Registration No. 2-76645
File No. 811-3430
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X /
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 28 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 26 / X /
OPPENHEIMER U.S. GOVERNMENT TRUST
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center
New York, New York 10048-0203
(Address of Principal Executive Offices)
(212) 323-0200
(Registrant's Telephone Number)
Andrew J. Donohue, Esq.
Oppenheimer Management Corporation
Two World Trade Center New York, New York 10048-0203
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box):
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On May 30, 1995, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On ------------, pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On ---------------, pursuant to paragraph (a)(2) of Rule
485(b)
The Registrant has registered an indefinite number of its shares under
the Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the
Registrant's fiscal year ended June 30, 1994, was filed on August 30,
1994.
<PAGE>
FORM N-1A
OPPENHEIMER U.S. GOVERNMENT TRUST
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
1 Front Cover Page
2 Expenses; Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and Policies
5 Expenses; How the Fund is Managed; Back Cover
5A Performance of the Fund
6 Dividends, Capital Gains and Taxes
7 How to Buy Shares; Exchanges of Shares; Special Investor
Services; Service Plan for Class A Shares; Distribution and
Service Plan for Class B Shares; Distribution and Service Plan
for Class C Shares; How to Sell Shares
8 How to Sell Shares; How to Exchange Shares; Special Investor
Services
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment Techniques
and Strategies; Additional Investment Restrictions
14 How the Fund is Managed - Trustees and Officers of the Fund
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 Additional Information About the Fund
19 Your Investment Account - How to Buy Shares; How to Sell
Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the Fund
22 Performance of the Fund
23 Financial Statements
________________
* Not applicable or negative answer.
<PAGE>
Oppenheimer
U.S. Government Trust
Prospectus dated May 30, 1995
Oppenheimer U.S. Government Trust is a mutual fund with the investment
objective of seeking high current income, preservation of capital and
maintenance of liquidity primarily through investments in debt
instruments issued or guaranteed by the U.S. Government or its agencies
or instrumentalities. The securities the Fund invests in are described
more completely in "Investment Objective and Policies," starting on
page ___.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep
it for future reference. You can find more detailed information about
the Fund in the May 30, 1995 Statement of Additional Information. For a
free copy, call Oppenheimer Shareholder Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has been
filed with the Securities and Exchange Commission and is incorporated
into this Prospectus by reference (which means that it is legally part
of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of
the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
By Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services,
and those expenses are subtracted from the Fund's assets to calculate
the Fund's net asset value per share. All shareholders therefore pay
those expenses indirectly. Shareholders pay other expenses directly,
such as sales charges and account transaction charges. The following
tables are provided to help you understand your direct expenses of
investing in the Fund and your share of the Fund's business operating
expenses that you will bear indirectly. The calculations are based on
the Fund's expenses during its last fiscal year ended June 30, 1994.
- Shareholder Transaction Expenses are charges you pay when
you buy or sell shares of the Fund. Please refer to "About Your
Account" from pages _____ through _____ for an explanation of how and
when these charges apply.
Class A Class B Class C
Shares Shares Shares
Maximum Sales Charge on Purchases
(as a % of offering price) 4.75% None None
Sales Charge on Reinvested
Dividends None None None
Deferred Sales Charge
(as a % of the lower of the
original purchase price or
redemption proceeds) None(1) 5% in 1.0%(2)
first year,
declining to
1% in the sixth
year, and elim-
inated there-
after(2)
Exchange Fee None None None
(1) If you invest more than $1 million in Class A shares, you may have
to pay a sales charge of up to 1% if you sell your shares within
18 calendar months from the end of the calendar month during which
you purchased those shares. See "How to Buy Shares - Class A
Shares," below.
(2) See "How to Buy Shares," below, for more information on the
contingent deferred sales charges.
(3) There is a $10 transaction fee for redemptions paid by Federal
Funds wire, but not for redemption proceeds paid by check, or ACH
wire through AccountLink, or, with respect to Class A shares only,
for which checkwriting privileges are used (see "How to Sell
Shares").
- Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business. For
example, the Fund pays management fees to its investment adviser,
Oppenheimer Management Corporation (which is referred to in this
Prospectus as the "Manager"). The rates of the Manager's fees are set
forth in "How the Fund is Managed," below. The Fund has other regular
expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds the Fund's portfolio securities, audit fees and
legal expenses. Those expenses are detailed in the Fund's Financial
Statements in the Statement of Additional Information.
The numbers in the table below are projections of the Fund's
business expenses based on the Fund's expenses in its last fiscal year.
These amounts are shown as a percentage of the average net assets of
each class of the Fund's shares for that year. The "12b-1 Distribution
Plan Fees" for Class A shares are the Service Plan Fees (which can be
up to a maximum of 0.25% of average annual net assets of that class),
and for Class B and Class C shares, are the Service Plan Fees (which
can be up to maximum of 0.25%) and the asset-based sales charges of
0.75%. These plans are described in greater detail in "How to Buy
Shares."
The actual expenses for each class of shares in future years may
be more or less than the figures in the table, depending on a number of
factors, including the actual value of the Fund's assets represented by
each class of shares. The Annual Fund Operating Expenses shown are net
of a voluntary reduction of the management fees paid by the Fund to
rates that are reflected in the current investment advisory agreement.
Without such reduction, "Management Fees" for each class would have
been 0.71% and "Total Fund Operating Expenses" would have been 1.14%,
1.96% and 1.96% for Class A, Class B and Class C shares, respectively.
Class B shares were not publicly offered during the fiscal year ended
June 30, 1994. Therefore, the Annual Fund Operating Expenses shown for
Class B shares are estimates based on amounts that would have been
payable in that period assuming that Class B shares were outstanding
during such fiscal year. Class C shares were not publicly sold before
December 1, 1993. Therefore, the Annual Fund Operating Expenses shown
for Class C shares are based on expenses for the period from December
1, 1993 through June 30, 1994.
Class A Class B Class C
Shares Shares Shares
Management Fees (restated) 0.62% 0.62%% 0.62%
12b-1 Distribution and/or 0.24%(1) 1.00%(2) 1.00%(2)
Service Plan Fees
Other Expenses 0.19% 0.25% 0.25%
Total Fund Operating
Expenses 1.05% 1.87% 1.87%
(restated)
(1) Includes Service Plan Fees only.
(2) Includes Service Plan Fees and asset-based sales charge.
- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and that the Fund's annual return is 5%, and that its
operating expenses for each class are the ones shown in the Annual Fund
Operating Expenses table above (as restated). If you were to redeem
your shares at the end of each period shown below, your investment
would incur the following expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years(1)
Class A Shares $58 $79 $103 $170
Class B Shares $69 $89 $121 $178
Class C Shares $29 $59 $101 $219
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years(1)
Class A Shares $58 $79 $103 $170
Class B Shares $19 $59 $101 $178
Class C Shares $19 $59 $101 $219
(1) The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your
Class B shares into Class A shares after 6 years. Because of the effect
of the asset-based sales charge and the contingent deferred sales
charge on Class B and Class C shares, long-term Class B and Class C
shareholders could pay the economic equivalent of an amount greater
than the maximum front-end sales charge allowed under applicable
regulations. The automatic conversion of Class B shares is designed to
minimize the likelihood that this will occur. Please refer to "How to
Buy Shares" for more information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which will vary.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire
Prospectus before making a decision about investing in the Fund. Keep
the Prospectus for reference after you invest, particularly for
information about your account, such as how to sell or exchange shares.
- What is The Fund's Investment Objective? The Fund's investment
objective is to seek high current income, preservation of capital and
maintenance of liquidity.
- What Does the Fund Invest In? The Fund primarily invests in U.S.
Government Securities, and repurchase agreements on such securities.
The Fund may write covered calls and use certain hedging instruments
approved by its Board of Trustees to try to manage investment risks.
U.S. Government Securities that the Fund invests include:
collateralized mortgage obligations ("CMO's") whose payment of
principal and interest generated by the pool of mortgages is passed
through to the Fund. CMO's may be issued in a variety of classes or
series ("tranches") that have different maturities and levels of
volatility. The Fund may also invest in "stripped" CMO's or mortgage-
backed securities. Stripped mortgage-backed securities usually have
two classes that receive different proportions of the interest and
principal payments. In certain cases, one class will receive all of
the interest payments, while the other class will receive all of the
principal value on maturity. These investments are more fully
explained in "Investment Objective and Policies," starting on page ___.
- Who Manages the Fund? The Fund's investment adviser (the
"Manager") is Oppenheimer Management Corporation. The Manager
(including a subsidiary) manages investment company portfolios having
over $30 billion in assets at March 31, 1995. The Fund's portfolio
manager, David A. Rosenberg, is primarily responsible for the selection
of the Fund's securities. The Manager is paid an advisory fee by the
Fund, based on its net assets. The Fund's Board of Trustees, elected
by shareholders, oversees the investment adviser and the portfolio
manager. Please refer to "How the Fund is Managed," starting on page
___ for more information about the Manager and its fees.
- How Risky is the Fund? Although U.S. Government Securities involve
little credit risk, their values will fluctuate depending on prevailing
interest rates. When prevailing interest rates fall, the values of
already-issued debt securities generally rise. When interest rates
rise, the values of already-issued debt securities generally decline.
The magnitude of these fluctuations will often be greater for longer-
term debt securities than shorter-term securities. While the Manager
tries to reduce risks by diversifying investments, by carefully
researching securities before they are purchased for the portfolio, and
in some cases by using hedging techniques, there is no guarantee of
success in achieving the Fund's objective and your shares may be worth
more or less than their original cost when you redeem them. Please
refer to "Investment Objective and Policies" starting on page ___ for a
more complete discussion of the Fund's investment risks.
- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How To Buy Shares"
on page ___ for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund has three
classes of shares. Each class has the same investment portfolio, but
different expenses. Class A shares are offered with a front-end sales
charge, starting at 4.75% and reduced for larger purchases. Class B
shares and Class C shares are offered without a front-end sales charge,
but may be subject to a contingent deferred sales charge if redeemed
within 6 years or 12 months, respectively, of purchase. There is also
an annual asset-based sales charge on Class B and Class shares. Please
review "How To Buy Shares" starting on page ___ for more details,
including a discussion about factors you and your financial advisor
should consider in determining which class may be appropriate for you.
- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through
your dealer. Please refer to "How To Sell Shares" on page ___. The
Fund also offers exchange privileges to other OppenheimerFunds,
described in "How to Exchange Shares" on page ____.
- How Has the Fund Performed? The Fund measures its performance by
quoting a yield, dividend yield, average annual total return and
cumulative total return, which measure historical performance. Those
returns can be compared to the yields and total returns (over similar
periods) of other funds. Of course, other funds may have different
objectives, investments, and levels of risk. The Fund's performance
can also be compared to U.S. Government bond indices, which we have
done on page___. Please remember that past performance does not
guarantee future results.
Financial Highlights
Effective August 16, 1985, the Fund became a long-term government
securities fund which has a fluctuating net asset value per share.
Prior to that date, the Fund invested only in short-term (maturing in
one year or less) U.S. Government Securities and maintained a fixed net
asset value of $1.00 per share. The table on the following pages
presents selected financial information about the Fund, including per
share data and expense ratios and other data based on the Fund's
average net assets. This information has been audited by KPMG Peat
Marwick LLP, the Fund's independent auditors, whose report on the
Fund's financial statements for the fiscal year ended June 30, 1994, is
included in the Statement of Additional Information, together with the
Fund's unaudited financial statements for the six months ended December
31, 1994. Class C shares were publicly offered only during a portion
of that period, commencing December 1, 1993. Class B shares were not
offered during the periods shown. Accordingly, no information on Class
B shares is reflected in the tables below or in the Fund's other
financial statements.
<TABLE>
<CAPTION>
Class A
-------------- ----------- ------------ ----------- ------------ ------------ -----------
Six Months Year Ended
Ended June 30,
Dec. 31, 1994 1994
(Unaudited) 1993 1992 1991 1990 1989
- ------------------------------------------ -------------- ----------- ------------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value, beginning of period $9.20 $9.95 $9.73 $9.25 $9.24 $9.54 $9.59
- ------------------------------------------ -------------- ----------- ------------ ----------- ------------ ------------ -----------
Income from investment operations:
Net investment income .34 .67 .68 .69 .83 .90 .91
Net realized and unrealized gain (loss)
on investments and options written
(.17) (.74) .22 .48 .02 (.32) (.05)
Total income (loss) from investment .17 (.07) .90 1.17 .85 .58 .86
operations
- ------------------------------------------ -------------- ----------- ------------ ----------- ------------ ------------ -----------
Dividends and distributions to
shareholders:
Dividends from net investment income (.34) (.64) (.68) (.69) (.84) (.88) (.91)
Dividends in excess of net
investment income -- (.01) -- -- -- -- --
Distributions from net realized gain on
investments and options written -- -- -- -- -- -- --
Tax return of capital distributions -- (.03) -- -- -- -- --
Total dividends and distributions to
shareholders (.34) (.68) (.68) (.69) (.84) (.88) (.91)
- ------------------------------------------ -------------- ----------- ------------ ----------- ------------ ------------ -----------
Net asset value, end of period $9.03 $9.20 $9.95 $9.73 $9.25 $9.24 $9.54
- ------------------------------------------ -------------- ----------- ------------ ----------- ------------ ------------ -----------
Total Return, at Net Asset Value(4) 1.82% (1.17)% 9.55% 13.05% 9.53% 6.34%
9.51%
- ------------------------------------------ -------------- ----------- ------------ ----------- ------------ ------------ -----------
Ratios/Supplemental Data:
- ------------------------------------------ -------------- ----------- ------------ ----------- ------------ ------------ -----------
Net assets, end of period
(in thousands) $300,993 $310,027 $380,916 $395,863 $342,220 $264,728 $232,593
- ------------------------------------------ -------------- ----------- ------------ ----------- ------------ ------------ -----------
Average net assets (in thousands) $304,675 $355,698 $401,789 $376,532 $299,144 $253,085
$210,060
- ------------------------------------------ -------------- ----------- ------------ ----------- ------------ ------------ -----------
Number of shares outstanding at
end of period (in thousands) 33,340 33,685 38,279 40,697 36,987 28,650 24,393
- ------------------------------------------ -------------- ----------- ------------ ----------- ------------ ------------ -----------
Ratios to average net assets:
Net investment income 7.40%(5) 6.61% 6.90% 7.23% 8.93% 9.60%
9.65%
Expenses 1.08%(5) 1.14% 1.17% 1.17% 1.19% 1.16%
1.19%
- ------------------------------------------ -------------- ----------- ------------ ----------- ------------ ------------ -----------
Portfolio turnover rate 98.2%(7) 139.5%(6) 96.8% 207.8% 133.9% 125.5%
76.9%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to
June 30, 1994.
2. All number of shares and per share data have been restated to
reflect a 1 for 10 stock split effective August 16, 1985.
3. For the period from August 16, 1985 to June 30, 1986.
4. Assumes a hypothetical initial investment on the business day
before the first day of the fiscal period, with all dividends and
distributions reinvested in additional shares on the reinvestment date,
and redemption at the net asset value calculated on the last business
day of the fiscal period. Sales charges are not reflected in the total
returns. Total returns are not annualized for periods of less than one
full year.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a
period, divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are
excluded from the calculation. Purchases and sales of investment
securities (excluding short-term securities) for the year ended June
30, 1994 were $495,481,969 and $550,946,645, respectively.
7. The lesser of purchases or sales of portfolio securities for a
period, divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are
excluded from the calculation. Purchases and sales of investment
securities (excluding short-term securities) for the six months ended
December 31, 1994 were $322,707,560 and $410,118,313, respectively.
<PAGE>
<TABLE>
<CAPTION>
Class A Class C
------------ ----------- ------------ ---------- -------------- ------------
Six Months
Ended Period
Dec. 31, Ended
1994 June 30,
1988 1987 1986(3) 1985(2) (Unaudited) 1994(1)
- ------------------------------------------ ------------ ----------- ------------ ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $9.77 $10.17 $10.00 $10.00 $9.19 $9.83
- ------------------------------------------ ------------ ----------- ------------ ---------- -------------- ------------
Income from investment operations:
Net investment income .90 .84 .94 .77 .30 .33
Net realized and unrealized gain (loss)
on investments and options written
(.18) (.33) .38 -- (.17) (.64)
Total income (loss) from investment .72 .51 1.32 .77 .13 (.31)
operations
- ------------------------------------------ ------------ ----------- ------------ ---------- -------------- ------------
Dividends and distributions to
shareholders:
Dividends from net investment income (.90) (.85) (.93) (.77) (.30) (.33)
Dividends in excess of net
investment income -- -- -- -- -- --
Distributions from net realized gain on
investments and options written -- (.06) (.22) -- -- --
Tax return of capital distributions -- -- -- -- -- --
Total dividends and distributions to
shareholders (.90) (.91) (1.15) (.77) (.30) (.33)
- ------------------------------------------ ------------ ----------- ------------ ---------- -------------- ------------
Net asset value, end of period $9.59 $9.77 $10.17 $10.00 $9.02 $9.19
- ------------------------------------------ ------------ ----------- ------------ ---------- -------------- ------------
Total Return, at Net Asset Value(4) 7.78% 5.54% 14.95% -- 1.41% (3.12)%
- ------------------------------------------ ------------ ----------- ------------ ---------- -------------- ------------
Ratios/Supplemental Data:
- ------------------------------------------ ------------ ----------- ------------ ---------- -------------- ------------
Net assets, end of period
(in thousands) $203,857 $216,306 $160,389 $7,798 $6,011 $4,261
- ------------------------------------------ ------------ ----------- ------------ ---------- -------------- ------------
Average net assets (in thousands) $197,834 $207,557 $98,004 $7,724 $5,185 $2,173
- ------------------------------------------ ------------ ----------- ------------ ---------- -------------- ------------
Number of shares outstanding at 21,252 22,146 15,767 780 667 464
end of period (in thousands)
- ------------------------------------------ ------------ ----------- ------------ ---------- -------------- ------------
Ratios to average net assets:
Net investment income 9.36% 8.73% 9.77% 7.77% 6.66%(5) 5.97%(5)
Expenses 1.13% .99% .56% 1.47% 1.80%(5) 1.96%(5)
- ------------------------------------------ ------------ ----------- ------------ ---------- -------------- ------------
Portfolio turnover rate 141.3% 263.0% 366.9% -- 98.2%(7) 139.5%(6)
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to
June 30, 1994.
2. All number of shares and per share data have been restated to
reflect a 1 for 10 stock split effective August 16, 1985.
3. For the period from August 16, 1985 to June 30, 1986.
4. Assumes a hypothetical initial investment on the business day
before the first day of the fiscal period, with all dividends and
distributions reinvested in additional shares on the reinvestment date,
and redemption at the net asset value calculated on the last business
day of the fiscal period. Sales charges are not reflected in the total
returns. Total returns are not annualized for periods of less than one
full year.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a
period, divided by the monthly average of the market value of
porttfolio securities owned during the period. Securities with a
maturity or expiration date at the time of acquisition of one year or
less are excluded from the calculation. Purchases and sales of
investment securities (excluding short-term securities) for the year
ended June 30, 1994 were $495,481,969 and $550,946,645, respectively.
7. The lesser of purchases or sales of portfolio securities for a
period, divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are
excluded from the calculation. Purchases and sales of investment
securities (excluding short-term securities) for the six months ended
December 31, 1994 were $322,707,560 and $410,118,313, respectively.
<PAGE>
Investment Objective and Policies
Objective. The Fund's investment objective is to seek high current
income, preservation of capital and maintenance of liquidity through
investments in debt instruments issued or guaranteed by the U.S.
Government or its agencies or instrumentalities ("U.S. Government
Securities").
Investment Policies and Strategies. The Fund seeks its investment
objective by investing primarily in U.S. Government Securities, and
repurchase agreements on such securities. U.S. Government Securities
include the following:
- - U.S. Treasury Obligations. These include Treasury Bills (which have
maturities of one year or less when issued), Treasury Notes (which have
maturities of two to ten years when issued) and Treasury Bonds (which
have maturities generally greater than ten years when issued). U.S.
Treasury obligations are backed by the full faith and credit of the
United States.
- - Obligations Issued or Guaranteed by U.S. Government Agencies or
Instrumentalities. These are obligations supported by any of the
following: (a) the full faith and credit of the U.S. Government, such
as Government National Mortgage Association ("Ginnie Mae") modified
pass-through certificates as described below, (b) the right of the
issuer to borrow an amount limited to a specific line of credit from
the U.S. Government such as bonds issued by Federal National Mortgage
Association ("Fannie Mae"), (c) the discretionary authority of the U.S.
Government to purchase the obligations of the agency or
instrumentality, or (d) the credit of the instrumentality, such as
obligations of Federal Home Loan Mortgage Corporation ("Freddie Mac").
Securities of agencies and instrumentalities the securities that are
supported by the discretionary authority of the U.S. Government to
purchase such securities and which the Fund may purchase under (c)
above include: Federal Land Banks, Farmers Home Administration,
Central Bank for Cooperatives, Federal Intermediate Credit Banks,
Freddie Mac and Fannie Mae.
- - Mortgage-Backed Securities. Also known as pass-through securities,
the homeowner's principal and interest payments pass from the
originating bank or savings and loan through the appropriate
governmental agency to investors, net of service charges. These pass-
through securities include participation certificates of Ginnie Mae,
that are guaranteed as to timely payment of interest and principal by
the full faith and credit of the U.S. Government, Freddie Mac and
Fannie Mae, that are guaranteed and issued, respectively, by these
agencies and instrumentalities of the U.S. Government.
The Statement of Additional Information contains additional
information on U.S. Government Securities. The effective maturity of a
mortgage-backed security may be shortened by unscheduled or early
payment of principal and interest on the underlying mortgages, which
may affect the effective yield of such securities. The principal that
is returned may be invested in instruments having a higher or lower
yield than the prepaid instruments depending on then-current market
conditions. Such securities therefore may be less effective as a means
of "locking in" attractive long-term interest rates and may have less
potential for appreciation during periods of declining interest rates
than conventional bonds with comparable stated maturities. If the Fund
buys mortgage-backed securities at a premium, prepayments of principal
and foreclosures of mortgages may result in some loss of the Fund's
principal investment to the extent of the premium paid.
As a matter of fundamental policy, the Fund will invest at least 80%
of its total assets in U.S. Government Securities, under normal market
conditions. The Fund expects that any investments in debt securities
other than U.S. Government Securities will be limited 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, although it is not a fundamental
policy that it do so. Such ratings are known as "investment grade"
ratings. The Fund is not obligated to dispose of securities if the
rating is reduced below investment grade. 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.
The Fund may invest in collateralized mortgage obligations ("CMOs")
that are issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, or that are collateralized by a portfolio of
mortgages or mortgage-related securities guaranteed by such an agency
or instrumentality. Payment of the interest and principal generated by
the pool of mortgages is passed through to the holders as the payments
are received by the issuer of the CMO. CMOs may be issued in a variety
of classes or series ("tranches") that have different maturities. The
principal value of certain CMO tranches may be more volatile than other
types of mortgage-related securities, because of the possibility that
the principal value of the CMO may be prepaid earlier than the maturity
of the CMO as a result of prepayments of the underlying mortgage loans
by the borrowers.
The Fund may invest in "stripped" mortgage-backed securities of CMOs
or other securities issued by agencies or instrumentalities of the U.S.
Government. Stripped mortgage-backed securities usually have two
classes. The classes receive different proportions of the interest and
principal distributions on the pool of mortgage assets that act as
collateral for the security. In certain cases, one class will receive
all of the interest payments (and is known as an "I/O"), while the
other class will receive all of the principal value (and is known as a
"P/O").
The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the
underlying mortgages. Principal prepayments increase that sensitivity.
Stripped securities that pay "interest only" are therefore subject to
greater price volatility when interest rates change, and they have the
additional risk that if the underlying mortgages are prepaid, the Fund
will lose the anticipated cash flow from the interest on the prepaid
mortgages. That risk is increased when general interest rates fall,
and in times of rapidly falling interest rates, the Fund might receive
back less than its investment.
The Fund may also enter into "forward roll" transactions with banks
and dealers with respect to the mortgage-related securities in which it
can invest. These require the Fund to secure its obligation in the
transaction by segregating assets with its custodian bank equal in
amount to its obligation under the roll.
As with other bond investments, the value of U.S. Government
Securities and mortgage-backed securities will tend to rise when
interest rates fall and to fall when interest rates rise. The value of
mortgage-backed securities may also be affected by changes in the
market's perception of the creditworthiness of the entity issuing or
guaranteeing them or by changes in government regulations and tax
policies. Because of these factors, the Fund's share value and yield
are not guaranteed and will fluctuate, and there can be no assurance
that the Fund's objective will be achieved. The magnitude of these
fluctuations generally will be greater when the average maturity of the
Fund's portfolio securities is longer. Because the yields on U.S.
Government Securities are generally lower than on corporate debt
securities, the Fund may attempt to increase the income it can earn
from U.S. Government Securities by writing covered call options against
them, when market conditions are appropriate. Writing covered call
options is explained below, under "Other Investment Techniques and
Strategies."
- Portfolio Turnover. A change in the securities held by the Fund
is known as "portfolio turnover." U.S. Government Securities may be
purchased or sold without regard to the length of time they have been
held, to attempt to take advantage of short-term differentials in
yields. While short-term trading increases portfolio turnover, the
Fund incurs little or no brokerage costs for U.S. Government
Securities. High portfolio turnover may affect the ability of the Fund
to qualify as a "regulated investment company" under the Internal
Revenue Code to obtain tax deductions for dividends and distributions
paid to shareholders. The Fund qualified in its last fiscal year and
intends to do so in the coming year, although it reserves the right not
to qualify.
- Can the Fund's Investment Objective and Policies Change? The
Fund has an investment objective, described above, as well as
investment policies it follows to try to achieve its objective.
Additionally, the Fund uses certain investment techniques and
strategies in carrying out those investment policies. The Fund's
investment policies and practices are not "fundamental" unless this
Prospectus or the Statement of Additional Information says that a
particular policy is "fundamental." The Fund's investment objective is
a fundamental policy.
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The
term "majority" is defined in the Investment Company Act to be a
particular percentage of outstanding voting shares (and this term is
explained in the Statement of Additional Information). The Fund's Board
of Trustees may change non-fundamental policies without shareholder
approval, although significant changes will be described in amendments
to this Prospectus.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below. These techniques
involve certain risks. The Statement of Additional Information contains
more detailed information about these practices, including limitations
on their use that may help to reduce some of the risks.
- Loans of Portfolio Securities. To raise cash for liquidity
purposes, the Fund may lend its portfolio securities to brokers,
dealers and other financial institutions. These loans are limited to
not more than 25% of the Fund's total assets and are subject to certain
conditions described in the Statement of Additional Information. The
Fund presently does not intend to lend its portfolio securities, but if
it does, the value of securities loaned is not expected to exceed 5% of
the value of the Fund's total assets in the coming year.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. There is no limit on the amount of the Fund's net assets
that may be subject to repurchase agreements of seven days or less.
The Fund will not enter into a repurchase agreement that will cause
more than 10% of its net assets to be subject to repurchase agreements
having a maturity beyond seven days. Repurchase agreements must be
fully collateralized. However, if the vendor fails to pay the resale
price on the delivery date, the Fund may experience costs in disposing
of the collateral and may experience losses if there is any delay in
doing so.
- Hedging. As described below, the Fund may purchase and sell
certain kinds of futures contracts, put and call options, and options
on futures, or enter into interest rate swap agreements. These are all
referred to as "hedging instruments." The Fund does not use hedging
instruments for speculative purposes, and has limits on the use of
them, described below. The hedging instruments the Fund may use are
described below and in greater detail in "Other Investment Techniques
and Strategies" in the Statement of Additional Information.
The Fund may buy and sell options and futures for a number of
purposes. It may do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or
to establish a position in the securities market as a temporary
substitute for purchasing individual securities. It may do so to try
to manage its exposure to changing interest rates. Some of these
strategies, such as selling futures, buying puts and writing covered
calls, hedge the Fund's portfolio against price fluctuations.
Other hedging strategies, such as buying futures and call options
and writing put options, tend to increase the Fund's exposure to the
securities market. Writing put options or covered call options may
also provide income to the Fund for liquidity purposes or raise cash
for the Fund to distribute to shareholders.
- Futures. The Fund may buy and sell futures contracts that
relate to interest rates (these are referred to as Interest Rate
Futures). Interest Rate Futures are described in "Hedging With Options
and Futures Contracts" in the Statement of Additional Information.
- Put and Call Options. The Fund may buy and sell certain kinds
of put options (puts) and call options (calls).
The Fund may buy calls only on securities or Interest Rate Futures,
or to terminate its obligation on a call the Fund previously wrote.
The Fund may write (that is, sell) covered call options. When the Fund
writes a call, it receives cash (called a premium). The call gives the
buyer the ability to buy the investment on which the call was written
from the Fund at the call price during the period in which the call may
be exercised. If the value of the investment does not rise above the
call price, it is likely that the call will lapse without being
exercised, while the Fund keeps the cash premium (and the investment).
The Fund may purchase put options. Buying a put on an investment
gives the Fund the right to sell the investment at a set price to a
seller of a put on that investment. The Fund can buy only those puts
that relate to (1) securities that the Fund owns, or (2) Interest Rate
Futures. The Fund can buy a put on an Interest Rate Future whether or
not the Fund owns the particular Future in its portfolio. The Fund may
write puts on securities or Interest Rate Futures in an amount up to
50% of its total assets only if such puts are covered by segregated
liquid assets. In writing puts, there is a risk that the Fund may be
required to buy the underlying security at a disadvantageous price.
The Fund may buy and sell puts and calls only if certain conditions
are met: (1) after the Fund writes a call, the Fund may write calls on
up to 100% of its total assets if the calls are listed on a domestic
securities or commodities exchange or quoted on the Automated Quotation
System of the National Association of Securities Dealers, Inc.
(NASDAQ); the limit is 10% of the Fund's total assets for calls that
are not listed or quoted; (2) calls the Fund buys or sells must be
listed on a securities or commodities exchange, or quoted on NASDAQ or
in the case of debt securities, traded in the over-the-counter market;
(3) each call the Fund writes must be "covered" while it is
outstanding: that means the Fund must own the investment on which the
call was written or it must own other securities that are acceptable
for the escrow arrangements required for calls; (4) the Fund may write
calls on Futures contracts it owns, but these calls must be covered by
securities or other liquid assets the Fund owns and segregates to
enable it to satisfy its obligations if the call is exercised; (5) a
call or put option may not be purchased if the value of all of the
Fund's put and call options would exceed 5% of the Fund's total assets.
- Interest Rate Swaps. In an interest rate swap, the Fund and
another party exchange their right to receive or their obligation to
pay interest on a security. For example, they may swap a right to
receive floating rate payments for fixed rate payments. The Fund
enters into swaps only on securities it owns. The Fund may not enter
into swaps with respect to more than 25% of its total assets. Also,
the Fund will segregate liquid assets (such as cash or U.S. Government
securities) to cover any amounts it could owe under swaps that exceed
the amounts it is entitled to receive, and it will adjust that amount
daily, as needed. Income from interest rate swaps may be taxable.
- Hedging instruments can be volatile investments and may involve
special risks. In the broadest sense, exchange-traded options and
futures contracts and other hedging instruments the Fund can use may be
defined as "derivative" investments. In general, a derivative
investment is a specially-designed investment whose performance is
linked to the performance of another investment or security. The use
of hedging instruments requires special skills and knowledge of
investment techniques that are different than what is required for
normal portfolio management. If the Manager uses a hedging instrument
at the wrong time or judges market conditions incorrectly, hedging
strategies may reduce the Fund's return. The Fund could also experience
losses if the prices of its futures and options positions were not
correlated with its other investments or if it could not close out a
position because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular
hedging strategies. If a covered call written by the Fund is exercised
on an investment that has increased in value, the Fund will be required
to sell the investment at the call price and will not be able to
realize any profit if the investment has increased in value above the
call price. Interest rate swaps are subject to credit risks (if the
other party fails to meet its obligations) and also to interest rate
risks. The Fund could be obligated to pay more under its swap
agreements than it receives under them, as a result of interest rate
changes. These risks are described in greater detail in the Statement
of Additional Information.
- Derivative Investments. The Fund can invest in a number of
different kinds of "derivative investments." The Fund may use some
types of derivatives for hedging purposes, and may invest in others
because they offer the potential for increased income and principal
value. 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. In the
broadest sense, derivative investments include exchange-traded options
and futures contracts (please refer to "Hedging," above).
One risk of investing in derivative investments is that the
company issuing the instrument might 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 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 can mean that the Fund will 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. If that is the case, the Fund's
investment in them will be limited as discussed in the following
paragraph.
Other Investment Restrictions. The Fund has other investment
restrictions which are fundamental policies. Under these fundamental
policies, the Fund cannot do any of the following: (a) make loans;
however, the purchase of debt securities which the Fund's investment
policies and restrictions permit it to purchase, whether or not subject
to repurchase agreements, is permitted; the Fund may also lend
securities as described under "Loans of Portfolio Securities"; (b)
borrow money in excess of 10% of the value of its assets (and then only
as a temporary measure for extraordinary or emergency purposes) or make
any investment at a time during which such borrowing exceeds 5% of the
value of its assets; no assets of the Fund may be pledged, mortgaged or
hypothecated to secure a debt; the escrow arrangements involved in
options trading are not considered to involve such a mortgage,
hypothecation or pledge; or (c) enter into repurchase agreements
maturing in more than seven days, or invest in securities which are
restricted as to resale, securities which are not readily convertible
to cash ("illiquid securities") or securities for which market
quotations are not readily available if more than 10% of the Fund's
total assets would be invested in such securities.
All of the percentage restrictions described above and elsewhere in
this Prospectus apply only at the time the Fund purchases a security,
and the Fund need not dispose of a security merely because the Fund's
assets have changed or the security has increased in value relative to
the size of the Fund. There are other fundamental policies discussed in
the Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in 1982 as a
Massachusetts business trust. The Fund is an open-end, diversified
management investment company, with an unlimited number of authorized
shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is responsible
under Massachusetts law for protecting the interests of shareholders.
The Trustees meet periodically throughout the year to oversee the
Fund's activities, review its performance, and review the actions of
the Manager. "Trustees and Officers of the Fund" in the Statement of
Additional Information names the Trustees and provides more information
about them and the officers of the Fund. Although the Fund is not
required by law to hold annual meetings, it may hold shareholder
meetings from time to time on important matters, and shareholders have
the right to call a meeting to remove a Trustee or to take other action
described in the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval,
to divide unissued shares of the Fund into two or more classes. The
Board has done so, and the Fund currently has three classes of shares,
Class A, Class B and Class C. Each class has its own dividends and
distributions and pays certain expenses which may be different for the
different classes. Each class may have a different net asset value.
Each share has one vote at shareholder meetings, with fractional shares
voting proportionally. Only shares of a particular class vote together
on matters that affect that class alone. Shares are freely
transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
Oppenheimer Management Corporation, which chooses the Fund's
investments and handles its day-to-day business. The Manager carries
out its duties, subject to the policies established by the Board of
Trustees, under an Investment Advisory Agreement which states the
Manager's responsibilities. The agreement sets forth the fees paid by
the Fund to the Manager and describes the expenses that the Fund pays
to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including an affiliate) currently manage investment companies,
including other OppenheimerFunds, with assets of more than $30 billion
as of March 31, 1995, and with more than 2.4 million shareholder
accounts. The Manager is owned by Oppenheimer Acquisition Corp., a
holding company that is owned in part by senior officers of the Manager
and controlled by Massachusetts Mutual Life Insurance Company.
- Portfolio Manager. The Portfolio Manager of the Fund (who is
also a Vice President of the Fund) is David A. Rosenberg, a Vice
President of the Manager. He has been responsible for the day-to-day
management of the Fund's portfolio since January 3, 1994. Mr.
Rosenberg also serves as a portfolio manager of other OppenheimerFunds.
Previously he was an officer and portfolio manager for Delaware
Investment Advisors and for one of its mutual funds.
- Fees and Expenses. Under the investment advisory agreement, the
Fund pays the Manager the following annual fees, which decline on
additional assets as the Fund grows: 0.65% of the first $200 million
of aggregate net assets, 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
aggregate net assets over $800 million.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal and
auditing costs. Those expenses are paid out of the Fund's assets and
are not paid directly by shareholders. However, those expenses reduce
the net asset value of shares, and therefore are indirectly borne by
shareholders through their investment. More information about the
investment advisory agreement and the other expenses paid by the Fund
is contained in the Statement of Additional Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers
are selected for the Fund's portfolio transactions. Because the Fund
purchases most of its portfolio securities directly from the sellers
and not through brokers, it therefore incurs relatively little expenses
for brokerage. From time to time it may use brokers when buying
portfolio securities. When deciding which brokers to use, the Manager
is permitted by the investment advisory agreement to consider whether
brokers have sold shares of the Fund or any other funds for which the
Manager serves as investment adviser.
- The Distributor. The Fund's shares are sold through dealers
and brokers that have a sales agreement with Oppenheimer Funds
Distributor, Inc., a subsidiary of the Manager that acts as the
Distributor. The Distributor also distributes the shares of other
mutual funds managed by the Manager (the "OppenheimerFunds") and is
sub-distributor for funds managed by a subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other OppenheimerFunds
on an "at-cost" basis. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free number
shown below in this Prospectus or on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total
return" and "yield" to illustrate its performance. The performance of
each class of shares is shown separately because each class of shares
will usually have different performance as a result of the different
kinds of expenses each class bears. These returns measure the
performance of a hypothetical account in the Fund over various periods,
and do not show the performance of each shareholder's account (which
will vary if dividends are received in cash, or shares are sold or
purchased). The Fund's performance data may help you see how well your
investment has done over time and to compare it to other funds or
market indices.
It is important to understand that the Fund's yields and total
returns represent past performance and should not be considered to be
predictions of future returns or performance. This performance data is
described below, but more detailed information about how total returns
and yields are calculated is contained in the Statement of Additional
Information, which also contains information about other ways to
measure and compare the Fund's performance. The Fund's investment
performance will vary, depending on market conditions, the composition
of the portfolio, expenses and which class of shares you purchase.
- Total Returns. There are different types of "total returns"
used to measure the Fund's performance. Total return is the change in
value of a hypothetical investment in the Fund over a given period,
assuming that all dividends and capital gains distributions are
reinvested in additional shares. The cumulative total return measures
the change in value over the entire period (for example, ten years). An
average annual total return shows the average rate of return for each
year in a period that would produce the cumulative total return over
the entire period. However, average annual total returns do not show
the Fund's actual year-by-year performance.
When total returns are quoted for Class A shares, they reflect the
payment of the maximum initial sales charge. When total returns are
shown for Class B shares, they reflect the effect of the contingent
deferred sales charge that applies to the period for which total return
is shown. When total returns are shown for a one-year period for Class
C shares, they reflect the effect of the contingent deferred sales
charge. Total returns may also be shown based on the change in net
asset value, without considering the effect of either the front-end or
the contingent deferred sales charge, as applicable, and those returns
would be reduced if sales charges were deducted.
- Yield. Each class of shares calculates its yield by dividing the
annualized net investment income per share on the portfolio during a
30-day period by the maximum offering price on the last day of the
period. The yield of each class will differ because of the different
expenses of each class of shares. The yield data represents a
hypothetical investment return on the portfolio, and does not measure
an investment return based on dividends actually paid to shareholders.
To show that return, a dividend yield may be calculated. Dividend
yield is calculated by dividing the dividends of a Class derived from
net investment income during a stated period by the maximum offering
price on the last day of the period. Yields and dividend yields for
Class A shares reflect the deduction of the maximum initial sales
charge, but may also be shown based on the Fund's net asset value per
share. Yields for Class B and Class C shares do not reflect the
deduction of the contingent deferred sales charge.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended June 30, 1994,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.
- Management's Discussion of Performance. During the Fund's
fiscal year ended June 30, 1994, the Federal Reserve increased U.S.
short-term interest rates as a pre-emptive strike against inflation.
In the beginning of the Fund's fiscal year the Manager began to
position the Fund's portfolio in response to an expected rise in
interest rates by shortening the maturity of the U.S. Treasury portion
of the portfolio and reducing the Fund's mortgage holdings. During the
latter part of the fiscal year, with the expectation that interest
rates would not rise significantly from rates then in effect, the
Manager added higher yielding bonds to the Fund's portfolio, focusing
on issues that could add yield at attractive prices.
- Comparing the Fund's Performance to the Market. The chart below
shows the performance of a hypothetical $10,000 investment in each
Class of shares of the Fund held until June 30, 1994; in the case of
Class A shares, since August 16, 1985 (the date on which the Fund's
investment objective was changed), and in the case of Class C shares,
from the inception of the Class on December 1, 1993, with all dividends
and capital gains distributions reinvested in additional shares. The
graph reflects the deduction of the 4.75% maximum initial sales charge
on Class A shares and the 1.0% contingent deferred sales charge on
Class C shares. Class B shares were not offered during the Fund's
fiscal year ended June 30, 1994. Accordingly, no information on Class
B shares is reflected below.
Comparison of Change in Value
of a $10,000 Hypothetical Investment in
Oppenheimer U.S. Government Trust
and the Lehman Brothers U.S. Government Bond Index
(Graph With Class A Shares Of The Fund)
(Graph With Class C Shares Of The Fund)
Past performance is not predictive of future performance.
Average Annual Total Returns of Class A Shares Of The Fund at
6/30/94(1)
1-Year 5-Year Life
- -5.87% 6.31% 7.64%
Cumulative Total Return of Class C Shares Of The Fund at 6/30/94(2)
Life
- -4.09%
_________________________________________
(1) The inception date of the Fund (Class A shares) was 8/16/85. The
average annual total returns and the ending account value in the graph
reflect reinvestment of all dividends and capital gains distributions
and are shown net of the applicable 4.75% maximum initial sales charge.
(2) Reflects cumulative total return from the date that Class C shares
of the Fund were first publicly offered (12/1/93), and is not
annualized.
The Fund's performance is compared to the performance of the Lehman
Brothers U.S. Government Bond Index, an unmanaged index including all
U.S. Treasury issues, publicly-issued debt of U.S. Government agencies
and quasi-public corporations and U.S. Government guaranteed corporate
debt, and is widely regarded as a measure of the performance of the
U.S. Government bond market. Index performance reflects the
reinvestment of dividends but does not consider the effect of capital
gains or transaction costs, and none of the data above shows the effect
of taxes. Also, the Fund's performance reflects the effect of Fund
business and operating expenses. While index comparisons may be
useful to provide a benchmark for the Fund's performance, it should be
noted that the Fund's investments are not limited to the securities in
any one index and the index data does not reflect any assessment of the
risk of the investments included in the index.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the
same portfolio of securities but are subject to different expenses and
will likely have different share prices.
- Class A Shares. When you buy Class A shares, you pay an initial
sales charge (on investments up to $1 million). If you purchase Class A
shares as part of an investment of at least $1 million in shares of one
or more OppenheimerFunds you will not pay an initial sales charge, but
if you sell any of those shares within 18 months after your purchase,
you may pay a contingent deferred sales charge, which will vary
depending on the amount you invested. Sales charges are described
below.
- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years of buying them, you will normally pay a contingent deferred sales
charge that varies depending on how long you owned your shares.
- Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within 12
months of buying them, you will normally pay a contingent deferred
sales charge of 1%.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is best suited to your needs depends on a number of factors
which you should discuss with your financial advisor. The Fund's
operating costs that apply to a class of shares and the effect of the
different types of sales charges on your investment will vary your
investment results over time. The most important factors are how much
you plan to invest, how long you plan to hold your investment, and
whether you anticipate exchanging your shares for shares of other
OppenheimerFunds (not all of which offer Class B or Class C shares). If
your goals and objectives change over time and you plan to purchase
additional shares, you should re-evaluate those factors to see if you
should consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the
sales charge rates that apply to each class, and considered the effect
of the asset-based sales charges on Class B and Class C expenses (which
will affect your investment return). For the sake of comparison, we
have assumed that there is a 10% rate of appreciation in your
investment each year. Of course, the actual performance of your
investment cannot be predicted and will vary, based on the Fund's
actual investment returns, and the operating expenses borne by each
class of shares, and which class of shares you invest in. The factors
discussed below are not intended to be investment advice, guidelines or
recommendations, because each investor's financial considerations are
different. The assumptions we have made in assessing the factors to
consider in purchasing a particular class of shares assume that you
will purchase only one class of shares, and not a combination of shares
of different classes.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long
you expect to hold your investment will assist you in selecting the
appropriate class of shares. The effect of the sales charge over time,
using our assumptions, will generally depend on the amount invested.
The effect of class-based expenses will also depend on how much you
invest.
Investing for the Short Term. If you have a short term investment
horizon (that is, you plan to hold your shares less than six years),
you should probably consider purchasing Class C shares rather than
Class A or Class B shares. This is because there is no initial sales
charge on Class C shares, and the contingent deferred sales charge does
not apply to amounts you sell after holding them one year.
However, if you plan to invest more than $250,000 for a period of
less than six years, Class C shares might not be as advantageous as
Class A shares. This is because the annual asset-based sales charge on
Class C shares (and the contingent deferred sales charge that applies
if you redeem Class C shares within a year of purchase) might have a
greater economic impact on your account during that period than the
initial sales charge that would apply if Class A shares were purchased
instead at the applicable reduced Class A sales charge rate.
And for most investors who invest $500,000 or more, in most cases
Class A shares will be the more advantageous choice than Class B
shares, no matter how long you intend to hold your shares. For that
reason, the Distributor normally will not accept purchase orders of
$500,000 or more of Class B shares from a single investor. For the same
reason, the Distributor will not accept purchase orders of $1 million
or more of Class C shares from a single investor.
Investing for the Longer Term. If you are investing for the longer
term, for example, for retirement, and do not expect to need access to
your money for six years or more, Class A shares will likely be more
advantageous than Class B or Class C shares. This is because of the
effect of expected lower expenses for Class A shares and the reduced
initial sales charges available for larger investments in Class A
shares under the Fund's Right of Accumulation. Class B shares may be
appropriate for smaller investments held for the longer term because
there is no initial sales charge on Class B shares, and Class B shares
held six years following their purchase convert into Class A shares.
Of course all of these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumed annual performance return
stated above, and you should analyze your options carefully.
- Are There Differences in Account Features That Matter To You?
Because some features (such as checkwriting) may not be available to
Class B or C shareholders, or other features (such as Automatic
Withdrawal Plans) may not be advisable (because of the effect of the
contingent deferred sales charge in non-retirement accounts) for Class
B or Class C shareholders, you should carefully review how you plan to
use your investment account before deciding which class of shares to
buy. Additionally, dividends payable to Class B and Class C
shareholders will be reduced by the additional expenses borne by those
classes that are not borne by Class A, such as the Class B and Class C
asset-based sales charges described below and in the Statement of
Additional Information.
Also, because not all of the OppenheimerFunds currently offer Class
B and Class C shares, and because exchanges are permitted only to the
same class of shares in another of the OppenheimerFunds, you should
consider how important the exchange privilege is likely to be for you.
- How Does It Affect Payments to My Broker? A salesperson, such as
a broker, or any other person who is entitled to receive compensation
for selling Fund shares, may receive different compensation for selling
one class than for selling another class. It is important that
investors understand that the purpose of the Class B and Class C
contingent deferred sales charges is the same as the purpose of the
front-end sales charge on Class A shares: to reimburse the Distributor
for commissions it pays to dealers and financial institutions for
selling shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any
time with as little as $25. There are reduced minimum investments under
special investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments for as little as $25; and subsequent purchases
of at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as
$250 (if your IRA is established under an Asset Builder Plan, the $25
minimum applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other OppenheimerFunds
(a list of them appears in the Statement of Additional Information, or
you can ask your dealer or call the Transfer Agent), or by reinvesting
distributions from unit investment trusts that have made arrangements
with the Distributor.
- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan
under the OppenheimerFunds AccountLink service. When you buy shares, be
sure to specify Class A, Class B or Class C shares. If you do not
choose, your investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "Oppenheimer Funds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment first
with a financial advisor, to be sure it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member to transmit funds electronically to purchase shares, to have the
transfer agent send redemption proceeds, or to transmit dividends and
distributions.
Shares are purchased for your account on the regular business day
the Distributor is instructed by you to initiate the ACH transfer to
buy shares. You can provide those instructions automatically, under an
Asset Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to
"AccountLink" below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other OppenheimerFunds) automatically each month from your
account at a bank or other financial institution under an Asset Builder
Plan with AccountLink. Details are on the Application and in the
Statement of Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales
charge that applies) that is next determined after the Distributor
receives the purchase order in Denver. In most cases, to enable you to
receive that day's offering price, the Distributor must receive your
order by the time of day The New York Stock Exchange closes, which is
normally 4:00 P.M., New York time, but may be earlier on some days (all
references to time in this Prospectus mean "New York time"). The net
asset value of each class of shares is determined as of that time on
each day The New York Stock Exchange is open (which is a "regular
business day").
If you buy shares through a dealer, the dealer must receive your
order by the close of The New York Stock Exchange on a regular business
day, and transmit it to the Distributor so that it is received before
the Distributor's close of business that day, which is normally 5:00
P.M. The Distributor may reject any purchase order for the Fund's
shares, in its sole discretion.
Class A Shares. Class A shares are sold at their offering price, which
is normally net asset value plus an initial sales charge. However, in
some cases, described below, where purchases are not subject to an
initial sales charge, the offering price may be net asset value. In
some cases, reduced sales charges may be available, as described below.
Out of the amount you invest, the Fund receives the net asset value to
invest for your account. The sales charge varies depending on the
amount of your purchase. A portion of the sales charge may be retained
by the Distributor and allocated to your dealer. The current sales
charge rates and commissions paid to dealers and brokers are as
follows:
<TABLE>
<CAPTION>
Front-End Sales Front-End Sales
Charge as a Charge as a Commission as
Percentage of Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
<S> <C> <C>
Less than $50,000 4.75% 4.98% 4.00%
$50,000 or more but
less than $100,000 4.50% 4.71% 3.75%
$100,000 or more but
less than $250,000 3.50% 3.63% 2.75%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
$1 million or more None* None* None*
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- - Class A Contingent Deferred Sales Charge. There is no initial sales
charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more (shares of any
OppenheimerFunds that offer only one class of shares that has no class
designation are considered "Class A" shares for this purpose). The
Distributor pays dealers of record commissions on such purchases in an
amount equal to the sum of 1.0% of the first $2.5 million, plus 0.50%
of the next $2.5 million, plus 0.25% of share purchases over $5
million. That commission will be paid only on the amount of those
purchases in excess of $1 million that were not previously subject to a
front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be
deducted from the redemption proceeds. That sales charge will be equal
to 1.0% of the aggregate net asset value of either (1) the redeemed
shares (not including shares purchased by reinvestment of dividends or
capital gain distributions) or (2) the original cost of the shares,
whichever is less. However, the Class A contingent deferred sales
charge will not exceed the aggregate commissions the Distributor paid
to your dealer on all Class A shares of all OppenheimerFunds you
purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales
charge, including shares purchased by reinvestment of dividends and
capital gains, and then will redeem other shares in the order that you
purchased them. The Class A contingent deferred sales charge is waived
in certain cases described in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges
of shares under the Fund's Exchange Privilege (described below).
However, if the shares acquired by exchange are redeemed within 18
months of the end of the calendar month of the purchase of the
exchanged shares, the sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance up
to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of OppenheimerFunds
(other than money market funds) under OppenheimerFunds-sponsored
403(b)(7) custodial plans exceed $5 million per year (calculated per
quarter), will receive monthly one-half of the Distributor's retained
commissions on those sales, and if those sales exceed $10 million per
year, those dealers will receive the Distributor's entire retained
commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of
the following ways:
- Right of Accumulation. To qualify for the lower sales charge
rates that apply to larger purchases of Class A shares, you and your
spouse can add together Class A shares you purchase for your individual
accounts, or jointly, or on behalf of your children who are minors,
under trust or custodial accounts. A fiduciary can cumulate shares
purchased for a trust, estate or other fiduciary account (including one
or more employee benefit plans of the same employer) that has multiple
accounts.
Additionally, you can add together current purchases of Class A
shares of the Fund and other OppenheimerFunds. To reduce the sales
charge rate for current purchases of Class A shares, you can also
include Class A shares of OppenheimerFunds you previously purchased
subject to a sales charge, provided that you still hold your investment
in one of the OppenheimerFunds. The value of those shares will be based
on the greater of the amount you paid for the shares or their current
value (at offering price). The OppenheimerFunds are listed in "Reduced
Sales Charges" in the Statement of Additional Information, or a list
can be obtained from the Transfer Agent. The reduced sales charge will
apply only to current purchases and must be requested when you buy your
shares.
Shareholders of the Fund who acquired (and still hold) Fund shares as
a result of a reorganization of the Fund with Advance America Funds,
Inc. on October 18, 1991, and who held shares of Advance America Funds,
Inc. on March 30, 1990, may purchase shares of the Fund at a maximum
sales charge of 4.50%
- Letter of Intent. Under a Letter of Intent, you may purchase
Class A shares of the Fund and other OppenheimerFunds during a 13-month
period at the reduced sales charge rate that applies to the aggregate
amount of the intended purchases, including purchases made up to 90
days before the date of the Letter. More information is contained in
the Application and in "Reduced Sales Charges" in the Statement of
Additional Information.
- Waivers of Class A Sales Charges. No sales charge is imposed on
sales of Class A shares to the following investors: (1) the Manager or
its affiliates; (2) present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced Sales
Charges" in the Statement of Additional Information) of the Fund, the
Manager and its affiliates, and retirement plans established by them
for their employees; (3) registered management investment companies, or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; (4) dealers or brokers
that have a sales agreement with the Distributor, if they purchase
shares for their own accounts or for retirement plans for their
employees; (5) employees and registered representatives (and their
spouses) of dealers or brokers described above or financial
institutions that have entered into sales arrangements with such
dealers or brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the time
of purchase that the purchase is for the purchaser's own account (or
for the benefit of such employee's spouse or minor children); (6)
dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor providing specifically for the
use of shares of the Fund in particular investment products made
available to their clients; and (7) dealers, brokers or registered
investment advisers that have entered into an agreement with the
Distributor to sell shares to defined contribution employee retirement
plans for which the dealer, broker or investment adviser provides
administrative services.
Additionally, no sales charge is imposed on shares that are (a)
issued in plans of reorganization, such as mergers, asset acquisitions
and exchange offers, to which the Fund is a party, or (b) purchased by
the reinvestment of loan repayments by a participant in a retirement
plan for which the Manager or its affiliates acts as sponsor, (c)
purchased by the reinvestment of dividends or other distributions
reinvested from the Fund or other OppenheimerFunds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor, or (d)
purchased and paid for with the proceeds of shares redeemed in the
prior 12 months from a mutual fund on which an initial sales charge or
contingent deferred sales charge was paid (other than a fund managed by
the Manager or any of its affiliates); this waiver must be requested
when the purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this waiver.
There is a further discussion of this policy in "Reduced Sales Charges"
in the Statement of Additional Information.
The Class A contingent deferred sales charge does not apply to
purchases of Class A shares at net asset value as described above and
is also waived if shares are redeemed in the following cases: (1)
retirement distributions or loans to participants or beneficiaries from
qualified retirement plans, deferred compensation plans or other
employee benefit plans ("Retirement Plans"), (2) returns of excess
contributions made to Retirement Plans, (3) Automatic Withdrawal Plan
payments that are limited to no more than 12% of the original account
value annually, (4) involuntary redemptions of shares by operation of
law or under the procedures set forth in the Fund's Declaration of
Trust or adopted by the Board of Trustees and (5) if, at the time an
order is placed for Class A shares that would otherwise be subject to
the Class A contingent deferred sales charge, the dealer agrees to
accept the dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month (with no further
commission payable if the shares are redeemed within 18 months of
purchase).
- Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of
its costs incurred in connection with the personal service and
maintenance of accounts that hold Class A shares. Reimbursement is
made quarterly at an annual rate that may not exceed 0.25% of the
average annual net assets of Class A shares of the Fund. The
Distributor uses all of those fees to compensate dealers, brokers,
banks and other financial institutions quarterly for providing personal
service and maintenance of accounts of their customers that hold Class
A shares and to reimburse itself (if the Fund's Board of Trustees
authorizes such reimbursements, which it has not yet done) for its
other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details,
please refer to "Distribution and Service Plans" in the Statement of
Additional Information.
Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are
redeemed within 6 years of their purchase, a contingent deferred sales
charge will be deducted from the redemption proceeds. That sales
charge will not apply to shares purchased by the reinvestment of
dividends or capital gains distributions. The charge will be assessed
on the lesser of the net asset value of the shares at the time of
redemption or the original purchase price. The contingent deferred
sales charge is not imposed on the amount of your account value
represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of
dividends and capital gains distributions). The Class B contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1)
shares acquired by reinvestment of dividends and capital gains
distributions, (2) shares held for over 6 years, and (3) shares held
the longest during the 6-year period.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being
redeemed, according to the following schedule:
<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge
Years Since Beginning of Month In on Redemptions in that Year
Which Purchase Order Was Accepted (As % of Amount Subject to Charge)
<S> <C>
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
</TABLE>
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made.
- Waivers of Class B Sales Charge. The Class B contingent deferred
sales charge will be waived if the shareholder requests it for any of
the following redemptions: (1) distributions to participants or
beneficiaries from Retirement Plans, if the distributions are made (a)
under an Automatic Withdrawal Plan after the participant reaches age
59-1/2, as long as the payments are no more than 10% of the account
value annually (measured from the date the Transfer Agent receives the
request), or (b) following the death or disability (as defined in the
Internal Revenue Code) of the participant or beneficiary; (2)
redemptions from accounts other than Retirement Plans following the
death or disability of the shareholder (the disability must have
occurred after the account was established, and you must provide
evidence of a determination of disability by the Social Security
Administration), (3) returns of excess contributions to Retirement
Plans, and (4) distributions from IRAs including SEP-IRAs and SAR/SEP
accounts before the participant is age 591/2, and distributions from
403(b)(7) custodial plans or pension or profit sharing plans before the
participant is age 591/2 but only after the participant has separated
from service if the distributions are made in substantially equal
periodic payments over the life (or life expectancy) of the participant
or the joint lives (or joint life and last survivor expectancy) of the
participant and the participant's designated beneficiary (and the
distributions must comply with other requirements for such
distributions under the Internal Revenue Code and may not exceed 10% of
the account value annually, measured from the date the Transfer Agent
receives the request).
The contingent deferred sales charge is also waived on Class B shares
in the following cases: (i) shares sold to the Manager or its
affiliates; (ii) shares sold to registered management investment
companies or separate accounts of insurance companies having an
agreement with the Manager or the Distributor for that purpose; (iii)
shares issued in plans of reorganization to which the Fund is a party;
and (iv) shares redeemed in involuntary redemptions as described below.
Further details about this policy are contained in "Reduced Sales
Charges" in the Statement of Additional Information.
- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B shareholders
of the asset-based sales charge that applies to Class B shares under
the Class B Distribution and Service Plan, described below. The
conversion is based on the relative net asset value of the two classes,
and no sales load or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the
reinvestment of dividends and distributions on the converted shares
will also convert to Class A shares. The conversion feature is subject
to the continued availability of a tax ruling described in "Alternative
Sales Arrangements - Class A and Class B Shares" in the Statement of
Additional Information.
- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for distributing Class B shares and
servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares
that are outstanding for 6 years or less. The Distributor also
receives a service fee of 0.25% per year. Both fees are computed on
the average annual net assets of Class B shares, determined as of the
close of each regular business day. The asset-based sales charge allows
investors to buy Class B shares without a front-end sales charge while
allowing the Distributor to compensate dealers that sell Class B
shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class B shares.
Those services are similar to those provided under the Class A Service
Plan, described above. The asset-based sales charge and service fees
increase Class B expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 3.75% of the
purchase price to dealers from its own resources at the time of sale.
The total up-front commission paid by the Distributor to the dealer at
the time of sales of Class C shares is 1.00% of the purchase price.
The Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been outstanding
for a year or more.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class B
shares. Those payments are at a fixed rate which is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions, service
fees, and other costs of distributing and selling Class B shares. If
the Plan is terminated by the Fund, the Board of Trustees may allow the
Fund to continue payments of the asset-based sales charge to the
Distributor for distributing Class B shares before the Plan was
terminated.
Class C Shares. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred
sales charge of 1.0% will be deducted from the redemption proceeds.
That sales charge will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions. The charge
will be assessed on the lesser of the net asset value of the shares at
the time of redemption or the original purchase price. The contingent
deferred sales charge is not imposed on the amount of your account
value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of
dividends and capital gains distributions). The Class C contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1)
shares acquired by reinvestment of dividends and capital gains
distributions, (2) shares held for over 12 months, and (3) shares held
the longest during the 12-month period.
- Waivers of Class C Sales Charge. The Class C contingent deferred
sales charge will be waived if the shareholder requests it for any of
the redemptions or circumstances described above under "Waivers of
Class B Sales Charge."
- Distribution and Service Plan for Class C Shares. The Fund has
adopted a Distribution and Service Plan for Class C shares to
compensate the Distributor for distributing Class C shares and
servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class C shares.
The Distributor also receives a service fee of 0.25% per year. Both
fees are computed on the average annual net assets of Class C shares,
determined as of the close of each regular business day. The asset-
based sales charge allows investors to buy Class C shares without a
front-end sales charge while allowing the Distributor to compensate
dealers that sell Class C shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class C shares.
Those services are similar to those provided under the Class A Service
Plan, described above. The asset-based sales charge and service fees
increase Class C expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class C shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 0.75% of the
purchase price to dealers from its own resources at the time of sale.
The total up-front commission paid by the Distributor to the dealer at
the time of sale of Class C shares is 1.00% of the purchase price. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been outstanding
for a year or more.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class C
shares. Those payments are at a fixed rate which is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions, service
fees, and other costs of distributing and selling Class C shares,
including compensating personnel of the Distributor who support
distribution of Class C shares. If the Plan is terminated by the Fund,
the Board of Trustees may allow the Fund to continue payments of the
asset-based sales charge to the Distributor for distributing Class C
shares before the Plan was terminated.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to
your account at your bank or other financial institution to enable you
to send money electronically between those accounts to perform a number
of types of account transactions. These include purchases of shares by
telephone (either through a service representative or by PhoneLink,
described below), automatic investments under Asset Builder Plans, and
sending dividends and distributions or Automatic Withdrawal Plan
payments directly to your bank account. Please refer to the Application
for details or call the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy
your shares through your dealer. After your account is established, you
can request AccountLink privileges on signature-guaranteed instructions
to the Transfer Agent. AccountLink privileges will apply to each
shareholder listed in the registration on your account as well as to
your dealer representative of record unless and until the Transfer
Agent receives written instructions terminating or changing those
privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-guaranteed
instructions to the Transfer Agent signed by all shareholders who own
the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone representative,
call the Distributor at 1-800-852-8457. The purchase payment will be
debited from your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be
used on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number:
1-800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with the
Fund, to pay for these purchases.
- Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically by
phone from your Fund account to another OppenheimerFunds account you
have already established by calling the special PhoneLink number.
Please refer to "How to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will send
the proceeds directly to your AccountLink bank account. Please refer
to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to
another OppenheimerFunds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or annual
basis. The checks may be sent to you or sent automatically to your bank
account on AccountLink. You may even set up certain types of
withdrawals of up to $1,500 per month by telephone. You should consult
the Application and Statement of Additional Information for more
details.
- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of
up to five other OppenheimerFunds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each other OppenheimerFunds account is $25. These exchanges are
subject to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A Fund
shares, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other
OppenheimerFunds without paying sales charge. This privilege applies
only to Class A shares that you sell. You must be sure to ask the
Distributor for this privilege when you send your payment. Please
consult the Statement of Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your
employer, the plan trustee or administrator must make the purchase of
shares for your retirement plan account. The Distributor offers a
number of different retirement plans that can be used by individuals
and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SAR/SEP-
IRAs
- Pension and Profit-Sharing Plans for self-employed persons and
small business owners
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers
you a number of ways to sell your shares: in writing, or by using the
Fund's checkwriting privilege, or by telephone. You can also set up
Automatic Withdrawal Plans to redeem shares on a regular basis, as
described above. If you have questions about any of these procedures,
and especially if you are redeeming shares in a special situation, such
as due to the death of the owner, or from a retirement plan, please
call the Transfer Agent first, at 1-800-525-7048, for assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the Statement
of Additional Information.
- Certain Requests Require a Signature Guarantee. To protect you
and the Fund from fraud, certain redemption requests must be in writing
and must include a signature guarantee in the following situations
(there may be other situations also requiring a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and receive a
check
- The check is not payable to all shareholders listed on the account
statement
- The check is not sent to the address of record on your account
statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If
you are signing as a fiduciary or on behalf of a corporation,
partnership or other business, you must also include your title in the
signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell
shares.
Use the following address for requests by mail:
Oppenheimer Shareholder Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular
business day, your call must be received by the Transfer Agent by the
close of The New York Stock Exchange that day, which is normally 4:00
P.M., but may be earlier on some days. Shares held in an
OppenheimerFunds retirement plan or under a share certificate may not
be redeemed by telephone.
- To redeem shares through a service representative, call 1-800-
852-8457
- To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your
bank account on AccountLink, you may have the proceeds wired to that
bank account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, in any 7-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account. This service is not available within 30 days of changing the
address on an account.
- Telephone Redemptions Through AccountLink or By Wire. There are
no dollar limits on telephone redemption proceeds sent to a bank
account designated when you establish AccountLink. Normally the ACH
wire to your bank is initiated on the business day after the
redemption. You do not receive dividends on the proceeds of the shares
you redeemed while they are waiting to be wired.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account. The bank must be a member of the Federal
Reserve wire system. There is a $10 fee for each Federal Funds wire.
To place a wire redemption request, call the Transfer Agent at 1-800-
852-8457. The wire will normally be transmitted on the next bank
business day after the shares are redeemed. There is a possibility that
the wire may be delayed up to seven days to enable the Fund to sell
securities to pay the redemption proceeds. No dividends are accrued or
paid on the proceeds of shares that have been redeemed and are awaiting
transmittal by wire. To establish wire redemption privileges on an
account that is already established, please contact the Transfer Agent
for instructions.
- Checkwriting. To be able to write checks against your Fund
account, you may request that privilege on your account Application or
you can contact the Transfer Agent for signature cards, which must be
signed (with a signature guarantee) by all owners of the account and
returned to the Transfer Agent so that checks can be sent to you to
use. Shareholders with joint accounts can elect in writing to have
checks paid over the signature of one owner.
- Checks can be written to the order of whomever you wish, but may
not be cashed at the Fund's bank or custodian.
- Checkwriting privileges are not available for accounts holding
Class B shares or Class C shares, or Class A shares that are subject to
a contingent deferred sales charge.
- Checks must be written for at least $100.
- Checks cannot be paid if they are written for more than your
account value. Remember: your shares fluctuate in value and you should
not write a check close to the total account value.
- You may not write a check that would require the Fund to redeem
shares that were purchased by check or Asset Builder Plan payments
within the prior 10 days.
- Don't use your checks if you changed your Fund account number.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. To exchange shares, you must meet several
conditions:
- Shares of the fund selected for exchange must be available for sale
in your state of residence
- The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of the
same class in the other OppenheimerFunds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund.
At present, not all of the OppenheimerFunds offer the same classes of
shares. If a fund has only one class of shares that does not have a
class designation, they are "Class A" shares for exchange purposes. In
some cases, sales charges may be imposed on exchange transactions.
Certain OppenheimerFunds offer Class A shares and either Class B or
Class C shares, and a list can be obtained by calling the Distributor
at 1-800-525-7048. Please refer to "How to Exchange Shares" in the
Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are
registered with the same name(s) and address. Shares held under
certificates may not be exchanged by telephone.
You can find a list of OppenheimerFunds currently available for
exchanges in the Statement of Additional Information or by calling a
service representative at 1-800-525-7048. Exchanges of shares involve a
redemption of the shares of the fund you own and a purchase of shares
of the other fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from
the other fund in the exchange transaction on the same regular business
day on which the Transfer Agent receives an exchange request in proper
form by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M. but may be earlier on some days. However, either
fund may delay the purchase of shares of the fund you are exchanging
into if it determines it would be disadvantaged by a same-day transfer
of the proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the disposition of securities at a time or price
disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice
whenever it is reasonably able to do so, it may impose these changes at
any time.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
The Distributor has entered into agreements with certain dealers and
investment advisers permitting them to exchange their clients' shares
by telephone. These privileges are limited under those agreements and
the Distributor has the right to reject or suspend those privileges.
As a result, those exchanges may be subject to notice requirements,
delays and other limitations that do not apply to shareholders who
exchange their shares directly by calling or writing to the Transfer
Agent.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of shares
as of the close of The New York Stock Exchange, which is normally 4:00
P.M. but may be earlier on some days, on each day the Exchange is open
by dividing the value of the Fund's net assets attributable to a class
by the number of shares of that class that are outstanding. The Fund's
Board of Trustees has established procedures to value the Fund's
securities to determine net asset value. In general, securities values
are based on market value. There are special procedures for valuing
illiquid and restricted securities, obligations for which market values
cannot be readily obtained, and call options and hedging instruments.
These procedures are described more completely in the Statement of
Additional Information.
- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer
representative of record for the account unless and until the Transfer
Agent receives cancellation instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm
that telephone instructions are genuine, by requiring callers to
provide tax identification numbers and other account data or by using
PINs, and by confirming such transactions in writing. If the Transfer
Agent does not use reasonable procedures it may be liable for losses
due to unauthorized transactions, but otherwise neither the Transfer
Agent nor the Fund will be liable for losses or expenses arising out of
telephone instructions reasonably believed to be genuine. If you are
unable to reach the Transfer Agent during periods of unusual market
activity, you may not be able to complete a telephone transaction and
should consider placing your order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From
time to time, the Transfer Agent in its discretion may waive certain of
the requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously.
- The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B and Class C shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within 7
days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. Effective June 7, 1995, for accounts registered in the name
of a broker-dealer, payment will be forwarded within 3 business days.
The Transfer Agent may delay forwarding a check or processing a payment
via AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided if
you purchase shares by certified check or arrange with your bank to
provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
- Involuntary redemptions in some cases may be made to repay the
Distributor for losses from the cancellation of share purchase orders.
- Under unusual circumstances, shares of the fund may be redeemed
"in kind", which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to the Statement of
Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified
Social Security or taxpayer identification number when you sign your
application, or if you violate Internal Revenue Service regulations on
tax reporting of dividends.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer
Agent. Under the circumstances described in "How to Buy Shares," you
may be subject to a contingent deferred sales charges when redeeming
certain Class A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report and
updated prospectus to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call the
Transfer Agent at 1-800-525-7048 to ask that copies of those materials
be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B
and Class C shares from net investment income each regular business day
and pays those dividends to shareholders monthly. Dividends are
normally paid on the last business day of each month, but the Board of
Trustees can change that date. The Board may also cause the Fund to
declare dividends after the close of the Fund's fiscal year (which ends
June 30th). Normally, distributions paid on Class A shares generally
are expected to be higher than for Class B and Class C shares because
expenses allocable to Class B and Class C shares will generally be
higher. There is no fixed dividend rate and there can be no assurance
as to the payment of any dividends. The amount of a class's dividends
or distributions may vary from time to time depending on market
conditions, the composition of the Fund's portfolio and expenses borne
by that class.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of dividends and capital gains following the
end of its fiscal year. Long-term capital gains will be separately
identified in the tax information the Fund sends you after the end of
the year. Short-term capital gains are treated as dividends for tax
purposes. There can be no assurance that the Fund will pay any capital
gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
- Reinvest Capital Gains Only. You can elect to reinvest long-term
capital gains in the Fund while receiving dividends by check or sent to
your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a check
for all dividends and long-term capital gains distributions or have
them sent to your bank on AccountLink.
- Reinvest Your Distributions in Another OppenheimerFunds Account.
You can reinvest all distributions in another OppenheimerFunds account
you have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains
when distributed to shareholders. It does not matter how long you held
your shares. Dividends paid from short-term capital gains and net
investment income are taxable as ordinary income. Distributions are
subject to Federal income tax and may be subject to state or local
taxes. Your distributions are taxable when paid, whether you reinvest
them in additional shares or take them in cash. Every year the Fund
will send you and the IRS a statement showing the amount of each
taxable distribution you received in the previous year.
- "Buying a Dividend": When a fund goes ex-dividend, its share price
is reduced by the amount of the distribution. If you buy shares on or
just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares
and then receive a portion of the price back as a taxable dividend or
capital gain.
- Taxes on Transactions: Share redemptions, including redemptions for
exchanges, are subject to capital gains tax. A capital gain or loss is
the difference between the price you paid for the shares and the price
you received when you sold them.
- Returns of Capital: In certain cases if distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.
If that occurs, it will be identified in notices to shareholders. A
non-taxable return of capital may reduce your tax basis in your Fund
shares.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement
of Additional Information, and in addition you should consult with your
tax adviser about the effect of an investment in the Fund on your
particular tax situation.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER U.S. GOVERNMENT TRUST
Graphic material included in Prospectus of Oppenheimer U.S.
Government Trust: "Comparison of Total Return of Oppenheimer U.S.
Government Trust and the Lehman Brothers Government Bond Index - Change
in Value of a $10,000 Hypothetical Investment."
A linear graph will be included in the Prospectus of Oppenheimer U.S.
Government Trust (the "Fund") depicting the initial account value and
subsequent account value of a hypothetical $10,000 investment in each
Class of shares of the Funds held until June 30, 1994, in the case of
Class A shares, since August 16, 1985, and in the case of Class C
shares, from the inception of the Class on December 1, 1993, and
comparing such values with the same investments over the same time
periods in the Lehman Brothers Government Bond Index. No performance
information is set forth on the Fund's Class B shares because they were
not publicly offered during the fiscal year ended June 30, 1994. Set
forth below are the relevant data points that will appear on the linear
graph. Additional information with respect to the foregoing, including
a description of the Lehman Brothers Government Bond Index, is set
forth in the Prospectus under "Comparing the Fund's Performance to the
Market."
Oppenheimer U.S. Lehman
Fiscal Year U.S. Government Brothers
(Period) Ended Trust - A Government Bond
Index
08/16/85 $9,525 $10,000
06/30/86 $10,803 $11,887
06/30/87 $11,371 $12,377
06/30/88 $12,268 $13,267
06/30/89 $13,430 $14,869
06/30/90 $14,282 $15,900
06/30/91 $15,645 $17,512
06/30/92 $17,688 $19,920
06/30/93 $19,403 $22,489
06/30/94 $19,218 $22,187
Oppenheimer U.S. Lehman
Fiscal Year U.S. Government Brothers
(Period) Ended Trust - C Government Bond
Index
12/1/93(1) $10,000 $10,000
06/30/94 $9,591 $9,625
- ----------------------
(1) Class C shares of the Fund were first publicly offered on December
1, 1993.
<PAGE>
Oppenheimer U.S. Government Trust
Two World Trade Center
New York, New York 10048-0203
Telephone: 1-800-525-7048
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been authorized
to give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional
Information, and if given or made, such information and representations
must not be relied upon as having been authorized by the Fund,
Oppenheimer Management Corporation, Oppenheimer Funds Distributor, Inc.
or any affiliate thereof. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any of the securities
offered hereby in any state to any person to whom it is unlawful to
make such an offer in such state.
PR0220.001.0595 Printed on recycled paper
<PAGE>
Oppenheimer U.S. Government Trust
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated May 30, 1995
This Statement of Additional Information of Oppenheimer U.S.
Government Trust is not a Prospectus. This document contains
additional information about the Fund and supplements information in
the Prospectus dated May 30, 1995. It should be read together with the
Prospectus, which may be obtained by writing to the Fund's Transfer
Agent, Oppenheimer Shareholder Services, at P.O. Box 5270, Denver,
Colorado 80217 or by calling the Transfer Agent at the toll-free number
shown above.
Contents
Page
About the Fund
Investment Objective and Policies
Investment Policies and Strategies
Other Investment Techniques and Strategies
Other Investment Restrictions
How the Fund is Managed
Organization and History
Trustees and Officers of the Fund
The Manager and Its Affiliates
Brokerage Policies of the Fund
Performance of the Fund
Distribution and Service Plans
About Your Account
How To Buy Shares
How To Sell Shares
How To Exchange Shares
Dividends, Capital Gains and Taxes
Additional Information About the Fund
Financial Information About the Fund
Financial Statements
Independent Auditors' Report
Appendix A: Description of Securities RatingsA-1
Appendix B: Industry ClassificationsB-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth below
is supplemental information about those policies and strategies and
about the types of securities in which the Fund invests, as well as the
strategies the Fund may use to try to achieve its objective. Certain
capitalized terms used in this Statement of Additional Information have
the same meaning as those terms have in the Prospectus.
- U.S. Government Securities. The obligations of U.S. Government
agencies or instrumentalities in which the Fund may invest may or may
not be guaranteed or supported by the "full faith and credit" of the
United States. Some are backed by the right of the issuer to borrow
from the U.S. Treasury; others, by discretionary authority of the U.S.
Government to purchase the agencies' obligations; while others are
supported only by the credit of the instrumentality. All U.S. Treasury
obligations are backed by the full faith and credit of the United
States. If the securities are not backed by the full faith and credit
of the United States, the owner of the securities must look principally
to the agency issuing the obligation for repayment and may not be able
to assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. Under normal
market conditions, the Fund will invest at least 80% of its total
assets in "full faith and credit" U.S. Government Securities and in
U.S. Government Securities of such agencies and instrumentalities only
when the Fund's investment manager, Oppenheimer Management Corporation
(the "Manager") is satisfied that the credit risk with respect to such
instrumentality is minimal.
General changes in prevailing interest rates will affect the values
of the Fund's portfolio securities. The value will vary inversely to
changes in such rates. For example, if such rates go up after a
security is purchased, the value of the security will generally
decline. A decrease in interest rates may affect the maturity and
yield of mortgage-backed securities by increasing unscheduled
prepayments of the underlying mortgages. With its objective of seeking
interest income while conserving capital, the Fund may purchase or sell
securities without regard to the length of time the security has been
held, to take advantage of short-term differentials in yields. While
short-term trading increases the portfolio turnover, the execution cost
for U.S. Government Securities is substantially less than for
equivalent dollar values of equity securities (see "Brokerage
Provisions of the Investment Advisory Agreement," below).
Other Investment Techniques and Strategies
- Repurchase Agreements. The Fund may acquire securities that are
subject to repurchase agreements. In a repurchase transaction, the
Fund purchases a U.S. Government security from, and simultaneously
resells it to, an approved vendor for delivery on an agreed-upon future
date. An "approved vendor" is a U.S. commercial bank, the U.S. branch
of a foreign bank or a broker-dealer which has been designated a
primary dealer in government securities which must meet the audit
requirements met by the Fund's Board of Trustees from time to time.
The resale price exceeds the purchase price by an amount that reflects
an agreed-upon interest rate effective for the period during which the
repurchase agreement is in effect. The majority of these transactions
run from day to day, and delivery pursuant to the resale typically will
occur within one to five days of the purchase. Repurchase agreements
are considered "loans" under the Investment Company Act of 1940 (the
"Investment Company Act"), collateralized by the underlying security.
The Fund's repurchase agreements require that at all times while the
repurchase agreement is in effect, the collateral's value must equal or
exceed the repurchase price to fully collateralize the repayment
obligation. Additionally, the Manager will impose creditworthiness
requirements to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the
loan collateral must, on each business day, at least equal the market
value of the loaned securities and must consist of cash, bank letters
of credit or U.S. Government Securities, or other cash equivalents in
which the Fund is permitted to invest. To be acceptable as collateral,
letters of credit must obligate a bank to pay amounts demanded by the
Fund if the demand meets the terms of the letter. The terms of the
letter and the issuing bank must be satisfactory to the Fund. In a
portfolio securities lending transaction, the Fund receives from the
borrower an amount equal to the interest paid or the dividends declared
on the loaned securities during the term of the loan as well as one or
more of (a) negotiated loan fees, (b) interest on securities used as
collateral, or (c) interest on short-term debt securities purchased
with such loan collateral; either type of interest may be shared with
the borrower. The Fund may also pay reasonable finder's, custodian and
administrative fees and will not lend its portfolio securities to any
officer, trustee, employee or affiliate of the Fund or its Manager.
The terms of the Fund's loans must meet certain tests under the
Internal Revenue Code and permit the Fund to reacquire loaned
securities on five business days' notice or in time to vote on any
important matter.
- Mortgage-Backed Security Rolls. The Fund may enter into
"forward roll" transactions with respect to mortgage-backed securities
in which it can invest. In a forward roll transaction, which is
considered to be a borrowing by the Fund, the Fund will sell a mortgage
security to selected banks or other entities and simultaneously agree
to repurchase a similar security (same type, coupon and maturity) from
the institution at a specified later date at an agreed upon price. The
mortgage securities that are repurchased will bear the same interest
rate as those sold, but generally will be collateralized by different
pools of mortgages with different prepayment histories than those sold.
Risks of mortgage-backed security rolls include: (i) the risk of
prepayment prior to maturity, (ii) the possibility that the Fund may
not be entitled to receive interest and principal payments on the
securities sold and that the proceeds of the sale may have to be
invested in money market instruments (typically repurchase agreements)
maturing not later than the expiration of the roll, and (iii) the
possibility that the market value of the securities sold by the Fund
may decline below the price at which the Fund is obligated to purchase
the securities. The Fund will enter into only "covered" rolls. Upon
entering into a mortgage-backed security roll, the Fund will be
required to place cash, U.S. Government Securities or other high-grade
debt securities in a segregated account with its Custodian in an amount
equal to its obligation under the roll.
- Hedging. As described in the Prospectus, the Fund may employ one
or more types of Hedging Instruments to manage its exposure to changing
interest rates and securities prices. The Fund's strategy of hedging
with Futures and options on Futures will be incidental to the Fund's
activities in the underlying cash market. Puts and covered calls may
also be written on U.S. Government Securities to attempt to increase
the Fund's income. For hedging purposes, the Fund may use Interest
Rate Futures and call and put options on debt securities and Interest
Rate Futures (all of the foregoing are referred to as "Hedging
Instruments"). Hedging Instruments may be used to attempt to do the
following: (i) protect against possible declines in the market value of
the Fund's portfolio resulting from downward trends in the debt
securities markets (generally due to a rise in interest rates), (ii)
protect unrealized gains in the value of the Fund's debt securities
which have appreciated, (iii) facilitate selling debt securities for
investment reasons, (iv) establish a position in the debt securities
markets as a temporary substitute for purchasing particular debt
securities, or (v) reduce the risk of adverse currency fluctuations. A
call or put may be purchased only if, after such purchase, the value of
all call and put options held by the Fund would not exceed 5% of the
Fund's total assets. The Fund will not use Futures and options on
Futures for speculation. The Hedging Instruments the Fund may use are
described below.
The Fund may use hedging to attempt to protect against declines in
the market value of the Fund's portfolio, to permit the Fund to retain
unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment
reasons. To do so, the Fund may: (i) sell Interest Rate Futures, (ii)
buy puts on such Futures or U.S. Government Securities, or (iii) write
covered calls on securities held by it or on Futures. When hedging to
attempt to protect against the possibility that portfolio securities
are not fully included in a rise in value of the debt securities
market, the Fund may: (i) purchase Futures, or (ii) purchase calls on
such Futures or on U.S. Government Securities. Covered calls and puts
may also be written on debt securities to attempt to increase the
Fund's income.
The Fund's strategy of hedging with Futures and options on Futures
will be incidental to the Fund's activities in the underlying cash
market. At present, the Fund does not intend to enter into Futures and
options on Futures if, after any such purchase or sale, the sum of
margin deposits on Futures and premiums paid on Futures options exceeds
5% of the value of the Fund's total assets. The Fund may, in the
future, employ Hedging Instruments and strategies that are not
presently contemplated to the extent such investment methods are
consistent with the Fund's investment objective, are legally
permissible, and are adequately disclosed.
- Writing Covered Calls. The Fund may write (i.e. sell) call
options ("calls") on U.S. Government Securities to enhance income
through the receipt of premiums from expired calls and any net profits
from closing purchase transactions, subject to the limitations stated
in the Prospectus. All such calls written by the Fund must be
"covered" while the call is outstanding (i.e. the Fund must own the
securities subject to the call or other securities acceptable for
applicable escrow requirements). Calls on Futures (discussed below)
must be covered by deliverable securities or by liquid assets
segregated to satisfy the Futures contract. When the Fund writes a
call on a security, it receives a premium and agrees to sell the
callable investment to a purchaser of a corresponding call on the same
security during the call period (usually not more than 9 months) at a
fixed exercise price (which may differ from the market price of the
underlying security), regardless of market price changes during the
call period. The Fund has retained the risk of loss should the price
of the underlying security decline during the call period, which may be
offset to some extent by the premium.
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." A
profit or loss will be realized, depending upon whether the net of the
amount of the option transaction costs and the premium received on the
call written was more or less than the price of the call subsequently
purchased. A profit may also be realized if the call expires
unexercised, because the Fund retains the underlying investment and the
premium received. Any such profits are considered short-term capital
gains for Federal income tax purposes, and when distributed by the Fund
are taxable as ordinary income. If the Fund could not effect a closing
purchase transaction due to lack of a market, it would have to hold the
callable investments until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a futures
contract or a deliverable bond, provided that at the time the call is
written, the Fund covers the call by segregating in escrow an
equivalent dollar amount of liquid assets. The Fund will segregate
additional liquid assets if the value of the escrowed assets drops
below 100% of the current value of the Future. In no circumstances
would an exercise notice require the Fund to deliver a futures
contract; it would simply put the Fund in a short futures position,
which is permitted by the Fund's hedging policies.
- Writing Put Options. The Fund may write put options on U.S.
Government securities or Interest Rate Futures but only if such puts
are covered by segregated liquid assets. The Fund will not write puts
if, as a result, more than 50% of the Fund's net assets would be
required to be segregated to cover such put obligations. In writing
puts, there is the risk that the Fund may be required to buy the
underlying security at a disadvantageous price. A put option on
securities gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying investment at the exercise price
during the option period. Writing a put covered by segregated liquid
assets equal to the exercise price of the put has the same economic
effect to the Fund as writing a covered call. The premium the Fund
receives from writing a put option represents a profit, as long as the
price of the underlying investment remains above the exercise price.
However, the Fund has also assumed the obligation during the option
period to buy the underlying investment from the buyer of the put at
the exercise price, even though the value of the investment may fall
below the exercise price. If the put expires unexercised, the Fund (as
the writer of the put) realizes a gain in the amount of the premium
less transaction costs. If the put is exercised, the Fund must fulfill
its obligation to purchase the underlying investment at the exercise
price, which will usually exceed the market value of the investment at
that time. In that case, the Fund may incur a loss, equal to the sum
of the current market value of the underlying investment and the
premium received minus the sum of the exercise price and any
transaction costs incurred.
When writing put options on securities, to secure its obligation to
pay for the underlying security, the Fund will deposit in escrow liquid
assets with a value equal to or greater than the exercise price of the
put option. The Fund therefore foregoes the opportunity of investing
the segregated assets or writing calls against those assets. As long
as the obligation of the Fund as the put writer continues, it may be
assigned an exercise notice by the broker-dealer through whom such
option was sold, requiring the Fund to take delivery of the underlying
security against payment of the exercise price. The Fund has no
control over when it may be required to purchase the underlying
security, since it may be assigned an exercise notice at any time prior
to the termination of its obligation as the writer of the put. This
obligation terminates upon expiration of the put, or such earlier time
at which the Fund effects a closing purchase transaction by purchasing
a put of the same series as that previously sold. Once the Fund has
been assigned an exercise notice, it is thereafter not allowed to
effect a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize a
profit on an outstanding put option it has written or to prevent an
underlying security from being put. Furthermore, effecting such a
closing purchase transaction will permit the Fund to write another put
option to the extent that the exercise price thereof is secured by the
deposited assets, or to utilize the proceeds from the sale of such
assets for other investments by the Fund. The Fund will realize a
profit or loss from a closing purchase transaction if the cost of the
transaction is less or more than the premium received from writing the
option. As above for writing covered calls, any and all such profits
described herein from writing puts are considered short-term gains for
Federal tax purposes, and when distributed by the Fund, are taxable as
ordinary income.
- Purchasing Calls and Puts. The Fund may purchase calls on U.S.
Government Securities or on Interest Rate Futures, in order to protect
against the possibility that the Fund's portfolio will not fully
participate in an anticipated rise in value of the long-term debt
securities market. The value of U.S. Government Securities underlying
calls purchased by the Fund will not exceed the value of the portion of
the Fund's portfolio invested in cash or cash equivalents (i.e.
securities with maturities of less than one year). When the Fund
purchases a call (other than in a closing purchase transaction), it
pays a premium and, except as to calls on indices or Futures, has the
right to buy the underlying investment from a seller of a corresponding
call on the same investment during the call period at a fixed exercise
price. When the Fund purchases a call on a Future, it pays a premium,
but settlement is in cash rather than by delivery of the underlying
investment to the Fund. In purchasing a call, the Fund benefits only
if the call is sold at a profit or if, during the call period, the
market price of the underlying investment is above the sum of the
exercise price, transaction costs and the premium paid, and the call is
exercised. If the call is not exercised or sold (whether or not at a
profit), it will become worthless at its expiration date and the Fund
will lose its premium payment and the right to purchase the underlying
investment.
The Fund may purchase put options ("puts") which relate to U.S.
Government Securities (whether or not it holds such securities in its
portfolio) or Futures. When the Fund purchases a put, it pays a
premium and, except as to puts on indices, has the right to sell the
underlying investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying a
put on an investment the Fund owns enables the Fund to protect itself
during the put period against a decline in the value of the underlying
investment below the exercise price by selling such underlying
investment at the exercise price to a seller of a corresponding put.
If the market price of the underlying investment is equal to or above
the exercise price and as a result the put is not exercised or resold,
the put will become worthless at its expiration date, and the Fund will
lose its premium payment and the right to sell the underlying
investment. The put may, however, be sold prior to expiration (whether
or not at a profit).
Buying a put on Interest Rate Futures or U.S. Government Securities
permits the Fund either to resell the put or buy the underlying
investment and sell it at the exercise price. The resale price of the
put will vary inversely with the price of the underlying investment.
If the market price of the underlying investment is above the exercise
price and as a result the put is not exercised, the put will become
worthless on its expiration date. In the event of a decline in the
bond market, the Fund could exercise or sell the put at a profit to
attempt to offset some or all of its loss on its portfolio securities.
When the Fund purchases a put on Interest Rate Futures or U.S.
Government Securities not held by it, the put protects the Fund to the
extent that the prices of the underlying Future or U.S. Government
Security move in a similar pattern to the prices of the U.S. Government
Securities in the Fund's portfolio.
An option position may be closed out only on a market which provides
secondary trading for options of the same series and there is no
assurance that a liquid secondary market will exist for any particular
option. The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise by the Fund of puts on securities
will cause the sale of related investments, increasing portfolio
turnover. Although such exercise is within the Fund's control, holding
a put might cause the Fund to sell the related investments for reasons
which would not exist in the absence of the put. The Fund may pay a
brokerage commission each time it buys a put or call, sells a call, or
buys or sells an underlying investment in connection with the exercise
of a put or call. Such commissions may be higher than those which
would apply to direct purchases or sales of such underlying
investments. Premiums paid for options are small in relation to the
market value of the related investments, and consequently, put and call
options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being
more sensitive to changes in the value of the underlying investments.
- Interest Rate Futures. The Fund may buy and sell Interest Rate
Futures. No price is paid or received upon the purchase or sale of an
Interest Rate Future. An Interest Rate Future obligates the seller to
deliver and the purchaser to take a specific type of debt security at a
specific future date for a fixed price. That obligation may be
satisfied by actual delivery of the debt security or by entering into
an offsetting contract.
Upon entering into a Futures transaction, the Fund will be required
to deposit an initial margin payment in cash or U.S. Treasury bills
with the futures commission merchant (the "futures broker"). The
initial margin will be deposited with the Fund's Custodian in an
account registered in the futures broker's name; however the futures
broker can gain access to that account only under specified conditions.
As the Future is marked to market to reflect changes in its market
value, subsequent margin payments, called variation margin, will be
made to or by the futures broker on a daily basis.
At any time prior to expiration of the Future, the Fund may elect to
close out its position by taking an opposite position, at which time a
final determination of variation margin is made and additional cash is
required to be paid by or released to the Fund. Any gain or loss is
then realized. Although Interest Rate Futures by their terms call for
settlement by delivery or acquisition of debt securities, in most cases
the obligation is fulfilled by entering into an offsetting transaction.
All futures transactions are effected through a clearinghouse
associated with the exchange on which the contracts are traded.
- Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the
Fund under a swap agreement will have been greater than those received
by it. Credit risk arises from the possibility that the counterparty
will default. If the counterparty to an interest rate swap defaults,
the Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor
the creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund may engage in interest rate
swaps only with respect to securities it holds, and not in excess of
25% of its total assets.
The Fund will enter into swap transactions with appropriate
counterparties pursuant to master netting agreements. A master netting
agreement provides that all swaps done between the Fund and that
counterparty under that master agreement shall be regarded as parts of
an integral agreement. If on any date amounts are payable in the same
currency in respect of one or more swap transactions, the net amount
payable on that date in that currency shall be paid. In addition, the
master netting agreement may provide that if one party defaults
generally or on one swap, the counterparty may terminate the swaps with
that party. Under such agreements, if there is a default resulting in
a loss to one party, the measure of that party's damages is calculated
by reference to the average cost of a replacement swap with respect to
each swap (i.e., the mark-to-market value at the time of the
termination of each swap). The gains and losses on all swaps are then
netted, and the result is the counterparty's gain or loss on
termination. The termination of all swaps and the netting of gains and
losses on termination is generally referred to as "aggregation".
- Additional Information About Hedging Instruments and Their Use.
The Fund's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent, through the facilities
of the Options Clearing Corporation ("OCC"), as to the investments on
which the Fund has written options traded on exchanges or as to other
acceptable escrow securities, so that no margin will be required for
such transactions. OCC will release the securities covering a call on
the expiration of the calls or upon the Fund entering into a closing
purchase transaction. An option position may be closed out only on a
market which provides secondary trading for options of the same series,
and there is no assurance that a liquid secondary market will exist for
any particular option.
When the Fund writes an over-the-counter ("OTC") option, it will
enter into an arrangement with a primary U.S. Government securities
dealer, which would establish a formula price at which the Fund would
have the absolute right to repurchase that OTC option. That formula
price would generally be based on a multiple of the premium received
for the option, plus the amount by which the option is exercisable
below the market price of the underlying security (that is, the extent
to which the option "is in-the-money"). For any OTC option the Fund
writes, it will treat as illiquid (for purposes of the limit on its
assets that may be invested in illiquid securities, stated in the
Prospectus) the mark-to-market value of any OTC option held by it. The
Securities and Exchange Commission ("SEC") is evaluating whether OTC
options should be considered liquid securities, and the procedure
described above could be affected by the outcome of that evaluation.
- Regulatory Aspects of Hedging Instruments. The Fund is required
to operate within certain guidelines and restrictions with respect to
its use of futures and options thereon as established by the
Commodities Futures Trading Commission ("CFTC"). In particular, the
Fund is excluded from registration as a "commodity pool operator" if it
complies with the requirements of Rule 4.5 adopted by the CFTC. Under
these restrictions, the Fund will not, as to any positions, whether
long, short or a combination thereof, enter into Futures and options
thereon for which the aggregate initial margins and premiums exceed 5%
of the fair market value of its net assets, with certain exclusions as
defined in the CFTC Rule. Under the restrictions, the Fund also must,
as to its short positions, use Futures and options thereon solely for
bona fide hedging purposes within the meaning and intent of the
applicable provisions of the CEA.
Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in
one or more accounts or through one or more different exchanges or
through one or more brokers. Thus, the number of options which the
Fund may write or hold may be affected by options written or held by
other entities, including other investment companies having the same or
an affiliated investment adviser. Position limits also apply to
Futures. An exchange may order the liquidation of positions found to
be in violation of those limits and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the Fund
purchases a Future, the Fund will maintain, in a segregated account or
accounts with its Custodian, cash or readily-marketable, short-term
(maturing in one year or less) debt instruments in an amount equal to
the market value of the securities underlying such Future, less the
margin deposit applicable to it.
- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the
Internal Revenue Code. That qualification enables the Fund to "pass
through" its income and realized capital gains to shareholders without
the Fund having to pay tax on them. This avoids a "double tax" on that
income and capital gains, since shareholders will be taxed on the
dividends and capital gains they receive from the Fund. One of the
tests for the Fund's qualification is that less than 30% of its gross
income (irrespective of losses) must be derived from gains realized on
the sale of securities held for less than three months. To comply with
that 30% cap, the Fund will limit the extent to which it engages in the
following activities, but will not be precluded from them: (i) selling
investments, including Futures, held for less than three months,
whether or not they were purchased on the exercise of a call held by
the Fund; (ii) purchasing calls or puts which expire in less than three
months; (iii) effecting closing transactions with respect to calls or
puts written or purchased less than three months previously; (iv)
exercising puts or calls held by the Fund for less than three months;
or (v) writing calls on investments held for less than three months.
- Risks Of Hedging With Options and Futures. In addition to the
risks with respect to hedging discussed in the Prospectus and above,
there is a risk in using short hedging by selling Futures to attempt to
protect against decline in value of the Fund's portfolio securities
(due to an increase in interest rates) that the prices of such Futures
will correlate imperfectly with the behavior of the cash (i.e., market
value) prices of the Fund's securities. The ordinary spreads between
prices in the cash and futures markets are subject to distortions due
to differences in the natures of those markets. First, all
participants in the futures markets are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the
futures markets depends on participants entering into offsetting
transactions rather than making or taking delivery. To the extent
participants decide to make or take delivery, liquidity in the futures
markets could be reduced, thus producing distortion. Third, from the
point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the
futures markets may cause temporary price distortions.
If the Fund uses Hedging Instruments to establish a position in the
U.S. Government Securities markets as a temporary substitute for the
purchase of individual U.S. Government Securities (long hedging) by
buying Interest Rate Futures and/or calls on such Futures or on U.S.
Government Securities, it is possible that the market may decline; if
the Fund then concludes not to invest in such securities at that time
because of concerns as to possible further market decline or for other
reasons, the Fund will realize a loss on the Hedging Instruments that
is not offset by a reduction in the price of the U.S. Government
Securities purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth in
the Prospectus. There are additional investment restrictions that the
Fund must follow that are also fundamental policies. Fundamental
policies and the Fund's investment objective cannot be changed without
the vote of a "majority" of the Fund's outstanding voting securities.
Under the Investment Company Act, such a "majority" vote is defined as
the vote of the holders of the lesser of (1) 67% or more of the shares
present or represented by proxy at a shareholder meeting, if the
holders of more than 50% of the outstanding shares are present, or (2)
more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot:
(1) invest in interests in oil, gas, or other mineral exploration or
development programs;
(2) invest in real estate;
(3) purchase securities on margin or make short sales of securities;
however, the Fund may make margin deposits in connection with any of
the Hedging Instruments which it may use as permitted by any of its
other fundamental policies;
(4) underwrite securities of other companies; or
(5) invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition
of assets.
The Fund will not concentrate investments to the extent of 25% of
its assets in any industry; there is no limit on obligations issued by
the U.S. Government or its agencies or instrumentalities. For purposes
of that policy, the Fund has adopted the industry classifications set
forth in Appendix B to this Statement of Additional Information.
The percentage restrictions described above and in the Prospectus
are applicable only at the time of investment and require no action by
the Fund as a result of subsequent changes in value of the investments
or the size of the Fund.
How the Fund is Managed
Organization and History. The Fund was organized in 1982 as a
Massachusetts business trust. Effective August 16, 1985, the Fund
changed its investment objective and became a long-term government
securities fund.
As a Massachusetts business trust, the Fund is not required to hold,
and does not plan to hold, regular annual meetings of shareholders. The
Fund will hold meetings when required to do so by the Investment
Company Act or other applicable law, or when a shareholder meeting is
called by the Trustees or upon proper request of the shareholders.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of the Fund, to remove a Trustee.
The Trustees will call a meeting of shareholders to vote on the removal
of a Trustee upon the written request of the record holders of 10% of
its outstanding shares. In addition, if the Trustees receive a request
from at least 10 shareholders (who have been shareholders for at least
six months) holding shares of the Fund valued at $25,000 or more or
holding at least 1% of the Fund's outstanding shares, whichever is
less, stating that they wish to communicate with other shareholders to
request a meeting to remove a Trustee, the Trustees will then either
make the Fund's shareholder list available to the applicants or mail
their communication to all other shareholders at the applicants'
expense, or the Trustees may take such other action as set forth under
Section 16(c) of the Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and
provides for indemnification and reimbursement of expenses out of its
property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Fund and satisfy any
judgment thereon. Thus, while Massachusetts law permits a shareholder
of a business trust (such as the Fund) to be held personally liable as
a "partner" under certain circumstances, the risk of a Fund shareholder
incurring financial loss on account of shareholder liability is
limited to the relatively remote circumstances in which the Fund would
be unable to meet its obligations described above. Any person doing
business with the Trust, and any shareholder of the Trust, agrees under
the Trust's Declaration of Trust to look solely to the assets of the
Trust for satisfaction of any claim or demand which may arise out of
any dealings with the Trust, and the Trustees shall have no personal
liability to any such person, to the extent permitted by law.
Trustees And Officers of the Fund. The Fund's Trustees and officers
and their principal occupations and business affiliations during the
past five years are listed below. The address of each Trustee and
officer is Two World Trade Center, New York, New York 10048-0203,
unless another address is listed below. All of the Trustees are also
trustees of Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer Time
Fund, Oppenheimer Growth Fund, Oppenheimer Target Fund, Oppenheimer
Discovery Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer
Global Emerging Growth Fund, Oppenheimer Tax-Free Bond Fund,
Oppenheimer New York Tax-Exempt Fund, Oppenheimer California Tax-Exempt
Fund, Oppenheimer Multi-State Tax-Exempt Trust, Oppenheimer Asset
Allocation Fund, Oppenheimer Mortgage Income Fund, Oppenheimer Global
Growth & Income Fund, Oppenheimer Multi-Sector Income Trust and
Oppenheimer Multi-Government Trust (the "New York-based
OppenheimerFunds"). Messrs. Spiro, Bishop, Bowen, Donohue, Farrar and
Zack respectively hold the same offices with the other New York-based
OppenheimerFunds as with the Fund. As of May 1, 1995, the officers and
Trustees of the Fund as a group owned of record or beneficially less
than 1% of the outstanding shares of each class of the Fund. The
foregoing statement does not reflect ownership of shares held of record
by an employee benefit plan for employees of the Manager (for which
plan one of the officers listed below, Mr. Donohue, is a trustee),
other than the shares beneficially owned under that plan by the
officers of the Fund listed below.
Leon Levy, Chairman of the Board of Trustees; Age: 69
31 West 52nd Street, New York, New York 10019
General Partner of Odyssey Partners, L.P. (investment partnership) and
Chairman of Avatar Holdings, Inc. (real estate development).
Leo Cherne, Trustee; Age: 82
122 East 42nd Street, New York, New York 10168
Chairman Emeritus of the International Rescue Committee (philanthropic
organization); formerly Executive Director of The Research Institute of
America.
Robert G. Galli, Trustee*; Age: 61
Vice Chairman of the Manager and Vice President and Counsel of
Oppenheimer 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 advisory 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, Trustee; Age: 72
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; Director of Sussex Publications,
Inc. (publishers of Psychology Today and Mother Earth News); and
Director of Spy Magazine, L.P.
Elizabeth B. Moynihan, Trustee; Age: 65
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer Gallery of
Art (Smithsonian Institution), the Institute of Fine Arts (New York
University), and the National Building Museum; a member of the Trustees
Council, Preservation League of New York State; a member of the Indo-
U.S. Sub-Commission on Education and Culture.
Kenneth A. Randall, Trustee; Age: 67
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil and gas
producer), Enron-Dominion Cogen Corp. (cogeneration company), Kemper
Corporation (insurance and financial services company) 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, Trustee; Age: 64
40 Park Avenue, New York, New York 10016
President of Jerome Levy Economics Institute; a member of the U.S.
Competitiveness Policy Council; a director of GranCare, Inc.
(healthcare provider); formerly New York State Comptroller and trustee
of the New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee; Age: 63
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House,
Greenwich Hospital and the Greenwich Historical Society.
________________________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company
Act.
Sidney M. Robbins, Trustee; Age: 83
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions, Graduate
School of Business, Columbia University; Visiting Professor of Finance,
University of Hawaii; a director of The Korea Fund, Inc. and The
Malaysia Fund, Inc. (closed-end investment companies); a member of the
Board of Advisors, Olympus Private Placement Fund, L.P.; Professor
Emeritus of Finance, Adelphi University.
Donald W. Spiro, President and Trustee*; Age: 69
Chairman Emeritus and a director of the Manager; formerly Chairman of
the Manager and the Distributor.
Pauline Trigere, Trustee; Age: 82
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale
of women's fashions).
Clayton K. Yeutter, Trustee; Age: 64
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar, Inc.
(machinery), ConAgra, Inc. (food and agricultural products), Farmers
Insurance Company (insurance), FMC Corp. (chemicals and machinery),
Lindsay Manufacturing Co. (irrigation equipment), Texas Instruments,
Inc. (electronics) and The Vigoro Corporation (fertilizer
manufacturer); formerly (in descending chronological order) Counsellor
to the President (Bush) for Domestic Policy, Chairman of the Republican
National Committee, Secretary of the U.S. Department of Agriculture,
and U.S. Trade Representative.
William L. Wilby, Vice President and Portfolio Manager; Age: 51
Vice President of the Manager and HarbourView; an officer of other
OppenheimerFunds; formerly international investment strategist at
Brown Brothers, Harriman & Co., prior to which he was a Managing
Director and Portfolio Manager at AIG Global Investors.
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, prior to which he was a partner in Kraft & McManimon (a
law firm), an officer of First Investors Corporation (a broker-dealer)
and First Investors Management Company, Inc. (broker-dealer and
investment adviser), and a director and an officer of First Investors
Family of Funds and First Investors Life Insurance Company.
George C. Bowen, Treasurer; Age: 58
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the 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.
________________________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company
Act.
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
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for the
Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm; and previously an Accountant and Commissions
Supervisor for Stuart James Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age: 29
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for the
Manager, prior to which he was an International Mutual Fund Supervisor
for Brown Brothers Harriman & Co., a bank, and previously a Senior Fund
Accountant for State Street Bank & Trust Company.
- 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 who is
also an officer of the Fund) 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 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 OppenheimerFunds1
<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, Jr. $2,140 $1,380 $ 52,100.00
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 each Trustee's retirement benefits will
depend on the amount of the Trustee's future compensation and length of
service, the amount of those benefits cannot be determined at this
time, nor can it be estimated the number of years of credited service
that will be used to determine these benefits. No payments have been
made by the Fund under the plan as of June 30, 1994.
- Major Shareholders. As May 1, 1995, the only persons who owned
of record or was known by the Fund to own beneficially 5% or more of
the Fund's outstanding shares were (i) R. Duffield & CR Player, Jr.,
CoTr., Char. Ren. Unit Trust for lives of Donor Ruth McCormick
Tankersley & Tiffany Wolfe UA Dec 08 93, P.O. Box 401, Barnesville,
Maryland 20838-0401 who owned 53,418.803 Class C shares of the Fund
(representing approximately 6.55% of the Fund's Class C shares then
outstanding); (ii) R. Duffield & CR Player, Jr., CoTr., Char. Ren. Unit
Trust for lives of Donor Ruth McCormick Tankersley & Kristie Miller UA
Dec 08 93, P.O. Box 401 Barnesville, Maryland 20838-0401, who owned
53,418.803 Class C shares of the Fund (representing approximately 6.55%
of the Fund's Class C shares then outstanding); and (iii) Merrill Lynch
Pierce Fenner & Smith, Inc., 97C22, 4800 Deer Lake Drive East,
Jacksonville, Florida 32246-6484, who owned 44,151.000 Class C shares
of the Fund (representing approximately 5.42% of the Fund's Class C
shares then outstanding).
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and two of whom (Messrs. Galli and
Spiro) also serve as Trustees of the Fund.
The Manager and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of the Fund's portfolio transactions. Compliance with the Code of
Ethics is carefully monitored and strictly enforced by the Manager.
- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation
and filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the
Fund. Prior to the adoption of the current investment advisory
agreement, the Manager voluntarily reduced the management fee to the
current rates, described in the Prospectus.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributor's
Agreement are paid by the Fund. The advisory agreement lists examples
of expenses paid by the Fund, the major categories of which relate to
interest, taxes, brokerage commissions, fees to certain Trustees, legal
and audit expenses, custodian and transfer agent expenses, share
issuance costs, certain printing and registration costs and non-
recurring expenses, including litigation costs. For the Fund's fiscal
years ended June 30, 1992, 1993 and 1994, the management fees paid by
the Fund to the Manager were $2,735,353, $2,911,199 and $2,515,934,
respectively.
The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the
Manager has voluntarily undertaken that the total expenses of the Fund
in any fiscal year (including the management fee but excluding taxes,
interest, brokerage commissions, distribution assistance payments and
extraordinary expenses such as litigation costs) shall not exceed the
most stringent expense limitation imposed under state law applicable to
the Fund. Pursuant to the undertaking, the Manager's fee will be
reduced at the end of a month so that there will not be any accrued but
unpaid liability under this undertaking. Currently, the most stringent
state expense limitation is imposed by California, and limits the
Fund's expenses (with specified exclusions) to 2.5% of the first $30
million of average annual net assets, 2% of the next $70 million of
average annual net assets, and 1.5% of average annual net assets in
excess of $100 million. The Manager reserves the right to terminate or
amend the undertaking at any time. Any assumption of the Fund's
expenses under this limitation would lower the Fund's overall expense
ratio and increase its total return during any period in which expenses
are limited.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard for its obligations and duties under the
advisory agreement, the Manager is not liable for any loss resulting by
reason of any investment, or the purchase, sale or retention of any
security, or for any act or omission in performing the services
required by the Agreement. The advisory agreement permits the Manager
to act as investment adviser for any other person, firm or corporation
and to use the name "Oppenheimer" in connection with its other
investment activities. 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 corporate name may be withdrawn.
- The Distributor. Under its Distribution Agreement with the
Fund, the Distributor acts as the Fund's principal underwriter in the
continuous public offering of the Fund's Class A, Class B and Class C
shares but is not obligated to sell a specific number of shares.
Expenses normally attributable to sales (other than those paid under
the Distribution and Service Plans, but including advertising and the
cost of printing and mailing prospectuses, other than those furnished
to existing shareholders), are borne by the Distributor. During the
Fund's fiscal years ended June 30, 1992, 1993 and 1994, the aggregate
sales charges on sales of the Fund's Class A shares were $1,881,944,
$1,823,585 and $876,525, respectively, of which the Distributor and an
affiliated broker-dealer retained in the aggregate $660,099, $594,110
and $282,424 in those respective years. There were no contingent
deferred sales charges collected by the Distributor on the redemption
of Class B shares for the fiscal year ended June 30, 1994, because
Class B shares were not publicly offered during that fiscal year.
During the Fund's fiscal period from December 1, 1993 through June 30,
1994, the contingent deferred sales charge collected on Class C shares
was $3,250, all of which the Distributor retained. For additional
information about distribution of the Fund's shares and the expenses
connected with such activities, please refer to "Distribution and
Service Plans," below.
- The Transfer Agent. Oppenheimer Shareholder Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder
servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ such broker-dealers,
including "affiliated" brokers, as that term is defined in the
Investment Company Act, as may, in its best judgment based on all
relevant factors, implement the policy of the Fund to obtain, at
reasonable expense, the "best execution" (prompt and reliable execution
at the most favorable price obtainable) of such transactions. The
Manager need not seek competitive commission bidding but is expected to
minimize the commissions paid to the extent consistent with the
interest and policies of the Fund as established by its Board of
Trustees.
Under the advisory agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be
higher than another qualified broker would have charged if a good faith
determination is made by the Manager 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 Followed by the Manager. Most
purchases made by the Fund are principal transactions at net prices,
and the Fund incurs little or no brokerage costs. Subject to the
provisions of the advisory agreement, the procedures and rules
described above, allocations of brokerage are generally made by the
Manager's portfolio traders based upon recommendations from the
Manager's portfolio managers. In certain instances, portfolio managers
of may directly place trades and allocate brokerage, also subject to
the provisions of the advisory agreement and the procedures and rules
described above. In either case, brokerage is allocated under the
supervision of the Manager's executive officers. Transactions in
securities other than those for which an exchange is the primary market
are generally done with principals or market makers. Brokerage
commissions are paid primarily for effecting transactions in listed
securities and otherwise only if it appears likely that a better price
or execution can be obtained.
When the Fund engages in an option transaction, ordinarily the
same broker will be used for the purchase or sale of the option and any
transaction in the securities to which the option relates. When
possible, concurrent orders to purchase or sell the same security by
more than one of the accounts managed by the Manager and 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 broadens 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 of the Fund
(those Trustees of the Fund who are not "interested persons" as defined
in the Investment Company Act, and who have no direct or indirect
financial interest in the operation of the advisory agreement or the
Distribution Plans described below) annually reviews information
furnished by the Manager as to the commissions paid to brokers
furnishing such services so that the Board may ascertain whether the
amount of such commissions was reasonably related to the value or
benefit of such services.
Performance of the Fund
Yield and Total Return Information. From time to time the
"standardized yield," "dividend yield," "average annual total return,"
"cumulative total return," "average annual total return at net asset
value" and "total return at net asset value" of an investment in a
class of shares of the Fund may be advertised. An explanation of how
these yields and total returns are calculated for each class and the
components of those calculations is set forth below. No total return
and yield calculations are presented below for Class B shares because
no shares of that class were publicly offered during the fiscal year
ended June 30, 1994.
The Fund's advertisement of its performance must, under applicable
rules of the Securities and Exchange Commission, include the average
annual total returns for each class of shares of the Fund for the 1, 5,
and 10-year periods (or the life of the class, if less) as of the most
recently-ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its yields, total returns and
share prices are not guaranteed and normally will fluctuate on a daily
basis. When redeemed, an investor's shares may be worth more or less
than their original cost. Yields and total returns for any given past
period are not a prediction or representation by the Fund of future
yields or rates of return on its shares. The yields and total returns
of Class A, Class B and Class C shares of the Fund are affected by
portfolio quality, the type of investments the Fund holds and its
operating expenses allocated to a particular class.
- Standardized Yields
- Yield. The Fund's "yield" (referred to as "standardized
yield") for a given 30-day period for a class of shares is calculated
using the following formula set forth in rules adopted by the
Securities and Exchange Commission that apply to all funds that quote
yields:
a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of the class on the last
day of the period, using the current maximum sales charge
rate adjusted for undistributed net investment income.
The standardized yield of a class of shares for a 30-day period
may differ from its yield for any other period. The SEC formula
assumes that the standardized yield for a 30-day period occurs at a
constant rate for a six-month period and is annualized at the end of
the six-month period. This standardized yield is not based on actual
distributions paid by the Fund to shareholders in the 30-day period,
but is a hypothetical yield based upon the net investment income from
the Fund's portfolio investments calculated for that period. The
standardized yield may differ from the "dividend yield" of that class,
described below. Additionally, because each class of shares is subject
to different expenses, it is likely that the standardized yields of the
Fund's classes of shares will differ. For the 30-day period ended June
30, 1994, the standardized yields for the Fund's Class A and Class C
shares were 6.14% and 5.57%, respectively.
- Dividend Yield and Distribution Return. From time to time
the Fund may quote a "dividend yield" or a "distribution return" for
each class. Dividend yield is based on the Class A, Class B or Class C
share dividends derived from net investment income during a stated
period. Distribution return includes dividends derived from net
investment income and from realized capital gains declared during a
stated period. Under those calculations, the dividends and/or
distributions for that class declared during a stated period of one
year or less (for example, 30 days) are added together, and the sum is
divided by the maximum offering price per share of that class) on the
last day of the period. When the result is annualized for a period of
less than one year, the "dividend yield" is calculated as follows:
Dividend Yield of the Class =
Dividends of the Class
- ----------------------------------------------------
Max Offering Price of the Class (last day of period)
Divided by number of days (accrual period) x 365
The maximum offering price for Class A shares includes the current
maximum front-end sales charge. For Class B or Class C shares, the
maximum offering price is the net asset value per share, without
considering the effect of contingent deferred sales charges.
From time to time similar yield or distribution return
calculations may also be made using the Class A net asset value
(instead of its respective maximum offering price) at the end of the
period. The dividend yields on Class A shares for the 30-day period
ended June 30, 1994, were 7.13% and 7.48% when calculated at maximum
offering price and at net asset value, respectively. The dividend
yield on Class C shares for the 30-day period ended June 30, 1994, was
6.63% when calculated at net asset value.
- Total Return Information
- Average Annual Total Returns. The "average annual total
return" of each class is an average annual compounded rate of return
for each year in a specified number of years. It is the rate of return
based on the change in value of a hypothetical initial investment of
$1,000 ("P" in the formula below) held for a number of years ("n") to
achieve an Ending Redeemable Value ("ERV") of that investment according
to the following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical investment
of $1,000 over an entire period of years. Its calculation uses some of
the same factors as average annual total return, but it does not
average the rate of return on an annual basis. Cumulative total return
is determined as follows:
ERV - P
- ------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 4.75% (as a percentage of the offering price)
is deducted from the initial investment ("P") (unless the return is
shown at net asset value, as described below). For Class B shares, the
payment of the current contingent deferred sales charge (5.0% for the
first year, 4.0% for the second year, 3.0% for the third and fourth
years, 2.0% in the fifth year, 1.0% in the sixth year and none
thereafter) is applied to the investment result for the time period
shown (unless the total return is shown at net asset value, as
described below). For Class C shares, the 1.0% contingent deferred
sales charge is applied to the investment result for the one-year
period (or less). Total returns also assume that all dividends and
capital gains distributions during the period are reinvested to buy
additional shares at net asset value per share, and that the investment
is redeemed at the end of the period. The "average annual total
returns" on an investment in Class A shares of the Fund for the one and
five year periods ended June 30, 1994 and for the period from August
16, 1985 to June 30, 1994, were -5.87%, 6.31% and 7.64%, respectively.
The cumulative "total return" on Class A shares for the period from
August 16, 1985 to June 30, 1994 was 92.18%. During a portion of the
periods for which total returns are shown for Class A shares, the
Fund's maximum initial sales charge rate was higher; as a result,
performance returns on actual investments during those periods may be
lower than the results shown. The cumulative total return on Class C
shares for the period from December 1, 1993 (the commencement of the
offering of the shares) through June 30, 1994 was -4.09%.
- Total Returns at Net Asset Value. From time to time the Fund may
also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A, Class B or
Class C shares. Each is based on the difference in net asset value per
share at the beginning and the end of the period for a hypothetical
investment in that class of shares (without considering front-end or
contingent deferred sales charges) and takes into consideration the
reinvestment of dividends and capital gains distributions.
The cumulative total return at net asset value of the Fund's Class
A shares for the period from August 16, 1985 to June 30, 1994 was
101.76%. The average annual total returns at net asset value for the
one and five year periods ended June 30, 1994 and for the period from
August 16, 1985 to June 30, 1994, for Class A shares were -1.17%, 7.35%
and 8.23%, respectively.
Other Performance Comparisons. From time to time the Fund may publish
the ranking of its Class A, Class B or Class C shares by Lipper
Analytical Services, Inc. ("Lipper"), a widely-recognized independent
mutual fund monitoring service. Lipper monitors the performance of
regulated investment companies, including the Fund, and ranks their
performance for various periods based on categories relating to
investment objectives. The performance of the Fund's classes are
ranked against (i) all other funds (excluding money market funds), (ii)
all other U.S. Government funds and (iii) all other U.S. Government
funds in a specific size category. The Lipper performance rankings are
based on total returns that include the reinvestment of capital gains
distributions and income dividends but does not take sales charges or
taxes into consideration.
From time to time the Fund may publish the ranking of the
performance of its Class A, Class B or Class C shares by Morningstar,
Inc., an independent mutual fund monitoring service that ranks mutual
funds, including the Fund, monthly in broad investment categories
(equity, taxable bond, municipal bond and hybrid) based on risk-
adjusted investment return. Investment return measures a fund's three,
five and ten-year average annual total returns (when available) in
excess of 90-day U.S. Treasury bill returns after considering sales
charges and expenses. Risk reflects fund performance below 90-day U.S.
Treasury bill monthly returns. Risk and return are combined to produce
star rankings reflecting performance relative to the average fund in a
fund's category. Five stars is the "highest" ranking (top 10%), four
stars is "above average" (next 22.5%), three stars is "average" next
35%), two stars is "below average" (next 22.5%) and one star is
"lowest" (bottom 10%). Morningstar ranks the Fund's Class A, Class B
and Class C shares in relation to other U.S. Government funds.
Rankings are subject to change.
The total return on an investment made in Class A, Class B or
Class C shares of the Fund may also be compared with the performance
for the same period of the Lehman Brothers U.S. Government Bond Index,
an unmanaged index including all U.S. Treasury issues, publicly- issued
debt of U.S. Government agencies and quasi-public corporations and U.S.
Government-guaranteed corporate debt, and is widely regarded as a
measure of the performance of the U.S. Government bond market. The
foregoing bond index includes a factor for the reinvestment of interest
but does not reflect expenses or taxes. Other indices may be used from
time to time.
From time to time the Fund may also include in its advertisements
and sales literature performance information about the Fund or rankings
of the Fund's performance cited in newspapers or periodicals, such as
The New York Times which may include quotations of performance from
other sources, such as Lipper or Morningstar.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or the Transfer Agent), by independent third-
parties, on the investor services provided by them to shareholders of
the OppenheimerFunds, other than the performance rankings of the
OppenheimerFunds themselves. These ratings or rankings of
shareholder/investor services may compare the OppenheimerFunds services
to those of other mutual fund families selected by the rating or
ranking services, and may be based upon the opinions of the rating or
ranking service itself, using its own research or judgment, or based
upon surveys of investors, brokers, shareholders or others.
When comparing yield, total return and investment risk of an
investment in Class A, Class B or Class C shares of the Fund with other
investments, investors should understand that certain other investments
have different risk characteristics than an investment in shares of the
Fund. For example, certificates of deposit may have fixed rates of
return and may be insured as to principal and interest by the FDIC,
while the Fund's returns will fluctuate and its share values and
returns are not guaranteed. U.S. Treasury securities are guaranteed as
to principal and interest by the full faith and credit of the U.S.
government.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares of the
Fund under Rule 12b-1 of the Investment Company Act, pursuant to which
the Fund makes payments to the Distributor in connection with the
distribution and/or servicing of the shares of that class, as described
in the Prospectus. Each Plan has been approved by a vote of (i) the
Board of Trustees of the Fund, including a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting
on that Plan, and (ii) the holders of a "majority" (as defined in the
Investment Company Act) of the shares of each class.
In addition, under the Plans the Manager and the Distributor, in
their sole discretion, from time to time may use their own resources
(which, in the case of the Manager, may include profits from the
advisory fee it receives from the Fund) to make payments to brokers,
dealers or other financial institutions (each is referred to as a
"Recipient" under the Plans) for distribution and administrative
services they perform. The Distributor and the Manager may, in their
sole discretion, increase or decrease the amount of payments they make
to Recipients from their own resources.
Unless terminated as described below, each Plan continues in
effect from year to year but only as long as such continuance is
specifically approved at least annually by the Fund's Board of Trustees
and its Independent Trustees by a vote cast in person at a meeting
called for the purpose of voting on such continuance. Any Plan may be
terminated at any time by the vote of a majority of the Independent
Trustees or by the vote of the holders of a "majority" (as defined in
the Investment Company Act) of the outstanding shares of that class.
No Plan may be amended to increase materially the amount of payments to
be made unless such amendment is approved by shareholders of the class
affected by the amendment. In addition, because Class B shares of the
Fund automatically convert into Class A shares after six years, the
Fund is required to obtain the approval of Class B as well as Class A
shareholders for a proposed amendment to the Class A Plan that would
materially increase the amount to be paid by Class A shareholders under
the Class A Plan. Such approval must be by a "majority" of the Class A
and Class B shares (as defined in the Investment Company Act), voting
separately by class. All material amendments must be approved by the
Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at
least quarterly on the amount of all payments made pursuant to each
Plan, the purpose for which the payment was made and the identity of
each Recipient that received any such payment. Each Plan further
provides that while it is in effect, the selection and nomination of
those Trustees of the Fund who are not "interested persons" of the Fund
is committed to the discretion of the Independent Trustees. This does
not prevent the involvement of others in such selection and nomination
if the final decision on any such selection or nomination is approved
by a majority of the Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers, did not exceed a minimum
amount, if any, that may be determined from time to time by a majority
of the Fund's Independent Trustees. Initially, the Board of Trustees
has set the fee at the maximum rate and set no minimum amount.
Any unreimbursed expenses incurred by the Distributor with respect
to Class A shares for any fiscal year may not be recovered in
subsequent years. Payments received by the Distributor under the Class
A Plan will not be used to pay any interest expense, carrying charges,
or other financial costs, or allocation of overhead by the Distributor.
For the fiscal year ended June 30, 1994, payments under the Class
A Plan totalled $863,331, all of which was paid by the Distributor to
Recipients, including $56,187 paid to MML Investor Services, Inc., an
affiliate of the Distributor. Payments made under the Class C Plan
during that fiscal period totalled $12,509. No payments have been made
under the Class B Plan during that period, as no Class B shares were
outstanding.
The Class B and Class C Plans allow the service fee payments to be
paid by the Distributor to Recipients in advance for the first year
Class B and Class C shares are outstanding, and thereafter on a
quarterly basis, as described in the Prospectus. The advance payment
is based on the net asset value of shares sold. An exchange of shares
does not entitle the Recipient to an advance payment of the service
fee. In the event shares are redeemed during the first year such
shares are outstanding, the Recipient will be obligated to repay a pro
rata portion of the advance of the service fee payment to the
Distributor.
Although the Class B and the Class C Plans permit the Distributor
to retain both the asset-based sales charges and the service fee, or to
pay Recipients the service fee on a quarterly basis, without payment in
advance, the Distributor presently intends to pay the service fee to
Recipients in the manner described above. A minimum holding period may
be established from time to time under the Class B and the Class C Plan
by the Board. Initially, the Board has set no minimum holding period.
All payments under the Class B and the Class C Plan are subject to the
limitations imposed by the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. on payments of asset-based
sales charges and service fees.
Asset-based sales charge payments are designed to permit an
investor to purchase shares of the Fund without the assessment of a
front-end sales load and at the same time permit the Distributor to
compensate brokers and dealers in connection with the sale of Class B
and Class C shares of the Fund. The Class B and Class C Plans provide
for the Distributor to be compensated at a flat rate, whether the
Distributor's distribution expenses are more or less than the amounts
paid by the Fund during that period. Such payments are made in
recognition that the Distributor (i) pays sales commissions to
authorized brokers and dealers at the time of sale, as described in the
Prospectus, (ii) may finance such commissions and/or the advance of the
service fee payment to Recipients under those Plans, (iii) employs
personnel to support distribution of shares, and (iv) may bear the
costs of sales literature, advertising and prospectuses (other than
those furnished to current shareholders) and state "blue sky"
registration fees.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C Shares.
The availability of three classes of shares permits an investor to
choose the method of purchasing shares that is more beneficial to the
investor depending on the amount of the purchase, the length of time
the investor expects to hold shares and other relevant circumstances.
Investors should understand that the purpose and function of the
deferred sales charge and asset-based sales charge with respect to
Class B and Class C shares are the same as those of the initial sales
charge with respect to Class A shares. Any salesperson or other person
entitled to receive compensation for selling Fund shares may receive
different compensation with respect to one class of shares than the
other. The Distributor will not accept any order for $1 million or
more of Class C shares on behalf of a single investor (not including
dealer "street name" or omnibus accounts) because generally it will be
more advantageous for that investor to purchase Class A shares of the
Fund instead. For the same reason the Distributor will not accept any
order for $500,000 or more of Class B shares on behalf of a single
investor (not including dealer "street name" or omnibus accounts)
because generally it will be more advantageous for that investor to
purchase Class A shares of the Fund instead.
The three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to
Class B and Class C shares and the dividends payable on Class B and
Class C shares will be reduced by incremental expenses borne solely by
that class, including the asset-based sales charge to which Class B and
Class C shares are subject.
The conversion of Class B shares to Class A shares is subject to
the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or tax adviser, to
the effect that the conversion of Class B shares does not constitute a
taxable event for the holder under Federal income tax law. If such a
revenue ruling or opinion is no longer available, the automatic
conversion feature may be suspended, in which event no further
conversions of Class B shares would occur while such suspension
remained in effect. Although Class B shares could then be exchanged
for Class A shares on the basis of relative net asset value of the two
classes, without the imposition of a sales charge or fee, such exchange
could constitute a taxable event for the holder, and absent such
exchange, Class B shares might continue to be subject to the asset-
based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not pertain
specifically to any class are allocated pro rata to the shares of each
class, based on the percentage of the net assets of such class to the
Fund's total assets, and then equally to each outstanding share within
a given class. Such general expenses include (i) management fees, (ii)
legal, bookkeeping and audit fees, (iii) printing and mailing costs of
shareholder reports, Prospectuses, Statements of Additional Information
and other materials for current shareholders, (iv) fees to Independent
Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and brokerage
commissions, and (ix) non-recurring expenses, such as litigation costs.
Other expenses that are directly attributable to a class are allocated
equally to each outstanding share within that class. Such expenses
include (i) Distribution and/or Service Plan fees, (ii) incremental
transfer and shareholder servicing agent fees and expenses, (iii)
registration fees and (iv) shareholder meeting expenses, to the extent
that such expenses pertain to a specific class rather than to the Fund
as a whole.
Determination of Net Asset Values Per Share. The net asset values per
share of Class A, Class B and Class C shares of the Fund are determined
as of the close of business of The New York Stock Exchange on each day
the Exchange is open by dividing the value of the Fund's net assets
attributable to that class by the number of shares of that class
outstanding. The Exchange normally closes at 4:00 P.M., New York time,
but may close earlier on some days (for example, in case of weather
emergencies or on days falling before a holiday). The Exchange's most
recent annual holiday schedule (which is subject to change) states that
it will close New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
It may also close on other days. Trading may occur in U.S. Government
Securities at times when the Exchange is closed (including weekends and
holidays or after 4:00 P.M., on a regular business day). Because the
net asset values of the Fund will not be calculated at such times, if
securities held in the Fund's portfolio are traded at such times, the
net asset values per share of Class A, Class B and Class C shares of
the Fund may be significantly affected on such days when shareholders
do not have the ability to purchase or redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally, as follows: (i) equity
securities traded on a securities exchange or on NASDAQ for which last
sale information is regularly reported are valued at the last reported
sale price on their primary exchange or NASDAQ that day (or, in the
absence of sales that day, at values based on the last sales prices of
the preceding trading day or closing bid and asked prices); (ii)
securities traded on NASDAQ and other unlisted equity securities for
which last sales prices are not regularly reported but for which over-
the-counter market quotations are readily available are valued at the
highest closing bid price as of the time of valuation, or, if no
closing bid price is reported, on the basis of a closing bid price
obtained from a dealer who maintains an active market in that security;
(iii) securities (including restricted securities) not having readily-
available market quotations are valued at fair value under the Board's
procedures; (iv) debt securities having a maturity in excess of 60
days, are valued at the mean between the asked and bid prices
determined by a portfolio pricing service approved by the Fund's Board
of Trustees or obtained from active market makers in the security on
the basis of reasonable inquiry; and (v) short-term debt securities
having a remaining maturity of 60 days or less are valued at cost,
adjusted for amortization of premiums and accretion of discounts.
In the case of U.S. Government Securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include "matrix" comparisons to the prices
for comparable instruments on the basis of quality, yield, maturity and
other special factors involved. The Fund's Board of Trustees has
authorized the Manager to employ a pricing service to price U.S.
Government Securities for which last sale information is not generally
available. The Trustees will monitor the accuracy of such pricing
services by comparing prices used for portfolio evaluation to actual
sales prices of selected securities.
Puts, calls and Futures held by the Fund are valued at the last
sales prices on the principal exchanges on which they are traded or on
NASDAQ, as applicable, or, if there are no sales that day, in
accordance with (i) above. When the Fund writes an option, an amount
equal to the premium received by the Fund is included in the Fund's
Statement of Assets and Liabilities as an asset and an equivalent
deferred credit is included in the liability section. The deferred
credit is "marked-to-market" to reflect the current market value of the
option.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House transfer to buy the shares. Dividends will
begin to accrue on shares purchased by the proceeds of ACH transfers on
the business day the Fund receives Federal Funds for such purchase
through the ACH system before the close of The New York Stock Exchange.
The Exchange normally closes at 4:00 P.M., but may close earlier on
certain days. If the Federal Funds are received on a business day
after the close of the Exchange, dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are normally
received by the Fund three days after the transfers are initiated. The
Distributor and the Fund are not responsible for any delays in
purchasing shares resulting from delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of
Accumulation and Letters of Intent because of the economies of sales
efforts and reduction in expenses realized by the Distributor, dealers
and brokers making such sales. No sales charge is imposed in certain
other circumstances described in the Prospectus because the Distributor
or dealer or broker incurs little or no selling expenses. The term
"immediate family" refers to one's spouse, children, grandchildren,
parents, grandparents, parents-in-law, sons- and daughters-in-law,
siblings, and a sibling's spouse and a spouse's siblings.
- The OppenheimerFunds. The OppenheimerFunds are those mutual
funds for which the Distributor acts as the distributor or the sub-
distributor and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppnheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A shares
of each of the OppenheimerFunds except Money Market Funds (under
certain circumstances described herein, redemption proceeds of Money
Market Fund shares may be subject to a contingent deferred sales
charge).
- Letters of Intent. A Letter of Intent ("Letter") is the
investor's statement of intention to purchase Class A shares of the
Fund (and other eligible OppenheimerFunds) sold with a front-end sales
charge during the 13-month period from the investor's first purchase
pursuant to the Letter (the "Letter of Intent period"), which may, at
the investor's request, include purchases made up to 90 days prior to
the date of the Letter. The Letter states the investor's intention to
make the aggregate amount of purchases (excluding any purchases made by
reinvestments of dividends or distributions or purchases made at net
asset value without sales charge), which together with the investor's
holdings of such funds (calculated at their respective public offering
prices calculated on the date of the Letter) will equal or exceed the
amount specified in the Letter. This enables the investor to count the
shares to be purchased under the Letter of Intent to obtain the reduced
sales charge rate (as set forth in the Prospectus) applicable to
purchases of shares in that amount (the "intended purchase amount").
Each purchase of Class A shares under the Letter will be made at the
public offering price (including sales charge) applicable to a single
lump-sum purchase of shares intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within the
Letter of Intent period, when added to the value (at offering price) of
the investor's holdings of shares on the last day of that period, do
not equal or exceed the intended purchase amount, the investor agrees
to pay the additional amount of sales charge applicable to such
purchases, as set forth in "Terms of Escrow," below (as those terms may
be amended from time to time). The investor agrees that shares equal
in value to 5% of the intended purchase amount will be held in escrow
by the Transfer Agent subject to the Terms of Escrow. Also, the
investor agrees to be bound by the terms of the Prospectus, this
Statement of Additional Information and the Application used for such
Letter of Intent, and if such terms are amended, as they may be from
time to time by the Fund, that those amendments will apply
automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual total purchases.
If total eligible purchases during the Letter of Intent period
exceed the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to the
lower rate, but only if and when the dealer returns to the Distributor
the excess of the amount of commissions allowed or paid to the dealer
over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be
used to purchase additional shares for the investor's account at the
net asset value per share in effect on the date of such purchase,
promptly after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter
of Intent period will be deducted. It is the responsibility of the
dealer of record and/or the investor to advise the Distributor about
the Letter in placing any purchase orders for the investor during the
Letter of Intent period. All of such purchases must be made through
the Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in value
to 5% of the intended purchase amount specified in the Letter shall be
held in escrow by the Transfer Agent. For example, if the intended
purchase amount specified under the Letter is $50,000, the escrow shall
be shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited to
the investor's account.
2. If the total minimum investment specified under the Letter is
completed within the thirteen-month Letter of Intent period, the
escrowed shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period
the total purchases pursuant to the Letter are less than the intended
purchase amount specified in the Letter, the investor must remit to the
Distributor an amount equal to the difference between the dollar amount
of sales charges actually paid and the amount of sales charges which
would have been paid if the total amount purchased had been made at a
single time. Such sales charge adjustment will apply to any shares
redeemed prior to the completion of the Letter. If such difference in
sales charges is not paid within twenty days after a request from the
Distributor or the dealer, the Distributor will, within sixty days of
the expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released from
escrow. If a request is received to redeem escrowed shares prior to
the payment of such additional sales charge, the sales charge will be
withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes
and appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of the Letter) do not
include any shares sold without a front-end sales charge or without
being subject to a Class A contingent deferred sales charge unless (for
the purpose of determining completion of the obligation to purchase
shares under the Letter) the shares were acquired in exchange for
shares of one of the OppenheimerFunds whose shares were acquired by
payment of a sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is requested,
as described in the section of the Prospectus entitled "Exchange
Privilege," and the escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany
the application. Shares purchased by Asset Builder Plan payments from
bank accounts are subject to the redemption restrictions for recent
purchases described in "How To Sell Shares," in the Prospectus. Asset
Builder Plans also enable shareholders of Oppenheimer Cash Reserves to
use those accounts for monthly automatic purchases of shares of up to
four other OppenheimerFunds.
There is a front-end sales charge on the purchase of Class A shares
of certain OppenheimerFunds, or a contingent deferred sales charge may
apply to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned, and a
prospectus of the selected fund(s) should be obtained from the
Distributor or your financial advisor before initiating Asset Builder
payments. The amount of the Asset Builder investment may be changed or
the automatic investments may be terminated at any time by writing to
the Transfer Agent. A reasonable period (approximately 15 days) is
required after the Transfer Agent's receipt of such instructions to
implement them. The Fund reserves the right to amend, suspend, or
discontinue offering such plans at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for
the Fund's shares (for example, when a purchase check is returned to
the Fund unpaid) causes a loss to be incurred when the net asset value
of the Fund's shares on the cancellation date is less than on the
purchase date. That loss is equal to the amount of the decline in the
net asset value per share multiplied by the number of shares in the
purchase order. The investor is responsible for that loss. If the
investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by
redeeming shares from any account registered in that investor's name,
or the Fund or the Distributor may seek other redress.
Check Writing. When a check is presented to the Bank for clearance,
the Bank will ask the Fund to redeem a sufficient number of full and
fractional shares in the shareholder's account to cover the amount of
the check. This enables the shareholder to continue receiving
dividends on those shares until the check is presented to the Fund.
Checks may not be presented for payment at the offices of the Bank or
the Fund's Custodian. This limitation does not affect the use of
checks for the payment of bills or to obtain cash at other banks. The
Fund reserves the right to amend, suspend or discontinue offering
checkwriting privileges at any time without prior notice.
- Selling Shares by Wire. The wire of redemption proceeds may be
delayed if the Fund's custodian bank is not open for business on a day
when the Fund would normally authorize the wire to be made, which is
usually the Fund's next regular business day following the redemption.
In those circumstances, the wire will not be transmitted until the next
bank business day on which the Fund is open for business. No dividends
will be paid on the proceeds of redeemed shares awaiting transfer by
wire.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions
for redemptions set forth in the Prospectus.
- Payments "In Kind". The Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, the Board
of Trustees of the Fund determines that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make
payment of a redemption order wholly or partly in cash. In that case
the Fund may pay the redemption proceeds in whole or in part by a
distribution "in kind" of securities from the portfolio of the Fund, in
lieu of cash, in conformity with applicable rules of the Securities and
Exchange Commission. The Fund has elected to be governed by Rule 18f-1
under the Investment Company Act, pursuant to which the Fund is
obligated to redeem shares solely in cash up to the lesser of $250,000
or 1% of the net assets of the Fund during any 90-day period for any
one shareholder. If shares are redeemed in kind, the redeeming
shareholder might incur brokerage or other costs in selling the
securities for cash. The method of valuing securities used to make
redemptions in kind will be the same as the method the Fund uses to
value it portfolio securities described above under "Determination of
Net Asset Values Per Share" and that valuation will be made as of the
time the redemption price is determined.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of (i)
Class A shares, or (ii) Class B shares that were subject to the Class B
contingent deferred sales charge when redeemed, or (iii) Class C shares
that were subject to the Class C contingent deferred sales charge when
redeemed. The reinvestment may be made without sales charge only in
Class A shares of the Fund or any of the other OppenheimerFunds into
which shares of the Fund are exchangeable as described in "How to
Exchange Shares" below, at the net asset value next computed after the
Transfer Agent receives the reinvestment order. The shareholder must
ask the Distributor for that privilege at the time of reinvestment.
Any capital gain that was realized when the shares were redeemed is
taxable, and reinvestment will not alter any capital gains tax payable
on that gain. If there has been a capital loss on the redemption, some
or all of the loss may not be tax deductible, depending on the timing
and amount of the reinvestment. Under the Internal Revenue Code, if
the redemption proceeds of Fund shares on which a sales charge was paid
are reinvested in shares of the Fund or another of the OppenheimerFunds
within 90 days of payment of the sales charge, the shareholder's basis
in the shares of the Fund that were redeemed may not include the amount
of the sales charge paid. That would reduce the loss or increase the
gain recognized from the redemption. However, in that case the sales
charge would be added to the basis of the shares acquired by the
reinvestment of the redemption proceeds. The Fund may amend, suspend
or cease offering this reinvestment privilege at any time as to shares
redeemed after the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of either class at the time of
transfer to the name of another person or entity (whether the transfer
occurs by absolute assignment, gift or bequest, not involving, directly
or indirectly, a public sale). The transferred shares will remain
subject to the contingent deferred sales charge, calculated as if the
transferee shareholder had acquired the transferred shares in the same
manner and at the same time as the transferring shareholder. If less
than all shares held in an account are transferred, and some but not
all shares in the account would be subject to a contingent deferred
sales charge if redeemed at the time of transfer, the priorities
described in the Prospectus under "How to Buy Shares" for the
imposition of the Class B and Class C contingent deferred sales charge
will be followed in determining the order in which shares are
transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, or pension
or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its
address listed in "How To Sell Shares" in the Prospectus or on the back
cover of this Statement of Additional Information. The request must:
(i) state the reason for the distribution; (ii) state the owner's
awareness of tax penalties if the distribution is premature; and (iii)
conform to the requirements of the plan and the Fund's other redemption
requirements. Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans may not
directly request redemption of their accounts. The employer or plan
administrator must sign the request. Distributions from pension and
profit sharing plans are subject to special requirements under the
Internal Revenue Code and certain documents (available from the
Transfer Agent) must be completed before the distribution may be made.
Distributions from retirement plans are subject to withholding
requirements under the Internal Revenue Code, and IRS Form W-4P
(available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be
delayed. Unless the shareholder has provided the Transfer Agent with a
certified tax identification number, the Internal Revenue Code requires
that tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Fund, the Manager, the
Distributor, the Trustee and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for any
tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price per share will be
the net asset value next computed after the Distributor receives the
order placed by the dealer or broker, except that if the Distributor
receives a repurchase order after the close of The New York Stock
Exchange on a regular business day, it will be processed at that day's
net asset value if the order was received by the dealer or broker from
its customer prior to the time the Exchange closes (normally, that is
4:00 P.M., but may be earlier on some days) and the order was
transmitted to and received by the Distributor prior to its close of
business that day (normally 5:00 P.M.). Payment ordinarily will be
made within seven days after the Distributor's receipt of the required
documents, with signature(s) guaranteed as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of
the Fund valued at $5,000 or more can authorize the Transfer Agent to
redeem shares (minimum $50) automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Withdrawal Plan. Shares
will be redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are by
check, payable to all shareholders of record, and sent to the address
of record for the account (and if the address has not been changed
within the prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this
basis. Payments are normally made by check, but shareholders having
AccountLink privileges (see "How To Buy Shares") may arrange to have
Automatic Withdrawal Plan payments transferred to the bank account
designated on the OppenheimerFunds New Account Application or
signature-guaranteed instructions. The Fund cannot guarantee receipt
of a payment on the date requested and reserves the right to amend,
suspend or discontinue offering such plans at any time without prior
notice. Because of the sales charge assessed on Class A share
purchases, shareholders should not make regular additional Class A
share purchases while participating in an Automatic Withdrawal Plan.
Class B and Class C shareholders should not establish withdrawal plans
because of the imposition of the Class B and Class C contingent
deferred sales charge on such withdrawals (except where the Class B and
Class C contingent deferred sales charge is waived as described in the
Prospectus under "Class B Contingent Deferred Sales Charge" and "Class
C Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below and in the provisions of the OppenheimerFunds
Application relating to such Plans, as well as the Prospectus. These
provisions may be amended from time to time by the Fund and/or the
Distributor. When adopted, such amendments will automatically apply to
existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other OppenheimerFunds automatically
on a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to
the restrictions that apply to exchanges as set forth in "Exchange
Privilege" in the Prospectus and "How to Exchange Shares" below, in
this Statement of Additional Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and thereafter shares acquired with
reinvested dividends and capital gains distributions will be redeemed
next, followed by shares acquired with a sales charge, to the extent
necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made
under withdrawal plans should not be considered as a yield or income on
your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. The Transfer Agent shall incur no
liability to the Planholder for any action taken or omitted by the
Transfer Agent in good faith to administer the Plan. Certificates will
not be issued for shares of the Fund purchased for and held under the
Plan, but the Transfer Agent will credit all such shares to the account
of the Planholder on the records of the Fund. Any share certificates
held by a Planholder may be surrendered unendorsed to the Transfer
Agent with the Plan application so that the shares represented by the
certificate may be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be
done at net asset value without a sales charge. Dividends on shares
held in the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be
made at the net asset value per share determined on the redemption
date. Checks or AccountLink payments of the proceeds of Plan
withdrawals will normally be transmitted three business days prior to
the date selected for receipt of the payment (receipt of payment on the
date selected cannot be guaranteed), according to the choice specified
in writing by the Planholder.
The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written
notice (in proper form in accordance with the requirements of the then-
current Prospectus of the Fund) to redeem all, or any part of, the
shares held under the Plan. In that case, the Transfer Agent will
redeem the number of shares requested at the net asset value per share
in effect in accordance with the Fund's usual redemption procedures and
will mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing
to the Transfer Agent. A Plan may also be terminated at any time by
the Transfer Agent upon receiving directions to that effect from the
Fund. The Transfer Agent will also terminate a Plan upon receipt of
evidence satisfactory to it of the death or legal incapacity of the
Planholder. Upon termination of a Plan by the Transfer Agent or the
Fund, shares that have not been redeemed from the account will be held
in uncertificated form in the name of the Planholder, and the account
will continue as a dividend-reinvestment, uncertificated account unless
and until proper instructions are received from the Planholder or his
or her executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to stop
because of exhaustion of uncertificated shares needed to continue
payments. However, should such uncertificated shares become exhausted,
Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
OppenheimerFunds having more than one class of shares may be exchanged
only for shares of the same class of other OppenheimerFunds. Shares of
OppenheimerFunds that have a single class without a class designation
are deemed "Class A" shares for this purpose. All of the
OppenheimerFunds offer Class A shares (except for Oppenheimer Strategic
Diversified Income Fund), but only the following other OppenheimerFunds
offer Class B shares:
Oppenheimer Limited-Term Government Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Value Stock Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer High Yield Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are only available by
exchange)
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Global Fund
Oppenheimer Discovery Fund
The following other OppenheimerFunds offer Class C shares:
Oppenheimer Limited-Term Government Fund
Oppenheimer Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Target Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Cash Reserves (Class C shares are available only by
exchange)
Oppenheimer Strategic Diversified Income Fund
Class A shares of OppenheimerFunds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
OppenheimerFunds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of
OppenheimerFunds subject to a contingent deferred sales charge).
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the OppenheimerFunds or from any unit
investment trust for which reinvestment arrangements have been made
with the Distributor may be exchanged at net asset value for shares of
any of the OppenheimerFunds.
No contingent deferred sales charge is imposed on exchanges of
shares of either class purchased subject to a contingent deferred sales
charge. However, when Class A shares acquired by exchange of other
OppenheimerFunds purchased subject to a Class A contingent deferred
sales charge are redeemed within 18 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares, the
Class A contingent deferred sales charge is imposed on the redeemed
shares (see "Class A Contingent Deferred Sales Charge" in the
Prospectus). The Class B contingent deferred sales charge is imposed
on Class B shares redeemed within six years of the exchanged Class B
shares. The Class C contingent deferred sales charge is imposed on
Class C shares acquired by exchange if they are redeemed within 12
months of the initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an exchange,
the priorities described in "How To Buy Shares" in the Prospectus for
the imposition of the Class B and Class C contingent deferred sales
charge will be followed in determining the order in which the shares
are exchanged. Shareholders should take into account the effect of any
exchange on the applicability and rate of any contingent deferred sales
charge that might be imposed in the subsequent redemption of remaining
shares. Shareholders owning shares of more than one class must specify
whether they intend to exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts.
The Fund may accept requests for exchanges of up to 50 accounts per day
from representatives of authorized dealers that qualify for this
privilege. In connection with any exchange request, the number of
shares exchanged may be less than the number requested if the exchange
or the number requested would include shares subject to a restriction
cited in the Prospectus or this Statement of Additional Information or
shares covered by a share certificate that is not tendered with the
request. In those cases, only the shares available for exchange
without restriction will be exchanged.
When exchanging shares by telephone, the shareholder must either
have an existing account in, or acknowledge receipt of a prospectus of,
the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the
Transfer Agent is instructed otherwise. If all telephone lines are
busy (which might occur, for example, during periods of substantial
market fluctuations), shareholders might not be able to request
exchanges by telephone and would have to submit written exchange
requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange
request that may disadvantage it (for example, if the receipt of
multiple exchange requests from a dealer might require the disposition
of portfolio securities at a time or at a price that might be
disadvantageous to the Fund).
The different OppenheimerFunds available for exchange have different
investment objectives, policies and risks, and a shareholder should
assure that the Fund selected is appropriate for his or her investment
and should be aware of the tax consequences of an exchange. For
Federal tax purposes, an exchange transaction is treated as a
redemption of shares of one fund and a purchase of shares of another.
"Reinvestment Privilege," above, discusses some of the tax consequences
of reinvestment of redemption proceeds in such cases. The Fund, the
Distributor, and the Transfer Agent are unable to provide investment,
tax or legal advice to a shareholder in connection with an exchange
request or any other transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on shares held
of record at the time of the previous determination of net asset value,
or as otherwise described in "How to Buy Shares." Daily dividends on
newly purchased shares will not be declared or paid until such time as
Federal Funds (funds credited to a member bank's account at the Federal
Reserve Bank) are available from the purchase payment for such shares.
Normally, purchase checks received from investors are converted to
Federal Funds on the next business day. Dividends will be declared on
shares repurchased by a dealer or broker for four business days
following the trade date (i.e., to and including the day prior to
settlement of the repurchase). If all shares in an account are
redeemed, all dividends accrued on shares of the same class in the
account will be paid together with the redemption proceeds.
Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the
Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after the
return of such checks to the Transfer Agent, to enable the investor to
earn a return on otherwise idle funds.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C shares," above. Dividends are calculated in the
same manner, at the same time and on the same day for shares of each
class. However, dividends on Class B and Class C shares are expected
to be lower than dividends on Class A shares as a result of the asset-
based sales charges on Class B and Class C shares, and will also differ
in amount as a consequence of any difference in net asset value between
the classes.
Distributions may be made annually in December out of any net short-
term or long-term capital gains realized from the sale of securities,
premiums from expired calls written by the Fund and net profits from
Hedging Instruments and closing purchase transactions realized in the
twelve months ending on October 31 of the current year. Any difference
between the net asset value of Class A, Class B and Class C shares will
be reflected in such distributions. Distributions from net short-term
capital gains are taxable to shareholders as ordinary income and when
paid by the Fund are considered "dividends." The Fund may make a
supplemental distribution of capital gains and ordinary income
following the end of its fiscal year. Any long-term capital gains
distributions will be identified separately when paid and when tax
information is distributed by the Fund. If prior distributions must be
re-characterized at the end of the fiscal year as a result of the
effect of the Fund's investment policies, shareholders may have a non-
taxable return of capital, which will be identified in notices to
shareholders. There is no fixed dividend rate and there can be no
assurance as to the payment of any dividends or the realization of any
capital gains.
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes
on amounts paid by it as dividends and distributions. The Fund
qualified as a regulated investment company in its last fiscal year and
intends to qualify in future years, but reserves the right not to
qualify. The Internal Revenue Code contains a number of complex tests
to determine whether the Fund will qualify, and the Fund might not meet
those tests in a particular year. For example, if the Fund derives 30%
or more of its gross income from the sale of securities held less than
three months, it may fail to qualify (see "Tax Aspects of Covered Calls
and Hedging Instruments," above). If it does not qualify, the Fund will
be treated for tax purposes as an ordinary corporation and will receive
no tax deduction for payments of dividends and distributions made to
shareholders.
Under the Internal Revenue Code, by December 31 each year the Fund
must distribute 98% of its taxable investment income earned from
January 1 through December 31 of that year and 98% of its capital gains
realized in the period from November 1 of the prior year through
October 31 of the current year, or else the Fund must pay an excise tax
on the amounts not distributed. While it is presently anticipated that
the Fund will meet those requirements, the Fund's Board and the Manager
might determine in a particular year that it would be in the best
interest of shareholders for the Fund not to make such distributions at
the required levels and to pay the excise tax on the undistributed
amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may
elect to reinvest all dividends and/or capital gains distributions in
shares of the same class of any of the other OppenheimerFunds listed in
"Reduced Sales Charges" above, at net asset value without sales charge.
Class B and Class C shareholders should be aware that as of the date of
this Statement of Additional Information, not all of the
OppenheimerFunds offer Class B and Class C shares. The names of funds
that do as of the date of this document can be obtained by referring to
"How to Exchange Shares," above or by calling the Distributor at 1-800-
525-7048. To elect this option, the shareholder must notify the
Transfer Agent in writing, and either must have an existing account in
the fund selected for reinvestment or must obtain a prospectus for that
fund and an application from the Distributor to establish an account.
The investment will be made at net asset value per share in effect at
the close of business on the payable date of the dividend or
distribution. Dividends and/or distributions from certain of the
OppenheimerFunds may be invested in shares of this Fund on the same
basis.
Additional Information About the Fund
The Custodian. Citibank, N.A. is the Custodian of the Fund's assets.
The Custodian's responsibilities include safeguarding and controlling
the Fund's portfolio securities, collecting income on the portfolio
securities and handling the delivery of such securities to and from the
Fund. The Manager has represented to the Fund that its banking
relationships between the Manager and the Custodian have been and will
continue to be unrelated to and unaffected by the relationship between
the Fund and the Custodian. It will be the practice of the Fund to
deal with the Custodian in a manner uninfluenced by any banking
relationship the Custodian may have with the Manager and its
affiliates. The Fund's cash balances with the Custodian in excess of
$100,000 are not protected by Federal deposit insurance. Those
uninsured balances at times may be substantial.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for certain other funds advised by the
Manager and its affiliates.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Statement of Investments December 31, 1994 (Unaudited)
------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
==========================================================
==========================================================
===============
<S> <C> <C>
Mortgage-Backed Obligations--92.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Government Agency--92.9%
- -----------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/ Federal Home Loan Mortgage Corp., Collateralized Mtg.
Sponsored--50.9% Obligations, Gtd. Multiclass Mtg. Participation Certificates:
10%, 6/15/20 $ 5,511,000 $ 5,949,345
14%, 1/11/11 651,212 727,977
6.65%, 4/15/21 10,750,000 9,466,771
6.80%, 3/15/16 15,000,000 14,591,249
8.50%, 10/15/19 2,801,766 2,811,684
9%, 7/15/21 3,154,441 3,191,349
------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collaterized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
13%, 11/1/12 281,412 311,642
8%, 3/25/01--12/1/22 15,167,643 15,035,752
8.50%, 1/25/00 29,617,000 24,949,950
8.75%, 12/25/20 22,500,000 22,801,147
9%, 7/1/21 1,845,984 1,866,457
------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates:
10.50%, 11/25/20 10,000,000 11,034,599
8%, 7/25/19 18,000,000 17,481,778
------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security, Trust 218, CI. 2, 7.50%, 4/25/23(2) 19,173,448 7,184,052
------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security, Trust 240, Cl.2, 7%, 9/25/23(2) 38,355,636 14,305,455
------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security, Trust 252, Cl. 2, 7.50%, 11/30/23(2) 11,383,932
4,338,345
------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only Stripped
Mtg.-Backed Security, Trust 253, Cl. G, 0%, 11/25/23(1) 1,000,028 421,340
------------
156,468,892
- -----------------------------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed--42.0% Government National Mortgage Assn.:
10%, 6/15/16--8/18/17 2,911,513 3,082,300
10.50%, 2/15/13--8/15/19 12,351,693 13,205,169
11%, 7/20/20 222,743 239,387
7.50%, 3/1/25(3) 25,000,000 24,960,938
8%, 4/15/22--9/15/24 48,416,361 46,421,678
8.50%, 12/1/24--12/15/24 41,650,000 40,947,157
------------
128,856,629
------------
Total Mortgage-Backed Obligations (Cost $286,446,651) 285,325,521
==========================================================
==========================================================
===============
U.S. Government Obligations--14.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Treasury--14.6% U.S. Treasury Bonds, 8.75%, 8/15/00(4) (Cost $44,838,594) 43,000,000
44,800,625
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $331,285,245) 107.5% 330,126,146
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (7.5) (23,122,477)
----- ------------
Net Assets 100.0% $307,003,669
=====
</TABLE>
1. Principal-Only Strips represent the right to receive the monthly
principal payments on an underlying pool of mortgage loans. The value
of these securities generally increases as interest rates decline and
prepayment rates rise. The price of these securities is typically more
volatile than that of coupon-bearing bonds of the same maturity.
2. Interest-Only Strips represent the right to receive the monthly
interest payment on an underlying pool of mortgage loans. These
securities typically decline in price as interest rates decline. Most
other fixed-income securities increase in price when interest rates
decline. The principal amount of the underlying pool represents the
notional amount on which current interest is calculated.
The price of these securities is typically more sensitive to changes in
prepayment rates than traditional mortgage-backed securities (for
example, GNMA pass-throughs).
3. When-issued security to be delivered and settled after December 31,
1994.
4. Securities with an aggregate market value of $36,465,625 are held in
escrow to cover initial margin requirements on open interest rate
futures sales contracts, as follows:
Type of Contract Number of Contracts Face Amount
- -------------------------------------------------------------
U.S. Treasury Nts., 3/95 350 $35,000,000
The market value of the open contracts was $35,032,813 at December 31,
1994, with a net unrealized gain of $10,938.
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1994 (Unaudited)
------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
<S> <C> <C>
Assets Investments, at value (cost $331,285,245)--see accompanying statement
$330,126,146
------------------------------------------------------------------------------------------------
Cash 137,179
------------------------------------------------------------------------------------------------
Unrealized appreciation on futures contracts--Note 6 10,938
------------------------------------------------------------------------------------------------
Receivables:
Investments sold 24,532,185
Interest and principal paydowns 3,841,574
Shares of beneficial interest sold 540,561
------------------------------------------------------------------------------------------------
Other 85,511
------------
Total assets 359,274,094
==========================================================
==========================================================
===============
Liabilities Payables and other liabilities:
Investments purchased 49,297,813
Shares of beneficial interest redeemed 2,161,906
Distribution and service plan fees--Note 4 182,191
Other 628,515
------------
Total liabilities 52,270,425
==========================================================
==========================================================
===============
Net Assets $307,003,669
============
==========================================================
==========================================================
===============
Composition of Paid-in capital $333,284,570
Net Assets ------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income 136,356
------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) from investment transactions (25,269,096)
------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments--Note 3 (1,148,161)
------------
Net assets $307,003,669
============
==========================================================
==========================================================
===============
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets
of $300,992,755 and 33,339,540 shares of beneficial interest outstanding) $9.03
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $9.48
------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $6,010,914 and 666,567 shares of beneficial interest outstanding) $9.02
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended December 31, 1994 (Unaudited)
------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
<S> <C> <C>
Investment Income Interest $13,056,094
==========================================================
==========================================================
===============
Expenses Management fees--Note 4 987,787
------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 366,495
Class C--Note 4 24,315
------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 150,730
------------------------------------------------------------------------------------------------
Shareholder reports 75,898
------------------------------------------------------------------------------------------------
Custodian fees and expenses 34,040
------------------------------------------------------------------------------------------------
Legal and auditing fees 16,544
------------------------------------------------------------------------------------------------
Trustees' fees and expenses 14,971
------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 1,587
Class C 593
------------------------------------------------------------------------------------------------
Other 17,816
------------
Total expenses 1,690,776
==========================================================
==========================================================
===============
Net Investment Income (Loss) 11,365,318
==========================================================
==========================================================
===============
Realized and Unrealized Net realized gain (loss) on:
Gain (Loss) on Investments Investments (3,962,064)
Closing of futures contracts (9,811)
------------
Net realized gain (loss) (3,971,875)
------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (2,105,988)
------------
Net realized and unrealized gain (loss) on investments (6,077,863)
==========================================================
==========================================================
===============
Net Increase (Decrease) in Net Assets Resulting From Operations $ 5,287,455
============
See accompanying Notes to Financial Statements.
</TABLE>
8 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
------------------------------------------------------------------------------------------------
Six Months Ended
December 31, 1994 Year Ended
(Unaudited) June 30, 1994
==========================================================
==========================================================
===============
<S> <C> <C>
Operations Net investment income (loss) $ 11,365,318 $ 23,618,222
------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (3,971,875) (11,210,170)
------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation
on investments (2,105,988) (15,469,786)
------------ ------------
Net increase (decrease) in net assets resulting from operations 5,287,455 (3,061,734)
==========================================================
==========================================================
===============
Dividends and Distributions Dividends from net investment income:
To Shareholders Class A ($.337 and $.634 per share, respectively) (11,212,167)
(21,966,741)
Class C ($.299 and $.329 per share, respectively) (166,064) (76,280)
Dividends in excess of net investment income:
Class A ($.012 per share) -- (418,629)
------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A ($.034 per share) -- (1,145,537)
==========================================================
==========================================================
===============
Beneficial Interest Net increase (decrease) in net assets resulting from Class A
Transactions beneficial interest transactions--Note 2 (3,035,592) (44,398,318)
------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from Class C
beneficial interest transactions--Note 2 1,842,592 4,438,932
==========================================================
==========================================================
===============
Net Assets Total increase (decrease) (7,283,776) (66,628,307)
------------------------------------------------------------------------------------------------
Beginning of period 314,287,445 380,915,752
------------ ------------
End of period (including undistributed net investment
income of $136,356 and $149,269, respectively) $307,003,669 $314,287,445
============
============
See accompanying Notes to Financial Statements.
</TABLE>
9 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Financial Highlights
------------------------------------------------------------------------------------------------
Class A Class C
-------------------------------------------------------------------------- ------------------------
Six Months Six Months Period
Ended Ended Ended
Dec. 31, 1994 Year Ended June 30, Dec. 31, 1994 June 30
(Unaudited) 1994 1993 1992 1991 1990 (Unaudited) 1994(1)
==========================================================
==========================================================
===============
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value,
beginning of period $ 9.20 $ 9.95 $ 9.73 $ 9.25 $ 9.24 $ 9.54 $ 9.19 $ 9.83
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .34 .67 .68 .69 .83 .90 .30 .33
Net realized and unrealized
gain (loss) on investments
and options written (.17) (.74) .22 .48 .02 (.32) (.17) (.64)
-------- -------- -------- -------- -------- -------- -------- --------
Total income from investment
operations .17 (.07) .90 1.17 .85 .58 .13 (.31)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net investment
income (.34) (.64) (.68) (.69) (.84) (.88) (.30) (.33)
Dividends in excess of net
investment income -- (.01) -- -- -- -- -- --
Distributions from net
realized gain on investments
and options written -- -- -- -- -- -- -- --
Tax return of capital
distributions -- (.03) -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Total dividends and
distributions to shareholders (.34) (.68) (.68) (.69) (.84) (.88) (.30) (.33)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.03 $ 9.20 $ 9.95 $ 9.73 $ 9.25 $ 9.24 $ 9.02 $ 9.19
======== ======== ======== ========
======== ======== ======== ========
==========================================================
==========================================================
===============
Total Return, at Net
Asset Value(2) 1.82% (1.17)% 9.55% 13.05% 9.53% 6.34% 1.41%
(3.12)%
==========================================================
==========================================================
===============
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $300,993 $310,027 $380,916 $395,863 $342,220 $264,728 $ 6,011 $
4,261
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $304,675 $355,698 $401,789 $376,532 $299,144 $253,085 $5,185
$2,173
- -----------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 33,340 33,685 38,279 40,697 36,987 28,650 667 464
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.40%(3) 6.61% 6.90% 7.23% 8.93% 9.60% 6.66%(3)
5.97%(3)
Expenses 1.08%(3) 1.14% 1.17% 1.17% 1.19% 1.16% 1.80%(3)
1.96%(3)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 98.2% 139.5% 96.8% 207.8% 133.9% 125.5% 98.2%
139.5%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to June
30, 1994.
2. Assumes a hypothetical initial investment on the business day before
the first day of the fisscal period, with all dividends and
distributions reinvested in additional shares on the investment date,
and redemption at the net asset value calculated on the last business
day of the fiscal period. Sales charges are not reflected in the total
returns.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a
period, divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are
excluded from the calculation. Purchases and sales of investment
securities (excluding short-term securities) for the six months ended
December 31, 1994 were $322,707,560 and $410,118,313, respectively.
See accompanying Notes to Financial Statements.
Notes to Financial Statements (Unaudited)
1. Significant Accounting Policies
Oppenheimer U.S. Government Trust (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment advisor is
Oppenheimer Management Corporation (the Manager). The Fund offers both
Class A and Class C shares. Class A shares are sold with a front-end
sales charge. Class C shares may be subject to a contingent deferred
sales charge. Both classes of shares have identical rights to earnings,
assets and voting privileges, except that each class has its own
distribution and/or service plan, expenses directly attributable to a
particular class and exclusive voting rights with respect to matters
affecting a single class.The following is a summary of significant
accounting policies consistently followed by the Fund.
Investment Valuation. Portfolio securities are valued at 4:00 p.m. (New
York time) on each trading day. Long-term debt securities are valued by
a portfolio pricing service approved by the Board of Trustees.
Long-term debt securities which cannot be valued by the approved
portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect current market value, or under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term debt securities having a
remaining maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization to maturity of any
premium or discount. Options are valued based upon the last sale price
on the principal exchange on which the option is traded or, in the
absence of any transactions that day, the value is based upon the last
sale on the prior trading date if it is within the spread between the
closing bid and asked prices. If the last sale price is outside the
spread, the closing bid or asked price closest to the last reported
sale price is used.
Repurchase Agreements. The Fund requires the custodian to take
possession, to have legally segregated in the Federal Reserve Book
Entry System or to have segregated within the custodian's vault, all
securities held as collateral for repurchase agreements. The market
value of the underlying securities is required to be at least 102% of
the resale price at the time of purchase. If the seller of the
agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
Allocation of Income, Expenses and Gains and Losses. Income, expenses
(other than those attributable to a specific class) and gains and
losses are allocated daily to each class of shares based upon the
relative proportion of net assets represented by such class. Operating
expenses directly attributable to a specific class are charged against
the operations of that class.
Federal Income Taxes. The Fund intends to continue to comply with
provisions of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income,
including any net realized gain on investments not offset by loss
carryovers, to shareholders. Therefore, no federal income tax provision
is required. At December 31, 1994, the Fund had available for federal
income tax purposes an unused capital loss carryover of aproximately
$11,875,000, $3,330,000 of which will expire in 1998, $7,358,000 in
1999 and $1,187,000 in 2000.
Trustees' Fees and Expenses. The Fund has adopted a nonfunded
retirement plan for the Fund's independent trustees. Benefits are based
on years of service and fees paid to each trustee during the years of
service. The accumulated liability for the Fund's projected benefit of
obligations was $109,656 at December 31, 1994. No payments have been
made under the plan.
Distributions to Shareholders. The Fund intends to declare dividends
separately for Class A and Class C shares from net investment income
each day the New York Stock Exchange is open for business and pay such
dividends monthly. Distributions from net realized gains on
investments, if any, will be declared at least once each year.
Change in Accounting Classification of Distributions to Shareholders.
Net investment income (loss) and net realized gain (loss) may differ
for financial statement and tax purposes primarily because of paydown
gains and losses. The character of the distributions made during the
year from net investment income or net realized gains may differ from
their ultimate characterization for federal income tax purposes. Also,
due to timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the income or
realized gain (loss) was recorded by the Fund. Effective July 1, 1993,
the Fund adopted Statement of Position 93-2: Determination, Disclosure,
and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. As a result,
the Fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts have been reclassified to reflect an increase in
accumulated net realized gain on investments of $1,754,888, a decrease
in undistributed net investment income of $438,124 and a decrease in
paid-in capital of $1,316,764.
Investment transactions are accounted for on the date the investments
are purchased or sold (trade date). Discount on securities purchased is
amortized over the average life of the respective securities. Realized
gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the
same basis used for federal income tax purposes.
2. Shares of Benefical Intaeraest. The Fund has authorized an unlimited
number of no par value shares of beneficial interest of each class.
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1994 Year Ended June 30, 1994(1)
-------------------------------- -------------------------------
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 3,670,698 $ 33,542,501 6,237,904 $ 60,979,282
Dividends reinvested 779,523 7,141,369 1,913,674 18,566,281
Redeemed (4,795,183) (43,719,462) (12,746,027) (123,943,881)
------------- ------------- ------------- -------------
Net increase (decrease) (344,962) $ (3,035,592) (4,594,449) $ (44,398,318)
============= =============
============= =============
------------------------------------------------------------------------------------------------
Class C:
Sold 305,060 $ 2,771,843 531,550 $ 5,070,299
Dividends reinvested 11,270 102,986 5,284 49,363
Redeemed (113,275) (1,032,237) (73,322) (680,730)
------------- ------------- ------------- -------------
Net increase 203,055 $ 1,842,592 463,512 $ 4,438,932
============= =============
============= =============
</TABALE>
1. For the year ended June 30, 1994 for Class A shares and for the
period from December 1, 1993 to June 30, 1994 for Class C shares.
3. Unrealized Gains and
Losses on Investments
At December 31, 1994, net unrealized depreciation on investments of
$1,148,161 was composed of gross appreciation of $3,032,950, and gross
depreciation of $4,181,111.
4. Management Fees and Other Transactions With Affiliates
Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for an
annual fee of .75% of the first $200 million of net assets, .70% of the
next $200 million, .65% of the next $400 million and .60% of net assets
in excess of $800 million. The Manager voluntarily reduced the
management fees to provide for an annual fee of .65% of the first $200
million of net assets, .60% of the next $200 million, .55% of the next
$400 million and .50% of net assets in excess of $800 million.
Effective January 3, 1995 the Manager will voluntarily reduce the
management fees to provide for an annual fee of .65% of the first $200
million of net assets of the Fund, .60% of the next $100 million, .57%
of the next $100 million, .55% of the next $400 million and .50% of
net assets in excess of $800 million. The Manager has agreed to
reimburse the Fund if aggregate expenses (with specified exceptions)
exceed the most stringent applicable regulatory limit on Fund expenses.
For the six months ended December 31, 1994, commissions (sales charges
paid by investors) on sales of Class A shares totaled $268,060, of
which $76,878 was retained by Oppenheimer Funds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general distributor, and by an
affiliated broker/dealer. During the six months ended December 31,
1994, OFDI received contingent deferred sales charges of $5,068 upon
redemption of Class C shares.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is
the transfer and shareholder servicing agent for the Fund, and for
other registered investment companies. OSS's total costs of providing
such services are allocated ratably to these companies.
Under separate approved plans, each class may expend up to 25% of its
net assets annually to reimburse OFDI for costs incurred in connection
with the personal service and maintenance of accounts that hold shares
of the Fund, including amounts paid to brokers, dealers, banks and
other financial institutions.
In addition, Class C shares are subject to an asset-based sales charge
of .75% of net assets annually, to reimburse OFDI for sales commissions
paid from its own resources at the time of sale and associated
financing costs. In the event of termination or discontinuance of the
Class C plan, the Board of Trustees may allow the Fund to continue
payment of the asset-based sales charge to OFDI for distribution
expenses incurred on Class C shares sold prior to termination or
discontinuance of the plan. During the six months ended December 31,
1994, OFDI paid $26,595 to an affiliated broker/dealer as reimbursement
for Class A personal service and maintenance expenses and retained
$26,001 as reimbursement for Class C sales commissions and service fee
advances, as well as financing costs.
5. Option Activity
The Fund may buy and sell put and call options, or write covered call
options on portfolio securities in order to produce incremental
earnings or protect against changes in the value of portfolio
securities.
The Fund generally purchases put options or writes covered call options
to hedge against adverse movements in the value of portfolio holdings.
When an option is written, the Fund receives a premium and becomes
obligated to sell or purchase the underlying security at a fixed price,
upon exercise of the option. The Fund segregates assets to cover its
obligations under option contracts. Options are valued daily based upon
the last sale price on the principal exchange on which the option is
traded and unrealized appreciation or depreciation is recorded. The
Fund will realize a gain or loss upon the expiration or closing of the
option transaction. When an option is exercised, the proceeds on sales
for a written call option, the purchase cost for a written put option,
or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
In this report, securities segregated to cover outstanding call options
are noted in the Statement of Investments. Shares subject to call,
expiration date, exercise price, premium received and market value are
detailed in a footnote to the Statement of Investments. Options written
are reported as a liability in the Statement of Assets and Liabilities.
Gains and losses are reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases
and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market price of the security decreases
and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund
also has the additional risk of not being able to enter into a closing
transaction if a liquid secondary market does not exist. Option
activity for the six months ended December 31, 1994 was as follows:
</TABLE>
<TABLE>
<CAPTION>
Call Options Put Options
---------------------------------------------------
Number Amount of Number Amount of
of Options Premiums of Options Premiums
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at June 30, 1994 30,000 $290,625 80,000 $248,438
------------------------------------------------------------------------------------------------
Options written -- -- -- --
------------------------------------------------------------------------------------------------
Options expired prior to exercise -- -- -- --
------------------------------------------------------------------------------------------------
Options closed 30,000 290,625 80,000 248,438
-------- -------- -------- --------
Options outstanding at December 31, 1994 -- $ -- -- $ --
======== ======== ========
========
</TABLE>
Notes to Financial Statements (Unaudited) (Continued)
6. Futures Contracts
The Fund may buy and sell interest rate futures contracts in order to
gain exposure to or protect against changes in interest rates. The Fund
may also buy or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases
in interest rates and the resulting negative effect on the value of
fixed rate portfolio securities. The Fund may also purchase futures
contracts to gain exposure to changes in interest rates as it may be
more efficient or cost-effective than actually buying fixed income
securities. The Fund will segregate assets to cover its commitments
under futures contracts.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities in an amount (initial margin) equal to a
certain percentage of the contract value.Subsequent payments (variation
margin) are made or received by the Fund each day. The variation margin
payments are equal to the daily changes in the contract value and are
recorded as unrealized gains and losses. The Fund recognizes a realized
gain or loss when the contract is closed or expires.
In this report, the number of open futures contracts, face amount,
market value and unrealized gain or loss are reported in a footnote to
the Statement of Investments. In addition, securities segregated to
cover initial margin requirements on open futures contracts are noted
in the Statement of Investments. Gains and losses (unrealized
appreciation or depreciation on futures contracts) are reported in the
Statement of Assets and Liabilities.
Risks of entering into futures contracts (and related options) include
the possibility that there may be an illiquid market and that a change
in the value of the contract or option may not correlate with changes
in the value of the underlying securities.
At December 31, 1994, the Fund had outstanding futures contracts to
sell debt securities as follows:
<TABLE>
<CAPTION>
Expiration Number of Valuation as of Unrealized
Date Futures Contracts December 31, 1994 Appreciation
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Nts. 3/95 350 $35,032,813 $10,938
</TABLE>
Independent Auditors' Report
The Board of Trustees and Shareholders of Oppenheimer U.S. Government
Trust:
We have audited the accompanying statements of investments and assets
and liabilities of Oppenheimer U.S. Government Trust as of June 30,
1994, and the related statement of operations for the year then ended,
the statements of changes in net assets for each of the years in the
two-year period then ended and the financial highlights for each of the
years in the ten-year period then ended.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements and financial
highlights. Our procedures included confirmation of securities owned as
of June 30, 1994, by correspondence with the custodian and brokers; and
where confirmations were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material respects,
the financial position of Oppenheimer U.S. Government Trust as of June
30, 1994, the results of its operations for the year then ended, the
changes in its net assets for each of the years in the two-year period
then ended, and the financial highlights for each of the years in the
ten-year period then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
July 22, 1994
<PAGE>
Statement of Investments June 30, 1994
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements--1.0%
Repurchase agreement with First Chicago Capital Markets, 4.22%, dated 6/30/94,
to be repurchased at $3,300,387 on 7/1/94, collateralized by U.S. Treasury Nts.,
5.125%, 11/30/98, with a value of $3,368,643 (Cost $3,300,000) $3,300,000 $3,300,000
Long-Term U.S. Government Obligations--97.8%
Agency: Full Faith and
Credit--33.2%
Government National Mortgage Assn.:
10.50%, 2/15/13 9,046 9,891
10.50%, 6/15/13 102,908 112,521
10.50%, 7/15/13 80,309 87,811
10.50%, 8/15/13 554,934 606,771
10.50%, 8/15/15 89,296 97,654
10.50%, 9/15/15 92,884 101,580
10.50%, 10/15/15 27,315 29,872
10.50%, 11/15/15 48,711 53,272
10.50%, 12/15/15 35,629 38,965
10.50%, 1/15/16 278,625 304,748
10.50%, 2/15/16 1,693,843 1,852,626
10.50%, 3/15/16 281,765 308,178
10.50%, 4/15/16 44,168 48,309
10.50%, 5/15/16 44,899 49,108
10%, 6/15/16 417,477 449,861
10.50%, 6/15/16 24,636 26,946
10.50%, 8/15/16 81,006 88,601
10.50%, 10/15/16 147,640 161,480
10.50%, 11/15/16 283,844 310,452
10.50%, 6/15/17 194,543 212,819
10.50%, 7/15/17 75,029 82,078
10%, 8/15/17 2,912,386 3,139,378
10.50%, 10/15/17 360,966 394,877
10.50%, 11/15/17 87,691 95,929
10.50%, 12/15/17 2,965,155 3,243,705
10.50%, 1/15/18 200,795 219,711
10.50%, 3/15/18 212,550 232,570
10.50%, 6/15/18 80,783 88,392
10.50%, 8/15/18 14,313 15,661
10.50%, 9/15/18 566,970 620,374
10.50%, 10/15/18 177,428 194,140
10.50%, 12/15/18 45,303 49,571
10.50%, 1/15/19 126,098 138,014
10.50%, 3/15/19 75,645 82,794
10.50%, 4/15/19 1,942 2,126
10.50%, 5/15/19 1,944,123 2,127,827
10.50%, 6/15/19 2,597,478 2,828,723
10.50%, 7/15/19 87,231 95,474
10.50%, 8/15/19 1,025,399 1,122,291
10.50%, 5/15/20 100,206 109,713
11%, 7/20/20 223,450 245,068
10.50%, 10/15/20 24,367 26,679
10.50%, 5/15/21 146,043 159,961
8%, 4/15/22 847,696 836,049
</TABLE>
4 Oppenheimer U.S. Government Trust
<PAGE> 5
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Agency: Full Faith and Credit
(continued)
8%, 9/15/22 $ 3,949,604 $ 3,895,337
6.50%, 9/15/23 248,312 220,931
6.50%, 10/15/23 14,326,733 14,120,040
6.50%, 12/15/23 207,645 184,748
6.50%, 2/15/24 233,980 207,801
8%, 4/15/24 3,360,157 3,311,839
8%, 5/15/24 8,741,098 8,615,401
8%, 6/15/24 5,567,724 5,487,660
7.50%, 7/15/24(3)(5) 49,500,000 47,241,316
------------
104,387,643
Agency: Government
Sponsored--40.3%
Federal Home Loan Mortgage Corp., Collateralized Mortgage Obligations,
Guaranteed Multiclass Mortgage Participation Certificates:
14%, 1/11/11 785,150 892,394
6.80%, 3/15/16 15,000,000 14,981,250
8.50%, 10/15/19 3,100,000 3,191,481
- ------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mortgage Obligations,
Guaranteed Real Estate Mortgage Investment Conduit Pass-Through Certificates:
8.50%, 1/25/00 29,617,000 26,180,536
8%, 3/25/01 11,700,000 11,852,918
13%, 11/1/12 330,156 371,462
8%, 7/25/19 18,000,000 18,286,738
8.75%, 12/25/20 22,500,000 23,284,329
9%, 7/1/21 2,030,600 2,105,002
9%, 7/15/21 4,000,000 4,127,079
8%, 12/1/22 3,602,262 3,562,169
7%, 9/25/23 34,296,980 12,630,934
Principal-Only Stripped Mtg-Backed Security, Trust 253, 0%, 11/25/23(1) 1,000,028 475,639
Interest-Only Stripped Mtg-Backed Security, Trust 257, Class 2, 7%, 2/25/24(2) 12,869,043 4,779,643
------------
126,721,574
Treasury--24.3%
U.S. Treasury Bonds:
12%, 8/15/20 22,500,000 30,839,064
11.625%, 11/15/20 7,850,000 9,967,042
- ------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
9.50%, 11/15/95 5,000,000 5,243,750
8.50%, 5/15/97(4) 28,750,000 30,232,404
------------
76,282,260
Total Long-Term U.S. Government Obligations (Cost $306,338,645) 307,391,477
------------
</TABLE>
5 Oppenheimer U.S. Government Trust
<PAGE> 6
Statement of Investments (Continued)
<TABLE>
<CAPTION>
Shares
Subject Market Value
Date/Price to Call See Note 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Call Options Purchased--0.1%
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.25%, 5/15/04 (Cost $292,187) Aug./$ 100.4375 22,000 $
140,932
- --------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $309,930,832) 98.9% 310,832,409
- --------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.1 3,455,036
------ -------------
Net Assets 100.0 % $ 314,287,445
</TABLE>
1. Principal-Only Strips represent the right to receive the monthly
principal payments on an underlying pool of mortgage loans. The value
of these securities generally increases as prepayment rates rise.
2. Interest-Only Strips represent the right to receive the monthly
interest payments on an underlying pool of mortgage loans. These
securities are subject to the risk of accelerated principal paydowns as
interest rates decline. The principal amount represents the notional
amount on which current interest is calculated.
3. When-issued security to be delivered and settled after June 30,
1994.
4. Securities with an aggregate market value of $10,515,619 are held in
escrow to cover initial margin requirements on open interest rate
futures sales contracts, as follows:
<TABLE>
<CAPTION>
Type of Contract Number of Contracts Face Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Nts., 9/94 100 $10,000,000
</TABLE>
The market value of the open contracts was $10,342,188 at June 30,
1994, with a net unrealized loss of $84,375.
5. Securities with an aggregate market value of $28,631,101 are held in
escrow to cover outstanding call options, as follows:
<TABLE>
<CAPTION>
Shares Subject Expiration Exercise Premium Market Value
to Call Date Price Received See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Government National Mortgage Assn. 30,000 8/94 $99.375 $290,625 $150,000
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer U.S. Government Trust
<PAGE> 7
Statement of Assets and Liabilities June 30, 1994
<TABLE>
<S> <C>
Assets
Investments, at value (cost $309,930,832)--see accompanying statement $310,832,409
- -----------------------------------------------------------------------------------------------------------------------------
Cash 101,565
Receivables:
Investments sold 50,509,259
Shares of beneficial interest sold 4,039,457
Interest and principal paydowns 3,073,764
- -----------------------------------------------------------------------------------------------------------------------------
Other 37,755
------------
Total assets 368,594,209
Liabilities
Options written, at value (premiums received $290,625)--see accompanying statement--Note 5 150,000
Unrealized depreciation on forward contracts 84,375
Payables and other liabilities:
Investment purchased 47,631,172
Shares of beneficial interest redeemed 6,029,922
Distribution and service plan fees--Note 4 196,867
Other 214,428
------------
Total liabilities 54,306,764
Net Assets $314,287,445
============
Composition of
Net Assets
Paid-in capital $334,477,570
- -----------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 149,269
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment transactions and written option transactions (21,297,221)
- -----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments--Note 3 957,827
------------
Net assets $314,287,445
============
Net Asset Value
Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$310,026,529 and 33,684,502 shares of beneficial interest outstanding) $9.20
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $9.66
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $4,260,916 and 463,512 shares of beneficial interest outstanding) $9.19
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer U.S. Government Trust
<PAGE> 8
Statement of Operations For the Year Ended June 30, 1994
<TABLE>
<S> <C>
Investment Income
Interest $27,701,376
Expenses
Management fees--Note 4 2,515,934
- -----------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 863,331
Class C--Note 4 12,509
- -----------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 303,755
- -----------------------------------------------------------------------------------------------------------------------------
Shareholder reports 156,383
- -----------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 61,792
- -----------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 57,770
- -----------------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 32,424
- -----------------------------------------------------------------------------------------------------------------------------
Registration and filing fees--Class C 1,542
- -----------------------------------------------------------------------------------------------------------------------------
Other 77,714
-----------
Total expenses 4,083,154
Net Investment Income 23,618,222
Realized and Unrealized
Loss on Investments
Net realized loss on investments (11,210,170)
- -----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation on investments (15,469,786)
Net realized and unrealized loss on investments (26,679,956)
Net Decrease in Net Assets Resulting From Operations $(3,061,734)
===========
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer U.S. Government Trust
<PAGE> 9
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended June 30,
1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 23,618,222 $ 27,729,894
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and options written (11,210,170) 4,056,978
- ---------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (15,469,786) 5,024,826
------------ -------------
Net increase (decrease) in net assets resulting from operations (3,061,734) 36,811,698
Dividends to
Shareholders
Dividends from net investment income:
Class A ($.634 and .678 per share, respectively) (21,966,741) (27,733,632)
Class C ($.329 per share) (76,280) --
Dividends in excess of net investment income:
Class A ($.012 per share) (418,629) --
Tax return of capital distribution:
Class A ($.034 per share) (1,145,537) --
Beneficial Interest
Transactions
Net decrease in net assets resulting from Class A
beneficial interest transactions--Note 2 (44,398,318) (24,025,195)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class C
beneficial interest transactions--Note 2 4,438,932 --
Net Assets
Total decrease (66,628,307) (14,947,129)
- ---------------------------------------------------------------------------------------------------------------------------
Beginning of year 380,915,752 395,862,881
------------ ------------
End of year (including undistributed net investment
income of $149,269 and $576,358, respectively) $314,287,445 $380,915,752
============
============
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer U.S. Government Trust
<PAGE> 10
Financial Highlights
<TABLE>
<CAPTION>
Class A Class C
-----------------------------------------------------------------------------------------------
Year Period
Ended Ended
June 30, June 30,
1994 1993 1992 1991 1990 1989 1988 1987 1986(3) 1985(2) 1994(1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $9.95 $9.73 $9.25 $9.24 $9.54 $9.59 $9.77 $10.17 $ 10.00 $10.00 $9.83
- -----------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .67 .68 .69 .83 .90 .91 .90 .84 .94 .77 .33
Net realized and unrealized
gain (loss) on investments,
options written (.74) .22 .48 .02 (.32) (.05) (.18) (.33) .38 -- (.64)
------- ------- ------- ------ ------ ------- ------- ------- ------- ------ ----
Total income (loss) from
investment operations (.07) .90 1.17 .85 .58 .86 .72 .51 1.32 .77 (.31)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.64) (.68) (.69) (.84) (.88) (.91) (.90) (.85) (.93) (.77) (.33)
Dividends in excess of net
investment income (.01) -- -- -- -- -- -- -- -- -- --
Distributions from net
realized gain on investments
and options written -- -- -- -- -- -- -- (.06) (.22) -- --
Tax return of capital
distribuiton (.03) -- -- -- -- -- -- -- -- -- --
------- ------- ------- ------ ------ ------- ------- ------- ------- ------ ----
Total dividends and
distributions to shareholders (.68) (.68) (.69) (.84) (.88) (.91) (.90) (.91) (1.15) (.77) (.33)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end
of period $9.20 $9.95 $9.73 $9.25 $9.24 $9.54 $9.59 $9.77 $ 10.17 $ 10.00 $9.19
======= ======= ======= ====== ====== ========
======= ======= ======= ======= =====
Total Return, at Net
Asset Value(4) (1.17)% 9.55% 13.05% 9.53% 6.34% 9.51% 7.78% 5.54% 14.95% --
(3.12)%
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $310,027 $380,916 $395,863 $342,220 $264,728 $232,593 $203,857 $216,306 $160,389 $7,798
$4,261
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $355,698 $401,789 $376,532 $299,144 $253,085 $210,060 $197,834 $207,557 $98,004 $7,724
$2,173
- -----------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period
(in thousands) 33,685 38,279 40,697 36,987 28,650 24,393 21,252 22,146 15,767 780 464
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.61% 6.90% 7.23% 8.93% 9.60% 9.65% 9.36% 8.73% 9.77% 7.77%
5.97%(6)
Expenses 1.14% 1.17% 1.17% 1.19% 1.16% 1.19% 1.13% .99% .56% 1.47%
1.96%(6)
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 139.5% 96.8% 207.8% 133.9% 125.5% 76.9% 141.3% 263.0% 366.9% --
139.5%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to June
30, 1994.
2. All number of shares and per share data have been restated to
reflect a 1 for 10 stock split effective August 16, 1985.
3. For the period from August 16, 1985 to June 30, 1986.
4. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and
distributions reinvested in additional shares on the reinvestment date,
and redemption at the net asset value calculated on the last business
day of the fiscal period. Sales charges are not reflected in the total
returns.
5. The lesser of purchases or sales of portfolio securities for a
period,
divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are
excluded from the calculation.
Purchases and sale of investment securities (excluding short-term
securities) for the year ended June 30, 1994 were $495,481,969 and
$550,946,645, respectively.
6. Annualized.
See accompanying Notes to Financial Statements.
Notes to Financial Statements
1. Significant Accounting Policies
Oppenheimer U.S. Government Trust (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment advisor is
Oppenheimer Management Corporation (the Manager). The Fund offers both
Class A and Class C shares. Class A shares are sold with a front-end
sales charge. Class C shares may be subject to a contingent deferred
sales charge. Both classes of shares have identical rights to earnings,
assets and voting privileges, except that each class has its own
distribution plan, expenses directly attributable to a particular class
and exclusive voting rights with respect to matters affecting a single
class. The following is a summary of significant accounting policies
consistently followed by the Fund.
Investment Valuation. Portfolio securities are valued at 4:00 p.m. (New
York time) on each trading day. Long-term debt securities are valued by
a portfolio pricing service approved by the Board of Trustees.
Long-term debt securities which cannot be valued by the approved
portfolio pricing service are valued by averaging the mean between the
bid and asked prices obtained from two active market makers in such
securities. Short-term debt securities having a remaining maturity of
60 days or less are valued at cost (or last determined market value)
adjusted for amortization to maturity of any premium or discount.
Securities for which market quotes are not readily available are valued
under procedures established by the Board of Trustees to determine fair
value in good faith. A call option is valued based upon the last sales
price on the principal exchange on which the option is traded or, in
the absence of any transactions that day, the value is based upon the
last sale on the prior trading date if it is within the spread between
the closing bid and asked prices. If the last sale price is outside the
spread, the closing bid or asked price closest to the last reported
sale price is used.
Repurchase Agreements. The Fund requires the custodian to take
possession, to have legally segregated in the Federal Reserve Book
Entry System or to have segregated within the custodian's vault, all
securities held as collateral for repurchase agreements. If the seller
of the agreement defaults and the value of the collateral declines, or
if the seller enters an insolvency proceeding, realization of the value
of the collateral by the Fund maybe delayed or imited.
Allocation of Income, Expenses and Gains and Losses. Income, expenses
(other than those attributable to a specific class) and gains and
losses reallocated daily to each class of shares based upon the
relative proportion of net assets represented by such class. Operating
expenses directly attributable to a specific class are charged against
the operations of that class.
Federal Income Taxes. The Fund intends to continue to comply with
provisions of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income,
including any net realized gain on investments not offset by loss
carryovers, to shareholders. Therefore, no federal income tax provision
is required. At June 30, 1994, the Fund had available for federal
income tax purposes an unused capital loss carryover of approximately
$11,875,000, $3,330,000 of which will expire in 1998, $7,358,000 in
1999 and $1,187,000 in 2002.
Trustees' Fees and Expenses. The Fund has adopted a nonfunded
retirement plan for the Fund's independent trustees. Benefits are based
on years of service and fees paid to each trustee during the years of
service. During the year ended June 30, 1994, a provision of $22,650
was made for the Fund's projected benefit obligations, resulting in an
accumulated liability of $122,000 at June 30, 1994. No payments have
been made under the plan.
Distributions to Shareholders. The Fund intends to declare dividends
separately for Class A and Class C shares from net investment income
each day the New York Stock Exchange is open for business and pay such
dividends monthly. Distributions from net realized gains on
investments, if any, will be declared at least once each year.
Change in Accounting for Distributions to Shareholders. Effective July
1, 1993, the Fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital
Gain, and Return of Capital Distributions by Investment Companies. As a
result, the Fund changed the classification of distributions to
shareholders to better disclose the differences between financial
statement amounts and distributions determined in accordance with
income tax regulations. Accordingly, subsequent to June 30, 1993,
amounts have been reclassified to reflect a decrease in paid-in capital
of $171,227, a decrease in undistributed net investment income of
$391,297, and an increase in undistributed capital gain on investments
of $562,524. During the year ended June 30, 1994, in accordance with
Statement of Position 93-2, undistributed net investment income has
been decreased by $46,827, paid-in capital has been decreased by
$1,145,537 and undistributed capital gain has been increased by
$1,192,364.
Other. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date). Discount on securities
purchased is amortized over the life of the respective securities, in
accordance with federal income tax requirements. Realized gains and
losses on investments and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used
for federal income tax purposes.
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1994(1) Year Ended June 30, 1993
------------------------------ ----------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 6,237,904 $ 60,979,282 10,114,092 $ 99,121,952
Dividends reinvested 1,913,674 18,566,281 2,059,182 20,214,713
Redeemed (12,746,027) (123,943,881) (14,590,989) (143,361,860)
----------- ------------- ----------- -------------
Net decrease (4,594,449) $ (44,398,318) (2,417,715) $ (24,025,195)
=========== ============= ===========
=============
- ----------------------------------------------------------------------------------------------------------
Class C:
Sold 531,550 $ 5,070,299 -- $ --
Dividends reinvested 5,284 49,363 -- --
Redeemed (73,322) (680,730) -- --
----------- ------------- ----------- -------------
Net increase 463,512 $ 4,438,932 -- $ --
=========== ============= ===========
=============
</TABLE>
1. For the year ended June 30, 1994 for Class A shares and for the
period from December 1, 1993 (inception of offering) to June 30, 1994
for Class C shares.
3. Unrealized Gains and Losses on Investments and Options Written
At June 30, 1994, net unrealized appreciation on investments and
options written of $957,827 was composed of gross appreciation of
$5,714,596, and gross depreciation of $4,756,769.
4. Management Fees and Other Transactions With Affiliates
Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for an
annual fee of .75% on the first $200 million of net assets, .70% on the
next $200 million, .65% on the next $400 million and .60% on net assets
in excess of $800 million.
Effective January 1, 1994, Oppenheimer Management Corporation (the
"Manager") voluntarily reduced the management fees to provide for an
annual fee of .70% on the first $200 million of net assets, .65% on the
next $200 million, .60% on the next $400 million and .55% on net assets
in excess of $800 million.
Effective July 1, 1994, Oppenheimer Management Corporation (the
``Manager'') will voluntarily reduce the management fees to provide for
an annual fee of .65% on the first $200 million of net assets, .60% on
the next $200 million, .55% on the next $400 million and .50% on net
assets in excess of $800 million.
The Manager has agreed to reimburse the Fund if aggregate expenses
(with specified exceptions) exceed the most stringent applicable
regulatory limit on Fund expenses.
For the year ended June 30, 1994, commissions (sales charges
paid by investors) on sales of Class A shares totaled $876,525, of
which $282,424 was retained by Oppenheimer Funds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general distributor, and by an
affiliated broker/dealer. During the year ended June 30, 1994, OFDI
received contingent deferred sales charges of $3,250 upon redemption of
Class C shares.
Oppenheimer Shareholder Services (OSS), a division of the
Manager, is the transfer and shareholder servicing agent for the Fund,
and for other registered investment companies. OSS's total costs of
providing such services are allocated ratably to these companies.
12 Oppenheimer U.S. Government Trust
<PAGE> 13
Notes to Financial Statements (Continued)
4. Management Fees and Other Transactions With Affiliates (continued)
Under separate approved plans, each class may expend up to
.25% of its net assets annually to reimburse OFDI for costs incurred in
connection with the personal service and maintenance of accounts that
hold shares of the Fund, including amounts paid to brokers, dealers,
banks and other institutions. In addition, Class C shares are subject
to an asset-based sales charge of .75% of net assets annually, to
reimburse OFDI for sales commissions paid from its own resources at the
time of sale and associated financing costs. In the event of
termination or discontinuance of the Class C plan, the Board of
Trustees may allow the Fund to continue payment of the asset-based
sales charge to OFDI for distribution expenses incurred on Class C
shares sold prior to termination or discontinuance of the plan. During
the year ended June 30, 1994, OFDI paid $56,187 to an affiliated
broker/dealer as reimbursement for Class A personal service and
maintenance expenses and retained $12,509 as reimbursement for Class C
sales commissions and service fee advances, as well as financing costs.
5. Call Option Activity
Call option activity for the year ended June 30, 1994 was as follows:
<TABLE>
<CAPTION>
Number Amount of
Call Option Activity of Options Premiums
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at June 30, 1993 -- $ --
- ---------------------------------------------------------------------------------------------------------------
Options written 30,000 290,625
- ---------------------------------------------------------------------------------------------------------------
Options expired prior to exercise -- --
- ---------------------------------------------------------------------------------------------------------------
Options exercised -- --
------ ---------
Options outstanding at June 30, 1994 30,000 $ 290,625
====== =========
</TABLE>
Appendix A
Description of Securities Ratings
Description of Standard & Poor's Corporation ("Standard & Poor's") and
Moody's Investors Service, Inc. ("Moody's") bond ratings:
Standard & Poor's describes its four highest ratings for corporate debt
as follows:
AAA: Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is
extremely strong.
AA: Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in
a small degree.
A: Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
BBB: Debt rated "BBB" is regarded as having an adequate capacity to
pay interest and repay principal.
Whereas it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
The ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating
categories.
Moody's describes its four highest corporate bond ratings as follows:
Aaa: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large
as in Aaa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in
Aaa securities.
A-1
A: Bonds which are rated A possess many favorable investment attributes
and may be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system.
The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
<PAGE>
Appendix B
Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies &
Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications -
Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
<PAGE>
OPPENHEIMER U.S. GOVERNMENT TRUST
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Highlights (see Part A, Prospectus): Filed herewith.
(2) Report of Independent Auditors (see Part B, Statement of
Additional Information): Filed herewith.
(3) Statement of Investments (audited) and December 31, 1994
(unaudited) (see Part B, Statement of Additional Information):
Filed herewith.
(4) Statement of Assets and Liabilities (audited) and December 31,
1994 (unaudited) (see Part B, Statement of Additional
Information): Filed herewith.
(5) Statement of Operations (see Part B, Statement of Additional
Information): Filed herewith.
(6) Statements of Changes in Net Assets (see Part B, Statement of
Additional Information): Filed herewith.
(7) Notes to Financial Statements (see Part B, Statement of
Additional Information): Filed herewith.
(b) Exhibits
(1) Amended and Restated Declaration of Trust of Registrant dated
June 1, 1992: Filed with Registrant's Post-Effective Amendment
No. 20, 10/16/92, refiled with Registrant's Post-Effective
Amendment No. 24, 8/24/94, pursuant to Item 102 of Regulation S-
T, and incorporated herein by reference.
(2) By-Laws as amended through 8/6/87: Filed with Registrant's Form
SE to its Form N-SAR for the fiscal year ended 6/30/88, refiled
with Registrant's Post-Effective Amendment No. 24, 8/24/94,
pursuant to Item 102 of Regulation S-T, and incorporated herein
by reference.
(3) Not applicable.
(4)(i) Specimen Class A Share Certificate: Filed with Registrant's
Post-Effective Amendment No. 24, 8/24/94, and incorporated herein by
reference.
(ii) Specimen Class B Share Certificate: Filed herewith.
(iii) Specimen Class C Share Certificate; Filed with Registrant's
Post-Effective Amendment No. 24, 8/24/94, and incorporated
herein by reference.
(5) Investment Advisory Agreement dated 5/25/95: Filed herewith.
(6)(i) General Distributor's Agreement dated 12/10/92: Filed with
Registrant's Post-Effective Amendment No. 21, 8/20/93, and incorporated
herein by reference.
(ii) Form of Oppenheimer Funds Distributor Inc. Dealer Agreement -
Filed with Post-Effective Amendment No. 14 of Oppenheimer Main
Street Funds, Inc. (Reg. No. 33-17850), 9/30/94, and
incorporated herein by reference.
(iii) Form of Oppenheimer Funds Distributor Inc. Broker Agreement -
Filed with Post-Effective Amendment No. 14 of Oppenheimer Main
Street Funds, Inc. (Reg. No. 33-17850), 9/30/94, and
incorporated herein by reference.
(iv) Form of Oppenheimer Funds Distributor Inc. Agency Agreement -
Filed with Post-Effective Amendment No. 14 of Oppenheimer Main
Street Funds, Inc. (Reg. No. 33-17850), 9/30/94, and
incorporated herein by reference.
(v) Broker Agreement between Oppenheimer Fund Management, Inc. and
Newbridge Securities, Inc. dated 10/1/86: Filed with Post-
Effective Amendment No. 25 of Oppenheimer Special Fund (Reg. No.
2-45272), 11/1/86, refiled with Post-Effective Amendment No. 45
of Oppenheimer Special Fund (Reg. No. 4-5272) 8/22/94, pursuant
to Item 102 of Regulation S-T, and incorporated herein by
reference.
(7) Retirement Plan for Non-Interested Trustees or Directors
(adopted by Registrant 6/7/90): Filed with Post-Effective
Amendment No. 97, 8/30/90, of Oppenheimer Fund (Reg. No. 2-
14586) refiled with Post-Effective Amendment No. 45 of
Oppenheimer Growth Fund (Reg. No. 2-45272), 10/21/94, pursuant
to Item 102 of Regulation S-T, and incorporated herein by
reference.
(8)(i) Custody Agreement dated 11/12/92: Filed with Post-Effective
Amendment No. 21 of the Registrant's Registration Statement, 8/20/93,
and incorporated herein by reference.
(9) Not applicable.
(10) Opinion and Consent of Counsel dated 6/24/82: Filed with
Registrant's Post-Effective Amendment No. 5, 8/31/84, refiled
with Registrant's Post-Effective Amendment No. 24, 8/24/94,
pursuant to Item 102 of Regulation S-T, and incorporated herein
by reference.
(11) Independent Auditor's Consent: Filed herewith.
(12) Not applicable.
(13) Not applicable.
(14)(i) Form of Individual Retirement Account Trust Agreement: Filed
with Post-Effective Amendment No. 21 of the Registrant's Registration
Statement, 8/20/93, and incorporated herein by reference.
(ii) Form of prototype Standardized and Non-Standardized Profit Sharing
Plans and Money Purchase Plans for self-employed persons and
corporations: Filed with Post-Effective Amendment No. 15 to the
Registration Statement of Oppenheimer Mortgage Income Fund (Reg. No.
33-6614), 1/19/95, and incorporated herein by reference.
(iii) Form of Tax-Sheltered Retirement Plan and Custody Agreement for
employees of public schools and tax-exempt organizations: Filed with
Post-Effective Amendment No. 47 of Oppenheimer Growth Fund (Reg. No.
2-45272), 10/21/94, and incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA: Filed with Post-Effective
Amendment No. 42 of Oppenheimer Equity Income Fund (Reg. No. 2-33043),
10/28/94, and incorporated herein by reference.
(v) Form of SAR-SEP Simplified Employee Pension IRA: Filed with Post-
Effective Amendment No. 15 to the Registration Statement of Oppenheimer
Mortgage Income Fund (Reg. No. 33-6614), 1/19/95, and incorporated
herein by reference.
(15)(a) Service Plan and Agreement for Class A shares under Rule 12b-1
of the Investment Company Act of 1940 dated as of 6/10/93: Filed with
Registrant's Post-Effective Amendment No. 24, 8/24/94, and incorporated
herein by reference.
(b) Distribution and Service Plan and Agreement for Class B Shares
dated May 30, 1995 under Rule 12b-1 of the Investment Company Act:
Filed herewith.
(c) Distribution and Service Plan and Agreement for Class C shares
dated May 30, 1995 under Rule 12b-1 of the Investment Company Act:
Filed herewith.
(16) Performance computation schedule: Filed herewith.
(17) (i) Financial Data Schedule for Class A shares for the fiscal year
ended June 30, 1994 (audited) : Filed herewith.
(ii) Financial Data Schedule for Class A shares for the six months
ended December 31, 1994 (unaudited): Filed herewith.
(iii) Financial Data Schedule for Class C shares for the fiscal year
ended June 30, 1994 (audited): Filed herewith.
(iv) Financial Data Schedule for Class C shares for the six months
ended December 31, 1994 (unaudited): Filed herewith.
(v) Financial Data Schedule for Class B shares: Not applicable.
- - - Powers of Attorney: Filed with Post-Effective Amendment No. 21
of the Registrant's Registration Statement, 8/20/93, and
incorporated herein by reference.
ITEM 25. Persons Controlled by or under Common Control with Registrant
None
ITEM 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of May 1, 1995
Shares of Beneficial Interest, 18,159
Class A shares
Shares of Beneficial Interest, 0
Class B shares
Shares of Beneficial Interest, 537
Class C shares
ITEM 27. Indemnification
Reference is made to Subdivision (c) of Section 12 of Article SEVENTH
of Registrant's Declaration of Trust filed as Exhibit (b)(1) to
Registrant's Registration Statement and incorporated herein by
reference.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling
persons of Registrant pursuant to the foregoing provisions or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer or
controlling person of Registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee, officer or
controlling person, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication
of such issue.
Item 28. Business and Other Connections of Investment Adviser
(a) Oppenheimer Management Corporation is the investment
adviser of the Registrant; it and certain subsidiaries and affiliates
act in the same capacity to other registered investment companies as
described in Parts A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial nature in
which each officer and director of Oppenheimer Management Corporation
is, or at any time during the past two fiscal years has been, engaged
for his/her own account or in the capacity of director, officer,
employee, partner or trustee.
<TABLE>
<CAPTION>
Name & Current Position
with Oppenheimer Other Business and Connections
Management Corporation During the Past Two Years
- ----------------------- ------------------------------
<S> <C>
Lawrence Apolito, None.
Vice President
James C. Ayer, Jr., Vice President and Portfolio Manager of
Assistant Vice President Oppenheimer Gold & Special Minerals Fund and
Oppenheimer Global Emerging Growth Fund.
Victor Babin, None.
Senior Vice President
Robert J. Bishop Assistant Treasurer of the OppenheimerFunds
Assistant Vice President (listed below); previously a Fund Controller
for Oppenheimer Management Corporation (the
"Manager").
Bruce Bartlett None.
Vice President
George Bowen Treasurer of the New York-based
Senior Vice President OppenheimerFunds; Vice President, Secretary
and Treasurer and Treasurer of the Denver-based
OppenheimerFunds. Vice President and
Treasurer of Oppenheimer Funds Distributor,
Inc. (the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment adviser
subsidiary of OMC; Senior Vice President,
Treasurer, Assistant Secretary and a
director of Centennial Asset Management
Corporation ("Centennial"), an investment
adviser subsidiary of the Manager; Vice
President, Treasurer and Secretary of
Shareholder Services, Inc. ("SSI") and
Shareholder Financial Services, Inc.
("SFSI"), transfer agent subsidiaries of
OMC; President, Treasurer and Director of
Centennial Capital Corporation; Vice
President and Treasurer of Main Street
Advisers; formerly Senior Vice President/
Comptroller and Secretary of Oppenheimer
Asset Management Corporation ("OAMC"), an
investment adviser which was a subsidiary of
the OMC.
Michael A. Carbuto, Vice President and Portfolio Manager of
Vice President Oppenheimer Tax-Exempt Cash Reserves,
Centennial California Tax Exempt Trust,
Centennial New York Tax Exempt Trust and
Centennial Tax Exempt Trust; Vice President
of Centennial.
William Colbourne, Formerly, Director of Alternative Staffing
Assistant Vice President Resources, and Vice President of Human
Resources, American Cancer Society.
Lynn Coluccy, Vice President Formerly Vice President/Director of Internal
Audit of the Manager.
O. Leonard Darling, Formerly Co-Director of Fixed Income for
Executive Vice President State Street Research & Management Co.
Robert A. Densen, None.
Vice President
Robert Doll, Jr., Vice President and Portfolio Manager of
Executive Vice President Oppenheimer Growth Fund and Oppenheimer
Target Fund; Senior Vice President and
Portfolio Manager of Strategic Income &
Growth Fund.
John Doney, Vice President Vice President and Portfolio Manager of
Oppenheimer Equity Income Fund.
Andrew J. Donohue, Secretary of the New York-based
Executive Vice President OppenheimerFunds; Vice President of the
& General Counsel Denver-based OppenheimerFunds; Executive
Vice President, Director and General Counsel
of the Distributor; formerly Senior Vice
President and Associate General Counsel of
the Manager and the Distributor.
Kenneth C. Eich, Treasurer of Oppenheimer Acquisition
Executive Vice President/ Corporation
Chief Financial Officer
George Evans, Vice President Vice President and Portfolio Manager of
Oppenheimer Global Securities Fund.
Scott Farrar, Assistant Treasurer of the OppenheimerFunds;
Assistant Vice President previously a Fund Controller for the
Manager.
Katherine P.Feld Vice President and Secretary of Oppenheimer
Vice President and Funds Distributor, Inc.; Secretary of
Secretary HarbourView, Main Street Advisers, Inc. and
Centennial; Secretary, Vice President and
Director of Centennial Capital Corp.
Jon S. Fossel, President and director of Oppenheimer
Chairman of the Board, Acquisition Corp. ("OAC"), the Manager's
Chief Executive Officer parent holding company; President, CEO and
and Director a director of HarbourView; a director of SSI
and SFSI; President, Director, Trustee, and
Managing General Partner of the Denver-based
OppenheimerFunds; formerly President of the
Manager. President and Chairman of the Board
of Main Street Advisers, Inc.
Robert G. Galli, Trustee of the New York-based
Vice Chairman OppenheimerFunds; Vice President and Counsel
of OAC; formerly he held the following
positions: a director of the Distributor,
Vice President and a director of HarbourView
and Centennial, a director of SFSI and SSI,
an officer of other OppenheimerFunds and
Executive Vice President & General Counsel
of the Manager and the Distributor.
Linda Gardner, None.
Assistant Vice President
Ginger Gonzalez, Formerly 1st Vice President/Director of
Vice President Creative Services for Shearson Lehman
Brothers.
Dorothy Grunwager, None.
Assistant Vice President
Caryn Halbrecht, Vice President and Portfolio Manager of
Vice President Oppenheimer Insured Tax-Exempt Bond Fund and
Oppenheimer Intermediate Tax Exempt Bond
Fund; an officer of other OppenheimerFunds;
formerly Vice President of Fixed Income
Portfolio Management at Bankers Trust.
Barbara Hennigar, President and Director of Shareholder
President and Chief Financial Service, Inc.
Executive Officer of
Oppenheimer Shareholder
Services, a division of OMC.
Alan Hoden, Vice President None.
Merryl Hoffman, None.
Vice President
Scott T. Huebl, None.
Assistant Vice President
Jane Ingalls, Formerly a Senior Associate with Robinson,
Assistant Vice President Lake/Sawyer Miller.
Stephen Jobe, None.
Vice President
Avram Kornberg, Formerly a Vice President with Bankers
Vice President Trust.
Paul LaRocco, Portfolio Manager of Oppenheimer Capital
Assistant Vice President Appreciation Fund; Associate Portfolio
Manager of Oppenheimer Discovery Fund and
Oppenheimer Time Fund. Formerly a
Securities Analyst for Columbus Circle
Investors.
Mitchell J. Lindauer, None.
Vice President
Loretta McCarthy, None.
Senior Vice President
Bridget Macaskill, Director of HarbourView; Director of Main
President and Director Street Advisers, Inc.; and Chairman of
Shareholder Services, Inc.
Sally Marzouk, None.
Vice President
Marilyn Miller, None
Vice President
Denis R. Molleur, None.
Vice President
Kenneth Nadler, None.
Vice President
David Negri, Vice President and Portfolio Manager of
Vice President Oppenheimer Strategic Bond Fund, Oppenheimer
Multiple Strategies Fund, Oppenheimer
Strategic Investment Grade Bond Fund,
Oppenheimer Asset Allocation Fund,
Oppenheimer Strategic Diversified Income
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Short-Term Income
Fund, Oppenheimer High Income Fund and
Oppenheimer Bond Fund; an officer of other
OppenheimerFunds.
Barbara Niederbrach, None.
Assistant Vice President
Stuart Novek, Formerly a Director Account Supervisor for
Vice President J. Walter Thompson.
Robert A. Nowaczyk, None.
Vice President
Robert E. Patterson, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Main Street California Tax-
Exempt Fund, Oppenheimer Insured Tax-Exempt
Bond Fund, Oppenheimer Intermediate Tax-
Exempt Bond Fund, Oppenheimer Florida Tax-
Exempt Fund, Oppenheimer New Jersey Tax-
Exempt Fund, Oppenheimer Pennsylvania Tax-
Exempt Fund, Oppenheimer California Tax-
Exempt Fund, Oppenheimer New York Tax-Exempt
Fund and Oppenheimer Tax-Free Bond Fund;
Vice President of the New York Tax-Exempt
Income Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income Trust.
Tilghman G. Pitts III, Chairman and Director of the Distributor.
Executive Vice President
and Director
Jane Putnam, Associate Portfolio Manager of Oppenheimer
Assistant Vice President Growth Fund and Oppenheimer Target Fund and
Portfolio Manager for Oppenheimer Variable
Account Funds-Growth Fund; Senior Investment
Officer and Portfolio Manager with Chemical
Bank.
Russell Read, Formerly an International Finance Consultant
Vice President for Dow Chemical.
Thomas Reedy, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-
Government Trust; an officer of other
OppenheimerFunds; formerly a Securities
Analyst for the Manager.
David Rosenberg, Vice President and Portfolio Manager of
Vice President Oppenheimer Limited-Term Government Fund and
Oppenheimer U.S. Government Trust. Formerly
Vice President and Senior Portfolio Manager
for Delaware Investment Advisors.
Richard H. Rubinstein, Vice President and Portfolio Manager of
Vice President Oppenheimer Asset Allocation Fund,
Oppenheimer Fund and Oppenheimer Multiple
Strategies Fund; an officer of other
OppenheimerFunds; formerly Vice President
and Portfolio Manager/Security Analyst for
Oppenheimer Capital Corp., an investment
adviser.
Lawrence Rudnick, Formerly Vice President of Dollar Dry Dock
Assistant Vice President Bank.
Ellen Schoenfeld, None.
Assistant Vice President
Diane Sobin, None.
Vice President
Nancy Sperte, None.
Senior Vice President
Donald W. Spiro, President and Trustee of the New York-based
Chairman Emeritus OppenheimerFunds; formerly Chairman of the
and Director Manager and the Distributor.
Arthur Steinmetz, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Strategic Diversified Income
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Investment Grade Bond
Fund, Oppenheimer Strategic Short-Term
Income Fund; an officer of other
OppenheimerFunds.
Ralph Stellmacher, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Champion High Yield Fund and
Oppenheimer High Yield Fund; an officer of
other OppenheimerFunds.
John Stoma, Vice President Formerly Vice President of Pension Marketing
with Manulife Financial.
James C. Swain, Chairman, CEO and Trustee, Director or
Vice Chairman of the Managing Partner of the Denver-based
Board of Directors OppenheimerFunds; President and a Director
and Director of Centennial; formerly President and
Director of OAMC, and Chairman of the Board
of SSI.
James Tobin, Vice President None.
Jay Tracey, Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Time Fund and Oppenheimer
Discovery Fund. Formerly Managing Director
of Buckingham Capital Management.
Gary Tyc, Vice President, Assistant Treasurer of the Distributor and
Assistant Secretary SFSI.
and Assistant Treasurer
Ashwin Vasan, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-
Government Trust: an officer of other
OppenheimerFunds.
Valerie Victorson, None.
Vice President
John Wallace, Vice President and Portfolio Manager of
Vice President Oppenheimer Total Return Fund, and
Oppenheimer Main Street Income and Growth
Fund; an officer of other OppenheimerFunds;
formerly a Securities Analyst and Assistant
Portfolio Manager for the Manager.
Dorothy Warmack, Vice President and Portfolio Manager of
Vice President Daily Cash Accumulation Fund, Inc.,
Oppenheimer Cash Reserves, Centennial
America Fund, L.P., Centennial Government
Trust and Centennial Money Market Trust;
Vice President of Centennial.
Christine Wells, None.
Vice President
William L. Wilby, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Global Fund and Oppenheimer
Global Growth & Income Fund; Vice President
of HarbourView; an officer of other
OppenheimerFunds.
Susan Wilson-Perez, None.
Vice President
Carol Wolf, Vice President and Portfolio Manager of
Vice President Oppenheimer Money Market Fund, Inc.,
Centennial America Fund, L.P., Centennial
Government Trust, Centennial Money Market
Trust and Daily Cash Accumulation Fund,
Inc.; Vice President of Oppenheimer Multi-
Sector Income Trust; Vice President of
Centennial.
Robert G. Zack, Associate General Counsel of the Manager;
Senior Vice President Assistant Secretary of the OppenheimerFunds;
and Assistant Secretary Assistant Secretary of SSI, SFSI; an officer
of other OppenheimerFunds.
Eva A. Zeff, Vice President and Portfolio Manager of
Assistant Vice President Oppenheimer Mortgage Income Fund; an officer
of other OppenheimerFunds; formerly a
Securities Analyst for the Manager.
Arthur J. Zimmer, Vice President and Portfolio Manager of
Vice President Centennial America Fund, L.P., Oppenheimer
Money Fund, Centennial Government Trust,
Centennial Money Market Trust and Daily Cash
Accumulation Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income Trust; Vice
President of Centennial; an officer of other
</TABLE> OppenheimerFunds.
The OppenheimerFunds include the New York-based
OppenheimerFunds and the Denver-based OppenheimerFunds set forth below:
New York-based OppenheimerFunds
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Mortgage Income Fund
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer Time Fund
Oppenheimer U.S. Government Trust
Denver-based OppenheimerFunds
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion High Yield Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Tax-Exempt Bond Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
The address of Oppenheimer Management Corporation, the New
York-based OppenheimerFunds, Oppenheimer Funds Distributor, Inc.,
Harbourview Asset Management Corp., Oppenheimer Partnership Holdings,
Inc., and Oppenheimer Acquisition Corp. is Two World Trade Center, New
York, New York 10048-0203.
The address of the Denver-based OppenheimerFunds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., Oppenheimer
Shareholder Services, Centennial Asset Management Corporation,
Centennial Capital Corp., and Main Street Advisers, Inc. is 3410 South
Galena Street, Denver, Colorado 80231.
Item 29. Principal Underwriter
(a) Oppenheimer Funds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which Oppenheimer
Management Corporation is the investment adviser, as described in Part
A and B of this Registration Statement and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
<TABLE>
<CAPTION> Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C> <C>
George Clarence Bowen+ Vice President & Treasurer Treasurer
Christopher Blunt Vice President None
6 Baker Avenue
Westport, CT 06880
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Mary Ann Bruce* Senior Vice President - None
Financial Institution Div.
Robert Coli Vice President None
12 Whitetail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Ronald Corlew Vice President None
1020 Montecito Drive
Los Angeles, CA 90031
Mary Crooks+ Vice President None
Paul Della Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
Andrew John Donohue* Executive Vice Secretary
President & Director
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Gregory Farley Vice President - None
1116 Westbury Circle Financial Institution Div.
Eagan, MN 55123
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Wayne Flanagan Vice President - None
36 West Hill Road Financial Institution Div.
Brookline, NH 03033
Ronald R. Foster Vice President - None
11339 Avant Lane Eastern Division Manager
Cincinnati, OH 45249
Patricia Gadecki Vice President None
6026 First Ave. South,
Apt. 10
St. Petersburg, FL 33707
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
609 Chimney Bluff Drive
Mt. Pleasant, SC 29464
Terry Lee Kelley Vice President - None
1431 Woodview Lane Financial Institution Div.
Commerce Township, MI 48382
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Hans Klehmet II Vice President None
26542 Love Lane
Ramona, CA 92065
Ilene Kutno* Assistant Vice President None
Wayne A. LeBlang Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Laura Mulhall* Vice President - None
Director of Key Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
1900 Eight Avenue
San Francisco, CA 94116
Bill Presutti Vice President None
664 Circuit Road
Portsmouth, NH 03801
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.
Minnie Ra Vice President - None
109 Peach Street Financial Institution Div.
Avenel, NJ 07001
David Robertson Vice President None
9 Hawks View
Hoeoye Falls, NY 14472
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Robert Romano Vice President None
1512 Fallingbrook Drive
Fishers, IN 46038
James Ruff* President None
Timothy Schoeffler Vice President None
3118 N. Military Road
Arlington, VA 22207
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
James A. Shaw Vice President - None
5155 West Fair Place Financial Institution Div.
Littleton, CO 80123
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker Vice President - None
2017 N. Cleveland, #2 Financial Institution Div.
Chicago, IL 60614
Michael Stenger Vice President None
C/O America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
Paul Stickney Vice President None
1314 Log Cabin Lane
St. Louis, MO 63124
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
Bernard J. Wolocko Vice President None
33915 Grand River
Farmington, MI 48335
William Harvey Young+ Vice President None
</TABLE>
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
(c) Not applicable.
Item 29. Principal Underwriter
(a) Oppenheimer Funds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which Oppenheimer
Management Corporation is the investment adviser, as described in Part
A and B of this Registration Statement and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
<TABLE>
<CAPTION>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C>
George Clarence Bowen+ Vice President & Treasurer Treasurer
Christopher Blunt Vice President None
6 Baker Avenue
Westport, CT 06880
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Mary Ann Bruce* Senior Vice President - None
Financial Institution Div.
Robert Coli Vice President None
12 Whitetail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Ronald Corlew Vice President None
1020 Montecito Drive
Los Angeles, CA 90031
Mary Crooks+ Vice President None
Paul Della Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
Andrew John Donohue* Executive Vice Secretary
President & Director
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Gregory Farley Vice President - None
1116 Westbury Circle Financial Institution Div.
Eagan, MN 55123
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Wendy Fishler* Vice President - None
Financial Institution Div.
Wayne Flanagan Vice President - None
36 West Hill Road Financial Institution Div.
Brookline, NH 03033
Ronald R. Foster Vice President - None
11339 Avant Lane Eastern Division Manager
Cincinnati, OH 45249
Patricia Gadecki Vice President None
6026 First Ave. South,
Apt. 10
St. Petersburg, FL 33707
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
609 Chimney Bluff Drive
Mt. Pleasant, SC 29464
Terry Lee Kelley Vice President - None
1431 Woodview Lane Financial Institution Div.
Commerce Township, MI 48382
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Hans Klehmet II Vice President None
26542 Love Lane
Ramona, CA 92065
Ilene Kutno* Assistant Vice President None
Wayne A. LeBlang Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Laura Mulhall* Vice President - None
Director of Key Accounts
Gina Munson Vice President None
120 Fisherville Road
Apt. 136
Concord, NH 03301
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
1900 Eight Avenue
San Francisco, CA 94116
Bill Presutti Vice President None
664 Circuit Road
Portsmouth, NH 03801
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.
Minnie Ra Vice President - None
109 Peach Street Financial Institution Div.
Avenel, NJ 07001
David Robertson Vice President None
9 Hawks View
Hoeoye Falls, NY 14472
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Robert Romano Vice President None
1512 Fallingbrook Drive
Fishers, IN 46038
James Ruff* President None
Timothy Schoeffler Vice President None
3118 N. Military Road
Arlington, VA 22207
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
James A. Shaw Vice President - None
5155 West Fair Place Financial Institution Div.
Littleton, CO 80123
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker Vice President - None
2017 N. Cleveland, #2 Financial Institution Div.
Chicago, IL 60614
Michael Stenger Vice President None
C/O America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
Paul Stickney Vice President None
1314 Log Cabin Lane
St. Louis, MO 63124
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
Bernard J. Wolocko Vice President None
33915 Grand River
Farmington, MI 48335
William Harvey Young+ Vice President None
</TABLE>
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
(c) Not applicable.
ITEM 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the Investment Company
Act and rules promulgated thereunder are in the possession of
Oppenheimer Management Corporation, at its offices at 3410 South
Galena Street, Denver, Colorado 80231.
ITEM 31. Management Services
Not applicable.
ITEM 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant certifies that it meets
all the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and
State of New York on the 25th day of May, 1995.
OPPENHEIMER U.S. GOVERNMENT TRUST
By: /s/ Donald W. Spiro
---------------------------
Donald W. Spiro, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Leon Levy Chairman of the
- -------------- Board of Trustees May 25, 1995
Leon Levy
/s/ Donald W. Spiro Chief Executive
- -------------------- Officer and
Donald W. Spiro Trustee May 25, 1995
/s/ George Bowen Chief Financial
- ----------------- and Accounting
George Bowen Officer May 25, 1995
/s/ Leo Cherne Trustee May 25, 1995
- ---------------
Leo Cherne
/s/ Robert G. Galli Trustee May 25, 1995
- -------------------
Robert G. Galli
/s/ Benjamin Lipstein Trustee May 25, 1995
- ----------------------
Benjamin Lipstein
/s/ Elizabeth B. Moynihan Trustee May 25, 1995
- --------------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall Trustee May 25, 1995
- -----------------------
Kenneth A. Randall
/s/ Edward V. Regan Trustee May 25, 1995
- --------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr. Trustee May 25, 1995
- -----------------------------
Russell S. Reynolds, Jr.
/s/ Sidney M. Robbins Trustee May 25, 1995
- ----------------------
Sidney M. Robbins
/s/ Pauline Trigere Trustee May 25, 1995
- --------------------
Pauline Trigere
/s/ Clayton K. Yeutter Trustee May 25, 1995
- -----------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
</TABLE>
<PAGE>
OPPENHEIMER U.S. GOVERNMENT TRUST
EXHIBIT INDEX
24(b)(4)(ii) Specimen Class B Share Certificate
24(b)(5) Investment Advisory Agreement dated 5/25/95
24(b)(11) Independent Auditor's Consent
24(b)(15)(b) Distribution and Service Plan and Agreement for Class B
shares dated May 30, 1995
24(b)(15)(c) Distribution and Service Plan and Agreement for Class C
shares dated May 30, 1995
24(b)(16) Performance Computation Schedule
24(b)(17)(i) Financial Data Schedule for Class A shares for the 12
months ended June 30, 1994
24(b)(17)(ii) Financial Data Schedule for Class A shares for the six
months ended December 31, 1994
24(b)(17)(iii) Financial Data Schedule for Class C shares for period
ended June 30, 1994
24(b)(17)(iv) Financial Data Schedule for Class C shares for the six
months ended December 31, 1994
OPPENHEIMER U.S. GOVERNMENT TRUST
Class B Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) share certificate no.
(upper right box with heading: CLASS B SHARES
below cert. no.)
(centered
below boxes) OPPENHEIMER U.S. GOVERNMENT TRUST
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP _____________
(at left) is the owner of
(centered) FULLY PAID CLASS B SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER U.S. GOVERNMENT TRUST
(hereinafter called the "Fund"), transferable only on the
books of the Fund by the holder hereof in person or by
duly authorized attorney, upon surrender of this
certificate properly endorsed. This certificate and the
shares represented hereby are issued and shall be held
subject to all of the provisions of the Declaration of
Trust of the Fund to all of which the holder by acceptance
hereof assents. This certificate is not valid until
countersigned by the Transfer Agent.
<PAGE>
WITNESS the facsimile seal of the Fund and the signatures
of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
_______________________ ___________________
SECRETARY PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER U.S. GOVERNMENT TRUST
SEAL
1982
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMER SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMER MANAGEMENT
CORPORATION)
Denver (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
<PAGE>
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________Class B Shares of
beneficial interest [capital stock] represented by the within Certificate,
and do hereby irrevocably constitute and appoint
___________________________ Attorney to transfer the said shares on the
books of the within named Fund with full power of substitution in the
premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the
of above paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Fund.
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without this "four hands"
watermark: logotype
________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
edgar\220certb
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 25th day of May, 1995, by and between
OPPENHEIMER U.S. GOVERNMENT TRUST (the "Fund"), and OPPENHEIMER MANAGEMENT
CORPORATION ("OMC").
WITNESSETH:
WHEREAS, the Fund is an open-end diversified management investment
company registered as such with the Securities and Exchange Commission
(the "Commission") pursuant to the Investment Company Act of 1940 (the
"Investment Company Act"), and the Management Company is a registered
investment adviser;
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, it is agreed by and between the
parties hereto as follows:
1. In General
OMC agrees, all as more fully set forth herein, to act as
investment adviser to the Fund with respect to the investment of its
assets; to supervise and arrange the purchases of securities for and the
sale of securities held in the portfolio of the Fund; and to furnish
facilities and furnish and supervise personnel as shall be required to
provide effective administration of the Fund.
2. Duties and Obligations of OMC with respect to investments of
assets of the Fund
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees, OMC shall:
(i) Regularly provide investment advice and
recommendations to the Fund with respect to its investments, investment
policies and the purchase and sale of securities;
(ii) Supervise continuously the investment program of
the Fund and the composition of its portfolio; and
(iii) Arrange, subject to the provisions of paragraph
"4" hereof, for the purchase of securities and other investments and for
the sale of securities and other investments held in the portfolio of the
Fund.
(b) Any investment advice furnished by OMC under this
section shall at all times conform to, and be in accordance with, any
requirements imposed by: (1) the provisions of the Investment Company Act
of 1940, and of any rules or regulations in force thereunder; (2) any
other applicable provision of law; (3) the provisions of the Declaration
of Trust and By-Laws of the Fund as amended from time to time; (4) any
policies and determinations of the Board of Trustees of the Fund; and (5)
the terms of the registration statement of the Fund, as amended from time
to time under the Securities Act of 1933 and the Investment Company Act
of 1940.
(c) Nothing in this Agreement shall prevent OMC or any
officer thereof from acting as investment adviser for any other person,
firm or corporation and shall not in any way limit or restrict OMC or any
of its directors, officers, stockholders or employees from buying, selling
or trading any securities for its or their own accounts or for the
accounts of others for whom it or they may be acting, provided, however,
that OMC expressly represents that it will undertake no activities which,
in its judgment, will adversely affect the performance of its obligations
to the Fund under this Agreement.
3. Fund Administration and Allocation of Expenses
OMC shall at its expense provide all executive,
administration and clerical personnel as shall be required to provide
effective administration for the Fund including the compilation and
maintenance of such records with respect to its operations as may
reasonably be required;
the preparation and filing of such reports with respect thereto as shall
be required by the Securities and Exchange Commission; composition of
periodic reports with respect to its operations for the shareholders of
the Fund; composition of proxy materials for meetings of the Fund's
shareholders; and the composition of such registration statements as may
be required by federal securities laws for continuous public sale of
shares of the Fund. OMC shall, at its own cost and expense, also provide
the Fund with adequate office space, facilities and equipment. All other
costs and expenses not expressly assumed by OMC under this Agreement shall
be paid by the Fund, including, but not limited to (i) interests and
taxes; (ii) insurance premiums for fidelity and other coverage requisite
to its operations; (iii) compensation and expenses of its Trustees other
than those associated or affiliated with OMC; (iv) legal and audit
expenses; (v) custodian and transfer agent fees and expenses, and
brokerage commissions, if any; (vi) expenses incident to the redemption
of its shares; (vii) expenses incident to the issuance of its shares
against payment therefor by or on behalf of the subscribers thereto;
(viii) fees and expenses, other than as hereinabove provided, incident to
the registration, under Federal law, of shares of the Fund for public
sale; (ix) expenses of printing and mailing periodic reports with respect
to its operations and notices and proxy materials to shareholders of the
Fund; (x) except as noted above, all other expenses incidental to holding
meetings of the Fund's shareholders; (xi) payments under the Fund's
Service Plan and its Distribution and Service Plans and Agreements; and
(xii) such non-recurring expenses as may arise, including litigation
affecting the Fund and the legal obligation which the Fund may have to
indemnify its officers and Trustees with respect thereto.
4. Portfolio Transactions and Brokerage
OMC is authorized, for the purchase and sale of the Fund's
portfolio securities, to employ such securities dealers as may, in the
best judgment of OMC, implement the policy of the Fund to obtain prompt
and reliable execution of orders at the most favorable net price.
Consistent with this policy, OMC is authorized to direct the execution of
the Fund's portfolio transactions to dealers furnishing statistical
information or research deemed by OMC to be useful or valuable to the
performance of its investment advisory functions for the Fund.
5. Compensation of OMC
The Fund agrees to pay OMC and OMC agrees to accept as full
compensation for all services rendered by OMC as such, a fee computed on
the aggregate net assets of the Fund as of the close of business each day
and payable monthly at the following annual rates:
0.65% of the first $200 million of net assets of the Fund;
plus
0.60% of the next $100 million; plus
0.57% of the next $100 million; plus
0.55% of the next $400 million; plus
0.50% of net assets over $800 million.
6. Use of Name
OMC hereby grants to the Fund a royalty-free, non-exclusive
license to use the name "Oppenheimer" in the name of the Fund and any
trademarks or service marks, whether or not registered, which it may own.
To the extent necessary to protect OMC's rights to the name "Oppenheimer"
under applicable law, such license shall allow OMC to inspect and, subject
to control by the Fund's Board, control the nature and quality of services
offered by the Fund under such name. The license may be terminated by OMC
upon termination of this agreement in which case the Fund shall have no
further right to use the name "Oppenheimer" in its name or otherwise or
any of such marks, and the Fund, the holders of its shares, and its
officers and Trustees shall promptly take whatever action may be necessary
to change its name accordingly. The name "Oppenheimer" or any of said
marks may be used or licensed by OMC in connection with any of its
activities, or licensed by OMC to any other party, and the Fund, the
holders of its shares, and its Trustees and officers agree to take
promptly whatever action may be necessary to permit such use or license.
7. Duration and Termination
(a) This Agreement shall go into effect on the date first set
forth above, and replaces the Fund's Investment Advisory Agreement dated
October 22, 1990. It shall continue in effect until December 31, 1995, and
thereafter from year to year, but only so long as such continuance is
specifically approved at least annually (a) by the Board of Trustees,
including the vote of a majority of the Trustees of the Fund who are not
parties to this Agreement or "interested persons" (as defined in the
Investment Company Act of 1940) of any such party, cast in person at a
meeting called for the purpose of voting on such approval, or (b) by the
vote of the holders of a "majority" (as so defined) of the outstanding
voting securities of the Fund and by such aforementioned vote of the Board
of Trustees.
(b) This Agreement may be terminated by OMC at any time without
penalty upon giving the Fund sixty days' written notice (which notice may
be waived by the Fund) and may be terminated by the Fund at any time
without penalty upon giving OMC sixty days' notice (which notice may be
waived by OMC), provided that such termination by the Fund shall be
directed or approved by the vote of a majority of all of the Board of
Trustees of the Fund in office at the time or by the vote of the holders
of a "majority" (as defined in the Investment Company Act of
1940) of the voting securities of the Fund at the time outstanding and
entitled to vote. This Agreement shall automatically terminate in the
event of its assignment (as "assignment" is defined in the Investment
Company Act of 1940).
8. Liability
(a) In the absence of willful misfeasance, bad faith gross
negligence or reckless disregard of its obligations or duties under this
Agreement, OMC shall not be liable to this Fund or any shareholder for any
act or omission in performing the services required by this Agreement or
for any losses that may be sustained in the purchase, holding or sale of
any security or other investment.
(b) OMC understands and agrees that the obligations of the
Fund under this Agreement are not binding upon any Trustee or shareholder
of the Fund personally, but bind only the Fund and the Fund's property;
OMC represents that it has notice of the provisions of the Declaration of
Trust of the Fund disclaiming shareholder liability for acts or
obligations of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers as of the day
and year first above written.
OPPENHEIMER U.S. GOVERNMENT TRUST
By: /s/ Robert G. Zack
---------------------------------
Robert G. Zack, Assistant Secretary
OPPENHEIMER MANAGEMENT CORPORATION
By: /s/ Mitchell J. Lindauer
-----------------------------------
Mitchell J. Lindauer, Vice President
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees
Oppenheimer U.S. Government Trust:
We consent to the use of our report dated July 22, 1994,
included herein and to the reference to our firm under the heading
"Financial Highlights" in the Prospectus.
/s/ KPMG Peat Marwick LLP
- -------------------------------
KPMG Peat Marwick LLP
Denver, Colorado
May 23, 1995
prosp\220con
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS B SHARES OF
OPPENHEIMER U.S. GOVERNMENT TRUST
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the 30th
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 B shares of the Fund (the "Shares"), contemplated by Rule
12b-1 (the "Rule") under the Investment Company Act of 1940 (the "1940
Act"), pursuant to which the Fund will compensate the Distributor for its
services in connection with the distribution of Shares, and the personal
service and maintenance of shareholder accounts that hold Shares
("Accounts"). The Fund may act as distributor of securities of which it
is the issuer, pursuant to the Rule, according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative support
services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms
and provisions of this Plan shall be interpreted and defined in a manner
consistent with the provisions and definitions contained in (i) the 1940
Act, (ii) the Rule, (iii) Article III, Section 26, of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., or its
successor (the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the
Fund relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have
the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person
or entity which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by
Customers (defined below) of the Recipient; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning the sale of Shares; and (iii) has been selected by
the Distributor to receive payments under the Plan. Notwithstanding
the foregoing, a majority of the Fund's Board of Trustees (the
"Board") who are not "interested persons" (as defined in the 1940
Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreements relating to this Plan
(the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or
entity's rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed
owned by more than one Recipient for purposes of this Plan. In the
event that more than one person or entity would otherwise qualify as
Recipients as to the same Shares, the Recipient which is the dealer
of record on the Fund's books as determined by the Distributor shall
be deemed the Recipient as to such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, (i) within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the
Shares computed as of the close of each business day (the "Service
Fee"), plus (ii) within ten (10) days of the end of each month, in
the aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of Shares
computed as of the close of each business day (the "Asset-Based Sales
Charge") outstanding for six years or less (the "Maximum Holding
Period"). Such Service Fee payments received from the Fund will
compensate the Distributor and Recipients for providing
administrative support services with respect to Accounts. Such
Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution
assistance in connection with the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in the establishment and maintenance of accounts
or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services
in connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may
reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and Recipients may include,
but shall not be limited to, the following: distributing sales
literature and prospectuses other than those furnished to current
holders of the Fund's Shares ("Shareholders"), and providing such
other information and services in connection with the distribution
of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment
under the Plan if it has Qualified Holdings of Shares to entitle it
to payments under the Plan. In the event that either the Distributor
or the Board should have reason to believe that, notwithstanding the
level of Qualified Holdings, a Recipient may not be rendering
appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the
Distributor, at the request of the Board, shall require the Recipient
to provide a written report or other information to verify that said
Recipient is providing appropriate distribution assistance and/or
services in this regard. If the Distributor or the Board of Trustees
still is not satisfied, either may take appropriate steps to
terminate the Recipient's status as such under the Plan, whereupon
such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed 0.0625% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate net asset
value of Shares computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by
the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from
time to time by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate
net asset value of Shares computed as of the close of each business
day, constituting Qualified Holdings owned beneficially or of record
by the Recipient or by its Customers for a period of more than one
(1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to
Recipients that are, or may be, imposed by Article III, Section 26,
of the NASD Rules of Fair Practice. In the event Shares are redeemed
less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand
a pro rata portion of such Advance Service Fee Payments, based on the
ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar
quarter. However, no such payments shall be made to any Recipient
for any such quarter in which its Qualified Holdings do not equal
or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rate set forth above, and/or direct the Distributor to increase or
decrease the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the Minimum
Qualified Holdings, Maximum Holding Period and Minimum Holding
Period, if any, and the rate of payments hereunder applicable to
Recipients, and shall provide each Recipient with written notice
within thirty (30) days after any change in these provisions.
Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice. The
Distributor may make Plan payments to any "affiliated person" (as
defined in the 1940 Act) of the Distributor if such affiliated person
qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are
subject to reduction or elimination of such amounts under the limits
to which the Distributor is, or may become, subject under Article
III, Section 26, of the NASD Rules of Fair Practice. The
distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may
include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity
that sells Shares, and\or paying such persons Advance Service Fee
Payments in advance of, and\or greater than, the amount provided for
in Section 3(b) of this Agreement; (ii) paying compensation to and
expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such
financing from its own resources, or from an affiliate, for the
interest and other borrowing costs of the Distributor's unreimbursed
expenses incurred in rendering distribution assistance and
administrative support services to the Fund; (iv) paying other direct
distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished
to current Shareholders) and state "blue sky" registration expenses;
and (v) any service rendered by the Distributor that a Recipient may
render pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services rendered
in connection with Shares acquired (i) by purchase, (ii) in exchange
for shares of another investment company for which the Distributor
serves as distributor or sub-distributor, or (ii) pursuant to a plan
of reorganization to which the Fund is a party. In the event that
the Board should have reason to believe that the Distributor may not
be rendering appropriate distribution assistance or administrative
support services in connection with the sale of Shares, then the
Distributor, at the request of the Board, shall provide the Board
with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC),
from its own resources, from Asset-Based Sales Charge payments or
from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does
not obligate or in any way make the Fund liable to make any payment
whatsoever to any person or entity other than directly to the
Distributor. In no event shall the amounts to be paid to the
Distributor exceed the rate of fees to be paid by the Fund to the
Distributor set forth in paragraph (a) of this section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of those persons to be Trustees of the Fund
who are not "interested persons" of the Fund ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees.
Nothing herein shall prevent the Disinterested Trustees from soliciting
the views or the involvement of others in such selection or nomination if
the final decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund
shall provide written reports to the Fund's Board for its review,
detailing services rendered in connection with the distribution of the
Shares, the amount of all payments made and the purpose for which the
payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied
with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at
any time, without payment of any penalty, by a vote of a majority of the
Independent Trustees or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act); (iii) it shall go
into effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan
has been approved by a vote of the Board and its Independent Trustees cast
in person at a meeting called on March 16, 1995, for the purpose of voting
on this Plan, and shall take effect as of the date first set forth above.
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 B
Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor shall be
entitled to payment from the Fund of 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
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 30th
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 person
or entity which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by
Customers (defined below) of the Recipient; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning the sale of Shares; and (iii) has been selected by
the Distributor to receive payments under the Plan. Notwithstanding
the foregoing, a majority of the Fund's Board of Trustees (the
"Board") who are not "interested persons" (as defined in the 1940
Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreements relating to this Plan
(the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or
entity's rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed
owned by more than one Recipient for purposes of this Plan. In the
event that more than one person or entity would otherwise qualify as
Recipients as to the same Shares, the Recipient which is the dealer
of record on the Fund's books as determined by the Distributor shall
be deemed the Recipient as to such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, within forty-
five (45) days of the end of each calendar quarter, in the aggregate
amount 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 with respect to Accounts. Such
Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution
assistance in connection with the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in the establishment and maintenance of accounts
or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services
in connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may
reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and Recipients may include,
but shall not be limited to, the following: distributing sales
literature and prospectuses other than those furnished to current
holders of the Fund's Shares ("Shareholders"), and providing such
other information and services in connection with the distribution
of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment
under the Plan if it has Qualified Holdings of Shares to entitle it
to payments under the Plan. In the event that either the Distributor
or the Board should have reason to believe that, notwithstanding the
level of Qualified Holdings, a Recipient may not be rendering
appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the
Distributor, at the request of the Board, shall require the Recipient
to provide a written report or other information to verify that said
Recipient is providing appropriate distribution assistance and/or
services in this regard. If the Distributor or the Board of Trustees
still is not satisfied, either may take appropriate steps to
terminate the Recipient's status as such under the Plan, whereupon
such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed 0.0625% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate net asset
value of Shares computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by
the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from
time to time by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate
net asset value of Shares computed as of the close of each business
day, constituting Qualified Holdings owned beneficially or of record
by the Recipient or by its Customers for a period of more than one
(1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to
Recipients that are, or may be, imposed by Article III, Section 26,
of the NASD Rules of Fair Practice. In the event Shares are redeemed
less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand
a pro rata portion of such Advance Service Fee Payments, based on the
ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor shall make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.1875% (0.75% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares computed as of the
close of each business day constituting Qualified Holdings owned
beneficially or of record by the Recipient or its Customers for a
period of more than one (1) year. However, no such service fee or
asset-based sales charge payments (collectively, the "Recipient
Payments") shall be made to any Recipient for any such quarter in
which its Qualified Holdings do not equal or exceed, at the end of
such quarter, the minimum amount ("Minimum Qualified Holdings"), if
any, to be set from time to time by a majority of the Independent
Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rates set forth above, and/or direct the Distributor to increase or
decrease the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the Minimum
Qualified Holdings 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 Service Fee and the Asset-Based Sales Charge on Shares are
subject to reduction or elimination of such amounts under the limits
to which the Distributor is, or may become, subject under Article
III, Section 26, of the NASD Rules of Fair Practice. The
distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may
include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity
that sells Shares, and\or paying such persons Advance Service Fee
Payments in advance of, and\or greater than, the amount provided for
in Section 3(b) of this Agreement; (ii) paying compensation to and
expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such
financing from its own resources, or from an affiliate, for the
interest and other borrowing costs of the Distributor's unreimbursed
expenses incurred in rendering distribution assistance and
administrative support services to the Fund; (iv) paying other direct
distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished
to current Shareholders) and state "blue sky" registration expenses;
and (v) any service rendered by the Distributor that a Recipient may
render pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services rendered
in connection with Shares acquired (i) by purchase, (ii) in exchange
for shares of another investment company for which the Distributor
serves as distributor or sub-distributor, or (ii) pursuant to a plan
of reorganization to which the Fund is a party. In the event that
the Board should have reason to believe that the Distributor may not
be rendering appropriate distribution assistance or administrative
support services in connection with the sale of Shares, then the
Distributor, at the request of the Board, shall provide the Board
with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC),
from its own resources, from Asset-Based Sales Charge payments or
from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does
not obligate or in any way make the Fund liable to make any payment
whatsoever to any person or entity other than directly to the
Distributor. In no event shall the amounts to be paid to the
Distributor exceed the rate of fees to be paid by the Fund to the
Distributor set forth in paragraph (a) of this section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of those persons to be Trustees of the Fund
who are not "interested persons" of the Fund ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees.
Nothing herein shall prevent the Disinterested Trustees from soliciting
the views or the involvement of others in such selection or nomination if
the final decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund
shall provide written reports to the Fund's Board for its review,
detailing services rendered in connection with the distribution of the
Shares, the amount of all payments made and the purpose for which the
payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied
with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at
any time, without payment of any penalty, by a vote of a majority of the
Independent Trustees or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act); (iii) it shall go
into effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Plan
has been approved by a vote of the Board and its Independent Trustees cast
in person at a meeting called on 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
ofmi\220C#2
Oppenheimer U.S. Government Trust
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated
as described below, on the basis of the Fund's distributions, for the past
10 years which are as follows:
Distribution Amount from Amount from
Reinvestment Ordinary Long and Short-Term Reinvestment
(Ex) Date Income Capital Gains Price
Class A Shares
09/26/85 $0.1250 $0.0000 $ 9.960
10/23/85 0.0850 0.0000 10.000
11/26/85 0.1050 0.0000 10.160
12/24/85 0.0900 0.0900 10.110
01/22/86 0.0900 0.0000 10.050
02/26/86 0.0900 0.0000 10.320
03/26/86 0.0900 0.0000 10.390
04/23/86 0.0850 0.0000 10.390
05/21/86 0.0790 0.0000 10.170
06/25/86 0.0800 0.0370 10.150
07/23/86 0.0680 0.0000 10.200
08/27/86 0.0860 0.0000 10.300
09/25/86 0.0680 0.0100 10.180
10/23/86 0.0696 0.0000 10.200
11/26/86 0.0856 0.0000 10.270
12/24/86 0.0695 0.0480 10.240
01/22/87 0.0708 0.0000 10.260
02/19/87 0.0674 0.0000 10.210
03/19/87 0.0680 0.0000 10.200
04/15/87 0.0648 0.0000 9.850
05/14/87 0.0682 0.0000 9.710
06/11/87 0.0650 0.0000 9.700
07/09/87 0.0668 0.0000 9.790
08/06/87 0.0657 0.0000 9.710
09/03/87 0.0668 0.0000 9.570
10/01/87 0.0674 0.0000 9.420
10/28/87 0.0682 0.0000 9.560
11/24/87 0.0664 0.0000 9.600
12/31/87 0.0890 0.0000 9.620
01/28/88 0.0700 0.0000 9.780
02/25/88 0.0720 0.0000 9.840
03/24/88 0.0714 0.0000 9.710
04/21/88 0.0710 0.0000 9.620
05/19/88 0.0697 0.0000 9.470
06/16/88 0.0696 0.0000 9.580
07/14/88 0.0685 0.0000 9.490
08/11/88 0.0679 0.0000 9.390
09/08/88 0.0688 0.0000 9.510
10/06/88 0.0684 0.0000 9.570
11/03/88 0.0683 0.0000 9.530
12/01/88 0.0698 0.0000 9.390
12/29/88 0.0702 0.0000 9.350
F:\rr\dnvshare\rr\sai\063094\220.wk4
Oppenheimer U.S. Government Trust
Page 2
Distribution Amount from Amount from
Reinvestment Ordinary Long and Short-Term Reinvestment
(Ex) Date Income Capital Gains Price
Class A Shares
01/26/89 $0.0701 $0.0000 $ 9.380
02/23/89 0.0700 0.0000 9.260
03/23/89 0.0700 0.0000 9.190
04/20/89 0.0700 0.0000 9.240
05/18/89 0.0710 0.0000 9.340
06/15/89 0.0700 0.0000 9.480
07/13/89 0.0690 0.0000 9.570
08/10/89 0.0675 0.0000 9.530
09/07/89 0.0674 0.0000 9.480
10/05/89 0.0675 0.0000 9.470
11/02/89 0.0676 0.0000 9.550
11/30/89 0.0677 0.0000 9.560
12/28/89 0.0677 0.0000 9.510
01/25/90 0.0678 0.0000 9.340
02/22/90 0.0677 0.0000 9.270
03/22/90 0.0679 0.0000 9.260
04/19/90 0.0677 0.0000 9.160
05/17/90 0.0676 0.0000 9.200
06/14/90 0.0678 0.0000 9.260
07/12/90 0.0679 0.0000 9.220
08/09/90 0.0680 0.0000 9.190
09/06/90 0.0678 0.0000 9.170
10/04/90 0.0681 0.0000 9.190
11/01/90 0.0661 0.0000 9.190
11/29/90 0.0635 0.0000 9.240
12/31/90 0.0725 0.0000 9.320
01/24/91 0.0566 0.0000 9.370
02/21/91 0.0666 0.0000 9.430
03/21/91 0.0633 0.0000 9.280
04/18/91 0.0605 0.0000 9.350
05/16/91 0.0590 0.0000 9.330
06/13/91 0.0575 0.0000 9.200
07/11/91 0.0575 0.0000 9.280
08/08/91 0.0558 0.0000 9.420
09/05/91 0.0564 0.0000 9.460
10/03/91 0.0555 0.0000 9.580
10/31/91 0.0564 0.0000 9.610
11/27/91 0.0550 0.0000 9.610
12/31/91 0.0623 0.0000 9.910
01/23/92 0.0417 0.0000 9.710
02/20/92 0.0507 0.0000 9.600
03/19/92 0.0515 0.0000 9.520
04/16/92 0.0553 0.0000 9.620
05/14/92 0.0452 0.0000 9.680
06/11/92 0.0504 0.0000 9.670
07/09/92 0.0523 0.0000 9.820
08/06/92 0.0534 0.0000 9.790
09/03/92 0.0526 0.0000 9.820
Oppenheimer U.S. Government Trust
Page 3
Distribution Amount from Amount from
Reinvestment Ordinary Long and Short-Term Reinvestment
(Ex) Date Income Capital Gains Price
Class A Shares
10/01/92 $0.0532 $0.0000 $ 9.870
10/29/92 0.0527 0.0000 9.700
11/25/92 0.0529 0.0000 9.670
12/31/92 0.0651 0.0000 9.710
01/28/93 0.0504 0.0000 9.790
02/25/93 0.0542 0.0000 9.900
03/25/93 0.0507 0.0000 9.880
04/22/93 0.0518 0.0000 9.930
05/20/93 0.0508 0.0000 9.860
06/17/93 0.0509 0.0000 9.930
07/30/93 0.0787 0.0000 9.960
08/31/93 0.0522 0.0000 10.030
09/30/93 0.0531 0.0000 9.990
10/29/93 0.0484 0.0000 9.950
11/30/93 0.0501 0.0000 9.820
12/31/93 0.0501 0.0000 9.830
01/31/94 0.0531 0.0000 9.870
02/28/94 0.0551 0.0000 9.720
03/31/94 0.0618 0.0000 9.460
04/29/94 0.0520 0.0000 9.310
05/31/94 0.0562 0.0000 9.260
06/30/94 0.0566 0.0000 9.200
07/29/94 0.0555 0.0000 9.300
Class C Shares
12/31/93 0.0395 0.0000 9.830
01/31/94 0.0431 0.0000 9.860
02/28/94 0.0463 0.0000 9.710
03/31/94 0.0545 0.0000 9.440
04/29/94 0.0454 0.0000 9.300
05/31/94 0.0495 0.0000 9.250
06/30/94 0.0501 0.0000 9.190
07/29/94 0.0489 0.0000 9.290
Oppenheimer U.S. Government Trust
Page 4
1. AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 06/30/94:
The formula for calculating average annual total return is as follows:
1 ERV n
- -------- = n (--------) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the period.
P = hypothetical initial investment of $1,00
Class A Shares
Examples, assuming a maximum sales charge of 4.75%:
One Year Five Year Inception
$941.31 1 $1,357.68 0.2 $1,921.79 0.1127
(---------) -1=-5.87% (---------) -1=6.31% (---------) -1=7.64%
$1,000.00 $1,000.00 $1,000.00
Class C Shares
Examples, assuming a maximum contingent deferred sales charge of 1.00%:
Inception
$959.09 1.7136
(----------) -1 = -6.91%
$1,000.00
Examples at NAV:
Class A Shares
One Year Five Year Inception
$988.25 1 $1,425.39 0.2 $2,017.63 0.1127
(--------) -1=-1.18% (----------) -1=7.35% (----------) -1=8.23%
$1,000.00 $1,000.00 $1,000.00
Class C Shares
Inception
$968.77 1.7136
(-----------) -1 = -5.29%
$1,000.00
Oppenheimer U.S. Government Trust
Page 5
2. CUMULATIVE TOTAL RETURNS FOR THE PERIODS ENDED 06/30/94:
The formula for calculating cumulative total return is as follows:
ERV - P
--------- = Cumulative Total Return
P
Class A Shares
Examples, assuming a maximum sales charge of 4.75%:
One Year Five Year Inception
$941.31 - 1,000 $1,357.68 - 1,000 $1,921.79 - 1,000
- ----------------- = -5.87% --------------- = 35.77% ---------------- = 92.18%
$1,000 $1,000 $1,000
Class C Shares
Examples, assuming a maximum contingent deferred sales charge of 1.00%:
Inception
$959.09 - 1,000
- ------------------- = -4.09%
$1,000
Examples at NAV:
Class A Shares
One Year Five Year Inception
$988.25 - 1,000 $1,425.39 - 1,000 $2,017.63 - 1,000
- -------------- = -1.18 ----------------- = 42.54% ---------------- = 101.76%
$1,000 $1,000 $1,000
Class C Shares
Inception
$968.77 - 1,000
- ----------------- = -3.12%
$1,000
Oppenheimer U.S. Government Trust
Page 6
3. STANDARDIZED YIELDS FOR THE 30-DAY PERIOD ENDED 06/30/94:
The Funds's standardized yield is calculated using the following formula set
forth in tthe SEC rules:
a - b 6
Standardized Yield = 2 { ( --------------- + 1 ) - 1 }
cd or ce
The symbols above represent the follwing factors:
a = Dividends and interest earned during the 30 - day period.
b = Expenses accrued for the period (net of any expense reimbursements).
c = Average daily number of Fund shares outstanding during the 30 - day
period that were entitled to receive dividends.
d = The Fund's maximum offering price (including sales charge) per share on
the last day of the period.
e = The Fund's net asset value (excluding contingent deferred sales charge)
per share on the last day of the period.
Class A Shares
Example, assuming a maximum sales charge of 4.75%:
$1,945,287.32 - $294,236.68 6
2 { ( -------------------------+ 1) - 1 } = 6.14%
33,879,823 * $9.65
Class C Shares
Example at NAV:
$24,432.53 - $6,467.18 6
2 { ( -------------------------+ 1) - 1 } = 5.57%
426,355 * $9.19
Oppenheimer U.S. Government Trust
Page 7
4. DIVIDEND YIELDS FOR THE 30-DAY PERIOD ENDED 06/30/94:
The Fund's dividend yields are calculated using the following formula:
Dividend Yield = ( a / 30 * 365 ) / b or c
The symbols above represent the following factors:
a = The dividend earned during the period.
b = The Fund's maximum offering price (including sales charge) per
share on the last day of the period.
c = The Fund's net asset value (excluding sales charge) per share on
the last day of the period.
Examples :
Class A Shares
Dividend Yield ($0.0565988 / 30 * 365)/ $9.66 = 7.13%
at Maximum Offer:
Dividend Yield ($0.0565988 / 30 * 365)/ $9.20 = 7.48%
at Net Asset Value:
Class C Shares
Dividend Yield ($0.0501038 / 30 * 365)/ $9.19 = 6.63%
at Net Asset Value:
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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