April 1994
Dear Oppenheimer U.S. Government Trust Class A Shareholder:
We have scheduled a shareholder meeting on May 25, 1995 for you to
decide upon some important proposals for the Fund. Your ballot card
and a detailed statement of the issues are enclosed with this letter.
Your vote is very important, because these decisions will affect
your investment, and it's your chance to help shape the policies of the
Fund. So we urge you to consider these issues carefully and to make
your vote count.
How do you vote?
To vote, simply complete the ballot by marking your choices and
return it in the postage-paid envelope provided. Remember, it can be
expensive for the Fund -- and ultimately for you as a shareholder -- to
re-mail ballots if not enough responses are received to conduct the
meeting.
What are the issues?
After consideration, the Board of Trustees, which represents your
interests in the day-to-day management of the Fund, recommends approval
of the following items:
-- Election of Trustees. There are 12 Trustees up for reelection
on May 25th. You will find detailed information on the members of the
Board in the enclosed proxy statement.
-- Ratification of Auditors. Each year, an independent auditing firm
is employed to review the Fund's financial statements, as explained in
the proxy statement.
-- Change in Certain Fundamental Investment Policies. The
fundamental investment policies described in the prospectus determine
the types of securities which may be purchased by the Fund.
In the wake of last year's turbulent marketplace, the Fund's
investment adviser requests your approval to amend some of these
investment limitations to allow the portfolio manager more
flexibility to diversify the Fund's holdings--while continuing the
Fund's focus on U.S. government securities. The investment
adviser firmly believes the ability to diversify a portion of the
Fund's assets may help protect your investment against volatility,
as well as potentially add to your investment return over time.
As demonstrated last year, diversification can be critical to
long-term success and to managing short-term volatility. You will
find additional information in the enclosed proxy statement.
-- New Investment Advisory Agreement. You are being asked to
approve a new investment advisory agreement which provides for lower
management fee rates than in the current agreement.
Please contact your financial advisor or call us at 1-800-525-7048
if you have any questions.
As always, we appreciate your confidence in OppenheimerFunds and
thank you for allowing us to manage a portion of your investment
assets.
Sincerely,
/s/ Jon S. Fossel
<PAGE>
April 1994
Dear Oppenheimer U.S. Government Trust Class C Shareholder:
We have scheduled a shareholder meeting on May 25, 1995 for you to
decide upon some important proposals for the Fund. Your ballot card
and a detailed statement of the issues are enclosed with this letter.
Your vote is very important, because these decisions will affect
your investment, and it's your chance to help shape the policies of the
Fund. So we urge you to consider these issues carefully and to make
your vote count.
How do you vote?
To vote, simply complete the ballot by marking your choices and
return it in the postage-paid envelope provided. Remember, it can be
expensive for the Fund -- and ultimately for you as a shareholder -- to
re-mail ballots if not enough responses are received to conduct the
meeting.
What are the issues?
After consideration, the Board of Trustees, which represents your
interests in the day-to-day management of the Fund, recommends approval
of the following items:
-- Election of Trustees. There are 12 Trustees up for reelection
on May 25th. You will find detailed information on the members of the
Board in the enclosed proxy statement.
-- Ratification of Auditors. Each year, an independent auditing
firm is employed to review the Fund's financial statements, as
explained in the proxy statement.
-- Change in Certain Fundamental Investment Policies. The
fundamental investment policies described in the prospectus determine
the types of securities which may be purchased and any limitations on
securities that may be held by the Fund.
In the wake of last year's turbulent marketplace, the Fund's
investment adviser requests your approval to amend some of these
investment limitations to allow the portfolio manager more
flexibility to diversify the Fund's holdings-- while continuing
the Fund's focus on U.S. government securities. The investment
adviser firmly believes the ability to diversify a larger portion
of the Fund's assets may help protect your investment against
volatility as well as potentially add to your investment return
over time.
As demonstrated last year, diversification can be critical to
long-term success and to managing short-term volatility. You will
find additional information in the enclosed proxy statement.
-- New Investment Advisory Agreement. You are being asked to
approve a new investment advisory agreement which provides for lower
management fee rates than in the current agrement.
-- New 12b-1 Plan for Class C Shares. Currently, the Fund's
distributor is reimbursed for a portion of its expenses by
demonstrating actual distribution costs. Your approval is requested to
change the way the distributor is paid so that it is compensated with a
flat fee (as a percentage of net assets) for its distribution efforts
at the same rate as the current plan. This is a common type of plan in
the mutual fund industry and is not expected to materially increase
fund expenses. Any distribution costs in excess of that rate will be
the responsibility of the distributor.
Please contact your financial advisor or call us at 1-800-525-7048
if you have any questions.
As always, we appreciate your confidence in OppenheimerFunds and
thank you for allowing us to manage a portion of your investment
assets.
Sincerely,
/s/ Jon S. Fossel
<PAGE>
OPPENHEIMER U.S. GOVERNMENT TRUST
Two World Trade Center, New York, New York 10048-0203
Notice Of Meeting Of Shareholders To Be Held
May 25, 1995
To The Class A & Class Shareholders of
Oppenheimer U.S. Government Trust
Notice is hereby given that a Meeting of the Class A and Class C
Shareholders of Oppenheimer U.S. Government Trust (the "Fund") will be
held at 3410 South Galena Street, Denver, Colorado, 80231, at 10:00
A.M., Denver time, on May 25, 1995, or any adjournments thereof, for
the following purposes:
To be voted on by holders of:
Class A Shares Class C Shares
X X (a) To elect twelve Trustees to hold
office until the next meeting of
shareholders called for the purpose of
electing Trustees and until their
successors are elected and shall qualify;
X X (b) To ratify the selection of KPMG Peat
Marwick LLP as the independent certified
public accountants and auditors of the
Fund for the fiscal year beginning July
1, 1994 (Proposal No. 1);
X X (c) To approve changes in the Fund's
fundamental investment policies on
investing in U.S. government securities
and in commodities (Proposal No. 2);
X X (d) To approve an Investment Advisory
Agreement between the Fund and
Oppenheimer Management Corporation (the
"Manager") that would provide for a
decrease in management fee rates
(Proposal No. 3);
X (e) To approve the Fund's Class C
12b-1 Distribution and Service Plan
(Proposal No. 4); and
X X (f) To transact such other business as
may properly come before the meeting, or
any adjournments thereof.
Shareholders of record at the close of business on March 24, 1995, are
entitled to vote at the meeting. The election of Trustees and the
Proposals are more fully discussed in the Proxy Statement. Please read
it carefully before telling us, through your proxy or in person, how
you wish your shares to be voted. The Board of Trustees of the Fund
recommends a vote to elect each of the nominees as Trustee and in favor
of each Proposal. WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE
ENCLOSED PROXY PROMPTLY.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
April 13, 1995
Shareholders who do not expect to attend the Meeting are asked to
indicate voting instructions on the enclosed proxy and to date, sign
and return it in the accompanying postage-paid envelope. To avoid
unnecessary duplicate mailings, we ask your cooperation in promptly
mailing your proxy no matter how large or small your holdings may be.
220
<PAGE>
OPPENHEIMER U.S. GOVERNMENT TRUST
Two World Trade Center, New York, New York 10048-0203
PROXY STATEMENT
Meeting of Shareholders
To Be Held May 25, 1995
This statement is furnished to the Class A and Class C shareholders of
Oppenheimer U.S. Government Trust (the "Fund") in connection with the
solicitation by the Fund's Board of Trustees of proxies to be used at a
meeting (the "Meeting") of shareholders to be held at 3410 South Galena
Street, Denver, Colorado, 80231, at 10:00 A.M., Denver time, on May 25,
1995, or any adjournments thereof. It is expected that the mailing of
this Proxy Statement will be made on or about April 21, 1995. For a
free copy of the annual and semi-annual reports covering the operations
of the Fund for the fiscal year ended June 30, 1994 and for the six
months ended December 31, 1994, respectively, call Oppenheimer
Shareholder Services, the Fund's transfer agent, at 1-800-525-7048.
The enclosed proxy, if properly executed and returned, will be voted
(or counted as an abstention or withheld from voting) in accordance
with the choices specified thereon, and will be included in determining
whether there is a quorum to conduct the meeting. The proxy will be
voted in favor of the nominees for Trustee named in this Proxy
Statement unless a choice is indicated to withhold authority to vote
for all listed nominees or any individual nominee. The proxy will be
voted in favor of each Proposal unless a choice is indicated to vote
against or to abstain from voting on that Proposal. Shares owned of
record by broker-dealers for the benefit of their customers ("street
account shares") will be voted by the broker-dealer based on
instructions received from its customers. If no instructions are
received, the broker-dealer may (if permitted under applicable stock
exchange rules) as record holder vote such shares for the election of
Trustees and on the Proposals in the same proportion as that broker-
dealer votes street account shares for which voting instructions were
received in time to be voted.
If a shareholder executes and returns a proxy but fails to indicate how
the votes should be cast, the proxy will be voted in favor of the
election of each of the nominees named herein for Trustee and in favor
of each Proposal.
The proxy may be revoked at any time prior to the voting by: (1)
writing to the Secretary of the Fund at Two World Trade Center, New
York, New York, 10048-0203; (2) attending the meeting and voting in
person; or (3) signing and returning a new proxy (if returned and
received in time to be voted).
The cost of printing and distributing these proxy materials is an
expense of the Fund. In addition to the solicitation of proxies by
mail, proxies may be solicited by officers or employees of the Fund's
transfer agent, personally or by telephone or telegraph; any expenses
so incurred will also be borne by the Fund. Brokers, banks and other
fiduciaries may be required to forward soliciting material to their
principals and to obtain authorization for the execution of proxies.
For those services they will be reimbursed by the Fund for their out-
of-pocket expenses.
Shares Outstanding and Entitled to Vote. As of March 24, 1995, the
record date, there were 34,079,041.310 shares of the Fund issued and
outstanding, consisting of 33,221,861.412 Class A shares and
857,179.898 Class C shares. Each Class A and Class C share of the Fund
has voting rights as stated in this Proxy Statement and is entitled to
one vote for each share (and a fractional vote for a fractional share)
held of record at the close of business on the record date. As of
March 17, 1995, the only entities owning of record or known by
management of the Fund to be the beneficial owner of 5% or more of the
outstanding shares of either class of the Fund's shares were (1)
Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake Drive,
Jacksonville, FL 32246, 44,151 Class C shares (5.42%), and R. Duffield
and C.R. Player, Jr., Co-Trustees, Charitable Remainder Trusts (the
"Trust"), P.O. Box 401, Barnesville, MD 20838, 106,837.606 Class C
shares (13.1%). The Trusts are party to an agreement with the Fund
that for so long as the Trust holds shares of the Fund, it shall vote
such shares at shareholder meetings in the same proportion as the
Fund's other shareholders.
ELECTION OF TRUSTEES
At the Meeting, twelve Trustees are to be elected to hold office until
the next meeting of shareholders called for the purpose of electing
Trustees and until their successors shall be duly elected and shall
have qualified. The persons named as attorneys-in-fact in the enclosed
proxy have advised the Fund that unless a proxy instructs them to
withhold authority to vote for all listed nominees or any individual
nominee, all validly executed proxies will be voted by them for the
election of the nominees named below as Trustees of the Fund. As a
Massachusetts business trust, the Fund does not contemplate holding
annual shareholder meetings for the purpose of electing Trustees.
Thus, the Trustees will be elected for indefinite terms until a
shareholders meeting is called for the purpose of voting for Trustees
and until their successors are elected and shall qualify.
Each of the nominees is presently a Trustee and has agreed to be
nominated and, if elected, to continue to serve as a Trustee of the
Fund. All Trustees except Messrs. Galli, Regan and Yeutter have been
elected by shareholders of the Fund. Each of the Trustees is also a
Trustee or Director of Oppenheimer Fund, Oppenheimer Discovery Fund,
Oppenheimer Global Fund, Oppenheimer Global Emerging Growth Fund,
Oppenheimer Global Growth & Income Fund, Oppenheimer Growth Fund,
Oppenheimer Time Fund, Oppenheimer Target Fund, Oppenheimer Tax-Free
Bond Fund, Oppenheimer Gold & Special Minerals Fund, Oppenheimer Asset
Allocation Fund, Oppenheimer California Tax-Exempt Fund, Oppenheimer
Multi-State Tax-Exempt Trust, Oppenheimer Mortgage Income Fund,
Oppenheimer Money Market Fund, Inc., Oppenheimer New York Tax-Exempt
Fund, Oppenheimer Multi-Government Trust and Oppenheimer Multi-Sector
Income Trust (together with the Fund, the "New York OppenheimerFunds").
Mr. Spiro is President of the Fund and each of the other New York
OppenheimerFunds.
Each nominee indicated below by an asterisk is an "interested person"
(as that term is defined in the Investment Company Act of 1940,
hereinafter referred to as the "Investment Company Act") of the Fund
due to the positions indicated with the Fund's investment adviser,
Oppenheimer Management Corporation (the "Manager") or its affiliates,
or other positions described. The year given below indicates when the
nominee first became a Trustee or Director of any of the New York
OppenheimerFunds without a break in service. The beneficial ownership
of Class A shares listed below includes voting and investment control,
unless otherwise indicated below. If a nominee should be unable to
accept election, the Board of Trustees may, in its discretion, select
another person to fill the vacant position. As of March 24, 1995 the
Trustees and officers of the Fund as a group owned 499.382 Class A
shares of the Fund in the aggregate, which is less than 1% of the
outstanding shares of that class.
<TABLE>
<CAPTION>
Shares
Beneficially
Nae And Business Experience Owned as of
Other Information During the Past Five Years March 24, 1995
<S> <C> <C>
Leon Levy General Partner of Odyssey Partners, L.P. None
first became a (investment partnership); Chairman of
Trustee in 1959 Avatar Holdings, Inc. (real estate
Age: 69 development).
Leo Cherne Chairman Emeritus of the International Rescue None
first became a Committee (philanthropic organization);
Trustee in 1982 formerly Executive Director of the
Age: 82 Research Institute of America.
Robert G. Galli*
first became a Vice Chairman of the Manager; Vice None
Trustee in 1993 President and Counsel of Oppenheimer
Age: 61 Acquisition Corp., the Manager's
parent holding company; formerly he held the
following positions: a director of the Manager
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 adviser
subsidiaries of the Manager, a director of
Shareholder Financial Services, Inc. ("SFSI")
and Shareholder Services, Inc. ("SSI"),
transfer agent subsidiaries of the Manager,
an officer of other OppenheimerFunds and
Executive Vice President and General Counsel of
the Manager and the Distributor.
Benjamin Lipstein Professor Emeritus of Marketing, Stern None
first became a Graduate School of Business Administration,
Trustee in 1974 New York University; Director of Sussex Publishers,
Age: 71 Inc. (publishers of Psychology Today and Mother
Earth News) and Spy Magazine, L.P.
Elizabeth B. Moynihan
first became a Author and architectural historian; a None
Trustee in 1992 trustee of the Freer Gallery of Art
Age: 65 (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 A director of Dominion Resources, Inc. 272.610
first became a (electric utility holding company),
Trustee in 1980 Dominion Energy, Inc. (electric power and
Age: 67 oil & gas producer), Enron-Dominion Cogen
Corp. (cogeneration company), Kemper
Corporation (insurance and financial
services company) and 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
first became a President of Jerome Levy Economics Institute; 226.772
Trustee in 1993 a member of the U.S. Competitiveness
Age: 64 Policy Council; a director of GranCare, Inc.
(health care provider); formerly New York State
Comptroller and trustee, New York State and Local
Retirement Fund.
Russell S. Reynolds, Founder Chairman of Russell Reynolds Associates, None
Jr. Inc. (executive recruiting); Chairman of Directors
first became a Publication, Inc. (consulting and publishing); a
Trustee in 1989 trustee of Mystic Seaport Museum, International House,
Age: 63 Greenwich Historical Society and Greenwich Hospital.
Shares Beneficially
Name And Business Experience Owned as of
Other Information During the Past Five Years March 24, 1995
Sidney M. Robbins Chase Manhattan Professor Emeritus of None
first became a Financial Institutions, Graduate School of
Trustee in 1963 Business, Columbia University; Visiting
Age: 83 Professor of Finance, University of Hawaii;
a director of The Korea Fund, Inc. and The
Malaysia Fund, Inc. (closed-end investment
companies); member of the Board of Advisors
of Olympus Private Placement Fund, L.P.;
Professor Emeritus of Finance, Adelphi University.
Donald W. Spiro* Chairman Emeritus and a director of the Manager; None
first became a formerly Chairman of the Manager and the
Trustee in 1985 Distributor.
Age: 69
Pauline Trigere Chairman and Chief Executive Officer of
first became a Trigere, Inc. (design and sale of
Trustee in 1977 women's fashions).
Age: 82
Clayton K. Yeutter
first became a Of Counsel to Hogan & Hartson (a law firm); None
Trustee in 1993 a director of B.A.T. Industries, Ltd. (tobacco
Age: 64 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 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.
</TABLE>
_______________________
* A nominee who is an "interested person" of the Fund or the Manager
under the Investment Company Act.
Vote Required. The affirmative vote of a majority of the votes cast by
shareholders of the Fund without regard to class is required for the
election of a nominee as Trustee. The Board of Trustees recommends a
vote for the election of each nominee.
Functions of the Board of Trustees: The primary responsibility for the
management of the Fund rests with the Board of Trustees. The Trustees
meet regularly to review the activities of the Fund and of the Manager,
which is responsible for its day-to-day operations. Six regular
meetings of the Trustees were held in the fiscal year ended June 30,
1994. Each of the Trustees was present for at least 75% of the
meetings held of the board and of all committees on which that Trustee
served. The Trustees of the Fund have appointed an Audit Committee,
comprised of Messrs. Randall (Chairman), Robbins (Vice Chairman),
Cherne and Regan, none of whom is an "interested person" (as that term
is defined in the Investment Company Act) of the Manager or the Fund.
The functions of the Committee include (i) making recommendations to
the Board concerning the selection of independent auditors for the Fund
(subject to shareholder ratification); (ii) reviewing the methods,
scope and results of audits and the fees charged; (iii) reviewing the
adequacy of the Fund's internal accounting procedures and controls; and
(iv) establishing a separate line of communication between the Fund's
independent auditors and its independent Trustees. The Committee met
four times during the fiscal year ended June 30, 1994. The Board of
Trustees does not have a standing nominating or compensation committee.
Remuneration of Trustees. The officers of the Fund are affiliated with
the Manager; they and the Trustees of the Fund who are affiliated with
the Manager (Messrs. 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 (i) from the Fund,
during its fiscal year ended June 30, 1994, and (ii) from all 19 of the
New York-based OppenheimerFunds (including the Fund) listed in the
first paragraph of this section (and from Oppenheimer Global
Environment Fund, a former New York-based OppenheimerFund), for
services in the positions shown:
<TABLE>
<CAPTION>
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as Part From All
Name and from of Fund New York-based
Position Fund Expenses OppenheimerFunds 1
<S> <C> <C> <C>
Leon Levy $5,785 $3,730 $141,000.00
Chairman and Trustee
Leo Cherne $2,823 $1,821 $ 68,800.00
Audit Committee
Member and Trustee
Edmund T. Delaney $3,537 $2,281 $ 86,200.00
Study Committee
Member and Trustee2
Benjamin Lipstein $3,537 $2,281 $ 86,200.00
Study Committee
Member and Trustee
Elizabeth B. Moynihan $2,486 $1,604 $ 60,625.00
Study Committee
Member3 and Trustee
Kenneth A. Randall $3,217 $2,075 $ 78,400.00
Audit Committee
Member and Trustee
Edward V. Regan $2,307 $1,488 $ 56,275.00
Audit Committee
Member and Trustee
Russell S. Reynolds, $2,140 $1,380 $ 52,100.00
Jr., Trustee
Sidney M. Robbins $5,008 $3,230 $122,100.00
Study Committee
Chairman, Audit
Committee Vice-Chairman
and Trustee
Pauline Trigere $2,140 $1,380 $ 52,100.00
Trustee
Clayton K. Yeutter $2,140 $1,380 $ 52,100.00
Trustee
</TABLE>
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. Because retirement benefits are determined by
future compensation and length of service, such benefits and estimated
credited years of service are not presently determinable. No payments
have been made by the Fund under the plan as of June 30, 1994.
Officers of the Fund. Each officer of the Fund is elected by the
Trustees to serve an indefinite term. Information is given below about
the executive officers who are not Trustees of the Fund, including
their business experience during the past five years.
David Rosenberg, Vice President and Portfolio Manager, Age 36.
Vice President of the Manager; an officer of other OppenheimerFunds.
Andrew J. Donohue, Secretary; Age: 44.
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other OppenheimerFunds; formerly Senior Vice
President and Associate General Counsel of the Manager and the
Distributor, Partner in, Kraft & McManimon (a law firm), an officer of
First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser);
director and an officer of First Investors Family of Funds and First
Investors Life Insurance Company.
George C. Bowen, Vice President and Treasurer; Age 58.
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice
President, Treasurer and Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
Robert G. Zack, Assistant Secretary; Age 46.
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
Robert Bishop, Assistant Treasurer; Age 36.
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for the
Manager, prior to which he was an 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.
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for the
Manager, prior to which he was an international mutual fund supervisor
for Brown Brothers, Harriman & Co., a bank, and previously a senior
fund accountant for State Street Bank & Trust Company.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(Proposal No. 1)
The Investment Company Act requires that independent certified public
accountants and auditors ("auditors") be selected annually by the Board
of Trustees and that such selection be ratified by the shareholders at
the next-convened annual meeting of the Fund, if one is held. The
Board of Trustees of the Fund, including a majority of the Trustees who
are not "interested persons" (as defined in the Investment Company Act)
of the Fund or the Manager, at a meeting held August 11, 1994, selected
KPMG Peat Marwick LLP ("Peat Marwick") as auditors of the Fund for the
fiscal year beginning July 1, 1994. Peat Marwick also serves as
auditors for certain other funds for which the Manager acts as
investment adviser. At the Meeting, a resolution will be presented for
the Class A and Class C shareholders' vote to ratify the selection of
Peat Marwick as auditors. Representatives of Peat Marwick are not
expected to be present at the Meeting but will have the opportunity to
make a statement if they desire to do so and will be available should
any matter arise requiring their presence. The Board of Trustees
recommends approval of the selection of Peat Marwick as auditors of the
Fund.
APPROVAL OF CHANGES TO THE FUND'S FUNDAMENTAL
INVESTMENT POLICIES WITH RESPECT TO INVESTMENT
IN U.S. GOVERNMENT SECURITIES AND COMMODITIES
(Proposal No. 2)
The Fund currently has certain investment policies with respect to its
investment in debt instruments issued or guaranteed by the U.S.
Government or its agencies or instrumentalities ("U.S. Government
Securities"), and in commodities. These investment policies have been
designated as "fundamental" policies, which are policies that may not
be changed without the requisite shareholder approval as described
below.
As a matter of fundamental investment policy, the Fund is permitted to
invest only in U.S. Government Securities, and repurchase agreements on
such securities, and may write covered calls and use hedging
instruments as described in the Fund's Prospectus. If this Proposal is
approved, the Fund will adopt in its place a fundamental investment
policy that under normal market conditions, the Fund will invest at
least 80% of its total assets in U.S. Government Securities. It is the
intention of the Fund's Board of Trustees to adopt a non-fundamental
investment policy limiting investments by the Fund in debt securities
other than U.S. Government Securities to debt securities rated within
the four highest rating categories of Moody's Investors Service, Inc.
or Standard & Poor's Corporation, or, if unrated, judged by the Manager
to be of comparable quality to debt securities rated within such
grades. Such ratings are known as "investment grade" ratings. This
limitation is being adopted as a non-fundamental policy so that the
Fund's Board of Trustees may further revise it at some future date
without securing shareholder approval and without subjecting the Fund
to the expense of holding a shareholder meeting to obtain such
approval.
The reason for the proposed change is that a portfolio made up entirely
of U.S. Government Securities is generally more sensitive to changes in
interest rates than a more diversified portfolio that invests primarily
(but not entirely) in U.S. Government Securities. Although the yield
on debt securities not issued or guaranteed by the U.S. Government or
its agencies or instrumentalities tends to be higher than on U.S.
Government Securities, and the potential for higher long-term returns
may increase if such investments are made, there is the increased
credit risk potential that issuers other than the U.S. Government or
its agencies or instrumentalities may not be able to make interest or
principal payments as they become due. Securities issued or guaranteed
by the U.S. Government are subject to little, if any, credit risk
assuming they are backed by the full faith and credit of the U.S.
Government, its agencies or instrumentalities. The Fund's investment
adviser intends to determine issuer creditworthiness, among other
factors, in selecting securities for the Fund's portfolio, and in
determining from time to time whether a portion (but not more than 20%)
of the Fund's portfolio should be invested in non-U.S. Government
Securities.
In addition, as a matter of fundamental policy, the Fund presently
cannot invest in commodities or commodity contracts or invest in
interests in oil, gas or other mineral exploration or development
programs; however, the Fund may buy and sell any of the hedging
instruments which it may use as permitted by any of its other
fundamental policies, whether or not any such hedging instrument is
considered to be a commodity or a commodity contract. If this proposal
is approved, the limitation on investment in commodities would be
eliminated as a fundamental policy. The Fund would be allowed to
purchase or sell options and futures contracts or invest in securities
or other instruments backed by physical or financial commodities. It
is the intention of the Fund's Board of Trustees to adopt a non-
fundamental investment policy not to invest in oil, gas or other
mineral leases.
This proposal would permit the Fund to invest in "derivative
investments" that offer the potential for increasing income and
principal value, as well as for hedging purposes. 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 or index. Derivative investments
include exchange-traded options and futures contracts and "index-
linked" notes. On the maturity of such notes, payment is made based on
the performance of an underlying index.
One risk of investing in derivative investments is that the company
issuing the instrument may not pay the amount due on the maturity of
the instrument. There is also the risk that the underlying investment
or security might not perform the way the Fund's portfolio 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 these risks mean that the Fund can realize less income than
expected from its investments, or that it can lose part of the value of
its investments, which will affect the Fund's share price. Certain
derivative investments held by the Fund may trade in the over-the-
counter markets and may be illiquid. The Fund's investments in
illiquid securities are limited to no more than 10% of the Fund's total
assets.
At a meeting of the Fund's Board of Trustees held on March 16, 1995,
the Manager presented the advantages and risks of allowing the Fund's
portfolio manager the flexibility to invest up to 20% of the Fund's
portfolio in non-U.S. Government Securities, in response to market,
economic and other conditions, and of removing restrictions on the
Fund's ability to invest in derivative investments. The Trustees
approved and recommended, subject to shareholder approval, the changes
in fundamental investment policy described in this Proposal. If
approved, the effective date of this Proposal can be delayed until the
Fund's Prospectus is updated to reflect these changes.
Vote Required. An affirmative vote of the holders of a "majority" (as
defined in the Investment Company Act) of all outstanding Class A and
Class C voting securities of the Fund is required to change a
fundamental investment policy; the classes do not vote separately.
Such "majority" vote is defined in the Investment Company Act as the
vote of the holders of the lesser of: (1) 67% or more of the voting
securities present or represented by proxy at the shareholders meeting,
if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy, or (ii) more than 50% of the
outstanding voting securities. If the Proposal is not approved, the
above-described fundamental investment policies will not change. The
Board of Trustees recommends a vote in favor of approving this
Proposal.
APPROVAL OF PROPOSED INVESTMENT ADVISORY AGREEMENT
(Proposal No. 3)
The Fund has an Investment Advisory Agreement dated October 22, 1990,
with the Manager (the "Current Agreement") which was submitted to and
approved by the Fund's shareholders at a meeting held October 1, 1990.
At a meeting of the Fund's Board of Trustees held March 16, 1995, the
Board, including a majority of the Trustees who are not "interested
persons" (as defined in the Investment Company Act) of the Fund or the
Manager, and who have no direct or indirect financial interest in the
operation of the Current Agreement ("Independent Trustees"), approved
the terms of a new Investment Advisory Agreement (the "Proposed
Agreement") between the Fund and the Manager. If approved by the
shareholders at this meeting, the Proposed Agreement will be effective
on such date and continue in effect until December 31, 1995, and
thereafter from year to year unless terminated, but only so long as
such continuance is approved in accordance with the Investment Company
Act. If the Proposed Agreement is not approved by shareholders, the
Current Agreement will continue in effect.
The Proposed Agreement differs from the Current Agreement in the
schedule of fee rates paid by the Fund and results in a lower fee than
under the Current Agreement. Under the Current Agreement, the
management fee payable monthly to the Manager is computed on the net
assets of the Fund as of the close of business each day at the annual
rates of 0.75% of the first $200 million of net assets; 0.70% of the
next $200 million; 0.65% of the next $400 million; and 0.60% of net
assets in excess of $800 million. Under the Proposed Agreement the
management fee would be payable monthly to the Manager and computed on
the net assets of the Fund as of the close of business each day at
annual rates of 0.65% of the first $200 million; 0.60% of the next $100
million; 0.57% of the next $100 million; 0.55% of the next $400
million, and 0.50% of net assets in excess of $800 million. The
management fee rates of the Proposed Agreement are lower at all asset
levels. The Manager has voluntarily reduced the management fee to the
rates of the Proposed Agreement.
For the fiscal year ended June 30, 1994, the Fund paid a management fee
of $2,515,934 under the Current Agreement and a voluntary reduction in
its management fee rate. If the Proposed Agreement had been in effect
during that period, the management fee would have been $2,224,675, a
decrease of approximately 11.58%. The Manager also acts as investment
adviser to three other funds that have similar investment objectives to
the Fund at the following advisory fee rates:
<TABLE>
<CAPTION>
Approximate Net Advisory Fee Rate as
Assets of 3/17/95 % of Average Annual
Name of Fund ($ Millions) Net Assets
<S> <C> <C>
Oppenheimer Limited-Term $339.5 0.50% on the first $100 million,
Government Fund (open-end) 0.45% on the next $150 million,
0.425% on the next $250 million, and
0.40% of net assets in excess of $500 million.
Oppenheimer Mortgage $86.7 0.65% on the first $200 million,
Income Fund (open-end) 0.60% of the next $200 million,
0.55% of the next $400 million and
0.50% of net assets in excess of $800 million.
Oppenheimer Multi-
Government Trust $49.5 0.65%
(closed-end)
</TABLE>
The Proposed Agreement and the Current Agreement (hereinafter jointly
referred to as the "Agreements") are identical other than the change in
the management fee rates described above and the date of the
Agreements. Under the Agreements, the Manager supervises the
investment operations of the Fund and the composition of its portfolio
and furnishes the Fund advice and recommendations with respect to
investments, investment policies and the purchase and sale of
securities. The Agreements require the Manager, at its expense, to
provide the Fund with adequate office space, facilities and equipment
as well as to provide, and supervise the activities of all
administrative and clerical personnel required to provide effective
administration for the Fund, including the compilation and maintenance
of records with respect to its operations, the preparation and filing
of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the
Fund. Expenses not expressly assumed by the Manager under the
Agreements or by the distributor of the Fund's shares are paid by the
Fund. The Agreements list examples of expenses paid by the Fund, the
major categories of which relate to interest, taxes, brokerage
commissions, fees to certain Trustees, legal and audit expenses,
custodian and transfer agent expenses, share certificate issuance
costs, certain printing and registration costs, and non-recurring
expenses, including litigation.
The Agreements contain no expense limitation. However, independently
of the Agreements, the Manager has undertaken that the total expenses
of the Fund in any fiscal year (including the management fee but
excluding taxes, interest, brokerage fees and any extraordinary non-
recurring expenses, such as litigation) shall not exceed the most
stringent applicable regulatory limitation. The payment of the
management fee at the end of any month will be reduced so that there
will not be any accrued but unpaid liability under this expense
limitation. The Manager reserves the right to change or eliminate this
expense limitation at any time.
The Agreements provide that in the absence of willful misfeasance, bad
faith or gross negligence in the performance of its duties or reckless
disregard of its obligations under the Agreements, the Manager is not
liable for any loss sustained by reason of any investment, or the
purchase, sale or retention of any security, or for any act or omission
in performing the services required by the Agreements. The Agreements
permit the Manager to act as investment adviser for any other person,
firm or corporation and to use the name "Oppenheimer" in connection
with other investment companies for which it may act as investment
adviser. If the Manager shall no longer act as investment adviser to
the Fund, the right of the Fund to use the name "Oppenheimer" as part
of its name may be withdrawn.
Brokerage Provisions of the Agreements. One of the duties of the
Manager under the Agreements is to arrange the portfolio transactions
for the Fund. The Agreements contain provisions relating to the
employment of broker-dealers ("brokers") to effect the Fund's portfolio
transactions. In doing so, the Manager is authorized by the agreements
to employ broker-dealers, including "affiliated" brokers, as that term
is defined in the Investment Company Act, as may, in its best judgment
based on all relevant factors, implement the policy of the Fund to
obtain, at reasonable expense, the "best execution" (prompt and
reliable execution at the most favorable price obtainable) of such
transactions. The Manager need not seek competitive commission bidding
but is expected to minimize the commissions paid to the extent
consistent with the interest and policies of the Fund as established by
its Board of Trustees.
Under the Agreements, the Manager is authorized to select brokers that
provide brokerage and/or research services for the Fund and/or the
other accounts over which the Manager or its affiliates have investment
discretion. The commissions paid to such brokers may be higher than
another qualified broker would have charged if a good faith
determination is made by the Manager and the commission is fair and
reasonable in relation to the services provided. Subject to the
foregoing considerations, the Manager may also consider sales of shares
of the Fund and other investment companies managed by the Manager or
its affiliates as a factor in the selection of brokers for the Fund's
portfolio transactions.
Description of Brokerage Practices. Subject to the provisions of the
Agreements, the procedures and rules described above, allocations of
brokerage are made by portfolio managers of the Manager under the
supervision of the Manager's executive officers. As most purchases
made by the Fund are principal transactions at net prices, the Fund
incurs little or no brokerage costs; no brokerage commissions were paid
to any broker affiliated with either the Fund or the Manager during the
fiscal year ended June 30, 1994. The Fund usually 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 better price or execution may be obtained by utilizing
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. The Fund seeks to obtain prompt execution of
orders at the most favorable net price.
When the Fund engages in an option transaction, ordinarily the same
broker will be used for the purchase or sale of the option and any
transaction in the securities to which the option relates. When
possible, concurrent orders to purchase or sell the same security by
more than one of the accounts managed by the Manager or its affiliates
are combined. The transactions effected pursuant to such combined
orders are averaged as to price and allocated in accordance with the
purchase or sale orders actually placed for each account.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of
those other accounts may be useful both to the Fund and one or more of
such other accounts. Such research, which may be supplied by a third
party at the instance of a broker, includes information and analyses on
particular companies and industries as well as market or economic
trends and portfolio strategy, receipt of market quotations for
portfolio evaluations, information systems, computer hardware and
similar products and services. If a research service also assists the
Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component that
provides assistance to the Manager in the investment decision-making
process may be paid in commission dollars. The Board of Trustees has
permitted the Manager to use concessions on fixed price offerings to
obtain research in the same manner as is permitted for agency
transactions.
The research services provided by brokers broaden the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities
held in the Fund's portfolio or being considered for purchase. The
Board of Trustees, including the Independent Trustees, annually reviews
information furnished by the Manager as to the commissions paid to
brokers furnishing such services so that the Board may ascertain
whether the amount of such commissions was reasonably related to the
value or benefit of such services.
The Manager and the Distributor. Subject to the authority of the Board
of Trustees, the Manager is responsible for the day-to-day management
of the Fund's business, pursuant to its investment advisory agreement
with the Fund. Oppenheimer Funds Distributor, Inc., a wholly-owned
subsidiary of the Manager, is the general distributor of the Fund's
shares.
The Manager (including a subsidiary) currently manages investment
companies, including other OppenheimerFunds, with assets of more than
$29 billion as of December 31, 1994, and with more than 2.4 million
shareholder accounts. The Manager is a wholly-owned subsidiary of
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company ("MassMutual"). The
Manager, the Distributor and OAC are located at Two World Trade Center,
New York, New York 10048. MassMutual is located at 1295 State Street,
Springfield, Massachusetts 01111. OAC acquired the Manager on October
22, 1990. As indicated below, the common stock of OAC is owned by (i)
certain officers and/or directors of the Manager, (ii) MassMutual and
(iii) another investor. No institution or person holds 5% or more of
OAC's outstanding common stock except MassMutual. MassMutual has
engaged in the life insurance business since 1851. It is the nation's
twelfth largest life insurance company by assets and has an A.M. Best
Co. rating of "A++".
The common stock of OAC is divided into three classes. At December 31,
1994, MassMutual held (i) all of the 2,160,000 shares of Class A voting
stock, (ii) 422,023 shares of Class B voting stock, and (iii) 937,403
shares of Class B non-voting stock. This collectively represented 80.2%
of the outstanding common stock and 86.5% of the voting power of OAC as
of that date. Certain officers and/or directors of the Manager held
(i) 706,286 shares of the Class B voting stock, representing 16.1% of
the outstanding common stock and 10.9% of the voting power, and (ii)
options acquired without cash payment which, when they become
exercisable, allow the holders to purchase up to 744,282 shares of
Class B non-voting stock. That group includes persons who serve as
officers of the Fund (Messrs. George C. Bowen, Andrew J. Donohue, David
Rosenberg and Robert G. Zack) and two of whom (Messrs. Donald W. Spiro
and Robert G. Galli) serve as Trustees of the Fund. Holders of OAC
Class B and Class C common stock may put (sell) their shares and vested
options to OAC or MassMutual at a formula price (based on earnings of
the Manager). MassMutual may exercise call (purchase) options on all
outstanding shares of both such classes of common stock and vested
options at the same formula price, according to a schedule that will
commence on September 30, 1995. Since July 1, 1993, the only
transactions by persons who serve as Trustees of the Fund were by Mr.
Galli, who sold 10,000 shares of Class C OAC common stock to MassMutual
and surrendered to OAC 80,594 stock appreciation rights issued in
tandem with the Class B OAC options for an aggregate of $4,878,494, and
by Mr. Spiro, who sold 65,500 shares of Class C OAC common stock to
MassMutual and surrendered to OAC 173,680 stock appreciation rights
issued in tandem with the Class B OAC options for an aggregate of
$12,094,068, for cash payments by OAC or MassMutual to be made as
follows: one-third of the amount due (i) within 30 days of the
transaction, (ii) by the first anniversary following the transaction
(with interest), and (iii) by the second anniversary following the
transaction (with interest).
The names and principal occupations of the executive officers and
directors of the Manager are as follows: Jon S. Fossel, Chairman, Chief
Executive Officer and a director; Bridget A. Macaskill, President and a
director; Donald W. Spiro, Chairman Emeritus and a director; Robert G.
Galli, Vice Chairman, James C. Swain, Vice Chairman and a director;
Robert C. Doll and O. Leonard Darling, Executive Vice Presidents;
Tilghman G. Pitts III, Executive Vice President and a director; Andrew
J. Donohue, Executive Vice President and General Counsel; Kenneth C.
Eich, Executive Vice President and Chief Financial Officer; George C.
Bowen, Senior Vice President and Treasurer; Victor Babin, Loretta
McCarthy, Robert Patterson, Nancy Sperte, Arthur Steinmetz, Ralph
Stellmacher and Robert G. Zack, Senior Vice Presidents.
Considerations by the Board of Trustees. In connection with the
revision in the investment management fee, the Manager provided
extensive information to the Independent Trustees. The Independent
Trustees were provided with data as to the qualifications of the
Manager's personnel, the quality and extent of the services rendered
and its commitment to its mutual fund advisory business. The
Independent Trustees also considered data presented by the Manager
showing the extent to which it had expanded its investment personnel
and other services dedicated to the fixed-income area of its mutual
fund advisory activities. Information prepared specifically for the
purpose of assisting the Independent Trustees in their evaluation of
the Proposed Agreements included an analysis of the performance and
expenses of the Fund as compared to other similar funds. The
Independent Trustees relied upon information previously provided to
them in connection with their annual and ongoing review, on the nature,
quality and extent of the Manager's services to the Fund.
The Independent Trustees first examined the nature, quality and scope
of the services provided to the Fund by the Manager. Second, they
reviewed the basis for an adjustment in the management fee and analyzed
the fee proposed by the Manager in terms of management fees charged by
the Manager and other investment advisors for similar services.
Finally, the Independent Trustees examined the mutual fund related
revenues and expenses of the Manager.
Analysis of Nature, Quality and Extent of Services. The Independent
Trustees considered, among other factors: (1) the necessity of the
Manager maintaining and enhancing its ability to retain and attract
capable personnel to serve the Fund; (2) the investment record of the
Manager in managing the Fund, and the investment record of other
investment companies for which it acts as investment adviser; (3) the
Manager's overall profitability; (4) pro-forma profitability data
giving effect to the proposed revision in the investment management fee
but before marketing and promotional expenses anticipated to be paid by
the Manager and its affiliates; (5) the effect of the proposed
investment management fee revision on the expense ratio of the Fund;
(6) possible economies of scale; (7) data as to investment performance,
advisory fees and expense ratios of other investment companies not
advised by the Manager but believed to be in the same overall
investment and size category as the Fund; (8) other benefits to the
Manager from serving as investment manager to the Fund, as well as
benefits to its affiliates acting as principal underwriter and its
division acting as transfer agent to the Fund; (9) current and
developing conditions in the financial services industry, including the
entry into the industry of larger and highly capitalized companies
which are spending and appear to be prepared to continue to spend
substantial sums to engage personnel and to provide services to
competing investment companies; and (10) the financial resources of the
Manager and the desirability of appropriate incentives to assure that
the Manager will continue to furnish high quality services to the Fund.
Analysis of Proposed Fee Adjustment. In their review of the proposed
adjustment in the level of the investment advisory fees, the
Independent Trustees considered the fact that the proposed investment
advisory fee is lower (and therefore more favorable to the Fund) than
the fee in the current Agreement, and that is would reduce expenses of
the Fund in comparison to the amount the Fund could pay under the
Current Agreement. Lower expenses can increase the amount of the
Fund's net income available for distribution to its shareholders. The
Independent Trustees also considered the fact that the proposed
investment advisory fee is comparable to that paid by many other
investment companies that invest primarily in U.S. Government
Securities.
Analysis of Profitability of the Manager. The Independent Trustees
were advised that the Manager does not maintain its financial records
on a fund-by-fund basis. However, the Manager does provide the
Independent Trustee on an annual basis with its allocation of expenses
on a fund-by-fund basis. The Independent Trustees considered specific
information provided by the Manager regarding its profitability and
also considered comparative information relating to the profitability
of other mutual fund investment managers. The Independent Trustees
also noted the substantial marketing and promotional activities in
which the Manager and its affiliates engage and propose to engage on
behalf of the Fund.
Determination by the Independent Trustees and the Board of Trustees.
After completion of its review, the Independent Trustees recommended
that the Board of Trustees approve, and the Board unanimously approved,
the Proposed Agreement.
Vote Required. An affirmative vote of the holders of a "majority" (as
defined in the Investment Company Act) of all outstanding voting
securities of the Fund is required for approval of the Proposed
Agreement; the classes do not vote separately. The requirements for
such "majority" vote are described in Proposal No. 2. The Board of
Trustees recommends a vote in favor of approving the Proposed
Investment Advisory Agreement.
APPROVAL OF THE FUND'S CLASS C 12b-1 DISTRIBUTION
AND SERVICE PLAN AND AGREEMENT
(Proposal No. 4)
NOTE: This Proposal applies to Class C Shareholders only.
Class C shares were first offered to the public on December 1, 1993.
At that time, the Fund had adopted a Distribution Plan and Agreement
for Class C shares pursuant to Rule 12b-1 of the Investment Company
Act, in conformity with the National Association of Securities Dealers,
Inc. ("NASD") Rule which permits the Fund to pay up to 0.25% of its
average annual net assets as a service fee and up to 0.75% of its
average annual assets as an asset-based sales charge. At a meeting of
the Fund's Board of Trustees held March 16, 1995, the Manager proposed
the adoption of a new Distribution and Service Plan and Agreement (the
"Distribution and Service Plan") which is recharacterized as a
"compensation type plan" instead of a "reimbursement type plan." The
Fund's Board of Trustees, including a majority of the Trustees who are
not "interested persons" (as defined in the Investment Company Act) of
the Fund or the Manager, and who have no direct or indirect financial
interest in the operation of the Fund's 12b-1 plans or in any related
agreements ("Independent Trustees"), approved the new Distribution and
Service Plan, subject to shareholder approval, and determined to
recommend the Distribution and Service Plan for approval by the
shareholders. A copy of the new Distribution and Service Plan is
attached as Exhibit A to this proxy statement.
Description of the Distribution and Service Plan. Under the
Distribution and Service Plan, the Fund compensates the Distributor for
its services in connection with the distribution of Class C Shares and
the personal service and maintenance of accounts that hold Class C
shares. The Fund pays the Distributor an asset-based sales charge of
0.75% per annum and also pays the Distributor a service fee of 0.25%
per annum, each of which is computed on the average annual net assets
of Class C shares of the Fund.
The Distribution and Service Plan provides for payments for two
different distribution related functions. The Distributor pays certain
brokers, dealers, banks or other institutions ("Recipients") a service
fee of 0.25% for personal services to Class C shareholders and
maintenance of shareholder accounts by those Recipients. The services
rendered by Recipients in connection with personal services and the
maintenance of Class C shareholder accounts may include, but shall not
be limited to, the following: answering routine inquiries from the
Recipient's customers concerning the Fund, providing such customers
with information on their investment in shares, assisting in the
establishment and maintenance of accounts or sub-accounts in the Fund,
making the Fund's investment plans and dividend payment options
available, and providing such other information and customer liaison
services and the maintenance of accounts as the Distributor or the Fund
may reasonably request. The Distributor is permitted under the
Distribution and Service Plan to retain service fee payments to
compensate it for rendering such services.
Service fee payments by the Distributor to Recipients are made (i) in
advance for the first year Class C shares are outstanding, following
the purchase of shares, in an amount equal to 0.25% of the net asset
value of the shares purchased by the Recipient or its customers and
(ii) thereafter, on a quarterly basis, computed as of the close of
business each day at an annual rate of 0.25% of the net asset value of
Class C shares held in accounts of the Recipient or its customers. In
the event Class C shares are redeemed less than one year after the date
such shares were sold, the Recipient is obligated to repay to the
Distributor on demand a pro rata portion of such advance service fee
payments, based on the ratio of the remaining period to one year.
The Distribution and Service Plan also provides that the Fund will pay
the Distributor on a monthly basis an asset-based sales charge at an
annual rate of 0.75% of the net asset value of Class C shares
outstanding to compensate it for other services in connection with the
distribution of the Fund's Class C shares. The distribution assistance
and administrative support services rendered by the Distributor in
connection with the sales of Class C shares may include: (i) paying
sales commissions to any broker, dealer, bank or other institution that
sells the Fund's Class C shares, (ii) paying compensation to and
expenses of personnel of the Distributor who support distribution of
Class C shares by Recipients, and (iii) paying or reimbursing the
Distributor for interest and other borrowing costs incurred on any
unreimbursed expenses carried forward to subsequent fiscal quarters.
The other distribution assistance in connection with the sale of Class
C shares rendered by the Distributor and Recipients may include, but
shall not be limited to, the following: distributing sales literature
and prospectuses other than those furnished to current Class C
shareholders, processing Class C share purchase and redemption
transactions and providing such other information in connection with
the distribution of Class C shares as the Distributor or the Fund may
reasonably request.
The Distributor currently pays sales commissions from its own resources
to Recipients at the time of sale equal to 0.75% of the purchase price
of Fund shares sold by such Recipient, and advances the first year
service fee of 0.25%. The Distributor retains the asset-based sales
charge during the first year shares are outstanding to recoup the sales
commissions it pays, the advances of service fee payments it makes, and
its financing costs. Asset-based sales charge payments are designed to
permit an investor to purchase shares of the Fund without the
assessment of a front-end sales load and at the same time permit the
Distributor to compensate Recipients in connection with the sale of
shares of the Fund.
The Distribution and Service Plan contains a provision which provides
that the Board may allow the Fund to continue payments to the
Distributor for Class C shares sold prior to termination of the
Distribution and Service Plan. Pursuant to this provision, payment of
the asset-based sales charge of up to 0.75% per annum could be
continued by the Board after termination.
The Distribution and Service Plan has the effect of increasing annual
expenses of Class C shares of the Fund by up to 1.00% of the class's
average annual net assets from what those expenses would otherwise be.
Payments by the Fund to the Distributor under the current Class C Plan
for the fiscal year ended June 30, 1994 were $12,509 (1.00% of the
Fund's average net assets represented by Class C shares during that
period), which the Distributor retained as reimbursement for Class C
sales commissions and service fee advances, as well as financing costs.
If the Class C shareholders approve this Proposal, the Distribution and
Service Plan shall, unless terminated as described below, continue in
effect until December 31, 1995 and from year to year thereafter only so
long as such continuance is specifically approved, at least annually,
by the Fund's Board of Trustees and its Independent Trustees by a vote
cast in person at a meeting called for the purpose of voting on such
continuance. The Distribution and Service Plan may be terminated at
any time by a vote of a majority of the Independent Trustees or by a
vote of the holders of a "majority" (as defined in the Investment
Company Act) of the Fund's outstanding Class C shares. The
Distribution and Service Plan may not be amended to increase materially
the amount of payments to be made without approval by Class C
shareholders. All material amendments must be approved by a majority
of the Independent Trustees.
Additional Information. The Distribution and Service Plan provides
that while it is in effect, the selection and nomination of those
Trustees of the Fund who are not "interested persons" of the Fund is
committed to the discretion of the Independent Trustees. This does not
prevent the involvement of others in such selection and nomination if
the final decision on any such selection or nomination is approved by a
majority of the Independent Trustees.
Under the Distribution and Service Plan, no payment for service fees
will be made to any Recipient in any quarter if the aggregate net asset
value of all Fund shares held by the Recipient for itself and its
customers does not exceed a minimum amount, if any, that may be
determined from time to time by a majority of the Independent Trustees.
Initially, the Board of Trustees has set the fee at the maximum rate
and set no minimum amount. The Distribution and Service Plan permits
the Distributor and the Manager to make additional distribution
payments to Recipients from their own resources (including profits from
management fees) at no cost to the Fund. The Distributor and the
Manager may, in their sole discretion, increase or decrease the amount
of distribution assistance payments they make to Recipients from their
own assets.
Analysis of the Distribution and Service Plan by the Board of Trustees.
In considering whether to recommend the Distribution and Service Plan
for approval, the Board requested and evaluated information it deemed
necessary to make an informed determination. The Board found that
there is a reasonable likelihood that the Distribution and Service Plan
benefits the Fund and its Class C shareholders by providing financial
incentives to financial intermediaries to attract new Class C
shareholders to the Fund and by assisting the efforts of the Fund and
the Distributor to service and retain existing shareholders and attract
new investors. The Distribution and Service Plan enables the Fund to
be competitive with similar funds, including funds that impose sales
charges, provide financial incentives to institutions that direct
investors to such funds, and provide shareholder servicing and
administrative services.
The Board also focused on the two principal differences in the
Distribution and Service Plan and its predecessor. First, the proposed
plan provides for compensating the Distributor for its distribution
efforts rather than reimbursing it for its costs. It is possible for
the Fund's Class C 12b-1 payments to be increased or the period during
which payments to the Distributor are made extended when such payments
are not limited by the Distributor's expenses (including past expenses
which were not previously reimbursed, and which were, therefore,
carried forward with interest), as under the existing reimbursement-
type plan. However, under normal circumstances this is unlikely.
Therefore, adoption of this Proposal is not expected to materially
increase the Fund's expenses under normal circumstances. Under the
existing proposed Distribution and Service Plans, payments will remain
subject to limits imposed on asset-based sales charges by the NASD.
The Board also noted that investors who purchase Class C shares of the
Fund reasonably expect that they will be paying an asset-based sales
charge of 0.75% per annum.
A second difference in the Distribution and Service Plan over its
predecessor is that the proposed Plan expressly provides that
distribution and administrative support services may be rendered in
connection with Class C shares acquired either in exchange for other
OppenheimerFund shares or by reorganization with another fund. The
Board formulated the terms of the new Plan to assure that the Board has
the flexibility to approve reorganizations among funds without concern
that the transaction would affect payments to the Distributor for its
distribution efforts. The Board also noted that investors who purchase
Class C shares of the Fund reasonably expect that they will be paying
an asset-based sales charge of 0.75% per annum despite any increase in
Fund assets as a result of share exchanges or the occurrences of
reorganizations to which their Fund is a party.
The Board concluded that it is likely that because the Distribution and
Service Plan provides an alternative means for investors to acquire
Fund shares without paying an initial sales charge, it will benefit
Class C shareholders of the Fund by enabling the Fund to maintain or
increase its present asset base in the face of competition from a
variety of financial products. The Trustees recognized that payments
made pursuant to the Distribution and Service Plan would likely be
offset in part by economies of scale associated with the growth of the
Fund's assets. With larger assets, the Class C shareholders should
benefit as the Distribution and Service Plan should help maintain Fund
assets at the lower investment advisory fee rate that is currently in
effect. Costs of shareholder administration and transfer agency
operations will be spread among a larger number of shareholders as the
Fund grows larger, thereby reducing the Fund's expense ratio. The
Manager has advised the Trustees that investing larger amounts of money
is made more readily, more efficiently, and at lesser cost to the Fund.
The Board found that a positive flow of new investment money is
desirable primarily to offset the potentially adverse effects that
might result from a pattern of net redemptions. Net cash outflow
increases the likelihood that the Fund will have to dispose of
portfolio securities for other than investment purposes. Net cash
inflow minimizes the need to sell securities to meet redemptions when
investment considerations would dictate otherwise, reduces daily
liquidity requirements, and may assist in a prompt restructuring of the
portfolio without the need to dispose of present holdings.
Stimulation of distribution of mutual fund shares and providing for
shareholder services and account maintenance services by payments to a
mutual fund's distributor and to brokers, dealers, banks and other
financial institutions has become common in the mutual fund industry.
Competition among brokers and dealers for these types of payments has
intensified. The Trustees concluded that promotion, sale and servicing
of mutual fund shares and shareholders through various brokers,
dealers, banks and other financial institutions is a successful way of
distributing shares of a mutual fund. The Trustees concluded that
without an effective means of selling and distributing Fund shares and
servicing shareholders and providing account maintenance, expenses may
remain higher on a per share basis than those of some competing funds.
By providing an alternative means of acquiring Fund shares, the
Distribution and Service Plan proposed for shareholder approval is
designed to stimulate sales by and services from many types of
financial institutions.
The Trustees recognize that the Manager will benefit from the
Distribution and Service Plan through larger investment advisory fees
resulting from an increase in Fund assets, since its fees are based
upon a percentage of net assets of the Fund. The Board, including each
of the Independent Trustees, determined that the Distribution and
Service Plan is in the best interests of the Fund, and that its
continuation has a reasonable likelihood of benefiting the Fund and its
Class C shareholders. In its annual review of the Distribution and
Service Plan, the Board will consider the continued appropriateness of
the Distribution and Service Plan, including the level of payments
provided for therein.
Vote Required. Pursuant to Rule 12b-1 under the Investment Company
Act, an affirmative vote of the holders of a "majority" (as defined in
the Investment Company Act) of the Fund's Class C voting securities is
required for approval of the Distribution and Service Plan. The
requirements for such "majority" vote under the Investment Company Act
are as described in Proposal No. 2. A vote in favor of this Proposal
shall be deemed a vote to approve the prior Plan and the Distribution
and Service Plan. The Board of Trustees recommends a vote in favor of
approving this Proposal.
RECEIPT OF SHAREHOLDER PROPOSALS
The Fund is not required to hold shareholder meetings on a regular
basis. Special meetings of shareholders may be called from time to
time by either the Fund or the Shareholders (under special conditions
described in the Fund's Statement of Additional Information). Under
the proxy rules of the Securities and Exchange Commission, shareholder
proposals which meet certain conditions may be included in the Fund's
proxy statement and proxy for a particular meeting. Those rules
require that for future meetings the shareholder must be a record or
beneficial owner of Fund shares with a value of at least $1,000 at the
time the proposal is submitted and for one year prior thereto, and must
continue to own such shares through the date on which the meeting is
held. Another requirement relates to the timely receipt by the Fund of
any such proposal. Under those rules, a proposal submitted for
inclusion in the Fund's proxy material for the next meeting after the
meeting to which this proxy statement relates must be received by the
Fund a reasonable time before the solicitation is made. The fact that
the Fund receives a proposal from a qualified shareholder in a timely
manner does not ensure its inclusion in the proxy material, since there
are other requirements under the proxy rules for such inclusion.
OTHER BUSINESS
Management of the Fund knows of no business other than the matters
specified above that will be presented at the Meeting. Since matters
not known at the time of the solicitation may come before the Meeting,
the proxy as solicited confers discretionary authority with respect to
such matters as properly come before the Meeting, including any
adjournment or adjournments thereof, and it is the intention of the
persons named as attorneys-in-fact in the proxy to vote the proxy in
accordance with their judgment on such matters.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
April 13, 1995
<PAGE>
Exhibit A
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS C SHARES OF
OPPENHEIMER U.S. GOVERNMENT TRUST
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the 26th
day of May, 1995, by and between OPPENHEIMER U.S. GOVERNMENT TRUST (the
"Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and
service plan for Class C shares of the Fund (the "Shares"),
contemplated by Rule 12b-1 (the "Rule") under the Investment Company
Act of 1940 (the "1940 Act"), pursuant to which the Fund will
compensate the Distributor for its services in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act
as distributor of securities of which it is the issuer, pursuant to the
Rule, according to the terms of this Plan. The Distributor is
authorized under the Plan to pay "Recipients," as hereinafter defined,
for rendering (1) distribution assistance in connection with the sale
of Shares and/or (2) administrative support services with respect to
Accounts. Such Recipients are intended to have certain rights as
third-party beneficiaries under this Plan. The terms and provisions of
this Plan shall be interpreted and defined in a manner consistent with
the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Article III, Section 26, of the Rules of Fair Practice of
the National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions pertaining
either to distribution-related expenses or to a plan of distribution,
to which the Fund is subject under any order on which the Fund relies,
issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have
the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
institution which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by
Customers (defined below) of the Recipient; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning the sale of Shares; and (iii) has been selected by
the Distributor to receive payments under the Plan. Notwithstanding
the foregoing, a majority of the Fund's Board of Trustees (the
"Board") who are not "interested persons" (as defined in the 1940
Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreements relating to this Plan
(the "Independent Trustees") may remove any broker, dealer, bank or
other institution as a Recipient, whereupon such entity's rights as a
third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-custodian
(collectively, the "Customers"), but in no event shall any such
Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that two entities would otherwise qualify as
Recipients as to the same Shares, the Recipient which is the dealer
of record on the Fund's books shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, within forty-
five (45) days of the end of each calendar quarter, in the aggregate
amount of (i) 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the
Shares computed as of the close of each business day (the "Service
Fee"), plus (ii) 0.1875% (0.75% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of
Shares computed as of the close of each business day (the "Asset-
Based Sales Charge"). Such Service Fee payments received from the
Fund will compensate the Distributor and Recipients for providing
administrative support services of the type approved by the Board
with respect to Accounts. Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor and Recipients
for providing distribution assistance in connection with the sales of
Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in the establishment and maintenance of accounts
or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services
in connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may
reasonably request.
The distribution assistance in connection with the sale of Shares
to be rendered by the Distributor and Recipients may include, but
shall not be limited to, the following: distributing sales
literature and prospectuses other than those furnished to current
holders of the Fund's Shares ("Shareholders"), and providing such
other information and services in connection with the distribution of
Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment
under the Plan if it has Qualified Holdings of Shares to entitle it
to payments under the Plan. In the event that either the Distributor
or the Board should have reason to believe that, notwithstanding the
level of Qualified Holdings, a Recipient may not be rendering
appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the
Distributor, at the request of the Board, shall require the Recipient
to provide a written report or other information to verify that said
Recipient is providing appropriate distribution assistance and/or
services in this regard. If the Distributor still is not satisfied,
it may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such entity's rights as a third-party
beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate
net asset value of Shares computed as of the close of each business
day, constituting Qualified Holdings owned beneficially or of record
by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from
time to time by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate
net asset value of Shares computed as of the close of each business
day, constituting Qualified Holdings owned beneficially or of record
by the Recipient or by its Customers for a period of more than one
(1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to
Recipients that are, or may be, imposed by Article III, Section 26,
of the NASD Rules of Fair Practice. In the event Shares are redeemed
less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand a
pro rata portion of such Advance Service Fee Payments, based on the
ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor shall make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.1875% (0.75% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares computed as of the
close of each business day constituting Qualified Holdings owned
beneficially or of record by the Recipient or its Customers for a
period of more than one (1) year. However, no such service fee or
asset-based sales charge payments (collectively, the "Recipient
Payments") shall be made to any Recipient for any such quarter in
which its Qualified Holdings do not equal or exceed, at the end of
such quarter, the minimum amount ("Minimum Qualified Holdings"), if
any, to be set from time to time by a majority of the Independent
Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rates set forth above, and/or direct the Distributor to increase or
decrease the Maximum Holding Period, the Minimum Holding Period or
the Minimum Qualified Holdings. The Distributor shall notify all
Recipients of the Minimum Qualified Holdings and Minimum Holding
Period, if any, and the rates of Recipient Payments hereunder
applicable to Recipients, and shall provide each Recipient with
written notice within thirty (30) days after any change in these
provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute
sufficient notice. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor
if such affiliated person qualifies as a Recipient.
(c) The Distributor is entitled to retain from the payments
described in Section 3(a) the aggregate amount of (i) the Service Fee
on Shares outstanding for less than the Minimum Holding Period plus
(ii) the Asset-Based Sales Charge on Shares outstanding for not more
than the Maximum Holding Period, plus (iii) any additional Asset-
Based Sales Charge payment which no Recipient qualifies to receive,
in each case computed as of the close of each business day during
that period and subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become, subject
under Article III, Section 26, of the NASD Rules of Fair Practice.
The distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may
include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other institution that
sells Shares, and/or paying such persons Advance Service Fee Payments
in advance of, and/or greater than, the amount provided for in
Section 3(a) of this Agreement; (ii) paying compensation to and
expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) paying of or reimbursing the Distributor
for interest and other borrowing costs on its unreimbursed expenses
at the rate paid by the Distributor or, if such amounts are financed
by the Distributor from its own resources or by an affiliate, at the
rate of 1% per annum above the prime rate (which shall mean the most
preferential interest rate on corporate loans at large U.S. money
center commercial banks) then being reported in the Eastern edition
of the Wall Street Journal (or if such prime rate is no longer so
reported, such other rate as may be designated from time to time by
the Distributor with the approval of the Independent Trustees); (iv)
other direct distribution costs, including without limitation the
costs of sales literature, advertising and prospectuses (other than
those furnished to current Shareholders) and state "blue sky"
registration expenses; and (v) any service rendered by the
Distributor that a Recipient may render pursuant to part (a) of this
Section 3. Such services include distribution and administrative
support services rendered in connection with Shares acquired by the
Fund (i) by purchase, (ii) in exchange for shares of another
investment company for which the Distributor serves as distributor or
sub-distributor, or (ii) pursuant to a plan of reorganization to
which the Fund is a party. In the event that the Board should have
reason to believe that the Distributor may not be rendering
appropriate distribution assistance or administrative support
services in connection with the sale of Shares, then the Distributor,
at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is
providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC),
from its own resources, from Asset-Based Sales Charge payments or
from its borrowings.
4. Selection and Nomination of Trustees. While this Plan is in
effect, the selection and nomination of those persons to be Trustees of
the Fund who are not "interested persons" of the Fund ("Disinterested
Trustees") shall be committed to the discretion of such Disinterested
Trustees. Nothing herein shall prevent the Disinterested Trustees from
soliciting the views or the involvement of others in such selection or
nomination if the final decision on any such selection and nomination
is approved by a majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund
shall provide written reports to the Fund's Board for its review,
detailing services rendered in connection with the distribution of the
Shares. The reports shall be provided in the frequency requested by
the Board, and shall state whether all provisions of Section 3 of this
Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be
in writing and shall provide that: (i) such agreement may be terminated
at any time, without payment of any penalty, by a vote of a majority of
the Independent Trustees or by a vote of the holders of a "majority"
(as defined in the 1940 Act) of the Fund's outstanding voting
securities of the Class, on not more than sixty days written notice to
any other party to the agreement; (ii) such agreement shall
automatically terminate in the event of its assignment (as defined in
the 1940 Act); (iii) it shall go into effect when approved by a vote of
the Board and its Independent Trustees cast in person at a meeting
called for the purpose of voting on such agreement; and (iv) it shall,
unless terminated as herein provided, continue in effect from year to
year only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such
continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan
has been approved by a vote of the Board and its Independent Trustees
cast in person at a meeting called on March 16, 1995, for the purpose
of voting on this Plan, and shall take effect after approval by Class C
shareholders of the Fund, at which time it shall replace the Fund's
Distribution and Service Plan and Agreement for the Shares dated
December 1, 1993. Unless terminated as hereinafter provided, it shall
continue in effect until December 31, 1995 and from year to year
thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by a vote of the
Board and its Independent Trustees cast in person at a meeting called
for the purpose of voting on such continuance. This Plan may not be
amended to increase materially the amount of payments to be made
without approval of the Class C Shareholders, in the manner described
above, and all material amendments must be approved by a vote of the
Board and of the Independent Trustees. This Plan may be terminated at
any time by vote of a majority of the Independent Trustees or by the
vote of the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event of
such termination, the Board and its Independent Trustees shall
determine whether the Distributor shall be entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based
Sales Charge in respect of Shares sold prior to the effective date of
such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Fund under this Plan are not
binding upon any Trustee or shareholder of the Fund personally, but
bind only the Fund and the Fund's property. The Distributor represents
that it has notice of the provisions of the Declaration of Trust of the
Fund disclaiming shareholder and Trustee liability for acts or
obligations of the Fund.
OPPENHEIMER U.S. GOVERNMENT TRUST
By:/s/ Robert G. Zack
--------------------
Robert G. Zack, Assistant Secretary
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
-----------------------------
Katherine P. Feld, Vice President
& Secretary
Oppenheimer U.S. Government Proxy for Shareholders Meeting to
Trust - Class A Shares be held May 25, 1995
Your shareholder Your prompt response can save your
vote is important! Fund the expense of another mailing.
Please mark your proxy on the reverse
side, date and sign it, and return it
promptly in the accompanying envelope,
which requires no postage if mailed in
the United States.
Please detach at perforation before
mailing.
Oppenheimer U.S. Government Trust - Class A Shares
Proxy For Shareholders Meeting to be held May 25, 1995
The undersigned shareholder of Oppenheimer U.S. Government Trust
(the "Fund"), does hereby appoint Robert Bishop, George C. Bowen,
Andrew J. Donohue and Scott Farrar, and each of them, as attorneys-in-
fact and proxies of the undersigned, with full power of substitution,
to attend the Meeting of Shareholders of the Fund to be held May 25,
1995, at 3410 South Galena Street, Denver, Colorado 80231 at 10:00
A.M., Denver time and at all adjournments thereof, and to vote the
shares held in the name of the undersigned on the record date for said
meeting for the election of Trustees and on the proposals specified on
the reverse side. Said attorneys-in-fact shall vote in accordance with
their best judgment as to any other matter.
Proxy solicited on behalf of the Board Of Trustees, which recommends a
vote FOR the election of all nominees for Trustee and FOR each proposal
on the reverse side. The shares represented hereby will be voted as
indicated on the reverse side or FOR if no choice is indicated.
(over)
220
Oppenheimer U.S. Government Proxy for Shareholders Meeting to
Trust - Class A Shares be held May 25, 1995
Your shareholder Your prompt response can save your
vote is important! Fund money.
Please vote, sign and mail your proxy
ballot (this card) in the enclosed
postage-paid envelope today, no matter
how many shares you own. A majority of
the Fund's shares must be represented in
person or by proxy. Please vote your
proxy so your Fund can avoid the expense
of another mailing.
Please detach at perforation before
mailing.
(OVER)
1. Election of Trustees
____ For all nominees listed _____ Withhold authority
except as marked to the vote for all nominees
contrary at left. listed at left.
L. Cherne R. Galli L. Levy B. Lipstein
(A) (B) (C) (D)
E. Moynihan K. Randall E. Regan R. Reynolds S. Robbins
(E) (F) (G) (H) (I)
D. Spiro P. Trigere C. Yeutter
(J) (K) (L)
Instruction: To withhold authority to vote for any individual nominee,
line out that nominee's name at left.
2. Ratification of selection of KPMG Peat Marwick LLP as independent
auditors (Proposal No. 1)
For ____ Against ____ Abstain ____
3. Approval of the proposed changes in fundamental investment policies
(Proposal No. 2)
For ____ Against ____ Abstain ____
4. Approval of the proposed Investment Advisory Agreement (Proposal
No. 3)
For ____ Against ____ Abstain ____
NOTE: Please sign exactly as your name(s) appear hereon. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership
or other entity, a duly authorized individual must sign on its behalf
and give title.
Dated: _______________________,
1995
(Month) (Day)
____________________________
Signature(s)
____________________________
Signature(s)
Please read both sides of this
ballot.
<PAGE>
Oppenheimer U.S. Government Proxy for Shareholders Meeting to
Trust - Class C Shares be held May 25, 1995
Your shareholder Your prompt response can save your
vote is important! Fund the expense of another mailing.
Please mark your proxy on the
reverse side, date and sign it, and
return it promptly in the
accompanying envelope, which
requires no postage if mailed in the
United States.
Please detach at perforation before
mailing.
Oppenheimer U.S. Government Trust - Class C Shares
Proxy For Shareholders Meeting to be held May 25, 1995
The undersigned shareholder of Oppenheimer U.S. Government Trust
(the "Fund"), does hereby appoint Robert Bishop, George C. Bowen,
Andrew J. Donohue and Scott Farrar, and each of them, as attorneys-in-
fact and proxies of the undersigned, with full power of substitution,
to attend the Meeting of Shareholders of the Fund to be held May 25,
1995, at 3410 South Galena Street, Denver, Colorado 80231 at 10:00
A.M., Denver time and at all adjournments thereof, and to vote the
shares held in the name of the undersigned on the record date for said
meeting for the election of Trustees and on the proposals specified on
the reverse side. Said attorneys-in-fact shall vote in accordance with
their best judgment as to any other matter.
Proxy solicited on behalf of the Board Of Trustees, which recommends a
vote FOR the election of all nominees for Trustee and FOR each proposal
on the reverse side. The shares represented hereby will be voted as
indicated on the reverse side or FOR if no choice is indicated.
(over)
222
Oppenheimer U.S. Government Proxy for Shareholders Meeting to
Trust - Class C Shares be held May 25, 1995
Your shareholder Your prompt response can save your
vote is important! Fund money.
Please vote, sign and mail your
proxy ballot (this card) in the
enclosed postage-paid envelope
today, no matter how many shares you
own. A majority of the Fund's
shares must be represented in person
or by proxy. Please vote your proxy
so your Fund can avoid the expense
of another mailing.
Please detach at perforation before
mailing.
(OVER)
1. Election of Trustees
____ For all nominees listed _____ Withhold authority
except as marked to the vote for all nominees
contrary at left. listed at left.
L. Cherne R. Galli L. Levy B. Lipstein
(A) (B) (C) (D)
E. Moynihan K. Randall E. Regan R. Reynolds S. Robbins
(E) (F) (G) (H) (I)
D. Spiro P. Trigere C. Yeutter
(J) (K) (L)
Instruction: To withhold authority to vote for any individual nominee,
line out that nominee's name at left.
2. Ratification of selection of KPMG Peat Marwick LLP as independent
auditors (Proposal No. 1)
For ____ Against ____ Abstain ____
3. Approval of proposed changes in fundamental investment policies
(Proposal No. 2)
For ____ Against ____ Abstain ____
4. Approval of proposed Investment Advisory Agreement (Proposal No.
3)
For ____ Against ____ Abstain ____
5. Approval of proposed Class C 12b-1 Distribution and Service Plan
(Proposal No. 4)
For ____ Against ____ Abstain ____
NOTE: Please sign exactly as your name(s) appear hereon. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership
or other entity, a duly authorized individual must sign on its behalf
and give title.
Dated: _______________________,
1995
(Month) (Day)
____________________________
Signature(s)
____________________________
Signature(s)
Please read both sides of this
ballot.
