. (3) Annualized. (4) Includes $.01 per share of federal excise tax expense. The expense ratio, exclusive of federal excise tax expense, was 1.10%. (5) The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the year ended October 31, 1994 were $552,455,453 and $528,484,242, respectively. See accompanying Notes to Financial Statements. 16 17 NOTES TO FINANCIAL STATEMENTS Oppenheimer Multi-Sector Income Trust 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Multi-Sector Income Trust (the Trust) is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company. The Trust's investment advisor is Oppenheimer Management Corporation (the Manager). The following is a summary of significant accounting policies consistently followed by the Trust. Investment Valuation -- Portfolio securities are valued at 4:00 p.m. (New York time) on the last day of each week on which day the New York Stock Exchange is open. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or asked price or the last sale price on the prior trading day. Long-term debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Long-term debt securities which cannot be valued by the approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short-term debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. Forward foreign currency contracts are valued at the closing price on the London foreign exchange market on a daily basis. Options are valued based upon the last sale price on the principal exchange on which the option is traded or, in the absence of any transactions that day, the value is based upon the last sale on the prior trading date if it is within the spread between the closing bid and asked prices. If the last sale price is outside the spread, the closing bid or asked price closest to the last reported sale price is used. Security Credit Risk -- The Trust invests in high yield securities, which may be subject to a greater degree of credit risk, greater market fluctuations and risk of loss of income and principal, and may be more sensitive to economic conditions than lower yielding, higher rated fixed income securities. The Trust may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. At October 31, 1994, securities with an aggregate market value of $1,452,000, representing .47% of the Trust's total assets, were in default. Foreign Currency Translation -- The accounting records of the Trust are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The Trust generally enters into forward foreign currency exchange contracts as a hedge, upon the purchase or sale of a security denominated in a foreign currency. In addition, the Trust may enter into such contracts as a hedge against changes in foreign currency exchange rates on portfolio positions. A forward exchange contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. Risks may arise from the potential inability of the counterparty to meet the terms of the contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Trust's results of operations. 17 18 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust Call Options Written -- The Trust may write covered call options. When an option is written, the Trust receives a premium and becomes obligated to sell the underlying security at a fixed price, upon exercise of the option. In writing an option, the Trust bears the market risk of an unfavorable change in the price of the security underlying the written option. Exercise of an option written by the Trust could result in the Trust selling a security at a price different from the current market value. All securities covering call options written are held in escrow by the custodian bank. Repurchase Agreements -- The Trust requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Trust may be delayed or limited. Federal Income Taxes -- The Trust intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income tax provision is required. At October 31, 1994, the Trust had available for federal income tax purposes an unused capital loss carryover of approximately $13,700,000, $6,700,000 of which will expire in 1998, $2,500,000 in 1999, and $4,500,000 in 2002. Trustees' Fees and Expenses -- The Trust has adopted a nonfunded retirement plan for the Trust's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. The accumulated liability for the Trust's projected benefit obligations was $117,741 at October 31, 1994. No payments have been made under the plan. Distributions to Shareholders -- The Trust intends to declare and pay dividends from net investment income monthly. Distributions from net realized gains on investments, if any, will be made at least once each year. Change in Accounting Classification of Distributions to Shareholders -- Effective November 1, 1993, the Trust adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the Trust changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, subsequent to October 31, 1993, amounts have been reclassified to reflect a decrease in paid-in capital of $202,055, a decrease in undistributed net investment income of $6,782,917, and a decrease in undistributed capital loss on investments of $6,984,972. During the year ended October 31, 1994, in accordance with Statement of Position 93-2, paid-in capital was decreased by $3,880,475, undistributed net investment loss was decreased by $763,547 and undistributed capital loss was decreased by $3,116,928. Other -- Investment transactions are accounted for on the date the investments are purchased or sold (trade date) and dividend income is recorded on the ex-dividend date. Discount on securities purchased is amortized over the life of the respective securities, in accordance with federal income tax requirements. Realized gains and losses on investments and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. Dividends in kind are recognized as income on the ex-dividend date, at the current market value of the underlying security. Interest on payment-in-kind debt instruments is accrued as 18 19 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust income at the coupon rate and a market adjustment is made on the ex-date. 2. SHARES OF BENEFICIAL INTEREST The Trust has authorized an unlimited number of $.01 par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
Year Ended October Year Ended October 31, 1994 31, 1993 --------------------- --------------------- Shares Amount Shares Amount -------- ----------- -------- ----------- Net increase from dividends reinvested........ 168,788 $1,801,323 271,391 $2,906,011
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS At October 31, 1994, net unrealized depreciation on investments and options written of $4,289,709 was composed of gross appreciation of $4,685,873, and gross depreciation of $8,975,582. 4. CALL OPTION ACTIVITY Call option activity for the year ended October 31, 1994 was as follows:
Number Amount of Options of Premiums ---------- ----------- Options outstanding at October 31, 1993................ -- -- Options written.................. 415 $ 416,379 Options closed................... (415) (416,379) --- --------- Options outstanding at October 31, 1994................ -- -- === =========
The cost of cancelling options in closing purchase transactions was $890,091 resulting in a net short-term loss of $473,712. 5. MANAGEMENT AND ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH AFFILIATES Management fees paid to the Manager were in accordance with the investment advisory agreement with the Trust which provides for an annual fee of .65% on the Trust's average annual net assets. Mitchell Hutchins Asset Management Inc. serves as the Trust's Administrator. The Trust pays the Administrator an annual fee of .20% of the Trust's average annual net assets. The Manager acts as the accounting agent for the Trust at an annual fee of $24,000, plus out-of-pocket costs and expenses reasonably incurred. Shareholder Financial Services, Inc. (SFSI), a wholly-owned subsidiary of the Manager, is the transfer agent and registrar for the Trust. Fees paid to SFSI are based on the number of accounts and the number of shareholder transactions, plus out-of-pocket costs and expenses. 19 20 NOTES TO FINANCIAL STATEMENTS (Continued) Oppenheimer Multi-Sector Income Trust 6. RESTRICTED SECURITIES The Trust owns securities purchased in private placement transactions, without registration under the Securities Act of 1933 (the Act). The securities are valued under methods approved by the Board of Trustees as reflecting fair value. The Trust intends to invest no more than 10% of its net assets (determined at the time of purchase) in restricted and illiquid securities, excluding securities eligible for resale pursuant to Rule 144A of the Act that are determined to be liquid by the Board of Trustees or by the Manager under Board-approved guidelines. Restricted and illiquid securities, excluding securities eligible for resale pursuant to Rule 144A of the Act amount to $21,729,775 or 7.35% of the Trust's net assets at October 31, 1994. Illiquid and/or restricted securities, including those restricted securities eligible for resale pursuant to Rule 144A of the Act are listed below.
Valuation Per Unit as Security Acquisition Date Cost Per Unit of October 31, 1994 --------------------------------------------------- ---------------- ------------- --------------------- Aftermarket Technology Corp., 12% Sr. Sub. Nts., 8/1/04(1)......................................... 7/25/94 $100.41 $101.50 AMR Corp., $3.00 Cum. Cv. Depositary Shares, Series A(1).............................................. 12/2/93-4/21/94 $ 50.57 $ 42.13 Argentina Local Market Securities Trust, Series 1994-II, 11.30%, 4/1/00(1)........................ 8/25/94 $100.00 $ 99.88 Arizona Charlie's, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00....................................... 11/18/93 $100.00 $ 84.50 Bayerische Landesbank, N.Y. Branch, Mexican Peso Linked Confidence Nts., Girozentrale Branch, 35.50%, 12/30/94.................................. 9/26/94 $100.00 $ 98.00 Becker Gaming, Inc. Wts., Exp. 11/00............... 11/18/93 $ 2.00 $ 2.00 Capitol Queen & Casino, Inc., 12% Fst. Mtg. Nts., Series A, 11/15/00................................ 11/13/94 $ 87.50 $ 85.00 Ecuador (Republic of) Bonds, 0%, 12/29/49(1)....... 10/10/94 $ 60.50 $ 58.88 Foamex LP/JPS Automotive Corp., Units(1)........... 6/22/94 $ 51.39 $ 54.50 Lehman Brothers Holdings, Inc., 5.225% Standard & Poor's 500 Index-Linked Nts., 12/8/94............. 3/30/94 $144.80 $105.33 Morocco (Kingdom of) Loan Participation Agreement: Tranche A, 5.934%, 1/1/09....................... 2/23/94-4/21/94 $ 70.44 $ 70.88 Tranche B, 5.938%, 1/1/04....................... 5/25/94 $ 80.00 $ 75.44 Purity Supreme, Inc. Wts., Exp 8/97................ 7/29/92 $ -- $ .02 Repackaged Argentina Domestic Securities Trust I, 14.75%, 9/1/02(1)................................. 9/19/94-10/19/94 $ 99.86 $ 94.75 Salomon Brothers, Inc., Standard & Poor's 500 Index-Linked Nts.: 5.3125%, 12/13/94............................... 10/7/94 $144.80 $109.00 5.625%, 1/12/95................................. 10/7/94 $155.40 $117.00 South African (Republic of) Loan Participation Agreement, Electricity Supply Commission, 7.25%, 10/14/98.......................................... 9/26/94-9/30/94 $ 94.62 $ 94.50 Terex Corp. Rts., Exp. 7/96(1)..................... 6/29/94 $ 1.49 $ 1.25 Triangle Wire & Cable, Inc. Common Stock........... 1/13/92 $ 9.50 $ 9.00 United Mexican States: Mexico UMS Combined Facility 3, Loan Participation Agreement, 5.6875%, 3/20/00..... 10/25/94 $ 89.00 $ 88.00 New New Money Loan Participation Agreement, Tranche A, 6.0625%, 3/25/05................... 1/13/94 $ 91.75 $ 81.81 Petacalco Topolobampo Trust, 8.125% Sr. Nts., 12/15/03(1)................................... 8/22/94 $ 89.06 $ 84.00 Venezuela (Republic of) Debs., 6.75%, 9/20/95(1)... 4/7/94-5/20/94 $ 94.96 $ 95.38
(1) Transferable under Rule 144A of the Act. PART C OTHER INFORMATION Item 24. Financial Statements and Exhibits. 1. Financial Statements. (a) Statement of Investments - (See Part B, Statement of Additional Information): filed herewith. (b) Statement of Assets and Liabilities - (See Part B, Statement of Additional Information): filed herewith. (c) Statement of Operations - (See Part B, Statement of Additional Information): filed herewith. (d) Statements of Changes in Net Assets - (See Part B, Statement of Additional Information): filed herewith. (e) Financial Highlights - (See Part B, Statement of Additional Information): filed herewith. (f) Notes to Financial Statements - (See Part B, Statement of Additional Information): filed herewith. (g) Independent Auditors' Report - (See Part B, Statement of Additional Information): filed herewith. (h) Independent Auditors' Consent - (See Part B, Statement of Additional Information): filed herewith. 2. Exhibits: (a) (1) Declaration of Trust of Registrant (1) (2) Amendment No. 1 dated as of March 10, 1988 to Declaration of Trust of Registrant (2) (3) Amendment No. 2 dated November 6, 1989 to Declaration of Trust of Registrant: Filed herewith. (b) By-Laws of Registrant (1) (amended by-laws) (c) Inapplicable (d) Specimen certificate for Shares of Beneficial Interest, $.01 par value (2) (e) Inapplicable (f) Inapplicable (g) (1) Investment Advisory Agreement with Oppenheimer Management Corporation dated 10/22/90 - Filed with Post-Effective Amendment No. 5 to Registrant's Registration Statement dated 2/27/91 and refiled herewith pursuant to Item 102 of Regulation S-T. (2) Form of Administration Agreement with Mitchell Hutchins Asset Management Inc. (2) (h) Form of Underwriting Agreement (2) __________________ (1) Filed with Registrant's Registration Statement, 2/2/88, and refiled herewith pursuant to Item 102 of Regulation S-T. (2) Filed with Amendment No. 2 to Registrant's Registration Statement, 3/24/88, and refiled herewith pursuant to Item 102 of Regulation S-T. (i) Retirement Plan for Non-Interested Trustees (adopted by Registrant on 6/7/90) - Filed with Post-Effective Amendment No. 45 to the Registration Statement of Oppenheimer Special Fund (Reg. No. 2-14586) dated 10/21/94, and incorporated herein by reference. (j) Co-Custody Agreement, dated 8/18/92 - Previously filed with Post-Effective Amendment No. 7 to Registrant's Registration Statement, and refiled herewith pursuant to Item 102 of Regulation S-T. (k) Accounting Service Agreement: Filed herewith. (l) Inapplicable (m) Inapplicable (n) Inapplicable (o) Inapplicable (p) Inapplicable (q) Inapplicable (r) Financial Data Schedule - Filed herewith Item 25. Marketing Arrangements. Inapplicable. Item 26. Other Expenses of Issuance and Distribution. Inapplicable. Item 27. Persons Controlled by or under Common Control. None. Item 28. Number of Holders of Securities. (1) (2) Number of Record Holders Title of Class at February 15, 1995 -------------- ------------------------ Shares of Beneficial Interest, 5,727 $.01 par value Item 29. Indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer, or controlling person of the Registrant in connection with the successful defense of any action, suit or proceeding) is asserted against the Registrant by such trustee, officer or controlling person, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act, and will be governed by the final adjudication of such issue. The Registrant hereby undertakes that it will apply the indemnification provision of its By-laws in a manner consistent with Release 11330 of the Securities and Exchange Commission under the Investment Company Act of 1940, so long as the interpretation therein of Sections 17(h) and 17(i) of the Investment Company Act remains in effect. Registrant, in conjunction with the Registrant's Trustees, and other registered management investment companies managed by the Adviser, generally maintains insurance on behalf of any person who is or was a Trustee, officer, employee, or agent of Registrant. However, in no event will Registrant pay that portion of the premium, if any, for insurance to indemnify any such person for any act for which Registrant itself is not permitted to indemnify him. Item 30. 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 "Adviser"). 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 Adviser; 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 Adviser. 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 Adviser 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 Adviser. 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 Adviser'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 Adviser. 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 Adviser 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 Adviser 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 Adviser; 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 Adviser. 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 Adviser; 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 Adviser. 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 Trust 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 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 31. Location of Accounts and Records. All accounts, books and other documents, required to be maintained by the Registrant under Section 31(a) of the Investment Company Act of 1940 and the Rule thereunder are maintained by Oppenheimer Management Corporation at its offices at 3410 South Galena Street, Denver, Colorado 80231. Item 32. Management Services. The Registrant is not a party to any management-related service contract not discussed in Part A of this Registration Statement. Item 33. Undertakings. 1. The Registrant undertakes to suspend the offering of the shares covered hereby until it amends its prospectus if (1) subsequent to the effective date of this Registration Statement, its net asset value per share declines more than 10 percent from its net asset value per share as of the effective date of this Registration Statement, or (2) its net asset value increases to an amount greater than its net proceeds as stated in the prospectus. 2. Inapplicable 3. Inapplicable 4. Inapplicable 5. Inapplicable SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and/or the Investment Company Act of 1940, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and State of New York on the 24th day of February, 1995. OPPENHEIMER MULTI-SECTOR INCOME TRUST By: /s/ Donald W. Spiro* ---------------------------------------- Donald W. Spiro, President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities on the dates indicated: Signatures Title Date - ---------- ----- ---- /s/ Leon Levy* Chairman of the - -------------- Board of Trustees February 24, 1995 Leon Levy /s/ Donald W. Spiro* President, Principal - -------------------- Executive Officer Donald W. Spiro and Trustee February 24, 1995 /s/ George Bowen* Treasurer and - ----------------- Principal Financial George Bowen and Accounting Officer February 24, 1995 /s/ Leo Cherne * Trustee February 24, 1995 - --------------- Leo Cherne /s/ Robert G. Galli* Trustee February 24, 1995 - ------------------- Robert G. Galli /s/ Benjamin Lipstein* Trustee February 24, 1995 - ---------------------- Benjamin Lipstein /s/ Elizabeth B. Moynihan* Trustee February 24, 1995 - -------------------------- Elizabeth B. Moynihan /s/ Kenneth A. Randall * Trustee February 24, 1995 - ----------------------- Kenneth A. Randall /s/ Edward V. Regan * Trustee February 24, 1995 - -------------------- Edward V. Regan /s/ Russell S. Reynolds, Jr.* Trustee February 24, 1995 - ----------------------------- Russell S. Reynolds, Jr. /s/ Sidney M. Robbins * Trustee February 24, 1995 - ---------------------- Sidney M. Robbins /s/ Pauline Trigere * Trustee February 24, 1995 - -------------------- Pauline Trigere /s/ Clayton K. Yeutter* Trustee February 24, 1995 - ----------------------- Clayton K. Yeutter * By /s/ Robert G. Zack -------------------- Robert G. Zack, Attorney-In-Fact OPPENHEIMER MULTI-SECTOR INCOME TRUST Registration No. 811-5473 Post-Effective Amendment No. 8 Index to Exhibits Exhibit No. Description - ----------- ----------- 24(1)(h) Independent Auditor's Consent 24(2)(a)(1) Declaration of Trust of Registrant 24(2)(a)(2) Amendment No. 1 dated as of March 10, 1988 to Declaration of Trust of Registrant 24(2)(a)(3) Amendment No. 2 dated November 6, 1989 to Declaration of Trust of Registrant 24(2)(b)(1) By-Laws (as amended) of Registrant 24(2)(b)(1) Amendment No. 1 to By-Laws 24(2)(d) Specimen Share Certificate 24(2)(g)(1) Investment Advisory Agreement with Oppenheimer Management Corporation dated 10/22/90 24(2)(g)(2) Form of Administration Agreement with Mitchell Hutchins Asset Management Inc. 24(2)(h) Underwriting Agreement 24(2)(j) Co-Custody Agreement 24(2)(k) Accounting Services Agreement 24(2)(r) Financial Data Schedule -- Powers of Attorney EX-23 2 Independent Auditors' Consent The Board of Trustees Oppenheimer Multi-Sector Income Trust: We consent to the use of our report dated November 21, 1994 included herein. /s/ KPMG Peat Marwick LLP ------------------------- KPMG Peat Marwick LLP Denver, Colorado February 23, 1995 EX-3 3 DECLARATION OF TRUST OF OPPENHEIMER MULTI-SECTOR INCOME TRUST Dated: February 22, 1988 _____________________________________ THE DECLARATION OF TRUST of Oppenheimer Multi-Sector Income Trust is made the 22nd day of February, 1988 by the parties signatory hereto, as trustees (such persons, so long as they shall continue in office in accor-dance with the terms of this Declaration of Trust, and all other persons who at the time in question have been duly elected or appointed as trustees in accordance with the provisions of this Declaration of Trust and are then in office, being hereinafter called the "Trustees"). W I T N E S S E T H: WHEREAS, the Trustees desire to form a trust fund under the laws of Massachusetts for the investment and reinvestment of funds contributed thereto; and WHEREAS, it is provided that the beneficial interest in the trust assets be divided into transferable shares of beneficial interest as herein-after provided; NOW, THEREFORE, the Trustees hereby declare that they will hold in trust, all money and property contributed to the trust fund to manage and dispose of the same for the benefit of the holders from time to time of the shares of beneficial interest issued hereunder and subject to the provisions hereof, to wit: ARTICLE I NAME AND DEFINITIONS Section 1.1. Name. The name of the trust created hereby is the "Oppenheimer Multi-Sector Income Trust," and so far as may be practicable the Trustees shall conduct the Trust's activities, execute all documents and sue or be sued under that name, which name (and the word "Trust" wherever herein used) shall refer to the Trustees as trustees, and not as individ-uals, or personally, and shall not refer to the officers, agents, employees or Shareholders of the Trust. Should the Trustees determine that the use of such name is not advisable, they may use such other name for the Trust as they deem proper and the Trust may hold its property and conduct its activi- ties under such other name. Section 1.2. Definitions. Wherever they are used herein, the follow- ing terms have the following respective meanings: (a) "By-Laws" means the By-Laws referred to in Section 3.9 hereof, as from time to time amended. (b) the terms "Commission," "Affiliated Person" and "Interested Person," have the meanings given them in the 1940 Act. (c) "Declaration" means this Declaration of Trust as amended from time to time. Reference in this Declaration of Trust to "Declaration," "hereof," "herein" and "hereunder" shall be deemed to refer to this Declaration rather than the article or section in which such words appear. (d) "Distributor" means the party, other than the Trust, to a contract described in Section 4.3 hereof. (e) "Fundamental Policies" shall mean the investment policies and restrictions set forth in the Registration Statement and designated as fundamental policies therein. (f) "Investment Adviser" means any party, other than the Trust, to a contract described in Section 4.1 hereof. (g) "Majority Shareholder Vote" means the vote of the holders of a majority of Shares, which shall consist of: (i) a majority of Shares presented in person or by proxy and entitled to vote at a meeting of Shareholders at which a quorum, as determined in accordance with the By- Laws, is present or (ii) a majority of Shares issued and outstanding and entitled to vote when action is taken by written consent of Share- holders, unless the action requires the approval of a "majority of the outstanding voting securities" under the 1940 Act, in which case such vote as specified in the 1940 Act shall be required. (h) "1940 Act" means the Investment Company Act of 1940 and the rules and regulations thereunder as amended from time to time. (i) "Person" means and includes individuals, corporations, partnerships, trusts, associations, joint ventures and other entities, whether or not legal entities, and governments and agencies and political subdivisions thereof. (j) "Registration Statement" means the Registration Statement of the Trust under the Securities Act of 1933 as such Registration State- ment may be amended and filed with the Commission from time to time. (k) "Shareholder" means a record owner of outstanding Shares. (l) "Shares" means the units of interest into which the beneficial interest in the Trust shall be divided from time to time and includes fractions of Shares as well as whole Shares. (m) "Transfer Agent" means the party, other than the Trust, to the contract described in Section 4.4 hereof. (n) "Trust" means the Oppenheimer Multi-Sector Income Trust. (o) "Trust Property" means any and all property, real or personal, tangible or intangible, which is owned or held by or for the account of the Trust or the Trustees. (p) "Trustees" means the persons who have signed the Declaration, so long as they shall continue in office in accordance with the terms hereof, and all other persons who may from time to time be duly elected or appointed, qualified and serving as Trustees in accordance with the provisions hereof, and reference herein to a Trustee or the Trustees shall refer to such person or persons in their capacity as trustees hereunder. ARTICLE II TRUSTEES Section 2.1. Number of Trustees. The number of Trustees shall be such number as shall be fixed from time to time by a written instrument signed by a majority of the Trustees, provided, however, that the number of Trustees shall in no event be less than three (3) nor more than fifteen (15). No reduction in the number of Trustees shall have the effect of removing any Trustee from office prior to the expiration of his term unless the Trustee is specifically removed pursuant to Section 2.2 of this Article II at the time of decrease. Section 2.2. Term of Office of Trustees. The Board of Trustees shall be divided into four classes. Within the limits above specified, the number of the Trustees in each class shall be determined by resolution of the Board of Trustees. The term of office of all of the Trustees shall expire on the date of the first annual or special meeting of shareholders following the effective date of the Registration Statement relating to the Shares under the Securi- ties Act of 1933, as amended. The term of office of the first class shall expire on the date of the second annual meeting of shareholders or special meeting in lieu thereof. The term of office of the second class shall expire on the date of the third annual meeting of shareholders or special meeting in lieu therof. The term of office of the third class shall expire on the date of the fourth annual meeting of shareholders or special meeting in lieu thereof. The term of office of the fourth class shall expire on the date of the fifth annual meeting of shareholders or special meeting in lieu thereof. Upon expiration of the term of office of each class as set forth above, the number of Trustees in such class, as determined by the Board of Trustees, shall be elected for a term expiring on the date of the fourth annual meet-ing of shareholders or special meeting in lieu thereof following such expir-ation to succeed the Trustees whose terms of office expire. The Trustees shall be elected at an annual meeting of the shareholders or special meeting in lieu thereof called for that purpose, except as provided in Section 2.3 of this Article and each Trustee elected shall hold office until his succes-sor shall have been elected and shall have qualified; except (a) that any Trustee may resign his trust (without need for prior or subsequent account-ing) by an instrument in writing signed by him or her and delivered to the other Trustees, which shall take effect upon such delivery or upon such later date as is specified therein; (b) that any Trustee may be removed (provided the aggregate number of Trustees after such removal shall not be less than the number required by Section 2.1 hereof) with cause, at any time by writ-ten instrument, signed by the remaining Trustees, specifying the date when such removal shall become effective; and (c) that any Trustee who requests in writing to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees, specifying date of his retirement. Upon the resignation or removal of a Trustee, or his otherwise ceasing to be Trustee, he shall execute and deliver such documents as the remaining Trustees shall require for the purpose of conveying to the Trust or the remaining Trustees any Trust property held in the name of the resigning or removed Trustee. Upon the incapacity or death of any Trustee, his legal representative shall execute and deliver on his behalf such documents as the remaining Trustees shall require as provided in the preceding sentence. Section 2.3. Resignation and Appointment of Trustees. In case of the declination, death, resignation, retirement, removal or inability of any of the Trustees, or in case a vacancy shall, by reason of an increase in number, or for any other reason, exist, the remaining Trustees or, prior to the pub-lic offering of Shares of the Trust, if only one Trustee shall then remain in office, the remaining Trustee, shall fill such vacancy by appointing such other person as they or he, in their or his discretion, shall see fit. Such appointment shall be evidenced by a written instrument signed by a majority of the remaining Trustees or by the remaining Trustee, as the case may be. Any such appointment shall not become effective, however, until the person named in the written instrument or appointment shall have accepted in writ- ing such appointment and agreed in writing to be bound by the terms of the Declaration. Within twelve months of such appointment, the Trustees shall cause notice of such appointment to be mailed to each Shareholder at his ad- dress as recorded on the books of the Trust. An appointment of a Trustee may be made by the Trustees then in office and notice thereof mailed to Shareholders as aforesaid in anticipation of a vacancy to occur by reason of retirement, resignation or increase in number of Trustees effective at a later date, provided that said appointment shall become effective only at or after the effective date of said retirement, resignation or increase in num-ber of Trustees. The power of appointment is subject to the provisions of Section 16(a) of the 1940 Act. Section 2.4. Vacancies. The death, declination, resignation, retirement, removal or incapacity of the Trustees, or any one of them, shall not operate to annul the Trust or to revoke any existing agency created pursuant to the terms of this Declaration. Whenever a vacancy in the number of Trustees shall occur, until such vacancy is filled as provided in Section 2.3, the Trustees in office, regardless of their number, shall have all the duties imposed upon the Trustees by the Declaration. A written instru-ment certifying the existence of such vacancy signed by a majority of the Trustees shall be conclusive evidence of the existence of such vacancy. Section 2.5. Delegation of Power to Other Trustees. Subject to the provisions of the 1940 Act, any Trustee may, by power of attorney, delegate his power for a period not exceeding six (6) months at any one time to any other Trustee or Trustees; provided that in no case shall less than two (2) Trustees personally exercise the powers granted to the Trustees under the Declaration except as herein otherwise expressly provided. ARTICLE III POWERS OF TRUSTEES Section 3.1. General. The Trustees shall have exclusive and absolute control over the Trust Property and over the business of the Trust to the same extent as if the Trustees were the sole owners of the Trust Property and business in their own right, but with such powers of delegation as may be permitted by the Declaration. The Trustees shall have power to conduct the business of the Trust and carry on its operations in any and all of its branches and maintain offices both within and without the Commonwealth of Massachusetts, in any and all states of the United States of America, in the District of Columbia, and in any and all commonwealths, territories, depen- dencies, colonies, possessions, agencies or instrumentalities wheresoever in the world they may be located and to do all such other things and execute all such instruments as they deem necessary, proper or desirable in order to promote the interests of the Trust although such things are not herein spe- cifically mentioned. Any determination as to what is in the interests of the Trust made by the Trustees in good faith shall be conclusive. In con-struing the provisions of the Declaration, the presumption shall be in favor of a grant of power to the Trustees. The enumeration of any specific power herein shall not be construed as limiting the aforesaid power. Such powers of the Trustees may be exercised without order of or resort to any court. Section 3.2. Investments. The Trustees shall have the power to: (a) conduct, operate and carry on the business of an investment company; (b) subscribe for, invest in, reinvest in, purchase or otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute, lend or otherwise deal in or dispose of negotiable or nonegotiable instruments, obligations, evidences of indebtedness, certificates of deposit or indebtedness, commercial paper, repurchase agreements, reverse repurchase agreements, options, commodities, commodity futures contracts and related options, currencies, currency futures and forward contracts, and other securities, investment contracts and other instruments of any kind, including, without limitation, those issued, guaranteed or sponsored by any and all Persons including, without limitation, states, territories and possessions of the United States, the District of Columbia and any of the political subdivisions, agencies or instrumentalities thereof, and by the United States Government or its agencies or instrumentalities, foreign or international governments, political subdivisions, agencies or instrumentalities, or by any bank or savings institution, or by any corporation or organization organized under the laws of the United States or of any state, territory or possession thereof, and of corporations or organizations organized under foreign laws, or in "when issued" contracts for any such securities, or retain Trust assets in cash and from time to time change the investments of the assets of the Trust; and to exercise any and all rights, powers and privileges of ownership or interest in respect of any and all such investments of every kind and description, including, without limitation, the right to consent and otherwise act with respect thereto, with power to designate one or more persons, firms, associations or corporations to exercise any of said rights, powers and privileges in respect of any of said instruments; and the Trustees shall be deemed to have the foregoing powers with respect to any additional securities in which the Trust may invest should the Fundamental Policies be amended. The Trustees shall not be limited to investing in obligations maturing be-fore the possible termination of the Trust, nor shall the Trustees be limi-ted by any law limiting the investments which may be made by fiduciaries. Section 3.3. Legal Title. Legal title to all the Trust Property shall be vested in the Trustees as joint tenants except that the Trustees shall have power to cause legal title to any Trust Property to be held by or in the name of one or more of the Trustees, or in the name of the Trust, or in the name of any other Person as nominee, on such terms as the Trustees may determine, provided that the interest of the Trust therein is appropri-ately protected. The right, title and interest of the Trustees in the Trust Property shall vest automatically in each Person who may hereafter become a Trustee. Upon the resignation, removal or death of a Trustee he shall auto- matically cease to have any right, title or interest in any of the Trust Property, and the right, title and interest of such Trustee in the Trust Property shall vest automatically in the remaining Trustees. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. Section 3.4. Issuance and Repurchase of Securities. The Trustees shall have the power to issue, sell, repurchase, retire, cancel, acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares and, subject to the provisions set forth in Articles VII and VIII hereof, to apply to any such repurchase, retirement, cancellation or acquisition of Shares any funds or property of the Trust, whether capital or surplus or otherwise, to the full extent now or hereafter permitted by the laws of the Commonwealth of Massachusetts governing business corporations. Section 3.5. Borrowing Money; Lending Trust Assets. Subject to the Fundamental Policies, the Trustees shall have power to borrow money or otherwise obtain credit and to secure the same by mortgaging, pledging or otherwise subjecting as security the assets of the Trust, to endorse, guarantee, or undertake the performance of any obligation, contract or engagement of any other Person and to lend Trust assets. Section 3.6. Delegation; Committees. The Trustees shall have power, consistent with their continuing exclusive authority over the management of the Trust and the Trust Property, to delegate from time to time to such of their number or to officers, employees or agents of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Trustees or otherwise as the Trustees may deem expedient. Section 3.7. Collection and Payment. The Trustees shall have power to collect all property due to the Trust; to pay all claims, including taxes, against the Trust Property; to prosecute, defend, compromise or abandon any claims relating to the Trust Property; to foreclose any security interest securing any obligations, by virtue of which any property is owed to the Trust; and to enter into releases, agreements and other instruments. Section 3.8. Expenses. The Trustees shall have the power to incur and pay any expenses which in the opinion of the Trustees are necessary or incidental to carry out any of the purposes of the Declaration, and to pay reasonable compensation from the funds of the Trust to themselves as Trustees. The Trustees shall fix the compensation of all officers, em-ployees and Trustees. Section 3.9 Manner of Acting; By-Laws. Except as otherwise provided herein or in the By-Laws or by any provision of law, any action to be taken by the Trustees may be taken by a majority of the Trustees present at a meeting of Trustees (a quorum being present), including any meeting held by means of a conference telephone circuit or similar communications equipment by means of which all persons participating in the meeting can hear each other, or by written consents of all the Trustees. The Trustees may adopt By-Laws not inconsistent with this Declaration to provide for the conduct of the business of the Trust and may amend or repeal such By-Laws to the extent such power is not reserved to the Shareholders. Section 3.10 Miscellaneous Powers. The Trustees shall have the power to: (a) employ or contract with such Persons as the Trustees may deem desir-able for the transaction of the business of the Trust; (b) enter into joint ventures, partnerships and any other combinations or associations; (c) remove Trustees or fill vacancies in or add to their number, elect and remove such officers and appoint and terminate such agents or employees as they consider appropriate, and appoint from their own number, and terminate, any one or more committees which may exercise some or all of the power and authority of the Trustees as the Trustees may determine; (d) purchase, and pay for out of Trust Property, insurance policies insuring the Shareholders, Trustees, officers, employees, agents, investment advisers, distributors, selected dealers or independent contractors of the Trust against all claims arising by reason of holding any such position or by reason of any action taken or omitted to be taken by any such Person in such capacity, whether or not constituting negligence, or whether or not the Trust would have the power to indemnify such Person against such liability; (e) establish pen-sion, profit- sharing, Share purchase, and other retirement, incentive and benefit plans for any Trustees, officers, employees and agents of the Trust; (f) to the extent permitted by law, indemnify any person with whom the Trust has dealings, including any Investment Adviser, Distributor, Transfer Agent and selected dealers, to such extent as the Trustees shall determine; (g) guarantee indebtedness or contractual obligations of others; (h) determine and change the fiscal year of the Trust and the method by which its accounts shall be kept; and (i) adopt a seal for the Trust, but the absence of such seal shall not impair the validity of any instrument executed on behalf of the Trust. Section 3.11 Principal Transactions. Except in transactions permit-ted by the 1940 Act or any rule or regulation thereunder, or any order of exemption issued by the Commission, or effected to implement the provisions of any agreement to which the Trust is a party, the Trustees shall not, on behalf of the Trust, buy any securities (other than Shares) from or sell any securities (other than Shares) to, or lend any assets of the Trust to, any Trustee or officer of the Trust or any firm of which any such Trustee or officer is a member acting as principal, or have any such dealings with any Investment Adviser, Distributor or Transfer Agent or with any Affiliated Person of such Person; but the Trust or any Series thereof may employ any such Person, or firm or company in which such Person is an Interested Per- son, as broker, legal counsel, registrar, transfer agent, dividend disburs-ing agent or custodian upon customary terms. Section 3.12 Litigation. The Trustees shall have the power to engage in and to prosecute, defend, compromise, abandon, or adjust, by arbitration or otherwise, any actions, suits, proceedings, disputes, claims, and demands relating to the Trust, and out of the assets of the Trust to pay or to sat- isfy any debts, claims or expenses incurred in connection therewith, includ- ing those of litigation, and such power shall include without limitation the power of the Trustees or any appropriate committee thereof, in the exercise of their or its good faith business judgment, to dismiss any action, suit, proceeding, dispute, claim, or demand, derivative or otherwise, brought by any person, including a Shareholder in its own name or the name of the Trust, whether or not the Trust or any of the Trustees may be named individ-ually therein or the subject matter arises by reason of business for or on behalf of the Trust. Section 3.13 Trustees and Officers as Shareholders. No officer or Trustee of the Trust, and no officer or director of the Investment Adviser or the Distributor, and no Investment Adviser or Distributor of the Trust, shall take a short position in the securities issued by the Trust. ARTICLE IV INVESTMENT ADVISER, DISTRIBUTOR, CUSTODIAN AND TRANSFER AGENT Section 4.1. Investment Adviser. Subject to approval by a Majority Shareholder Vote, the Trustees may in their discretion from time to time enter into one or more investment advisory or management contracts whereby the other party or parties to any such contracts shall undertake to furnish the Trust such management, investment advisory, administration, accounting, legal, statistical and research facilities and services, promotional or marketing activities, and such other facilities and services, if any, as the Trustees shall from time to time consider desirable and all upon such terms and conditions as the Trustees may in their discretion determine. Notwith- standing any provisions of the Declaration, the Trustees may authorize the Investment Advisers, or any of them, under any such contracts (subject to such general or specific instructions as the Trustees may from time to time adopt) to effect purchases, sales, loans or exchanges or portfolio securi-ties and other investments of the Trust on behalf of the Trustees or may authorize any officer, employee or Trustee to effect such purchases, sales, loans or exchanges pursuant to recommendations of such Investment Advisers, or any of them (and all without further action by the Trustees). Any such purchases, sale, loans and exchanges shall be deemed to have been authorized by all of the Trustees. Section 4.2. Administrative Services. The Trustees may in their dis- cretion from time to time contract for administrative personnel and services whereby the other party shall agree to provide the Trustees or the Trust ad- ministrative personnel and services to operate the Trust on a daily or other basis, on such terms and conditions as the Trustees may in their discretion determine. Such services may be provided by one or more persons or entities. Section 4.3. Distributor. The Trustees may in their discretion from time to time enter into one or more contracts, providing for the sale of Shares whereby the Trust may either agree to sell the Shares to the other parties to the contracts, or any of them, or appoint any such other party its sales agent for such Shares. In either case, any such contract shall be on such terms and conditions as the Trustees may in their discretion deter-mine not inconsistent with the provisions of this Article IV or the By-Laws, including, without limitation, the provision for the repurchase or sale of shares of the Trust by such other party as principal or as agent of the Trust, and for entry by the other parties to the contracts into selected dealer agreements with registered securities dealers to further the purpose of distribution of the Shares. Section 4.4. Transfer Agent. The Trustees may in their discretion from time to time enter into a transfer agency and shareholder service contract whereby the other party to such contract shall undertake to furnish transfer agency and shareholder services to the Trust. The contract shall have such terms and conditions as the Trustees may in their discretion determine not inconsistent with the Declaration or the By- Laws. Such services may be provided by one or more Persons. Section 4.5. Custodian. The Trustees may appoint or otherwise engage one or more banks or trust companies, each having an aggregate capital, surplus and undivided profits (as shown in its last published report) of at least five million dollars ($5,000,000) to serve as Custodian with authority as its agent, but subject to such restrictions, limitations and other requirements, if any, as may be contained in the By- Laws of the Trust. Section 4.6. Parties to Contract. Any contract of the character des- cribed in Sections 4.1, 4.2, 4.3, 4.4 or 4.5 of this Article IV and any other contract may be entered into with any Person, although one or more of the Trustees or officers of the Trust may be an officer, director, trustee, shareholder, or member of such other party to the contract, and no such con-tract shall be invalidated or rendered voidable by reason of the existence of any such relationship; nor shall any Person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Trust under or by reason of said contract or accountable for any profit rea- lized directly or indirectly therefrom, provided that the contract when en- tered into was not inconsistent with the provisions of this Article IV. The same Person may be the other party to any contracts entered into pursuant to Sections 4.1, 4.2, 4.3, 4.4 or 4.5 above or otherwise, and any individual may be financially interested or otherwise affiliated with Persons who are parties to any or all of the contracts mentioned in this Section 4.6. ARTICLE V LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND OTHERS Section 5.1. No Personal Liability of Shareholders, Trustees, etc. No Shareholder shall be subject to any personal liability whatsoever to any Person in connection with Trust Property or the acts, obligations or affairs of the Trust. No Trustee, officer, employee or agent of the Trust shall be subject to any personal liability whatsoever to any Person, other than the Trust or its Shareholders, in connection with the Trust Property or the af- fairs of the Trust, save only that arising from bad faith, willful misfeas-ance, gross negligence or reckless disregard for his duty to such Person; and all such Persons shall look solely to the Trust Property for satisfac-tion of claims of any nature arising in connection with the affairs of the Trust. If any Shareholder, Trustee, officer, employee or agent, as such, of the Trust is made a party to any suit or proceeding to enforce any such li-ability, he shall not, on account thereof, be held to any personal liability. The Trust shall indemnify and hold each Shareholder harmless from and again-st all claims and liabilities, to which such Shareholder may become subject by reason of his being or having been a Shareholder, other than by reason of his own wrongful act or omission, and shall reimburse such Shareholder for all legal and other expenses reasonably incurred by him in connection with any such claim or liability. The rights accruing to a Shareholder under this Section 5.1 shall not exclude any other right to which such Shareholder may be lawfully entitled, nor shall anything herein contained restrict the right of the Trust to indemnify or reimburse a Shareholder in any appropri-ate situation even though not specifically provided herein. Section 5.2. Non-Liability of Trustees, etc. No Trustee, officer, employee or agent of the Trust shall be liable to the Trust, its Shareholders, or to any Shareholder, Trustee, officer, employee, or agent thereof for any action or failure to act (including without limitation the failure to compel in any way any former or acting Trustee to redress any breach of trust) except for his own bad faith, willful misfeasance, gross negligence or reckless disregard of his or her duties. Section 5.3. Indemnification. (a) The Trustees shall provide for indemnification by the Trust of any person who is, or has been, a Trustee, officer, employee or agent of the Trust against all liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been a Trustee, officer, employee or agent and against amounts paid or incurred by him in the settlement thereof, in such manner as the Trustees may provide from time to time in the By-Laws. (b) The words "claim," "action," "suit," or "proceeding" shall apply to all claims, actions, suits or proceedings (civil, criminal, or other, including appeals), actual or threatened; and the words "liability" and "expenses" shall include, without limitation, attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities. Section 5.4. No Bond Required of Trustees. No Trustee shall be obligated to give any bond or other security for the performance of any of his duties hereunder. Section 5.5. No Duty of Investigation; Notice in Trust Instruments, etc. No purchaser, lender, transfer agent or other Person dealing with the Trustees or any officer, employee or agent of the Trust shall be bound to make any inquiry concerning the validity of any transaction purporting to be made by the Trustees or by said officer, employee or agent or be liable for the application of money or property paid, loaned, or delivered to or on the order of the Trustees or of said officer, employee or agent. Every obliga- tion, contract, instrument, certificate, Share, other security of the Trust or undertaking, and every other act or thing whatsoever executed in connec-tion with the Trust shall be conclusively presumed to have been executed or done by the executors thereof only in their capacity as officers, employees or agents of the Trust. Every written obligation, contract, instrument, certificate, Share, other security of the Trust or undertaking made or issued by the Trustees shall recite that the same is executed or made by them not individually, but as Trustees under the Declaration, and that the obligations of the Trust under any such instrument are not binding upon any of the Trustees or Shareholders, individually, but bind only the Trust Estate, and may contain any further recital which they or he may deem appropriate, but the omission of such recital shall not affect the validity of such obligation, contract instrument, certificate, Share, security or undertaking and shall not operate to bind the Trustees or Shareholders individually. The Trustees may maintain insurance for the protection of the Trust Property, its Shareholders, Trustees, officers, employees and agents in such amount as the Trustees shall deem adequate to cover possible tort liability, and such other insurance as the Trustees in their sole judgment shall deem advisable. Section 5.6. Reliance on Experts, etc. Each Trustee and officer or employee of the Trust shall, in the performance of his duties, be fully and completely justified and protected with regard to any act or any failure to act resulting from reliance in good faith upon the books of account or other records or the Trust, upon an opinion of counsel, or upon reports made to the Trust by any of its officers or employees or by any Investment Adviser, Distributor, Transfer Agent, selected dealers, accountants, appraisers or other experts or consultants selected with reasonable care by the Trustees, officers or employees of the Trust, regardless of whether such counsel or expert may also be a Trustee. ARTICLE VI SHARES OF BENEFICIAL INTEREST Section 6.1. Beneficial Interest. The interest of the beneficiaries hereunder shall be divided into transferable shares of beneficial interest of $.01 par value. The number of such shares of beneficial interest autho-rized hereunder is unlimited. All Shares issued in connection with a dividend in Shares or a split in Shares, shall be fully paid and nonassessable. Section 6.2. Rights of Shareholders. The ownership of the Trust Pro- perty of every description and the right to conduct any business hereinbefore described are vested exclusively in the Trustees, and the Shareholders shall have no interest therein other than the beneficial interest conferred by their Shares, and they shall have no right to call for any partition or division of any property, profits, rights or interests of the Trust nor can they be called upon to assume any losses of the Trust or suffer an assess- ment of any kind by virtue of their ownership of Shares. The Shares shall be personal property giving only the rights in the Declaration specifically set forth. The Shares shall not entitle the holder to preference, preemp-tive, appraisal, conversion or exchange rights. Section 6.3. Trust Only. It is the intention of the Trustees to create only the relationship of Trustee and beneficiary between the Trustees and each Shareholder from time to time. It is not the intention of the Trustees to create a general partnership, limited partnership, joint stock association, corporation, bailment or any form of legal relationship other than a trust. Nothing in the Declaration shall be construed to make the Shareholders, either by themselves or with the Trustees, partners or mem-bers of a joint stock association. Section 6.4. Issuance of Shares. The Trustees, in their descretion may, from time to time without vote of the Shareholders, issue Shares, in addition to the then issued and outstanding Shares and Shares held in the treasury, to such party or parties and for such amount and type of consider- ation, including cash or property, at such time or times and on such terms as the Trustees may deem best, and may in such manner acquire other assets (including the acquisition of assets subject to, and in connection with the assumption of liabilities) and businesses. In connection with any issuance of Shares, the Trustees may issue fractional Shares. The Trustees may from time to time divide or combine the Shares into a greater or lesser number without thereby changing the proportionate beneficial interests in the Trust. Contributions to the Trust may be accepted for whole Shares and/or 1/1,000ths of a Share or integral multiples thereof. Section 6.5. Register of Shares. A register shall be kept in respect of the Trust at the principal office of the Trust or at an office of the Transfer Agent which shall contain the names and addresses of the Share- holders and the number of Shares held by them respectively and a record of all transfers thereof. Such register may be in written form or any other form capable of being converted into written form within a reasonable time for visual inspection. Such register shall be conclusive as to who are the holders of the Shares and who shall be entitled to receive dividends or distributions or otherwise to exercise or enjoy the rights of Shareholders. No Shareholder shall be entitled to receive payment of any dividend or dis- tribution, nor to have notice given to him as herein or in the By-Laws pro- vided, until he has given his address to the Transfer Agent or such other officer or agent of the Trustees as shall keep the said register for entry thereon. The Trustees, in their discretion, may authorize the issuance of Share certificates and promulgate appropriate rules and regulations as to their use. Section 6.6. Transfer of Shares. Shares shall be transferable on the records of the Trust only by the record holder thereof or by his agent thereunto duly authorized in writing, upon delivery to the Trustees or the Trans-fer Agent of a duly executed instrument of transfer, together with such evi-dence of the genuineness of each such execution and authorization and of other matters as may reasonably be required. Upon such delivery the trans-fer shall be recorded on the register of the Trust. Until such record is made, the Shareholder of record shall be deemed to be the holder of such Shares for all purposes hereunder and neither the Trustees nor any Transfer Agent or registrar nor any officer, employee or agent of the Trust shall be affected by any notice of the proposed transfer. Any person becoming entitled to any Shares in consequence of the death, bankruptcy, or incompetence of any Shareholder, or otherwise by operation of law, shall be recorded on the register of Shares as the holder of such Shares upon production of the proper evidence thereof to the Trustees or the Transfer Agent, but until such record is made, the Shareholder of record shall be deemed to be the holder of such Shares for all purposes hereunder and neither the Trustees nor any Transfer Agent or registrar nor any officer or agent of the Trust shall be affected by any notice of such death, bank-ruptcy or incompetence, or other operation of law, except as may otherwise be provided by the laws of the Commonwealth of Massachusetts. Section 6.7. Notices. Any and all notices to which any Shareholder may be entitled and any and all communications shall be deemed duly served or given if mailed, postage prepaid, addressed to any Shareholder of record at his last known address as recorded on the register of the Trust. Annual reports and proxy statements need not be sent to a shareholder if: (i) an annual report and proxy statement for two consecutive annual meetings, or ii) all, and at least two, checks (if sent by first class mail) in payment of dividends or interest and shares during a twelve month period have been mailed to such shareholder's address and have been returned undelivered. However, delivery of such annual reports and proxy statements shall resume once a Shareholder's current address is determined. Section 6.8. Voting Powers. The Shareholders shall have power to vote only (i) for the election of Trustees as provided in Section 2.2 here-of, (ii) for the removal of Trustees as provided in Section 2.2 hereof, (iii) with respect to any investment advisory or management contract as pro-vided in Section 4.1, (iv) with respect to termination of the Trust as pro-vided in Section 8.2, (v) with respect to any amendment of the Declaration to the extent and as provided in Section 8.3, (vi) with respect to any mer-ger, consolidation, conversion or sale of assets as provided in Sections 8.4, 8.5 and 8.6, (vii) with respect to incorporation or reorganization of the Trust to the extent and as provided in Section 8.5, (viii) to the same extent as the stockholders of a Massachusetts business corporation as to whether or not a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders and (ix) with respect to such additional matters relating to the Trust as may be required by law, the Declaration, the By-Laws or any registration of the Trust with the Commission (or any successor agency) or any state, or as and when the Trustees may consider necessary or desirable. Each whole Share shall be entitled to one vote as to any matter on which it is entitled to vote and each fractional Share shall be entitled to a proportionate fractional vote, except that Shares held in the treasury of the Trust as of the record date, as determined in accordance with the By- Laws, shall not be voted. There shall be no cumulative voting in the election of Trustees. Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust. Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, the Declaration or the By-Laws to be taken by Shareholders. The By-Laws may include further provisions for Shareholders' votes and meetings and related matters. ARTICLE VII DETERMINATION OF NET ASSET VALUE, NET INCOME AND DISTRIBUTIONS Section 7.1. Net Asset Value. The net asset value of each outstanding Share of the Trust shall be determined on such days and at such time or times as the Trustees may determine. The method of determination of net asset value shall be determined by the Trustees and shall be as set forth in the Registration Statement. The power and duty to make the calculations may be delegated by the Trustees to any Investment Adviser, the Custodian, the Transfer Agent or such other person as the Trustees by resolution may deter-mine. The Trustees may suspend the determination of net asset value to the extent permitted by the 1940 Act. Section 7.2. Distributions to Shareholders. The Trustees shall from time to time distribute ratably among the Shareholders of the Trust such proportion of the net income, earnings, profits, gains, surplus (including paidin surplus), capital, or assets of the Trust held by the Trustees as they may deem proper. Such distribution may be made in cash or property (including without limitation any type of obligations of the Trust or any assets thereof), and the Trustees may distribute ratably among the Shareholders of the Trust additional Shares issuable hereunder in such manner, at such times, on such terms as the Trustees may deem proper. Such distri- butions may be among the Shareholders of record (determined in accordance with the Registration Statement) of the Trust at the time of declaring a distribution or among the Shareholders of record of the Trust at such later date as the Trustees shall determine. The Trustees may always retain from the net income, earnings, profits or gains of the Trust such amount as they may deem necessary to pay the debts or expenses of the Trust or to meet ob- ligations of the Trust, or as they may deem desirable to use in the conduct of its affairs or to retain for future requirements or extensions of the business. The Trustees may adopt and offer to Shareholders of the Trust such dividend reinvestment plans as the Trustees deem appropriate. Inasmuch as the computation of net income and gains for Federal income tax purposes may vary from the computation thereof on the books, the above provisions shall be interpreted to give the Trustees the power in their discretion to distribute for any fiscal year as ordinary dividends and as capital gains distributions, respectively, additional amounts sufficient to enable the Trust to avoid or reduce liability for taxes. Section 7.3. Determination of Net Income. The Trustees shall have the power to determine the net income of the Trust and from time to time to distribute such net income ratably among the Shareholders as dividends in cash or additional Shares issuable hereunder. The determination of net income and the resultant declaration of dividends shall be as set forth in the Registration Statement. The Trustees or their delegates shall have full discretion to determine whether any cash or property received by the Trust shall be treated as income or as principal and whether any item of expense shall be charged to the income or the principal account, and their determi-nation made in good faith shall be conclusive upon the Shareholders. In the case of stock dividends received, the Trustees shall have full discretion to determine, in the light of the particular circumstances, how much, if any, of the value thereof shall be treated as income, the balance, if any, to be treated as principal. Section 7.4. Power to Modify Foregoing Procedures. Notwithstanding any of the foregoing provisions of this Article VII, the Trustees may prescribe, in their absolute discretion, such other bases and times for determining the per Share net asset value of the Shares or net income, or the declaration and payment of dividends and distributions, as they may deem necessary or desirable to enable the Trust to comply with any provision of the 1940 Act, or any rule or regulation thereunder, or any order of exemp- tion issued by the Commission, all as in effect now or hereafter amended or modified. ARTICLE VIII DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC. Section 8.1. Duration. The Trust shall continue without limitation of time but subject to the provision of this Article VIII. Section 8.2. Termination of Trust. (a) The Trust may be terminated (i) by the affirmative vote of the holders of not less than two-thirds (66-2/3%) of the Shares outstanding and entitled to vote at any meeting of Shareholders of the Trust except that a Majority Shareholder Vote shall be sufficient if termination of the Trust has been recommended by two-thirds of the Trustees, or (ii) by an instrument in writing, without a meeting, signed by a majority of the Trustees and consented to by the holders of not less than two-thirds of such Shares of the Trust. Upon the termination of the Trust: (i) The Trust shall carry on no business except for the purpose of winding up its affairs. (ii) The Trustees shall proceed to wind up the affairs of the Trust and all of the powers of the Trustees under this Declaration shall continue until the affairs of the Trust shall have been wound up, including the power to fulfill or discharge the contracts of the Trust, collect its assets, sell, convey, assign, exchange, transfer or otherwise dispose of all or any part of the remaining Trust Property to one or more persons at public or private sale for consideration which may consist in whole or in part of cash, securities or other property of any kind, discharge or pay its liabilities, and to do all other acts appropriate to liquidate its business; provided that any sale, conveyance, assignment, exchange, transfer or other disposition of all or substantially all the Trust Property shall require Shereholder approval in accordance with Section 8.4 hereof. (iii) After paying or adequately providing for the payment of all liabilities, and upon receipt of such releases, indemnities and refunding agreements, as they deem necessary for their protection, the Trustees may distribute the remaining Trust Property, in cash or in kind or partly each, among the Shareholders of the Trust according to their respective rights. (b) After termination of the Trust and distribution to the Shareholders as herein provied, a majority of the Trustees shall execute and lodge among the records of the Trust an instrument in writing setting forth the fact of such termination, and the Trustees shall thereupon be discharged from all further liabilities and duties with respect to the Trust, and the rights and interests of all Shareholders of the Trust shall thereupon cease. Section 8.3. Amendment Procedure. (a) Except as provided in paragraph (c) of this Section 8.3, this Declaration may be amended by a Majority Shareholder Vote, at a meeting of Shareholders, or by written consent without a meeting. The Trustees may also amend this Declaration without the vote or consent of Shareholders (i) to change the name of the Trust, (ii) to supply any omission, or cure, correct or supplement any ambiguous, defective or inconsistent provision hereof, (iii) if they deem it necessary to conform this Declaration to the requirements of applicable federal or state laws or regulations or the requirements of the Internal Revenue Code, or to eliminate or reduce any federal, state or local taxes which are or may be payable by the Trust or the Shareholders, but the Trustees shall not be liable for failing to do so, or (iv) for any other purpose which does not adversely affect the rights of any Shareholder with respect to which the amendment is or purports to be applicable. (b) No amendment may be made under this Section 8.3 which would change any rights with respect to any Shares of the Trust by reducing the amount payable thereon upon liquidation of the Trust or by diminishing or eliminating any voting rights pertaining thereto, except with the vote or consent of the holders of two-thirds of the Shares of the Trust outstanding and entitled to vote. Nothing contained in this Declaration shall permit the amendment of this Declaration to impair the exemption from personal liability of the Shareholders, Trustees, officers, employees and agents of the Trust or to permit assessments upon Shareholders set forth in Section 5.1 above. (c) No amendment may be made under this Section 8.3 which shall amend, alter, change or repeal any of the provisions of Sections 8.3, 8.4, 8.6 and 8.7 unless the amendment effecting such amendment, alteration, change or repeal shall receive the affirmative vote or consent of that proportion of the Shares outstanding and entitled to vote as would be necessary to approve the transaction or action set forth in that respective section under circumstances where the Board of Trustees has not recommended approval of the transaction or action. Such affirmative vote or consent shall be in addition to the vote or consent of the holders of Shares otherwise required by law or by the terms of any class or series of preferred stock, whether now or hereafter authorized, or any agreement between the Trust and any national securities exchange. (d) A certificate signed by a majority of the Trustees or by the Secretary or any Assistant Secretary of the Trust, setting forth an amendment and reciting that it was duly adopted by the Shareholders or by the Trustees as aforesaid or a copy of the Declaration, as amended, and executed by a majority of the Trustees or certified by the Secretary or any Assistant Secretary of the Trust, shall be conclusive evidence of such amendment when lodged among the records of the Trust. Unless such amendment or such certificate sets forth some later time for the effectiveness of such amendment, such amendment shall be effective when lodged among the records of the Trust. Notwithstanding any other provision hereof, until such time as a Registration Statement under the Securities Act of 1933, as amended, covering the first public offering of securities of the Trust shall have become effective, this Declaration may be terminated or amended in any respect by the affirmative vote of a majority of the Trustees or by an instrument signed by a majority of the Trustees. Section 8.4. Merger, Consolidation and Sale of Assets. The Trust may merge or consolidate with any other corporation, association, trust or other organization or may sell, lease or exchange all or substantially all of the Trust Property, including its good will, upon such terms and conditions and for such consideration when and as authorized, at any meeting of Shareholders called for the purpose, by the affirmative vote of the holders of not less than two-thirds (66-2/3%) of the Shares of the Trust outstanding and entitled to vote, or by an instrument or instruments in writing without a meeting, consented to by the holders of not less than two-thirds (66-2/3%) of such Shares; provided, however, that, if such merger, consolidation, sale, lease or exchange is recommended by two- thirds of the Trustees, a Ma-jority Shareholder Vote shall be sufficient authorization; and any such merger, consolidation, sale, lease or exchange shall be deemed for all purposes to have been accomplished under and pursuant to the laws of the Commonwealth of Massachusetts. Nothing contained herein shall be construed as requiring approval of shareholders for any sale of assets in the ordinary course of business of the Trust. Section 8.5. Incorporation and Reorganization. With approval of a Majority Shareholder Vote, the Trustees may cause to be organized or assist in organizing a corporation or corporations under the laws of any jurisdic-tion or any other trust, partnership, association or other organization to take over all of the Trust Property or to carry on any business in which the Trust shall directly or indirectly have any interest, and to sell, convey and transfer the Trust Property to any such corporation, trust, partnership, association or organization in exchange for the shares or securities thereof or otherwise, and to lend money to, subscribe for the shares or securities of, and enter into any contracts with any such corporation, trust, partnership, association or organization in which the Trust holds or is about to acquire shares or any other interest. Subject to Section 8.4 hereof, the Trustees may also cause a merger or consolidation between the Trust or any successor thereto and any such corporation, trust, partnership, association or other organization if and to the extent permitted by law, as provided under the law then in effect. Nothing contained herein shall be construed as requiring approval of Shareholders for the Trustees to organize or assist in organizing one or more corporations, trusts, partnerships, associations or other organizations and selling, conveying or transferring a portion of the Trust Property to such organization or entities. Section 8.6. Conversion. The Trust may be converted at any time from a "closed-end company" to an "open-end company" as those terms are defined by the 1940 Act, upon the approval of such a proposal, together with the necessary amendments to the Declaration of Trust to permit such a conversion, by the holders of not less than two-thirds (66-2/3%) of the Trust's outstand-ing Shares entitled to vote, except that if such proposal is recommended by two-thirds of the total number of Trustees then in office such proposal may be adopted by a Majority Shareholder Vote. Commencing with the fiscal year beginning November 1, 1993, and each fiscal year thereafter, if (a) Shares of the Trust have traded on the principal securities exchange where listed at an average discount of more than ten percent (10%), determined on the basis of the discount as of the end of the last trading day in each week during the period of twelve (12) calendar weeks preceding the beginning of each such fiscal year, and (b) during the fiscal year subsequent to such discounted valuation the Trust receives written requests from the holders of 10 percent (10%) or more of the Trust's outstanding shares that a propo-sal to convert the Trust to an open-end company be submitted to the share-holders, the Trustees within six months will submit to the shareholders a proposal to convert the Trust from a "closed-end company" to an "open-end company," together with the necessary amendments to this Declaration of Trust to permit such a conversion. Upon the adoption of such proposal and related amendments by not less than two-thirds (66-2/3%) of the Trust's outstanding Shares entitled to vote, the Trust shall upon complying with any requirements of the 1940 Act and state law, become an "open-end" investment company. Such affirmative vote or consent shall be in addition to the vote or consent of the holders of the Shares otherwise required by law, or any agreement between the Trust and any national securities exchange. Section 8.7. Certain Transactions. Notwithstanding any other provision of this Declaration and subject to the exceptions provided in pargraph (d) of this Section, the types of transactions described in paragraph (c) of this Section shall require the affirmative vote or consent of the holders of eighty percent (80%) of the Shares outstanding and entitled to vote, when a Principal Shareholder (as defined in paragraph (b) of this Section) is a party to the transaction. Such affirmative vote or consent shall be in addition to the vote or consent of the holders of Shares otherwise required by law or by the terms of any class of series of preferred stock, whether now or hereafter authorized, or any agreement between the Trust and any national securities exchange. (b) The term "Principal Shareholder" shall mean any corporation, person or other entity which is the beneficial owner, directly or indirectly, of more than five percent (5%) of the outstanding Shares and shall include any affiliate or associate, as such terms are defined in clause (ii) below, of a Principal Shareholder. For the purposes of this Section, in addition to the Shares which a corporation, person or other entity beneficially owns directly, (a) any corporation, person or other entity shall be deemed to be the beneficial owner of any Shares (i) which it has the right to acquire pursuant to any agreement or upon exercise of conversion rights or warrants, or otherwise (but excluding share options granted by the Trust) or (ii) which are beneficially owned, directly or indirctly (including Shares deemed owned through application of clause (i) above), by any other corporation, person or entity with which its "affiliate" or "associate" (as defined below) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of Shares, or which is its "affiliate" or "associate" as those terms are defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, and (b) the outstanding Shares shall include Shares deemed owned through application of clauses (i) and (ii) above but shall not include any other Shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights or warrants, or otherwise. (c) This Section shall apply to the following transactions: (i) The merger or consolidation of the Trust or any subsidiary of the Trust with or into any Principal Shareholder. (ii) The issuance of any securities of the Trust to any Principal Shareholder for cash. (iii) The sale, lease or exchange of all or any substantial part of the assets of the Trust to any Principal Shareholder (except assets having an aggregate fair market value of less than $1,000,000, aggregating for the purpose of such computation all assets sold, leased or exchanged in any series of similar transactions within a twelve-month period.) (iv) The sale, lease or exchange to the Trust or any subsidiary thereof, in exchange for securities of the Trust of any assets of any Principal Shareholder (except assets having an aggregate fair market value of less than $1,000,000, aggregating for the purposes of such computation all assets sold, leased or exchanged in any series of similar transactions within a twelve-month period). (d) The provisions of this Section shall not be applicable to (i) any of the transactions described in paragraph (c) of this Section if two-thirds of the Board of Trustees of the Trust shall by resolution have approved a memorandum of understanding with such Principal Shareholder with respect to and substantially consistent with such transaction, or (ii) any such transaction with any corporation of which a majority of the outstanding shares of all classes of stock normally entitled to vote in elections of direcors is owned of record or beneficially by the Trust and its subsidiaries. (e) The Board of Trustees shall have the power and duty to determine for the purposes of this Section on the basis of information known to the Trust, whether (i) a corporation, person or entity beneficially owns more than five percent (5%) of the outstanding Shares, (ii) a corporation, person or entity is an "affiliate " or "associate" (as defined above) of another, (iii) the assets being acquired or leased to or by the Trust or any subsidiary thereof, constitute a substantial part of the assets of the Trust and have an aggregate fair market value of less than $1,000,000, and (iv) the memorandum of understanding referred to in paragraph (d) hereof is substantially consistent with the transaction covered thereby. Any such determination shall be conclusive and binding for all purposes of this Section. ARTICLE IX REPORTS TO SHAREHOLDERS The Trustees shall at least semi-annually submit or cause the officers of the Trust to submit to the Shareholders a written financial report of the Trust, including financial statements which shall at least annually be certified by independent public accountants. ARTICLE X MISCELLANEOUS Section 10.1. Filing. This Declaration and any amendment hereto shall be filed in the office of the Secretary of the Commonwealth of Massa-chusetts and in such other places as may be required under the laws of Massachusetts and may also be filed or recorded in such other places as the Trustees deem appropriate. Each amendment so filed shall be accompanied by a certificate signed and acknowledged by a Trustee or by the Secretary or any Assistant Secretary of the Trust stating that such action was duly taken in a manner provided herein. A restated Declaration, integrating into a single instrument all of the provisions of the Declaration which are then in effect and operative, may be executed from time to time by a majority of the Trustees and shall, upon filing with the Secretary of the Commonwealth of Massachusetts, be conclusive evidence of all amendments contained therein and may thereafter be referred to in lieu of the original Declaration and the various amendments thereto. Section 10.2. Resident Agent. CT Corporation System, 2 Oliver Street, Boston, Massachusetts 02109 is the resident agent of the Trust in the Commonwealth of Masschusetts. Section 10.3. Governing Law. This Declaration is executed by the Trustees and delivered in the Commonwealth of Massachusetts and with reference to the laws thereof and the rights of all parties and the validity and construction of every provision hereof shall be subject to and construed according to the laws of said State. Section 10.4. Organizational Expenses. In the event that any person advances the organizational expenses of the Trust, such advances shall become an obligation of the Trust, subject to such terms and conditions as may be fixed by, and on a date fixed by, or determined with criteria fixed by the Board of Trustees, to be amortized over a period or periods to be fixed by the Board. Section 10.5. Counterparts. The Declaration may be simultaneously executed in several counterparts, each of which shall be deemed to be an original, and such counterparts, together, shall constitute one and the same instrument, which shall be sufficiently evidenced by any such original counterpart. Section 10.6. Reliance by Third Parties. Any certificate executed by an individual who, according to the records of the Trust, appears to be a Trustee hereunder, or Secretary or Assistant Secretary of the Trust, certifying to: (a) the number or identity of Trustees or Shareholders, (b) the due authorization of the execution of any instrument or writing, (c) the form of any vote passed at a meeting of Trustees or Shareholders, (d) the fact that the number of Trustees or Shareholders present at any meeting or executing any written instrument satisfies the requirements of this Declaration, (e) the form of any By-Laws adopted by or the identity of any officers elected by the Trustees, or (f) the existence of any fact or facts which in any manner relate to the affairs of the Trust, shall be conclusive evidence as to the matters so certified in favor of any Person dealing with the Trustees and their successors. Section 10.7. Provisions in Conflict with Law or Regulations. (a) The provisions of the Declaration are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with the 1940 Act, the regulated investment company provisions of the Internal Revenue Code or with other applicable laws and regulations, the conflicting provisions shall be deemed superseded by such law or regulation to the extent necessary to eliminate such conflict; provided, however, that such determination shall not affect any of the remaining provisions of the Declaration or render invalid or improper any action taken or omitted prior to such determination. (b) If any provision of the Declaration shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall pertain only to such provision in such jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any other provision of the Declaration in any jurisdiction. Section 10.8. Use of the name "Oppenheimer". The name "Oppenheimer" included in the name of the Trust shall be used pursuant to a royalty-free, non-exclusive license from Oppenheimer Management Corporation, incidental to and as part of an advisory, management or supervisory contract which may be entered into by the Trust with Oppenheimer Management Corporation. The license may be terminated by Oppenheimer Management Corporation upon termi-nation of such advisory, management or supervisory contract or without cause upon 60 days' written notice, in which case the Trust shall have no 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 accordingly. IN WITNESS WHEREOF, the undersigned, the Trustees of the Trust, have executed this instrument this 22nd day of February, 1988. __________________________ Robert G. Zack, as Trustee and not Individually Two World Trade Center, New York, N.Y. 10048 ___________________________ Mitchell J. Lindauer, as Trustee and not Individually Two World Trade Center New York, N.Y. 10048 ___________________________ Katherine P. Feld, as Trustee and not Individually Two World Trade Center New York, N.Y. 10048 STATE OF NEW YORK ) ) :ss. COUNTY OF NEW YORK) On this 22nd day of February, 1988, ROBERT G. ZACK, MITCHELL J. LINDAUER and KATHERINE P. FELD, known to me and known to be the individuals described in and who executed the foregoing instrument, personally appeared before me and they severally acknowledged the foregoing instrument to be their free act and deed. ________________________________ Notary Public IN WITNESS WHEREOF, the undersigned has executed this this instrument this 22nd day of February, 1988. /s/ Pamela J. Wilson --------------------- Pamela J. Wilson, as Trustee and not Individually One Federal Street, Boston, MA 02110 COMMONWEALTH OF MASSACHUSETTS Suffolk, SS. Boston, MA Then personally appeared the above-named Pamela J. Wilson who acknowl-edged the foregoing instrument to be her free act and deed. before me. _______________________ Notary Public My commission expires: - ----------------------- orgzn\680#2 EX-3 4 OPPENHEIMER MULTI-SECTOR INCOME TRUST DECLARATION OF TRUST AMENDMENT NO. 1 Dated as of March 10, 1988 The undersigned constituting all of the Trustees of Oppenheimer Multi-Sector Income Trust (the "Trust") acting pursuant to Section 8.3 of the Trust's Declaration of Trust dated February 22, 1988 (the "DOT") hereby amend the DOT as follows: Article II of the DOT is hereby amended by adding the following: Section 2.6. Removal of Trustees. The Trust shall comply with the provisions of Section 16(c) of the 1940 Act as though applicable to the Trust, and with interpretations thereof by the Commission staff, insofar as such provisions and interpretations provide for the removal of trustees of common law trusts and the calling of shareholder meetings for such purpose; provided, however, that 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) or a staff interpretation thereof and, if exemptive order(s) or interpretation(s) are issued or provided by the Commission or its staff, such order(s) or interpretation(s) shall be deemed part of Section 16(c) for the purposes of applying this Section 2.6. Section 5.1 of the DOT is hereby amended and restated as follows: Section 5.1. No Personal Liability of Shareholders, Trustees, etc. No Shareholder shall be subject to any personal liability whatsoever to any Person in connection with Trust Property or the acts, obligations or affairs of the Trust. 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. Shareholder liability for the acts and obligations of the Trust is hereby expressly disclaimed. 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). No Trustee, officer, employee or agent of the Trust shall be subject to any personal liability whatsoever to any Person, other than the Trust or its Shareholders, in connection with the Trust Property or the affairs of the Trust, save only that arising from bad faith, willful misfeasance, gross negligence or reckless disregard for his duty to such Person; and all such Persons shall look solely to the Trust Property for satisfaction of claims of any nature arising in connection with the affairs of the Trust. If any Shareholder, Trustee, officer, employee or agent, as such, of the Trust is made a party to any suit or proceeding to enforce any such liability, he shall not, on account thereof, be held to any personal liability. The Trust shall indemnify and hold each Shareholder harmless from and against all claims and liabilities, to which such Shareholder may become subject by reason of his own wrongful act or omission, and shall reimburse such Shareholder for all legal and other expenses reasonably incurred by him in connection with any such claim or liability. The rights accruing to a Shareholder under this Section 5.1 shall not exclude any other right to which such Shareholder may be lawfully entitled, nor shall anything herein contained restrict the right of the Trust to indemnify or reimburse a Shareholder in any appropriate situation even though not specifically provided herein. IN WITNESS WHEREOF, the undersigned have executed this instrument as of this 10th day of March, 1988. - ------------------------- --------------------------- Leo Cherne Benjamin Lipstein 50 East 79th Street 333 East 57th Street New York, NY 10021 New York, NY 10022 - ------------------------- ---------------------------- Edmund T. Delaney Donald W. Spiro 5 Gorham Road 562 Greenhill Road Chester, CT 06412 Kinnelon, NJ 07405 - ------------------------- ----------------------------- Leon Levy Pauline Trigere One Sutton Place South 525 Park Avenue New York, NY 10022 New York, NY 10081 - -------------------------- ------------------------------ Sidney M. Robbins Kenneth A. Randall 50 Overlook Road 6 Whittaker's Mill Ossining, NY 10562 Williamsburg, VA 23185 ORGZN\680#5 EX-3 5 OPPENHEIMER MULTI-SECTOR INCOME TRUST DECLARATION OF TRUST AMENDMENT NO. 2 Dated: November 6, 1989 The undersigned constituting all of the Trustees of Oppenheimer Multi- Sector Income Trust (the "Trust") acting pursuant to Section 8.3 of the Trust's Declaration of Trust dated 10/5/88 (the "DOT") hereby amend the DOT as follows: Section 1.1 of the DOT is hereby amended and restated as follows: Section 1.1. Name. The name of the trust created hereby is the "Oppenheimer Multi-Sector Income Trust," having its principal place of business at Two World Trade Center, Suite 3400, New York, New York 10048, and so far as may be practicable the Trustees shall conduct the Trust's activities, execute all documents, and sue or be sued under that name, which name (and the word "Trust" wherever herein used) shall refer to the Trustees as trustees, and not as individuals, or personally, and shall not refer to the officers, agents, employees or Shareholders of the Trust. Should the Trustee determine that the use of such name is not advisable, they may use such other name for the Trust as they deem proper and the Trust may hold its property and conduct its activities under such other name. C.T. Corporation System, 2 Oliver Street, Boston, Massachusetts 02109, is hereby appointed as the Trust's resident agent in the Commonwealth of Massachusetts. Section 2.2 of the DOT is hereby amended and reinstated as follows: Section 2.2. Term of Office of Trustees. The Board of Trustees shall be divided into three classes. Within the limits above specified, the number of the Trustees in each class shall be determined by resolution of the Board of Trustees. The term of office of all of the Trustees shall expire on the date of the second annual meeting of shareholders or special meeting in lieu thereof. The term of office of the first class shall expire on the date of the third annual meeting of shareholders or special meeting in lieu thereof. The term of office of the second class shall expire on the date of the fourth annual meeting of shareholders or special meeting in lieu thereof. The term of office of the third class shall expire on the date of the fifth annual meeting of shareholders or special meeting in lieu thereof. Upon expiration of the term of office of each class as set forth above, the number of Trustees in such class, as determined by the Board of Trustees, shall be elected for a three year term expiring on the date of the annual meeting of shareholders or special meeting in lieu thereof held in the year during which such three year term expires. The Trustees shall be elected at an annual meeting of the shareholders or special meeting in lieu thereof called for that purpose, except as provided in Section 2.3 of this Article and each Trustee elected shall hold office until his successor shall have been elected and shall have qualified; except (a) that any Trustee may resign his trust (without need for prior or subsequent accounting) by an instrument in writing signed by him or her and delivered to the other Trustees, which shall take effect upon such delivery or upon such later date as is specified therein; (b) that any Trustee may be removed (provided the aggregate number of Trustees after such removal shall not be less than the number required by Section 2.1 hereof) with cause, at any time by written instrument, signed by the remaining Trustees, specifying the date when such removal shall become effective; and (c) that any Trustee who requests in writing to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees, specifying date of his retirement. Upon the resignation or removal of a Trustee, or his otherwise ceasing to be Trustee, he shall execute and deliver such documents as the remaining Trustees shall require for the purpose of conveying to the Trust or the remaining Trustees any Trust property held in the name of the resigning or removed Trustee. Upon the incapacity or death of any Trustee, his legal representative shall execute and deliver on his behalf such documents as the remaining Trustees shall require as provided in the preceding sentence. ORGZN/680#3 EX-3 6 BY-LAWS OF OPPENHEIMER MULTI-SECTOR INCOME TRUST ARTICLE I Definitions The terms "Commission", "Declaration", "Distributor", "Investment Adviser", "Majority Shareholder Vote", "1940 Act", "Shareholder", "Shares", Transfer Agent", "Trust", "Trust Property", and "Trustees" have the respective meanings given them in the Declaration of Trust of OPPENHEIMER MULTI-SECTOR INCOME TRUST dated February 22, 1988, as amended from time to time. ARTICLE II Offices SECTION 2.1. Principal Office. Until changed by the Trustees, the principal office of the Trust in the Commonwealth of Massachusetts shall be in the City of Boston, County of Suffolk. SECTION 2.2. Other Offices. In addition to its principal office in the Commonwealth of Massachusetts, the Trust may have an office or offices in the City of New York, State of New York, and at such other places within and without the Commonwealth as the Trustees may from time to time designate or the business of the Trust may require. ARTICLE III Shareholders' Meetings SECTION 3.1. Place of Meetings. Meetings of Shareholders shall be held at such place, within or without the Commonwealth of Massachusetts, as may be designated from time to time by the Trustees. SECTION 3.2. Annual Meetings. An annual meeting of Shareholders, at which the Shareholders shall elect Trustees and transact such other business as may properly come before the meeting, shall be held in April of each year, the precise date to be fixed by the Board of Trustees, or such other day as may be fixed by the Trustees. SECTION 3.3. Special Meetings. Special meetings of Shareholders of the Trust shall be held whenever called by the Board of Trustees or the President of the Trust. Special meetings of Shareholders shall also be called by the Secretary upon the written request of the holders of Shares entitled to vote not less than twenty-five percent (25%) of all the votes entitled to be cast at such meeting. Such request shall state the purpose or purposes of such meeting and the matters proposed to be acted on thereat. The Secretary shall inform such Shareholders of the reasonable estimated cost of preparing and mailing such notice of the meeting, and, upon payment to the Trust of such costs, the Secretary shall give notice stating the purpose or purposes of the meeting to all entitled to vote at such meeting. No special meeting need be called upon the request of the holders of Shares entitled to cast less than a majority of all votes entitled to be cast at such meeting, to consider any matter which is substantially the same as a matter voted upon at any special meeting of Shareholders held during the preceding twelve months. SECTION 3.4. Notice of Meetings. Written or printed notice of every Shareholders' meeting stating the place, date, and purpose or purposes thereof, shall be given by the Secretary not less than ten (10) nor more than ninety (90) days before such meeting to each Shareholder entitled to vote at such meeting. Such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the Shareholder at his address as it appears on the records of the Trust. SECTION 3.5. Quorum and Adjournment of Meetings. Except as otherwise provided by law, by the Declaration or by these By-Laws, at all meetings of Shareholders the holders of a majority of the Shares issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite and shall constitute a quorum for the transaction of business. In the absence of a quorum, the Shareholders present or represented by proxy and entitled to vote thereat shall have power to adjourn the meeting from time to time. Any adjourned meeting may be held as adjourned without further notice. At any adjourned meeting at which a quorum shall be present, any business may be transacted as if the meeting had been held as originally called. SECTION 3.6. Voting Rights, Proxies. At each meeting of Shareholders, each holder of record of Shares entitled to vote thereat shall be entitled to one vote in person or by proxy, executed in writing by the Shareholder or his duly authorized attorney-in-fact, for each Share of beneficial interest of the Trust and for the fractional portion of one vote for each fractional Share entitled to vote so registered in his name on the records of the Trust on the date fixed as the record date for the determination of Shareholders entitled to vote at such meeting. No proxy shall be valid after eleven months from its date, unless otherwise provided in the proxy. At all meetings of Shareholders, unless the voting is conduc-ted by inspectors, all questions relating to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided by the chairman of the meeting. Pursuant to a resolution of a majority of the Trustees, proxies may be solicited in the name of one or more Trustees or Officers of the Trust. SECTION 3.7. Vote Required. Except as otherwise provided by law, by the Declaration of Trust, or by these By-Laws, at each meeting of Shareholders at which a quorum is present, all matters shall be decided by Majority Shareholder Vote. SECTION 3.8. Inspectors of Election. In advance of any meeting of Shareholders, the Trustees may appoint Inspectors of Election to act at the meeting or any adjournment thereof. If Inspectors of Election are not so appointed, the chairman of any meeting of Shareholders may, and on the request of any Shareholder or his proxy shall, appoint Inspectors of Election of the meeting. In case any person appointed as Inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment made by the Trustees in advance of the convening of the meeting or at the meeting by the person acting as chairman. The Inspectors of Election shall determine the number of Shares outstanding, the Shares represented at the meeting, the existence of a quorum, the authenticity, validity and effect of proxies, shall receive votes, ballots or consents, shall hear and determine all challenges and questions in any way arising in connection with the right to vote, shall count and tabulate all votes or consents, determine the results, and do such other acts as may be proper to conduct the election or vote with fairness to all Shareholders. On request of the chairman of the meeting, or of any Shareholder or his proxy, the Inspectors of Election shall make a report in writing of any challenge or question or matter determined by them and shall execute a certificate of any facts found by them. SECTION 3.9. Inspection of Books and Records. Shareholders shall have such rights and procedures of inspection of the books and records of the Trust as are granted to Shareholders under the Corporations and Associations Law of the State of Massachusetts. SECTION 3.10. Action by Shareholders Without Meeting. Except as otherwise provided by law, the provisions of these By-Laws relating to notices and meetings to the contrary notwithstanding, any action required or permitted to be taken at any meeting of Shareholders may be taken without a meeting if a majority of the Shareholders entitled to vote upon the action consent to the action in writing and such consents are filed with the records of the Trust. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders. ARTICLE IV Trustees SECTION 4.1. Meetings of the Trustees. The Trustees may in their discretion provide for regular or special meetings of the Trustees. Regular meetings of the Trustees may be held at such time and place as shall be determined from time to time by the Trustees without further notice. Special meetings of the Trustees may be called at any time by the President and shall be called by the President or the Secretary upon the written request of any two (2) Trustees. SECTION 4.2. Notice of Special Meetings. Written notice of special meetings of the Trustees, stating the place, date and time thereof, shall be given not less than two (2) days before such meeting to each Trustee, personally, by telegram, by mail, or by leaving such notice at his place of residence or usual place of business. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the Trustee at his address as it appears on the records of the Trust. Subject to the provisions of the 1940 Act, notice or waiver of notice need not specify the purpose of any special meeting. SECTION 4.3. Telephone Meetings. Except as may otherwise be required by law, any Trustee, or any member or members of any committee designated by the Trustees, may participate in a meeting of the Trustees, or any such committee, as the case may be, by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes presence in person at the meeting. SECTION 4.4. Quorum, Voting and Adjournment of Meetings. At all meetings of the Trustees, a majority of the Trustees shall be requisite to and shall constitute a quorum for the transaction of business. If a quorum is present, the affirmative vote of a majority of the Trustees present shall be the act of the Trustees, unless the concurrence of a greater proportion is expressly required for such action by law, the Declaration or these By-Laws. If at any meeting of the Trustees there be less than a quorum present, the Trustees present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall have been obtained. SECTION 4.5. Action by Trustees Without Meeting. The provisions of these By-Laws covering notices and meetings to the contrary notwithstanding, and except as required by law, any action required or permitted to be taken at any meeting of the Trustees may be taken without a meeting if a consent in writing setting forth the action shall be signed by all of the Trustees entitled to vote upon the action and such written consent is filed with the minutes of proceedings of the Trustees. SECTION 4.6. Expenses and Fees. Each Trustee may be allowed expenses, if any, for attendance at each regular or special meeting of the Trustees, and each Trustee who is not an officer or employee of the Trust or of its investment manager or underwriter or of any corporate affiliate of any of said persons shall receive for services rendered as a Trustee of the Trust such compensation as may be fixed by the Trustees. Nothing herein contained shall be construed to preclude any Trustee from serving the Trust in any other capacity and receiving compensation therefor. SECTION 4.7. Execution of Instruments and Documents and Signing of Checks and Other Obligations and Transfers. All instruments, documents and other papers shall be executed in the name and on behalf of the Trust and all checks, notes, drafts and other obligations for the payment of money by the Trust shall be signed, and all transfer of securities standing in the name of the Trust shall be executed, by the President, any Vice President or the Treasurer or by any one or more officers or agents of the Trust as shall be designated for that purpose by vote of the Trustees. SECTION 4.8. Indemnification of Trustees, Officers, Employees and Agents. (a) As used in this Declaration of Trust the following terms shall have the meanings set forth below: (i) the term "indemnitee" shall mean any present or former Trustee, officer or employee of the Trust, any present or former Trustee, partner, Director or officer of another trust, partnership, corporation or association whose securities are or were owned by the Trust or of which the Trust is or was a creditor and who served or serves in such capacity at the request of the Trust, and the heirs, executors, administrators, successors and assigns of any of the foregoing; however, whenever conduct by an indemnitee is referred to, the conduct shall be that of the original indemnitee rather than that of the heir, executor, administrator, successor or assignee; (ii) the term "covered proceeding" shall mean any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, to which an indemnitee is or was a party or is threatened to be made a party by reason of the fact or facts under which he or it is an indemnitee as defined above; (iii) the term "disabling conduct" shall mean willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office in question; (iv) the term "covered expenses" shall mean expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by an indemnitee in connection with a covered proceeding; and (v) the term "adjudication of liability" shall mean, as to any covered proceeding and as to any indemnitee, an adverse determination as to the indemnitee whether by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent. (b) 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 a disabiling conduct. (c) Except as set forth in paragraph (b) 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 paragraphs (a), (b) and (c) hereof. (d) Nothing herein shall be deemed to affect the right of the Trust and/or any indemnitee to acquire and pay for any insurance covering any or all indemnitees to the extent permitted by applicable law or to affect any other indemnification rights to which any indemnitee may be entitled to the extent permitted by applicable law. Such rights to indemnification shall not, except as otherwise provided by law, be deemed exclusive of any other rights to which such indemnitee may be entitled under any statute, By- Law, contract or otherwise. (e) In case any Shareholder or former Shareholder shall be held to be personally liable solely by reason of his being or having been a Shareholder and not because of his acts or omissions or for some other reason, the Shareholder or former Shareholder (or his heirs, executors, administrators or other legal representatives or in the case of a corporation or other entity, its corporate or other general successor) shall be entitled out of the 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. ARTICLE V Committees SECTION 5.1. Executive and Other Committees. The Trustees, by resolution adopted by a majority of the Trustees, may designate an Executive Committee and/or other committees, each committee to consist of two (2) or more of the Trustees of the Trust and may delegate to such committees, in the intervals between meetings of the Trustees, any or all of the powers of the Trustees in the management of the business and affairs of the Trust. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint a Trustee to act in place of such absent member. Each such committee shall keep a record of its proceedings. The Executive Committee and any other committee shall fix its own rules or procedure, but the presence of at least fifty percent (50%) of the members of the whole committee shall in each case be necessary to constitute a quorum of the committee and the affirmative vote of the majority of the members of the committee present at the meeting shall be necessary to take action. All actions of the Executive Committee shall be reported to the Trustees at the meeting thereof next succeeding to the taking of such action. SECTION 5.2. Advisory Committee. The Trustees may appoint an advisory committee which shall be composed of persons who do not serve the Trust in any other capacity and which shall have advisory functions with respect to the investments of the Trust but which shall have no power to determine that any security or other investment shall be purchased, sold or otherwise disposed of by the Trust. The number of persons constituting any such advisory committee shall be determined from time to time by the Trustees. The members of any such advisory committee may receive compensation for their services and may be allowed such fees and expenses for the attendance at meetings as the Trustees may from time to time determine to be appropriate. SECTION 5.3. Committee Action Without Meeting. The provisions of these By-Laws covering notices and meetings to the contrary notwithstanding, and except as required by law, any action required or permitted to be taken at any meeting of any Committee of the Trustees appointed pursuant to Section 5.1 of these By-Laws may be taken without a meeting if a consent in writing setting forth the action shall be signed by all members of the Committee entitled to vote upon the action and such written consent is filed with the records of the proceedings of the Committee. ARTICLE VI Officers SECTION 6.1. Executive Officers. The executive officers of the Trust shall be a Chairman, a President, one or more Vice Presidents, a Secretary and a Treasurer. The Chairman shall be selected from among the Trustees but none of the other executive officers need be a Trustee. Two or more officers, except those of President and any Vice President, may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity. The executive officers of the Trust shall be elected annually by the Trustees and each executive officer so elected shall hold office until his successor is elected and has qualified. SECTION 6.2. Other Officers and Agents. The Trustees may also elect one or more Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers and may elect, or may delegate to the President the power to appoint, such other officers and agents as the Trustees shall at any time or from time to time deem advisable. SECTION 6.3. Term and Removal and Vacancies. Each officer of the Trust shall hold office until his successor is elected and has qualified. Any officer or agent of the Trust may be removed by the Trustees whenever, in their judgment, the best interests of the Trust will be served thereby, but such removal shall be without prejudice to the contractual rights, if any, of the person so removed. SECTION 6.4. Compensation of Officers. The compensation of officers and agents of the Trust shall be fixed by the Trustees, or by the President to the extent provided by the Trustees with respect to officers appointed by the President. SECTION 6.5. Power and Duties. All officers and agents of the Trust, as between themselves and the Trust, shall have such authority and perform such duties in the management of the Trust as may be provided in or pursuant to these By-Laws, or to the extent not so provided, as may be prescribed by the Trustees; provided, that no rights of any third party shall be affected or impaired by any such By-Law or resolution of the Trustees unless he has knowledge thereof. SECTION 6.6. The Chairman. The Chairman shall preside at all meetings of the Shareholders and of the Trustees, and he shall perform such other duties as the Trustees may from time to time prescribe. SECTION 6.7. The President. The President shall be the chief executive officer of the Trust; he shall have general and active management of the business of the Trust, shall see that all orders and resolutions of the Trustees are carried into effect, and, in connection therewith, shall be authorized to delegate to one or more Vice Presidents such of his powers and duties at such times and in such manner as he may deem advisable. SECTION 6.8. The Vice Presidents. The Vice President shall be of such number and shall have such titles as may be determined from time to time by the Trustees. The Vice President, or, if there be more than one, the Vice Presidents in the order of their seniority as may be determined from time to time by the Trustees or the President, shall, in the absence or disability of the President, exercise the powers and perform the duties of the President, and he or they shall perform such other duties as the Trustees or the President may from time to time prescribe. SECTION 6.9. The Assistant Vice Presidents. The Assistant Vice President, or, if there be more than one, the Assistant Vice Presidents, shall perform such duties and have such powers as may be assigned them from time to time by the Trustees or the President. SECTION 6.10. The Secretary. The Secretary shall attend all meetings of the Trustees and all meetings of the Shareholders and record all the proceedings of the meetings of the Shareholders and of the Trustees in a book to be kept for that purpose, and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the Shareholders and special meetings of the Trustees, and shall perform such other duties and have such powers as the Trustees, or the President, may from time to time prescribe. He shall keep in safe custody the seal of the Trust and affix or cause the same to be affixed to any instrument requiring it, and, when so affixed, it shall be attested by his signature or by the signature of an Assistant Secretary. SECTION 6.11. The Assistant Secretaries. The Assistant Secretary, or, if there be more than one, the Assistant Secretaries in the order determined by the Trustees or the President, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such duties and have such other powers as the Trustees or the President may from time to time prescribe. SECTION 6.12. The Treasurer. The Treasurer shall be the chief financial officer of the Trust. He shall keep or cause to be kept full and accurate accounts of receipts and disbursements in books belonging to the Trust, and he shall render to the Trustees and the President, whenever any of them require it, an account of his transactions as Treasurer and of the financial condition of the Trust; and he shall perform such other duties as the Trustees, or the President, may from time to time prescribe. SECTION 6.13. The Assistant Treasurers. The Assistant Treasurer, or, if there shall be more than one, the Assistant Treasurers in the order determined by the Trustees or the President, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Trustees, or the President, may from time to time prescribe. SECTION 6.14. Delegation of Duties. Whenever an officer is absent or disabled, or whenever for any reason the Trustees may deem it desirable, the Trustees may delegate the powers and duties of an officer or officers to any other officer or officers or to any Trustee or Trustees. ARTICLE VII Dividends and Distributions Subject to any applicable provisions of law and the Declaration, dividends and distributions upon the Shares may be declared at such intervals as the Trustees may determine, in cash, in securities or other property, or in Shares, from any sources permitted by law, all as the Trustees shall from time to time determine. Inasmuch as the computation of net income and net profits from the sale of securities or other properties for federal income tax purposes may vary from the computation thereof on the records of the Trust, the Trustees shall have power, in their discretion, to distribute as income dividends and as capital gain distributions, respectively, amounts sufficient to enable the Trust to avoid or reduce liability for federal income taxes. ARTICLE VIII Certificates of Shares SECTION 8.1. Certificates of Shares. Certificates for Shares of the Trust shall be in such form and of such design as the Trustees shall approve, subject to the right of the Trustees to change such form and design at any time or from time to time, and shall be entered in the records of the Trust as they are issued. Each such certificate shall bear a distinguishing number; shall exhibit the holder's name and certify the number of full Shares owned by such holder; shall be signed by or in the name of the Trust by the President, or a Vice President, and countersigned by the Secretary or an Assistant Secretary or the Treasurer and an Assistant Treasurer of the Trust; shall be sealed with the seal; and shall contain such recitals as may be required by law. Where any certificate is signed by a Transfer Agent or by a Registrar, the signature of such officers and the seal may be facsimile, printed or engraved. The Trust may, at its option, determine not to issue a certificate or certificates to evidence Shares owned of record by any Shareholder. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall appear on, any such certificate or certificates shall cease to be such officer or officers of the Trust, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Trust, such certificate or certificates shall, nevertheless, be adopted by the Trust and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall appear therein had not ceased to be such officer or officers of the Trust. No certificate shall be issued for any share until such share is fully paid. SECTION 8.2 Transfer of Shares. Shares 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, 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 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 8.3 Share Ledgers. The share ledgers of the Trust, containing the name and address of the Shareholders of the Trust and the number of shares held by them respectively, shall be kept at the principal offices of the Trust or, if the Trust employs a transfer agent, at the offices of the transfer agent of the Trust. SECTION 8.4. Lost, Stolen, Destroyed and Mutilated Certificates. The Trustees may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Trust alleged to have been lost, stolen or destroyed, upon satisfactory proof of such loss, theft, or destruction; and the Trustees may, in their discretion, require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give to the Trust and to such Registrar, Transfer Agent and/or Transfer Clerk as may be authorized or required to countersign such new certificate or certificates, a bond in such sum and of such type as they may direct, and with such surety or sureties, as they may direct, as indemnity against any claim that may be against them or any of them on account of or in connection with the alleged loss, theft or destruction of any such certificate. ARTICLE IX Waiver of Notice Whenever any notice of the time, place or purpose of any meeting of Shareholders, Trustees, or of any committee is required to be given in accordance with law or under the provisions of the Declaration or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to such notice and filed with the records of the meeting, whether before or after the holding thereof, or actual attendance at the meeting of Shareholders, Trustees or committee, as the case may be, in person, shall be deemed equivalent to the giving of such notice to such person. ARTICLE X Miscellaneous SECTION 10.1. Location of Books and Records. The books and records of the Trust may be kept outside the Commonwealth of Massachusetts at such place or places as the Trustees may from time to time determine, except as otherwise required by law. SECTION 10.2. Record Date. The Trustees may fix in advance a date as the record date for the purpose of determining Shareholders entitled to notice of, or to vote at, any meeting of Shareholders, or Shareholders entitled to receive payment of any dividend or the allotment of any rights, or in order to make a determination of Shareholders for any other proper purpose. Such date, in any case, shall be not more than ninety (90) days, and in case of a meeting of Shareholders not less than ten (10) days, prior to the date on which particular action requiring such determination of Shareholders is to be taken. In lieu of fixing a record date the Trustees may provide that the transfer books shall be closed for a stated period but not to exceed, in any case, twenty (20) days. If the transfer books are closed for the purpose of determining Shareholders entitled to notice of a vote at a meeting of Shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. SECTION 10.3. Seal. The Trustees shall adopt a seal, which shall be in such form and shall have such inscription thereon as the Trustees may from time to time provide. The seal of the Trust may be affixed to any document, and the seal and its attestation may be lithographed, engraved or otherwise printed on any document with the same force and effect as if it had been imprinted and attested manually in the same manner and with the same effect as if done by a Massachusetts business corporation under Massachusetts law. SECTION 10.4. Fiscal Year. The fiscal year of the Trust shall end on such date as the Trustees may by resolution specify, and the Trustees may by resolution change such date for future fiscal years at any time and from time to time. SECTION 10.5. Orders for Payment of Money. All orders or instructions for the payment of money of the Trust, and all notes or other evidences of indebtedness issued in the name of the Trust, shall be signed by such officer or officers or such other person or persons as the Trustees may from time to time designate, or as may be specified in or pursuant to the agreement between the Trust and the bank or trust company appointed as Custodian of the securities and funds of the Trust. ARTICLE XI Compliance with Federal Regulations The Trustees are hereby empowered to take such action as they may deem to be necessary, desirable or appropriate so that the Trust is or shall be in compliance with any federal or state statute, rule or regulation with which compliance by the Trust is required. ARTICLE XII Amendments These By-Laws may be amended, altered, or repealed, or new By-Laws may be adopted, (a) by a Majority Shareholder Vote, or (b) by the Trustees; provided, however, that no By-Law may be amended, adopted or repealed by the Trustees if such amendment, adoption or repeal requires, pursuant to law, the Declaration, or these By-Laws, a vote of the Shareholders. The Trustees shall in no event adopt By-Laws which are in conflict with the Declaration, and any apparent inconsistency shall be construed in favor of the related provisions in the Declaration. ARTICLE XIII Declaration of Trust The Declaration of Trust establishing Oppenheimer Special Government Trust, dated February 22, 1988, a copy of which is on file in the office of the Secretary of the Commonwealth of Massachusetts, provides that the name Oppenheimer Premium Government Fund refers to the Trustees under the Declaration collectively as Trustees, but not as individuals or personally; and no Trustee, Shareholder, officer, employee or agent of the Trust shall be held to any personal liability, nor shall resort be had to their private property for the satisfaction of any obligation or claim or otherwise, in connection with the affairs of said Trust, but the Trust Estate only shall be liable. orgzn\680#4 EX-3 7 Amendment No. 1 to the By-Laws of Oppenheimer Multi-Sector Income Trust SECTION 3.2 of ARTICLE III of the By-Laws of Oppenheimer Multi-Sector Income Trust is hereby amended to read in its entirety as follows: "SECTION 3.2. Annual Meetings. An annual meeting of Shareholders, at which the Shareholders shall elect Trustees and transact such other business as may properly come before the meeting, shall be held each year on such date and at such time as shall be fixed by the Board of Trustees." ORGZN\680 EX-99 8 Share Certificate (8-1/2" x 11") I. FACE OF CERTIFICATE (All text and other matter lies within 8-1/4" x 10-3/4" decorative border, 5/16" wide) (at left) (at right) ORGANIZED UNDER THE THIS CERTIFICATE IS LAWS OF THE COMMONWEALTH TRANSFERABLE IN DENVER, OF MASSACHUSETTS COLORADO OR IN THE CITY OF NEW YORK, NEW YORK NUMBER OF SHARES SHARES (at left, box for (at right, box for share certificate number) number of shares) (at right) CUSIP 683933 10 5 SEE REVERSE FOR CERTAIN DEFINITIONS (centered, the following text) OPPENHEIMER MULTI-SECTOR INCOME TRUST (at left, the following text) This Is to Certify That (at left, the following text) is the owner of (beginning at left, the following text) FULLY PAID AND NON-ASSESSABLE SHARES OF BENEFICIAL INTEREST $.01 PAR VALUE , OF OPPENHEIMER MULTI-SECTOR INCOME TRUST (hereinafter called the "Fund"), transferable on the books of the Fund by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Declaration of Trust and By-Laws of the Fund, each as from time to time amended, to all of which the holder by acceptance hereof expressly assents. This Certificate is not valid until countersigned and registered by the Transfer Agent and Registrar. Witness the facsimile seal of the Fund and the facsimile signatures of its duly authorized officers. (at left, the following text) (at right, following text) Dated: (signature at left of seal) Countersigned and Registered: /s/ Donald Spiro SHAREHOLDER FINANCIAL SERVICES, INC. - ----------------------- (Denver) Transfer Agent and President Registrar /s/ George C. Bowen By: - ------------------------ Authorized Signature Treasurer UNITED MISSOURI TRUST CO. OF NEW YORK (New York) Co-Transfer Agent and Co-Registrar By: Authorized Signature (centered) 1-1/2" diameter facsimile seal with legend OPPENHEIMER MULTI-SECTOR INCOME TRUST 1988 SEAL COMMONWEALTH OF MASSACHUSETTS II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension) (beginning at left, the following text) The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN WROS - as joint tenants with NOT TC - right of survivorship and not as tenants in common (at right, the following text, parallel with the above abbreviations) UNIF GIFT MIN ACT - ( ) Custodian ( ) -------- -------- (Cust) (Minor) Under UGMA/UTMA ( ) -------------- (State) (centered, the following text) Additional abbreviations may also be used though not in the above list. (beginning at left, the following text) For value received ----------------- hereby sell, assign and transfer unto - -------------------------------------------------------------------------- (PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE) - -------------------------------------------------------------------------- (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE) - -------------------------------------------------------------------------- - ------------------------------------------------------------------- Shares of the beneficial interest represented by the written Certificate and do hereby irrevocably constitute and appoint ---------------------------- Attorney to transfer the said shares on the books of the within-named Fund, with full power of substitution in the premises. Dated: ------------------------- Signed: ------------------------- -------------------------------- (both must sign if joint owners) Signature(s) guaranteed by -------------------------------- (Firm or Bank) -------------------------------- (Officer) ---------------------------------------------- The signature(s) to this assignment must correspond with the name as written upon the face for the certificate in every particular, without alteration or enlargement or any change whatever. (beginning at left, the following text) Signatures must be guaranteed by a financial institution of the type identified in the policies and procedures of Shareholder Financial Servcies, Inc. CERTIFIC\680CERT EX-10 9 INVESTMENT ADVISORY AGREEMENT AGREEMENT made as of the 22nd day of October, 1990, by and between OPPENHEIMER MULTI-SECTOR INCOME TRUST (hereinafter called the "Trust"), and OPPENHEIMER MANAGEMENT CORPORATION (hereinafter called the "Adviser"). WHEREAS, the Trust is a closed-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 the Adviser is a registered investment adviser; NOW, THEREFORE, in consideration of the mutual promises and agreements hereinafter set forth, it is agreed by and between the parties as follows: 1. In General The Adviser agrees, all as more fully set forth herein, to act as investment adviser to the Trust with respect to the investment of its assets; to supervise and arrange the purchases of securities for and the sale of securities held in the portfolio of the Trust; and to furnish facilities and furnish and supervise personnel as shall be required to provide the services described herein. 2. Duties and Obligations of the Adviser with respect to investment of assets of the Trust (a) Subject to the succeeding provisions of this section and subject to the direction and control of the Board of Trustees, the Adviser shall: (i) Regularly provide investment advice and recommendations to the Trust with respect to its investments, investment policies and the purchase and sale of securities and other investments (collectively, "securities"); (ii) Supervise continuously the investment program of the Trust and the composition of its portfolio; (iii) Arrange, subject to the provisions of paragraph "4" hereof, for the purchase of securities and other investments and for the sale of securities and other investments held in the portfolio of the Trust; and (iv) Prepare proxy materials for meetings of the Trust's shareholders and such registrations and reports as may be required by federal securities laws. (b) Any investment advice furnished by the Adviser under this section shall at all times conform to, and be in accordance with, any requirements imposed by: (1) the provisions of the Investment Company Act of 1940, and of any rules or regulations in force thereunder; (2) any other applicable provision of law; (3) the provisions of the Declaration of Trust and By-Laws of the Trust as amended from time to time; (4) any policies and determinations of the Board of Trustees of the Trust; and (5) the terms of the registration statement of the Trust, as amended from time to time under the Securities Act of 1933 and the Investment Company Act of 1940. (c) Nothing in this Agreement shall prevent the Adviser or any officer thereof from acting as investment adviser for any other person, firm or corporation and shall not in any way limit or restrict the Adviser or any of its directors, officers, stockholders or employees from buying, selling or trading any securities for its or their own accounts or for the accounts of other for whom it or they may be acting, provided, however, that the Adviser expressly represents that it will undertake no activities which, in its judgment, will adversely affect the performance of its obligations to the Trust under this Agreement. (d) The Adviser may obtain investment information, research or assistance from any other person, firm or corporation to supplement, update or otherwise improve its investment management services, provided that the Trust shall not be required to pay any compensation other than as provided by the terms of this Agreement and subject to the provisions of Paragraph 4 hereof. 3. Trust Administration and Allocation of Expenses. The Adviser shall at its expense provide all executive, administrative and clerical personnel as shall be required to provide effective administration for the Trust, except such services, facilities and personnel as the Trust has contracted to obtain pursuant to the Administration Agreement annexed hereto as Exhibit A. Services to be provided by the Adviser hereunder shall include the compilation and maintenance of such records with respect to the Trust's operations as may reasonably be required; the preparation and filing of such reports with respect thereto as shall be required by the Securities and Exchange Commission and periodic reports with respect to its operations for the shareholders of the Trust except required reports to shareholders and Form N-SAR (or such other form as the SEC may substitute therefor); preparation of proxy materials for meetings of the Trust's shareholders; and the preparation of such registrations and reports as may be required by Federal securities laws. The Adviser shall, at its own cost and expense, also provide the Trust with adequate office space, facilities and equipment. The Adviser shall, at its own expense, provide such officers for the Trust as the Trust's Board may request. All other costs and expenses not expressly assumed by the Adviser under this Agreement shall be paid by the Trust, including, but not limited to: (i) interest and taxes, including issue and transfer taxes, incurred by or levied on the Fund; (ii) insurance premiums for fidelity and other coverage requisite to its operations; (iii) compensation and expenses of its Trustees other than those associated or affiliated with the Adviser; (iv) legal and audit expenses; (v) custodian, dividend paying agent, registrar and transfer agent fees and expenses (including charges and expenses of the Trust's Dividend Reinvestment Plan Agent) and brokerage commissions, if any; (viii) fees and expenses, other than as hereinabove provided, incident to the registration, under Federal law, of shares of the Trust for public sale; (ix) except as noted above, all other expenses incidental to holding meetings of the Trust's shareholders; (x) payments under the Trust's Administration Agreement; (xi) fees and expenses of listing and maintaining the listing of the Trust's shares of any national securities exchange; (xii) cost of certificates representing the Trust's shares; and (xiii) such non-recurring expenses as may arise, including litigation affecting the Trust and the legal obligation which the Trust may have to indemnify its officers and Trustees with respect thereto. 4. Portfolio Transactions and Brokerage. (a) The Adviser is authorized, in arranging the purchase and sale of the Trust'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 Trust to obtain, at reasonable expense, the "best execution" (prompt and reliable execution at the most favorable security price obtainable) of the Trust's portfolio transactions as well as to obtain, consistent with the provisions of subparagraph (c) of this paragraph 4, the benefit of such investment information or research as will be of significant assistance to the performance by the Adviser of its investment management functions. (b) The Adviser shall select broker-dealers to effect the Trust'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 the Adviser 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 Trust's portfolio transactions by participating therein for its own account; the importance to the Trust 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 Trust. (c) The Adviser shall have discretion, in the interests of the Trust, to allocate brokerage on the Trust'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 Trust and/or other accounts for which the Adviser 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 Trust to pay such broker-dealers a commission for effecting a portfolio transaction for the Trust 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 the Adviser 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 the Adviser or its affiliates with respect to the accounts as to which they exercise investment discretion. In reaching such determination, the Adviser 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, the Adviser shall be prepared to show that all commissions were allocated for purposes contemplated by this Agreement and that the total commissions paid by the Trust over a representative period selected by the Trust's trustees were reasonable in relation to the benefits to the Trust. (d) The Adviser 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 Trust for effecting its portfolio transactions to the extent consistent with the interests and policies of the Trust as established by the determinations of the Board of Trustees of the Trust and the provisions of this paragraph 4. (e) The Trust recognizes that an affiliated broker-dealer: (i) may act as one of the Trust's regular brokers so long as it is lawful for it so to act; (ii) may be a major recipient of brokerage commissions paid by the Trust; and (iii) may effect portfolio transactions for the Trust 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 4, the Adviser may also consider sales of shares of the Trust and the other funds advised by the Adviser and its affiliates as a factor in the selection of broker-dealers for its portfolio transactions. 5. Compensation of the Adviser. The Trust agrees to pay the Adviser and the Adviser agrees to accept as full compensation for all services rendered by the Adviser as such, a fee payable weekly in an amount computed by applying the annual rate of .65 of 1% to the end of week net assets of the Trust, determined as of the close of business of the New York Stock Exchange each Friday. When the New York Stock Exchange is not open on a Friday, then the net assets shall be determined as of the close of business of the New York Stock Exchange on the day on which the New York Stock Exchange was open next preceding such Friday. 6. Use of Name. The Adviser hereby grants to the Trust a royalty- free, non-exclusive license to use the name "Oppenheimer" in the name of the Trust for the duration of this Agreement and any extensions or renewals thereof. To the extent necessary to protect the Adviser's rights to the name "Oppenheimer" under applicable law, such license shall allow the Adviser to inspect and, subject to control by the Trust's Board, control the nature and quality of services offered by the Trust under such name. Such license may, upon termination of this Agreement, be terminated by the Adviser, in which event the Trust 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 Trust or otherwise. The name "Oppenheimer" may be used or licensed by the Adviser in connection with any of its activities, or licensed by the Adviser to any other party. 7. Duration and Termination. (a) This Agreement will take effect on the date first set forth above. This Agreement shall continue in effect until December 31, 1991, and thereafter from year to year, so long as such continuance shall be approved at least annually (a) by the Board of Trustees, including the vote of a majority of the Trustees of the Trust who are not parties to this Agreement or "interested persons" (as defined in the Investment Company Act of 1940) of any such party cast in person at a meeting called for the purpose of voting on such approval, or (b) by the vote of the holders of a "majority" (as defined in the Investment Company Act) of the outstanding voting securities of the Trust and by such aforementioned vote of the Board of Trustees. (b) This Agreement may be terminated by the Adviser at any time without penalty upon sixty days' written notice to the Trust (which notice may be waived by the Trust) and may be terminated by the Trust at any time without penalty upon sixty days' notice to the Adviser (which notice may be waived by the Adviser), provided that such termination by the Trust shall be directed or approved by the vote of a majority of all the Trustees of the Trust then in office or by the vote of the holders of a "majority" (as defined in the Investment Company Act of 1940) of the outstanding voting securities of the Trust. This Agreement shall automatically terminate in the event of its assignment (as "assignment" is defined in the Investment Company Act of 1940). 8. Liability. (a) Provided that nothing herein shall be deemed to protect the Adviser 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, the Adviser 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. (b) The Adviser understands and agrees that the obligations of the Trust under this Agreement are not binding upon any Trustee or shareholder of the Trust personally, but bind only the Trust and the Trust's property; the Adviser represents that it has notice of the provisions of the Declaration of Trust of the Trust disclaiming Trustee or shareholder liability for acts or obligations of the Trust. IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be executed by their duly authorized officers as of the day and year first above written. OPPENHEIMER MULTI-SECTOR INCOME TRUST Attest: By: /s/ Robert G. Galli ------------------------ Robert G. Galli, Secretary OPPENHEIMER MANAGEMENT CORPORATION Attest: By: /s/ Katherine P. Feld ---------------------- Katherine P. Feld Vice President & Secretary ADVISORY\680 EX-99 10 ADMINISTRATION AGREEMENT Agreement made as of , 1988, between OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust ("Fund"), and MITCHELL HUTCHINS ASSET MANAGEMENT INC. a Delaware corporation ("Mitchell Hutchins"). WHEREAS, the Fund intends to operate as a closed-end management investment company, and is so registered under the Investment Company Act of 1940, as amended ("1940 Act"); and WHEREAS, the Fund wishes to retain Mitchell Hutchins to provide certain administrative services to the Fund, under the terms and conditions stated below, and Mitchell Hutchins is willing to provide such services for the compensation set forth below; NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties agree as follows: 1. Appointment. The Fund hereby appoints Mitchell Hutchins as administrator of the Fund, and Mitchell Hutchins accepts such appointment and agrees that it will furnish the services set forth in paragraph 2 below. 2. Services and Duties of Mitchell Hutchins. Subject to the supervision of the Fund's Board of Trustees ("Board"), Mitchell Hutchins will: (a) Prepare all quarterly, semi-annual and annual reports required to be sent to Fund shareholders, and arrange for the printing and dissemination of such reports to shareholders; (b) Assemble all reports required to be filed with the Securities and Exchange Commission ("SEC") on Form N-SAR, or such other form as the SEC may substitute for Form N-SAR, and file such completed from with the SEC; (c) Review the provision of services by the Fund's independent accountants, including but not limited to the examination by such accountants of audited financial statements of the Fund and the review of the Fund's federal, state, and local tax returns; and make such reports and recommendations to the Board concerning the performance of the independent accountants as the Board reasonably requests or it deems appropriate; (d) File with the appropriate authorities all required federal, state and local tax returns; (e) Arrange for the dissemination to shareholders of the Fund's proxy materials and oversee the tabulation of proxies by the Fund's transfer agent; (f) Negotiate the terms and conditions under which custodian services will be provided to the Fund and the fees to be paid by the Fund to its custodian (which may or may not be an affiliate of the Fund's investment adviser), in connection therewith; (g) Recommend an accounting agent (which may or may not be the same party as the Fund's custodian or an affiliate of the Fund's custodian) to the Board, which agent would be responsible for computing the Fund's net asset value in accordance with the Fund's registration statement under the 1940 Act and Securities Act of 1933, as amended; negotiate the terms and conditions under which such accounting agent would compute the Fund's net asset value, and the fees to be paid by the Fund in connection therewith; review the provision of such accounting services to the Fund; and make such reports and recommendations to the Board concerning the provision of such services as the Board reasonably requests or it deems appropriate; (h) Negotiate the terms and conditions under which transfer agency and dividend disbursing services will be provided to the Fund, and the fees to be paid by the Fund in connection therewith; review the provision of transfer agency and dividend disbursing services to the Fund; and make such reports and recommendations to the Board concerning the performance of the Fund's transfer and dividend disbursing agent as the Board reasonably requests or it deems appropriate; (i) Establish the accounting policies of the Fund; reconcile accounting issues which may arise with respect to the Fund's operations; and consult with the Fund's (executive) officers, independent accountants, legal counsel, custodian, accounting agent and transfer and dividend disbursing agent as necessary in connection therewith; (j) Determine the amounts available for distribution as dividends and distributions to be paid by the Fund to its shareholders; prepare and arrange for the printing of dividend notices to shareholders; and arrange for the printing of dividend notices to shareholders; and provide the Fund's transfer and dividend disbursing agent and custodian with such information as is required for such parties to effect the payment of dividends and distributions and to implement the Fund's dividend reinvestment plan; (k) Review the Fund's bills and authorize payments of such bills by the Fund's custodian; and (l) If requested by the Board, designate one or more of its employees to serve as treasurer or assistant treasurer(s) of the Fund, and such person(s) shall not be compensated by the Fund for so serving. 3. Public Inquiries. The Fund and Mitchell Hutchins agree that Mitchell Hutchins will not be responsible for replying to questions or requests for information concerning the Fund from shareholders, brokers or the public. The Fund will inform Mitchell Hutchins of the party or parties to whom any such questions or requests should be directed, and Mitchell Hutchins will refer such questions and requests to such party or parties. 4. Compliance with the Fund's Governing Documents and Applicable Law. In all matters relating to the performance of this Agreement, Mitchell Hutchins will act in conformity with the Declaration of Trust, By-Laws and registration statement of the Fund and with the directions of the Board and Fund executive officers and will conform to and comply with the requirements of the 1940 Act and all other applicable federal and state laws and regulations. 5. Services Not Exclusive. Mitchell Hutchins' services hereunder are not deemed to be exclusive, and Mitchell Hutchins is free to render administrative or other services under this Agreement are not impaired thereby. 6. Expenses. During the term of this Agreement, Mitchell Hutchins will pay all expenses incurred by it in connection with its services under this Agreement. 7. Compensation. For the services provided and expenses assumed by Mitchell Hutchins under this Agreement, the Fund will pay Mitchell Hutchins a fee, calculated and paid weekly, at the annual rate of .20% of the Fund's net assets at the end of that week. 8. Limitation of Liability of Mitchell Hutchins. Mitchell Hutchins will not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund or its shareholders in connection with the performance of its duties under this Agreement, except a loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its duties under this Agreement. 9. Limitation of Liability of the Trustees and Shareholders of the Fund. Neither the Trustees of the Fund nor the shareholders of the Fund shall be liable for any obligations of the Fund under this Agreement, and Mitchell Hutchins agrees that, in asserting any rights or claims under this Agreement, it shall look only to the assets and property of the Fund in settlement of such right or claim, and not to such Trustees or shareholders. Mitchell Hutchins represents that it has notice of the provisions of the Declaration of Trust of the Fund disclaiming shareholder liability for acts or omissions of the Fund. 10. Duration and Termination. This Agreement will become effective upon the date hereabove written and shall continue in effect thereafter until terminated without penalty by Mitchell Hutchins or the Fund upon 30 days' written notice to the other and shall automatically terminate in the event of its assignment as that term is defined in the 1940 Act. 11. Amendment to this Agreement. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. 12. Governing Law. This Agreement shall be construed in accordance with the laws of the State of Delaware and the 1940 Act; provided, however, that paragraph 9 above will be construed in accordance with the laws of the Commonwealth of Massachusetts conflict with the applicable provisions of the 1940 Act, the latter shall control. 13. Miscellaneous. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. 14. Representation of Mitchell Hutchins. Mitchell Hutchins represents to the Fund as follows: (a) Mitchell Hutchins has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, in duly qualified as a foreign corporation and in good standing in each other jurisdiction in which its ownership of property or its conduct of business requires such qualification and in which the failure to qualify would have a material adverse effect on the business or operations of Mitchell Hutchins and has full power and authority to conduct its business as Administrator of Investment Companies; (b) The Administration Agreement has been duly and validly authorized, executed and delivered by Mitchell Hutchins, complies with all applicable provisions of the Investment Company Act and the Investment Company Act Rules and constitutes a legal, valid and binding obligation of Mitchell Hutchins enforceable in accordance with its terms, subject, as to enforcement, to applicable bankruptcy, reorganization insolvency or other similar laws relating to or affecting creditors' rights generally; and (c) Neither the execution and delivery of the Administration Agreement nor the consummation by Mitchell Hutchins of the transactions contemplated by the Administration Agreement conflicts with, or results in a breach of, the charter or By- laws of Mitchell Hutchins or nay agreement or o instrument to which Mitchell Hutchins is a party or by which Mitchell Hutchins is bound, andy law, rule, regulation, order or nay court, governmental instrumentality, securities exchange or association or arbitrator. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. Attest: OPPENHEIMER MULTI-SECTOR INCOME TRUST y: Attest: MITCHELL HUTCHINS ASSET MANAGEMENT INC. By: OFMI\680#2 EX-1 11 28,000 Shares* OPPENHEIMER MULTI-SECTOR INCOME TRUST Beneficial Interest Underwriting Agreement March 24, 1988 New York, New York PAINEWEBBER INCORPORATED THOMSON MCKINNON SECURITIES INC. ADVEST, INC. INTERSTATE SECURITIES CORPORATION RAYMOND JAMES & ASSOCIATES, INC. As Representatives of the Underwriters In care of PaineWebber Incorporated 1285 Avenue of the Americas New York, New York 10019 Dear Sirs: Oppenheimer Multi-Sector Income Trust (the "Company") proposes to issue and sell to you and the other underwriters named in Schedule 1 (the "Underwriters"), for whom you are acting as representatives (the "Representatives"), 28,000,000 shares (the "Firm Shares") of its shares of beneficial interest, par value $.01 per share (the"Common Stock"). In addition, the Company proposes to grant to the Underwriters an option to purchase up to an additional 4,200,000 shares (the "Option Shares") of such Common Stock. All or part, as the context may require, of the Firm Shares and the Option Shares are called the "Shares." Oppenheimer Management Corporation, a Colorado corporation (the "Investment Adviser"), will be the Company's investment adviser. The Company and the Investment Adviser agree with you as follows: 1. Sales and Purchase. (a) The Company will issue and sell to each Underwriter, and each Underwriter will purchase form the Company, the number of Firm Shares opposite such Underwriter's name in Schedule I, at the purchase price of $11.16 per share. (b) The Company grants to the Underwriters an option to purchase all or any part of the Option Shares for the same consideration per share as for the Firm Shares. The number of Option Shares to be purchased by each Underwriter will be the same percentage (adjusted by Representatives to eliminate fractions) of the number of Option Shares being sold as such Underwriter is obligated to purchase of the Firm Shares. Such option may be exercised only to cover over-allotments in the sales of the Firm Shares by the Underwriters and may be exercised in whole or in part, at any time within 30 days after the date of this Agreement, by notice (the "Option - ---------------------- * Plus an option to purchase up to 4,200,000 additional shares to cover over-allotments. Shares Notice") from Representatives to the Company no later than 12:00 noon, New York City time, at least two and not more than five business days before the date specified for closing in the Option Shares Notice ("Option Shares Closing Date") setting forth the number of Option Shares to be purchased and the time and date of such purchase. Upon the Option Shares Notice, the Company will issue and sell to each Underwriter, and each Underwriter will purchase from the Company, the number of Option Shares set forth in the Option Shares Notices. (c) The Underwriters agree to pay Oppenheimer Fund Management, Inc. ("OFM"), a subsidiary of the Investment Adviser, $.03 per share for assistance in the distribution of the Shares. Payment shall be made by certified or official bank checks payable in New York Clearing House (next-day) funds to OFM on the Closing Date (as defined below) or in the case of the Option Shares, as soon as practicable thereafter. (d) The obligations of the Underwriters under this Agreement are several and not joint and are undertaken on the basis of the representations and are subject to the conditions in this Agreement. 2. Payment and Delivery. Delivery by the Company of the Firm Shares (the "Firm Shares Closing") to the Representatives for the accounts of the Underwriters against payment of the purchase price by one or more certified or official bank check or checks payable in New York Clearing House (next-day) funds to the Company for the Firm Shares, will take place at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York, at 10:00 a.m., New York city time, on the fifth business day following the date of this Agreement, or at such time on such other date, not later than 7 business days after the date of this Agreement, as may be agreed on by the Company and the Representatives (the "Firm Shares Closing Date"). To the extent the option with respect to the Option Shares is exercised, delivery of the Option Shares against payment by the Underwriters (in the manner specified above will take place at the offices specified above for the Firm Shares Closing Date at the time and date (which may be the Firm Shares Closing Date) specified in the Option Shares Notice. The Firm Shares Closing Date and the Option Shares Closing Date are called the "Closing Dates." Certificates evidencing the Shares will be in definitive form, registered in such names and be in such denominations as the Representatives request (a) at least three full business days before the Firm Shares Closing Date or (b) in the case of Option Shares, on the day of the Option Shares Notice and will be made available to the Representatives for checking and packaging, at a place in New York City designated by the Representatives, at least one full business day before the relevant Closing Date. 3. Registration Statement and Prospectus; Public Offering. The Company has filed with the Securities and Exchange Commission (the "Commission"), pursuant to the Securities Act of 1933 (the "Securities Act"), the Investment Company Act of 1940 (the "Investment Company Act") and the published rules and regulations adopted by the Commission under the Securities Act (the "Securities Act Rules") and the Investment Company Act (the "Investment Company Act Rules"), a notification of registration on Form N-8A (the "Notification") and a registration statement on Form N- 2, including a preliminary prospectus, relating to the Shares, and such amendments to such registration statement as may have been required to the date of this Agreement. The term "preliminary prospectus" means any preliminary prospectus as referred to in Rule 430 or 430A of the Securities Act Rules included at any time as a part the registration statement. The Company has furnished the Representatives copies of such registration statement, each amendment to it filed by the Company with the Commission and each preliminary prospectus filed by the Company with the Commission or used by the Company. If such registration statement has not become effective, a further amendment (the "Final Amendment") to such registration statement, including a form of final prospectus, necessary to permit such registration to become effective will promptly be filed by the Company with the Commission. If such registration statement has become effective, a final prospectus (the "Rule 430A Prospectus") containing information permitted to be omitted at the time of effectiveness by Rule 430A of the Securities Act Rules will be promptly filed by the Company with the Commission in accordance with Rule 497 of the Securities Act Rules. The registration statement as amended at the time it becomes or became effective (the "Effective Date"), including financial statements and all exhibits and any information deemed to be included by Rule 430A, is called the "Registration Statement." The term "Prospectus" means the prospectus as first filed with the Commission pursuant to Rule 497 of the Securities Act Rules or, if no such filing is required, the form of final prospectus included in the Registration Statement at the Effective Date. The Company understands that the Underwriters propose to make a public offering of the Shares, as described in the Prospectus, as soon after the Effective Date (or, if later, after the date this Agreement is signed) as the Representative deem advisable. The Company confirms that the Underwriters and dealers have been authorized to distribute each preliminary prospectus and are authorized to distribute the Prospectus and any amendments or supplements to it except that the Underwriters and dealers are only authorized to distribute the Prospectus or any amendments or supplements to it only until the Prospectus is amended and supplemented, after which the Underwriters or dealers shall deliver the amended or supplemented Prospectus. 4. Representations and Warranties. (a) The Company represents to each Underwriter as follows: (i) On the Effective Date and the date the Prospectus is first filed with the Commission pursuant to Rule 497 (if required), when any post- effective amendment to the Registration Statement (except any posteffective amendment required by Rule 8b-16 of the Investment Company Act which is filed with the Commission after the later of one year from the date of this Agreement or the date on which the distribution of the Shares is completed) becomes effective or any amendment or supplement to the Prospectus is filed with the Commission and at each Closing Date, the Registration Statement, the Prospectus and any such amendment or supplement and the Notification did or will comply in all material respects with the requirements of the Securities Act, the Investment Company Act, the Securities Act Rules and the Investment Company Act Rules. On the Effective Date and when any posteffective amendment to the Registration Statement (except any posteffective amendment required by Rule 8b-16 of the Investment Company Act which is filed with the Commission after the later of one year from the date of this Agreement or the date on which the distribution of the Shares is completed) becomes effective, no part of the Registration Statement, the Prospectus or any such amendment or supplement did or will contain any untrue statement of a material fact or omit to a state a material fact required to be stated in it or necessary to make the statements in it not misleading. At the Effective Date, the date the Prospectus or any amendment or supplement to the Prospectus is filed with the Commission and at each Closing Date, the Prospectus did or will no contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements in it, in light of the circumstances under which they were made, not misleading. The foregoing representations do not apply to statements or omissions made in reliance on and in conformity with information relating to any Underwriter furnished in writing to the Company by the Representatives on behalf of such Underwriter expressly for use in the Registration Statement, Prospectus, amendment or supplement. (ii) The Company has been duly organized and is validly existing as a business trust in good standing under the laws of the Commonwealth of Massachusetts and is duly qualified as a foreign entity and in good standing in each state of the United States of America in which its ownership of property or conduct of its business requires such qualification and in which the failure to qualify would have a material adverse effect on its business or operations. The Company has full power and authority to own its properties and conduct its business as described in the Registration Statement. (iii) The authorized shares of beneficial interest of the Company are as described in the Prospectus. The shares of beneficial interest of the Company conform in all material respects to the description of them in the Prospectus insofar as such statements are legal matters. Proper proceedings have been taken validly to authorize the outstanding shares of beneficial interest (including the Shares, when delivered to and paid for by the Underwriters as provided in the Agreement) have been duly and validly issued and are fully paid and nonassessable. The holders of outstanding shares of beneficial interest of the Company are not entitled to any preemptive or other similar rights. (iv) The Registration Statement and the Prospectus comply as to form in all material respects with the requirements of the Securities Act, the Investment Company Act, the Securities Act Rules and the Investment Company Act Rules. (v) The Agreement has been duly authorized, executed and delivered by the Company and complies with all applicable provisions of the Investment Company Act and the Investment Company Act Rules. (vi) Each of the Advisory Agreement, the Administration Agreement (as defined in the Prospectus) and the Custodian Agreement (as so defined) (i) has been duly and validly authorized, executed and delivered by the Company, (ii) complies with all applicable provisions of the Investment Company Act and the Investment Company Act Rules and (iii) constitutes the legal, valid and binding obligations of the Company enforceable in accordance with its terms, subject, as to enforcement, to applicable bankruptcy, reorganization, insolvency or other similar laws relating to or affecting creditors' rights generally and to termination under the Investment Company Act. (vii) None of (i) the execution and delivery of he Agreement, the Advisory Agreement, the Administration Agreement or the Custodian Agreement by the Company, (ii) the issue and sale by the Company of the Shares sold by the Company as contemplated by the Agreement and (iii) the consummation by the Company of the other transactions contemplated by such agreements conflicts with, or results in a breach of, the declaration of trust or by-laws of the Company or any agreement or instrument to which the Company is a party or by which the Company is bound, any law or regulation or any order or regulation of any court, governmental instrumentality or arbitrator. (viii) The Company is not currently in breach of, or in default under, any material written agreement or instrument to which it is a party or by which it or its property is bound or affected. (ix) No holder of securities of the Company has rights to the registration of any securities of the Company because of the filing of the Registration Statement. (x) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation by the Company of the transactions contemplated in the Agreement, the Advisory Agreement, the Administration Agreement or the Custodian Agreement, except such as have been obtained under the Securities Act, the Investment Company Act, the Securities Act Rules and the Investment Company Act Rules and such as may be required under state securities or blue sky laws or the National Association of Securities Dealers, Inc. in connection with the purchase and distribution of the Shares by the Underwriters. (xi) The Shares are duly authorized for listing, subject to official notice of issuance, on the New York Stock Exchange. (xii) The Company is duly registered with the Commission under the Investment Company Act as a closed-end diversified management investment company, and all required action has been taken by the Company under the Securities Act and the Investment Company Act to make the public offering and consummate the sale of the Shares as provided in the Agreement. (xiii) Arthur Young & Company, whose report appears in the Prospectus, are independent public accountants with respect to the Company and the Investment Adviser, as required by the Securities Act and the Securities Act Rules. (b) The Investment Adviser represents to each Underwriter as follows: (i) The Investment Adviser is registered as an investment adviser under the Investment Advisers Act of 1940 (the "Advisers Act") and is not prohibited by the Advisers Act, the Investment Company Act, the published rules and regulations adopted by the Commission under the Advisers Act (the "Advisers Act Rules") or the Investment Company Act Rules from acting as an investment adviser for the Company under the Advisory Agreement (as defined in the prospectus) as contemplated by the Prospectus. (ii) The Investment Adviser has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Colorado, is duly qualified as a foreign corporation and in good standing in each other jurisdiction in which its ownership of property or its conduct of business requires such qualification and in which the failure to qualify would have a material adverse effect on the business or operations of the Investment Adviser and has full power and authority to conduct its business as described in the Registration Statement. (iii) The Agreement has been duly and validly authorized, executed and delivered by the Investment Adviser and complies with all applicable provisions of the Investment Company Act and the Investment Company Act Rules. (iv) The Advisory Agreement has been duly and validly authorized, executed and delivered by the Investment Adviser, complies with all applicable provisions of the Investment Company Act and the Investment Company Act Rules and constitutes a legal, valid and binding obligation of the Investment Adviser enforceable in accordance with its terms, subject, as to enforcement, to applicable bankruptcy, reorganization, insolvency or other similar laws relating to or affecting creditors' rights generally and to termination under the Investment Company Act. (v) Neither the execution and delivery of the Agreement nor the Advisory Agreement no the consummation by the Investment Adviser of the transactions contemplated by the Agreement or the Advisory Agreement conflicts with, or results in a breach of, the charter or By-laws of the Investment Adviser or any agreement or instrument to which the Investment Adviser is a party or by which the Investment Adviser is bound, any law, rule, regulation, order of any court, governmental instrumentality, securities exchange or association or arbitrator. (vi) The description of the Investment Adviser in the Prospectus does not contain any untrue statement of a material fact or omit to state any material fact required to be stated in it or necessary in order to make the statements in it not misleading. 5. Agreements of the Company. (a) If the Registration Statement has not yet become effective, the Company will promptly file the Final Amendment with the Commission, will use its best efforts to cause the Registration Statement to become effective and, as soon as the Company is advised, will advise the Representatives when the Registration Statement or any amendment to it has become effective. If the Registration Statement has become effective, the Company will file the 430A Prospectus as promptly as practicable, but no later than the second business day following the date of this Agreement, and will provide the Representatives satisfactory evidence of the filing. The Company will not file any prospectuses or nay other amendment (except any posteffective amendment required by Rule 8b-16 of the Investment Company Act which is filed with the Commission after the later of one year from the date of this Agreement or the date on which the distribution of the Shares is completed) or supplement to the Registration Statement or Prospectus unless a copy has first been submitted to the Representatives a reasonable time before its filing and the Representatives of their counsel have not reasonably objected to it within a reasonable time after receiving the copy. (b) The Company will advise the Representatives (1) of the issuance by the Commission of any order in respect of the Company, or if respect of the Investment Adviser which relates to the Company, (2) of the initiation or threatening of any proceedings for, or receipt by the Company of any notice with respect to, suspension of the qualification of the Shares for sale in any jurisdiction or the issuance of any order by the Commission suspending the effectiveness for the Registration Statement and (3) of receipt by the Company or any representative or attorney of the Company or any other communication from the Commission relating to the Company, the Registration Statement, the Notification, any preliminary prospectus, the Prospectus or to the transactions contemplated by this Agreement. The Company will make every reasonable effort to prevent the issuance of an order suspending the effectiveness of the Registration Statement and, if any such order is issued, to obtain its lifting as soon as possible. (c) The Company will deliver to each Representative, without charge, a signed copy of the Registration Statement and the Notification and of any amendments (except any posteffective amendment required by Rule 8b-16 of the Investment Company Act which is filed with the Commission after the later of one year from the date of this Agreement or the date on which the distribution of the Shares is completed) to either of them ( including all exhibits filed with any such document) and as many conformed copies of the Registration Statement and of any amendments (except any posteffective amendment required by Rule 8b-16 of the Investment Company Act which is filed with the Commission after the later of one year from the date of this Agreement or the date on which the distribution of the Shares is completed) to it (excluding exhibits) as the Representatives may reasonably request. (d) During such period as a prospectus is required by law to be delivered by an underwriter or a dealer, the Company will deliver without charge, to the Representatives and to the Underwriters and dealers, at such office or offices as the Representatives may designate, as many copies of the Prospectus as the Representatives may reasonably request, and, if any event occurs during such period as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements in it, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, not misleading in any material respect, or during such period it is necessary to amend or supplement the Prospectus to comply with the Securities Act, the Investment Company Act, the Securities Act Rules or the Investment Company Act Rules, the Company will promptly prepare, submit to the Representatives, file with the Commission and deliver, without charge, to the Underwriters and to dealers (whose names and addresses the Representatives will furnish to the Company) to whom Shares have been sold by the Underwriters and to other dealers on request, amendments or supplements to the Prospectus (except that if the amendment or supplement is filed as a result of a misstatement or omission by the Underwriters, then the Company may deliver such amendments or supplements to the Underwriters at a reasonable charge) so that the statements in the Prospectus, as so amended or supplemented, will not, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, be misleading in any material respect and will comply with the Securities Act, the Investment Company Act, the Securities Act Rules and the Investment Company Act Rules. Delivery by Underwriters of any such amendments or supplements to the prospectus will not constitute a waiver of any of the conditions in Section 6. (e) The Company will make generally available to the Company's security holders, as soon as practicable but in no event later than the last day of the 18th full calendar month following the calendar quarter in which the Effective Date falls, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 of the Securities Act Rules. (f) The Company will take such actions as the Representatives reasonably request in order to qualify the Shares for offer and sale under the securities or "blue sky" laws of such jurisdictions as the Representatives reasonably designate except that the Company shall not be required in connection therewith or as a condition thereof to qualify as a foreign corporation or to execute a general consent to service of process in any state. (g) The Company will pay, or reimburse if paid by the Representatives, whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, all costs and expenses incident to the performance of the obligations of the Company under this Agreement, including but not limited to costs and expenses of or relating to (1) the preparation, printing and filing of the Registration Statement and exhibits to it, each preliminary prospectus, the Prospectus, all amendments and supplements to the Registration Statement and the Prospectus, and the printing or other reproduction of this Agreement and any other underwriting documents, (2) the issuance of the Shares and the preparation and delivery of certificates for the Shares, (3) the registration or qualification of the Shares for offer and sale under the securities or "blue sky" laws of the jurisdictions referred to in the foregoing paragraph, including the reasonable fees and disbursements of counsel for the Underwriters in that connection, and the preparation and printing of preliminary and supplemental "blue sky" memoranda, (4) the furnishing (including costs of shipping and mailing) to the Underwriters and to dealers of copies of each preliminary prospectus, the Prospectus, and all amendments or supplements to the Prospectus,and of the other documents required by this Section to be so furnished, (5) the filing requirements of the National Association of Securities Dealers, Inc., in connection with its review of the financing, (6) all transfer taxes, if any, with respect to the sale and delivery of the Shares to the Underwriters, (7) the listing of the Shares on the New York Stock Exchange and (8) the transfer agent for the Shares. Notwithstanding the foregoing, the Underwriters agree to pay any expenses (including fees and disbursements of counsel) incurred by the Underwriters in connection with their investigation, preparing to market and marketing of the Shares. (h) Without the prior written consent of the Representatives, the Company will not offer, sell or register with the Commission, or announce an offering of, any equity securities issued by the Company, within 180 days after the Effective Date, except for the Shares. 6. Conditions of the Underwriters' Obligations. The obligations of the Underwriters to purchase the Shares are subject to the accuracy on the date of this Agreement and on each Closing Date, of the representations and warranties of the Company and the Investment Adviser in this Agreement, to the accuracy and completeness of all statements made by the Company or the Investment Adviser, or any of their officers in certificate delivered to the Representatives or their counsel pursuant to this Agreement, to performance by the Company and the Investment Adviser of their obligations under this Agreement and to each of the following additional conditions: (a) The Registration Statement must have become effective by 5:30 p.m., New York City time, on the date of this Agreement or such later date and time as these Representatives consent to in writing. If required, the Prospectus must have been filed in accordance with Rule 497 of the Securities Act Rules. (b) No order suspending the effectiveness of the Registration Statement may be in effect an no proceedings for such purpose may be pending before or threatened by the Commission, and any requests for additional information on the part of the Commission (to be included in the Registration Statement or Prospectus otherwise) must be complied with to the reasonable satisfaction of the Representatives and their counsel. (c) Since the dates as of which information is given in the Registration Statement and Prospectus, (1) there must not have been any material change (other than as a result of the Firm Shares Closing) in the shares of beneficial interest or liabilities of the Company, (2) there must not have been any material adverse change in the general affairs, prospects, management, business, financial condition or results of operations of the Company, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated by the Prospectus, (3) the Company must not have sustained any material loss or interference with its business from any court or legislative or other governmental action, order or decree, or any other occurrence, not described in the Prospectus, and (4) there must not have occurred any event, other than events which result from actions taken by the Administrator or the Underwriters, that makes untrue or incorrect in nay material respect any statement or information contained in the Prospectus or that is not reflected in the Prospectus but should be reflected in it in order to make the statements or information in it not misleading in any material respect,if, in the judgment of the Representatives, any such development referred to in clause (1), (2), (3), or (4) makes it impracticable or inadvisable to consummate the sale and delivery of the Shares by the Underwriters at the initial public offering price. (d) The Representatives must have received on the date of this Agreement certificates, dated such date, of the chief executive or operating officer and the chief financial or accounting officer of each of the Company and the Investment Adviser certifying that (1) the signers have examined the Registration Statement, the Prospectus and this Agreement, (2) the representations and warranties of the Company and the Investment Adviser in this Agreement are accurate on and as of the date of the certificate, (3) there has not been any material adverse change in the general affairs, prospects, management, business, financial condition or results of operations oft he Company, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated by the Prospectus, and (4) to the knowledge of such officers, no actions to delay the effectiveness of the Registration Statement, to prohibit the sale of Shares or having or which may have any material adverse effect on the Investment Adviser have been taken or threatened by the Commission. The Representatives must receive on each Closing Date certificates, dated such Closing Date, of such officers certifying to the effect set forth in (1), (2), and that (1) to the knowledge of such officers, no order suspending the effectiveness of the Registration Statement, prohibiting the sale of the Shares or having a material adverse effect on the Investment Adviser has been issued and no proceedings for any such purpose are pending before or threatened by the Commission and (2) each of the Company and the Adviser has performed all agreements that this Agreement requires it to perform by such Closing Date. (e) The Representatives must receive on each Closing Date the opinions dated such Closing Date substantially in the form of Annex A to this Agreement from Gordon Hurwitz Butowsky Weitzen Shavlov & Wein. (f) The Representatives must receive on each Closing Date, the opinions dated such Closing Date substantially in the form of Annex C to this Agreement from Robert G. Galli, Esq., Executive Vice President and General Counsel of the Investment Adviser. (g) The Representatives must receive on Closing Date from Sadden, Arps, Slate, Meagher & Flom, their counsel, an opinion dated such Closing Date with respect to the Company, the Shares, the Registration Statement and the Prospectus, this Agreement and the form and sufficiency of all proceedings taken in connection with the sale and delivery of the Shares. Such opinion and proceedings shall be satisfactory in all respects to the Representatives. The Company and the Investment Adviser must have furnished to such counsel such documents as they may reasonably request for the purpose of enabling them to render such opinion. (h) The Representatives must receive by 1:00 p.m. on the date this Agreement is signed and delivered by the Representatives a signed letter, dated such date, substantially in the form of Annex B to this Agreement from the firm of accountants designated in such Annex. The Representatives must also receive on each Closing Date a signed letter form such accountants, dated such Closing Date, confirming on the basis of a review in accordance with the procedures set forth in their earlier letter that nothing has come to their attention during the period from a date not more than five business days before the date of this Agreement, specified in the letter, to a date not more than five business days before such Closing Date that would require any change in their letter referred to in the foregoing sentence. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement will comply with this agreement only if they are in the form and scope previously agreed to or satisfactory to the Representatives and counsel for the Representatives. 7. Indemnification. (a) Each of the Company and the Investment Adviser, jointly and severally will indemnify and hold harmless each Underwriter, the directors, officers, employees and agents of each Underwriter and each person, if any, who controls each Underwriter within the meaning of Section 15 of the Securities Act against any and all losses, claims, damages and liabilities, join or several (including any investigation, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of , any action, suit or proceeding or any claim asserted), to which they, or any of them, may become subject under the Securities Act, the Exchange Act, the Investment Company Act, the Advisers Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities arise out of or are based on any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, the Registration Statement or the Prospectus, or the omission or alleged omission to state in such document a material fact required to be stated in it or necessary to make the statements in it not misleading, provided that the Company and the Investment Adviser will not be liable to the extent that such loss, claim, damage, or liability arises from the sale of the Shares in the public offering to any person by an Underwriter and is abased on an untrue statement or omission or alleged untrue statement or omission (1) made in reliance on and in conformity with information furnished in writing to the Company by the Representatives on behalf of any Underwriter expressly for use in the document, (2) made in reliance on and in conformity with the information furnished in writing to the Company by the Administrator expressly for use in the document or (3) in a preliminary prospectus if the Prospectus corrects the untrue statement or omission or alleged untrue statement or omission that is the basis of the loss, claim, damage or liability for which indemnification is sought and a copy of the Prospectus was not sent or given to such person at or before the confirmation of the sale to such person in any case where such delivery is required by the Securities Act, unless such failure to deliver the Prospectus was a result of noncompliance by the Company with section 5(d). This indemnity agreement will be in addition to any liability that the Company or the Investment Adviser might otherwise have. (b) Each Underwriter will indemnify and hold harmless the Company, the Investment Adviser, each person, if any, who controls the Company or the Investment Adviser within the meaning of Section 15 of the Securities Act, each director of the Company and each officer of the Company who signs the Registration Statement to the same extent as the foregoing indemnity from the Company and the Investment Adviser to each Underwriter, but only insofar as losses, claims, damages or liabilities arise out of or are based on any untrue statement or omission or alleged untrue statement or omission made in reliance on and in conformity with information furnished in writing to the Company by the Representatives on behalf of such Underwriter expressly for use in preparation of the documents in which the statement or omission is made or alleged to be made. The Company and the Investment Adviser acknowledge that the statements under the caption "Underwriting" in, any preliminary prospectus and the Prospectus constitute the only information furnished in writing to the Company by the Representatives on behalf of the Underwriters expressly for use in any such document, and the Underwriters confirm that such statements are correct. This indemnity will be in addition to any liability that each Underwriter might otherwise have. (c) Any party that proposes to assert the right to be indemnified under this Section will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section, notify each such indemnifying party of the commencement of such action, enclosing a copy of all papers served, but the omission so to notify such indemnifying party will not relieve it from any liability that it may have to any indemnified party otherwise than under this Section. If any such action is brought against any indemnified party and it notifies the indemnifying party of its commencement, the indemnifying party will be entitled to participate in, and, to the extent that it elects by delivering written notice to the indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, jointly with any other indemnifying party similarly notified, to assume the defense of the action, with counsel satisfactory to the indemnified party, and after notice from the indemnifying party to the indemnified party of its election to assume the defense, the indemnifying party will not be liable to the indemnified party for any legal or other expenses except as provided below and except for the reasonable costs of investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its counsel in any such action, but the fees and expenses of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (3) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees and expenses of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm at any one time for all such indemnified party or parties. All such fees and expenses will be reimbursed promptly as they are incurred. An indemnifying party will not be liable for any settlement of any action or claim effected without its written consent or, in connection with any proceeding or related proceeding in the same jurisdiction, for the fees and expenses of more than one separate counsel for all indemnified parties. (d) The indemnity agreements contained in this Paragraph and the representations, warranties and agreements of the Company and the Investment Adviser in Paragraph 4 and Paragraph 5 hereof shall survive the delivery of the Shares and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party. (e) Notwithstanding the foregoing, neither the Investment Adviser nor the Representatives shall be entitled to indemnification from the Company or the Shareholders pursuant to this Agreement in the event such person is found guilty of willful malfeasance, bad faith, or gross negligence, in the performance of his duties, or by reason of such person's reckless disregard of such person's obligations and duties under this Agreement. 8. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing Section 7 is applicable in accordance with its terms but for any reason is held to be unavailable from the Company, the Investment Adviser or the Underwriters, the Company, the Investment Adviser and the Underwriters will contribute to the total losses, claims, damages and liabilities (including any investigation, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action or any claims asserted, but after deducting any contribution received by the Company or the Investment Adviser from persons other than the Underwriters, such as persons who control the Company or the Investment Adviser within the meaning of the Securities Act, officers of the Company who signed the Registration Statement and directors of the Company, who may also be labile for contribution) to which the Company or the Investment Adviser and any one or more of the Underwriters may be subject in such proportion so that (i) the Underwriters are responsible for that portion represented by the percentage that the underwriting discount appearing on the cover of the Prospectus bears to the public offering price appearing on the cover, (ii) and the Company and the Investment Adviser in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and the Investment Adviser on the other or (iii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect no only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Investment Adviser on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations and the Investment Adviser with respect to such offering, in each case. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact related to information supplied by the Company or the Investment Adviser, the intent of the parties an their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 8 were to be determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 8 shall be deemed to include, for purposes of this Section 8, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise paid or become liable to pay by reason of nay untrue or alleged untrue statement or omission or alleged omission. The Underwriters' obligations to contribute as provided in this Section 8 are several in proportion to their respective underwriting obligations and not joint; provided that (1) no Underwriter (except as may be provided in the Agreement Among Underwriters) will be responsible for any amount in excess of the underwriting discount applicable to the Shares purchased by such Underwriter, (2) no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentations, and (3) no person found guilty of willful malfeasance, bad faith, or gross negligence,in the performance of such person's duties, or by reason of such person's reckless disregard of his obligations and duties under this Agreement shall be entitled to contribution from the Company or the Shareholders. For purposes of this Section, any person who controls a party to this Agreement within the meaning of the Securities Act will have the same rights to contribution as that party, and each officer of the Company who signed the Registration Statement and each director of the Company will have the same rights to contribution as the Company, subject in each case to clauses (1), (2) and (3) of this Section. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section, notify any such party or parties from whom contribution may be sought, but the omission so to notify will not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have otherwise than under this Section. No party will be liable for contribution with respect to any action or claim settled without its written consent. 9. Termination. This Agreement may be terminated by the Representatives or by Underwriters who have agreed to purchase at least 50% of the Shares by notifying the Company at any time. (a) before the later of the effectiveness of the Registration Statement and the time when the Shares are first generally offered by the Representatives to dealers by letter or telegram, (b) at or before any Closing Date, if in the judgment of the Representatives or in the judgment of such Underwriters payment for and delivery of the Shares is rendered impracticable or inadvisable because (1) trading in the equity securities of the Company is suspended by the Commission, by an exchange that lists the Shares, or by the National Association of Securities Dealers Automated Quotation Market System, (2) additional material governmental restrictions,not in force on the date of this Agreement, have been imposed upon trading in securities generally or minimum or maximum prices have been generally established on the New York Stock Exchange, or trading in securities generally has been suspended on any such Exchange or a general banking moratorium has been established by Federal or New York authorities, or (3) any outbreak or material escalation of hostilities or other calamity or crisis occurs the effect of which is such as to make it impracticable to market the Shares, or (c) at or before the Closing Date, if any of the conditions specified in Section 6 have not been fulfilled when and as required by this Agreement. If this Agreement is terminated pursuant to any of its provisions, except as otherwise provided, no party will be under any liability to any other party, except that (1) if this Agreement is terminated by the Representatives or the Underwriters because of any failure or refusal on the part of the Company or the Investment Adviser to comply with its terms or because the conditions in Section 6 are not satisfied, the Company and the Investment Adviser, jointly and severally, will reimburse the Underwriters for all reasonable out-of-pocket expenses (including the reasonable fees and disbursements of their counsel) incurred by them in connection with the proposed purchase and sale of the Shares and (2) no Underwriter who has failed or refused to purchase the Shares agreed to be purchased by it under this Agreement, will be relieved of liability to the Company, the Investment Adviser or to the other Underwriters for damages occasioned by its default. 10. Substitution of Underwriters. If one or more of the Underwriters fails (other than for a reason sufficient to justify the termination of this Agreement) to purchase on any Closing Date the Shares agreed to be purchased on such Closing Date by such Underwriter or Underwriters, the Representatives may find one or more substitute underwriters to purchase such shares or make such other arrangements as the Representatives deem advisable or one or more of the remaining Underwriters may agree to purchase such Shares in such proportions as may be approved by the Representatives, in each case upon the terms set forth in this Agreement. If no such arrangements have been made within 36 hours after such Closing Date, and (a) the number of Shares to be purchased by the defaulting Underwriters on such Closing Date does not exceed 10% of the Shares that the Underwriters are obligated to purchase on such Closing Date, each of the nondefaulting Underwriters will be obligated to purchase such Shares on the terms set forth in this Agreement in proportion to their respective obligations under this Agreement, or (b) the number of Shares to be purchased by the defaulting Underwriters on such Closing Date exceeds 10% of the Shares to be purchased by all the Underwriters on such Closing Date, the Company will be entitled to an additional period of 24 hours within which to find one or more substitute underwriters reasonably satisfactory to the Representatives to purchase such Shares on the terms set forth in this Agreement. In any such case, either the Representatives or the Company will have the right to postpone the applicable Closing Date for not more than five business days in order that necessary changes and arrangements (including any necessary amendments or supplements to the Registration Statement or Prospectus) may be effected by the Representatives and the Company. If the number of Shares to be purchased on such Closing Date by such defaulting Underwriter or Underwriters exceeds 10% of the Shares that the Underwriters are obligated to purchase on such Closing Date, and none of the nondefaulting Underwriters or the Company makes arrangements pursuant to this Section within the period stated for the purchase of the Shares that the defaulting Underwriters agreed to purchase, this Agreement will terminate without liability on the part of any nondefaulting Underwriter to the Company and without liability on the part of the Company, except in both cases, as provided in Sections 5, 7, 8 and 9. This Section will not affect the liability of any defaulting Underwriter to the Company or the Investment Adviser or the nondefaulting Underwriters arising out of such default. A substitute underwriter will become an Underwriter for all purposes of this Agreement. 11. Miscellaneous. The reimbursement, indemnification and contribution agreements in sections 5, 7, 8 and 9 of the representations and agreements of the Company, the Investment Adviser and the Underwriters in this Agreement will remain in full force and effect regardless of any termination of this Agreement, any investigation made by or on behalf of any Underwriter, the Company, the Investment Adviser or any controlling person and delivery of and payment for the Shares. This Agreement is for the benefit of the Underwriters, the Company and the Investment Adviser and their successor and assigns, and, to the extent expressed in this Agreement, for the benefit of persons controlling any of the Underwriters, the Company or the Investment Adviser, and directors and officers of the Company, and their respective successor and assigns, and no other person, partnership, association or corporation will acquire or have any right under or by virtue of this Agreement. The term "successors and corporation will acquire or have any right under or by virtue of this Agreement. The term "successor and assigns" does not include any purchaser of Shares from any Underwriter merely because of such purchase. All notices and communications under this Agreement will be in writing, effective only on receipt and mailed or delivered, by messenger, facsimile transmission or otherwise, to the Representatives in care of PaineWebber Incorporated at 1285 Avenue of the Americas, New York, New York 10019, Attn: Equity Syndicate Department to the Company, to its agent for service at such agent's address on the cover of the Registration Statement and to the Investment Adviser at its address set forth in the Prospectus. Any action required or permitted to be taken by the Representatives under this Agreement may be taken by them jointly or by PainWebber Incorporated. The Underwriters understand and agree that the obligations of the Company under this Agreement are not binding upon any shareholder or trustee of the Company personally, but bind only the Company and the Company's property. The Underwriters acknowledge that they have notice of the provisions of the Declaration of Trust of the Company disclaiming shareholder and trustee liability for acts and obligations of the Company. This Agreement may be signed in multiple counterparts that taken as a whole constitute one agreement. This Agreement will be governed by and construed in accordance with the laws of the State of New York. Please confirm that the foregoing correctly sets forth the agreement between us. Very truly yours, OPPENHEIMER MULTI-SECTOR INCOME TRUST By: /s/ Donald W. Spiro ------------------------- Title: President OPPENHEIMER MANAGEMENT CORPORATION, By: /s/ Robert G. Zack ------------------------- Title: Senior Vice President CONFIRMED: PAINEWEBBER INCORPORATED THOMSON MCKINNON SECURITIES INC. ADVEST, INC. INTERSTATE SECURITIES CORPORATION RAYMOND JAMES & ASSOCIATES, INC. As Representatives of the Underwriters In case of PaineWebber Incorporated 1285 Avenue of the Americas New York, New York 10019 By: PaineWebber Incorporated. By:______________________ Title: Managing Director Acting on behalf of itself and the Underwriters named in Schedule 1. SCHEDULE 1 Number of Firm Shares to be Name Purchased ---- ----------- PaineWebber Incorporated 2,060,800 Thomson McKinnon Securities Inc. 2,060,800 Advest, Inc. 2,060,800 Interstate Securities Corporation 2,060,800 Raymond James & Associates, Inc. 2,060,800 Bear, Stearns & Co. Inc. 560,000 The First Boston Corporation 560,000 Alex, Brown & Sons Incorporated 560,000 Donaldson, Lufkin & Jenrette Securities Corporation 560,000 A.G. Edwards & Sons, Inc. 560,000 Prudential-Bache Securites Inc. 560,000 Salomon Brothers Inc. 560,000 Smith Barney, Harris Upham & Co. Incorporated 560,000 Dean Witter Reynolds Inc. 560,000 Robert W. Baird & Co. Incorporated 280,000 Bateman Eichler, Hill Richards Incorporated 280,000 William Blair & Company 280,000 Blunt Ellis & Loewi Incorporated 280,000 J.C. Bradford & Co. 280,000 Butcher & Singer Inc. 280,000 Cowen & Co. 280,000 Dain Bosworth Incorporated 280,000 First Albany Corporation 280,000 First of Michigan Corporation 280,000 Janney Montgomery Scott Inc. 280,000 Ladengurg, Thalmann & Co. Inc. 280,000 Legg Mason Wood Walder Incorporated 280,000 McDonald & Company Securities, Inc. 280,000 Morgan Keegan & Company, Inc. 280,000 Neuberger & Berman 280,000 Oppenheiemr & Co., Inc. 280,000 Piper, Jaffray & Hopwood Incorporated 280,000 Prescott, Ball & Turben, Inc. 280,000 The Robinson-Humphrey Company, Inc. 280,000 Rotan Mosle Inc. 280,000 Stifel, Nicolaus & Company, Incorporated 280,000 Sutro & Co. Incorporated 280,000 Tucker, Anthony & R.L. Day, Inc. 280,000 Wheat, First Securities, Inc. 280,000 Birr, Wilson Securities, Inc. 140,000 Boettcher & Company, Inc. 140,000 Carolina Securities Corporation 140,000 The Chicago Corporation 140,000 Crowell, Weedon & Co. 140,000 Doft & Co., Inc. 140,000 Eppler, Guerin & Turner, Inc. 140,000 Fahnestock & Co., Inc. 140,000 First Manhattan Co. 140,000 Furman Selz Mager Dietz & Birney Incorporated 140,000 Gruntal & Co., Incorporated 140,000 Howard, Weil, Labouisse, Friedrichs Incorporated 140,000 Johnson, Lane, Space, Smith & Co., Inc. 140,000 Johnston, Lemon & Co. Incorporated 140,000 Josephthal & Co., Incorporated 140,000 C.J. Lawrence, Morgan Grenfell Inc. 140,000 Mabon, Nugent & Co. 140,000 Morgan, Olmstead, Kennedy & Gardner Incorporated 140,000 Newhard, Cook & Co., Incorporated 140,000 The Ohio Company 140,000 Rauscher Pierce Refsnes, Inc. 140,000 Rodman & Renshaw, Inc. 140,000 Scott & Stringfellow, Inc. 140,000 Wedbush Securities, Inc. 140,000 Baker, Watts & Co. 56,000 George K. Baum & Company 56,000 Branch, Cabell and Company 56,000 Brean Murray, Foster Securities Inc. 56,000 JW Charles-Bush Securities, Inc. 56,000 B.C. Christopher Securities Co. 56,000 Craigie Incorporated 56,000 Culverwell & Co., Inc. 56,000 R.G. Dickinson & Co. 56,000 Dominick & Dominick, Inc. 56,000 First Equity Corporation of Florida 56,000 First Tryon Securities, Inc. 56,000 Fitzgerald, Dearman & Roberts Inc. 56,000 Hanifen, Imhoff Inc. 56,000 J.J.B. Hilliard, W.L. Lyons, Inc. 56,000 Howe, Barnes & Johnson, Inc. 56,000 Independence Securities Inc. 56,000 Jesup & Lamont Securities Co., Inc. 56,000 John G. Kinnard and Co., Inc. 56,000 Emmett A. Larkin Company, Inc. 56,000 Needham & Company, Inc. 56,000 W.H. Newbold's Son & Co., Inc. 56,000 David A. Noyes & Company 56,000 Parker/Hunter Incorporated 56,000 Philips, Appel & Walden, Inc. 56,000 Rowland, Simon & Co. 56,000 Seidler Amdec Securities Inc. 56,000 Smith, Hague & Co., Incorporated 56,000 Smith, Moore & Co. 56,000 Henry F. Swift & Co. 56,000 Allied Group Securities Corp. 28,000 American Securities Corporation 28,000 Arthurs, Lestrange & Company Incorporated 28,000 Barclay Investments, Inc. 28,000 Butler, Wick & Co., Inc. 28,000 Cleary Gull Reiland McDevitt & Collopy, Inc. 28,000 Cunningham, Schmertz & Co., Inc. 28,000 Davenport & Co. of Virginia, Inc. 28,000 Dorsey & Company Inc. 28,000 Evans & Co. Incorporated 28,000 Ferris & Company, Incorporated 28,000 First Affiliated Securities, Inc. 28,000 Gabelli & Company, Inc. 28,000 Hopper Soliday & Co., Inc. 28,000 Investment Corporation of Virginia 28,000 Kuhns Brothers & Laidlaw, Inc. 28,000 Oberweis Securities, Inc. 28,000 The Pinnacle Group 28,000 Private Ledger Securities, Inc. 28,000 Southwest Securities Inc. 28,000 Edward A. Viner & Co., Inc. 28,000 Young, Smith & Peacock, Inc. 28,000 ------ Total 28,000,000 ANNEX A OPINION OF GORDON HURWITZ BUTOWSKY WEITZEN SHALOV & WEIN 1. Oppenheimer Multi-Sector Income Trust (the "Company") has been duly organized and is validly existing as a business trust in good standing under the laws of the Commonwealth of Massachusetts and is duly qualified as a foreign entity and in good standing in each state of the United States of America in which its ownership or leasing of property requires such qualification and in which the failure to qualify would have a material adverse effect on its business or operations. The Company has full corporate power and authority to won its properties and conduct its business as described in the Registration Statement. 2. The authorized shares of beneficial interest of the Company are as described in the Prospectus. The shares of beneficial interest of the Company conform in all material respects to the description of them in the Prospectus insofar as such statements are legal matters. Proper proceedings have been taken to validly issue and authorize the outstanding shares of such shares of beneficial interest (including the Shares being issued). All the outstanding shares of beneficial interest (including the Shares, when delivered to and paid for by the Underwriters as provided in the Agreement) have been duly and validly issued and are fully paid and nonassessable. The holders of outstanding shares of beneficial interest of the Company are not entitled to any preemptive or other similar rights. 3. The Registration Statement has become effective under the Securities Act and, to the best of our knowledge, no stop order suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus is in effect, and no proceedings for that purpose have been instituted or are pending or contemplated by the Commission. Any required filing of the Prospectus or any supplements to it have been made in accordance with Rule 497 of the Securities Act Rules. 4. The Registration Statement and the Prospectus (except as to the financial statements contained in them, as to which we express no opinion) comply as to form in all material respects with the requirements of the Securities Act, the Investment Company Act, the Securities Act Rules and the Investment Company Act Rules. 5. We have no reason to believe that the Registration Statement or any amendment to it at the time it became effective, or as of the Closing Date contained any untrue statement of a material fact or omitted to state any material fact required to be stated in it or necessary in order to make the statements in it not misleading or that the Prospectus, as amended or supplemented, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements in it, in light of the circumstances under which they were made, not misleading. 6. To the best of our knowledge, there are no franchises, contracts or other documents or any pending or threatened proceedings, legal or otherwise, before any court, governmental body or arbitrator, that are of a character required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement and that are not adequately described or filed as required. 7. The Agreement has been duly authorized, signed and delivered by the Company and complies with all applicable provisions of the Investment Company Act Rules. 8. Each of the Advisory Agreement, the Administration Agreement (as defined in the Prospectus) and the Custodian Agreement (as so defined) (i) has been duly and validly authorized, signed and delivered by the Company, (ii) complies with all applicable provisions of the Investment Company Act Rules and (iii) constitutes the legal, valid and binding obligations of the Company enforceable in accordance with its terms, subject, as to enforcement, to applicable bankruptcy, reorganization, insolvency or other similar laws relating to or affecting creditors' rights generally and to termination under the Investment Company Act. 9. None of (i) the execution and delivery of the Agreement, the Advisory Agreement, the Administrative Agreement or the Custodian Agreement, (ii) the issue and sale by the Company of the Shares sold by the Company as contemplated by the agreement and (iii) the consummation in the Company of the other transactions contemplated by such agreements conflicts with, or results in a breach of, the declaration of trust or by- laws of the Company or any agreement or instrument known to us to which the Company is a party or by which the Company is bound, any law or regulation or, so far as is known to us, any order to regulation of any court, governmental instrumentality or arbitrator. 10. To the best of our knowledge, the Company is not currently in breach of, or in default under, any material written agreement or instrument to which it is a party or by which it or its property is bound or affected. 11. To the best of our knowledge, no holder of securities of the Company has rights to the registration of any securities of the Company because of the filing of the Registration Statement. 12. No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated in the Agreement, the Advisory Agreement, the Administration Agreement or the Custodian Agreement, except such as have been obtained under the Securities Act, the Investment Company Act, the Securities Act Rules and the Investment Company Act Rules and such as may be required under state securities or blue sky laws in connection with the purchase and distribution of the Shares by the Underwriters. 13. The Shares are duly authorized for listing, subject to official notice of issuance, on the New York Stock Exchange. 14. The Company is duly registered with the Commission under the Investment Company Act as a closed-end diversified management investment company, and all required action has been taken by the Company under the Securities Act and the Investment Company Act to make the public offering and consummated the sale of the Shares as provided in the Agreement. 15. We confirm the accuracy of the statements set forth under the heading "Taxes" in the Prospectus. In rendering the foregoing opinions, Gordon Hurwitz Butowsky Weitzen Shalov & Wein may rely (i) as to matters involving the application of laws of any jurisdiction other than the State of New York or the United States, to the extent they deem proper and specify in such opinion, upon the opinion of other counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for the Underwriters and (ii) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials. ANNEX B ACCOUNTANT'S LETTER We have examined the statement of assets and liabilities of Oppenheimer Multi-Sector Income Trust (the "Company"), as of March 15, 1988. Such statement, and our report with respect thereto, are included in Amendment No. 2 filed with the Securities And Exchange COmmission (the "Commission") on March 24, 1988, to the Registration Statement on Form N-2 (Registration No. 33-20191) filed with the Commissionon February 22, 1988 and amended on February 26, 1988. The Registration Statement, as ameded on March 24, 1988, is herein referred to as teh Registration Statement. In connection with the Registration Statement: 1. We are independent certified public accountants with respect to the Company within the meaning of the Securities Act of 1933 (the "Securities Act") and the rules and regulations thereunder. 2. In our opinion, the statement of assets and liabilities examined by us and included in the Registration Statement complies as to form in all material respects with the applicable accounting requirements or the Securities Act and the Investment Company Act of 1940 and the respective rules and regulations thereunder. 3. For purposes of this letter we have read the 1987 adn 1988 minutes of meetings of the shareholders, the Board of Directors and all Committees of the Board of Trustees of the Company as set forth in the minute books at March 15, 1988, officials of the Company having advised us that the minutes of all such meetings through March 15, 1988, were set forth therein, and have made inquiries of certain officials of the Company who have responsibility for financial and accounting matters regarding whether there was any change at March 24, 1988, in the net assets, capital stock or liabilities of the Company as compared with amounts shown on the statement of assets and liabilities included in the Registration Statement. On the basis of these inquiries and our reading of the minutes, nothing came to our attention that caused us to believe that there were any such changes. ANNEX C OPINION OF COUNSEL 1. The Investment Adviser has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Colorado, is duly qualified as a foreign corporation and in good standing in each other jurisdiction in which its ownership of property or its conduct of business requires such qualification and in which the failure to qualify would have a material adverse effect on the business or operations of the Investment Adviser and has full power and authority to conduct its business as described in the Registration Statement. 2. The Investment Adviser is duly registered with the Commission under the Advisers Act as an investment adviser and is not prohibited under the Advisers Act, the Investment Company Act, the Advisers Act Rules or the Investment Company Act Rules from acting as investment adviser or otherwise under the Advisory Agreement for the Company as contemplated by the Prospectus. 3. The Agreement has been duly and validly authorized, executed and delivered by the Investment Adviser and complies with all applicable provisions of the Investment Company Act and the Investment Company Act Rules. 4. The Advisory Agreement has been duly and validly authorized, executed and delivered by the Investment Adviser, complies with all applicable provisions of the Investment Company Act and the Investment Company Act Rules and constitutes a legal, valid and binding obligation of the Investment Adviser enforceable in accordance with its terms, subject, as to enforcement, to applicable bankruptcy, reorganization, insolvency or other similar laws relating to or affecting creditors' rights generally and to termination under the Investment Company Act. 5. No consent, approval, authorization or order of any court, governmental agency or body or securities exchange or association is required for the consummation of the transactions contemplated in the Agreement or the Advisory Agreement. 6. Neither the execution and delivery of the Agreement or the Advisory Agreement nor the consummation by the Investment Advisor of the transactions contemplated by the Agreement or the Advisory Agreement conflicts with, or results in a breach of, the charter or By-laws of the Investment Adviser or any agreement or instrument known to us to which the Investment Adviser is a party or by which the Investment Adviser is bound, andy law, rule, regulation or, so far as is known to us, order of any court, government instrumentality, securities exchange or association or arbitrator. 7. The description of the Investment Advisor in the Prospectus does not contain any untrue statement of a material fact or omit to state any material fact required to be stated in it or necessary in order to make the statements in it not misleading. In rendering the foregoing opinion, the Counsel who is also general counsel of Oppenheimer Management Corporation may rely (i) as to matters involving the application of laws of any jurisdiction other than the State of New York or the Untied States, to the extent he deems proper and specifies in such opinion, upon the opinion of other counsel of good standing whom he believes to be reliable and who are satisfactory to counsel for the Underwriters and (ii) as to matters of fact, to the extent he deems proper, on certificates of responsible officers of the Investment Adviser and public officials. OFMI\680 EX-10 12 OPPENHEIMER MULTI-SECTOR INCOME TRUST CO-CUSTODY AGREEMENT Agreement made as of this 18th day of August, 1992, between OPPENHEIMER MULTI-SECTOR INCOME TRUST, a business trust organized and existing under the laws of the Commonwealth of Massachusetts, having its principal office and place of business at 2 World Trade Center, New York, New York 10048 (hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New York corporation authorized to do a banking business, having its principal office and place of business at 48 Wall Street, New York, New York 10286 (hereinafter called the "Custodian"). W I T N E S S E T H that for and in consideration of the mutual promises hereinafter set forth, the Fund and the Custodian agree as follows: ARTICLE I DEFINITIONS Whenever used in this Agreement, the following words and phrases, shall have the following meanings: 1. "Agreement" shall mean this Custody Agreement and all Appendices and Certifications described in the Exhibits delivered in connection herewith. 2. "Authorized Person" shall mean any person, whether or not such person is an Officer or employee of the Fund, duly authorized by the Board of Trustees of the Fund to give Oral Instructions and Written Instructions on behalf of the Fund and listed in the Certificate annexed hereto as Appendix A or such other Certificate as may be received by the Custodian from time to time, provided that each person who is designated in any such Certificate as an "Officer of OSS" shall be an Authorized Person only for purposes of Articles XII and XIII hereof. 3. "Book-Entry System" shall mean the Federal Reserve/Treasury book- entry system for United States and federal agency securities, its successor or successors and its nominee or nominees. 4. "Call Option" shall mean an exchange traded Option with respect to Securities other than Index, Futures Contracts, and Futures Contract Options entitling the holder, upon timely exercise and payment of the exercise price, as specified therein, to purchase from the writer thereof the specified underlying instruments, currency, or Securities. 5. "Certificate" shall mean any notice, instruction, or other instrument in writing, authorized or required by this Agreement to be given to the Custodian which is actually received (irrespective of constructive receipt) by the Custodian and signed on behalf of the Fund by any two Officers. The term Certificate shall also include instructions by the Fund to the Custodian communicated by a Terminal Link. 6. "Clearing Member" shall mean a registered broker-dealer which is a clearing member under the rules of O.C.C. and a member of a national securities exchange qualified to act as a custodian for an investment company, or any broker-dealer reasonably believed by the Custodian to be such a clearing member. 7. "Collateral Account" shall mean a segregated account so de- nominated which is specifically allocated to a Series and pledged to the Custodian as security for, and in consideration of, the Custodian's issuance of any Put Option guarantee letter or similar document described in paragraph 8 of Article V herein. 8. "Covered Call Option" shall mean an exchange traded Option entitling the holder, upon timely exercise and payment of the exercise price, as specified therein, to purchase from the writer thereof the specified underlying instruments, currency, or Securities (excluding Futures Contracts) which are owned by the writer thereof. 9. "Depository" shall mean The Depository Trust Company ("DTC"), a clearing agency registered with the Securities and Exchange Commission, its successor or successors and its nominee or nominees. The term "Depository" shall further mean and include any other person authorized to act as a depository under the Investment Company Act of 1940, its successor or successors and its nominee or nominees, specifically identified in a certified copy of a resolution of the Fund's Board of Trustees specifically approving deposits therein by the Custodian, including, without limitation, a Foreign Depository. 10. "Financial Futures Contract" shall mean the firm commitment to buy or sell financial instruments on a U.S. commodities exchange or board of trade at a specified future time at an agreed upon price. 11. "Foreign Subcustodian" shall mean an "Eligible Foreign Custodian" as defined in Rule 17-5 which is appointed by the Custodian to perform or coordinate the receipt, custody and delivery of Foreign Property of the Fund outside the United States in a manner consistent with the provisions of this Agreement and whose written contract is approved by the Board of Trustees of the Fund in accordance with Rule 17f-5. References to the Custodian herein shall, when appropriate, include reference to its Foreign Subcustodians. 12. "Foreign Depository" shall mean an entity organized under the laws of a foreign country which operates a system outside the United States in general use by foreign banks and securities brokers for the central or transnational handling of securities or equivalent book-entries which is regulated by a foreign government or agency thereof and which is an "Eligible Foreign Custodian" as defined in Rule 17f-5. 13. "Foreign Securities" shall mean securities and/or short term paper as defined in Rule 17f-5 under the Act, whether issued in registered or bearer form. 14. "Foreign Property" shall mean Foreign Securities and money of any currency which is held outside of the United States. 15. "Futures Contract" shall mean a Financial Futures Contract and/or Index Futures Contracts. 16. "Futures Contract Option" shall mean an Option with respect to a Futures Contract. 17. "Investment Company Act of 1940" shall mean the Investment Company Act of 1940, as amended, and the rules and regulations thereunder. 18. "Index Futures Contract" shall mean a bilateral agreement pursuant to which the parties agree to take or make delivery of an amount of cash equal to a specified dollar amount times the difference between the value of a particular index at the close of the last business day of the contract and the price at which the futures contract is originally struck. 19. "Index Option" shall mean an exchange traded Option entitling the holder, upon timely exercise, to receive an amount of cash determined by reference to the difference between the exercise price and the value of the index on the date of exercise. 20. "Margin Account" shall mean a segregated account in the name of a broker, dealer, futures commission merchant, or a Clearing Member, or in the name of the Fund for the benefit of a broker, dealer, futures commission merchant, or Clearing Member, or otherwise, in accordance with an agreement between the Fund, the Custodian and a broker, dealer, futures commission merchant or a Clearing Member (a "Margin Account Agreement"), separate and distinct from the custody account, in which certain Securities and/or money of the Fund shall be deposited and withdrawn from time to time in connection with such transactions as the Fund may from time to time determine. Securities held in the Book-Entry System or a Depository shall be deemed to have been deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting an appropriate entry in its books and records. 21. "Money Market Security" shall mean all instruments and ob- ligations commonly known as a money market instruments, where the purchase and sale of such securities normally requires settlement in federal funds on the same day as such purchase or sale, including, without limitation, certain Reverse Repurchase Agreements, debt obligations issued or guaranteed as to interest and/or principal by the government of the United States or agencies or instrumentalities thereof, any tax, bond or revenue anticipation note issued by any state or municipal government or public authority, commercial paper, certificates of deposit and bankers' acceptances, repurchase agreements with respect to Securities and bank time deposits. 22. "Nominee" shall mean, in addition to the name of the registered nominee of the Custodian, (i) a partnership or other entity of a Foreign Subcustodian which is used solely for the assets of its customers other than the Custodian and the Foreign Subcustodian, if any, by which it was appointed; or (ii) the nominee of a Foreign Depository which is used for the securities and other assets of its customers, members or participants. 23. "O.C.C." shall mean the Options Clearing Corporation, a clearing agency registered under Section 17A of the Securities Exchange Act of 1934, its successor or successors, and its nominee or nominees. 24. "Officers" shall mean the President, any Vice President, the Secretary, the Treasurer, the Controller, any Assistant Secretary, any Assistant Treasurer, and any other person or persons, whether or not any such other person is an officer or employee of the Fund, but in each case only if duly authorized by the Board of Trustees of the Fund to execute any Certificate, instruction, notice or other instrument on behalf of the Fund and listed in the Certificate annexed hereto as Appendix B or such other Certificate as may be received by the Custodian from time to time; provided that each person who is designated in any such Certificate as holding the position of "Officer of OSS" shall be an Officer only for purposes of Articles XII and XIII hereof. 25. "Option" shall mean a Call Option, Covered Call Option, Index Option and/or a Put Option. 26. "Oral Instructions" shall mean verbal instructions actually received (irrespective of constructive receipt) by the Custodian from an Authorized Person or from a person reasonably believed by the Custodian to be an Authorized Person. 27. "Put Option" shall mean an exchange traded Option with respect to instruments, currency, or Securities other than Index Options, Futures Contracts, and Futures Contract Options entitling the holder, upon timely exercise and tender of the specified underlying instruments, currency, or Securities, to sell such instruments, currency, or Securities to the writer thereof for the exercise price. 28. "Repurchase Agreement" shall mean an agreement pursuant to which the Fund buys Securities and agrees to resell such Securities at a described or specified date and price. 29. "Reverse Repurchase Agreement" shall mean an agreement pursuant to which the Fund sells Securities and agrees to repurchase such Securities at a described or specified date and price. 30. "Rule 17f-5" shall mean Rule 17f-5 (Reg. 270.17f-5) promulgated by the Securities and Exchange Commission under the Investment Company Act of 1940, as amended. 31. "Security" shall be deemed to include, without limitation, Money Market Securities, Call Options, Put Options, Index Options, Index Futures Contracts, Index Futures Contract Options, Financial Futures Contracts, Financial Futures Contract Options, Reverse Repurchase Agreements, over the counter Options on Securities, common stocks and other securities having characteristics similar to common stocks, preferred stocks, debt obligations issued by state or municipal governments and by public authorities, (including, without limitation, general obligation bonds, revenue bonds, industrial bonds and industrial development bonds), bonds, debentures, notes, mortgages or other obligations, and any certificates, receipts, warrants or other instruments representing rights to receive, purchase, sell or subscribe for the same, or evidencing or representing any other rights or interest therein, or rights to any property or assets. 32. "Senior Security Account" shall mean an account maintained and specifically allocated to a Series under the terms of this Agreement as a segregated account, by recordation or otherwise, within the custody account in which certain Securities and/or other assets of the Fund specifically allocated to such Series shall be deposited and withdrawn from time to time in accordance with Certificates received by the Custodian in connection with such transactions as the Fund may from time to time determine. 33. "Series" shall mean the various portfolios, if any, of the Fund as described from time to time in the current and effective prospectus for the Fund, except that if the Fund does not have more than one portfolio, "Series" shall mean the Fund or be ignored where a requirement would be imposed on the Fund or the Custodian which is unnecessary if there is only one portfolio. 34. "Shares" shall mean the shares of beneficial interest of the Fund and its Series. 35. "Terminal Link" shall mean an electronic data transmission link between the Fund and the Custodian requiring in connection with each use of the Terminal Link the use of an authorization code provided by the Custodian and at least two access codes established by the Fund, provided, that the Fund shall have delivered to the Custodian a Certificate substantially in the form of Appendix C. 36. "Transfer Agent" shall mean Oppenheimer Shareholder Services, a division of Oppenheimer Management Corporation, its successors and as- signs. 37. "Transfer Agent Account" shall mean any account in the name of the Fund, or the Transfer Agent, as agent for the Fund, maintained with United Missouri Bank or such other Bank designated by the Fund in a Certificate. 38. "Written Instructions" shall mean written communications actually received (irrespective of constructive receipt) by the Custodian from an Authorized Person or from a person reasonably believed by the Custodian to be an Authorized Person by telex or any other such system whereby the receiver of such communications is able to verify by codes or otherwise with a reasonable degree of certainty the identity of the sender of such communication. ARTICLE II APPOINTMENT OF CUSTODIAN 1. The Fund hereby constitutes and appoints the Custodian as custodian of the Securities and moneys at any time owned or held by the Fund during the period of this Agreement. 2. The Custodian hereby accepts appointment as such custodian and agrees to perform the duties thereof as hereinafter set forth. ARTICLE III CUSTODY OF CASH AND SECURITIES 1. Except for monies received and maintained in the Transfer Agent Account, or as otherwise provided in paragraph 7 of this Article or in Article VIII or XV, the Fund will deliver or cause to be delivered to the Custodian all Securities and all moneys owned by it, at any time during the period of this Agreement, and shall specify with respect to such Securities and money the Series to which the same are specifically allocated, and the Custodian shall not be responsible for any Securities or money not so delivered. Except for assets held at DTC, the Custodian shall physically segregate, keep and maintain the Securities of the Series separate and apart from each other Series and from other assets held by the Custodian. Except as otherwise expressly provided in this Agreement, the Custodian will not be responsible for any Securities and moneys not actually received by it, unless the Custodian has been negligent or has engaged in willful misconduct with respect thereto. The Custodian will be entitled to reverse any credit of money made on the Fund's behalf where such credits have been previously made and moneys are not finally col- lected, unless the Custodian has been negligent or has engaged in willful misconduct with respect thereto; provided that if such reversal is thirty (30) days or more after the credit was issued, the Custodian will give five (5) days' prior notice of such reversal. The Fund shall deliver to the Custodian a certified resolution of the Board of Trustees of the Fund, substantially in the form of Exhibit A hereto, approving, authorizing and instructing the Custodian on a continuous and on-going basis to deposit in the Book-Entry System all Securities eligible for deposit therein, regardless of the Series to which the same are specifically allocated and to utilize the Book-Entry System to the extent possible in connection with its performance hereunder, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities and deliveries and returns of Securities collateral. Prior to a deposit of Securities specifically allocated to a Series in any Depository, the Fund shall deliver to the Custodian a certified resolution of the Board of Trustees of the Fund, substantially in the form of Exhibit B hereto, approving, authorizing and instructing the Custodian on a continuous and ongoing basis until instructed to the contrary by a Certificate to deposit in such Depository all Securities specifically allocated to such Series eligible for deposit therein, and to utilize such Depository to the extent possible with respect to such Securities in connection with its per- formance hereunder, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of Securities collateral. Securities and moneys deposited in either the Book-Entry System or a Depository will be represented in accounts which include only assets held by the Custodian for customers, including, but not limited to, accounts in which the Custo- dian acts in a fiduciary or representative capacity and will be specifically allocated on the Custodian's books to the separate account for the applicable Series. Prior to the Custodian's accepting, utilizing and acting with respect to Clearing Member confirmations for Options and transactions in Options for a Series as provided in this Agreement, the Custodian shall have received a certified resolution of the Fund's Board of Trustees, substantially in the form of Exhibit C hereto, approving, authorizing and instructing the Custodian on a continuous and on-going basis, until instructed to the contrary by a Certificate to accept, utilize and act in accordance with such confirmations as provided in this Agreement with respect to such Series. All Securities are to be held or disposed of by the Custodian for, and subject at all times to the instructions of, the Fund pursuant to the terms of this Agreement. The Custodian shall have no power or authority to assign, hypothecate, pledge or otherwise dispose of any Securities except as provided by the terms of this Agreement, and shall have the sole power to release and deliver Securities held pursuant to this Agreement. 2. The Custodian shall establish and maintain separate accounts, in the name of each Series, and shall credit to the separate account for each Series all moneys received by it for the account of the Fund with respect to such Series. Money credited to a separate account for a Series shall be subject only to drafts, orders, or charges of the Custodian pursuant to this Agreement and shall be disbursed by the Custodian only: (a) As hereinafter provided; (b) Pursuant to Certificates or Resolutions of the Fund's Board of Trustees certified by an Officer and by the Secretary or Assistant Secretary of the Fund setting forth the name and address of the person to whom the payment is to be made, the Series account from which payment is to be made, the purpose for which payment is to be made, and declaring such purpose to be a proper corporate purpose; provided, however, that amounts representing dividends, distributions, or redemptions proceeds with respect to Shares shall be paid only to the Transfer Agent Account; (c) In payment of the fees and in reimbursement of the expenses and liabilities of the Custodian attributable to such Series and authorized by this Agreement; or (d) Pursuant to Certificates to pay interest, taxes, management fees or operating expenses (including, without limitation thereto, Board of Trustees' fees and expenses, and fees for legal accounting and auditing services), which Certificates set forth the name and address of the person to whom payment is to be made, state the purpose of such payment and designate the Series for whose account the payment is to be made. 3. Promptly after the close of business on each day, the Custodian shall furnish the Fund with confirmations and a summary, on a per Series basis, of all transfers to or from the account of the Fund for a Series, either hereunder or with any co-custodian or subcustodian appointed in accordance with this Agreement during said day. Where Securities are transferred to the account of the Fund for a Series but held in a Depository, the Custodian shall upon such transfer also by book-entry or otherwise identify such Securities as belonging to such Series in a fungible bulk of Securities registered in the name of the Custodian (or its nominee) or shown on the Custodian's account on the books of the Book- Entry System or the Depository. At least monthly and from time to time, the Custodian shall furnish the Fund with a detailed statement, on a per Series basis, of the Securities and moneys held under this Agreement for the Fund. 4. Except as otherwise provided in paragraph 7 of this Article and in Article VIII, all Securities held by the Custodian hereunder, which are issued or issuable only in bearer form, except such Securities as are held in the Book-Entry System, shall be held by the Custodian in that form; all other Securities held hereunder may be registered in the name of the Fund, in the name of any duly appointed registered nominee of the Custodian as the Custodian may from time to time determine, or in the name of the Book- Entry System or a Depository or their successor or successors, or their nominee or nominees. The Fund agrees to furnish to the Custodian appropriate instruments to enable the Custodian to hold or deliver in proper form for transfer, or to register in the name of its registered nominee or in the name of the Book-Entry System or a Depository any Securities which it may hold hereunder and which may from time to time be registered in the name of the Fund. The Custodian shall hold all such Securities specifically allocated to a Series which are not held in the Book-Entry System or in a Depository in a separate account in the name of such Series physically segregated at all times from those of any other person or persons. 5. Except as otherwise provided in this Agreement and unless otherwise instructed to the contrary by a Certificate, the Custodian by itself, or through the use of the Book-Entry System or a Depository with respect to Securities held hereunder and therein deposited, shall with respect to all Securities held for the Fund hereunder in accordance with preceding paragraph 4: (a) Promptly collect all income, dividends and dis- tributions due or payable; (b) Promptly give notice to the Fund and promptly present for payment and collect the amount of money or other consideration payable upon such Securities which are called, but only if either (i) the Custodian receives a written notice of such call, or (ii) notice of such call appears in one or more of the publications listed in Appendix D annexed hereto, which may be amended at any time by the Custodian without the prior consent of the Fund, provided the Custodian gives prior notice of such amendment to the Fund; (c) Promptly present for payment and collect for the Fund's account the amount payable upon all Securities which mature; (d) Promptly surrender Securities in temporary form in exchange for definitive Securities; (e) Promptly execute, as custodian, any necessary de- clarations or certificates of ownership under the Federal Income Tax Laws or the laws or regulations of any other taxing authority now or hereafter in effect; (f) Hold directly, or through the Book-Entry System or the Depository with respect to Securities therein deposited, for the account of a Series, all rights and similar securities issued with respect to any Securities held by the Custodian for such Series hereunder; and (g) Promptly deliver to the Fund all notices, proxies, proxy soliciting materials, consents and other written information (including, without limitation, notices of tender offers and exchange offers, pendency of calls, maturities of Securities and expiration of rights) relating to Securities held pursuant to this Agreement which are actually received by the Custodian, such proxies and other similar materials to be executed by the registered holder (if Securities are registered otherwise than in the name of the Fund), but without indicating the manner in which proxies or consents are to be voted. 6. Upon receipt of a Certificate and not otherwise, the Custodian, directly or through the use of the Book-Entry System or the Depository, shall: (a) Promptly execute and deliver to such persons as may be designated in such Certificate proxies, consents, authorizations, and any other instruments whereby the authority of the Fund as owner of any Securities held hereunder for the Series specified in such Certificate may be exercised; (b) Promptly deliver any Securities held hereunder for the Series specified in such Certificate in exchange for other Securities or cash issued or paid in connection with the liquidation, reorganization, refinancing, merger, consolidation or recapitalization of any corporation, or the exercise of any right, warrant or conversion privilege and receive and hold hereunder specifically allocated to such Series any cash or other Securities received in exchange; (c) Promptly deliver any Securities held hereunder for the Series specified in such Certificate to any protective committee, reorganization committee or other person in connection with the reorganization, refinancing, merger, consolidation, recapitalization or sale of assets of any corporation, and receive and hold hereunder specifically allocated to such Series in exchange therefor such certificates of deposit, interim receipts or other instruments or documents as may be issued to it to evidence such delivery or such Securities as may be issued upon such delivery; and (d) Promptly present for payment and collect the amount payable upon Securities which may be called as specified in the Certificate. 7. Notwithstanding any provision elsewhere contained herein, the Custodian shall not be required to obtain possession of any instrument or certificate representing any Futures Contract, any Option, or any Futures Contract Option until after it shall have determined, or shall have received a Certificate from the Fund stating, that any such instruments or certificates are available. The Fund shall deliver to the Custodian such a Certificate no later than the business day preceding the availability of any such instrument or certificate. Prior to such availability, the Custodian shall comply with Section 17(f) of the Investment Company Act of 1940 in connection with the purchase, sale, settlement, closing out or writing of Futures Contracts, Options, or Futures Contract Options by making payments or deliveries specified in Certificates in connection with any such purchase, sale, writing, settlement or closing out upon its receipt from a broker, dealer, or futures commission merchant of a statement or confirmation reasonably believed by the Custodian to be in the form customarily used by brokers, dealers, or future commission merchants with respect to such Futures Contracts, Options, or Futures Contract Options, as the case may be, confirming that such Security is held by such broker, dealer or futures commission merchant, in book-entry form or otherwise in the name the Custodian (or any nominee of the Custodian) as custodian for the Fund; provided, however, that notwithstanding the foregoing, payments to or deliveries from the Margin Account and payments with respect to Securities to which a Margin Account relates, shall be made in accordance with the terms and conditions of the Margin Account Agreement. Whenever any such instruments or certificates are available, the Custodian shall, notwithstanding any provision in this Agreement to the contrary, make payment for any Futures Contract, Option, or Futures Contract Option for which such instruments or such certificates are available only against the delivery to the Custodian of such instrument or such certificate, and deliver any Futures Contract, Option or Futures Contract Option for which such instruments or such certificates are available only against receipt by the Custodian of payment therefor. Any such instrument or certificate delivered to the Custodian shall be held by the Custodian hereunder in accordance with, and subject to, the provisions of this Agreement. ARTICLE IV PURCHASE AND SALE OF INVESTMENTS OF THE FUND OTHER THAN OPTIONS, FUTURES CONTRACTS, FUTURES CONTRACT OPTIONS, REPURCHASE AGREEMENTS, REVERSE REPURCHASE AGREEMENTS AND SHORT SALES 1. Promptly after each execution of a purchase of Securities by the Fund, other than a purchase of an Option, a Futures Contract, a Futures Contract Option, a Repurchase Agreement, a Reverse Repurchase Agreement or a Short Sale, the Fund shall deliver to the Custodian (i) with respect to each purchase of Securities which are not Money Market Securities, a Certificate, and (ii) with respect to each purchase of Money Market Securities, a Certificate, oral Instructions or Written Instructions, specifying with respect to each such purchase: (a) the Series to which such Securities are to be specifically allocated; (b) the name of the issuer and the title of the Securities; (c) the number of shares or the principal amount purchased and accrued interest, if any; (d) the date of purchase and settlement; (e) the purchase price per unit; (f) the total amount payable upon such purchase; (g) the name of the person from whom or the broker through whom the purchase was made, and the name of the clearing broker, if any; and (h) the name of the broker or other party to whom payment is to be made. Custodian shall, upon receipt of such Securities purchased by or for the Fund, pay to the broker specified in the Certificate out of the moneys held for the account of such Series the total amount payable upon such purchase, provided that the same conforms to the total amount payable as set forth in such Certificate, oral Instructions or Written Instructions. 2. Promptly after each execution of a sale of Securities by the Fund, other than a sale of any Option, Futures Contract, Futures Contract Option, Repurchase Agreement, Reverse Repurchase Agreement or Short Sale, the Fund shall deliver such to the Custodian (i) with respect to each sale of Securities which are not Money Market Securities, a Certificate, and (ii) with respect to each sale of Money Market Securities, a Certificate, Oral Instructions or Written Instructions, specifying with respect to each such sale: (a) the Series to which such Securities were specifically allocated; (b) the name of the issuer and the title of the Security; (c) the number of shares or principal amount sold, and accrued interest, if any; (d) the date of sale and settlement; (e) the sale price per unit; (f) the total amount payable to the Fund upon such sale; (g) the name of the broker through whom or the person to whom the sale was made, and the name of the clearing broker, if any; and (h) the name of the broker to whom the Securities are to be delivered. On the settlement date, the Custodian shall deliver the Securities specifically allocated to such Series to the broker in accordance with generally accepted street practices and as specified in the Certificate upon receipt of the total amount payable to the Fund upon such sale, provided that the same conforms to the total amount payable as set forth in such Certificate, oral Instructions or Written Instructions. ARTICLE V OPTIONS 1. Promptly after each execution of a purchase of any Option by the Fund other than a closing purchase transaction, the Fund shall deliver to the Custodian a Certificate specifying with respect to each Option purchased: (a) the Series to which such Option is specifically allocated; (b) the type of Option (put or call); (c) the instrument, currency, or Security underlying such Option and the number of Options, or the name of the in the case of an Index Option, the index to which such Option relates and the number of Index Options purchased; (d) the expiration date; (e) the exercise price; (f) the dates of purchase and settlement; (g) the total amount payable by the Fund in connection with such purchase; and (h) the name of the Clearing Member through whom such Option was purchased. The Custodian shall pay, upon receipt of a Clearing Member's written statement confirming the purchase of such Option held by such Clearing Member for the account of the Custodian (or any duly appointed and registered nominee of the Custodian) as Custodian for the Fund, out of moneys held for the account of the Series to which such Option is to be specifically allocated, the total amount payable upon such purchase to the Clearing Member through whom the purchase was made, provided that the same conforms to the amount payable as set forth in such Certificate. 2. Promptly after the execution of a sale of any Option purchased by the Fund, other than a closing sale transaction, pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to each such sale: (a) the Series to which such Option was specifically allocated; (b) the type of Option (put or call); (c) the instrument, currency, or Security underlying such Option and the number of Options, or the name of the issuer and the title and number of shares subject to such Option or, in the case of a Index Option, the index to which such Option relates and the number of Index Options sold; (d) the date of sale; (e) the sale price; (f) the date of settlement; (g) the total amount payable to the Fund upon such sale; and (h) the name of the Clearing Member through whom the sale was made. The Custodian shall consent to the delivery of the Option sold by the Clearing Member which previously supplied the confirmation described in preceding paragraph of this Article with respect to such Option upon receipt by the Custodian of the total amount payable to the Fund, provided that the same conforms to the total amount payable as set forth in such Certificate. 3. Promptly after the exercise by the Fund of any Call Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to such Call Option: (a) the Series to which such Call Option was specifically allocated; (b) the name of the issuer and the title and number of shares subject to the Call Option; (c) the expiration date; (d) the date of exercise and settlement; (e) the exercise price per share; (f) the total amount to be paid by the Fund upon such exercise; and (g) the name of the Clearing Member through whom such Call Option was exercised. The Custo- dian shall, upon receipt of the Securities underlying the Call Option which was exercised, pay out of the moneys held for the account of the Series to which such Call Option was specifically allocated the total amount payable to the Clearing Member through whom the Call Option was ex- ercised, provided that the same conforms to the total amount payable as set forth in such Certificate. 4. Promptly after the exercise by the Fund of any Put Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to such Put Option: (a) the Series to which such Put Option was specifically allocated; (b) the name of the issuer and the title and number of shares subject to the Put Option; (c) the expiration date; (d) the date of exercise and settlement; (e) the exercise price per share; (f) the total amount to be paid to the Fund upon such exercise; and (g) the name of the Clearing Member through whom such Put Option was exercised. The Custodian shall, upon receipt of the amount payable upon the exercise of the Put Option, deliver or direct a Depository to deliver the Securities specifically allocated to such Series, provided the same conforms to the amount payable to the Fund as set forth in such Certificate. 5. Promptly after the exercise by the Fund of any Index Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to such Index Option: (a) the Series to which such Index Option was specifically allocated; (b) the type of Index Option (put or call) (c) the number of Options being exercised; (d) the index to which such Option relates; (e) the expiration date; (f) the exercise price; (g) the total amount to be received by the Fund in connection with such exercise; and (h) the Clearing Member from whom such payment is to be received. 6. Whenever the Fund writes a Covered Call Option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Covered Call Option: (a) the Series for which such Covered Call Option was written; (b) the name of the issuer and the title and number of shares for which the Covered Call Option was written and which underlie the same; (c) the expiration date; (d) the exercise price; (e) the premium to be received by the Fund; (f) the date such Covered Call Option was written; and (g) the name of the Clearing Member through whom the premium is to be received. The Custodian shall deliver or cause to be delivered, upon receipt of the premium specified in the Certificate with respect to such Covered Call Option, such receipts as are required in accordance with the customs prevailing among Clearing Members dealing in Covered Call Options and shall impose, or direct a Depository to impose, upon the underlying Securities specified in the Certificate specifically allocated to such Series such restrictions as may be required by such receipts. Notwithstanding the foregoing, the Custodian has the right, upon prior written notification to the Fund, at any time to refuse to issue any receipts for Securities in the possession of the Custodian and not deposited with a Depository underlying a Covered Call Option. 7. Whenever a Covered Call Option written by the Fund and described in the preceding paragraph of this Article is exercised, the Fund shall promptly deliver to the Custodian a Certificate instructing the Custodian to deliver, or to direct the Depository to deliver, the Securities subject to such Covered Call Option and specifying: (a) the Series for which such Covered Call Option was written; (b) the name of the issuer and the title and number of shares subject to the Covered Call Option; (c) the Clearing Member to whom the underlying Securities are to be delivered; and (d) the total amount payable to the Fund upon such delivery. Upon the return and/or cancellation of any receipts delivered pursuant to paragraph 6 of this Article, the Custodian shall deliver, or direct a Depository to deliver, the underlying Securities as specified in the Certificate upon payment of the amount to be received as set forth in such Certificate. 8. Whenever the Fund writes a Put Option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Put Option: (a) the Series for which such Put Option was written; (b) the name of the issuer and the title and number of shares for which the Put Option is written and which underlie the same; (c) the expiration date; (d) the exercise price; (e) the premium to be received by the Fund; (f) the date such Put Option is written; (g) the name of the Clearing Member through whom the premium is to be received and to whom a Put Option guarantee letter is to be delivered; (h) the amount of cash, and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in the Senior Security Account for such Series; and (i) the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be deposited into the Collateral Account for such Series. The Custodian shall, after making the deposits into the Collateral Account specified in the Certificate, issue a Put Option guarantee letter substantially in the form utilized by the Custodian on the date hereof, and deliver the same to the Clearing Member specified in the Certificate upon receipt of the premium specified in said Certificate. Notwithstanding the foregoing, the Custodian shall be under no obligation to issue any Put Option guarantee letter or similar document if it is unable to make any of the representations contained therein. 9. Whenever a Put Option written by the Fund and described in the preceding paragraph is exercised, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series to which such Put Option was written; (b) the name of the issuer and title and number of shares subject to the Put Option; (c) the Clearing Member from whom the underlying Securities are to be received; (d) the total amount payable by the Fund upon such delivery; (e) the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be withdrawn from the Collateral Account for such Series and (f) the amount of cash and/or the amount and kind of Securities, specifically allocated to such series, if any, to be withdrawn from the Senior Security Account. Upon the return and/or cancellation of any Put Option guarantee letter or similar document issued by the Custodian in connection with such Put Option, the Custodian shall pay out of the moneys held for the account of the series to which such Put Option was specifically allocated the total amount payable to the Clearing Member specified in the Certificate as set forth in such Certificate, upon delivery of such Securities, and shall make the withdrawals specified in such Certificate. 10. Whenever the Fund writes an Index Option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Index Option: (a) the Series for which such Index Option was written; (b) whether such Index Option is a put or a call; (c) the number of Options written; (d) the index to which such Option relates; (e) the expiration date; (f) the exercise price; (g) the Clearing Member through whom such Option was written; (h) the premium to be received by the Fund; (i) the amount of cash and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in the Senior Security Account for such Series; (j) the amount of cash and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in the Collateral Account for such Series; and (k) the amount of cash and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in a Margin Account, and the name in which such account is to be or has been established. The Custodian shall, upon receipt of the premium specified in the Certificate, make the deposits, if any, into the Senior Security Account specified in the Certificate, and either (1) deliver such receipts, if any, which the Custodian has specifically agreed to issue, which are in accordance with the customs prevailing among Clearing Members in Index Options and make the deposits into the Collateral Account specified in the Certificate, or (2) make the deposits into the Margin Account specified in the Certi- ficate. 11. Whenever an Index Option written by the Fund and described in the preceding paragraph of this Article is exercised, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Index Option: (a) the Series for which such Index Option was written; (b) such information as may be necessary to identify the Index Option being exercised; (c) the Clearing Member through whom such Index Option is being exercised; (d) the total amount payable upon such exercise, and whether such amount is to be paid by or to the Fund; (e) the amount of cash and/or amount and kind of Securities, if any, to be with- drawn from the Margin Account; and (f) the amount of cash and/or amount and kind of Securities, if any, to be withdrawn from the Senior Security Account for such Series; and the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Collateral Account for such Series. Upon the return and/or cancellation of the receipt, if any, delivered pursuant to the preceding paragraph of this Article, the Custodian shall pay out of the moneys held for the account of the Series to which such Stock Index Option was specifically allocated to the Clear- ing Member specified in the Certificate the total amount payable, if any, as specified therein. 12. Promptly after the execution of a purchase or sale by the Fund of any Option identical to a previously written Option described in paragraphs, 6, 8 or 10 of this Article in a transaction expressly designated as a "Closing Purchase Transaction" or a "Closing Sale Transaction", the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to the Option being purchased: (a) that the transaction is a Closing Purchase Transaction or a Closing Sale Transaction; (b) the Series for which the Option was written; (c) the instrument, currency, or Security subject to the Option, or, in the case of an Index Option, the index to which such Option relates and the number of Options held; (d) the exercise price; (e) the premium to be paid by or the amount to be paid to the Fund; (f) the expiration date; (g) the type of Option (put or call); (h) the date of such purchase or sale; (i) the name of the Clearing Member to whom the premium is to be paid or from whom the amount is to be received; and (j) the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Collateral Account, a specified Margin Account, or the Senior Security Account for such Series. Upon the Custodian's payment of the premium or receipt of the amount, as the case may be, specified in the Certificate and the return and/or cancellation of any receipt issued pursuant to paragraphs 6, 8 or 10 of this Article with respect to the Option being liquidated through the Closing Purchase Transaction or the Closing Sale Transaction, the Custodian shall remove, or direct a Depository to remove, the pre- viously imposed restrictions on the Securities underlying the Call Option. 13. Upon the expiration, exercise or consummation of a Closing Purchase Transaction with respect to any Option purchased or written by the Fund and described in this Article, the Custodian shall delete such Option from the statements delivered to the Fund pursuant to paragraph 3 Article III herein, and upon the return and/or cancellation of any receipts issued by the Custodian, shall make such withdrawals from the Collateral Account, and the Margin Account and/or the Senior Security Account as may be specified in a Certificate received in connection with such expiration, exercise, or consummation. 14. Securities acquired by the Fund through the exercise of an Option described in this Article shall be subject to Article IV hereof. ARTICLE VI FUTURES CONTRACTS 1. Whenever the Fund shall enter into a Futures Contract, the Fund shall deliver to the Custodian a Certificate specifying with respect to such Futures Contract, (or with respect to any number of identical Futures Contract (s)): (a) the Series for which the Futures Contract is being entered; (b) the category of Futures Contract (the name of the underlying index or financial instrument); (c) the number of identical Futures Contracts entered into; (d) the delivery or settlement date of the Futures Contract(s); (e) the date the Futures Contract(s) was (were) entered into and the maturity date; (f) whether the Fund is buying (going long) or selling (going short) such Futures Contract(s); (g) the amount of cash and/or the amount and kind of Securities, if any, to be deposited in the Senior Security Account for such Series; (h) the name of the broker, dealer, or futures commission merchant through whom the Futures Contract was entered into; and (i) the amount of fee or commission, if any, to be paid and the name of the broker, dealer, or futures commission merchant to whom such amount is to be paid. The Custodian shall make the deposits, if any, to the Margin Account in accordance with the terms and conditions of the Margin Account Agreement. The Custodian shall make payment out of the moneys specifically allocated to such Series of the fee or commission, if any, specified in the Certificate and deposit in the Senior Security Account for such Series the amount of cash and/or the amount and kind of Securities specified in said Certificate. 2. (a) Any variation margin payment or similar payment required to be made by the Fund to a broker, dealer, or futures commission merchant with respect to an outstanding Futures Contract shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. (b) Any variation margin payment or similar payment from a broker, dealer, or futures commission merchant to the Fund with respect to an outstanding Futures Contract shall be received and dealt with by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 3. Whenever a Futures Contract held by the Custodian hereunder is retained by the Fund until delivery or settlement is made on such Futures Contract, the Fund shall deliver to the Custodian prior to the delivery or settlement date a Certificate specifying: (a) the Futures Contract and the Series to which the same relates; (b) with respect to an Index Futures Contract, the total cash settlement amount to be paid or received, and with respect to a Financial Futures Contract, the Securities and/or amount of cash to be delivered or received; (c) the broker, dealer, or futures commission merchant to or from whom payment or delivery is to be made or received; and (d) the amount of cash and/or Securities to be withdrawn from the Senior Security Account for such Series. The Custodian shall make the payment or delivery specified in the Certificate, and delete such Futures Contract from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein. 4. Whenever the Fund shall enter into a Futures Contract to offset a Futures Contract held by the Custodian hereunder, the Fund shall deliver to the Custodian a Certificate specifying: (a) the items of information required in a Certificate described in paragraph 1 of this Article, and (b) the Futures Contract being offset. The Custodian shall make payment out of the money specifically allocated to such Series of the fee or commission, if any, specified in the Certificate and delete the Futures Contract being offset from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein, and make such withdrawals from the Senior Security Account for such Series as may be specified in the Cer- tificate. The withdrawals, if any, to be made from the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. ARTICLE VII FUTURES CONTRACT OPTIONS 1. Promptly after the execution of a purchase of any Futures Contract Option by the Fund, the Fund shall deliver to the Custodian a Certificate specifying with respect to such Futures Contract Option: (a) the Series to which such Option is specifically allocated; (b) the type of Futures Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option purchased; (d) the expiration date; (e) the exercise price; (f) the dates of purchase and settlement; (g) the amount of premium to be paid by the Fund upon such purchase; (h) the name of the broker or futures commission merchant through whom such Option was purchased; and (i) the name of the broker, or futures commission merchant, to whom payment is to be made. The Cus- todian shall pay out of the moneys specifically allocated to such Series the total amount to be paid upon such purchase to the broker or futures commissions merchant through whom the purchase was made, provided that the same conforms to the amount set forth in such Certificate. 2. Promptly after the execution of a sale of any Futures Contract Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to each such sale: (a) Series to which such Futures Contract Option was specifically allocated; (b) the type of Future Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option; (d) the date of sale; (e) the sale price; (f) the date of settlement; (g) the total amount payable to the Fund upon such sale; and (h) the name of the broker of futures commission merchant through whom the sale was made. The Custodian shall consent to the cancellation of the Futures Contract Option being closed against payment to the Custodian of the total amount payable to the Fund, provided the same conforms to the total amount payable as set forth in such Certificate. 3. Whenever a Futures Contract Option purchased by the Fund pursuant to paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series to which such Futures Contract Option was specifically allocated; (b) the particular Futures Contract Option (put or call) being exercised; (c) the type of Futures Contract underlying the Futures Contract Option; (d) the date of exercise; (e) the name of the broker or futures commission merchant through whom the Futures Contract Option is exercised; (f) the net total amount, if any, payable by the Fund; (g) the amount, if any, to be received by the Fund; and (h) the amount of cash and/or the amount and kind of Securities to be deposited in the Senior Security Account for such Series. The Custodian shall make, out of the moneys and Securities specifically allocated to such Series, the payments of money, if any, and the deposits of Securities, if any, into the Senior Security Account as specified in the Certificate. The deposits, if any, to be made to the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 4. Whenever the Fund writes a Futures Contract Option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Futures Contract Option: (a) the Series for which such Futures Contract Option was written; (b) the type of Futures Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option; (d) the expiration date; (e) the exercise price; (f) the premium to be received by the Fund; (g) the name of the broker or futures commission merchant through whom the premium is to be received; and (h) the amount of cash and/or the amount and kind of Securities, if any, to be deposited in the Senior Security Account for such Series. The Custodian shall, upon receipt of the premium specified in the Certificate, make out of the moneys and Securities specifically allocated to such Series the deposits into the Senior Security Account, if any, as specified in the Certificate. The deposits, if any, to be made to the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 5. Whenever a Futures Contract Option written by the Fund which is a call is exercised, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series to which such Futures Contract Option was specifically allocated; (b) the particular Futures Contract Option exercised; (c) the type of Futures Contract underlying the Futures Contract Option; (d) the name of the broker or futures commission merchant through whom such Futures Contract Option was exercised; (e) the net total amount, if any, payable to the Fund upon such exercise; (f) the net total amount, if any, payable by the Fund upon such exercise; and (g) the amount of cash and/or the amount and kind of Securities to be deposited in the Senior Security Account for such Series. The Custodian shall, upon its receipt of the net total amount payable to the Fund, if any, specified in such Certificate make the payments, if any, and the deposits, if any, into the Senior Security Account as specified in the Certificate. The de- posits, if any, to be made to the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 6. Whenever a Futures Contract Option which is written by the Fund and which is a put is exercised, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series to which such Option was specifically allocated; (b) the particular Futures Contract Option exercised; (c) the type of Futures Contract underlying such Futures Contract Option; (d) the name of the broker or futures commission merchant through whom such Futures Contract Option is exercised; (e) the net total amount, if any, payable to the Fund upon such exercise; (f) the net total amount, if any, payable by the Fund upon such exercise; and (g) the amount and kind of Securities and/or cash to be withdrawn from or deposited in, the Senior Security Account for such Series, if any. The Custodian shall, upon its receipt of the net total amount payable to the Fund, if any, specified in the Certificate, make out of the moneys and Securities specifically allocated to such Series, the payments, if any, and the deposits, if any, into the Senior Security Account as specified in the Certificate. The deposits to and/or withdrawals from the Margin Account, if any, shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 7. Promptly after the execution by the Fund of a purchase of any Futures Contract Option identical to a previously written Futures Contract Option described in this Article in order to liquidate its position as a writer of such Futures Contract Option, the Fund shall deliver to the Custodian a Certificate specifying with respect to the Futures Contract Option being purchased: (a) the Series to which such Option is specifically allocated; (b) that the transaction is a closing transaction; (c) the type of Future Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Option Contract; (d) the exercise price; (e) the premium to be paid by the Fund; (f) the expiration date; (g) the name of the broker or futures commission merchant to whom the premium is to be paid; and (h) the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Senior Security Account for such Series. The Custodian shall effect the withdrawals from the Senior Security Account specified in the Certificate. The withdrawals, if any, to be made from the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 8. Upon the expiration, exercise, or consummation of a closing transaction with respect to, any Futures Contract Option written or purchased by the Fund and described in this Article, the Custodian shall (a) delete such Futures Contract Option from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein and (b) make such withdrawals from and/or in the case of an exercise such deposits into the Senior Security Account as may be specified in a Certificate. The deposits to and/or withdrawals from the Margin Account, if any, shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement. 9. Futures Contracts acquired by the Fund through the exercise of a Futures Contract Option described in this Article shall be subject to Article VI hereof. ARTICLE VIII SHORT SALES 1. Promptly after the execution of any short sales of Securities by any Series of the Fund, the Fund shall deliver to the Custodian a Certificate specifying: (a) the Series for which such short sale was made; (b) the name of the issuer-and the title of the Security; (c) the number of shares or principal amount sold, and accrued interest or dividends, if any; (d) the dates of the sale and settlement; (e) the sale price per unit; (f) the total amount credited to the Fund upon such sale, if any, (g) the amount of cash and/or the amount and kind of Securities, if any, which are to be deposited in a Margin Account and the name in which such Margin Account has been or is to be established; (h) the amount of cash and/or the amount and kind of Securities, if any, to be deposited in a Senior Security Account, and (i) the name of the broker through whom such short sale was made. The Custodian shall upon its receipt of a statement from such broker confirming such sale and that the total amount credited to the Fund upon such sale, if any, as specified in the Certificate is held by such broker for the account of the Custodian (or any nominee of the Custodian) as custodian of the Fund, issue a receipt or make the deposits into the Margin Account and the Senior Security Account specified in the Certificate. 2. Promptly after the execution of a purchase to close-out any short sale of Securities, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to each such closing out: (a) the Series for which such transaction is being made; (b) the name of the issuer and the title of the Security; (c) the number of shares or the principal amount, and accrued interest or dividends, if any, required to effect such closing-out to be delivered to the broker; (d) the dates of closing-out and settlement; (e) the purchase price per unit; (f) the net total amount payable to the Fund upon such closing-out; (g) the net total amount payable to the broker upon such closing-out; (h) the amount of cash and the amount and kind of Securities to be withdrawn, if any, from the Margin Account; (i) the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Senior Security Account; and (j) the name of the broker through whom the Fund is effecting such closing-out. The Custodian shall, upon receipt of the net total amount payable to the Fund upon such closing-out, and the return and/or cancellation of the receipts, if any, issued by the Custodian with respect to the short sale being closed-out, pay out of the moneys held for the account of the Fund to the broker the net total amount payable to the broker, and make the withdrawals from the Margin Account and the Senior Security Account, as the same are specified in the Certificate. ARTICLE IX REPURCHASE AND REVERSE REPURCHASE AGREEMENTS 1. Promptly after the Fund enters a Repurchase Agreement or a Reverse Repurchase Agreement with respect to Securities and money held by the Custodian hereunder, the Fund shall deliver to the Custodian a Certi- ficate, or in the event such Repurchase Agreement or Reverse Repurchase Agreement is a Money Market Security, a Certificate, Oral Instructions, or Written Instructions specifying: (a) the Series for which the Repurchase Agreement or Reverse Repurchase Agreement is entered; (b) the total amount payable to or by the Fund in connection with such Repurchase Agreement or Reverse Repurchase Agreement and specifically allocated to such Series; (c) the broker, dealer, or financial institution with whom the Repurchase Agreement or Reverse Repurchase Agreement is entered; (d) the amount and kind of Securities to be delivered or received by the Fund to or from such broker, dealer, or financial institution; (e) the date of such Repurchase Agreement or Reverse Repurchase Agreement; and (f) the amount of cash and/or the amount and kind of Securities, if any, specifi- cally allocated to such Series to be deposited in a Senior Security Ac- count for such Series in connection with such Reverse Repurchase Agreement. The Custodian shall, upon receipt of the total amount payable to or by the Fund specified in the Certificate, Oral Instructions, or Written Instructions make or accept the delivery to or from the broker, dealer, or financial institution and the deposits, if any, to the Senior Security Account, specified in such Certificate, Oral Instructions, or Written Instructions. 2. Upon the termination of a Repurchase Agreement or a Reverse Repurchase Agreement described in preceding paragraph 1 of this Article, the Fund shall promptly deliver a Certificate or, in the event such Repurchase Agreement or Reverse Repurchase Agreement is a Money Market Security, a Certificate, Oral Instructions, or Written Instructions to the Custodian specifying: (a) the Repurchase Agreement or Reverse Repurchase Agreement being terminated and the Series for which same was entered; (b) the total amount payable to or by the Fund in connection with such termination; (c) the amount and kind of Securities to be received or delivered by the Fund and specifically allocated to such Series in connection with such termination; (d) the date of termination; (e) the name of the broker, dealer, or financial institution with whom the Repur- chase Agreement or Reverse Repurchase Agreement is to be terminated; and (f) the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Senior Securities Account for such Series. The Custodian shall, upon receipt or delivery of the amount and kind of Securities or cash to be received or delivered by the Fund specified in the Certificate, Oral Instructions, or Written Instructions, make or receive the payment to or from the broker, dealer, or financial institution and make the withdrawals, if any, from the Senior Security Account, specified in such Certificate, Oral Instructions, or Written Instructions. 3. The Certificates, Oral Instructions, or Written Instructions described in paragraphs 1 and 2 of this Article may with respect to any particular Repurchase Agreement or Reverse Repurchase Agreement be combined and delivered to the Custodian at the time of entering into such Repurchase Agreement or Reverse Repurchase Agreement. ARTICLE X LOANS OF PORTFOLIO SECURITIES OF THE FUND 1. Promptly after each loan of portfolio Securities specifically allocated to a Series held by the Custodian hereunder, the Fund shall deliver or cause to be delivered to the Custodian a Certificate specifying with respect to each such loan: (a) the Series to which the loaned Securities are specifically allocated; (b) the name of the issuer and the title of the Securities, (c) the number of shares or the principal amount loaned, (d) the date of loan and delivery, (e) the total amount to be delivered to the Custodian against the loan of the Securities, including the amount of cash collateral and the premium, if any, separately iden- tified, and (f) the name of the broker, dealer, or financial institution to which the loan was made. The Custodian shall deliver the Securities thus designated to the broker, dealer or financial institution to which the loan was made upon receipt of the total amount designated in the Certificate as to be delivered against the loan of Securities. The Custodian may accept payment in connection with a delivery otherwise than through the Book-Entry System or a Depository only in the form of a certified or bank cashier's check payable to the order of the Fund or the Custodian drawn on New York Clearing House funds. 2. In connection with each termination of a loan of Securities by the Fund, the Fund shall deliver or cause to be delivered to the Custodian a Certificate specifying with respect to each such loan termination and return of Securities: (a) the Series to which the loaned Securities are specifically allocated; (b) the name of the issuer and the title of the Securities to be returned, (c) the number of shares or the principal amount to be returned, (d) the date of termination, (e) the total amount to be delivered by the Custodian (including the cash collateral for such Securities minus any offsetting credits as described in said Certificate), and (f) the name of the broker, dealer, or financial institution from which the Securities will be returned. The Custodian shall receive all Securities returned from the broker, dealer, or financial institution to which such Securities were loaned and upon receipt thereof shall pay, out of the moneys held for the account of the Fund, the total amount payable upon such return of Securities as set forth in the Certificate. ARTICLE XI CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY ACCOUNTS, AND COLLATERAL ACCOUNTS 1. The Custodian shall establish a Senior Security Account and from time to time make such deposits thereto, or withdrawals therefrom, as specified in a Certificate. Such Certificate shall specify the Series for which such deposit or withdrawal is to be made and the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be deposited in, or withdrawn from, such Senior Security Account for such Series. In the event that the Fund fails to specify in a Certificate the Series, the name of the issuer, the title and the number of shares or the principal amount of any particular Securities to be deposited by the Custodian into, or withdrawn from, a Senior Securities Account, the Custodian shall be under no obligation to make any such deposit or withdrawal and shall promptly notify the Fund that no such deposit has been made. 2. The Custodian shall make deliveries or payments from a Margin Account to the broker, dealer, futures commission merchant or Clearing Member in whose name, or for whose benefit, the account was established as specified in the Margin Account Agreement. 3. Amounts received by the Custodian as payments or distributions with respect to Securities deposited in any Margin Account shall be dealt with in accordance with the terms and conditions of the Margin Account Agreement. 4. The Custodian shall to the extent permitted by the Fund's Declaration of Trust, investment restrictions and the Investment Company Act of 1940 have a continuing lien and security interest in and to any property at any time held by the Custodian in any Collateral Account described herein. In accordance with applicable law the Custodian may enforce its lien and realize on any such property whenever the Custodian has made payment or delivery pursuant to any Put Option guarantee letter or similar document or any receipt issued hereunder by the Custodian; provided, however, that the Custodian shall not be required to issue any Put Option guarantee letter unless it shall have received an opinion of counsel to the Fund or its investment adviser that the issuance of such letters is authorized by the Fund and that the Custodian's continuing lien and security interest is valid, enforceable and not limited by the Declaration of Trust, any investment restrictions or the Investment Company Act of 1940. In the event the Custodian should realize on any such property net proceeds which are less than the Custodian's obligations under any Put Option guarantee letter or similar document or any receipt, such deficiency shall be a debt owed the Custodian by the Fund within the scope of Article XIV herein. 5. On each business day the Custodian shall furnish the Fund with a statement with respect to each Margin Account in which money or Securities are held specifying as of the close of business on the previous business day: (a) the name of the Margin Account; (b) the amount and kind of Securities held therein; and (c) the amount of money held therein. The Custodian shall make available upon request to any broker, dealer, or futures commission merchant specified in the name of a Margin Account a copy of the statement furnished the Fund with respect to such Margin Account. 6. The Custodian shall establish a Collateral Account and from time to time shall make such deposits thereto as may be specified in a Certificate. Promptly after the close of business on each business day in which cash and/or Securities are maintained in a Collateral Account for any Series, the Custodian shall furnish the Fund with a statement with respect to such Collateral Account specifying the amount of cash and/or the amount and kind of Securities held therein. No later than the close of business next succeeding the delivery to the Fund of such statement, the Fund shall furnish to the Custodian a Certificate or Written Instructions specifying the then market value of the Securities described in such statement. In the event such then market value is indicated to be less than the Custodian's obligation with respect to any outstanding Put Option guarantee letter or similar document, the Fund shall promptly specify in a Certificate the additional cash and/or Securities to be deposited in such Collateral Account to eliminate such deficiency. ARTICLE XII PAYMENT OF DIVIDENDS OR DISTRIBUTIONS 1. The Fund shall furnish to the Custodian a copy of the resolution of the Board of Trustees of the Fund, certified by the Secretary or any Assistant Secretary, either (i) setting forth with respect to the Series specified therein the date of the declaration of a dividend or distribu- tion, the date of payment thereof, the record date as of which shareholders entitled to payment shall be determined, the amount payable per Share of such Series to the shareholders of record as of that date and the total amount payable to the Transfer Agent Account and any sub- dividend agent or co-dividend agent of the Fund on the payment date, or (ii) authorizing with respect to the Series specified therein and the declaration of dividends and distributions thereon the Custodian to rely on Oral Instructions, Written Instructions, or a Certificate setting forth the date of the declaration of such dividend or distribution, the date of payment thereof, the record date as of which shareholders entitled to payment shall be determined, the amount payable per Share of such Series to the shareholders of record as of that date and the total amount payable to the Transfer Agent Account on the payment date. 2. Upon the payment date specified in such resolution, Oral Instructions, Written Instructions, or Certificate, as the case may be, the Custodian shall pay to the Transfer Agent Account out of the moneys held for the account of the Series specified therein the total amount payable to the Transfer Agent Account and with respect to such Series. ARTICLE XIII SALE AND REDEMPTION OF SHARES 1. Whenever the Fund shall sell any Shares, it shall deliver or cause to be delivered, to the Custodian a Certificate duly specifying: (a) The Series, the number of Shares sold, trade date, and price; and (b) The amount of money to be received by the Custodian for the sale of such Shares and specifically allocated to the separate account in the name of such Series. 2. Upon receipt of such money from the Fund's General Distributor, the Custodian shall credit such money to the separate account in the name of the Series for which such money was received. 3. Upon issuance of any Shares of any Series the Custodian shall pay, out of the money held for the account of such Series, all original issue or other taxes required to be paid by the Fund in connection with such issuance upon the receipt of a Certificate specifying the amount to be paid. 4. Except as provided hereinafter, whenever the Fund desires the Custodian to make payment out of the money held by the Custodian hereunder in connection with a redemption of any Shares, it shall furnish, or cause to be furnished, to the Custodian a Certificate specifying: (a) The number and Series of Shares redeemed; and (b) The amount to be paid for such Shares. 5. Upon receipt of an advice from an Authorized Person setting forth the Series and number of Shares received by the Transfer Agent for redemption and that such Shares are in good form for redemption, the Custodian shall make payment to the Transfer Agent Account out of the moneys held in the separate account in the name of the Series the total amount specified in the Certificate issued pursuant to the foregoing paragraph 4 of this Article. ARTICLE XIV OVERDRAFTS OR INDEBTEDNESS 1. If the Custodian should in its sole discretion advance funds on behalf of any Series which results in an overdraft because the moneys held by the Custodian in the separate account for such Series shall be insuffi- cient to pay the total amount payable upon a purchase of Securities specifically allocated to such Series, as set forth in a Certificate, Oral Instructions, or Written Instructions or which results in an overdraft in the separate account of such Series for some other reason, or if the Fund is for any other reason indebted to the Custodian with respect to a Ser- ies, (except a borrowing for investment or for temporary or emergency purposes using Securities as collateral pursuant to a separate agreement and subject to the provisions of paragraph 2 of this Article), such overdraft or indebtedness shall be deemed to be a loan made by the Custodian to the Fund for such Series payable on demand and shall bear interest from the date incurred at a rate per annum (based on a 360-day year for the actual number of days involved) equal to the Federal Funds Rate plus 1/2%, such rate to be adjusted on the effective date of any change in such Federal Funds Rate but in no event to be less than 6% per annum. In addition, unless the Fund has given a Certificate that the Custodian shall not impose a lien and security interest to secure such overdrafts (in which event it shall not do so), the Custodian shall have a continuing lien and security interest in the aggregate amount of such overdrafts and indebtedness as may from time to time exist in and to any property specifically allocated to such Series at any time held by it for the benefit of such Series or in which the Fund may have an interest which is then in the Custodian's possession or control or in possession or control of any third party acting in the Custodian's behalf. The Fund authorizes the Custodian, in its sole discretion, at any time to charge any such overdraft or indebtedness together with interest due thereon against any money balance in an account standing in the name of such Series' credit on the Custodian's books. In addition, the Fund hereby covenants that on each Business Day on which either it intends to enter a Reverse Repurchase Agreement and/or otherwise borrow from a third party, or which next succeeds a Business Day on which at the close of business the Fund had outstanding a Reverse Repurchase Agreement or such a borrowing, it shall prior to 9 a.m., New York City time, advise the Custodian, in writing, of each such borrowing, shall specify the Series to which the same relates, and shall not incur any indebtedness, including pursuant to any Reverse Repurchase Agreement, not so specified other than from the Custodian. 2. The Fund will cause to be delivered to the Custodian by any bank (including, if the borrowing is pursuant to a separate agreement, the Custodian) from which it borrows money for investment or for temporary or emergency purposes using Securities held by the Custodian hereunder as collateral for such borrowings, a notice or undertaking in the form currently employed by any such bank setting forth the amount which such bank will loan to the Fund against delivery of a stated amount of collateral. The Fund shall promptly deliver to the Custodian a Certificate specifying with respect to each such borrowing: (a) the Series to which such borrowing relates; (b) the name of the bank, (c) the amount and terms of the borrowing, which may be set forth by incorporating by reference an attached promissory note, duly endorsed by the Fund, or other loan agreement, (d) the time and date, if known, on which the loan is to be entered into, (e) the date on which the loan becomes due and payable, (f) the total amount payable to the Fund on the borrowing date, (g) the market value of Securities to be delivered as collateral for such loan, including the name of the issuer, the title and the number of shares or the principal amount of any particular Securities, and (h) a statement specifying whether such loan is for investment purposes or for temporary or emergency purposes and that such loan is in conformance with the Investment Company Act of 1940 and the Fund's prospectus and Statement of Additional Information. The Custodian shall deliver on the borrowing date specified in a Certificate the specified collateral and the executed promissory note, if any, against delivery by the lending bank of the total amount of the loan payable, provided that the same conforms to the total amount payable as set forth in the Certificate. The Custodian may, at the option of the lending bank, keep such collateral in its possession, but such collateral shall be subject to all rights therein given the lending bank by virtue of any promissory note or loan agreement. The Custodian shall deliver such Securities as additional collateral as may be specified in a Certificate to collateralize further any transaction described in this paragraph. The Fund shall cause all Securities released from collateral status to be returned directly to the Custodian, and the Custodian shall receive from time to time such return of collateral as may be tendered to it. In the event that the Fund fails to specify in a Certificate the Series, the name of the issuer, the title and number of shares or the principal amount of any particular Securities to be delivered as collateral by the Custodian, to any such bank, the Custodian shall not be under any obligation to deliver any Securities. ARTICLE XV CUSTODY OF ASSETS OUTSIDE THE U.S. 1. The Custodian is authorized and instructed to employ, as its agent, as subcustodians for the securities and other assets of the Fund maintained outside of the United States the Foreign Subcustodians and For- eign Depositories designated on Schedule A hereto. Except as provided in Schedule A, the Custodian shall employ no other Foreign Custodian or Foreign Depository. The Custodian and the Fund may amend Schedule A hereto from time to time to agree to designate any additional Foreign Subcustodian or Foreign Depository with which the Custodian has an agreement for such entity to act as the Custodian's agent, as subcus- todian, and which the Custodian in its absolute discretion proposes to utilize to hold any of the Fund's Foreign Property. Upon receipt of a Certificate or Written Instructions from the Fund, the Custodian shall cease the employment of any one or more of such subcustodians for maintaining custody of the Fund's assets and such custodian shall be deemed deleted from Schedule A. 2. The Custodian shall limit the securities and other assets maintained in the custody of the Foreign Subcustodians to: (a) "foreign securities," as defined in paragraph (c)(1) of Rule 17f-5 under the Investment Company Act of 1940, and (b) cash and cash equivalents in such amounts as the Fund may determine to be reasonably necessary to effect the foreign securities transactions of the Fund. 3. The Custodian shall identify on its books as belonging to the Fund, the Foreign Securities held by each Foreign Subcustodian. 4. Each agreement pursuant to which the Custodian employs a Foreign Subcustodian shall be substantially in the form reviewed and approved by the Fund and will not be amended in a way that materially affects the Fund without the Fund's prior written consent and shall: (a) require that such institution establish custody account(s) for the Custodian on behalf of the Fund and physically segregate in each such account securities and other assets of the fund, and, in the event that such institution deposits the securities of the Fund in a Foreign Depository, that it shall identify on its books as belonging to the Fund or the Custodian, as agent for the Fund, the securities so deposited; (b) provide that: (1) the assets of the Fund will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the Foreign Subcustodian or its creditors, except a claim of payment for their safe custody or administration; (2) beneficial ownership for the assets of the Fund will be freely transferable without the payment of money or value other than for custody or administration; (3) adequate records will be maintained identifying the assets as belonging to the Fund; (4) the independent public accountants for the Fund will be given access to the books and records of the Foreign Subcustodian relating to its actions under its agreement with the Custodian or confirmation of the contents of those records; (5) the Fund will receive periodic reports with respect to the safekeeping of the Fund's assets, including, but not necessarily limited to, notification of any transfer to or from the custody account(s); and (6) assets of the Fund held by the Foreign Subcustodian will be subject only to the instructions of the Custodian or its agents. (c) Require the institution to exercise reasonable care in the performance of its duties and to indemnify, and hold harmless, the Custodian from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the institution's performance of such obligations, with the exception of any such losses, damages, costs, expenses, liabilities or claims arising as a result of an act of God. At the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claims against a Foreign Subcustodian as a consequence of any such loss, damage, cost, expense, liability or claim of or to the Fund, if and to the extent that the Fund has not been made whole for any such loss, damage, cost, expense, liability or claim. 5. Upon receipt of a Certificate or Written Instructions, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall on behalf of the Fund make or cause its Foreign Subcustodian to transfer, exchange or deliver securities owned by the Fund, except to the extent explicitly prohibited therein. Upon receipt of a Certificate or Written Instructions, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall on behalf of the fund pay out or cause its Foreign Subcustodians to pay out monies of the Fund. The Custodian shall use all means reasonably available to it, including, if specifically authorized by the Fund in a Certificate, any necessary litigation at the cost and expense of the Fund (except as to matters for which the Custodian is responsible hereunder) to require or compel each Foreign Subcustodian or Foreign Depository to perform the services required of it by the agreement between it and the Custodian authorized pursuant to this Agreement. 6. The Custodian shall maintain all books and records as shall be necessary to enable the Custodian readily to perform the services required of it hereunder with respect to the Fund's Foreign Properties. The Custodians shall supply to the Fund from time to time, as mutually agreed upon, statements in respect of the Foreign Securities and other Foreign Properties of the Fund held by Foreign Subcustodians, directly or through Foreign Depositories, including but not limited to an identification of entities having possession of the Fund's Foreign Securities and other assets, an advice or other notification of any transfers of securities to or from each custodial account maintained for the Fund or the Custodian on behalf of the Fund indicating, as to securities acquired for the Fund, the identity of the entity having physical possession of such securities. The Custodian shall promptly and faithfully transmit all reports and information received pertaining to the Foreign Property of the Fund, including, without limitation, notices or reports of corporate action, proxies and proxy soliciting materials. 7. Upon request of the Fund, the Custodian shall use reasonable efforts to arrange for the independent accountants of the Fund to be afforded access to the books and records of any Foreign Subcustodian, or confirmation of the contents thereof, insofar as such books and records relate to the Foreign Property of the Fund or the performance of such Foreign Subcustodian under its agreement with the Custodian; provided that any litigation to afford such access shall be at the sole cost and expense of the Fund. 8. The Custodian recognizes that employment of a Foreign Sub- custodian or Foreign Depository for the Fund's Foreign Securities and Foreign Property is permitted by Section 17(f) of the Investment Company Act of 1940 only upon compliance with Section (a) of Rule 17f-5 promulgated thereunder. With respect to the Foreign Subcustodians and Foreign Depositories identified on Schedule A, the Custodian represents that it has furnished the Fund with certain materials prepared by the Custodian and with such other information in the possession of the Cus- todian as the Fund advised the Custodian was reasonably necessary to assist the Board of Trustees of the Fund in making the determinations required of the Board of Trustees by Rule 17f-5, including, without limitation, consideration of the matters set forth in the Notes to Rule 17f-5. If the Custodian recommends any additional Foreign Subcustodian or Foreign Depository, the Custodian shall supply information similar in kind and scope to that furnished pursuant to the preceding sentence. Fur- ther, the Custodian shall furnish annually to the Fund, at such time as the Fund and Custodian shall mutually agree, information concerning each Foreign Subcustodian and Foreign Depository then identified on Schedule A similar in kind and scope to that furnished pursuant to the preceding two sentences. 9. The Custodian's employment of any Foreign Subcustodian or Foreign Depository shall constitute a representation that the Custodian believes in good faith that such Foreign Subcustodian or Foreign Depository provides a level of safeguards for maintaining the Fund's assets not materially different from that provided by the Custodian in maintaining the Fund's securities in the United States. In addition, the Custodian shall monitor the financial condition and general operational performance of the Foreign Subcustodians and Foreign Depositories and shall promptly inform the Fund in the event that the Custodian has actual knowledge of a material adverse change in the financial condition thereof or that there appears to be a substantial likelihood that the share- holders' equity of any Foreign Subcustodian will decline below $200 million (U.S. dollars or the equivalent thereof) or that its shareholders' equity has declined below $200 million , or that the Foreign Subcustodian or Foreign Depository has breached the agreement between it and the Custodian in a way that the Custodian believes adversely affects the Fund. Further, the Custodian shall advise the Fund if it believes that there is a material adverse change in the operating environment of any Foreign Subcustodian or Foreign Depository. ARTICLE XVI CONCERNING THE CUSTODIAN 1. The Custodian shall use reasonable care in the performance of its duties hereunder, and, except as hereinafter provided, neither the Custodian nor its nominee shall be liable for any loss or damage, including counsel fees, resulting from its action or omission to act or otherwise, either hereunder or under any Margin Account Agreement, except for any such loss or damage arising out of its own negligence, bad faith, or willful misconduct or that of the subcustodians or co-custodians appointed by the Custodian or of the officers, employees, or agents of any of them. The Custodian may, with respect to questions of law arising hereunder or under any Margin Account Agreement, apply for and obtain the advice and opinion of counsel to the Fund, at the expense of the Fund, or of its own counsel, at its own expense, and shall be fully protected with respect to anything done or omitted by it in good faith in conformity with such advice or opinion. The Custodian shall be liable to the Fund for any loss or damage resulting from the use of the Book-Entry System or any Depository arising by reason of any negligence, bad faith or willful mis- conduct on the part of the Custodian or any of its employees or agents. 2. Notwithstanding the foregoing, the Custodian shall be under no obligation to inquire into, and shall not be liable for: (a) The validity (but not the authenticity) of the issue of any Securities purchased, sold, or written by or for the Fund, the legality of the purchase, sale or writing thereof, or the propriety of the amount paid or received therefor, as specified in a Certificate, Oral Instructions, or Written Instructions; (b) The legality of the sale or redemption of any Shares, or the propriety of the amount to be received or paid therefor, as specified in a Certificate; (c) The legality of the declaration or payment of any dividend by the Fund, as specified in a resolution, Certificate, Oral Instructions, or Written Instructions; (d) The legality of any borrowing by the Fund using Securities as collateral; (e) The legality of any loan of portfolio Securities, nor shall the Custodian be under any duty or obligation to see to it that the cash collateral delivered to it by a broker, dealer, or financial institution or held by it at any time as a result of such loan of portfolio Securities of the Fund is adequate collateral for the Fund against any loss it might sustain as a result of such loan, except that this subparagraph shall not excuse any liability the Custodian may have for failing to act in accor- dance with Article X hereof or any Certificate, Oral Instructions or Written Instructions given in accordance with this Agreement. The Custo- dian specifically, but not by way of limitation, shall not be under any duty or obligation periodically to check or notify the Fund that the amount of such cash collateral held by it for the Fund is sufficient collateral for the Fund, but such duty or obligation shall be the sole responsibility of the Fund. In addition, the Custodian shall be under no duty or obligation to see that any broker, dealer or financial institution to which portfolio Securities of the Fund are lent pursuant to Article X of this Agreement makes payment to it of any dividends or interest which are payable to or for the account of the Fund during the period of such loan or at the termination of such loan, provided, however, that the Custodian shall promptly notify the Fund in the event that such dividends or interest are not paid and received when due; or (f) The sufficiency or value of any amounts of money and/or Securities held in any Margin Account, Senior Security Account or Collateral Account in connection with transactions by the Fund, except that this subparagraph shall not excuse any liability the Custodian may have for failing to establish, maintain, make deposits to or withdrawals from such accounts in accordance with this Agreement. In addition, the Custodian shall be under no duty or obligation to see that any broker, dealer, futures commission merchant or Clearing Member makes payment to the Fund of any variation margin payment or similar payment which the Fund may be entitled to receive from such broker, dealer, futures commission merchant or Clearing Member, to see that any payment received by the Custodian from any broker, dealer, futures commission merchant or Clearing Member is the amount the Fund is entitled to receive, or to notify the Fund of the Custodian's receipt or non-receipt of any such payment. 3. The Custodian shall not be liable for, or considered to be the Custodian of, any money, whether or not represented by any check, draft, or other instrument for the payment of money, received by it on behalf of the Fund until the Custodian actually receives such money directly or by the final crediting of the account representing the Fund's interest at the Book-Entry System or the Depository. 4. With respect to Securities held in a Depository, except as otherwise provided in paragraph 5(b) of Article III hereof, the Custodian shall have no responsibility and shall not be liable for ascertaining or acting upon any calls, conversions, exchange offers, tenders, interest rate changes or similar matters relating to such Securities, unless the Custodian shall have actually received timely notice from the Depository in which such Securities are held. In no event shall the Custodian have any responsibility or liability for the failure of a Depository to collect, or for the late collection or late crediting by a Depository of any amount payable upon Securities deposited in a Depository which may mature or be redeemed, retired, called or otherwise become payable. How- ever, upon receipt of a Certificate from the Fund of an overdue amount on Securities held in a Depository the Custodian shall make a claim against the Depository on behalf of the Fund, except that the Custodian shall not be under any obligation to appear in, prosecute or defend any action suit or proceeding in respect to any Securities held by a Depository which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense and liability be furnished as often as may be required, or alternatively, the Fund shall be subrogated to the rights of the Custodian with respect to such claim against the Depository should it so request in a Certificate. This paragraph shall not, however, excuse any failure by the Custodian to act in accordance with a Certificate, Oral Instructions, or Written Instructions given in accordance with this Agreement. 5. The Custodian shall not be under any duty or obligation to take action to effect collection of any amount due the Fund from the Transfer Agent of the Fund nor to take any action to effect payment or distribution by the Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer Agent of the Fund in accordance with this Agreement. 6. The Custodian shall not be under any duty or obligation to take action to effect collection of any amount if the Securities upon which such amount is payable are in default, or if payment is refused after the Custodian has timely and properly, in accordance with this Agreement, made due demand or presentation, unless and until (i) it shall be directed to take such action by a Certificate and (ii) it shall be assured to its satisfaction of reimbursement of its costs and expenses in connection with any such action, but the Custodian shall have such a duty if the Secu- rities were not in default on the payable date and the Custodian failed to timely and properly make such demand for payment and such failure is the reason for the non-receipt of payment. 7. The Custodian may, with the prior approval of the Board of Trustees of the Fund, appoint one or more banking institutions as subcustodian or subcustodians, or as co-Custodian or co-Custodians, of Securities and moneys at any time owned by the Fund, upon such terms and conditions as may be approved in a Certificate or contained in an agreement executed by the Custodian, the Fund and the appointed institution; provided, however, that appointment of any foreign banking institution or depository shall be subject to the provisions of Article XV hereof. 8. The Custodian agrees to indemnify the Fund against and save the Fund harmless from all liability, claims, losses and demands whatsoever, including attorney's fees, howsoever arising or incurred because of the negligence, bad faith or willful misconduct of any subcustodian of the Securities and moneys owned by the Fund. 9. The Custodian shall not be under any duty or obligation (a) to ascertain whether any Securities at any time delivered to, or held by it, for the account of the Fund and specifically allocated to a Series are such as properly may be held by the Fund or such Series under the provisions of its then current prospectus, or (b) to ascertain whether any transactions by the Fund, whether or not involving the Custodian, are such transactions as may properly be engaged in by the Fund. 10. The Custodian shall be entitled to receive and the Fund agrees to pay to the Custodian all reasonable out-of-pocket expenses and such compensation as may be agreed upon in writing from time to time between the Custodian and the Fund. The Custodian may charge such compensation, and any such expenses with respect to a Series incurred by the Custodian in the performance of its duties under this Agreement against any money specifically allocated to such Series. The Custodian shall also be entitled to charge against any money held by it for the account of a Series the amount of any loss, damage, liability or expense, including counsel fees, for which it shall be entitled to reimbursement under the provisions of this Agreement attributable to, or arising out of, its serving as Custodian for such Series. The expenses for which the Custodian shall be entitled to reimbursement hereunder shall include, but are not limited to, the expenses of subcustodians and foreign branches of the Custodian incurred in settling outside of New York City transactions involving the purchase and sale of Securities of the Fund. Notwithstanding the foregoing or anything else contained in this Agreement to the contrary, the Custodian shall, prior to effecting any charge for compensation, expenses, or any overdraft or indebtedness or interest thereon, submit an invoice therefor to the Fund. 11. The Custodian shall be entitled to rely upon any Certificate, notice or other instrument in writing, Oral Instructions, or Written Instructions received by the Custodian and reasonably believed by the Custodian to be genuine. The Fund agrees to forward to the Custodian a Certificate or facsimile thereof confirming Oral Instructions or Written Instructions in such manner so that such Certificate or facsimile thereof is received by the Custodian, whether by hand delivery, telecopier or other similar device, or otherwise, by the close of business of the same day that such Oral Instructions or Written Instructions are given to the Custodian. The Fund agrees that the fact that such confirming instructions are not received by the Custodian shall in no way affect the validity of the transactions or enforceability of the transactions thereby authorized by the Fund. The Fund agrees that the Custodian shall incur no liability to the Fund in acting upon Oral Instructions or Written Instructions given to the Custodian hereunder concerning such transactions provided such instructions reasonably appear to have been received from an Authorized Person. 12. The Custodian shall be entitled to rely upon any instrument, instruction or notice received by the Custodian and reasonably believed by the Custodian to be given in accordance with the terms and conditions of any Margin Account Agreement. Without limiting the generality of the foregoing, the Custodian shall be under no duty to inquire into, and shall not be liable for, the accuracy of any statements or representations contained in any such instrument or other notice including, without limi- tation, any specification of any amount to be paid to a broker, dealer, futures commission merchant or Clearing Member. This paragraph shall not excuse any failure by the Custodian to have acted in accordance with any Margin Agreement it has executed or any Certificate, Oral Instructions, or Written Instructions given in accordance with this Agreement. 13. The books and records pertaining to the Fund, as described in Appendix E hereto, which are in the possession of the Custodian shall be the property of the Fund. Such books and records shall be prepared and maintained by the Custodian as required by the Investment Company Act of 1940, as amended, and other applicable Securities laws and rules and regulations. The Fund, or the Fund's authorized representatives, shall have access to such books and records during the Custodian's normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by the Custodian to the Fund or the Fund's authorized representative, and the Fund shall reimburse the Custodian its expenses of providing such copies. Upon reasonable request of the Fund, the Custodian shall provide in hard copy or on micro-film, whichever the Custodian elects, any records included in any such delivery which are maintained by the Custodian on a computer disc, or are similarly maintained, and the Fund shall reimburse the Custodian for its expenses of providing such hard copy or micro-film. 14. The Custodian shall provide the Fund with any report obtained by the Custodian on the system of internal accounting control of the Book- Entry system, each Depository or O.C.C., and with such reports on its own systems of internal accounting control as the Fund may reasonably request from time to time. 15. The Custodian shall furnish upon request annually to the Fund a letter prepared by the Custodian's accountants with respect to the Custodian's internal systems and controls in the form generally provided by the Custodian to other investment companies for which the Custodian acts as custodian. 16. The Fund agrees to indemnify the Custodian against and save the Custodian harmless from all liability, claims, losses and demands whatsoever, including attorney's fees, howsoever arising out of, or related to, the Custodian's performance of its obligations under this Agreement, except for any such liability, claim, loss and demand arising out of the negligence, bad faith, or willful misconduct of the Custodian, any co-Custodian or subcustodian appointed by the Custodian, or that of the officers, employees, or agents of any of them. 17. Subject to the foregoing provisions of this Agreement, the Custodian shall deliver and receive Securities, and receipts with respect to such Securities, and shall make and receive payments only in accordance with the customs prevailing from time to time among brokers or dealers in such Securities and, except as may otherwise be provided by this Agreement or as may be in accordance with such customs, shall make payment for Securities only against delivery thereof and deliveries of Securities only against payment therefor. 18. The Custodian will comply with the procedures, guidelines or restrictions ("Procedures") adopted by the Fund from time to time for par- ticular types of investments or transactions, e.g., Repurchase Agreements and Reverse Repurchase Agreements, provided that the Custodian has received from the Fund a copy of such Procedures. If within ten days after receipt of any such Procedures, the Custodian determines in good faith that it is unreasonable for it to comply with any new procedures, guidelines or restrictions set forth therein, it may within such ten day period send notice to the Fund that it does not intend to comply with those new procedures, guidelines or restrictions which it identifies with particularity in such notice, in which event the Custodian shall not be required to comply with such identified procedures, guidelines or restrictions; provided, however, that, anything to the contrary set forth herein or in any other agreement with the Fund, if the Custodian identi- fies procedures, guidelines or restrictions with which it does not intend to comply, the Fund shall be entitled to terminate this Agreement without cost or penalty to the Fund upon thirty days' written notice. 19. Whenever the Custodian has the authority to deduct monies from the account for a series without a Certificate, it shall notify the Fund within one business day of such deduction and the reason for it. Whenever the Custodian has the authority to sell Securities or any other property of the Fund on behalf of any Series without a Certificate, the Custodian will notify the Fund of its intention to do so and afford the Fund the reasonable opportunity to select which Securities or other property it wishes to sell on behalf of such Series. If the Fund does not promptly sell sufficient Securities or Deposited Property on behalf of the Series, then, after notice, the Custodian may proceed with the intended sale. 20. The Custodian shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth or referred to in this Agreement, and no covenant or obligation shall be implied in this Agreement against the Custodian. ARTICLE XVII TERMINATION 1. Except as provided in paragraph 3 of this Article, this Agreement shall continue until terminated by either the Custodian giving to the Fund, or the Fund giving to the Custodian, a notice in writing specifying the date of such termination, which date shall be not less than 60 days after the date of the giving of such notice. In the event such notice or a notice pursuant to paragraph 3 of this Article is given by the Fund, it shall be accompanied by a copy of a resolution of the Board of Trustees of the Fund, certified by an Officer and the Secretary or an Assistant Secretary of the Fund, electing to terminate this Agreement and designating a successor custodian or custodians, each of which shall be eligible to serve as a custodian for the Securities of a management investment company under the Investment Company Act of 1940. In the event such notice is given by the Custodian, the Fund shall, on or before the termination date, deliver to the Custodian a copy of a resolution of the Board of Trustees of the Fund, certified by the Secretary or any Assistant Secretary, designating a successor custodian or custodians. In the ab- sence of such designation by the Fund, the Custodian may designate a successor custodian which shall be a bank or trust company eligible to serve as a custodian for Securities of a management investment company under the Investment Company Act of 1940 and which is acceptable to the Fund. Upon the date set forth in such notice this Agreement shall terminate, and the Custodian shall upon receipt of a notice of acceptance by the successor custodian on that date deliver directly to the successor custodian all Securities and moneys then owned by the Fund and held by it as Custodian, after deducting all fees, expenses and other amounts for the payment or reimbursement of which it shall then be entitled. 2. If a successor custodian is not designated by the Fund or the Custodian in accordance with the preceding paragraph, the Fund shall upon the date specified in the notice of termination of this Agreement and upon the delivery by the Custodian of all Securities (other than Securities held in the Book-Entry System which cannot be delivered to the Fund) and moneys then owned by the Fund be deemed to be its own custodian and the Custodian shall thereby be relieved of all duties and responsibilities pursuant to this Agreement arising thereafter, other than the duty with respect to Securities held in the Book Entry System which cannot be deliv- ered to the Fund to hold such Securities hereunder in accordance with this Agreement. 3. Notwithstanding the foregoing, the Fund may terminate this Agreement upon the date specified in a written notice in the event of the "Bankruptcy" of The Bank of New York. As used in this sub-paragraph, the term "Bankruptcy" shall mean The Bank of New York's making a general assignment, arrangement or composition with or for the benefit of its creditors, or instituting or having instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or the entry of a order for relief under any applicable bankruptcy law or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors rights, or if a petition is presented for the winding up or liquidation of the party or a resolution is passed for its winding up or liquidation, or it seeks, or becomes subject to, the appointment of an administrator, receiver, trustee, custodian or other similar official for it or for all or substantially all of its assets or its taking any action in furtherance of, or indicating its consent to approval of, or acquiescence in, any of the foregoing. ARTICLE XVIII TERMINAL LINK 1. At no time and under no circumstances shall the Fund be obligated to have or utilize the Terminal Link, and the provisions of this Article shall apply if, but only if, the Fund in its sole and absolute discretion elects to utilize the Terminal Link to transmit Certificates to the Custodian. 2. The Terminal Link shall be utilized only for the purpose of the Fund providing Certificates to the Custodian and the Custodian providing notices to the Fund and only after the Fund shall have established access codes and internal safekeeping procedures to safeguard and protect the confidentiality and availability of such access codes. Each use of the Terminal Link by the Fund shall constitute a representation and warranty that at least two officers have each utilized an access code that such internal safekeeping procedures have been established by the Fund, and that such use does not contravene the Investment Company Act of 1940 and the rules and regulations thereunder. 3. Each party shall obtain and maintain at its own cost and expense all equipment and services, including, but not limited to communications services, necessary for it to utilize the Terminal Link, and the other party shall not be responsible for the reliability or availability of any such equipment or services, except that the Custodian shall not pay any communications costs of any line leased by the Fund, even if such line is also used by the Custodian. 4. The Fund acknowledges that any data bases made available as part of, or through the Terminal Link and any proprietary data, software, processes, information and documentation (other than any such which are or become part of the public domain or are legally required to be made available to the public) (collectively, the "Information"), are the exclusive and confidential property of the Custodian. The Fund shall, and shall cause others to which it discloses the Information, to keep the Information confidential by using the same care and discretion it uses with respect to its own confidential property and trade secrets, and shall neither make nor permit any disclosure without the express prior written consent of the Custodian. 5. Upon termination of this Agreement for any reason, each Fund shall return to the Custodian any and all copies of the Information which are in the Fund's possession or under its control, or which the Fund distributed to third parties. The provisions of this Article shall not affect the copyright status of any of the Information which may be copyrighted and shall apply to all Information whether or not copyrighted. 6. The Custodian reserves the right to modify the Terminal Link from time to time without notice to the Fund, except that the Custodian shall give the Fund notice not less than 75 days in advance of any modification which would materially adversely affect the Fund's operation, and the Fund agrees not to modify or attempt to modify the Terminal Link without the Custodian's prior written consent. The Fund acknowledges that any software provided by the Custodian as part of the Terminal Link is the property of the Custodian and, accordingly, the Fund agrees that any modifications to the same, whether by the Fund or the Custodian and whether with or without the Custodian's consent, shall become the property of the Custodian. 7. Neither the Custodian nor any manufacturers and suppliers it utilizes or the Fund utilizes in connection with the Terminal Link makes any warranties or representations, express or implied, in fact or in law, including but not limited to warranties of merchantability and fitness for a particular purpose. 8. Each party will cause its officers and employees to treat the authorization codes and the access codes applicable to Terminal Link with extreme care, and irrevocably authorizes the other to act in accordance with and rely on Certificates and notices received by it through the Terminal Link. Each party acknowledges that it is its responsibility to assure that only its authorized persons use the Terminal Link on its behalf, and that a party shall not be responsible nor liable for use of the Terminal Link on behalf of the other party by unauthorized persons of such other party. 9. Notwithstanding anything else in this Agreement to the contrary, neither party shall have any liability to the other for any losses, damages, injuries, claims, costs or expenses arising as a result of a delay, omission or error in the transmission of a Certificate or notice by use of the Terminal Link except for money damages for those suffered as the result of the negligence, bad faith or willful misconduct of such party or its officers, employees or agents in an amount not exceeding for any incident $100,000; provided, however, that a party shall have no liability under this Section 9 if the other party fails to comply with the provisions of Section 11. 10. Without limiting the generality of the foregoing, in no event shall either party or any manufacturer or supplier of its computer equipment, software or services relating to the Terminal Link be responsible for any special, indirect, incidental or consequential damages which the other party may incur or experience by reason of its use of the Terminal Link even if such party, manufacturer or supplier has been advised of the possibility of such damages, nor with respect to the use of the Terminal Link shall either party or any such manufacturer or supplier be liable for acts of God, or with respect to the following to the extent beyond such person's reasonable control: machine or computer breakdown or malfunction, interruption or malfunction of communication facilities, labor difficulties or any other similar or dissimilar cause. 11. The Fund shall notify the Custodian of any errors, omissions or interruptions in, or delay or unavailability of, the Terminal Link as promptly as practicable, and in any event within 24 hours after the earliest of (i) discovery thereof, and (ii) in the case of any error, the date of actual receipt of the earliest notice which reflects such error, it being agreed that discovery and receipt of notice may only occur on a business day. The Custodian shall promptly advise the Fund whenever the Custodian learns of any errors, omissions or interruption in, or delay or unavailability of, the Terminal Link. 12. Each party shall, as soon as practicable after its receipt of a Certificate or a notice transmitted by the Terminal Link, verify to the other party by use of the Terminal Link its receipt of such Certificate or notice, and in the absence of such verification the party to which the Certificate or notice is sent shall not be liable for any failure to act in accordance with such Certificate or notice and the sending party may not claim that such Certificate or notice was received by the other party. ARTICLE XIX MISCELLANEOUS 1. Annexed hereto as Appendix A is a Certificate signed by two of the present Officers of the Fund under its seal, setting forth the names and the signatures of the present Authorized Persons. The Fund agrees to furnish to the Custodian a new Certificate in similar form in the event that any such present Authorized Person ceases to be an Authorized Person or in the event that other or additional Authorized Persons are elected or appointed. Until such new Certificate shall be received, the Custodian shall be entitled to rely and to act upon Oral Instructions, Written Instructions, or signatures of the present Authorized Persons as set forth in the last delivered Certificate to the extent provided by this Agreement. 2. Annexed hereto as Appendix B is a Certificate signed by two of the present Officers of the Fund under its seal, setting forth the names and the signatures of the present Officers of the Fund. The Fund agrees to furnish to the Custodian a new Certificate in similar form in the event any such present officer ceases to be an officer of the Fund, or in the event that other or additional officers are elected or appointed. Until such new Certificate shall be received, the Custodian shall be entitled to rely and to act upon the signatures of the officers as set forth in the last delivered Certificate to the extent provided by this Agreement. 3. Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Custodian, other than any Certificate or Written Instructions, shall be sufficiently given if addressed to the Custodian and mailed or delivered to it at its offices at 90 Washington Street, New York, New York 10286, or at such other place as the Custodian may from time to time designate in writing. 4. Any notice or other instrument in writing, authorized or rehired by this Agreement to be given to the Fund shall be sufficiently given if addressed to the Fund and mailed or delivered to it at its office at the address for the Fund first above written, or at such other place as the Fund may from time to time designate in writing. 5. This Agreement constitutes the entire agreement between the parties, replaces all prior agreements and may not be amended or modified in any manner except by a written agreement executed by both parties with the same formality as this Agreement and approved by a resolution of the Board of Trustees of the Fund, except that Appendices A and B may be amended unilaterally by the Fund without such an approving resolution. 6. This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Fund without the written consent of the Custodian, or by the Custodian or The Bank of New York without the written consent of the Fund, authorized or approved by a resolution of the Fund's Board of Trustees. For purposes of this paragraph, no merger, consolidation, or amalgamation of the Custodian, The Bank of New York, or the Fund shall be deemed to constitute an assignment of this Agreement. 7. This Agreement shall be construed in accordance with the laws of the State of New York without giving effect to conflict of laws principles thereof. Each party hereby consents to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder and hereby waives its right to trial by jury. 8. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument. 9. A copy of the Declaration of Trust of the Fund is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Board of Trustees of the Fund as Trustees and not individually and that the obligations of the instrument are not binding upon any of the Trustees or shareholders individually but are binding upon the assets and property of the Fund; provided, however, that the Declaration of Trust of the Fund provides that the assets of a particular series of the Fund shall under no circumstances be charges with liabilities attributable to any other series of the Fund and that all persons extending credit to, or contracting with or having any claim against a particular series of the Fund shall look only to the assets of that particular series for payment of such credit, contract or claim. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective Officers, thereunto duly authorized and their respective seals to be hereunto affixed, as of the day and year first above written. OPPENHEIMER MULTI-SECTOR INCOME TRUST By: _______________________________ Robert G. Galli, Secretary [SEAL] Attest: ___________________________________ Robert G. Zack, Assistant Secretary THE BANK OF NEW YORK [SEAL] By__________________________________ Attest: ___________________________________ APPENDIX A I, President and I, , of Oppenheimer Fund, a Massachusetts business trust (the "Fund") do hereby certify that: The following individuals have been duly authorized by the Board of Trustees of the Fund in conformity with the Fund's Declaration of Trust and By-Laws to give Oral Instructions and Written Instructions on behalf of the Fund, except that those persons designated as being an "Officer of OSS" shall be an Authorized Person only for purposes of Articles XII and XIII. The signatures set forth opposite their respective names are their true and correct signatures: Name Position Signature __________________ _______________________ __________________ APPENDIX B I, President and I, , of Oppenheimer Fund, a Massachusetts business trust (the "Fund"), do hereby certify that: The following individuals for whom a position other than "Officer of OSS" is specified serve in the following positions with the Fund and each has been duly elected or appointed by the Board of Trustees of the Fund to each such position and qualified therefor in conformity with the Fund's Declaration of Trust and By-Laws. With respect to the following individuals for whom a position of "Officer of OSS" is specified, each such individual has been designated by a resolution of the Board of Trustees of the Fund to be an Officer for purposes of the Fund's Custody Agreement with The Bank of New York, but only for purposes of Articles XII and XIII thereof and a certified copy of such resolution is attached hereto. The signatures of each individual below set forth opposite their respective names are their true and correct signatures: Name Position Signature __________________ _______________________ __________________ APPENDIX C The undersigned, hereby certifies that he or she is the duly elected and acting of Oppenheimer Fund (the "Fund"), further certifies that the following resolutions were adopted by the Board of Trustees of the Fund at a meeting duly held on __________________, 199 , at which a quorum at all times present and that such resolutions have not been modified or rescinded and are in full force an effect as of the date hereof. RESOLVED, that The Bank New York, as Custodian pursuant to a Custody Agreement between The Bank of New York and the Fund dated as of 199 (the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis to act in accordance with, and to rely on instructions by the Fund to the Custodian communicated by a Terminal Link as defined in the Custody Agreement. RESOLVED, that the Fund shall establish access codes and grant use of such access codes only to officers of the Fund as defined in the Custody Agreement, and shall establish internal safekeeping procedures to safeguard and protect the confidentiality and availability of such access codes. RESOLVED, that Officers of the Fund as defined in the Custody Agreement shall, following the establishment of such access codes and such internal safekeeping procedures, advise the Custodian that the same have been established by delivering a Certificate, as defined in the Custody Agreement, and the Custodian shall be entitled to rely upon such advice. IN WITNESS WHEREOF, I hereunto set my hand in the seal of , as of the day of , 199 . APPENDIX D I, Richard P. Lando, an Assistant Vice President with THE BANK OF NEW YORK do hereby designate the following publications: The Bond Buyer Depository Trust Company Notices Financial Daily Card Service JJ Kenney Municipal Bond Service London Financial Times New York Times Standard & Poor's Called Bond Record Wall Street Journal APPENDIX E The following books and records pertaining to Fund shall be prepared and maintained by the Custodian and shall be the property of the Fund: EXHIBIT A CERTIFICATION The undersigned, , hereby certifies that he or she is the duly elected and acting of Oppenheimer Fund, a Massachusetts business trust (the "Fund"), and further certifies that the following resolution was adopted by the Board of Trustees of the Fund at a meeting duly held on 199 , at which a quorum was at all times present and that such resolution has not been modified or rescinded and is in full force and effect as of the date hereof. RESOLVED, that The Bank of New York, as Custodian pursuant to a Custody Agreement between The Bank of New York and the Fund dated as of , 199 (the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis to deposit in the Book-Entry System, as defined in the Custody Agreement, all Securities eligible for deposit therein, regardless of the Series to which the same are specifically allocated, and to utilize the Book-Entry System to the extent possible in connection with its performance thereunder, including, without limitation, In connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of Securities col- lateral. IN WITNESS WHEREOF, I have hereunto set my hand and the seal of , as of the day of , 199 . __________________________ [SEAL] EXHIBIT B CERTIFICATION The undersigned , hereby certifies that he or she is the duly elected and acting of Oppenheimer Fund, a Massachusetts business trust (the "Fund"), and further certifies that the following resolution was adopted by the Board of Trustees of the Fund at a meeting duly held on , 199 , at which a quorum was at all times present and that such resolution has not been modified or rescinded and is in full force and effect as of the date hereof. RESOLVED, that The Bank of New York, as Custodian pursuant to a Custody Agreement between The Bank of New York and the Fund dated as of , 199 (the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis until such time as it receives a Certificate, as defined in the Custody Agreement, to the contrary to deposit in The Depository Trust Company ("DTC") as a "Depository" as defined in the Custody Agreement, all Securities eligible for deposit therein, regardless of the Series to which the same are specifically allocated, and to utilize DTC to the extent possible in connection with its performance there- under, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of Securities collateral. IN WITNESS WHEREOF, I have hereunto set my hand and the seal of as of the day of , 199 . ___________________________ [SEAL] EXHIBIT B-1 CERTIFICATION The undersigned, hereby certifies that he or she is the duly elected and acting of Oppenheimer Fund, a Massachusetts business trust (the "Fund"), and further certifies that the following resolution was adopted by the Board of Trustees of the Fund at a meeting duly held on , 199 , at which a quorum was at all times present and that such resolution has not been modified or rescinded and is in full force and effect as of the date hereof. RESOLVED, that The Bank of New York, as Custodian pursuant to a Custody Agreement between The Bank of New York and the Fund dated as of 199 , (the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis until such time as it receives a Certificate, as defined in the Custody Agreement, to the contrary to deposit in the Participants Trust Company as a Depository, as defined in the Custody Agreement, all Securities eligible for deposit therein, regardless of the Series to which the same are specifically allocated, and to utilize the Participants Trust Company to the extent possible in connection with its performance thereunder, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of Securities collateral. IN WITNESS WHEREOF, I have hereunto set my hand and the seal of , as of the day of , 199 . _______________________ [SEAL] EXHIBIT C CERTIFICATION The undersigned, , hereby certifies that he or she is the duly elected and acting of Oppenheimer Fund, a Massachusetts business trust (the "Fund"), and further certifies that the following resolution was adopted by the Board of Trustees of the Fund at a meeting duly held on , 199 , at which a quorum was at all times present and that such resolution has not been modified or rescinded and is in full force and effect as of the date hereof. RESOLVED, that The Bank of New York, as Custodian pursuant to a Custody Agreement between The Bank of New York and the Fund dated as of , 199 (the "Custody Agreement") is authorized and instructed on a continuous and ongoing basis until such time as it receives a Certificate, as defined in the Custody Agreement, to the contrary, to ac- cept, utilize and act with respect to Clearing Member confirmations for Options and transaction in Options, regardless of the Series to which the same are specifically allocated, as such terms are defined in the Custody Agreement, as provided in the Custody Agreement. IN WITNESS WHEREOF, I have hereunto set my hand and the seal of , as of the day of , 199 . ____________________________ [SEAL] EXHIBIT D [FORM OF FOREIGN SUBCUSTODIAN AGREEMENT] Appendix A Article XIX.1 49 Appendix B Article XIX.2 50 Exhibit A Article III. 17 Exhibit B Article III. 18 Exhibit C Article III. 18 Exhibit D34 Article XV.4 34 Schedule A Article XV.1 33 CUSTODY\680 EX-99 13 ACCOUNTING SERVICES AGREEMENT AGREEMENT made this 12th day of April, 1990 between OPPENHEIMER MULTI-SECTOR INCOME TRUST (the "Fund") having its principal place of business at Two World Trade Center, New York, New York 10048-0203, and OPPENHEIMER MANAGEMENT CORPORATION ("OMC"), having its principal place of business at Two World Trade Center, New York, New York 10048-0203. WITNESSETH: WHEREAS, pursuant to a Custodian Agreement dated November 30, 1988, as amended, between the Fund and State Street Bank and Trust Company ("State Street"), State Street furnished certain services to the Fund, including accounting services and the calculation of the Fund's net asset value; WHEREAS, the said Custodian Agreement between the Fund and State Street has terminated effective this date; WHEREAS, the Fund now desires that OMC perform such accounting services and calculate the Fund's net asset value; WHEREAS, OMC is willing to perform such services on the terms and conditions set forth in this Agreement, including a fee which is the same as that received by State Street for providing accounting services; NOW, THEREFORE, in consideration of the mutual premises and covenants hereinafter contained, the parties agree as follows: 1. Employment. The Fund hereby employs OMC to maintain the books and records of the Fund required to be maintained pursuant to Rule 31a-1 (the "Rule") under the Investment Company Act of 1940 (the "Act"), including, without limitation: (a) Journals containing an itemized daily record in detail of all purchases and sales of securities, all receipts and disbursements of cash and all other debits and credits, as required by subsection (b)(1) of the Rule; (b) General and auxiliary ledgers reflecting all asset, liability, reserve, capital, income and expense accounts, including interest accrued and interest received, as required by subsection (b)(2)(i) of the Rule; (c) Separate ledger accounts required by subsections (b)(2)(ii) and (iii) of the Rule; and (d) A monthly trial balance of all ledger accounts (except shareholder accounts) as required by subsection (b)(8) of the Rule. 2. Daily Services. In addition to the maintenance of the books and records specified above, OMC shall perform the following accounting services for the Fund daily (unless otherwise noted below): (a) Calculate the net asset value per share once each week, on the last day of such week that The New York Stock Exchange is open for business, and also at the end of each month, using securities valuation methods determined from time to time by the Fund's board of Trustees, or valuations provided by a pricing service approved by the Board; (b) Calculate the dividend and capital gain distributions, if any; (c) Calculate the Fund's dividend yield, based upon the distributions paid over the prior 30-day or monthly period, using the offering price on the last day of the period; (d) Reconcile cash movements with the Fund's Custodian Bank; (e) Affirm to the Fund's Custodian Bank portfolio trades and cash settlements; (f) Verify and reconcile with the Fund's Custodian all daily trade activity; (g) Produce the following reports: (i) a current security position report; (ii) a summary report of transactions and pending maturities (including the principal, cost, and accrued interest on each portfolio security in maturity date order); and (iii) a current cash position report (including cash available from portfolio sales less cash needed for settlement of portfolio purchases); and (h) Calculate the daily expense accrual. 3. Semi-Annual Services. Semi-annually, OMC shall prepare drafts of financial statements to shareholders. 4. Fees. The above services will be provided at an annual fee of $24,000 payable to OMC by the Fund, plus out-of-pocket costs and expenses reasonably incurred. Such fee shall be payable monthly (with proration for any month during which services are provided for less than a full month). 5. Information from the Fund. The Fund shall, in written form satisfactory to OMC, daily (i) inform OMC of all purchases and sales of portfolio securities and all payments of expenses; (ii) arrange to have its Custodian Bank inform OMC of all receipts and disbursements of cash, cash on hand, and securities positions; (iii) arrange to have its transfer agent inform OMC of total shares outstanding, and (iv) cause the pricing service, if any, designated by the Board to provide OMC the daily valuations of all securities held by the Fund as of the time agreed to by the Fund and such pricing service; and the Fund shall provide or cause to be provided all such information to OMC in a timely fashion to enable OMC to calculate the Fund's net asset value in the manner contemplated by the Fund's prospectus and the procedures described herein. Upon the commencement of services hereunder, the Fund shall provide OMC a list of all of its currently-held portfolio securities and other assets. 6. Evidence of Authority. OMC shall be protected, in carrying out its duties under this Agreement, in acting upon any written instruction, notice, consent, certificate or other instrument believed by it to be genuine and to have been properly executed by or on behalf of the Fund by an officer or employee of the Fund named in a resolution of the Fund's Board of Trustees. Such instructions may be transmitted to OMC by mail or by hand delivery or by telecopier or other facsimile or electromagnetic device, and OMC may rely on such facsimile or electromagnetic copy as an original. The Fund shall furnish to OMC and OMC may receive and accept a certified copy of such resolution as conclusive evidence of the authority of any person to act in accordance with such resolution, and such resolution may be considered as in full force and effect until receipt by OMC of written notice to the contrary. Such resolution may be general or specific in its terms. 7. Records. OMC shall create and maintain all records relating to its activities and obligations under this Agreement in such manner as will meet the obligations of the Fund under the Act, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder, applicable federal and state tax laws and any other laws or administrative rules or procedures which may be applicable to the Fund. All such records shall be the property of the Fund and shall at all times during the regular business hours of OMC be open for inspection by duly authorized officers, employees or agents of the Fund, and employees and agents of the Securities and Exchange Commission. 8. Reports to the Fund by Independent Public Accountants. OMC shall provide the Fund, at such times as the Fund may reasonably require, with reports by independent public accountants concerning OMC's accounting system and internal accounting controls. Such reports shall be of sufficient scope and in sufficient detail, as may reasonably be required by the Fund, to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, shall so state. 9. Standard of Care. OMC shall exercise reasonable care in carrying out the provisions of this Agreement, but shall be kept indemnified by and shall be without liability to the Fund for any action taken or omitted by OMC in the absence of bad faith, gross negligence or willful misconduct. It shall be entitled to receive and act upon advice of counsel (who may be counsel for the Fund) on all matters, and shall be without liability for any action reasonably taken or not taken pursuant to such advice. OMC shall have no obligation to verify independently any securities valuations provided to it hereunder by any pricing service designated by the Fund's Board of Trustees, and the Fund agrees to indemnify and hold harmless OMC from and against any loss or liability arising from OMC's reliance on information provided by such pricing service, the Fund's Custodian Bank, or the Fund's transfer agent unless OMC has acted with gross negligence or bad faith. OMC shall have no obligation to verify the beginning account balances as of the date OMC commences to provide accounting services hereunder, and the Fund agrees to indemnify and hold harmless OMC from and against any loss or liability arising from OMC's reliance on such information provided by State Street. 10. Effective Period, Termination and Amendment. This Agreement takes effect on April 12, 1990, and shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by agreement of the parties hereto, and may be terminated by the Fund or OMC by an instrument in writing delivered by hand or mailed, postage prepaid to the Fund or OMC, such termination to take effect not sooner than thirty days after the date of such hand delivery or mailing. Unless earlier terminated as set forth above, this Agreement shall terminate automatically on the termination of OMC's Investment Advisory Agreement with the Fund. Upon termination of this Agreement, the Fund shall pay to OMC such compensation as may be due as of the date of such termination and shall likewise reimburse OMC for its costs, expenses and disbursements incurred to such date. 11. Notices. Unless otherwise provided hereunder, any notice provided hereunder shall be sufficiently given when sent by registered or certified mail to the party or parties required to be served with such notice, at the address of such party set forth above or at such other address as such party may from time to time specify in writing to the other party pursuant to this paragraph. 12. Heading. Paragraph headings in this Agreement are included for convenience only and are not to be used to construe or interpret this Agreement. 13. Assignment. This Agreement and the rights and duties hereunder shall not be assignable by any party hereto except upon the specific written consent of the other party. 14. Governing Law. This Agreement shall be governed by and its provisions shall be construed in accordance with the laws of the State of New York as to contracts to be performed wholly in such state, without reference to conflicts and choice of law principles. 15. Limitation of Liability of the Trustees and Shareholders. A copy of the Declaration of Trust of the Fund is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given by the Fund to OMC that this instrument is executed on behalf of the Trustees of the Fund as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Fund or a particular Series. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed all as of the day and year first above written. OPPENHEIMER MULTI-SECTOR INCOME TRUST By: /s/ Robert G. Zack ---------------------- Robert G. Zack OPPENHEIMER MANAGEMENT CORPORATION By: /s/ Robert G. Galli ---------------------- Robert G. Galli LEGAG\680.ACC EX-24 14 OPPENHEIMER ASSET ALLOCATION FUND OPPENHEIMER CALIFORNIA TAX-EXEMPT FUND OPPENHEIMER DISCOVERY FUND OPPENHEIMER GLOBAL BIO-TECH FUND OPPENHEIMER GLOBAL ENVIRONMENT FUND OPPENHEIMER GLOBAL FUND OPPENHEIMER GLOBAL GROWTH & INCOME FUND OPPENHEIMER GOLD & SPECIAL MINERALS FUND OPPENHEIMER MONEY MARKET FUND, INC. OPPENHEIMER MORTGAGE INCOME FUND OPPENHEIMER MULTI-GOVERNMENT TRUST OPPENHEIMER MULTI-SECTOR INCOME TRUST OPPENHEIMER NEW YORK TAX-EXEMPT FUND OPPENHEIMER FUND OPPENHEIMER PENNSYLVANIA TAX-EXEMPT FUND OPPENHEIMER SPECIAL FUND OPPENHEIMER TARGET FUND OPPENHEIMER TAX-FREE BOND FUND OPPENHEIMER TIME FUND OPPENHEIMER U.S. GOVERNMENT TRUST CERTIFIED RESOLUTIONS OF THE BOARDS June 10, 1993 At a meeting of the Boards for the above referenced funds (the "Funds") held on June 10, 1993, the members thereof by unanimous vote of those present adopted and approved the following resolutions: "RESOLVED, that Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, be, and the same hereby is appointed the attorney- in-fact and agent of Donald W. Spiro, as President of the Funds, Robert G. Galli, as Secretary of the Funds, and George C. Bowen, as Treasurer of the Funds (Principal Financial and Accounting Officer), with full power of substitution and resubstitution, to sign on the behalf of such officers of each of the Funds any and all Registration Statements (including any post-effective amendments to such Registration Statements) under the Securities Act of 1933 and the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission; and be it further RESOLVED, that Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, hereby is authorized, empowered and directed, in the name and on behalf of the Funds, to take such additional action and to execute and deliver such additional documents and instruments as any of them may deem necessary or appropriate to implement the provisions of the foregoing resolution, the authority for the taking of such action and the execution and delivery of such documents and instruments of such documents and instruments to be conclusively evidenced thereby." In witness whereof, the undersigned has hereunto set his hand this 26th day of July, 1993. /s/ Robert G. Zack Robert G. Zack POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacity as the Treasurer (Principal Financial and Accounting Officer) of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 10th day of June, 1993. /s/ George C. Bowen George C. Bowen POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 10th day of June, 1993. /s/ Sidney M. Robbins Sidney M. Robbins POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 10th day of June, 1993. /s/ Russell S. Reynolds, Jr. Russell S. Reynolds, Jr. POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 10th day of June, 1993. /s/ Edward V. Regan Edward V. Regan POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 10th day of June, 1993. /s/ Kenneth A. Randall Kenneth A. Randall POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 10th day of June, 1993. /s/ Elizabeth B. Moynihan Elizabeth B. Moynihan POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 10th day of June, 1993. /s/ Leon Levy Leon Levy POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 10th day of June, 1993. /s/ Pauline Trigere Pauline Trigere POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 10th day of June, 1993. /s/ Leo Cherne Leo Cherne POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 10th day of June, 1993. /s/ Donald W. Spiro Donald W. Spiro POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 15th day of February, 1995. /s/ Clayton Yeutter Clayton Yeutter POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Robert G. Galli, Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 10th day of June, 1993. /s/ Benjamin Lipstein Benjamin Lipstein POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Andrew J. Donohue or Robert G. Zack, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her capacities as a trustee of OPPENHEIMER MULTI-SECTOR INCOME TRUST, a Massachusetts business trust (the "Fund"), to sign on his (her) behalf any and all Registration Statements (including any post-effective amendments to Registration Statements) under the Securities Act of 1933, the Investment Company Act of 1940 and any amendments and supplements thereto, and other documents in connection thereunder, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in- fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully as to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, may lawfully do or cause to be done by virtue hereof. Dated this 19th day of August, 1993. /s/ Robert G. Galli Robert G. Galli EX-27 15
6 0000829801 OPPENHEIMER MULTI-SECTOR INCOME TRUST 12-MOS OCT-31-1994 NOV-01-1993 OCT-31-1994 298494029 294204320 10304848 213820 2237788 306960776 10077634 0 1225013 11302647 0 319068305 29064849 28896061 0 3324611 (15862506) 0 (4223059) 295658129 410652 30828264 0 3115564 28123352 (7693213) (15068472) 5361667 0 24512388 0 3638975 0 0 168788 (20988373) 2722769 (18271193) 0 0 1995015 0 3115564 306686000 10.96 1.00 (.82) .84 0 .13 10.17 1.02 0 0
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