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. 32 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
AMENDMENT NO. 29 / X /
OPPENHEIMER U.S. GOVERNMENT TRUST
- --------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
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(Address of Principal Executive Offices)
(212) 323-0200
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(Registrant's Telephone Number)
Andrew J. Donohue, Esq.
Oppenheimer Management Corporation
Two World Trade Center New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box):
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On October 24, 1996, 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 August 31, 1996, was filed on August 23, 1996.
<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; How to Exchange 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 November 1, 1996
Oppenheimer U.S. Government Trust (the "Fund") 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 November 1, 1996 Statement of Additional Information. For a
free copy, call OppenheimerFunds Services, the Fund's Transfer Agent, at
1-800-525-7048, or write to the Transfer Agent at the address on the back
cover. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
(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
A B O U T T H E F U N D
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
A-1 Appendix A: Special Sales Charge Arrangements
<PAGE>
A B O U T T H E F U N D
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 numbers below are based on the Fund's expenses
during the fiscal year ended June 30, 1996.
- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to "About Your Account" from
pages __ through __ for an explanation of how and when these charges
apply.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
<S> <C> <C> <C>
Maximum Sales Charge 4.75% None None
on Purchases (as a %
of offering price)
Maximum Deferred Sales None(1) 5% in the first 1.0%(2)
Charge (as a % of the year, declining
lower of the original to 1% in the
offering price or sixth year, and
redemption proceeds) eliminated
thereafter(2)
Maximum Sales Charge on None None None
Reinvested Dividends
Redemption Fee None(3) None(3) None(3)
Exchange Fee None None None
<FN>
_________________________
1. If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) 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 in which you purchased
those shares. See "How to Buy Shares - Buying Class A Shares" below.
2. See "How to Buy Shares - Buying Class B Shares" and "How to Buy Shares
- - Buying Class C 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 transfer
through AccountLink, or, with respect to Class A shares only, for which
checkwriting privileges are used (see "How to Sell Shares").
</TABLE>
- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, OppenheimerFunds,
Inc. (which is referred to in this Prospectus as the "Manager"). The
rates of the Manager's fees are set forth in "How the Fund is Managed,"
below. The Fund has other regular expenses for services, such as transfer
agent fees, custodial fees paid to the bank that holds the Fund's
portfolio securities, audit fees and legal expenses. Those expenses are
detailed in the Fund's Financial Statements in the Statement of Additional
Information.
Annual Fund Operating Expenses (as a Percentage of Average Net Assets)
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
<S> <C> <C> <C>
Management Fees 0.60% 0.60% 0.60%
12b-1 Distribution
Plan Fees 0.24% 1.00% 1.00%
Other Expenses 0.24% 0.33% 0.25%
Total Fund Operating
Expenses 1.08% 1.93% 1.85%
</TABLE>
The numbers in the chart above are based upon the Fund's expenses in
the fiscal year ended June 30, 1996. 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 fees (the fee is 0.25% of average annual net assets of that
class), and for Class B and Class C shares, are the service fees (the
service fee is 0.25% of average annual net assets of that class) and the
asset-based sales charge 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, depending on a number of factors, including the actual
amount of the assets represented by each class of shares. Class B shares
were not publicly sold before July 21, 1995. Therefore, the Annual Fund
Operating Expenses shown for Class B shares are based on amounts that
would have been payable in that period assuming that Class B shares were
outstanding during the entire fiscal year.
- 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. 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:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years(1)
<S> <C> <C> <C> <C>
Class A Shares $58 $80 $104 $173
Class B Shares $70 $91 $124 $183
Class C Shares $29 $58 $100 $217
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 $80 $104 $173
Class B Shares $20 $61 $104 $183
Class C Shares $19 $58 $100 $217
</TABLE>
1. In the first example, expenses include the Class A initial sales charge
and the applicable Class B or Class C contingent deferred sales charge.
In the second example, Class A expenses include the initial sales charge,
but Class B and Class C expenses do not include contingent deferred sales
charges. 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
imposed on Class B and Class C shares, long-term holders of Class B and
Class C shares could pay the economic equivalent of more than the maximum
front-end sales charge allowed under applicable regulations. For Class
B shareholders, the automatic conversion of Class B shares to Class A
shares is designed to minimize the likelihood that this will occur.
Please refer to "How to Buy Shares - Buying Class B 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 may be more or less than those shown.
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 debt
instruments issued or guaranteed by the U.S. Government or its agencies
or instrumentalities, 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 in 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 OppenheimerFunds, Inc. Prior to January 6, 1996, the
Manager was known as Oppenheimer Management Corporation. The Manager
(including a subsidiary) manages investment company portfolios having over
$55 billion in assets at September 30, 1996. The Manager is paid an
advisory fee by the Fund, based on the Fund's net assets. The Fund's
portfolio manager, David A. Rosenberg, is employed by the Manager and is
primarily responsible for the selection of the Fund's securities. 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 or by writing a check against your current account (available for
Class A shares only). Please refer to "How to Sell Shares" on page __.
The Fund also offers exchange privileges to other Oppenheimer funds,
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
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, 1996 and for the fiscal period July 1, 1996 to August
31, 1996 (the Fund's new fiscal year end), is included in the Statement
of Additional Information. Class B shares were only offered during a
portion of the fiscal year ended June 30, 1996, commencing July 21, 1995.
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.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
Financial Highlights
Class A
--------------------------------------------------------------------------
Two Months
Ended
August 31, Year Ended June 30,
1996(2) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $9.30 $9.51 $9.20 $9.95
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .10 .67 .68 .67
Net realized and unrealized gain (loss) (.07) (.21) .31 (.74)
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .03 .46 .99 (.07)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.10) (.66) (.68) (.64)
Dividends in excess of net investment
income -- -- -- (.01)
Distributions from net realized gain -- -- -- --
Tax return of capital distributions -- (.01) -- (.03)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.10) (.67) (.68) (.68)
- ---------------------------------------------------------=====================================
=====================================
Net asset value, end of period $9.23 $9.30 $9.51 $9.20
==========================================================
================
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(4) 0.42% 4.91% 11.22% (1.17)%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $503,693 $504,966 $312,607 $310,027
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $508,123 $452,236 $307,306 $355,698
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.64(5) 7.07% 7.32% 6.61%
Expenses 1.09(5) 1.08% 1.09% 1.14%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 5.6% 399.7% 303.5% 139.5%
<PAGE>
[table restubbed]
--------------------------------------------------------------------------
Financial Highlights
Class A
--------------------------------------------------------------------------
Year Ended June 30,
1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data:
Net asset value, beginning of period $9.73 $9.25 $9.24 $9.54
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .68 .69 .83 .90
Net realized and unrealized gain (loss) .22 .48 .02 (.32)
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .90 1.17 .85 .58
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.68) (.69) (.84) (.88)
Dividends in excess of net investment
income -- -- -- --
Distributions from net realized gain -- -- -- --
Tax return of capital distributions -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.68) (.69) (.84) (.88)
- ----------------------------------------------------------====================================
=====================================
Net asset value, end of period $9.95 $9.73 $9.25 $9.24
==========================================================
===============
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(4) 9.55% 13.05% 9.53% 6.34%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $380,916 $395,863 $342,220 $264,728
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $401,789 $376,532 $299,144 $253,085
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.90% 7.23% 8.93% 9.60%
Expenses 1.17% 1.17% 1.19% 1.16%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 96.8% 207.8% 133.9% 125.5%
</TABLE>
<PAGE>
[Restubbed Table Con't]
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
Financial Highlights
Class A Class B
--------------------------------------------------------------------------
Two Months
Year Ended June 30, Ended Period Ended
August 31, June 30,
1989 1988 1987 1996(2) 1996(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $9.59 $9.77 $10.17 $9.29 $9.40
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .91 .90 .84 .09 .56
Net realized and unrealized gain (loss) (.05) (.18) .33 (.07) (.11)
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .86 .72 .51 .02 .45
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.91) (.90) (.85) (.09) (.55)
Dividends in excess of net investment
income -- -- -- -- --
Distributions from net realized gain -- -- (.06) -- --
Tax return of capital distributions -- -- -- -- (.01)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.91) (.90) (.91) (.09) (.56)
- ----------------------------------------------------------====================================
=====================================
Net asset value, end of period $9.54 $9.59 $9.77 $9.22 $9.29
==========================================================
===============
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(4) 9.51% 7.78% 5.54% 0.28% 4.80%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $232,593 $203,857 $216,306 $36,504 $30,737
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $210,060 $197,834 $207,557 $35,078 $19,227
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 9.65% 9.36% 8.73% 5.82%(5) 6.44%(5)
Expenses 1.19% 1.13% 0.99% 1.88%(5) 1.93%(5)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 76.9% 141.3% 263.0% 5.6% 399.7%
</TABLE>
<PAGE>
[Restubbed Table Con't]
<TABLE>
<CAPTION>
----------------------------------------------------
Financial Highlights
Class C
----------------------------------------------------
Two Month
Ended August31, Year Ended June 30,
1996(2) 1996 1995 1994(1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $9.29 $9.50 $9.19 $9.83
- -------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .09 .60 .61 .33
Net realized and unrealized gain (loss) (.07) (.21) .30 (.64)
- -------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .02 .39 .91 .31
- -------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.09) (.59) (.60) (.33)
Dividends in excess of net investment
income -- -- -- --
Distributions from net realized gain -- -- -- --
Tax return of capital distributions -- (.01) -- --
- -------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.09) (.60) (.60) (.33)
- ----------------------------------------------------------====================================
===============
Net asset value, end of period $9.22 $9.29 $9.50 $9.19
===================================================
- -------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(4) 0.28% 4.11% 10.31% 3.12%
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $18,547 $18,531 $11,019 $4,261
- -------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $18,620 $15,766 $6,503 $2,173
- -------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.90%(5) 6.27% 6.44% 5.97%(5)
Expenses 1.84%(5) 1.85% 1.89% 1.96%(5)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 5.6% 399.7% 303.5% 139.5%
[End Restubbed Table]
<FN>
1. For the period from December 1, 1993 (inception of offering) to June 30, 1994.
2. The Fund changed its fiscal year end from June 30 to August 31.
3. For the period from July 21, 1995 (inception of offering) to June 30, 1996.
4. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period (or inception of
offering), 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
period ended August 31, 1996 were $107,275,488 and $38,439,764, respectively. For the years ended June 30, 1996 and
1995,
purchases and sales of investment securities included mortgage "dollar-rolls".
</FN>
</TABLE>
<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 to achieve 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 U.S. Government
agencies and instrumentalities 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, Freddie Mac and Fannie Mae.
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 (when the manager believes that the financial markets are not
in a volatile or unstable period). 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 or CMOs
or other such 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 interest only (I/O)
is extremely sensitive to the rate of payment of the principal on the
underlying mortgages. Principal prepayments increase that sensitivity.
I/Os 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 prepayment rates increase. In times of rapidly
falling interest rates, the Fund might receive back less than its
investment. Conversely, the value of P/Os are very sensitive to increases
in interest rates. When interest rates increase, mortgage prepayments
decline and the cash flows accruing to P/Os decline. Therefore, in times
of rising interest rates, the value of principal only mortgage-backed
securities may decline.
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."
The Fund may enter into "forward roll" transactions with banks or
other buyers that provide for future delivery of mortgage-backed
securities in which the Fund may invest. The Fund would be required to
identify cash, U.S. Government Securities or other high-grade debt
securities to its custodian bank in an amount equal to its purchase
payment obligation under the roll.
- Interest Rate Risks. Although U.S. Government Securities involve
little credit risk, their market values will fluctuate until they mature,
depending on prevailing interest rates. When prevailing interest rates
go up, the market value of already issued debt securities tends to go
down. When interest rates go down, the market value of already issued
debt securities tends to go up. The magnitude of those fluctuations
generally will be greater when the average maturity of the Fund's
portfolio securities is longer. Because of this factor, the Fund's share
value and yield are not guaranteed and will fluctuate, and there can be
no assurance that the Fund's objective of seeking high current income and
conservation of principal will be achieved.
- 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 (and may increase
the Fund's transaction costs), 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 techniques
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 information about these practices, including limitations on their use
that are designed to reduce some of the risks.
- Loans of Portfolio Securities. To attempt to increase its income
or to raise cash for liquidity purposes, the Fund may lend its portfolio
securities other than in repurchase transactions to brokers, dealers and
other financial institutions. The Fund must receive collateral for a
loan. These loans are limited to not more than 25% of the Fund's total
assets and are subject to certain other conditions described in the
Statement of Additional Information. See "Loans of Portfolio Securities"
in the Statement of Additional Information on securities loans.
- "When-Issued" and "Delayed Delivery" Transactions. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "delayed delivery" basis. These terms refer to securities
that have been created and for which a market exists, but which are not
available for immediate delivery. There may be a risk of loss to the Fund
if the value of the security declines prior to the settlement date.
Additionally, if the Fund chooses to sell its right to acquire the when-
issued security prior to its acquisition, or to dispose of its right to
deliver or receive under a delayed delivery commitment, the Fund may incur
a gain or loss.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
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.
- Reverse Repurchase Agreements. The Fund may enter into reverse
repurchase agreements under which the Fund sells securities and agrees to
repurchase them at an agreed upon time and at an agreed upon price. The
difference between the amount the Fund receives for the securities and the
amount it pays on repurchase is deemed to be a payment of interest.
- 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 as a temporary substitute for purchasing securities.
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 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) 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 ("NASDAQ") of The Nasdaq Stock
Market, Inc.; 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, 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; and (5) a call or put option may not be purchased if the value
of the initial premiums paid 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, security index, or other readily
measurable economic variable. The use of hedging instruments requires
special skills and knowledge of investment techniques that are different
from what is required for normal portfolio management. If the Manager
uses a hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the Fund's return. The Fund
could also experience losses if the prices of its futures and options
positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market for the future or
option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. 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 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 below.
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:
- 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";
- 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
- 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 officers and provides more information
about them. Although the Fund will not normally hold annual meetings of
its shareholders, 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. All classes invest in the same investment portfolio.
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 as a class on matters that affect that class
alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the Fund's
investments and managing its day-to-day business. The Manager carries out
its duties, subject to the policies established by the Board of Trustees,
under an Investment Advisory Agreement which states the Manager's
responsibilities. The agreement sets forth the fees paid by the Fund to
the Manager and describes the expenses that the Fund is responsible for
paying to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $55 billion
as of September 30, 1996, and with more than 3 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 is David A.
Rosenberg. He has been the person principally responsible for the day-to-
day management of the Fund's portfolio since January 3, 1994. Mr.
Rosenberg is a Vice President of the Manager. 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,
brokers and other financial institutions that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager that acts
as the the Fund's Distributor. The Distributor also distributes the
shares of the other Oppenheimer funds managed by the Manager and is sub-
distributor for funds managed by a subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder
servicing agent for the Fund on an "at-cost" basis. It also acts as the
shareholder servicing agent for the other Oppenheimer funds. Shareholders
should direct inquiries about their account to the Transfer Agent at the
address and toll-free number shown below in this Prospectus and on the
back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms
"total return" 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). This
performance information may be useful to help you see how well your
investment has done over time and to compare it to other funds or market
indices, as we have done on pages __ and __.
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. 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 over time, depending on market
conditions, the composition of the portfolio, expenses and which class of
shares you purchase.
- Total Returns. There are different types of "total returns" used
to measure the Fund's performance. Total return is the change in value
of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares. The cumulative total return measures the change in
value over the entire period (for example, ten years). An average annual
total return shows the average rate of return for each year in a period
that would produce the cumulative total return over the entire period.
However, average annual total returns do not show the Fund's actual year-
by-year performance.
When total returns are quoted for Class A shares, normally the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B or Class C shares, normally the effect of
the contingent deferred sales charge that applies to the period for which
total return is shown has been deducted. However, total returns may also
be quoted at "net asset value," without considering the effect of the
sales charge, and those returns would be less 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 August 31, 1996,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.
- Management's Discussion of Performance. During the first half of
1996 interest rates increased as investors become concerned about renewed
inflation. During this period, the Manager limited the average maturity
of the Fund's overall portfolio so that it would be less sensitive to
fluctuations in interest rates. Additionally, the Manager increased the
Fund's holdings of mortgage-backed securities which provided greater
income potential as interest rates increased and the risk of increased
prepayments declined. As interest rates stabilized during the second half
of 1996, the Manager continued to hold large positions in mortgage-backed
securities because these investments tend to perform well in stable
interest rate environments when prepayment rates are more reliable.
Mortgage-backed securities also provided extra yield compared to the more
creditworthy U.S. Treasury securities.
- Comparing the Fund's Performance to the Market. The graphs below
show the performance of a hypothetical $10,000 investment in Class A,
Class B and Class C shares of the Fund at June 30, 1996 and August 31,
1996, the Fund's new fiscal year end; in the case of Class A shares, over
a ten-year period ending June 30, 1996 and August 31, 1996; in the case
of Class B shares, from the inception of the Class on July 21, 1995 to
June 30, 1996, for the one year period ended August 31, 1996 and from the
inception of the Class on July 21, 1995 to August 31, 1996; and in the
case of Class C shares, for the one year period ended June 30, 1996, from
the inception of the Class on December 1, 1993 to June 30, 1996.
Performance on the Fund's Class C shares is also shown for the one year
period ended August 31, 1996 and from the inception of the Class on
December 1, 1993 to August 31, 1996.
The performance of each class of the Fund's shares 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 general
measurement 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
below 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 must be noted that the Fund's investments are not limited
to the securities in any one index. Moreover, the index data does not
reflect any assessment of the risk of the investments included in the
index.
Class A Shares
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)
Average Annual Total Returns of Class A Shares Of The Fund at 06/30/96(1)
1-Year 5-Year 10-Year
(0.08)% 6.34% 7.03%
Average Annual Total Returns of Class A Shares Of The Fund at 08/31/96(1)
1-Year 5-Year 10-Year
(0.49)% 5.66% 7.63%
Class B Shares
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)
Cumulative Total Returns of Class B Shares Of The Fund at 06/30/96(2)
1-Year
(0.14)%
Average Annual Total Returns of Class B Shares Of The Fund at 08/31/96(2)
1-Year Life of Class
(1.25)% 1.05%
Class C Shares
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)
Average Annual Total Returns of Class C Shares Of The Fund at 06/30/96(3)
1-Year Life of Class
3.13% 4.18%
Average Annual Total Returns of Class C Shares Of The Fund at 08/31/96(3)
1-Year Life of Class
2.70% 4.02%
Past performance is not predictive of future performance.
______________________
The average annual total returns and the ending account value in the graph
show change in share value and include reinvestment of all dividends and
capital gains distributions. The Fund's fiscal year end has changed from
6/30 to 8/31.
1. Class A returns are shown net of the applicable 4.75% maximum initial
sales charge. The inception date of the Fund (Class A shares) was
8/16/85.
2. Class B shares of the Fund were first publicly offered on 7/21/95. The
returns are shown net of the applicable 5% and 4% contingent deferred
sales charge, respectively, for the one year period and the life of the
class. The ending account value in the graph is net of the applicable 4%
contingent deferred sales charge.
3. Class C shares of the Fund were first publicly offered on 12/1/93. The
one year and life of class return is shown net of the applicable 1%
contingent deferred sales charge.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
A B O U T Y O U R A C C O U N T
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.
- Class A Shares. If you buy Class A shares, you pay an initial
sales charge on investments up to $1 million (up to $500,000 for purchases
by OppenheimerFunds prototype 401(k) plans.) If you purchase Class A
shares as part of an investment of at least $1 million ($500,000 for
OppenheimerFunds prototype 401(k) plans) in shares of one or more
Oppenheimer funds, you will not pay an initial sales charge but if you
sell any of those shares within 18 months of buying them, you may pay a
contingent deferred sales charge. The amount of that sales charge will
vary depending on the amount you invested. Sales charge rates are
described in "Buying Class A Shares" 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 sales charge varies depending on how long you own your
shares, as discussed in "Buying Class B Shares," below.
- 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%, as discussed in "Buying Class C Shares," below.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisor. The Fund's operating
costs that apply to a class of shares and the effect of the different
types of sales charges on your investment will vary your investment
results over time. The most important factors to consider are how much
you plan to invest and how long you plan to hold your investment. 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, considering the effect of the
annual asset-based sales charge on Class B and Class C expenses (which,
like all expenses, will affect your investment return). For the sake of
comparison, we have assumed that there is a 10% rate of appreciation in
the investment each year. Of course, the actual performance of your
investment cannot be predicted and will vary, based on the Fund's actual
investment returns, and the operating expenses borne by each class of
shares, and which class of shares you invest in. The factors discussed
below are not intended to be investment advice or recommendations, because
each investor's financial considerations are different. The discussion
below of the factors to consider in purchasing a particular class of
shares assumes 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. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to invest.
For example, the reduced sales charges available for larger purchases of
Class A shares may, over time, offset the effect of paying an initial
sales charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the
effect over time of higher class-based expenses on Class B or Class C
shares for which no initial sales charge is paid.
- Investing for the Short Term. If you have a short-term investment
horizon (that is, you plan to hold your shares for not more than six
years), you should probably consider purchasing Class A or Class C shares
rather than Class B shares, because of the effect of the Class B
contingent deferred sales charge if you redeem in less than 7 years, as
well as the effect of the Class B asset-based sales charge on the
investment return for that class in the short-term. Class C shares might
be the appropriate choice (especially for investments of less than
$100,000), 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 $100,000 for the shorter
term, then the more you invest and the more your investment horizon
increases toward six years, Class C shares might not be as advantageous
as Class A shares. That is because the annual asset-based sales charge
on Class C shares will have a greater impact on your account over the
longer term than the reduced front-end sales charge available for larger
purchases of Class A shares. For example, Class A might be more
advantageous than Class C as well as Class B shares for investments of
more than $100,000 expected to be held for 5 or 6 years (or more). For
investments over $250,000 expected to be held 4 to 6 years (or more) Class
A shares may become more advantageous than Class C and Class B shares.
If investing $500,000 or more, Class A shares may be more advantageous as
your investment horizon approaches 3 years or more.
And for investors who invest $1 million or more, in most cases Class
A shares will be the most advantageous choice, no matter how long you
intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or more of Class B shares or
$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 seven years or more, Class B shares may be an appropriate
consideration, if you plan to invest less than $100,000. If you plan to
invest more than $100,000 over the long term, Class A shares will likely
be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for Class A
shares and the reduced initial sales charge available for larger
investments in Class A shares under the Fund's Right of Accumulation.
Of course these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over
time, using the assumed annual performance return stated above, and you
should analyze your options carefully.
- Are There Differences in Account Features That Matter to You?
Because some account features (such as checkwriting) may not be available
to Class B or Class C shareholders, or other features 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 is better for
you. For example, share certificates are not available for Class B or
Class C shares and if you are considering using your shares as collateral
for a loan, this may be a factor to consider. 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 solely by
that class, such as the asset-based sales charge as described below and
in the Statement of Additional Information.
- 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 of shares than for selling another class. It is important that
investors understand that the purpose of the Class B and Class C
contingent deferred sales charge and asset-based sales charges are the
same as the purpose of the front-end sales charge on sales of Class A
shares: that is, to compensate the Distributor for commissions it pays to
dealers and financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under
special investment plans.
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension, profit-sharing and 401(k) 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 Oppenheimer funds (a list
of them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.
- 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. The Distributor may appoint
certain servicing agents as the Distributor's agent to accept purchase
(and redemption) orders. 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 "OppenheimerFunds 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, it
is recommended that you discuss your investment first with a financial
advisor, to be sure it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member. You can then transmit funds electronically to purchase shares,
to have the Transfer Agent send redemption proceeds, or to transmit
dividends and distributions to your bank account.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions automatically,
under an Asset Builder Plan, described below, or by telephone instructions
using OppenheimerFunds PhoneLink, also described below. You should
request AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to "AccountLink"
below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other Oppenheimer funds) automatically each month from your
account at a bank or other financial institution under an Asset Builder
Plan with AccountLink. Details are on the Application and in the
Statement of Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver, Colorado. In most cases, to enable you to
receive that day's offering price, the Distributor or its designated agent
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.
Special Sales Charge Arrangements for Certain Persons. Appendix A to this
Prospectus sets forth conditions for the waiver of, or exemption from,
sales charges or the special sales charge rates that apply to purchases
of shares of the Fund (including purchases by exchange) by a person who
was a shareholder of one of the Former Quest for Value Funds or one of the
Former Connecticut Mutual Investment Accounts, Inc. (as defined in that
Appendix).
Buying 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 will be the net asset value. In
some cases, reduced sales charges may be available, as described below.
Out of the amount you invest, the Fund receives the net asset value to
invest for your account. The sales charge varies depending on the amount
of your purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer as commission. The current sales
charge rates and commissions paid to dealers and brokers are as follows:
<TABLE>
<CAPTION>
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> <C>
Less than $50,000 4.75% 4.98% 4.00%
$50,000 or more but
less than $100,000 4.50% 4.71% 3.75%
$100,000 or more but
less than $250,000 3.50% 3.63% 2.75%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more of the
Oppenheimer funds in the following cases:
- purchases aggregating $1 million or more, or
- purchases by an OppenheimerFunds prototype 401(k) plan that: (1)
buys shares costing $500,000 or more, or (2) has, at the time of purchase,
100 or more eligible participants, or (3) certifies that it projects to
have annual plan purchases of $200,000 or more.
The Distributor pays dealers of record commissions on those 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 purchases over $5 million.
That commission will be paid only on the amount of those purchases in
excess of $1 million ($500,000 for purchases by OppenheimerFunds 401(k)
prototype plans) 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") may be deducted
from the redemption proceeds. That sales charge may be equal to 1% of the
lesser of (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gains
distributions) or (2) the original offering price (which is the original
net asset value). However, the Class A contingent deferred sales charge
will not exceed the aggregate amount of the commissions the Distributor
paid to your dealer on all Class A shares of all Oppenheimer funds 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
contingent deferred 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 Oppenheimer funds
(other than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
Reduced Sales Charges for 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 and Class B shares you purchase for your individual
accounts, or jointly, or for trust or custodial accounts on behalf of your
children who are minors. A fiduciary can count all shares purchased for
a trust, estate or other fiduciary account (including one or more employee
benefit plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and
Class B shares of the Fund and other Oppenheimer funds to reduce the sales
charge rate that applies to current purchases of Class A shares. You can
also include Class A and Class B shares of Oppenheimer funds you
previously purchased subject to an initial contingent deferred sales
charge to reduce the sales charge rate for current purchases of Class A
shares, provided that you still hold your investment in one of the
Oppenheimer funds. The value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The Oppenheimer funds are listed in "Reduced Sales Charges" in
the Statement of Additional Information, or a list can be obtained from
the Distributor. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
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 or Class A shares and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period; you can reduce the sales
charge rate that applies to your purchases of Class A shares. The total
amount of the intended purchases of both Class A and Class B shares will
determine your reduced sales charge rate for the Class A shares purchased
during that period. This can include purchases made up to 90 days before
the date of the Letter. More information is contained in the Application
and in "Reduced Sales Charges" in the Statement of Additional Information.
- Waivers of Class A Sales Charges. The Class A sales charges are
not imposed in the circumstances described below. There is an explanation
of this policy in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not
subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees;
- registered management investment companies, or separate accounts
of insurance companies having an agreement with the Manager or the
Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are
identified to the Distributor) or with the Distributor; the purchaser must
certify to the Distributor at the time of purchase that the purchase is
for the purchaser's own account (or for the benefit of such employee's
spouse or minor children);
- dealers, brokers, banks or registered investment advisers that
have entered into an agreement with the Distributor providing specifically
for the use of shares of the Fund in particular investment products made
available to their clients (those clients may be charged a transaction fee
by their dealer, broker or adviser on the purchase or sale of Fund
shares);
- employee benefit plans purchasing shares through a shareholder
servicing agent which the Distributor has appointed as agent to accept
those purchase orders;
- directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those
persons;
- accounts for which Oppenheimer Capital is the investment adviser
(the Distributor must be advised of this arrangement) and persons who are
directors or trustees of the company or trust which is the beneficial
owner of such accounts;
- any unit investment trust that has entered into an appropriate
agreement with the Distributor;
- a TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value Fund
were exchanged for Class A shares of that Fund due to the termination of
the Class B and Class C TRAC-2000 program on November 24, 1995; or
- qualified retirement plans that had agreed with the former Quest
for Value Advisors to purchase shares of any of the Former Quest for Value
Funds at net asset value, with such shares to be held through DCXchange,
a sub-transfer agency mutual fund clearinghouse, provided that such
arrangements are consummated and share purchases commence by March 31,
1996.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
- shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its affiliates
acts as sponsor;
- shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other
than Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor;
- shares purchased and paid for with the proceeds of shares redeemed
in the past 12 months from a mutual fund (other than a fund managed by the
Manager or any of its subsidiaries) on which an initial sales charge or
contingent deferred sales charge was paid (this waiver also applies to
shares purchased by exchange of shares of Oppenheimer Money Market Fund,
Inc. that were purchased and paid for in this manner); 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; or
- purchased with proceeds or maturing principal units of any
Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge does not apply
to purchases of Class A shares at net asset value without sales charge as
described in the two sections above. It is also waived if shares that
would otherwise be subject to the contingent deferred sales charge are
redeemed in the following cases:
- for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred compensation plans
or other employee benefit plans, including OppenheimerFunds prototype
401(k) plans (these are all referred to as "Retirement Plans);
- to return excess contributions made to Retirement Plans;
- to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
- involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account Rules
and Policies," below);
- if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales
charge, the dealer agrees in writing to accept the dealer's portion of the
commission payable on the sale in installments of 1/18th of the commission
per month (and no further commission will be payable if the shares are
redeemed within 18 months of purchase); or
- for distributions from OppenheimerFunds prototype 401(k) plans for
any of the following cases or purposes: (1) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary (the death or disability must occur after the participant's
account was established); (2) hardship withdrawals, as defined in the
plan; (3) under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code; (4) to meet the minimum distribution requirements
of the Internal Revenue Code; (5) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal Revenue
Code, or (6) separation from service.
- 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
shareholder 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 service provider or their 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.
Buying 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 contingent deferred sales charge will
be based on the lesser of the net asset value of the shares at the time
of redemption or the original offering price (which is the original net
asset value). The contingent deferred sales charge is not imposed on the
amount of your account value represented by an increase in net asset value
over the initial purchase price. 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 contingent deferred sales charge is not imposed in the
circumstances described in "Waivers of Class B and Class C Sales Charges"
below.
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>
Years Since Contingent Deferred Sales Charge
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.
- 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 at that
time of the asset-based sales charge that applies to Class B shares under
the Class B Distribution and Service Plan, described below. The conversion
is based on the relative net asset value of the two classes, and no sales
load or other charge is imposed. When Class B shares convert, any other
Class B shares that were acquired by the reinvestment of dividends and
distributions on the converted shares will also convert to Class A shares.
The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A, Class B and
Class C Shares" in the Statement of Additional Information.
- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for distributing Class B shares and servicing accounts.
This Plan is described below under "Buying Class C Shares - Distribution
and Service Plans for Class B and Class C Shares."
- Waivers of Class B Sales Charge. The Class B contingent deferred
sales charge will not apply to share purchases in certain types of
transactions, nor will it apply to shares redeemed in certain
circumstances, as described below under "Waivers of Class B and Class C
Sales Charges."
Buying 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 contingent deferred sales charge will
be based on the lesser of the net asset value of the redeemed shares at
the time of redemption or the original offering price (which is the
original net asset value). 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. 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.
- Distribution and Service Plans for Class B and Class C Shares.
The Fund has adopted Distribution and Service Plans for Class B and Class
C shares to compensate the Distributor for distributing Class B and Class
C shares and servicing accounts. Under the Plans, 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 and on Class C
shares. The Distributor also receives a service fee of 0.25% per year
under each plan.
Under each Plan, both fees are computed on the average of the net
asset value of shares in the respective class, determined as of the close
of each regular business day during the period. The asset-based sales
charge and service fees increase Class B and Class C expenses by up to
1.00% of the net assets per year of the respective class.
The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or Class C
shares. Those services are similar to those provided under the Class A
Service Plan, described above. The Distributor pays the 0.25% service
fees to dealers in advance for the first year after Class B or Class C
shares have been sold by the dealer and retains the service fee paid by
the Fund in that year. After the shares have been held for a year, the
Distributor pays the service fees to dealers on a quarterly basis.
The Distributor currently pays sales commissions of 3.75% of the
purchase price of Class B shares to dealers from its own resources at the
time of sale. Including the advance of the service fee, the total amount
paid by the Distributor to the dealer at the time of sales of Class B
shares is 4.00% of the purchase price. 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, retained by the
Distributor, 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.
The Distributor currently pays sales commissions of 0.75% of the
purchase price to dealers from its own resources at the time of sale of
Class C shares. Including the advance of the service fee, the total
amount paid by the Distributor to the dealer at the time of sale of Class
C shares is 1.00% of the purchase price. The Distributor retains the
asset-based sales charge during the first year Class C shares are
outstanding to recoup sales commissions it has paid, the advances of
service fee payments it has made, and its financing costs and other
expenses. 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.
Because the Distributor's actual expenses in selling Class C shares
may be more than the payments it receives from contingent deferred sales
charges collected on redeemed shares and from the Fund under the
Distribution and Service Plan for Class C shares, those expenses may be
carried over and paid in future years. 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 certain expenses it
incurred before the plan was terminated.
At June 30, 1996, the Distributor had incurred unreimbursed expenses
under the Plan of $998,862 (equal to 3.25% of the Fund's net assets
represented by Class B shares on that date) which have been carried over
into the present Plan year. At August 31, 1996, the Distributor had
incurred unreimbursed expenses under the Plan of $1,139,137 (equal to
3.12%) of the Fund's net assets represented by Class B shares on that
date, which have been carried over into the present Plan year. At June
30, 1996, the end of the Class C Plan year, the Distributor had incurred
unreimbursed expenses under the Plan of $240,974 (equal to 1.30% of the
Fund's net assets represented by Class C shares on that date) which have
been carried over into the present Plan year. At August 31, 1996, the
Distributor had incurred unreimbursed expenses under the Plan of $254,802
(equal to 1.37% of the Fund's net assets represented by Class C shares on
that date) which have been carried over into the present plan year.
- Waivers of Class B and Class C Sales Charges. The Class B and
Class C contingent deferred sales charges will not be applied to shares
purchased in certain types of transactions nor will it apply to Class B
and Class C shares redeemed in certain circumstances as described below.
The reasons for this policy are described in "Reduced Sales Charges" in
the Statement of Additional Information.
Waivers for Redemptions in Certain Cases. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares
in the following cases if the Transfer Agent is notified that these
conditions apply to the redemption:
- 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 (the death or disability must have occurred after the
account was established);
- redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder, including a trustee
of a "grantor" trust or revocable living trust for which the trustee is
also the sole beneficiary (the death or disability must have occurred
after the account was established, and for disability you must provide
evidence of a determination of disability by the Social Security
Administration);
- returns of excess contributions to Retirement Plans;
- distributions from Retirement Plans to make "substantially equal
periodic payments" as permitted in Section 72(t) of the Internal Revenue
Code that do not exceed 10% of the account value annually, measured from
the date the Transfer Agent receives the request);
- shares issued in plans of reorganization to which the Fund is a
party; or
- distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make
"substantially equal periodic payments" as described in Section 72(t) of
the Internal Revenue Code; or (5) for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C
shares in the following cases:
- shares sold to the Manager or its affiliates;
- 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; or
- shares redeemed in involuntary redemptions as described above.
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 should 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 by sending 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 Oppenheimer funds account you have already
established by calling the special PhoneLink number. Please refer to "How
to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
Oppenheimer funds account on a regular basis:
- 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 Oppenheimer funds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each other Oppenheimer funds account is $25. These exchanges are
subject to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A or
Class B shares of the Fund, you have up to 6 months to reinvest all or
part of the redemption proceeds in Class A shares of the Fund or other
Oppenheimer funds without paying a sales charge. This privilege applies
to Class A shares that you purchased subject to an initial sales charge
and to Class A or Class B shares on which you paid a contingent deferred
sales charge when you redeemed them. This privilege does not apply to
Class C shares. You must be sure to ask the Distributor for this
privilege when you send your payment. Please consult the Statement of
Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for
your retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SAR/SEP-IRAs
- Pension and Profit-Sharing Plans for self-employed persons and
other employers
- 401(k) Prototype Retirement Plans for businesses
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 by selling
(redeeming) some or all of your shares on any regular business day. 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 redemption check is not payable to all shareholders listed on
the account statement
- The redemption check is not sent to the address of record on your
account statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If
you are signing on behalf of a corporation, partnership or other business,
or as a fiduciary you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell
shares.
Use the following address Send courier or Express Mail
for requests by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217 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. You may not redeem
shares held in an OppenheimerFunds retirement plan or under a share
certificate by telephone.
- To redeem shares through a service representative, call 1-800-852-
8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address
on the account statement, or, if you have linked your Fund account to your
bank account on AccountLink, you may have the proceeds wired to that bank
account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone in any 7-day period. The check must be payable to all owners
of record of the shares and must be sent to the address on the account
statement. This service is not available within 30 days of changing the
address on an account.
- Telephone Redemptions Through AccountLink 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.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on behalf
of their customers. Brokers or dealers may charge for that service.
Please call your dealer for more information about this procedure. Please
refer to "Special Arrangements for Repurchase of Shares from Dealers and
Brokers" in the Statement of Additional Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. 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; and
- Before exchanging into a fund, you should obtain and read its
prospectus.
Shares of a particular class of the Fund may be exchanged only for
shares of the same class in the other Oppenheimer funds. For example, you
can exchange Class A shares of this Fund only for Class A shares of
another fund. At present, Oppenheimer Money Market Fund, Inc. offers only
one class of shares, which are considered "Class A" shares for this
purpose. In some cases, sales charges may be imposed on exchange
transactions. Please refer to "How to Exchange Shares" in the Statement
of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same name(s) and address. Shares held under certificates may not
be exchanged by telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by
calling a service representative at 1-800-525-7048. This list can change
from time to time.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request that is in proper
form by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M. but may be earlier on some days. However, either fund
may delay the purchase of shares of the fund you are exchanging into up
to 7 days if it determines it would be disadvantaged by a same-day
transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy
might require the sale of portfolio 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.
- For tax purposes, exchanges of shares involve a redemption of the
shares of the Fund you own and a purchase of the shares of the other fund,
which may result in a capital gain or loss. For more information about
taxes affecting exchanges, please refer to "How to Exchange Shares" in the
Statement of Additional Information.
- 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, 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 and obligations for which market values
cannot be readily obtained. 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. 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 of small accounts may be made by the Fund
if the account value has fallen below $200 for reasons other than the fact
that market value of the shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
- Under unusual circumstances, shares of the Fund may be redeemed
"in kind," which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to "How to Sell
Shares" in the Statement of Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from taxable dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or Employer Identification Number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of income.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How to Buy Shares," you may be
subject to a contingent deferred sales charge when redeeming certain Class
A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B
and Class C shares from net investment income each regular business day
and pays those dividends to shareholders monthly. Normally dividends are
paid on or about the last business day of each month, but the Board of
Trustees can change that date. 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 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 Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or
sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a check
for all dividends and long-term capital gains distributions or have them
sent to your bank on AccountLink.
- Reinvest Your Distributions in Another Oppenheimer Funds Account.
You can reinvest all distributions in another Oppenheimer funds 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. Generally speaking, 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 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 A
I. Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and waivers
for Class A, Class B and Class C shares of the Fund described elsewhere
in this Prospectus are modified as described below for those shareholders
of (i) Quest for Value Fund, Inc., Quest for Value Growth and Income Fund,
Quest for Value Opportunity Fund, Quest for Value Small Capitalization
Fund and Quest for Value Global Equity Fund, Inc. on November 24, 1995,
when OppenheimerFunds, Inc. became the investment adviser to those funds,
and (ii) Quest for Value U.S. Government Income Fund, Quest for Value
Investment Quality Income Fund, Quest for Global Income Fund, Quest for
Value New York Tax-Exempt Fund, Quest for Value National Tax-Exempt Fund
and Quest for Value California Tax-Exempt Fund when those funds merged
into various Oppenheimer funds on November 24, 1995. The funds listed
above are referred to in this Prospectus as the "Former Quest for Value
Funds." The waivers of initial and contingent deferred sales charges
described in this Appendix apply to shares of the Fund (i) acquired by
such shareholder pursuant to an exchange of shares of one of the
Oppenheimer funds that was one of the Former Quest for Value Funds or (ii)
received by such shareholder pursuant to the merger of any of the Former
Quest for Value Funds into an Oppenheimer fund on November 24, 1995.
Class A Sales Charges
- - Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
- - Purchases by Groups, Associations and Certain Qualified Retirement
Plans. The following table sets forth the initial sales charge rates for
Class A shares purchased by a "Qualified Retirement Plan" through a single
broker, dealer or financial institution, or by members of "Associations"
formed for any purpose other than the purchase of securities if that
Qualified Retirement Plan or that Association purchased shares of any of
the Former Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this purpose
only, a "Qualified Retirement Plan" includes any 401(k) plan, 403(b) plan,
and SEP/IRA or IRA plan for employees of a single employer.
<TABLE>
<CAPTION>
Front-End Front-End Commission
Sales Charge Sales Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
__________________________________________________________________
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
__________________________________________________________________
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Qualified Retirement plans and Associations having
50 or more eligible employees or members, there is no initial sales charge
on purchases of Class A shares, but those shares are subject to the Class
A contingent deferred sales charge described on pages and of this
Prospectus.
Purchases made under this arrangement qualify for the lower of the
sales charge rate in the table based on the number of eligible employees
in a Qualified Retirement Plan or members of an Association or the sales
charge rate that applies under the Rights of Accumulation described above
in the Prospectus. In addition, purchases by 401(k) plans that are
Qualified Retirement Plans qualify for the waiver of the Class A initial
sales charge if they qualified to purchase shares of any of the Former
Quest For Value Funds by virtue of projected contributions or investments
of $1 million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of Associations, or
as eligible employees in Qualified Retirement Plans also may purchase
shares for their individual or custodial accounts at these reduced sales
charge rates, upon request to the Fund's Distributor.
- - Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of Former
Quest for Value Funds into those Oppenheimer funds, and which shares were
subject to a Class A contingent deferred sales charge prior to November
24, 1995 will be subject to a contingent deferred sales charge at the
following rates: if they are redeemed within 18 months of the end of the
calendar month in which they were purchased, at a rate equal to 1.0% if
the redemption occurs within 12 months of their initial purchase and at
a rate of 0.50 of 1.0% if the redemption occurs in the subsequent six
months. Class A shares of any of the Former Quest for Value Funds
purchased without an initial sales charge on or before November 22, 1995
will continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
- - Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are not
subject to any Class A initial or contingent deferred sales charges:
- Shareholders of the Fund who were shareholders of the AMA Family
of Funds on February 28, 1991 and who acquired shares of any of the Former
Quest for Value Funds by merger of a portfolio of the AMA Family of Funds.
- Shareholders of the Fund who acquired shares of any Former Quest
for Value Fund by merger of any of the portfolios of the Unified Funds.
- - Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to redemptions
of Class A shares of the Fund purchased by the following investors who
were shareholders of any Former Quest for Value Fund:
- Investors who purchased Class A shares from a dealer that is or was
not permitted to receive a sales load or redemption fee imposed on a
shareholder with whom that dealer has a fiduciary relationship under the
Employee Retirement Income Security Act of 1974 and regulations adopted
under that law.
- Participants in Qualified Retirement Plans that purchased shares
of any of the Former Quest For Value Funds pursuant to a special
"strategic alliance" with the distributor of those funds. The Fund's
Distributor will pay a commission to the dealer for purchases of Fund
shares as described above in "Class A Contingent Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge Waivers
- - Waivers for Redemptions of Shares Purchased Prior to March 6, 1995
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, Class B or Class C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund or by
exchange from an Oppenheimer fund that was a Former Quest for Value Fund
or into which such fund merged, if those shares were purchased prior to
March 6, 1995: in connection with (i) distributions to participants or
beneficiaries of plans qualified under Section 401(a) of the Internal
Revenue Code or from custodial accounts under Section 403(b)(7) of the
Code, Individual Retirement Accounts, deferred compensation plans under
Section 457 of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals under an
automatic withdrawal plan holding only either Class B or Class C shares
if the annual withdrawal does not exceed 10% of the initial value of the
account, and (iii) liquidation of a shareholder's account if the aggregate
net asset value of shares held in the account is less than the required
minimum value of such accounts.
- - Waivers for Redemptions of Shares Purchased on or After March 6, 1995
but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, Class B or Class C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund or by
exchange from an Oppenheimer fund that was a Former Quest For Value Fund
or into which such fund merged, if those shares were purchased on or after
March 6, 1995, but prior to November 24, 1995: (1) distributions to
participants or beneficiaries from Individual Retirement Accounts under
Section 408(a) of the Internal Revenue Code or retirement plans under
Section 401(a), 401(k), 403(b) and 457 of the Code, if those distributions
are made either (a) to an individual participant as a result of separation
from service or (b) following the death or disability (as defined in the
Code) of the participant or beneficiary; (2) returns of excess
contributions to such retirement plans; (3) redemptions other than from
retirement plans following the death or disability of the shareholder(s)
(as evidenced by a determination of total disability by the U.S. Social
Security Administration); (4) withdrawals under an automatic withdrawal
plan (but only for Class B or Class C shares) where the annual withdrawals
do not exceed 10% of the initial value of the account; and (5) liquidation
of a shareholder's account if the aggregate net asset value of shares held
in the account is less than the required minimum account value. A
shareholder's account will be credited with the amount of any contingent
deferred sales charge paid on the redemption of any Class A, Class B or
Class C shares of the Fund described in this section if within 90 days
after that redemption, the proceeds are invested in the same Class of
shares in this Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to Quest
for Value prototype 401(k) plans that were maintained on the TRAC-2000
recordkeeping system and that were transferred to an OppenheimerFunds
prototype 401(k) plan shall be eligible for an additional one-time payment
by the Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to Quest
for Value prototype 401(k) plans that were maintained on the TRAC-2000
recordkeeping system and (i) the shares held by those plans were exchanged
for Class A shares, or (ii) the plan assets were transferred to an
OppenheimerFunds prototype 401(k) plan, shall be eligible for an
additional one-time payment by the Distributor of 1% of the value of the
plan assets transferred, but that payment may not exceed $5,000.
II. Special Sale Charge Arrangements for Fund Shareholders of the Fund
Who Were Shareholders of the Former Connecticut Mutual Investment
Accounts, Inc.
The initial and contingent sales charge rates and waivers for Class
A and Class B shares described elsewhere in this Prospectus are modified
as described below for those shareholders of the Fund who were
shareholders of Connecticut Mutual Investment Accounts, Inc. on March 17,
1996 ("former CMIA shareholders").
- - Prior Class A CDSC and Class A Sales Charge Waivers
- Class A Contingent Deferred Sales Charge. Certain former CMIA
shareholders are entitled to continue to make additional purchases of
Class A shares of the Fund at net asset value without the Class A initial
sales charge, but subject to the Class A contingent deferred sales charge
that was in effect prior to March 18, 1996 (the "prior Class A CDSC").
Under the prior Class A CDSC, if any of those shares are redeemed within
one year of purchase, they will be assessed a 1% contingent deferred sales
charge on an amount equal to the current market value or the original
purchase price of the shares sold, whichever is smaller (in such
redemptions, any shares not subject to the prior Class A CDSC will be
redeemed first).
Those former CMIA shareholders who are eligible for the prior Class
A CDSC are: (1) persons whose purchases of Class A shares of the former
CMIA funds were $500,000 prior to March 18, 1996, as a result of direct
purchases or purchases pursuant to the CMIA funds' policies on Combined
Purchases or Rights of Accumulation, who still hold those shares in any
of the Oppenheimer funds, and (2) persons whose intended purchases under
a Statement of Intention entered into prior to March 18, 1996, with the
CMIA funds' former general distributor to purchase shares valued at
$500,000 or more over a 13-month period entitled those persons to purchase
shares at net asset value without being subject to the Class A initial
sales charge.
Class A shares of the former CMIA funds that were purchased at net
asset value prior to March 18, 1996, remain subject to the prior Class A
CDSC. If any additional Class A shares are purchased by those
shareholders at net asset value pursuant to this arrangement they will be
subject to the prior Class A CDSC.
- Class A Sales Charge Waivers. Additional Class A shares of the
Fund may be purchased without a sales charge by a person who was in one
or more of the categories described below and acquired Class A shares of
the CMIA funds prior to March 18, 1996 and still holds Class A shares of
any Oppenheimer funds: (1) any purchaser, provided the total initial
amount invested in the former CMIA funds totaled $500,000 or more,
including investments made pursuant to the Combined Purchases, Statement
of Intention and Rights of Accumulation features available at the time of
the initial purchase and such investment is still held in one or more of
the Oppenheimer funds; (2) any participant in a qualified plan, provided
that the total initial amount invested by the plan in any one or more of
the former CMIA funds totaled $500,000 or more; (3) Directors of the
former CMIA funds and members of their immediate families; (4) employee
benefit plans sponsored by Connecticut Mutual Financial Services, L.L.C.
("CMFS"), the CMIA funds' prior distributor, and its affiliated companies;
(5) one or more members of a group of a least 1,000 persons (and persons
who are retirees from such group) engaged in a common business,
profession, civic or charitable endeavor or other activity, and the
spouses and minor dependent children of such persons, pursuant to a
marketing program between CMFS and such group; (6) any holder of a
variable annuity contract issued in New York State by Connecticut Mutual
Life Insurance Company through the Panorama Separate Account which was
beyond the applicable surrender charge period and which was used to fund
a qualified plan, if that holder exchanges the variable annuity contract
for Class A shares of the Fund; and (7) an institution acting as a
fiduciary on behalf of an individual or individuals, if such institution
was directly compensated by the individual(s) for recommending the
purchase of the shares of the CMIA funds, provided the institution had an
agreement with CMFS. Purchases of Class A shares made pursuant to (1) and
(2) above may be subject to the applicable Class A CDSC.
- - Class A and Class B Contingent Deferred Sales Charge Waivers
In addition to the waivers set forth above under the caption "How to
Buy Shares," the contingent deferred sales charge will be waived for
redemptions of Class A and Class B shares of the Fund and acquired through
the reorganization of the Connecticut Mutual Income Account Series of CMIA
with the Fund and the shares of that series were acquired prior to March
18, 1996, (ii) were acquired by exchange from another CMIA fund and the
shares of that fund were purchased prior to March 18, 1996 and (iii) were
exchanged or redeemed in the following cases:
(1) by the estate of the deceased shareholder; (2) upon the
disability of the shareholder, as defined in Section 72(m)(7) of the
Internal Revenue Code of 1986, as amended (Code); (3) for retirement
distributions (or loans) to participants or beneficiaries from retirement
plans qualified under Sections 401(a) or 403(b)(7) of the Code, or from
IRAs, deferred compensation plans created under Section 457 of the Code,
or other employee benefit plans; (4) in whole or in part, in connection
with shares sold by any state, county, or city, or any instrumentality,
department, authority, or agency thereof, that is prohibited by applicable
investment laws from paying a sales charge or commission in connection
with the purchase of shares of any registered investment management
company; (5) in connection with the former CMIA fund's right to
involuntarily redeem or liquidate a Fund; (6) in connection with automatic
redemptions of Class A shares and Class B shares in certain retirement
plan accounts pursuant to an Automatic Withdrawal Plan but limited to no
more than 12% of the original value annually; and (7) as involuntary
redemptions of shares by operation of law, or under procedures set forth
in the former CMIA fund's Articles of Incorporation, or as adopted by the
Board of Directors of the former CMIA funds.
<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."
Linear graphs 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 Fund. For Class A shares, that graph will cover
each of the Fund's last eleven fiscal years from 6/30/86 through 8/31/96,
in the case of Class B shares, the graph will cover the period from
inception of the class (July 21, 1995) through 8/31/96, and in the case
of Class C shares, the graph will cover the period from the inception of
the Class (December 1, 1993) to 8/31/96. The graphs will compare such
values with hypothetical $10,000 investments over the same time periods
in the Lehman Brothers Government Bond Index. Set forth below are the
relevant data points that will appear on the linear graphs. 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."
<TABLE>
<CAPTION>
Fiscal Year Oppenheimer Lehman Brothers
(Period) Ended U.S. Government Trust - A Government Bond Index
<S> <C> <C>
06/30/86 $ 9,525 $10,000
06/30/87 $10,006 $10,390
06/30/88 $10,796 $11,160
06/30/89 $11,818 $12,509
06/30/90 $12,568 $13,375
06/30/91 $13,767 $14,731
06/30/92 $15,565 $16,756
06/30/93 $17,075 $18,918
06/30/94 $16,913 $18,665
06/30/95 $18,810 $20,916
06/30/96 $19,733 $21,860
08/31/96 $19,815 $21,865
Fiscal Oppenheimer Lehman Brothers
Period Ended U.S. Government Trust - B Government Bond Index
07/31/95 $10,000 $10,000
06/30/96 $10,480 $10,490
08/31/96 $10,117 $10,492
Fiscal Oppenheimer Lehman Brothers
Period Ended U.S. Government Trust - C Government Bond Index
12/1/93(2) $10,000 $10,000
06/30/94 $ 9,678 $9,625
06/30/95 $10,675 $10,786
06/30/96 $11,115 $11,273
08/31/96 $11,146 $11,276
- ----------------------
(1) Class B shares of the Fund were first publicly offered on July 31,
1995.
(2) Class C shares of the Fund were first publicly offered on December
1, 1993.
</TABLE>
<PAGE>
Oppenheimer U.S. Government Trust
Two World Trade Center
New York, New York 10048-0203
Telephone: 1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds 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, OppenheimerFunds, Inc.,
OppenheimerFunds 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.
PR0220.001.1196 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 November 1, 1996
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 November 1, 1996. It should be read together with the Prospectus,
which may be obtained by writing to the Fund's Transfer Agent,
OppenheimerFunds 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
Independent Auditors' Report
Financial Statements
Appendix A: Description of Securities Ratings A-1
Appendix B: Corporate Industry Classifications B-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 the types of securities
in which the Fund may invest, 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 U.S. Government Securities
and the securities of such agencies and instrumentalities of the U.S.
Government when the Fund's investment manager, OppenheimerFunds, Inc. (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).
The U.S. Government Securities in which the Fund may invest include
the following:
- GNMA Certificates. The Government National Mortgage Association
("GNMA") is a wholly-owned corporate instrumentality of the United States
within the U.S. Department of Housing and Urban Development. GNMA's
principal programs involve its guarantees of privately-issued securities
backed by pools of mortgages. GNMA Certificates are debt securities
representing an interest in one or a pool of mortgages that are insured
by the Federal Housing Administration ("FHA") or the Farmers Home
Administration ("FMHA") or guaranteed by the Veterans Administration
("VA").
The GNMA Certificates in which the Fund invests are of the "fully
modified pass-through" type, that is, they provide that the registered
holders of the Certificates will receive timely monthly payments of the
pro-rata share of the scheduled principal payments on the underlying
mortgages, whether or not those amounts are collected by the issuers.
Amounts paid include, on a pro rata basis, any prepayment of principal of
such mortgages and interest (net of servicing and other charges) on the
aggregate unpaid principal balance of such GNMA Certificates, whether or
not the interest on the underlying mortgages has been collected by the
issuers.
The GNMA Certificates purchased by the Fund are guaranteed as to
timely payment of principal and interest by GNMA. It is expected that
payments received by the issuers of GNMA Certificates on account of the
mortgages backing the Certificates will be sufficient to make the required
payments of principal of and interest on such GNMA Certificates, but if
such payments are insufficient for that purpose, the guaranty agreements
between the issuers of the Certificates and GNMA require the issuers to
make advances sufficient for such payments. If the issuers fail to make
such payments, GNMA will do so.
Under Federal law, the full faith and credit of the United States is
pledged to the payment of all amounts which may be required to be paid
under any guaranty issued by GNMA as to such mortgage pools. An opinion
of an Assistant Attorney General of the United States, dated December 9,
1969, states that such guaranties "constitute general obligations of the
United States backed by its full faith and credit." GNMA is empowered to
borrow from the United States Treasury to the extent necessary to make any
payments of principal and interest required under such guaranties.
GNMA Certificates are backed by the aggregate indebtedness secured
by the underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages
and, except to the extent of payments received by the issuers on account
of such mortgages, GNMA Certificates do not constitute a liability of, nor
evidence any recourse against, such issuers, but recourse is solely
against GNMA. Holders of GNMA Certificates (such as the Fund) have no
security interest in or lien on the underlying mortgages.
Monthly payments of principal will be made, and additional
prepayments of principal may be made, to the Fund with respect to the
mortgages underlying the GNMA Certificates held by the Fund. All of the
mortgages in the pools relating to the GNMA Certificates in the Fund are
subject to prepayment without any significant premium or penalty, at the
option of the mortgagors. While the mortgages on 1-to-4-family dwellings
underlying certain GNMA Certificates have a stated maturity of up to 30
years, it has been the experience of the mortgage industry that the
average life of comparable mortgages, as a result of prepayments,
refinancing and payments from foreclosures, is considerably less. Periods
of dropping interest rates may spur refinancing of existing mortgages,
accelerating the rate of prepayments. Prepayments on such mortgages
received by the Fund will be reinvested in additional GNMA Certificates
or other U.S. Government Securities. The yields on such additional
securities may not necessarily be the same as (and may be lower than) the
yields on the prepaid securities, which will affect the income the Fund
receives and pays to its shareholders.
- Federal Home Loan Mortgage Corporation ("FHLMC") Certificates.
FHLMC, a corporate instrumentality of the United States, issues FHLMC
Certificates representing interests in mortgage loans. FHLMC guarantees
to each registered holder of a FHLMC Certificate timely payment of the
amounts representing a holder's proportionate share in (i) interest
payments less servicing and guarantee fees, (ii) principal prepayments and
(iii) the ultimate collection of amounts representing such holder's
proportionate interest in principal payments on the mortgage loans in the
pool represented by such FHLMC Certificate, in each case whether or not
such amounts are actually received. The obligations of FHLMC under its
guarantees are obligations solely of FHLMC and are not backed by the full
faith and credit of the United States.
- Federal National Mortgage Association ("FNMA") Certificates. FNMA,
a federally-chartered and privately-owned corporation, issues FNMA
Certificates which are backed by a pool of mortgage loans. FNMA
guarantees to each registered holder of a FNMA Certificate that the holder
will receive amounts representing such holder's proportionate interest in
scheduled principal and interest payments, and any principal prepayments,
on the mortgage loans in the pool represented by such FNMA Certificate,
less servicing and guarantee fees, and such holder's proportionate
interest in the full principal amount of any foreclosed or other
liquidated mortgage loan, in each case whether or not such amounts are
actually received. The obligations of FNMA under its guarantees are
obligations solely of FNMA and are not backed by the full faith and credit
of the United States or any agency or instrumentality thereof other than
FNMA.
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.
- Reverse Repurchase Agreements. The Fund will maintain, in a
segregated account with its Custodian, cash, Treasury bills or other U.S.
Government Securities having an aggregate value equal to the amount of
such commitment to repurchase, including accrued interest, until payment
is made. The Fund will use reverse repurchase agreements as a source of
funds on a short-term basis (and not for leverage). In determining
whether to enter into a reverse repurchase agreement with a bank or
broker-dealer, the Fund will take into account the creditworthiness of
such party. As a matter of fundamental policy, the Fund will not enter
into a reverse repurchase transaction unless the securities
collateralizing the transaction have a maturity date not later than the
settlement date for the transaction.
- 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 or other 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 identify cash, U.S. Government Securities or other high-grade
debt securities with its Custodian in an amount equal to its obligation
under the roll.
- "When-Issued" and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis, and may purchase or sell
such securities on a "delayed delivery" basis. Although the Fund will
enter into such transactions for the purpose of acquiring securities for
its portfolio or for delivery pursuant to options contracts it has entered
into, the Fund may dispose of a commitment prior to settlement. "When-
issued" or "delayed delivery" refers to securities whose terms and
indenture are available and for which a market exists, but which are not
available for immediate delivery. When such transactions are negotiated,
the price (which is generally expressed in yield terms) is fixed at the
time the commitment is made, but delivery and payment for the securities
take place at a later date. Such securities may bear interest at a lower
rate than longer-term securities. The Fund does not intend to make such
purchase for speculative purposes. The commitment to purchase a security
for which payment will be made on a future date may be deemed a separate
security and involve a risk of loss if the value of the security declines
prior to the settlement date. During the period between commitment by the
Fund and settlement (generally within 120 days), no payment is made for
the securities purchased by the purchaser, and no interest accrues to the
purchaser from the transaction. Such securities are subject to market
fluctuation; the value at delivery may be less than the purchase price.
The Fund will identify with its Custodian cash, U.S. Government securities
or other high grade debt obligations at least equal to the value of
purchase commitments until payment is made.
The Fund will engage in when-issued transactions in order to secure
what is considered to be an advantageous price and yield at the time of
entering into the obligation. When the Fund engages in when-issued or
delayed delivery transactions, it relies on the buyer or seller, as the
case may be, to consummate the transaction. Failure of the buyer or
seller to do so may result in the Fund losing the opportunity to obtain
a price and yield considered to be advantageous. At the time the Fund
makes a commitment to purchase or sell a security on a when-issued or
forward commitment basis, it records the transaction and reflects the
value of the security purchased, or if a sale, the proceeds to be
received, in determining its net asset value. If the Fund chooses to (i)
dispose of the right to acquire a when-issued security prior to its
acquisition or (ii) dispose of its right to deliver or receive against a
forward commitment, it may incur a gain or loss.
To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objective and policies and not
for the purposes of investment leverage. Except for mortgage-backed
security rolls, the Fund enters into such transactions only with the
intention of actually receiving or delivering the securities, although (as
noted above), when-issued securities and forward commitments may be sold
prior to settlement date. In addition, changes in interest rates before
settlement in a direction other than that expected by the Manager will
affect the value of such securities and may cause a loss to the Fund.
When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and prices.
For instance, in periods of rising interest rates and falling prices, the
Fund might sell securities in its portfolio on a forward commitment basis
to attempt to limit its exposure to anticipated falling prices. In
periods of falling interest rates and rising prices, the Fund might sell
portfolio securities and purchase the same or similar securities on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields.
- 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 net value of all call and put option positions 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 its 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 effect its
hedges, 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 the margin
deposits on Futures and the 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 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. This is not a
fundamental policy.
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. Prior to August 16, 1985, the Fund operated as a money market fund
with a fixed net asset value per share.
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 Growth Fund,
Oppenheimer Target Fund, Oppenheimer Enterprise Fund, Oppenheimer
International Growth 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 Multi-Sector Income Trust
and Oppenheimer Multi-Government Trust (the "New York-based Oppenheimer
funds"). Messrs. Spiro, Bishop, Bowen, Donohue, Farrar and Zack
respectively hold the same offices with the other New York-based
Oppenheimer funds as with the Fund. As of October 1, 1996, 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
statement does not include ownership of shares held of record by an
employee benefit plan for employees of the Manager (one of the Trustees
listed below Ms. Macaskill and one of the officers, Mr. Donohue, are
trustees of that plan), 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: 71
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).
Robert G. Galli, Trustee*; Age: 63
Vice Chairman of the Manager; formerly he held the following positions:
Vice President and Counsel of Oppenheimer Acquisition Corp. ("OAC"), the
Manager's parent holding company; Executive Vice President and General
Counsel of the Manager and OppenheimerFunds Distributor, Inc. (the
"Distributor"); a director of the Manager and 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 Oppenheimer funds.
Benjamin Lipstein, Trustee; Age: 73
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 of Spy
Magazine, L.P.
Bridget A. Macaskill, President and Trustee*; Age: 48
President, Chief Executive Officer and a Director of the Manager; Chairman
and a Director of SSI, President and a Director of OAC and HarbourView;
a Director of HarbourView and Oppenheimer Partnership Holdings, Inc., a
holding company subsidiary of the Manager; a director of Oppenheimer Real
Asset Management, Inc.; formerly an Executive Vice President of the
Manager.
___________________
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Elizabeth B. Moynihan, Trustee; Age: 67
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 Indo-U.S.
Sub-Commission on Education and Culture; a member of the Trustees Council,
Preservation League of New York State.
Kenneth A. Randall, Trustee; Age: 69
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 director of the Federal Deposit Insurance
Corporation and President and Chief Executive Officer of The Conference
Board, Inc. (international economic and business research) and a director
of Lumbermens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company.
Edward V. Regan, Trustee; Age: 66
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York;
Senior Fellow of Jerome Levy Economics Institute; Bard College; a member
of the U.S. Competitiveness Policy Council; a director of GranCare, Inc.
(health care provider); formerly New York State Comptroller and trustee
of the New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee; Age: 65
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directorship Inc. (consulting and publishing);
a director of XYAN Inc. (printing), Professional Staff Limited and
American Scientific Resources, Inc.; a trustee of Mystic Seaport Museum,
International House, Greenwich Hospital and the Greenwich Historical
Society.
Sidney M. Robbins, Trustee; Age: 84
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; Emeritus Founding Director of The Korea Fund, Inc.
(closed-end investment company); 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: 70
Chairman Emeritus and a director of the Manager; formerly Chairman of the
Manager and the Distributor.
___________________
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Pauline Trigere, Trustee; Age: 83
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: 65
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), IMC
Global Inc. (chemicals and animal feed), and Texas Instruments, Inc.
(electronics); 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.
David Rosenberg, Vice President and Portfolio Manager; Age: 38
Vice President of the Manager; an officer of other Oppenheimer funds;
formerly an Officer and Portfolio Manager for Delaware Investment Advisers
and for one of its mutual funds.
Andrew J. Donohue, Secretary; Age: 46
Executive Vice President and General Counsel of the Manager and the
Distributor; President and a Director of Centennial; Executive Vice
President and General Counsel and a director of HarbourView, SSI, SFSI,
and Oppenheimer Partnership Holdings, Inc.; President and director of
Oppenheimer Real Asset Management, Inc.; General Counsel of OAC; Executive
Vice President, Chief Legal Officer and a director of MultiSource
Services, Inc. (a broker-dealer); an officer of other Oppenheimer funds;
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: 60
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; Vice President, Treasurer and
Secretary of SFSI; Treasurer of OAC; Vice President and Treasurer of
Oppenheimer Real Asset Management, Inc.; Chief Executive Officer,
Treasurer and a director of MultiSource Services, Inc.; an officer of
other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: 48
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other Oppenheimer
funds.
Robert Bishop, Assistant Treasurer; Age: 37
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of other
Oppenheimer funds; previously a Fund Controller for the Manager, prior to
which he was an Accountant for Yale & Seffinger, P.C., an accounting firm;
and previously an Accountant and Commissions Supervisor for Stuart James
Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age: 31
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other Oppenheimer funds; previously a Fund Controller for the Manager,
prior to which he was an International Mutual Fund Supervisor for Brown
Brothers Harriman & Co., a bank, and previously a Senior Fund Accountant
for State Street Bank & Trust Company.
- 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 (Ms.
Macaskill and Messrs. Galli and Spiro) receive no salary or fee from the
Fund. The remaining Trustees of the Fund received the compensation shown
below from the Fund, during its fiscal year ended June 30, 1996, and from
all of the New York-based Oppenheimer funds (including the Fund) for which
they served as Trustee or Director. Compensation is paid for services in
the positions below their names:
<TABLE>
<CAPTION>
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as Part From All
Name and from of Fund New York-based
Position Fund Expenses Oppenheimer funds1
<S> <C> <C> <C>
Leon Levy $9,326 $18,210 $141,000.00
Chairman and
Trustee
Benjamin Lipstein $5,701 $11,133 $ 86,200.00
Study
Committee
Member and
Trustee
Elizabeth B. Moynihan $5,701 $11,133 $ 86,200.00
Study
Committee
Member and
Trustee
Kenneth A. Randall $5,186 $10,125 $ 78,400.00
Audit
Committee
Chairman and
Trustee
Edward V. Regan $4,551 $ 8,886 $ 68,800.00
Proxy Committee
Chairman,
Audit
Committee
Member and
Trustee
Russell S.
Reynolds, Jr. $3,446 $ 6,729 $ 52,100.00
Proxy Committee
Member and
Trustee
Sidney M. Robbins $8,076 $15,769 $122,100.00
Study Committee
Chairman, Audit
Committee
Vice-Chairman
and Trustee
Pauline Trigere $3,446 $ 6,729 $ 52,100.00
Trustee
Clayton K. Yeutter $3,446 $ 6,729 $ 52,100.00
Proxy Committee
Member and
Trustee
<FN>
______________________
1 For the 1995 calendar year (prior to the inception of the Proxy
Committee), during which the New York-based Oppenheimer funds, listed in
the first paragraph of this section, included Oppenheimer Mortgage Income
Fund and Oppenheimer Time Fund (which ceased operation following the
acquisition of their assets by certain other Oppenheimer funds) but
excluded Oppenheimer International Growth Fund, which had not yet
commenced operations.
</TABLE>
The officers of the Fund are affiliated with the Manager. They and
the Trustees of the Fund who are affiliated with the Manager (Ms.
Macaskill and Messrs. Galli and Spiro) receive no salary or fee from the
Fund. The remaining Trustees of the Fund received the compensation shown
below from the Fund, during its fiscal period July 1, 1996 to August 31,
1996, and from all of the New York-based Oppenheimer funds (including the
Fund) for which they served as Trustee or Director. Compensation is paid
for services in the positions below their names:
<TABLE>
<CAPTION>
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as Part From All
Name and from of Fund New York-based
Position Fund Expenses Oppenheimer funds1
<S> <C> <C> <C>
Leon Levy $3,179 $89 $141,000.00
Chairman and
Trustee
Benjamin Lipstein $1,943 $54 $ 86,200.00
Study
Committee
Member and
Trustee
Elizabeth B. Moynihan $1,943 $54 $ 86,200.00
Study
Committee
Member and
Trustee
Kenneth A. Randall $1,768 $49 $ 78,400.00
Audit
Committee
Chairman and
Trustee
Edward V. Regan $1,551 $43 $ 68,800.00
Proxy Committee
Chairman,
Audit
Committee
Member and
Trustee
Russell S.
Reynolds, Jr. $1,175 $33 $ 52,100.00
Proxy Committee
Member and
Trustee
Sidney M. Robbins $2,753 $77 $122,100.00
Study Committee
Chairman, Audit
Committee
Vice-Chairman
and Trustee
Pauline Trigere $1,175 $33 $ 52,100.00
Trustee
Clayton K. Yeutter $1,175 $33 $ 52,100.00
Proxy Committee
Member and
Trustee
<FN>
______________________
1 For the 1995 calendar year (prior to the inception of the Proxy
Committee), during which the New York-based Oppenheimer funds, listed in
the first paragraph of this section, included Oppenheimer Mortgage Income
Fund and Oppenheimer Time Fund (which ceased operation following the
acquisition of their assets by certain other Oppenheimer funds) but
excluded Oppenheimer International Growth Fund, which had not yet
commenced operations.
</TABLE>
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 Oppenheimer funds 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
the Fund estimate the number of years of credited service that will be
used to determine those benefits.
- Major Shareholders. As of October 1, 1996, the only persons who
owned of record or was known by the Fund to own beneficially 5% or more
of the Fund's outstanding Class A, Class B or Class C shares was Merrill
Lynch Pierce Fenner & Smith, Inc., 4800 Deer Lake Drive, East, Floor 3,
Jacksonville, Florida 32246-6484, who owned 281,312.000 Class C shares
(representing approximately 14.05% of the Fund's then outstanding Class
C shares).
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and two of whom (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. A management fee is payable
monthly to the Manager under the terms of 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 Distribution 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, 1994, 1995
and 1996, the management fees paid by the Fund to the Manager were
$2,515,934, $1,980,189 and $2,946,711, respectively. For the fiscal
period July 1, 1996 to August 31, 1996, the management fees paid by the
Fund to the Manager were $569,144.
The advisory agreement contains no expense limitation. 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 applicable state regulatory limitation on Fund
expenses. 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 payment of the management fee at the end of any month will
be reduced or eliminated so that there will not be any accrued but unpaid
liability under this expense limitation. 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 of its obligations and duties under the
advisory agreement, the Manager is not liable for any loss resulting from
a good faith error or omission on its part with respect to any of its
duties thereunder. The advisory agreement permits the Manager to act as
investment adviser for any other person, firm or corporation and to use
the name "Oppenheimer" in connection with its other investment companies
for which it may act as investment adviser or general distributor. If the
Manager shall no longer act as investment adviser to the Fund, the right
of the Fund to use the name "Oppenheimer" as part of its 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, excluding payments under the Distribution and
Service Plans, but including advertising and the cost of printing and
mailing prospectuses, other than those furnished to existing
shareholders), are borne by the Distributor. During the Fund's fiscal
years ended June 30, 1994, 1995 and 1996, the aggregate sales charges on
sales of the Fund's Class A shares were $876,525, $582,157 and $880,535,
respectively, of which the Distributor and an affiliated broker-dealer
retained in the aggregate $282,424, $169,246 and $277,638 in those
respective years. For the fiscal period July 1, 1996 to August 31, 1996,
the aggregate sales charges on sales of the Fund's Class A shares, were
$119,450, of which the Distributor and an affiliated broker-dealer
retained in the aggregate $35,853. During the fiscal year ended June 30,
1996 and for the fiscal period July 21, 1996 to August 31, 1996,
contingent deferred sales charges collected by the Distributor on the
redemption of Class B shares totaled $64,030 and $9,733, respectively, all
of which the Distributor retained. During the Fund's fiscal year ended
June 30, 1996 and the fiscal period July 1, 1996 to August 31, 1996, sales
charges advanced to broker/dealers by the Distributor on sales of the
Fund's Class B shares totalled $692,568 and $130,843, respectively, of
which $15,855 and $6,477, respectively, were paid to an affiliated
broker/dealer. During the Fund's fiscal period from December 1, 1993
through June 30, 1994, and the fiscal years ended June 30, 1995 and 1996
and for the fiscal period July 1, 1996 to August 31, 1996, the contingent
deferred sales charges collected on Class C shares were $3,250, $9,578,
$14,816 and $2,260, respectively, all of which the Distributor retained.
During the Fund's fiscal year ended June 30, 1996 and for the fiscal
period July 1, 1996 to August 31, 1996, sales charges advanced to
broker/dealers by the Distributor on sales of the Fund's Class C shares
totalled $86,810 and $9,765, of which $8,756 and $1,030, respectively,
were paid to an affiliated broker/dealer. 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. OppenheimerFunds 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 or for certain fixed income agency transactions in the
secondary market and are otherwise paid only if it appears likely that a
better price or execution can be obtained. When the Fund engages in an
option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transaction in the securities to
which the option relates. When possible, concurrent orders to purchase
or sell the same security by more than one of the accounts managed by the
Manager or its affiliates are combined. The transactions effected
pursuant to such combined orders are averaged as to price and allocated
in accordance with the purchase or sale orders actually placed for each
account.
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 Board has also
permitted the Manager to use stated commissions on secondary fixed-income
agency trades to obtain research where the broker has represented to the
Manager that (i) the trade is not from or for the broker's own inventory,
(ii) the trade was executed by the broker on an agency basis at the stated
commission, and (iii) the trade is not a riskless principal transaction.
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. 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.
During the Fund's fiscal years ended June 30, 1994, 1995 and 1996,
total brokerage commissions paid by the Fund (not including spread or
commissions on principal transactions on a net trade basis) were $0.00,
$0.00 and $28,118, respectively. For the fiscal period July 1, 1996 to
August 31, 1996, total brokerage commissions paid by the Fund were
$26,168.
Performance of the Fund
Yield and Total Return Information. As described in the Prospectus,
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.
The Fund's advertisement of its performance data must, under
applicable rules of the Securities and Exchange Commission, include the
average annual total returns for each class of shares of the Fund for the
1, 5, and 10-year periods (or the life of the class, if less) 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:
Standardized Yield = 2 [(a-b
--- + 1) 6 - 1]
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of that class on the last
day of the period, 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 August 31, 1996, the standardized yields for the
Fund's Class A, Class B and Class C shares were 5.99%, 5.49% and 5.52%,
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 dividends paid on shares of a class from
dividends derived from net investment income during a stated period.
Distribution return includes dividends derived from net investment income
and from realized capital gains declared during a stated period. Under
those calculations, the dividends and/or distributions for that class
declared during a stated period of one year or less (for example, 30 days)
are added together, and the sum is divided by the maximum offering price
per share of that class) on the last day of the period. When the result
is annualized for a period of less than one year, the "dividend yield" is
calculated as follows:
Dividend Yield of the Class = Dividends of the Class
-----------------------------
Max. Offering Price of the Class
(last day of period)
+ Number of days (accrual period) x 365
The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B or Class C shares, the maximum
offering price is the net asset value per share, without considering the
effect of contingent deferred sales charges.
From time to time similar yield or distribution return calculations
may also be made using the Class A net asset value (instead of its
respective maximum offering price) at the end of the period. The dividend
yields on Class A shares for the 30-day period ended August 31, 1996, were
6.56% and 6.89% when calculated at maximum offering price and at net asset
value, respectively. The dividend yield on Class B and Class C shares for
the 30-day period ended August 31, 1996, were 6.10% and 6.11%,
respectively, 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
applicable 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
payment of 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, five and ten year periods ended June 30, 1996
were -0.08%, 6.34% and 7.03%, respectively. The "cumulative total return"
on Class A shares for the ten year period ended June 30, 1996 was 97.33%.
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 "average annual total
returns" on an investment in Class A shares of the Fund for the one, five
and ten year periods ended August 31, 1996 were -0.49%, 5.66% and 6.72%.
The "cumulative total return" for the ten year period ended August 31,
1996 on Class A shares was 91.59%. The "cumulative total return" on Class
B shares for the period July 21, 1995 (commencement of the Class) to June
30, 1996, was -0.14%. The "average annual total return" on Class B shares
at August 31, 1996 was -1.25%. The "cumulative total return" on Class B
shares for the period July 21, 1995 (commencement of the class) to August
31, 1996 was 1.17%. For the one year period ended June 30, 1996 the
"average annual total return" on an investment in Class C shares was
3.13%. The cumulative total return on Class C shares for the period from
December 1, 1993 (the commencement of the class) through June 30, 1996 was
11.14%. For the one year period ended August 31, 1996, the "average
annual total return" on an investment in Class C shares was 2.70%. The
"cumulative total return" on Class C shares for the period December 1,
1993 (commencement of the class) to August 31, 1996 was 11.46%.
- 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 ten year period ended June 30, 1996 was 107.17%. The
"cumulative total return at net asset value" of the Fund's Class A shares
for the ten year period ended August 31, 1996 was 101.15%. The
"cumulative total return at net asset value" of the Fund's Class B shares
for the period July 21, 1995 to June 30, 1996 was 4.80%. The "cumulative
total return at net asset value" of the Fund's Class B shares for the
period July 21, 1995 to August 31, 1996 was 5.09%. The "cumulative total
return at net asset value" of the Fund's Class C shares for the period
from December 1, 1993 to June 30, 1996 was 11.14%. The "cumulative total
return at net asset value" of the Fund's Class C shares for the period
December 1, 1993 to August 31, 1996 was 11.46%. The "average annual total
returns at net asset value" for the one, five and ten year periods ended
June 30, 1996 for Class A shares were 4.91%, 7.38% and 7.56%,
respectively. The "average annual total returns at net asset value" for
the one, five and ten year periods ended August 31, 1996, for Class A
shares were 4.47%, 6.70% and 7.24%. The "average annual total returns at
net asset value" for the one year period ended August 31, 1996 for Class
B shares was 3.62%. The "average annual total returns at net asset value"
for the period July 21, 1996 to August 31, 1996 for Class B shares was
4.57%. The "average annual total returns at net asset value" for the one
year period ended June 30, 1996 and for the period from December 1, 1993
to June 30, 1996 for Class C shares were 4.11% and 4.18%, respectively.
The "average annual total returns at net asset value" for the one year
period ended August 31, 1996 and for the period December 1, 1993 to August
31, 1996 for Class C shares were 3.67% and 4.02%, respectively.
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B or Class C shares. However,
when comparing total return of an investment in shares of the Fund with
that of other alternatives, investors should understand that as the Fund
invests in high yield securities, its shares are subject to greater market
risks than shares of funds having other investment objectives and that the
Fund is designed for investors who are willing to accept greater risk of
loss in the hopes of realizing greater gains.
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 of the Fund 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.
The performance of the Fund's Class A, Class B and Class C shares may also
be compared in publications to (i) performance of various market indices
or other investments for which reliable performance data is available, and
(ii) to averages, performance rankings or other benchmarks prepared by
recognized mutual fund statistical services.
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 Oppenheimer
funds, other than the performance rankings of the Oppenheimer funds
themselves. Those ratings or rankings of shareholder/investor services
by third parties may compare the Oppenheimer funds' 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. For the Distribution and Service Plans
for Class B shares and Class C shares, such vote was cast by the Manager
as the sole initial holder of Class B shares and Class C shares of the
Fund.
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, at
no cost to the Fund. The Distributor and the Manager may, in their sole
discretion, increase or decrease the amount of payments they make from
their own resources to Recipients.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as such continuance is specifically
approved at least annually by the Fund's Board of Trustees including its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Each Plan may be terminated at any
time by the vote of a majority of the Independent Trustees or by the vote
of the holders of a "majority" (as defined in the Investment Company Act)
of the outstanding shares of that class. 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 Board and 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. The report for the Class B and Class C
Plans shall also include the distribution costs for that quarter, and such
costs for previous fiscal years that are carried forward, as explained in
the Prospectus and below. Those reports, including allocations on which
they are based, will be subject to review and approval of the Independent
Trustees in the exercise of their fiduciary duty. Each Plan further
provides that while it is in effect, the selection and nomination of those
Trustees of the Fund who are not "interested persons" of the Fund is
committed to the discretion of the Independent Trustees. This does not
prevent the involvement of others in such selection and nomination if the
final decision on 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 requirement for a minimum amount of
assets.
For the fiscal year ended June 30, 1996, and for the fiscal period
July 1, 1996 to August 31, 1996, payments under the Class A Plan totalled
$1,085,680 and $212,196, respectively, all of which was paid by the
Distributor to Recipients, including $83,455 and $23,299, respectively,
paid to an affiliate of the Distributor. Any unreimbursed expenses
incurred with respect to Class A shares for any fiscal year by the
Distributor may not be recovered in subsequent fiscal 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.
The Class B and Class C Plans allow the service fee payment to be
paid by the Distributor to Recipients in advance for the first year such
shares are outstanding, and thereafter on a quarterly basis, as described
in the Prospectus. The advance payment is based on the net assets of the
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. Payments made under the Class B Plan during
the period July 21, 1995 through June 30, 1996 and for the fiscal period
July 1, 1996 to August 31, 1996 totalled $187,678 and $59,266,
respectively, of which $187,678 and $50,535, respectively, were retained
by the Distributor. Payments made under the Class C Plan during the
fiscal year ended June 30, 1996 and for the fiscal period July 1, 1996 to
August 31, 1996 totalled $157,684 and $31,535, of which $99,336 and
$14,173, respectively, were retained by the Distributor, including $9,640
and $1,511, respectively, paid to an affiliate of 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 fees on such
shares, 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.
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. 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, or may
provide such financing from its own resources, or from an affiliate, (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
and certain other distribution expenses.
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 the individual
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 $500,000 or more of Class B
shares or $1 million or more of Class C shares on behalf of a single
investor (not including dealer "street name" or omnibus accounts) because
generally it will be more advantageous for that investor to purchase Class
A shares of the Fund instead.
The three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B and Class C shares and the dividends payable on such 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 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.
The conversion of Class B shares to Class A shares after six years
is subject to the continuing availability of a private letter ruling from
the Internal Revenue Service, or an opinion of counsel or tax adviser, to
the effect that the conversion of 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.
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 announcement (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 Fund's net asset
value will not be calculated at such times, the net asset value per share
of Class A, Class B and Class C shares of the Fund may be significantly
affected at times 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 U.S. securities exchange or on NASDAQ for which
last sale information is regularly reported are valued at the last
reported sale price on their primary exchange or NASDAQ that day (or, in
the absence of sales that day, at values based on the last sale prices of
the preceding trading day or closing bid and asked prices that day); (ii)
securities traded on a foreign securities exchange are valued generally
at the last sales price available to the pricing service approved by the
Fund's Board of Trustees or to the Manager as reported by the principal
exchange on which the security is traded at its last trading session on
or immediately preceding the valuation date, or at the mean between "bid"
and "asked" prices obtained from active market makers in the security on
the basis of reasonable inquiry; (iii) long-term debt securities having
a remaining maturity in excess of 60 days are valued based on the mean
between the "bid" and "asked" prices determined by a portfolio pricing
service approved by the Fund's Board of Trustees or obtained by the
Manager from two active market makers in the security on the basis of
reasonable inquiry; (iv) debt instruments having a maturity of more than
397 days when issued, and non-money market type instruments having a
maturity of 397 days or less when issued, which have a remaining maturity
of 60 days or less are valued at the mean between "bid" and "asked" prices
determined by a pricing service approved by the Fund's Board of Trustees
or obtained by the Manager from two active market makers in the security
on the basis of reasonable inquiry; (v) money market debt securities that
had a maturity of less than 397 days when issued that have a remaining
maturity of 60 days or less are valued at cost, adjusted for amortization
of premiums and accretion of discounts; and (vi) securities (including
restricted securities) not having readily-available market quotations are
valued at fair value determined under the Board's procedures. If the
Manager is unable to locate two market makers willing to give quotes (see
(ii), (iii) and (iv) above, the security may be priced at the mean between
the "bid" and "asked" prices provided by a single active market maker.
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 Manager may use pricing services approved
by the Board of Trustees to price U.S. Government Securities for which
last sale information is not generally available. The Manager will
monitor the accuracy of such pricing services, which may include 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. In determining the Fund's
gain on investments, if a call written by the Fund is exercised, the
proceeds are increased by the premium received. If a call or put written
by the Fund expires, the Fund has a gain in the amount of the premium; if
the Fund enters into a closing purchase transaction, it will have a gain
or loss depending on whether the premium was more or less than the cost
of the closing transaction. If the Fund exercises a put it holds, the
amount the Fund receives on its sale of the underlying investment is
reduced by the amount of premium paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the regular
business day the Distributor is instructed to initiate the Automated
Clearing House ("ACH") transfer to buy shares. Dividends will begin to
accrue on shares purchased by the proceeds of ACH transfers on the
business day the Fund receives Federal Funds for the purchase through the
ACH system before the close of The New York Stock Exchange. The Exchange
normally closes at 4:00 P.M., but may close earlier on certain days. If
the Federal Funds are received on a business day after the close of the
Exchange, the shares will be purchased and dividends will begin to accrue
on the next regular business day. The proceeds of ACH transfers are
normally received by the Fund 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, a sibling's spouse and a spouse's siblings, aunts, uncles,
nieces and nephews.
- The Oppenheimer funds. The Oppenheimer funds are those mutual funds
for which the Distributor acts as the distributor or the sub-distributor
and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer International Bond Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Enterprise Fund
Oppenheimer International Growth Fund
Oppenheimer Bond Fund For Growth
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Series Fund, Inc.
Panorama Series Fund, Inc.
Rochester Fund Municipals*
Rochester Portfolio Series - Limited Term
New York Municipal 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.
________________________
* Shares of the Fund are not presently exchangeable for shares of these
funds.
There is an initial sales charge on the purchase of Class A shares
of each of the Oppenheimer funds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a contingent deferred sales charge).
- Letters of Intent. A Letter of Intent (referred to as a "Letter")
is an investor's statement in writing to the Distributor of the intention
to purchase Class A shares of the Fund (and Class A and Class B shares of
other Oppenheimer funds) during a 13-month period (the "Letter of Intend
period"), which may, at the investor's request, include purchases made up
to 90 days prior to the date of the Letter. The Letter states the
investor's intention to make the aggregate amount of purchases of shares
which, when added to the investor's holdings of shares of those funds,
will equal or exceed the amount specified in the Letter. Purchases made
at net asset value without sales charge do not count toward satisfying the
amount of the Letter. A Letter enables an investor to count the Class A
and Class B shares purchased under the Letter to obtain the reduced sales
charge rate on purchases of Class A shares of the Fund (and other
Oppenheimer funds) that applies under the Right of Accumulation to current
purchases of Class A shares. Each purchase of Class A shares under the
Letter will be made at the public offering price (including the sales
charge) that applies to a single lump-sum purchase of shares in the amount
intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the
Transfer Agent will not hold shares in escrow. If the intended purchase
amount under the Letter entered into by an OppenheimerFunds prototype
401(k) plan is not purchased by the plan by the end of the Letter of
Intent period, there will be no adjustment of commissions paid to the
broker-dealer or financial institution of record for accounts held in the
name of that plan.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual 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
up to 5% of the intended purchase amount specified in the Letter shall be
held in escrow by the Transfer Agent. For example, if the intended
purchase amount is $50,000, the escrow shall be shares valued in the
amount of $2,500 (computed at the public offering price adjusted for a
$50,000 purchase). Any dividends and capital gains distributions on the
escrowed shares will be credited to the investor's account.
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 a Letter) include (a) Class
A shares sold with a front-end sales charge or subject to a Class A
contingent deferred sales charge, (b) Class B shares of other Oppenheimer
funds acquired subject to a contingent deferred sales charge, and (c)
Class A shares or Class B shares acquired in exchange for either (i) Class
A shares of one of the other Oppenheimer funds that were acquired subject
to a Class A initial or contingent deferred sales charge or (ii) Class B
shares of one of the other Oppenheimer funds that were acquired subject
to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as described
in the section of the Prospectus entitled "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
Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions
for redemptions set forth in the Prospectus.
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.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of (i)
Class A shares that you purchase subject to an initial sales charge or
(ii) Class B shares that were subject to the Class B contingent deferred
sales charge when redeemed. This privilege does not apply to Class C
shares. The reinvestment may be made without sales charge only in Class
A shares of the Fund or any of the other Oppenheimer funds 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 Oppenheimer funds within 90 days of payment
of the sales charge, the shareholder's basis in the shares of the Fund
that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added to the
basis of the shares acquired by the reinvestment of the redemption
proceeds. The Fund may amend, suspend or cease offering this reinvestment
privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of transfer to
the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain subject
to the contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B and Class C
contingent deferred sales charge will be followed in determining the order
in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) 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 maintaining a plan account
in their own name) in OppenheimerFunds-sponsored prototype pension,
profit-sharing or 401(k) plans may not directly redeem or exchange shares
held for their account under those plans. The employer or plan
administrator must sign the request. Distributions from pension plans or
401(k) 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 on behalf of their customers. The
shareholder should contact the dealer or broker to arrange this type of
redemption. The repurchase price per share will be the net asset value
next computed after the Distributor receives the order placed by the
dealer or broker, except that if the Distributor receives a repurchase
order from a dealer or broker after the close of The New York Stock
Exchange on a regular business day, it will be processed at that day's net
asset value if the order was received by the dealer or broker from its
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.). Ordinarily, for accounts redeemed by a broker-
dealer under this procedure, payment will be made within three business
days after the shares have been redeemed upon the Distributor's receipt
the required redemption documents in proper form, with the signature(s)
of the registered owners guaranteed on the redemption document as
described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of
the Fund valued at $5,000 or more can authorize the Transfer Agent to
redeem shares (minimum $50) automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Withdrawal Plan. Shares will
be redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are made by
check, payable to all shareholders of record, and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B and Class C shareholders should not establish
withdrawal plans because of the imposition of the contingent deferred
sales charge on such withdrawals (except where the Class B or Class C
contingent deferred sales charge is waived as described in the Prospectus
under "Waivers of Class B and Class C Contingent Deferred Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other Oppenheimer funds automatically
on a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to Exchange
Shares" in the Prospectus 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. It may not be desirable to purchase shares of Class A shares
while maintaining automatic withdrawal plans because of the sales charges
that apply to purchases when made. Accordingly, a shareholder normally
may not maintain an Automatic Withdrawal Plan while simultaneously making
purchases of Class A shares.
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. Neither the Transfer Agent nor the Fund shall incur no
liability to the Planholder for any action taken or omitted by the
Transfer Agent in good faith to administer the Plan. Certificates will
not be issued for shares of the Fund purchased for and held under the
Plan, but the Transfer Agent will credit all such shares to the account
of the Planholder on the records of the Fund. Any share certificates held
by a Planholder may be surrendered unendorsed to the Transfer Agent with
the Plan application so that the shares represented by the certificate may
be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or ACH 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 Class A 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.
- Involuntary Redemptions. The Fund's Board of Trustees has the right
to cause the involuntary redemption of the shares held in any account if
the aggregate net asset value of those shares is less than $200 or such
lesser amount as the Board may fix. The Board of Trustees will not cause
the involuntary redemption of shares in an account if the aggregate net
asset value of the shares has fallen below the stated minimum solely as
a result of market fluctuations. Should the Board elect to exercise this
right, it may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in question
(not less than 30 days), or the Board may set requirements for granting
permission to the Shareholder to increase the investment, and set other
terms and conditions so that the shares would not be involuntarily
redeemed.
Payments "In Kind". The Prospectus states that payment for shares tendered
for redemption is ordinarily made in cash. However, the Board of Trustees
of the Fund 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.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be exchanged
only for shares of the same class of other OppenheimerFunds. Shares of
Oppenheimer funds that have a single class without a class designation are
deemed "Class A" shares for this purpose. All of the Oppenheimer funds
offer Class A, B and C shares except Oppenheimer Money Market Fund, Inc.,
Centennial Tax Exempt Trust, Centennial Government Trust, Centennial New
York Tax Exempt Trust, Centennial California Tax Exempt Trust, Centennial
America Fund, L.P. and Daily Cash Accumulation Fund Inc., which only offer
Class A shares and Oppenheimer Main Street California Tax Exempt Fund
which only offers Class A and Class B shares (Class B and Class C shares
of Oppenheimer Cash reserves are generally available only by exchange from
the same class of shares of other Oppenheimer funds or through
OppenheimerFunds sponsored 401(k) plans). A current list showing which
funds offer which class can be obtained by calling the Distributor at 1-
800-525-7048. Prior to May 1, 1996, Oppenheimer Disciplined Allocation
Fund, Oppenheimer Disciplined Value Fund, Oppenheimer LifeSpan Balanced
Fund, Oppenheimer LifeSpan Income Fund and Oppenheimer LifeSpan Growth
Fund only offer Class A and Class B shares and are not available for
exchange to or from other Oppenheimer funds.
For accounts established on or before March 8, 1996 holding Class M
shares of Oppenheimer Bond Fund for Growth, Class M shares can be
exchanged only for Class A shares of other Oppenheimer funds, including
Rochester Fund Municipals and Limited Term New York Municipal Fund. Class
A shares of Rochester Fund Municipals or Limited Term New York Municipal
Fund acquired on the exchange of Class M shares of Oppenheimer Bond Fund
for Growth may be exchanged for Class M shares of that fund. For accounts
of Oppenheimer Bond Fund for Growth established after March 8, 1996, Class
M shares may be exchanged for Class A shares of other Oppenheimer funds
except Rochester Fund Municipals and Limited Term New York Municipals.
Exchanges to Class M shares of Oppenheimer Bond Fund for Growth are
permitted from Class A shares of Oppenheimer Money Market Fund, Inc. or
Oppenheimer Cash Reserves that were acquired by exchange from Class M
shares. Otherwise no exchanges of any class of any Oppenheimer fund into
Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
Oppenheimer funds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of Oppenheimer
funds subject to a contingent deferred sales charge). However, shares of
Oppenheimer Money Market Fund, Inc. purchased with the redemption proceeds
of shares of other mutual funds (other than funds managed by the Manager
or its subsidiaries) redeemed within the 12 months prior to that purchase
may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or
the investor's dealer must notify the Distributor of eligibility for this
privilege at the time the shares of Oppenheimer Money Market Fund, Inc.
are purchased, and, if requested, must supply proof of entitlement to this
privilege.
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except Oppenheimer
Cash Reserves) 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 Oppenheimer funds. No contingent
deferred sales charge is imposed on exchanges of shares of either class
purchased subject to a contingent deferred sales charge. However, when
Class A shares acquired by exchange of Class A shares of other Oppenheimer
funds purchased subject to a Class A contingent deferred sales charge are
redeemedwithin 18 months of the end of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A contingent deferred
sales charge is imposed on the redeemed shares (see "Class A Contingent
Deferred Sales Charge" in the Prospectus. The Class B contingent deferred
sales charge is imposed on Class B shares acquired by exchange if they are
redeemed within 6 years of the initial purchase of the exchanged Class B
shares. The Class C contingent deferred sales charge is imposed on Class
C shares acquired by exchange if they are redeemed within 12 months of the
initial purchase of the exchanged Class C shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of more than one account.
The Fund may accept requests for exchanges of up to 50 accounts per day
from representatives of authorized dealers that qualify for this
privilege. In connection with any exchange request, the number of shares
exchanged may be less than the number requested if the exchange or the
number requested would include shares subject to a restriction cited in
the Prospectus or this Statement of Additional Information or would
include shares covered by a share certificate that is not tendered with
the request. In those cases, only the shares available for exchange
without restriction will be exchanged.
When 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.
When exchanging shares by telephone, a shareholder must either have
an existing account in, or obtain and acknowledge receipt of a prospectus
of, the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on shares held
of record at the time of the previous determination of net asset value,
or as otherwise described in "How to Buy Shares." However, daily
dividends on newly purchased shares will not be declared or paid until
such time as Federal Funds (funds credited to a member bank's account at
the Federal Reserve Bank) are available from the purchase payment for such
shares. Normally, purchase checks received from investors are converted
to Federal Funds on the next business day. Shares purchased through
dealers or brokers are normally paid for by the third business day
following the placement of the purchase order. Shares redeemed through
regular redemption procedures will be paid dividends through and including
the day on which the redemption request is received by the Transfer Agent
in proper form. Dividends will be paid with respect to shares repurchased
by a dealer or broker for three business days following the trade date
(i.e., to and including the day prior to settlement of the repurchase).
If all shares in an account are redeemed, all dividends accrued on shares
in the account will be paid together with the redemption proceeds.
Dividends, 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.
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 Oppenheimer funds listed in "Reduced
Sales Charges" above, at net asset value without sales charge. To elect
this option, the shareholder must notify the Distributor 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
Transfer Agent 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 Oppenheimer funds 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>
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 August 31, 1996, and the
statements of operations for the two month period then ended and the year ended
June 30, 1996, the statements of changes in net assets for the two month period
ended August 31, 1996 and the years ended June 30, 1996 and 1995, and the
financial highlights for the two month period ended August 31, 1996 and for each
of the years in the five year period ended June 30, 1996. 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. Our procedures included confirmation of securities owned as of
August 31, 1996, 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 August 31, 1996, the results of its
operations for the two month period then ended and the year ended June 30, 1996,
the changes in its net assets for the two month period ended August 31, 1996 and
the years ended June 30, 1996 and 1995, and the financial highlights for the two
month period ended August 31, 1996 and each of the years in the five year period
ended June 30, 1996, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Denver, Colorado
September 23, 1996
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments August 31, 1996
Face Market Value
Amount See Note 1
<S> <C> <C>
==========================================================
==========================================================
================
Mortgage-Backed Obligations--105.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Government Agency--94.7%
- ------------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/
Sponsored--68.0%
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates:
14%, 1/1/11 $ 512,994 $ 603,533
Series 1061, Cl. L, 6.65%, 4/15/21 10,750,000 10,229,270
7.50%, 5/1/26 20,129,582 19,689,952
Series 1065, Cl. H, 8.50%, 10/15/19 1,208,603 1,227,857
Series 0192, Cl. H, 9%, 7/15/21 1,539,472 1,568,338
9.50%, 12/1/02--11/1/03 507,713 528,603
Series 5, Cl. Z, 9%, 5/15/19 3,191,469 3,315,389
Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Series 1548, Cl. C, 7%, 4/15/21 3,000,000 2,775,000
Gtd. Multiclass Mtg. Participation Certificates:
11.50%, 6/1/20 1,343,525 1,523,642
13%, 8/1/15 2,270,297 2,679,661
Series 1347, Cl. I, 8%, 8/15/22 10,000,000 9,906,200
Series 1455, Cl. J, 7.50%, 12/15/22 5,000,000 4,848,400
Interest-Only Stripped Mtg.-Backed Security,
Trust 177, Cl. B, 15.333%--15.447%, 7/15/26(1) 98,281,338 37,224,057
----------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
11%, 7/1/16 1,639,309 1,832,953
11.50%, 11/1/15 1,258,946 1,419,463
7%, 8/1/25--5/1/26 57,007,637 54,279,433
7%, 9/15/26(2) 10,000,000 9,515,600
7.50%, 8/1/25 4,619,678 4,523,450
7.50%, 9/15/26(2) 31,500,000 30,771,720
8%, 9/15/26(2) 34,000,000 33,989,460
8.50%, 9/15/26(2) 36,500,000 37,173,060
----------------------------------------------------------------------------------------------------------------
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates:
Series 1992-103, Cl. JB, 10.50%, 11/25/20 10,000,000 11,040,600
13%, 11/1/12 173,005 201,640
Series 1991-176, Cl. PL, 7%, 12/25/21 29,617,000 27,349,226
8%, 12/1/22 2,904,616 2,915,335
8.75%, 11/25/05--12/25/20 30,000,000 31,031,680
Series G92-42, Cl. C, 7%, 9/25/19 456,912 455,624
Gtd. Mtg. Pass-Through Certificates, 12%, 4/15/19 1,555,172 1,790,393
Gtd. Multiclass Mtg. Participation Certificates, Series 1989-4,
Cl. D, 10%, 2/25/19 3,000,000 3,317,790
----------------------------------------------------------------------------------------------------------------
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Series 1992-132, Cl. PJ, 8%, 7/25/19 18,000,000 18,191,160
Series 1990-18, Cl. K, 9.60%, 3/25/20 5,000,000 5,473,400
Series 1992-112, Cl. ED, 4%, 12/25/20 3,000,000 2,546,250
----------------------------------------------------------------------------------------------------------------
Interest-Only Stripped Mtg.-Backed Security:
Trust 177, Cl. B, 9.997%, 1/1/24(1) 6,278,865 2,193,679
Trust 218, Cl. 2, 12.666%, 4/1/23(1) 6,796,442 2,316,100
Principal-Only Stripped Mtg.-Backed Security, Trust 4, Cl. J, 2.715%, 9/25/22(3) 3,400,000 1,568,250
---------------
380,016,168
- ------------------------------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed--26.7%
Government National Mortgage Assn.:
10%, 6/15/16--8/15/19 3,735,250 4,093,536
10.50%, 1/15/98--5/15/21 8,810,561 9,749,851
11%, 7/20/20 125,251 140,790
11.50%, 1/15/98--4/15/13 146,676 162,196
12%, 12/15/12--3/15/14 67,332 77,762
</TABLE>
6 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
==========================================================
==========================================================
================
GNMA/Guaranteed
(continued)
- ------------------------------------------------------------------------------------------------------------------------------------
12.50%, 1/15/14--6/15/19 $ 1,249,820 $ 1,455,523
13%, 4/15/11--12/15/14 174,697 206,238
13.50%, 4/15/11--8/15/14 217,270 258,996
14%, 6/15/11 44,099 53,429
15%, 7/15/11--9/15/12 194,694 239,268
6.50%, 11/15/23--12/15/23 1,977,758 1,833,368
7%, 2/15/22--10/15/23 10,181,250 9,726,719
7.125%, 4/20/17 389,891 394,949
7.25%, 12/15/05 41,365 41,134
7.50%, 10/15/06--7/15/26 22,245,983 21,776,785
7.50%, 9/15/26(2) 59,750,000 58,312,415
8%, 4/15/02--5/15/25 3,530,234 3,573,074
8%, 9/15/26(2) 30,000,000 29,990,700
8.25%, 4/15/08 149,304 152,636
8.50%, 6/15/01--1/15/06 129,358 133,931
9%, 9/15/08--5/15/09 525,975 557,275
9.50%, 4/15/01--1/15/20 1,484,741 1,598,182
----------------------------------------------------------------------------------------------------------------
U.S. Department of Veterans Affairs, Interest-Only Gtd.
Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Vendee Mtg. Trust, Series 1995-2B, Cl. 2-IO, 26.274%, 6/15/25(1) 134,650,312 4,760,023
---------------
149,288,780
- ------------------------------------------------------------------------------------------------------------------------------------
Private--10.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Commercial--7.9%
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Series 1994-C1, Cl. 2-G, 8.70%, 9/25/25(4) 3,000,000 2,989,688
----------------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates,
Series 1995-C2, Cl. C, 7.882%, 6/15/21(5) 2,757,008 2,739,777
----------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc.:
Collateralized Mtg. Obligations, Cl. C, 7.95%, 8/15/27(4) 5,014,988 4,952,301
Commercial Mtg. Pass-Through Certificates,
Series 1996-C1, Cl. D-1, 7.51%, 2/15/28(4)(5) 3,000,000 2,820,000
----------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1992-C5, Cl. C, 8.85%, 5/25/22 7,316,813 7,468,866
Series 1993-C1, Cl. D, 9.45%, 5/25/24 1,183,001 1,209,989
Series 1994-C1, Cl. C, 8%, 6/25/26 7,075,000 7,048,469
Series 1994-C2, Cl. D, 8%, 4/25/25 2,869,093 2,868,197
Series 1995-C1, Cl. D, 6.90%, 2/25/27 7,677,000 6,942,887
----------------------------------------------------------------------------------------------------------------
SC Commercial Mortgage Pass-Through Certificates,
Series 93-01, Cl. A1, 6.65%, 11/28/13(4) 1,840,968 1,768,192
----------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates, Series 1996-CFL, Cl. D, 7.034%, 2/25/28 3,700,000 3,515,000
---------------
44,323,366
- ------------------------------------------------------------------------------------------------------------------------------------
Multi-Family--2.2%
Countrywide Funding Corp., Series 1993-12, Cl. B1, 6.625%, 2/25/24 3,000,000 2,614,453
----------------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg
Pass-Through Interest-Only Certificates, Series 94-M1:
Cl. A-X, 0.52%, 2/15/02(1)(4) 88,100,000 27,531
Cl. B-X, 0.61%, 2/15/02(1)(4) 19,300,000 6,031
Cl. C-X, 0.66%, 2/15/02(1)(4) 15,400,000 4,813
Cl. D-X, 0.82%, 2/15/02(1)(4) 2,968,000 928
</TABLE>
7 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments (Continued)
Face Market Value
Amount See Note 1
<S> <C> <C>
==========================================================
==========================================================
================
Multi-Family (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
DLJ Mortgage Acceptance Corp., Series 1996-CF1, Cl. B2, 8.27%, 3/13/28(4) $ 2,000,000 $
1,911,563
----------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1991-M5, Cl. A, 9%, 3/25/17 6,487,495 6,643,601
Series 1992-M4, Cl. B, 7.20%, 9/25/21 1,028,368 1,026,440
---------------
12,235,360
- ------------------------------------------------------------------------------------------------------------------------------------
Residential--0.7%
Prudential Home Mortgage Securities Corp., Sub. Fixed Rate Mtg.
Securities, Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1995-A, Cl. B2, 8.684%, 3/28/25(4)(5) 1,484,273 1,474,070
----------------------------------------------------------------------------------------------------------------
Residential Funding Corp., Mtg. Pass-Through Certificates,
Series 1993-S10, Cl. A9, 8.50%, 2/25/23 2,206,543 2,245,158
---------------
3,719,228
---------------
Total Mortgage-Backed Obligations (Cost $590,280,548) 589,582,902
==========================================================
==========================================================
================
U.S. Government Obligations--29.9%
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
7.125%, 2/15/23 8,643,000 8,499,845
7.50%, 11/15/24 25,000,000 25,781,250
----------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6%, 8/31/97 54,000,000 54,033,750
7.25%, 11/15/96(6) 19,321,000 19,393,454
7.75%, 1/31/00 26,800,000 27,721,250
8%, 1/15/97 17,300,000 17,456,771
9.125%, 5/15/99 3,500,000 3,723,125
9.25%, 8/15/98 6,750,000 7,102,261
STRIPS, Zero Coupon, 7.03%, 8/15/16(7) 15,000,000 3,479,848
---------------
Total U.S. Government Obligations (Cost $172,414,790) 167,191,554
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $762,695,338) 135.4% 756,774,456
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (35.4) (198,029,864)
-------------- --------------
Net Assets 100.0% $ 558,744,592
==============
==============
</TABLE>
1. Interest-Only Strips represent the right to receive the
monthly interest payments on an underlying pool of mortgage
loans. These securities typically decline in price as
interest rates decline. Most other fixed-income securities
increase in price when interest rates decline. The principal
amount of the underlying pool represents the notional amount
on which current interest is calculated. The price of these
securities is typically more sensitive to changes in
prepayment rates than traditional mortgage-backed securities
(for example, GNMA pass-throughs). Interest rates disclosed
represent current yields based upon the current cost basis
and estimated timing and amount of future cash flows.
Interest-Only Strips amount to $46,533,162 or 8.33% of the
Fund's net assets at August 31, 1996.
2. When-issued security to be delivered and settled after
August 31, 1996.
3. 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. Interest rates
disclosed represent current yields based upon the current
cost basis and estimated timing of future cash flows.
4. Represents a security sold under Rule 144A, which is
exempt from registration under the Securities Act of 1933,
as amended. This security has been determined to be liquid
under guidelines established by the Board of Trustees. These
securities amount to $15,955,117 or 2.86% of the Fund's net
assets, at August 31, 1996.
5. Represents the current interest rate for a variable rate
security.
6. Securities with an aggregate market value of $3,513,125
are held in collateralized accounts to cover initial margin
requirements on open futures sales contracts. See Note 5 of
Notes to Financial Statements.
7. For zero coupon bonds, the interest rate shown is the
effective yield on the date of purchase.
See accompanying Notes to Financial Statements.
8 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities August 31, 1996
<S> <C>
==========================================================
==========================================================
================
Assets Investments, at value (cost $762,695,338)--see accompanying statement $756,774,456
----------------------------------------------------------------------------------------------------------------
Cash 52,363
----------------------------------------------------------------------------------------------------------------
Receivables:
Interest and principal paydowns 6,849,108
Daily variation on futures contracts--Note 5 992,753
Shares of beneficial interest sold 372,004
----------------------------------------------------------------------------------------------------------------
Other 12,911
------------
Total assets 765,053,595
==========================================================
==========================================================
================
Liabilities Payables and other liabilities:
Investments purchased on a when-issued basis--Note 1 202,264,794
Shares of beneficial interest redeemed 2,339,774
Dividends 695,742
Daily variation on futures contracts--Note 5 485,938
Distribution and service plan fees 229,663
Trustees' fees 226,045
Shareholder reports 45,139
Other 21,908
------------
Total liabilities 206,309,003
==========================================================
==========================================================
================
Net Assets $558,744,592
============
==========================================================
==========================================================
================
Composition of
Net Assets
Paid-in capital $584,946,382
----------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (90,989)
----------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (22,059,013)
----------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments--Notes 3 and 5 (4,051,788)
------------
Net assets $558,744,592
============
==========================================================
==========================================================
================
Net Asset Value
Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$503,693,372 and 54,553,161 shares of beneficial interest outstanding) $ 9.23
Maximum offering price per share (net asset value plus sales charge of 4.75% of
offering price) $ 9.69
----------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $36,504,488 and 3,957,387 shares of beneficial interest outstanding) $ 9.22
----------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $18,546,732 and 2,011,022 shares of beneficial interest outstanding) $ 9.22
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
Statements of Operations Two Months Year Ended
Ended Aug. 31, June 30,
1996(1) 1996
<S> <C> <C>
==========================================================
==========================================================
================
Investment Income Interest $7,376,473 $39,641,998
==========================================================
==========================================================
================
Expenses Management fees--Note 4 569,144 2,946,711
-----------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 212,196 1,085,680
Class B 59,266 187,678
Class C 31,535 157,684
-----------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 118,340 543,943
-----------------------------------------------------------------------------------------------------------------
Shareholder reports 38,757 219,630
-----------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 20,003 168,562
-----------------------------------------------------------------------------------------------------------------
Legal and auditing fees 13,102 70,743
-----------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 8,300 95,373
-----------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 2,971 35,406
Class B 2,932 10,398
Class C 35 2,222
-----------------------------------------------------------------------------------------------------------------
Other 33,756 44,847
---------- -----------
Total expenses 1,110,337 5,568,877
---------- -----------
Less assumption of expenses by OppenheimerFunds, Inc.--Note 4 -- (38,982)
---------- -----------
Net expenses 1,110,337 5,529,895
==========================================================
==========================================================
================
Net Investment Income 6,266,136 34,112,103
==========================================================
==========================================================
================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 5,131,991 (6,758,735)
Closing of futures contracts (2,485,316) 976,460
Closing and expiration of options written--Note 6 799,343 436,513
---------- -----------
Net realized gain (loss) 3,446,018 (5,345,762)
-----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (7,579,207) (5,672,502)
---------- -----------
Net realized and unrealized loss (4,133,189) (11,018,264)
==========================================================
==========================================================
================
Net Increase in Net Assets Resulting From Operations $2,132,947 $23,093,839
==========
===========
</TABLE>
1. The Fund changed its fiscal year end from June 30 to
August 31.
See accompanying Notes to Financial Statements.
10 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets Two Months
Ended Aug. 31, Year Ended June 30,
1996(1) 1996 1995
<S> <C> <C> <C>
==========================================================
==========================================================
================
Operations Net investment income $ 6,266,136 $ 34,112,103 $ 22,905,201
-----------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 3,446,018 (5,345,762) 2,180,093
-----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (7,579,207) (5,672,502) 8,115,444
---------- ----------- ------------
Net increase in net assets resulting from operations 2,132,947 23,093,839 33,200,738
==========================================================
==========================================================
================
Dividends and Distributions
To Shareholders
Dividends from net investment income:
Class A (5,731,651) (31,382,515) (22,498,787)
Class B (348,062) (1,137,105) --
Class C (186,423) (968,691) (416,947)
-----------------------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A -- (618,306) --
Class B -- (37,635) --
Class C -- (22,691) --
==========================================================
==========================================================
================
Beneficial Interest
Transactions
Net increase (decrease) in net assets resulting from
beneficial interest transactions--Note 2:
Class A 2,449,140 202,362,216 (7,455,681)
Class B 6,033,028 31,353,131 --
Class C 161,928 7,965,917 6,508,757
==========================================================
==========================================================
================
Net Assets Total increase 4,510,907 230,608,160 9,338,080
-----------------------------------------------------------------------------------------------------------------
Beginning of period 554,233,685 323,625,525 314,287,445
------------ ------------ -------------
End of period [including undistributed (overdistributed)
net investment income of $(90,989), $57,809 and $87,075,
respectively] $558,744,592 $554,233,685 $ 323,625,525
============ ============
=============
</TABLE>
1. The Fund changed its fiscal year end from June 30 to
August 31. See accompanying Notes to Financial Statements.
11 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
Class A
--------------------------------------------------------
Two Months
Ended
August 31, Year Ended June 30,
1996(2) 1996 1995 1994 1993 1992
==========================================================
===========================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value,
beginning of period $9.30 $9.51 $9.20 $9.95 $9.73 $9.25
- -------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .10 .67 .68 .67 .68 .69
Net realized
and unrealized
gain (loss) (.07) (.21) .31 (.74) .22 .48
----- ----- ----- ----- ----- -----
Total income
(loss) from
investment
operations .03 .46 .99 (.07) .90 1.17
- -------------------------------------------------------------------------------------
Dividends and
distributions
to shareholders:
Dividends from net
investment income (.10) (.66) (.68) (.64) (.68) (.69)
Dividends in excess
of net investment
income -- -- -- (.01) -- --
Tax return of
capital distribution -- (.01) -- (.03) -- --
----- ----- ----- ----- ----- -----
Total dividends and
distributions to
shareholders (.10) (.67) (.68) (.68) (.68) (.69)
- -------------------------------------------------------------------------------------
Net asset value,
end of period $9.23 $9.30 $9.51 $9.20 $9.95 $9.73
===== ===== ===== ===== ===== =====
==========================================================
===========================
Total Return, at
Net Asset Value(4) 0.42% 4.91% 11.22% (1.17)% 9.55% 13.05%
==========================================================
===========================
Ratios/Supplemental Data:
Net assets, end
of period
(in thousands) $503,693 $504,966 $312,607 $310,027 $380,916 $395,863
- -------------------------------------------------------------------------------------
Average net assets
(in thousands) $508,123 $452,236 $307,306 $355,698 $401,789 $376,532
- -------------------------------------------------------------------------------------
Ratios to average
net assets:
Net investment
income 6.64%(5) 7.07% 7.32% 6.61% 6.90% 7.23%
Expenses 1.09%(5) 1.08% 1.09% 1.14% 1.17% 1.17%
- -------------------------------------------------------------------------------------
Portfolio
turnover rate(6) 5.6% 399.7% 303.5% 139.5% 96.8% 207.8%
<CAPTION>
Financial Highlights (Continued)
Class B Class C
---------- --------------------------------------------
Two Months Two Months
Ended Period Ended
August 31, Ended August 31, Year Ended June 30,
1996(2) 1996(3) 1996(2) 1996 1995 1994(1)
==========================================================
=============================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value,
beginning of period $9.29 $9.40 $9.29 $9.50 $9.19 $9.83
- ---------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .09 .56 .09 .60 .61 .33
Net realized
and unrealized
gain (loss) (.07) (.11) (.07) (.21) .30 (.64)
----- ----- ----- ----- ----- -----
Total income
(loss) from
investment
operations .02 .45 .02 .39 .91 (.31)
- ---------------------------------------------------------------------------------------
Dividends and
distributions
to shareholders:
Dividends from net
investment income (.09) (.55) (.09) (.59) (.60) (.33)
Dividends in excess
of net investment
income -- -- -- -- -- --
Tax return of
capital distribution -- (.01) -- (.01) -- --
----- ----- ----- ----- ----- -----
Total dividends and
distributions to
shareholders (.09) (.56) (.09) (.60) (.60) (.33)
- ---------------------------------------------------------------------------------------
Net asset value,
end of period $9.22 $9.29 $9.22 $9.29 $9.50 $9.19
===== ===== ===== ===== ===== =====
==========================================================
=============================
Total Return, at
Net Asset Value(4) 0.28% 4.80% 0.28% 4.11% 10.31% (3.12)%
==========================================================
=============================
Ratios/Supplemental Data:
Net assets, end
of period
(in thousands) $36,504 $30,737 $18,547 $18,531 $11,019 $4,261
- ---------------------------------------------------------------------------------------
Average net assets
(in thousands) $35,078 $19,227 $18,620 $15,766 $6,503 $2,173
- ---------------------------------------------------------------------------------------
Ratios to average
net assets:
Net investment
income 5.82%(5) 6.44%(5) 5.90%(5) 6.27% 6.44% 5.97%(5)
Expenses 1.88%(5) 1.93%(5) 1.84%(5) 1.85% 1.89% 1.96%(5)
- ---------------------------------------------------------------------------------------
Portfolio
turnover rate(6) 5.6% 399.7% 5.6% 399.7% 303.5% 139.5%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to June 30,
1994.
2. The Fund changed its fiscal year end from June 30 to August 31.
3. For the period from July 21, 1995 (inception of offering) to June 30, 1996.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), 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 period
ended August 31, 1996 were $107,275,488 and $38,439,764, respectively. For the
years ended June 30, 1996 and 1995, purchases and sales of investment securities
included mortgage "dollar-rolls." See accompanying Notes to Financial
Statements.
12 & 13 Oppenheimer U.S. Government Trust
<PAGE>
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. On August 15, 1996, the Board of Trustees elected to change
the fiscal year end of the Fund from June 30 to August 31. Accordingly, these
financial statements include information for the two month period from July 1,
1996 to August 31, 1996. The Fund's investment objective is to seek 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 Fund's investment adviser is
OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class
C shares. Class A shares are sold with a front-end sales charge. Class B and C
shares may be subject to a contingent deferred sales charge. All three 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 the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such 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 are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" 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 price 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 price is
used.
- --------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. During this
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of August 31, 1996,
the Fund had entered into outstanding when-issued or forward commitments of
$202,264,794.
In connection with its ability to purchase securities on a when-issued or
forward commitment basis, the Fund may enter into mortgage "dollar-rolls" in
which the Fund sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar (same
type, coupon and maturity) but not identical securities on a specified future
date. The Fund records each dollar-roll as a sale and a new purchase
transaction.
14 Oppenheimer U.S. Government Trust
<PAGE>
==========================================================
======================
1. Significant Accounting
Policies (continued)
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 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 or excise tax provision is required. At August 31, 1996, the Fund
had available for federal income tax purposes an unused capital loss carryover
of approximately $32,073,000 which expires between 1998 and 2004.
- --------------------------------------------------------------------------------
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 two months
ended August 31, 1996, a provision of $544 was made for the Fund's projected
benefit obligations, resulting in an accumulated liability of $213,863 at August
31, 1996.
- --------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A, Class B 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.
- --------------------------------------------------------------------------------
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 the 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.
During the two months ended August 31, 1996, the Fund adjusted the
classification of distributions to shareholders to reflect the differences
between financial statement amounts and distributions determined in accordance
with income tax regulations. Accordingly, during the two months ended August 31,
1996, amounts have been reclassified to reflect an increase in accumulated net
realized loss on investments of $1,106,358, a decrease in undistributed net
investment income of $148,798, and an increase in paid-in capital of $1,255,156.
- --------------------------------------------------------------------------------
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 average life of the respective securities. Realized gains
and losses on investments and options written and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same basis
used for federal income tax purposes. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
15 Oppenheimer U.S. Government Trust
<PAGE>
Notes to Financial Statements (Continued)
==========================================================
======================
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>
Two Months Ended
August 31, 1996(2) Year Ended June 30, 1996(1) Year Ended June 30, 1995
------------------------- --------------------------- ------------------------
Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A:
Sold 1,923,780 $ 17,886,206 10,356,711 $ 98,293,347 7,076,177 $ 65,369,039
Dividends reinvested 493,845 4,572,687 2,643,981 25,030,137 1,868,269 17,288,287
Issued in connection with the
acquisition of:
Oppenheimer Mortgage Income
Fund--Note 7 -- -- 8,262,838 77,918,563 -- --
Quest for Value U.S. Government
Income Fund--Note 7 -- -- 10,598,976 101,114,231 -- --
Connecticut Mutual Government
Account--Note 7 -- -- 5,008,473 46,829,224 -- --
Redeemed (2,152,748) (20,009,753) (15,453,509) (146,823,286) (9,758,134) (90,113,007)
---------- ------------ ----------- ------------- ---------- ------------
Net increase (decrease) 264,877 $ 2,449,140 21,417,470 $ 202,362,216 (813,688) $ (7,455,681)
========== ============ ===========
============= ========== ============
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 769,313 $ 7,144,526 2,376,966 $ 22,507,322 -- $ --
Dividends reinvested 26,786 247,712 81,288 766,568 -- --
Issued in connection with the
acquisition of:
Oppenheimer Mortgage Income
Fund--Note 7 -- -- 683,099 6,434,794 -- --
Quest for Value U.S. Government
Income Fund--Note 7 -- -- 967,755 9,222,705 -- --
Connecticut Mutual Government
Account--Note 7 -- -- 10,367 96,832 -- --
Redeemed (146,276) (1,359,210) (811,911) (7,675,090) -- --
---------- ------------ ----------- ------------- ---------- ------------
Net increase 649,823 $ 6,033,028 3,307,564 $ 31,353,131 -- $ --
========== ============ ===========
============= ========== ============
- ------------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 209,265 $ 1,946,901 1,386,839 $ 13,136,459 1,086,358 $ 10,120,239
Dividends reinvested 16,389 151,584 85,473 807,582 35,316 327,690
Issued in connection with the
acquisition of Quest for Value U.S.
Government Income Fund--Note 7 -- -- 284,411 2,710,439 -- --
Redeemed (209,156) (1,936,557) (921,932) (8,688,563) (425,453) (3,939,172)
---------- ------------ ----------- ------------- ---------- ------------
Net increase 16,498 $ 161,928 834,791 $ 7,965,917 696,221 $ 6,508,757
========== ============ ===========
============= ========== ============
</TABLE>
1. For the year ended June 30, 1996 for Class A and Class C shares and for the
period from July 21, 1995 (inception of offering) to June 30, 1996 for Class B
shares.
2. The Fund changed its fiscal year end from June 30 to August 31.
==========================================================
======================
3. Unrealized Gains and
Losses on Investments
At August 31, 1996, net unrealized depreciation on investments of $5,920,882 was
composed of gross appreciation of $7,328,830, and gross depreciation of
$13,249,712.
16 Oppenheimer U.S. Government Trust
<PAGE>
==========================================================
======================
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 a fee of 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 Manager has agreed to reimburse the Fund if
aggregate expenses (with specified exceptions) exceed the most stringent
applicable regulatory limit on Fund expenses.
The Manager reimbursed the Fund for SEC fees incurred in connection with
the acquisition of Quest for Value U.S. Government Income Fund.
For the two months ended August 31, 1996, commissions (sales charges paid
by investors) on sales of Class A shares totaled $119,450, of which $35,853 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $130,843 and $9,765, of which $6,477 and $1,030,
respectively, was paid to an affiliated broker/dealer. During the two months
ended August 31, 1996, OFDI received contingent deferred sales charges of $9,733
and $2,260, respectively, upon redemption of Class B and Class C shares as
reimbursement for sales commissions advanced by OFDI at the time of sale of such
shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI
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. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold Class
A shares. During the two months ended August 31, 1996, OFDI paid $23,299 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
The Fund has adopted compensation type Distribution and Service Plans for
Class B and Class C shares to compensate OFDI for its services and costs in
distributing Class B and Class C shares and servicing accounts. Under the Plans,
the Fund pays OFDI an annual asset-based sales charge of 0.75% per year on Class
B shares that are outstanding for 6 years or less and on Class C shares, as
compensation for sales commissions paid from its own resources at the time of
sale and associated financing costs. If the Plans are terminated by the Fund,
the Board of Trustees may allow the Fund to continue payments of the asset-based
sales charge to OFDI for certain expenses it incurred before the Plans were
terminated. OFDI also receives a service fee of 0.25% per year as compensation
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. Both fees are computed on the
average annual net assets of Class B and Class C shares, determined as of the
close of each regular business day. During the two months ended August 31, 1996,
OFDI paid $1,511 to an affiliated broker/dealer as compensation for Class C
personal service and maintenance expenses and retained $50,535 and $14,173,
respectively, as compensation for Class B and Class C sales commissions and
service fee advances, as well as financing costs. At August 31, 1996, OFDI had
incurred unreimbursed expenses of $1,139,137 for Class B and $254,802 for Class
C.
17 Oppenheimer U.S. Government Trust
<PAGE>
Notes to Financial Statements (Continued)
==========================================================
======================
5. 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.
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. Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable or
payable for the daily mark to market for variation margin.
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 August 31, 1996, the Fund had outstanding futures contracts to buy and
sell debt securities as follows:
<TABLE>
<CAPTION>
Unrealized
Number of Valuation as of Appreciation
Contracts to Buy Expiration Date Futures Contracts August 31, 1996 (Depreciation)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bonds 9/96 595 $ 63,850,938 $(2,578,844)
Contracts to Sell
- ---------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts. 9/96 776 81,322,375 1,343,844
U.S. Treasury Nts. 9/96 1,080 114,648,750 3,104,094
-----------
Total Unrealized Appreciation $ 1,869,094
===========
</TABLE>
==========================================================
======================
6. Option Activity
The Fund may buy and sell put and call options, or write put and 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.
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.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. 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.
Written option activity for the two months ended August 31, 1996 was as follows:
Put Options
---------------------------
Number of Amount of
Options Premiums
- --------------------------------------------------------------------------------
Options outstanding at June 30, 1996 -- $ --
- --------------------------------------------------------------------------------
Options written 833 1,119,344
- --------------------------------------------------------------------------------
Options closed or expired (833) (1,119,344)
---------- -----------
Options outstanding at August 31, 1996 -- $ --
========== ===========
18 Oppenheimer U.S. Government Trust
<PAGE>
==========================================================
======================
7. Acquisition of Oppenheimer
Mortgage Income Fund,
Quest for Value U.S.
Government Income Fund
And Connecticut Mutual
Government Account
On July 28, 1995, the Fund acquired all of the net assets of Oppenheimer
Mortgage Income Fund, pursuant to an Agreement and Plan of Reorganization
approved by the Oppenheimer Mortgage Income Fund shareholders on July 12, 1995.
The Fund issued 8,262,838 and 683,099 shares of Class A and Class B beneficial
interest, respectively, valued at $77,918,563 and $6,434,794 in exchange for the
net assets, resulting in combined Class A net assets of $385,440,401 and Class B
net assets of $6,806,465 on July 28, 1995. The net assets acquired included net
unrealized appreciation of $844,310. The exchange qualifies as a tax-free
reorganization for federal income tax purposes.
On November 24, 1995, the Fund acquired all of the net assets of Quest for
Value U.S. Government Income Fund, pursuant to an Agreement and Plan of
Reorganization approved by the Quest for Value U.S. Government Income Fund
shareholders on November 16, 1995. The Fund issued 10,598,976, 967,755, and
284,411 shares of Class A, Class B, and Class C beneficial interest,
respectively, valued at $101,114,231, $9,222,705 and $2,710,439 in exchange for
the net assets, resulting in combined Class A net assets of $518,859,988, Class
B net assets of $21,270,443, and Class C net assets of $16,422,311 on November
24, 1995. The net assets acquired included net unrealized depreciation of
$533,506. The exchange qualifies as a tax-free reorganization for federal income
tax purposes.
On April 26, 1996, the Fund acquired all of the net assets of Connecticut
Mutual Government Account, pursuant to an Agreement and Plan of Reorganization
approved by the Connecticut Mutual Government Account shareholders on April 24,
1996. The Fund issued 5,008,473 and 10,367 shares of Class A and Class B
beneficial interest, respectively, valued at $46,829,224 and $96,832 in exchange
for the net assets, resulting in combined Class A net assets of $513,892,599 and
Class B net assets of $28,393,161 on April 26, 1996. The net assets acquired
included net unrealized depreciation of $184,154. The exchange qualifies as a
tax-free reorganization for federal income tax purposes.
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, 1996, 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 five-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. Our procedures included confirmation of securities owned as of June
30, 1996, 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, 1996, 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 five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
July 22, 1996
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments June 30, 1996
Face Market Value
Amount See Note 1
<S> <C> <C>
==========================================================
==========================================================
================
Mortgage-Backed Obligations--102.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Government Agency--90.9%
- ------------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/
Sponsored--66.0%
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation Certificates:
6.65%, 4/15/21 $10,750,000 $10,306,562
7.50%, 5/1/26 20,199,999 19,961,640
8.50%, 10/15/19 1,366,917 1,392,971
9%, 7/15/21 1,690,015 1,731,725
9.50%, 12/1/02--11/1/03 526,275 550,002
14%, 1/1/11 514,919 611,137
Collateralized Mtg. Obligations, Series 1548, Cl. C, 7%, 4/15/21 3,000,000 2,840,610
Gtd. Multiclass Mtg. Participation Certificates:
11.50%, 6/1/20 1,458,780 1,644,319
13%, 8/1/15 2,406,995 2,823,706
Series 1347, Cl. I, 8%, 8/15/22 10,000,000 10,103,100
Series 1455, Cl. J, 7.50%, 12/15/22 5,000,000 4,960,900
-----------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
7%, 7/15/26(1) 52,750,000 50,739,170
7%, 8/1/25--5/1/26 57,310,609 55,152,297
7.50%, 8/1/25 4,673,297 4,613,759
8%, 7/1/26(1) 57,000,000 57,427,500
11%, 7/1/16 1,728,173 1,919,893
11.50%, 11/1/15 1,282,515 1,445,626
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates:
7%, 12/25/21 29,617,000 27,932,385
8%, 12/1/22 2,968,055 3,000,170
8.75%, 11/25/05--12/25/20 30,000,000 31,310,560
10.50%, 11/25/20 10,000,000 11,193,700
13%, 11/1/12 189,042 219,215
Gtd. Mtg. Pass-Through Certificates, 12%, 4/15/19 1,600,497 1,836,070
Gtd. Multiclass Mtg. Participation Certificates, Series 1989-4,
Cl. D, 10%, 2/25/19 3,000,000 3,337,500
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, 8%, 7/25/19 18,000,000
18,309,240
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Series 1992-112, Cl. ED, 4%, 12/25/20 3,000,000 2,567,790
Interest-Only Stripped Mtg.-Backed Security:
Trust 222, Cl. 2, 8.838%--11.98%, 6/1/23(2) 82,752,795 28,084,231
Trust 240, Cl. 2, 14.083%--15.735%, 9/1/23(2) 16,393,125 5,645,383
Trust 254, Cl. 2, 14.083%, 1/1/24(2) 6,397,998 2,177,319
Principal-Only Stripped Mtg.-Backed Security, Trust 4,
Cl. J, 19.927%, 9/25/22(3) 3,400,000 1,640,500
Series G92-42, Cl. C, 7%, 9/25/19 544,179 544,685
-----------
366,023,665
- ------------------------------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed--24.9%
Government National Mortgage Assn.:
6%, 7/15/26(1) 34,000,000 33,723,750
6.50%, 11/15/23--12/15/23 2,027,458 1,900,770
7%, 7/15/26(1) 15,000,000 14,381,250
7%, 2/15/22--10/15/23 10,412,914 10,046,839
7.25%, 12/15/05 42,328 42,384
7.375%, 4/20/17 402,721 408,194
7.50%, 7/15/26(1) 31,800,000 31,343,034
7.50%, 10/15/06--5/15/24 7,726,885 7,662,303
8%, 7/15/26(1) 10,000,000 10,087,500
</TABLE>
7 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments (Continued)
Face Market Value
Amount See Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed
(continued)
8%, 4/15/02--5/15/25 $ 3,676,903 $ 3,750,843
8.25%, 4/15/08 153,004 157,842
8.50%, 6/15/01--1/15/06 140,070 145,381
9%, 9/15/08--5/15/09 544,304 578,390
9.50%, 4/15/01--1/15/20 1,575,825 1,692,757
10%, 6/15/16--8/15/19 3,835,145 4,185,987
10.50%, 1/15/98--5/15/21 9,188,226 10,121,862
11%, 7/20/20 125,414 140,268
11.50%, 1/15/98--4/15/13 150,957 166,336
12%, 12/15/12--3/15/14 68,010 78,167
12.50%, 1/15/14--6/15/19 1,286,216 1,491,094
13%, 4/15/11--12/15/14 205,658 241,749
13.50%, 4/15/11--8/15/14 217,886 258,573
14%, 6/15/11 49,029 59,111
15%, 7/15/11--9/15/12 195,385 239,023
-----------------------------------------------------------------------------------------------------------------
U.S. Department of Veterans Affairs, Interest-Only Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, Vendee Mtg. Trust,
Series 1995-2B, Cl. 2-IO, 21.665%, 6/15/25(2) 135,401,332 4,992,924
------------
137,896,331
- ------------------------------------------------------------------------------------------------------------------------------------
Private--11.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Commercial--8.1%
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1994-C1, Cl. 2-G, 8.70%, 9/25/25(4) 3,000,000 3,030,000
-----------------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through
Certificates, Series 1995-C2, Cl. C, 7.906%, 6/15/21(5) 2,893,343 2,901,481
-----------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc.:
Commercial Mtg. Pass-Through Certificates,
Series 1996-C1, Cl. D-1, 7.51%, 2/15/28(4)(5) 3,000,000 2,853,750
Collateralized Mtg. Obligations, Cl. C, 7.95%, 8/15/27(4) 5,014,988 5,002,451
-----------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1992-C5, Cl. C, 8.85%, 5/25/22 7,383,975 7,573,189
Series 1993-C1, Cl. D, 9.45%, 5/25/24 1,183,001 1,216,643
Series 1994-C1, Cl. C, 8%, 6/25/26 7,075,000 7,101,531
Series 1994-C2, Cl. D, 8%, 4/25/25 2,882,774 2,893,585
Series 1995-C1, Cl. D, 6.90%, 2/25/27 7,677,000 6,974,075
-----------------------------------------------------------------------------------------------------------------
SC Commercial Mortgage Pass-Through Certificates,
Series 93-01, Cl. A1, 6.65%, 11/28/13(4) 1,960,544 1,883,041
-----------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates, Series 1996-CFL, Cl. D, 7.034%, 2/25/28 3,700,000 3,521,938
-----------
44,951,684
- ------------------------------------------------------------------------------------------------------------------------------------
Multi-Family--2.3%
Countrywide Funding Corp., Series 1993-12, Cl. B1, 6.625%, 2/25/24 3,000,000 2,626,641
-----------------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg.
Pass-Through Interest-Only Certificates:
Series 94-M1, Cl. A-X, .52%, 2/15/02(2)(4) 88,100,000 27,531
Series 94-M1, Cl. B-X, .61%, 2/15/02(2)(4) 19,300,000 6,031
Series 94-M1, Cl. C-X, .66%, 2/15/02(2)(4) 15,400,000 4,813
Series 94-M1, Cl. D-X, .82%, 2/15/02(2)(4) 2,968,000 928
-----------------------------------------------------------------------------------------------------------------
DLJ Mortgage Acceptance Corp., Series 1996-CF1, Cl. B2, 8.27%, 3/13/28(4) 2,000,000
1,961,875
-----------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1991-M5, Cl. A, 9%, 3/25/17 6,928,849 7,128,054
Series 1992-M4, Cl. B, 7.20%, 9/25/21 1,122,180 1,121,128
-----------
12,877,001
</TABLE>
8 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Residential--0.7%
Prudential Home Mortgage Securities Corp.,
Sub. Fixed Rate Mtg. Securities, Real Estate Mtg
Investment Conduit Pass-Through Certificates,
Series 1995-A, Cl. B2, 8.684%, 3/28/25(4)(5) $ 1,485,483 $ 1,494,768
-----------------------------------------------------------------------------------------------------------------
Residential Funding Corp., Mtg. Pass-Through Certificates,
Series 1993-S10, Cl. A9, 8.50%, 2/25/23 2,283,053 2,313,007
-----------
3,807,775
-----------
Total Mortgage-Backed Obligations (Cost $557,454,915) 565,556,456
==========================================================
==========================================================
================
U.S. Government Obligations--30.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Treasury--30.1%
U.S. Treasury Bonds:
7.125%, 2/15/23 8,643,000 8,732,126
7.50%, 11/15/24 25,000,000 26,507,797
STRIPS, Zero Coupon, 7.19%, 8/15/22(6) 8,000,000 1,283,096
-----------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6%, 8/31/97 50,000,000 50,046,844
7.25%, 11/15/96(7) 51,521,000 51,891,276
8%, 1/15/97 17,300,000 17,527,062
9.125%, 5/15/99 3,500,000 3,754,842
9.25%, 8/15/98 6,750,000 7,157,105
-----------
Total U.S. Government Obligations (Cost $170,260,207) 166,900,148
==========================================================
==========================================================
================
Repurchase Agreement--0.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with J. P. Morgan Securities, Inc.,
5.45%, dated 6/28/96, to be repurchased at $4,301,953 on 7/1/96,
collateralized by U.S. Treasury Nts., 8.50%, 5/15/97 with a value of
$4,410,215 (Cost $4,300,000) 4,300,000 4,300,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $732,015,122) 132.9% 736,756,604
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (32.9) (182,522,919)
--------- ------------
Net Assets 100.0% $554,233,685
=========
============
</TABLE>
1. When-issued security to be delivered and settled after
June 30, 1996.
2. Interest-Only Strips represent the right to receive the
monthly interest payments on an underlying pool of mortgage
loans. These securities typically decline in price as
interest rates decline. Most other fixed-income securities
increase in price when interest rates decline. The principal
amount of the underlying pool represents the notional amount
on which current interest is calculated. The price of these
securities is typically more sensitive to changes in
prepayment rates than traditional mortgage-backed securities
(for example, GNMA pass-throughs). Interest rates disclosed
represent current yields based upon the current cost basis
and estimated timing and amount of future cash flows.
3. 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. Interest rates
disclosed represent current yields based upon the current
cost basis and estimated timing of future cash flows.
4. Represents a security sold under Rule 144A, which is
exempt from registration under the Securities Act of 1933,
as amended. This security has been determined to be liquid
under guidelines established by the Board of Trustees. These
securities amount to $16,265,188 or 2.93% of the Fund's net
assets, at June 30, 1996.
5. Represents the current interest rate for a variable rate
security.
6. For zero coupon bonds, the interest rate shown is the
effective yield on the date of purchase.
7. Securities with an aggregate market value of $2,517,967
are held in collateralized accounts to cover initial margin
requirements on open futures sales contracts. See Note 5 of
Notes to Financial Statements.
See accompanying Notes to Financial Statements.
9 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities June 30, 1996
<S> <C>
==========================================================
==========================================================
================
Assets Investments, at value (cost $732,015,122)--see accompanying statement $736,756,604
-----------------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 56,460,820
Interest and principal paydowns 6,614,910
Shares of beneficial interest sold 656,513
-----------------------------------------------------------------------------------------------------------------
Other 17,040
------------
Total assets 800,505,887
==========================================================
==========================================================
================
Liabilities Bank overdraft 9,190
-----------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $196,902,837 purchased
on a when-issued basis)--Note 1 242,408,548
Shares of beneficial interest redeemed 1,985,520
Dividends 683,248
Daily variation on futures contracts--Note 5 543,552
Distribution and service plan fees 321,228
Trustees' fees 230,957
Transfer and shareholder servicing agent fees 11,281
Other 78,678
------------
Total liabilities 246,272,202
==========================================================
==========================================================
================
Net Assets $554,233,685
============
==========================================================
==========================================================
================
Composition of
Net Assets
Paid-in capital $575,047,130
-----------------------------------------------------------------------------------------------------------------
Undistributed net investment income 57,809
-----------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (24,398,673)
-----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 3,527,419
------------
Net assets $554,233,685
============
==========================================================
==========================================================
================
Net Asset Value
Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $504,966,021 and 54,288,284 shares of beneficial interest outstanding) $9.30
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $9.76
-----------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $30,736,590 and 3,307,564 shares of beneficial interest outstanding) $9.29
-----------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $18,531,074 and 1,994,524 shares of beneficial interest outstanding) $9.29
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations For the Year Ended June 30, 1996
<S> <C>
==========================================================
==========================================================
================
Investment Income Interest $39,641,998
==========================================================
==========================================================
================
Expenses Management fees--Note 4 2,946,711
-----------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 1,085,680
Class B 187,678
Class C 157,684
-----------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 543,943
-----------------------------------------------------------------------------------------------------------------
Shareholder reports 219,630
-----------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 168,562
-----------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 95,373
-----------------------------------------------------------------------------------------------------------------
Legal and auditing fees 70,743
-----------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 35,406
Class B 10,398
Class C 2,222
-----------------------------------------------------------------------------------------------------------------
Other 44,847
-----------
Total expenses 5,568,877
-----------
Less assumption of expenses by OppenheimerFunds, Inc.--Note 4 (38,982)
-----------
Net expenses 5,529,895
==========================================================
==========================================================
================
Net Investment Income 34,112,103
==========================================================
==========================================================
================
Realized and
Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (6,758,735)
Closing of futures contracts 976,460
Closing and expiration of options written 436,513
-----------
Net realized loss (5,345,762)
-----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (5,672,502)
-----------
Net realized and unrealized loss (11,018,264)
==========================================================
==========================================================
================
Net Increase in Net Assets Resulting From Operations $23,093,839
===========
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Year Ended June 30,
1996 1995
<S> <C> <C>
==========================================================
==========================================================
================
Operations Net investment income $34,112,103 $22,905,201
----------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (5,345,762) 2,180,093
----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (5,672,502) 8,115,444
------------ ------------
Net increase in net assets resulting from operations 23,093,839 33,200,738
==========================================================
==========================================================
===============
Dividends and Distributions
To Shareholders
Dividends from net investment income:
Class A (31,382,515) (22,498,787)
Class B (1,137,105) --
Class C (968,691) (416,947)
----------------------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A (618,306) --
Class B (37,635) --
Class C (22,691) --
==========================================================
==========================================================
===============
Beneficial Interest
Transactions
Net increase (decrease) in net assets resulting from
beneficial interest transactions--Note 2:
Class A 202,362,216 (7,455,681)
Class B 31,353,131 --
Class C 7,965,917 6,508,757
==========================================================
==========================================================
===============
Net Assets Total increase 230,608,160 9,338,080
----------------------------------------------------------------------------------------------------------------
Beginning of period 323,625,525 314,287,445
------------ ------------
End of period (including undistributed net investment
income of $57,809 and $87,075, respectively) $554,233,685 $323,625,525
============
============
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
Class A Class B
------------------------------------------------------------- ------------
Period Ended
Year Ended June 30, June 30,
1996 1995 1994 1993 1992 1996(2)
<S> <C> <C> <C> <C> <C> <C>
==========================================================
==========================================================
================
Per Share Operating Data:
Net asset value, beginning of period $9.51 $9.20 $9.95 $9.73 $9.25 $9.40
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .67 .68 .67 .68 .69 .56
Net realized and unrealized gain (loss) (.21) .31 (.74) .22 .48 (.11)
----- ----- ----- ----- ----- -----
Total income (loss) from investment
operations .46 .99 (.07) .90 1.17 .45
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net investment income (.66) (.68) (.64) (.68) (.69) (.55)
Dividends in excess of net
investment income -- -- (.01) -- -- --
Tax return of capital distribution (.01) -- (.03) -- -- (.01)
----- ----- ----- ----- ----- -----
Total dividends and distributions
to shareholders (.67) (.68) (.68) (.68) (.69) (.56)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.30 $9.51 $9.20 $9.95 $9.73 $9.29
===== ===== ===== ===== =====
=====
==========================================================
==========================================================
================
Total Return, at Net Asset Value(3) 4.91% 11.22% (1.17)% 9.55% 13.05% 4.80%
==========================================================
==========================================================
================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $504,966 $312,607 $310,027 $380,916 $395,863 $30,737
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $452,236 $307,306 $355,698 $401,789 $376,532 $19,227
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.07% 7.32% 6.61% 6.90% 7.23% 6.44%(4)
Expenses 1.08% 1.09% 1.14% 1.17% 1.17% 1.93%(4)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 399.7% 303.5% 139.5% 96.8% 207.8% 399.7%
<CAPTION>
Class C
----------------------------------------
Year Ended June 30,
1996 1995 1994(1)
<S> <C> <C> <C>
==========================================================
=============================
Per Share Operating Data:
Net asset value, beginning of period $9.50 $9.19 $9.83
- ---------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .60 .61 .33
Net realized and unrealized gain (loss) (.21) .30 (.64)
----- ----- -----
Total income (loss) from investment
operations .39 .91 (.31)
- ---------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net investment income (.59) (.60) (.33)
Dividends in excess of net
investment income -- -- --
Tax return of capital distribution (.01) -- --
----- ----- -----
Total dividends and distributions
to shareholders (.60) (.60) (.33)
- ---------------------------------------------------------------------------------------
Net asset value, end of period $9.29 $9.50 $9.19
===== ===== =====
==========================================================
=============================
Total Return, at Net Asset Value(3) 4.11% 10.31% (3.12)%
==========================================================
=============================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $18,531 $11,019 $4,261
- ---------------------------------------------------------------------------------------
Average net assets (in thousands) $15,766 $6,503 $2,173
- ---------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.27% 6.44% 5.97%(4)
Expenses 1.85% 1.89% 1.96%(4)
- ---------------------------------------------------------------------------------------
Portfolio turnover rate(5) 399.7% 303.5% 139.5%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to June 30,
1994.
2. For the period from July 21, 1995 (inception of offering) to June 30, 1996.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), 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.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities and including
mortgage "dollar-rolls") for the period ended June 30, 1996 were $2,379,959,418
and $2,209,844,705, respectively.
See accompanying Notes to Financial Statements.
13 Oppenheimer U.S. Government Trust
<PAGE>
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 objective is to seek 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 Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class
C shares. Class A shares are sold with a front-end sales charge. Class B and C
shares may be subject to a contingent deferred sales charge. All three 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 the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
asked price or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio pricing
service approved by the Board of Trustees. Such 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 are valued under consistently applied procedures established by the
Board of Trustees to determine fair value in good faith. Short-term "money
market type" 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 price 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.
- --------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for
securities that have been purchased by the Fund on a forward commitment or
when-issued basis can take place a month or more after the transaction date.
During this period, such securities do not earn interest, are subject to market
fluctuation and may increase or decrease in value prior to their delivery. The
Fund maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of June 30, 1996, the
Fund had entered into outstanding when-issued or forward commitments of
$196,902,837.
In connection with its ability to purchase securities on a when-issued or
forward commitment basis, the Fund may enter into mortgage "dollar-rolls" in
which the Fund sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar (same
type, coupon and maturity) but not identical securities on a specified future
date. The Fund records each dollar-roll as a sale and a new purchase
transaction.
- --------------------------------------------------------------------------------
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.
14 Oppenheimer U.S. Government Trust
<PAGE>
==========================================================
======================
1. Significant Accounting
Policies (continued)
Federal 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 or excise tax provision is required. At June 30, 1996, the Fund
had available for federal income tax purposes an unused capital loss carryover
of approximately $32,074,000 subject to certain limitations under IRC Section
382, which expires between 1998 and 2004.
- --------------------------------------------------------------------------------
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, 1996, a provision of $111,473 was made for the Fund's projected benefit
obligations and payments of $6,067 were made to retired trustees, resulting in
an accumulated liability of $213,319 at June 30, 1996.
- --------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A, Class B 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.
- --------------------------------------------------------------------------------
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.
During the year ended June 30, 1996, 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, during the year ended June 30, 1996,
amounts have been reclassified to reflect an increase in accumulated net
realized loss on investments of $2,561, an increase in undistributed net
investment income of $26,101, and a decrease in paid-in-capital of $23,540.
- --------------------------------------------------------------------------------
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 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.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
==========================================================
======================
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, 1996(1) Year Ended June 30, 1995
------------------------------ ------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A:
Sold 10,356,711 $ 98,293,347 7,076,177 $ 65,369,039
Dividends reinvested 2,643,981 25,030,137 1,868,269 17,288,287
Issued in connection with the acquisition of:
Oppenheimer Mortgage Income
Fund--Note 7 8,262,838 77,918,563 -- --
Quest for Value U.S. Government Income
Fund--Note 7 10,598,976 101,114,231 -- --
Connecticut Mutual Government
Account--Note 7 5,008,473 46,829,224 -- --
Redeemed (15,453,509) (146,823,286) (9,758,134) (90,113,007)
---------- ------------- ---------- -------------
Net increase (decrease) 21,417,470 $ 202,362,216 (813,688) $ (7,455,681)
========== =============
========== =============
</TABLE>
15 Oppenheimer U.S. Government Trust
<PAGE>
Notes to Financial Statements (Continued)
==========================================================
======================
2. Shares of
Beneficial Interest
(continued)
<TABLE>
<CAPTION>
Year Ended June 30, 1996(1) Year Ended June 30, 1995
---------------------------- ----------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 2,376,966 $ 22,507,322 -- $ --
Dividends reinvested 81,288 766,568 -- --
Issued in connection with the acquisition of:
Oppenheimer Mortgage Income
Fund--Note 7 683,099 6,434,794 -- --
Quest for Value U.S. Government Income
Fund--Note 7 967,755 9,222,705 -- --
Connecticut Mutual Government
Account--Note 7 10,367 96,832 -- --
Redeemed (811,911) (7,675,090) -- --
--------- ------------- --------- -------------
Net increase 3,307,564 $ 31,353,131 -- $ --
========= =============
========= =============
- ------------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 1,386,839 $ 13,136,459 1,086,358 $ 10,120,239
Dividends reinvested 85,473 807,582 35,316 327,690
Issued in connection with the acquisition
of Quest for Value U.S. Government
Income Fund--Note 7 284,411 2,710,439 -- --
Redeemed (921,932) (8,688,563) (425,453) (3,939,172)
--------- ------------- --------- -------------
Net increase 834,791 $ 7,965,917 696,221 $ 6,508,757
========= =============
========= =============
</TABLE>
1. For the year ended June 30, 1996 for Class A and Class C shares and for the
period from July 21, 1995 (inception of offering) to June 30, 1996 for Class B
shares.
==========================================================
======================
3. Unrealized Gains and
Losses on Investments
At June 30, 1996, net unrealized appreciation on investments of $4,741,482 was
composed of gross appreciation of $12,304,712, and gross depreciation of
$7,563,230.
==========================================================
======================
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 a fee of 0.65% of the first
$200 million of average annual net assets of the Fund, 0.60% of the next $100
million, 0.57% of the next $100 million, 0.55% of the next $400 million and
0.50% of net assets in excess of $800 million. The Manager has agreed to
reimburse the Fund if aggregate expenses (with specified exceptions) exceed the
most stringent applicable regulatory limit on Fund expenses.
The Manager has agreed to reimburse the Fund for SEC fees incurred in
connection with the acquisition of Quest for Value U.S. Government Income Fund.
For the year ended June 30, 1996, commissions (sales charges paid by
investors) on sales of Class A shares totaled $880,535, of which $277,638 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $692,568 and $86,810, of which $15,855 and $8,756,
respectively, was paid to an affiliated broker/dealer. During the year ended
June 30, 1996, OFDI received contingent deferred sales charges of $64,030 and
$14,816, respectively, upon redemption of Class B and Class C shares as
reimbursement for sales commissions advanced by OFDI at the time of sale of such
shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI
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. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold Class
A shares. During the year ended June 30, 1996, OFDI paid $83,455 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
The Fund has adopted compensation type Distribution and Service Plans for
Class B and Class C shares to compensate OFDI for its services and costs in
distributing Class B and Class C shares and servicing accounts. Under the Plans,
the Fund pays OFDI an annual asset-based sales charge of 0.75% per year
16 Oppenheimer U.S. Government Trust
<PAGE>
==========================================================
======================
4. Management Fees and
Other Transactions
With Affiliates
(continued)
on Class B shares that are outstanding for 6 years or less and on Class C
shares, as compensation for sales commissions paid from its own resources at the
time of sale and associated financing costs. If the Plans are terminated by the
Fund, the Board of Trustees may allow the Fund to continue payments of the
asset-based sales charge to OFDI for certain expenses it incurred before the
Plans were terminated. OFDI also receives a service fee of 0.25% per year as
compensation 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. Both fees are computed
on the average annual net assets of Class B and Class C shares, determined as of
the close of each regular business day. During the year ended June 30, 1996,
OFDI paid $9,640 to an affiliated broker/dealer as compensation for Class C
personal service and maintenance expenses and retained $187,678 and $99,336,
respectively, as compensation for Class B and Class C sales commissions and
service fee advances, as well as financing costs. At June 30, 1996, OFDI had
incurred unreimbursed expenses of $998,862 for Class B and $240,974 for Class C.
==========================================================
======================
5. 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.
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.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable or
payable for the daily mark to market for variation margin.
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 June 30, 1996, the Fund had outstanding futures contracts to sell debt
securities as follows:
<TABLE>
<CAPTION>
Number of Valuation as of Unrealized
Contracts to Sell Expiration Date Futures Contracts June 30, 1996 Depreciation
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes 9/96 950 $100,462,500 $1,214,063
</TABLE>
==========================================================
======================
6. Option Activity
The Fund may buy and sell put and call options, or write put and 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.
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.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. 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.
17 Oppenheimer U.S. Government Trust
<PAGE>
Notes to Financial Statements (Continued)
==========================================================
======================
6. Option Activity
(continued)
Written option activity for the year ended June 30, 1996 was as follows:
<TABLE>
<CAPTION>
Call Options Put Options
-------------------------- --------------------------
Number of Amount of Number of Amount of
Options Premiums Options Premiums
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Options outstanding at June 30, 1995 -- $ -- -- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
Options written 25,000 326,172 38,080 279,931
- ------------------------------------------------------------------------------------------------------------------------------------
Options closed or expired (25,000) (326,172) (38,080) (279,931)
------- -------- ------- --------
Options outstanding at June 30, 1996 -- $ -- -- $ --
======= ======== =======
========
</TABLE>
==========================================================
======================
7. Acquisition of Oppenheimer
Mortgage Income Fund,
Quest For Value U.S.
Government Income Fund
And Connecticut Mutual
Government Account
On July 28, 1995, the Fund acquired all of the net assets of Oppenheimer
Mortgage Income Fund, pursuant to an Agreement and Plan of Reorganization
approved by the Oppenheimer Mortgage Income Fund shareholders on July 12, 1995.
The Fund issued 8,262,838 and 683,099 shares of Class A and Class B beneficial
interest, respectively, valued at $77,918,563 and $6,434,794 in exchange for the
net assets, resulting in combined Class A net assets of $385,440,401 and Class B
net assets of $6,806,465 on July 28, 1995. The net assets acquired included net
unrealized appreciation of $844,310. The exchange qualifies as a tax-free
reorganization for federal income tax purposes.
On November 24, 1995, the Fund acquired all of the net assets of Quest For
Value U.S. Government Income Fund, pursuant to an Agreement and Plan of
Reorganization approved by the Quest For Value U.S. Government Income Fund
shareholders on November 16, 1995. The Fund issued 10,598,976, 967,755, and
284,411 shares of Class A, Class B, and Class C beneficial interest,
respectively, valued at $101,114,231, $9,222,705 and $2,710,439 in exchange for
the net assets, resulting in combined Class A net assets of $518,859,988, Class
B net assets of $21,270,443, and Class C net assets of $16,422,311 on November
24, 1995. The net assets acquired included net unrealized depreciation of
$533,506. The exchange qualifies as a tax-free reorganization for federal income
tax purposes.
On April 26, 1996, the Fund acquired all of the net assets of Connecticut
Mutual Government Account, pursuant to an Agreement and Plan of Reorganization
approved by the Connecticut Mutual Government Account shareholders on April 24,
1996. The Fund issued 5,008,473 and 10,367 shares of Class A and Class B
beneficial interest, respectively, valued at $46,829,224 and $96,832 in exchange
for the net assets, resulting in combined Class A net assets of $513,892,599 and
Class B net assets of $28,393,161 on April 26, 1996. The net assets acquired
included net unrealized depreciation of $184,154. The exchange qualifies as a
tax-free reorganization for federal income tax purposes.
<PAGE>
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: 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
Corporate 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
___________________
* For purposes of the Fund's investment policy not to concentrate in
securities of issuers in the same industry, utilities are divided into
"industries" according to their services (e.g., gas utilities, gas
transmission utilities, electric utilities and telephone utilities are
each considered a separate industry)
<PAGE>
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds 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 (see Part B, Statement of Additional
Information): Filed herewith.
(4) Statement of Assets and Liabilities (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 herewith.
(ii) Specimen Class B Share Certificate: Filed herewith.
(iii) Specimen Class C Share Certificate; Filed herewith.
(5) Investment Advisory Agreement dated 5/25/95: Filed with
Registrant's Post-Effective Amendment No. 28, 5/26/95, and incorporated
herein by reference.
(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 Prototype 401 (k) plan: Filed with Post-
Effective Amendment No. 7 to the Registration Statement of Oppenheimer
Strategic Income & Growth Fund (Reg. No. 33-47378), 9/28/95, 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 with Registrant's Post-Effective Amendment No. 28, 5/26/95, and
incorporated herein by reference.
(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 with Registrant's Post-Effective Amendment No. 28, 5/26/95, and
incorporated herein by reference.
(16) Performance computation schedule: Filed herewith.
(17) (i) Financial Data Schedule for Class A shares for the
fiscal year ended June 30, 1996 (audited) : Filed herewith.
(ii) Financial Data Schedule for Class B shares for the
fiscal year ended June 30, 1996 (audited): Filed herewith.
(iii) Financial Data Schedule for Class C shares for the
fiscal year ended June 30, 1996 (audited): Filed herewith.
(iv) Financial Data Schedule for Class A shares for the
fiscal year ended August 31, 1996 (audited) : Filed herewith.
(v) Financial Data Schedule for Class B shares for the
fiscal year ended August 31, 1996 (audited): Filed herewith.
(vi) Financial Data Schedule for Class C shares for the
fiscal year ended August 31, 1996 (audited): Filed herewith.
(18) Oppenheimer Funds Multiple Class Plan under Rule 18f-3
dated 10/24/95: Filed with Post-Effective Amendment No. 12 to the
Registration Statement of Oppenheimer California Tax-Exempt Fund (33-
23566), 11/1/95, and incorporated herein by reference.
-- 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 October 1, 1996
- -------------- ---------------------
Shares of Beneficial Interest,
Class A shares 25,675
Shares of Beneficial Interest,
Class B shares 1,704
Shares of Beneficial Interest,
Class C shares 976
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) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the same
capacity to other registered investment companies as described in Parts
A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial nature in
which each officer and director of OppenheimerFunds, Inc. is, or at any
time during the past two fiscal years has been, engaged for his/her own
account or in the capacity of director, officer, employee, partner or
trustee.
<TABLE>
<CAPTION>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- -------------------------------
<S> <C>
Mark J.P. Anson,
Vice President Formerly Vice President of Equity
Derivatives at Salomon Brothers,
Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; Senior Vice President of
HarbourView; prior to March, 1996
he was the senior equity portfolio
manager for the Panorama Series
Fund, Inc. (the "Company") and
other mutual funds and pension
funds managed by G.R. Phelps & Co.
Inc. ("G.R. Phelps"), the
Company's former investment
adviser, which was a subsidiary of
Connecticut Mutual Life Insurance
Company; was also responsible for
managing the common stock
department and common stock
investments of Connecticut Mutual
Life Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly a Vice President
and Senior Portfolio Manager at
First of America Investment Corp.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith Barney,
Inc.
David Bernard,
Vice President Previously a Regional Sales
Director for Retirement Plan
Services at Charles Schwab & Co.,
Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the
Oppenheimer Funds (listed below);
previously a Fund Controller for
OppenheimerFunds, Inc. (the
"Manager").
George Bowen,
Senior Vice President & Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President
and Treasurer of the Denver-based
Oppenheimer Funds. Vice President
and Treasurer of OppenheimerFunds
Distributor, Inc. (the
"Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment
adviser subsidiary of the Manager;
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 the Manager;
Director and Chief Executive
Officer of Multi-Source Services,
Inc.; President, Treasurer and
Director of Centennial Capital
Corporation; Vice President and
Treasurer of Main Street Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of
Educational Services for H.D. Vest
Investment Securities, Inc.
Michael A. Carbuto,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed
Income for State Street Research &
Management Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr.,
Executive Vice President and
Director An officer and/or portfolio
manager of certain Oppenheimer
funds.
John Doney,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Secretary of the New York-based
Oppenheimer Funds; Vice President
and Secretary of the Denver-based
Oppenheimer Funds; Secretary of
the Oppenheimer Quest and
Oppenheimer Rochester Funds;
Executive Vice President, Director
and General Counsel of the
Distributor; President and a
Director of Centennial; formerly
Senior Vice President and
Associate General Counsel of the
Manager and the Distributor.
George Evans,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Scott Farrar,
Vice President Assistant Treasurer of the New
York-based and Denver-based
Oppenheimer funds.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor,
Inc.; Secretary of HarbourView
Asset Management Corporation, Main
Street Advisers, Inc. and
Centennial Asset Management
Corporation; Secretary, Vice
President and Director of
Centennial Capital Corporation.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division Formerly Chairman of the Board and
Director of Rochester Fund
Distributors, Inc. ("RFD");
President and Director of Fielding
Management Company, Inc. ("FMC");
President and Director of
Rochester Capital Advisors, Inc.
("RCAI"); Managing Partner of
Rochester Capital Advisors, L.P.;
President and Director of
Rochester Fund Services, Inc.
("RFS"); President and Director of
Rochester Tax Managed Fund, Inc.;
an officer, Director and/or
portfolio manager of certain
Oppenheimer funds.
John Fortuna,
Assistant Vice President
Jon S. Fossel,
Chairman of the Board Director of OAC, the Manager's
parent holding company; President,
CEO and a director of HarbourView;
a director of SSI and SFSI;
President, Director, Trustee, and
Managing General Partner of the
Denver-based Oppenheimer Funds;
President and Chairman of the
Board of Main Street Advisers,
Inc.; formerly Chief Executive
Officer of the Manager.
Patricia Foster,
Vice President An officer of certain Oppenheimer
funds; Secretary and General
Counsel of Rochester Capital
Advisors, L.P. and Secretary of
Rochester Tax Managed Fund, Inc.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President
and Counsel of OAC; formerly he
held the following positions: Vice
President and a director of
HarbourView and Centennial, a
director of SFSI and SSI, an
officer of other Oppenheimer
Funds.
Linda Gardner,
Assistant Vice President None.
Janelle Gellerman,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez,
Vice President, Director of
Marketing Communications Formerly 1st Vice President /
Director of Graphic and Print
Communications for Shearson Lehman
Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Caryn Halbrecht,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly Vice President of
Fixed Income Portfolio Management
at Bankers Trust.
Barbara Hennigar,
Executive Vice President and
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the Manager President and Director of SFSI;
President and Chief Executive
Officer of SSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Ronald Jamison,
Vice President Formerly Vice President and
Associate General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Managing
Director of Global Equities at
Paine Webber's Mitchell Hutchins
division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing Director
of Van Eck Global.
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Paul LaRocco,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Securities
Analyst for Columbus Circle
Investors.
Michael Levine,
Assistant Vice President
Stephen F. Libera,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; a Vice President of
HarbourView; prior to March, 1996
he was the senior bond portfolio
manager for Panorama Series Fund,
Inc., other mutual funds and
pension accounts managed by G.R.
Phelps; was also responsible for
managing the public fixed-income
securities department at
Connecticut Mutual Life Insurance
Co.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and Trustee of
the New York-based and the Denver-
based Oppenheimer funds; President
and a Director of OAC, HarbourView
and Oppenheimer Partnership
Holdings, Inc.; Director of Main
Street Advisers, Inc.; Chairman
and Director of SSI.
Timothy Martin,
Assistant Vice President Formerly Vice President, Mortgage
Trading, at S.N. Phelps & Co.,
Salomon Brothers, and Kidder
Peabody.
Sally Marzouk,
Vice President None.
Lisa Migan,
Assistant Vice President, None.
Robert J. Milnamow,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Portfolio
Manager with Phoenix Securities
Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
John Pirie,
Assistant Vice President Formerly a Vice President with
Cohane Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President Chairman and Director of the
Distributor.
Jane Putnam,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly Senior Investment
Officer and Portfolio Manager with
Chemical Bank.
Russell Read,
Vice President Consultant for Prudential
Insurance on behalf of the General
Motors Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Securities
Analyst for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for
Metropolitan Life Insurance
Company.
Michael S. Rosen
Vice President; President:
Rochester Division Formerly Vice President of RFS;
President and Director of RFD;
Vice President and Director of
FMC; Vice President and director
of RCAI; General Partner of RCA;
an officer and/or portfolio
manager of certain Oppenheimer
funds.
David Rosenberg,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly Vice President and
Portfolio Manager/Security Analyst
for Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of Dollar
Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of
Citicorp Investment Services.
Diane Sobin,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly a Vice President
and Senior Portfolio Manager for
Dean Witter InterCapital, Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus Vice Chairman and Trustee of the
New York-based Oppenheimer Funds;
formerly Chairman of the Manager
and the Distributor.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S.
Group Pension Strategy and
Marketing for Manulife Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; a Vice President of
HarbourView; prior to March, 1996
he was an equity portfolio manager
for Panorama Series Fund, Inc. and
other mutual funds and pension
accounts managed by G.R. Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee,
Director or Managing Partner of
the Denver-based Oppenheimer
Funds; President and a Director
of Centennial; formerly President
and Director of OAMC, and Chairman
of the Board of SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager;
Vice President and Portfolio
Manager of Oppenheimer Discovery
Fund, Oppenheimer Global Emerging
Growth Fund and Oppenheimer
Enterprise Fund. Formerly
Managing Director of Buckingham
Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the
Distributor and SFSI.
Ashwin Vasan,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Jerry A. Webman,
Senior Vice President Director of New York-based tax-
exempt fixed income Oppenheimer
Funds; Formerly Managing Director
and Chief Fixed Income Strategist
at Prudential Mutual Funds.
Christine Wells,
Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; Vice President of
HarbourView; prior to March, 1996
he was an equity portfolio manager
for Panorama Series Fund, Inc. and
other mutual funds and pension
funds managed by G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
Centennial; Vice President,
Finance and Accounting and member
of the Board of Directors of the
Junior League of Denver, Inc.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the
Manager; Assistant Secretary of
the Oppenheimer Funds; Assistant
Secretary of SSI, SFSI; an officer
of other Oppenheimer Funds.
Arthur J. Zimmer,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
Centennial.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds,
the Denver-based Oppenheimer Funds, and the Rochester-based Oppenheimer
Funds, set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Series Fund, Inc.
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Denver-based Oppenheimer Funds
- ------------------------------
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.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Rochester-based Oppenheimer Funds
- ---------------------------------
Bond Fund Series - Oppenheimer Bond Fund For
Growth
Rochester Fund Municipals
Rochester Portfolio Series - Limited Term
New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, OppenheimerFunds Distributor, Inc., HarbourView
Asset Management Corp., Oppenheimer Partnership Holdings, Inc., and
Oppenheimer Acquisition Corp. is Two World Trade Center, New York, New
York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., OppenheimerFunds
Services, Centennial Asset Management Corporation, Centennial Capital
Corp., Oppenheimer Real Asset Management, Inc., and Main Street
Advisers, Inc. is 3410 South Galena Street, Denver, Colorado 80231.
The address of the Rochester-based funds is 350 Linden Oaks,
Rochester, New York 14625-2807.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which OppenheimerFunds,
Inc. is the investment adviser, as described in Part A and B of this
Registration Statement and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
<TABLE>
<CAPTION>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C> <C>
Susan P. Bader ++ Assistant Vice President None
Christopher Blunt Vice President None
38954 Plumbrook Drive
Farmington Hills, MI 48331
George Clarence Bowen+ Vice President & Treasurer Vice President
and Treasurer
of the NY-
based
Oppenheimer
funds / Vice
President,
Secretary and
Treasurer of
the Denver-
based Oppen-
heimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce* Senior Vice President - None
Director - Financial
Institution Div.
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
3425 1/2 Irving Avenue So.
Minneapolis, MN 55408
Mary Crooks+ Senior Vice President None
Paul Delli-Bovi Vice President None
750 W. Broadway
Apt. 5M
Long Beach, NY 11561
E. Drew Devereaux ++ Assistant Vice President None
Andrew John Donohue* Executive Vice Secretary of
President, General the New York-
Counsel and Director based Oppen-
heimer funds /
Vice President
of the Denver-
based Oppen-
heimer funds
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
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President; Chairman:
Rochester Division None
Reed F. Finley Vice President - None
320 E. Maple, Ste. 254 Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Ronald R. Foster Senior Vice President None
139 Avant Lane
Cincinatti, OH 45249
Patricia Gadecki Vice President None
3906 Americana Drive
Tampa, FL 3334
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
111 Rexford Court
Summerville, SC 29485
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Ilene Kutno* Vice President - None
Director - Regional Sales
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Timothy G. Mulligan ++ Vice President None
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Wendy Murray Vice President None
114-B Larchmont Acres West
Larchmont, NY 10538
Joseph Norton Vice President None
2518 Fillmore Street
Apt. 1
San Francisco, CA 94115
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
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.,
Director -
Key Accounts
Minnie Ra Vice President - None
0895 Thirty-First Ave. Financial Institution Div.
Apt. 4
San Francisco, CA 94121
Michael Raso Vice President None
30 Hommocks Road
Apt. 30
Larchmont, NY 10538
John C. Reinhardt ++ Vice President None
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen++ Vice President, President:
Rochester Division None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. 3D
Indianapolis, IN 46240
James Ruff* President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Wasington, DC 20007
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker ++ Vice President None
Michael Stenger Vice President None
c/o America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip 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
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
++ 350 Linden Oaks, Rochester, NY 14625-2807 (the "Rochester
Division")
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
The accounts, books and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the Investment Company Act
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 of the requirements for the effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 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 22nd day of October, 1996.
OPPENHEIMER U.S. GOVERNMENT TRUST
By: /s/ Bridget A. Macaskill*
--------------------------
Bridget A. Macaskill, 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 October 22, 1996
Leon Levy
/s/ Donald W. Spiro* Vice Chairman
- --------------------------- and Trustee October 22, 1996
Donald W. Spiro
/s/ Bridget A. Macaskill* President and October 22, 1996
- ---------------------------
Bridget A. Macaskill
/s/ George Bowen* Treasurer and
- --------------------------- Principal Financial
George Bowen and Accounting
Officer October 22, 1996
/s/ Robert G. Galli* Trustee October 22, 1996
- ---------------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee October 22, 1996
- ---------------------------
Benjamin Lipstein
/s/ Elizabeth B. Moynihan* Trustee October 22, 1996
- ---------------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee October 22, 1996
- ---------------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee October 22, 1996
- ---------------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee October 22, 1996
- ---------------------------
Russell S. Reynolds, Jr.
/s/ Sidney M. Robbins* Trustee October 22, 1996
- ---------------------------
Sidney M. Robbins
/s/ Pauline Trigere* Trustee October 22, 1996
- ---------------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee October 22, 1996
- ---------------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
</TABLE>
<PAGE>
OPPENHEIMER U.S. GOVERNMENT TRUST
Registration No. 2-76645
Index to Exhibits
Exhibit No. Description
24(b)(4)(i) Specimen Share Certificate: Class A Shares
24(b)(4)(ii) Specimen Share Certificate: Class B Shares
24(b)(4)(iii) Specimen Share Certificate: Class C Shares
24(b)(11) Independent Auditor's Consent
24(b)(16) Performance Computation Schedule
24(b)(17)(i) Financial Data Schedule - Class A Shares at 6/30/96
24(b)(17)(ii) Financial Data Schedule - Class B Shares at 6/30/96
24(b)(17)(iii) Financial Data Schedule - Class C Shares at 6/30/96
24(b)(17)(iv) Financial Data Schedule - Class A Shares at 8/31/96
24(b)(17)(v) Financial Data Schedule - Class B Shares at 8/31/96
24(b)(17)(vi) Financial Data Schedule - Class C Shares at 8/31/96
OPPENHEIMER U.S. GOVERNMENT TRUST
Class A 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 A 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 683810 105
(at left) is the owner of
(centered) FULLY PAID CLASS A 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.
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)
/s/ George C. Bowen /s/ Bridget A. Macaskill
___________________ ________________________
TREASURER 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
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
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
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 A 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\220certa
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.
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)
/s/ George C. Bowen /s/ Bridget A. Macaskill
___________________ ________________________
TREASURER 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
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
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
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
OPPENHEIMER U.S. GOVERNMENT TRUST
Class C 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 C 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 683810 204
(at left) is the owner of
(centered) FULLY PAID CLASS C 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.
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)
/s/ George C. Bowen /s/ Bridget A. Macaskill
___________________ ________________________
TREASURER 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
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
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
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 C 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\220certc
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees
Oppenheimer U.S. Government Trust:
We consent to the use of our reports dated July 22, 1996 and September 23,
1996 included herein and to the reference to our firm under the heading
"Financial Highlights" in Part A of The Registration Statement.
/s/ KPMG Peat Marwick LLP
- -------------------------
KPMG Peat Marwick LLP
Denver, Colorado
October 21, 1996
Oppenheimer U.S. Government Trust Fund
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 Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
07/23/86 0.0680 0.0000 10.200
08/27/86 0.0860 0.0000 10.320
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
10/29/87 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 9.530
11/03/88 0.0683 0.0000 9.570
12/01/88 0.0698 0.0000 9.440
12/29/88 0.0702 0.0000 9.350
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
Oppenheimer U.S. Government Trust
Page 2
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares (continued)
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
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
Oppenheimer U.S. Government Trust
Page 3
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares (continued)
10/29/93 0.0484 0.0000 9.950
11/30/93 0.0506 0.0000 9.820
12/31/93 0.0509 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
08/31/94 0.0545 0.0000 9.280
09/30/94 0.0593 0.0000 9.130
10/31/94 0.0525 0.0000 9.080
11/30/94 0.0572 0.0000 9.020
12/30/94 0.0576 0.0000 9.030
01/31/95 0.0572 0.0000 9.160
02/28/95 0.0574 0.0000 9.320
03/31/95 0.0617 0.0000 9.340
04/28/95 0.0525 0.0000 9.390
05/31/95 0.0565 0.0000 9.530
06/30/95 0.0581 0.0000 9.510
07/31/95 0.0503 0.0000 9.420
08/31/95 0.0584 0.0000 9.480
09/29/95 0.0600 0.0000 9.510
10/31/95 0.0553 0.0000 9.540
11/30/95 0.0580 0.0000 9.610
12/29/95 0.0551 0.0000 9.660
01/31/96 0.0554 0.0000 9.670
02/29/96 0.5428 0.0000 9.480
03/29/96 0.0552 0.0000 9.410
04/30/96 0.0550 0.0000 9.320
05/31/96 0.0591 0.0000 9.240
06/28/96 0.0507 0.0000 9.300
Class B Shares
07/31/95 0.0116 0.0000 9.410
08/31/95 0.0517 0.0000 9.470
09/29/95 0.0522 0.0000 9.500
10/31/95 0.0474 0.0000 9.530
11/30/95 0.0519 0.0000 9.600
12/29/95 0.0486 0.0000 9.660
01/31/96 0.0490 0.0000 9.660
02/29/96 0.0483 0.0000 9.470
03/29/96 0.0489 0.0000 9.400
04/30/96 0.0490 0.0000 9.310
05/31/96 0.0526 0.0000 9.230
06/28/96 0.0453 0.0000 9.290
Oppenheimer U.S. Government Trust
Page 4
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
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 0.0549 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
08/31/94 0.0484 0.0000 9.270
09/30/94 0.0529 0.0000 9.120
10/31/94 0.0469 0.0000 9.070
12/30/94 0.0505 0.0000 9.020
01/31/95 0.0485 0.0000 9.150
02/28/95 0.0520 0.0000 9.310
03/31/95 0.0545 0.0000 9.330
04/28/95 0.0468 0.0000 9.380
05/31/95 0.0503 0.0000 9.530
06/30/95 0.0508 0.0000 9.500
07/31/95 0.0446 0.0000 9.420
08/31/95 0.0523 0.0000 9.470
09/29/95 0.0536 0.0000 9.490
10/31/95 0.0489 0.0000 9.530
11/30/95 0.0521 0.0000 9.600
12/29/95 0.0488 0.0000 9.650
01/31/96 0.0491 0.0000 9.660
02/29/96 0.0482 0.0000 9.470
03/29/96 0.0491 0.0000 9.390
04/30/96 0.0491 0.0000 9.310
05/31/96 0.0527 0.0000 9.230
06/28/96 0.0456 0.0000 9.290
1. Average Annual Total Returns for the Periods Ended 06/30/96:
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 $1,000
Oppenheimer U.S. Government Trust
Page 5
1. Average Annual Total Returns for the Periods Ended 06/30/96 (Continued):
Class A Shares
Examples, assuming a maximum sales charge of 4.75%:
One Year Five Year
$ 999.23 1 $1,360.14 .2
(---------) - 1 = -0.08% (---------) - 1 = 6.34%
$1,000 $1,000
Ten Years
$1,973.30 .1
(---------) - 1 = 7.03%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00% for
the inception year:
Inception
$ 998.59 1.0619
(---------) - 1 = -0.15%
$1,000
Class C Shares
Examples, assuming a maximum contingent deferred sales charge of 1.00%
for the first year, and 0.00% for the inception year:
One Year Inception
$1,031.32 1 $1,111.43 .3875
(---------) - 1 = 3.13% (---------) - 1 = 4.18%
$1,000 $1,000
Oppenheimer U.S. Government Trust
Page 6
1. Average Annual Total Returns for the Periods Ended 06/30/96 (continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,049.06 1 $1,427.92 .2
(---------) - 1 = 4.91% (---------) - 1 = 7.38%
$1,000 $1,000
Ten Years
$2,071.74 .1
(---------) - 1 = 7.56%
$1,000
Class B Shares
Inception
$1,048.00 1.0619
(---------) - 1 = 5.10%
$1,000
Class C Shares
One Year Inception
$1,041.10 1 $1,111.43 .3875
(---------) - 1 = 4.11% (---------) - 1 = 4.18%
$1,000 $1,000
Oppenheimer U.S. Government Trust
Page 7
2. Cumulative Total Returns for the Periods Ended 06/30/96:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum sales charge of 4.75%:
One Year Five Year
$ 999.23 - $1,000 $1,360.14 - $1,000
------------------ = -0.08% ------------------ = 36.01%
$1,000 $1,000
Inception
$1,973.30 - $1,000
------------------ = 97.33%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00% for
the inception year:
Inception
$ 998.59 - $1,000
------------------ = -0.14%
$1,000
Class C Shares
Examples, assuming a maximum contingent deferred sales charge of 1.00% for
the first year and 0.00% for the inception year:
One Year Inception
$1,031.32 - $1,000 $1,111.43 - $1,000
------------------ = 3.13% ------------------ = 11.14%
$1,000 $1,000
Oppenheimer U.S. Government Trust
Page 8
2. Cumulative Total Returns for the Periods Ended 06/30/96 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,049.06 - $1,000 $1,427.92 - $1,000
------------------ = 4.91% ------------------ = 42.79%
$1,000 $1,000
Inception
$2,071.74 - $1,000
------------------ = 107.17%
$1,000
Class B Shares
Inception
$1,048.00 - $1,000
------------------ = 4.80%
$1,000
Class C Shares
One Year Inception
$1,041.10 - $1,000 $1,111.43 - $1,000
------------------ = 4.11% ------------------ = 11.14%
$1,000 $1,000
Oppenheimer U.S. Government Trust
Page 9
3. Standardized Yield for the 30-Day Period Ended 06/30/96:
The Fund's standardized yields are calculated using the following formula
set forth in the SEC rules:
a - b 6
Yield = 2 { (-------- + 1 ) - 1 }
cd or ce
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 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%:
$3,221,003.93 - $440,466.57 6
2{(--------------------------- + 1) - 1} = 6.36%
54,442,359 x $ 9.76
Class B Shares
Example at NAV:
$ 190,723.84 - $ 44,997.20 6
2{(-------------------------- + 1) - 1} = 5.90%
3,226,792 x $ 9.29
Class C Shares
Example at NAV:
$ 118,616.36 - $ 27,310.59 6
2{(-------------------------- + 1) - 1} = 5.95%
2,007,189 x $ 9.29
Oppenheimer U.S. Government Trust
Page 10
4. DIVIDEND YIELDS FOR THE 30-DAY PERIOD ENDED 06/30/96:
The Fund's dividend yields are calculated using the following formula:
Dividend Yield = { (a / 30) x 365 } / b or c
The symbols above represent the following factors:
a = The accrual 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
at Maximum Offering $.0543314/30 x 365
------------------ = 6.77%
$9.76
Dividend Yield
at Net Asset Value $.0543314/30 x 365
------------------ = 7.11%
$9.30
Class B Shares
Dividend Yield
at Net Asset Value $.0484643/30 x 365
------------------ = 6.35%
$9.29
Class C Shares
Dividend Yield
at Net Asset Value $.0488294/30 x 365
------------------ = 6.39%
$9.29
Oppenheimer U.S. Government Trust Fund
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 Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
07/23/86 0.0680000 0.0000000 10.200
08/27/86 0.0860000 0.0000000 10.320
09/25/86 0.0680000 0.0100000 10.180
10/23/86 0.0696000 0.0000000 10.200
11/26/86 0.0856000 0.0000000 10.270
12/24/86 0.0695000 0.0480000 10.240
01/22/87 0.0708000 0.0000000 10.260
02/19/87 0.0674000 0.0000000 10.210
03/19/87 0.0680000 0.0000000 10.200
04/15/87 0.0648000 0.0000000 9.850
05/14/87 0.0682000 0.0000000 9.710
06/11/87 0.0650000 0.0000000 9.700
07/09/87 0.0668000 0.0000000 9.790
08/06/87 0.0657000 0.0000000 9.710
09/03/87 0.0668000 0.0000000 9.570
10/01/87 0.0674000 0.0000000 9.420
10/29/87 0.0682000 0.0000000 9.560
11/24/87 0.0664000 0.0000000 9.600
12/31/87 0.0890000 0.0000000 9.620
01/28/88 0.0700000 0.0000000 9.780
02/25/88 0.0720000 0.0000000 9.840
03/24/88 0.0714000 0.0000000 9.710
04/21/88 0.0710000 0.0000000 9.620
05/19/88 0.0697000 0.0000000 9.470
06/16/88 0.0696000 0.0000000 9.580
07/14/88 0.0685000 0.0000000 9.490
08/11/88 0.0679000 0.0000000 9.390
09/08/88 0.0688000 0.0000000 9.510
10/06/88 0.0684000 0.0000000 9.530
11/03/88 0.0683000 0.0000000 9.570
12/01/88 0.0698000 0.0000000 9.440
12/29/88 0.0702000 0.0000000 9.350
01/26/89 0.0701000 0.0000000 9.380
02/23/89 0.0700000 0.0000000 9.260
03/23/89 0.0700000 0.0000000 9.190
04/20/89 0.0700000 0.0000000 9.240
05/18/89 0.0710000 0.0000000 9.340
06/15/89 0.0700000 0.0000000 9.480
07/13/89 0.0690000 0.0000000 9.570
08/10/89 0.0675000 0.0000000 9.530
09/07/89 0.0674000 0.0000000 9.480
10/05/89 0.0675000 0.0000000 9.470
11/02/89 0.0676000 0.0000000 9.550
11/30/89 0.0677000 0.0000000 9.560
Oppenheimer U.S. Government Trust
Page 2
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares (Continued)
12/28/89 0.0677000 0.0000000 9.510
01/25/90 0.0678000 0.0000000 9.340
02/22/90 0.0677000 0.0000000 9.270
03/22/90 0.0679000 0.0000000 9.260
04/19/90 0.0677000 0.0000000 9.160
05/17/90 0.0676000 0.0000000 9.200
06/14/90 0.0678000 0.0000000 9.260
07/12/90 0.0679000 0.0000000 9.220
08/09/90 0.0680000 0.0000000 9.190
09/06/90 0.0678000 0.0000000 9.170
10/04/90 0.0681000 0.0000000 9.190
11/01/90 0.0661000 0.0000000 9.190
11/29/90 0.0635000 0.0000000 9.240
12/31/90 0.0725000 0.0000000 9.320
01/24/91 0.0566000 0.0000000 9.370
02/21/91 0.0666000 0.0000000 9.430
03/21/91 0.0633000 0.0000000 9.280
04/18/91 0.0605000 0.0000000 9.350
05/16/91 0.0590000 0.0000000 9.330
06/13/91 0.0575000 0.0000000 9.200
07/11/91 0.0575000 0.0000000 9.280
08/08/91 0.0558000 0.0000000 9.420
09/05/91 0.0564000 0.0000000 9.460
10/03/91 0.0555000 0.0000000 9.580
10/31/91 0.0564000 0.0000000 9.610
11/27/91 0.0550000 0.0000000 9.610
12/31/91 0.0623000 0.0000000 9.910
01/23/92 0.0417000 0.0000000 9.710
02/20/92 0.0507000 0.0000000 9.600
03/19/92 0.0515000 0.0000000 9.520
04/16/92 0.0553000 0.0000000 9.620
05/14/92 0.0452000 0.0000000 9.680
06/11/92 0.0504000 0.0000000 9.670
07/09/92 0.0523000 0.0000000 9.820
08/06/92 0.0534000 0.0000000 9.790
09/03/92 0.0526000 0.0000000 9.820
10/01/92 0.0532000 0.0000000 9.870
10/29/92 0.0527000 0.0000000 9.700
11/25/92 0.0529000 0.0000000 9.670
12/31/92 0.0651000 0.0000000 9.710
01/28/93 0.0504000 0.0000000 9.790
02/25/93 0.0542000 0.0000000 9.900
03/25/93 0.0507000 0.0000000 9.880
04/22/93 0.0518000 0.0000000 9.930
05/20/93 0.0508000 0.0000000 9.860
06/17/93 0.0509000 0.0000000 9.930
07/30/93 0.0787000 0.0000000 9.960
08/31/93 0.0522000 0.0000000 10.030
09/30/93 0.0531000 0.0000000 9.990
Oppenheimer U.S. Government Trust
Page 3
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares (Continued)
10/29/93 0.0484000 0.0000000 9.950
11/30/93 0.0506000 0.0000000 9.820
12/31/93 0.0509000 0.0000000 9.830
01/31/94 0.0530619 0.0000000 9.870
02/28/94 0.0550562 0.0000000 9.720
03/31/94 0.0618166 0.0000000 9.460
04/29/94 0.0520043 0.0000000 9.310
05/31/94 0.0561872 0.0000000 9.260
06/30/94 0.0565988 0.0000000 9.200
07/29/94 0.0554792 0.0000000 9.300
08/31/94 0.0544724 0.0000000 9.280
09/30/94 0.0593098 0.0000000 9.130
10/31/94 0.0525157 0.0000000 9.080
11/30/94 0.0572171 0.0000000 9.020
12/30/94 0.0576133 0.0000000 9.030
01/31/95 0.0571550 0.0000000 9.160
02/28/95 0.0573650 0.0000000 9.320
03/31/95 0.0616844 0.0000000 9.340
04/28/95 0.0524699 0.0000000 9.390
05/31/95 0.0565335 0.0000000 9.530
06/30/95 0.0580527 0.0000000 9.510
07/31/95 0.0503394 0.0000000 9.420
08/31/95 0.0584312 0.0000000 9.480
09/29/95 0.0600469 0.0000000 9.510
10/31/95 0.0552780 0.0000000 9.540
11/30/95 0.0579923 0.0000000 9.610
12/29/95 0.0551305 0.0000000 9.660
01/31/96 0.0553803 0.0000000 9.670
02/29/96 0.0542759 0.0000000 9.480
03/29/96 0.0551610 0.0000000 9.410
04/30/96 0.0550334 0.0000000 9.320
05/31/96 0.0591093 0.0000000 9.240
06/28/96 0.0507340 0.0000000 9.300
07/31/96 0.0517255 0.0000000 9.290
08/30/96 0.0570352 0.0000000 9.230
Class B Shares
07/31/95 0.0116288 0.0000000 9.410
08/31/95 0.0517350 0.0000000 9.470
09/29/95 0.0521544 0.0000000 9.500
10/31/95 0.0473843 0.0000000 9.530
11/30/95 0.0519212 0.0000000 9.600
12/29/95 0.0486363 0.0000000 9.660
01/31/96 0.0489925 0.0000000 9.660
02/29/96 0.0483281 0.0000000 9.470
03/29/96 0.0489069 0.0000000 9.400
04/30/96 0.0489971 0.0000000 9.310
05/31/96 0.0526125 0.0000000 9.230
06/28/96 0.0452644 0.0000000 9.290
Oppenheimer U.S. Government Trust
Page 4
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class B Shares (Continued)
07/31/96 0.0454435 0.0000000 9.280
08/30/96 0.0504001 0.0000000 9.220
Class C Shares
12/31/93 0.0395000 0.0000000 9.830
01/31/94 0.0430935 0.0000000 9.860
02/28/94 0.0463215 0.0000000 9.710
03/31/94 0.0549083 0.0000000 9.440
04/29/94 0.0454252 0.0000000 9.300
05/31/94 0.0495481 0.0000000 9.250
06/30/94 0.0501038 0.0000000 9.190
07/29/94 0.0489179 0.0000000 9.290
08/31/94 0.0484417 0.0000000 9.270
09/30/94 0.0529037 0.0000000 9.120
10/31/94 0.0468736 0.0000000 9.070
11/30/94 0.0515118 0.0000000 9.010
12/30/94 0.0505484 0.0000000 9.020
01/31/95 0.0485380 0.0000000 9.150
02/28/95 0.0519730 0.0000000 9.310
03/31/95 0.0544530 0.0000000 9.330
04/28/95 0.0467503 0.0000000 9.380
05/31/95 0.0502619 0.0000000 9.530
06/30/95 0.0508075 0.0000000 9.500
07/31/95 0.0446144 0.0000000 9.420
08/31/95 0.0523147 0.0000000 9.470
09/29/95 0.0536339 0.0000000 9.490
10/31/95 0.0488699 0.0000000 9.530
11/30/95 0.0520511 0.0000000 9.600
12/29/95 0.0487752 0.0000000 9.650
01/31/96 0.0490823 0.0000000 9.660
02/29/96 0.0482380 0.0000000 9.470
03/29/96 0.0490642 0.0000000 9.390
04/30/96 0.0490569 0.0000000 9.310
05/31/96 0.0526854 0.0000000 9.230
06/28/96 0.0456113 0.0000000 9.290
07/31/96 0.0459414 0.0000000 9.280
08/30/96 0.0504742 0.0000000 9.220
Oppenheimer U.S. Government Trust
Page 5
1. AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 08/31/96:
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 $1,000
Class A Shares
Examples, assuming a maximum sales charge of 4.75%:
One Year Five Year
$ 995.08 1 $1,317.12 .2
(---------) - 1 = -0.49% (---------) - 1 = 5.66%
$1,000 $1,000
Ten Years
$1,915.91 .1
(---------) - 1 = 6.72%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00%
for the first year, and 4.00% for the inception year:
One Year Inception
$ 987.53 1 $1,011.68 .9000
(---------) - 1 = -1.25% (---------) - 1 = 1.05%
$1,000 $1,000
Class C Shares
Examples, assuming a maximum contingent deferred sales charge of 1.00%
for the first year, and 0.00% for the inception year:
One Year Inception
$1,026.97 1 $1,114.58 .3636
(---------) - 1 = 2.70% (---------) - 1 = 4.02%
$1,000 $1,000
Oppenheimer U.S. Government Trust
Page 6
1. AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 08/31/96 (CONTINUED):
Examples at NAV:
Class A Shares
One Year Five Year
$1,044.71 1 $1,382.76 .2
(---------) - 1 = 4.47% (---------) - 1 = 6.70%
$1,000 $1,000
`
Ten Years
$2,011.49 .1
(---------) - 1 = 7.24%
$1,000
Class B Shares
One Year Inception
$1,036.21 1 $1,050.91 .9000
(---------) - 1 = 3.62% (---------) - 1 = 4.57%
$1,000 $1,000
Class C Shares
One Year Inception
$1,036.71 1 $1,114.58 .3636
(---------) - 1 = 3.67% (---------) - 1 = 4.02%
$1,000 $1,000
2. CUMULATIVE TOTAL RETURNS FOR THE PERIODS ENDED 08/31/96:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum sales charge of 4.75%:
One Year Five Year
$ 995.08 - $1,000 $1,317.12 - $1,000
------------------ = -0.49% ------------------ = 31.71%
$1,000 $1,000
Inception
$1,915.91 - $1,000
------------------ = 91.59%
$1,000
Oppenheimer U.S. Government Trust
Page 7
2. CUMULATIVE TOTAL RETURNS FOR THE PERIODS ENDED 08/31/96 (CONTINUED):
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00%
for the first year, and 4.00% for the inception year:
One Year Inception
$ 987.53 - $1,000 $1,011.68 - $1,000
------------------ = -1.25% ------------------ = 1.17%
$1,000 $1,000
Class C Shares
Examples, assuming a maximum contingent deferred sales charge of 1.00%
for the first year and 0.00% for the inception year:
One Year Inception
$1,026.97 - $1,000 $1,114.58 - $1,000
------------------ = 2.70% ------------------ = 11.46%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,044.71 - $1,000 $1,382.76 - $1,000
------------------ = 4.47% ------------------ = 38.28%
$1,000 $1,000
Inception
$2,011.49 - $1,000
------------------ = 101.15%
$1,000
Class B Shares
One Year Inception
$1,036.21 - $1,000 $1,050.91 - $1,000
------------------ = 3.62% ------------------ = 5.09%
$1,000 $1,000
Class C Shares
One Year Inception
$1,036.71 - $1,000 $1,114.58 - $1,000
------------------ = 3.67% ------------------ = 11.46%
$1,000 $1,000
Oppenheimer U.S. Government Trust
Page 8
3. STANDARDIZED YIELD FOR THE 30-DAY PERIOD ENDED 08/31/96:
The Fund's standardized yields are calculated using the following formula
set forth in the SEC rules:
a - b 6
Yield = 2 { (-------- + 1 ) - 1 }
cd or ce
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 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%:
$3,073,279.01 - $461,687.42 6
2{(--------------------------- + 1) - 1} = 5.99%
54,634,442 x $ 9.69
Class B Shares
Example at NAV:
$ 219,375.44 - $ 56,655.41 6
2{(-------------------------- + 1) - 1} = 5.49%
3,902,682 x $ 9.22
Class C Shares
Example at NAV:
$ 112,310.13 - $ 28,538.94 6
2{(-------------------------- + 1) - 1} = 5.52%
1,998,352 x $ 9.22
Oppenheimer U.S. Government Trust
Page 9
4. DIVIDEND YIELDS FOR THE 30-DAY PERIOD ENDED 08/31/96:
The Fund's dividend yields are calculated using the following formula:
Dividend Yield = { (a / 30) x 365 } / b or c
The symbols above represent the following factors:
a = The accrual 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
at Maximum Offering $.0522444/30 x 365
------------------ = 6.56%
$9.69
Dividend Yield
at Net Asset Value $.0522444/30 x 365
------------------ = 6.89%
$9.23
Class B Shares
Dividend Yield
at Net Asset Value $.0462211/30 x 365
------------------ = 6.10%
$9.22
Class C Shares
Dividend Yield
at Net Asset Value $.0462727/30 x 365
------------------ = 6.11%
$9.22
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK>
701382
<NAME> Oppenheimer U.S. Government Trust - A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST>
732,015,122
<INVESTMENTS-AT-VALUE>
736,756,604
<RECEIVABLES>
63,732,243
<ASSETS-OTHER>
17,040
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
800,505,887
<PAYABLE-FOR-SECURITIES>
242,408,548
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
3,863,654
<TOTAL-LIABILITIES>
246,272,202
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
575,047,130
<SHARES-COMMON-STOCK>
54,288,284
<SHARES-COMMON-PRIOR>
32,870,814
<ACCUMULATED-NII-CURRENT>
57,809
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
(24,398,673)
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
3,527,419
<NET-ASSETS>
504,966,021
<DIVIDEND-INCOME>
0
<INTEREST-INCOME>
39,641,998
<OTHER-INCOME>
0
<EXPENSES-NET>
5,529,895
<NET-INVESTMENT-INCOME>
34,112,103
<REALIZED-GAINS-CURRENT>
(5,345,762)
<APPREC-INCREASE-CURRENT>
(5,672,502)
<NET-CHANGE-FROM-OPS>
23,093,839
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
31,382,515
<DISTRIBUTIONS-OF-GAINS>
0
<DISTRIBUTIONS-OTHER>
618,306
<NUMBER-OF-SHARES-SOLD>
34,226,998
<NUMBER-OF-SHARES-REDEEMED>
15,453,509
<SHARES-REINVESTED>
2,643,981
<NET-CHANGE-IN-ASSETS>
230,608,160
<ACCUMULATED-NII-PRIOR>
87,075
<ACCUMULATED-GAINS-PRIOR>
(19,050,877)
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
2,946,711
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
5,568,877
<AVERAGE-NET-ASSETS>
452,235,768
<PER-SHARE-NAV-BEGIN>
9.51
<PER-SHARE-NII>
0.67
<PER-SHARE-GAIN-APPREC>
(0.21)
<PER-SHARE-DIVIDEND>
0.66
<PER-SHARE-DISTRIBUTIONS>
0.00
<RETURNS-OF-CAPITAL>
0.01
<PER-SHARE-NAV-END>
9.30
<EXPENSE-RATIO>
1.08
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK>
701382
<NAME> Oppenheimer U.S. Government Trust - B
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-21-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST>
732,015,122
<INVESTMENTS-AT-VALUE>
736,756,604
<RECEIVABLES>
63,732,243
<ASSETS-OTHER>
17,040
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
800,505,887
<PAYABLE-FOR-SECURITIES>
242,408,548
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
3,863,654
<TOTAL-LIABILITIES>
246,272,202
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
575,047,130
<SHARES-COMMON-STOCK>
3,307,564
<SHARES-COMMON-PRIOR>
0
<ACCUMULATED-NII-CURRENT>
57,809
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
(24,398,673)
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
3,527,419
<NET-ASSETS>
30,736,590
<DIVIDEND-INCOME>
0
<INTEREST-INCOME>
39,641,998
<OTHER-INCOME>
0
<EXPENSES-NET>
5,529,895
<NET-INVESTMENT-INCOME>
34,112,103
<REALIZED-GAINS-CURRENT>
(5,345,762)
<APPREC-INCREASE-CURRENT>
(5,672,502)
<NET-CHANGE-FROM-OPS>
23,093,839
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
1,137,105
<DISTRIBUTIONS-OF-GAINS>
0
<DISTRIBUTIONS-OTHER>
37,635
<NUMBER-OF-SHARES-SOLD>
4,038,187
<NUMBER-OF-SHARES-REDEEMED>
811,911
<SHARES-REINVESTED>
81,288
<NET-CHANGE-IN-ASSETS>
230,608,160
<ACCUMULATED-NII-PRIOR>
87,075
<ACCUMULATED-GAINS-PRIOR>
(19,050,877)
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
2,946,711
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
5,568,877
<AVERAGE-NET-ASSETS>
19,227,039
<PER-SHARE-NAV-BEGIN>
9.40
<PER-SHARE-NII>
0.56
<PER-SHARE-GAIN-APPREC>
(0.11)
<PER-SHARE-DIVIDEND>
0.55
<PER-SHARE-DISTRIBUTIONS>
0.00
<RETURNS-OF-CAPITAL>
0.01
<PER-SHARE-NAV-END>
9.29
<EXPENSE-RATIO>
1.93
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK>
701382
<NAME> Oppenheimer U.S. Government Trust - C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
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732,015,122
<INVESTMENTS-AT-VALUE>
736,756,604
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63,732,243
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17,040
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0
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800,505,887
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242,408,548
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0
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3,863,654
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246,272,202
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0
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575,047,130
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1,994,524
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1,159,733
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57,809
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0
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0
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3,527,419
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18,531,074
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0
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39,641,998
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0
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5,529,895
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34,112,103
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(5,345,762)
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(5,672,502)
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23,093,839
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0
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968,691
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0
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22,691
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1,671,250
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921,932
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85,473
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230,608,160
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87,075
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(19,050,877)
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0
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0
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2,946,711
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0
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5,568,877
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15,766,416
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9.50
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0.60
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0.59
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0.01
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9.29
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1.85
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0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
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701382
<NAME> Oppenheimer U.S. Government Trust - A
<S> <C>
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762,695,338
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756,774,456
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8,213,865
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12,911
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52,363
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765,053,595
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202,264,794
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54,553,161
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54,288,284
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6,266,136
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2,132,947
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0
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0
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4,510,907
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0
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1,110,337
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508,122,603
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9.30
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0.10
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0.10
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0.00
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0.00
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9.23
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1.09
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0
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0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK>
701382
<NAME> Oppenheimer U.S. Government Trust - B
<S> <C>
<PERIOD-TYPE> 2-MOS
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762,695,338
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756,774,456
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12,911
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52,363
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202,264,794
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0
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7,376,473
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0
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1,110,337
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6,266,136
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3,446,018
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0
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348,062
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0
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769,313
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146,276
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26,786
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4,510,907
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57,809
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35,077,789
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0.09
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0.09
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0.00
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9.22
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1.88
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</TABLE>
<TABLE> <S> <C>
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<CIK>
701382
<NAME> Oppenheimer U.S. Government Trust - C
<S> <C>
<PERIOD-TYPE> 2-MOS
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756,774,456
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12,911
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52,363
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765,053,595
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202,264,794
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206,309,003
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7,376,473
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0
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6,266,136
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0
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186,423
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0
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0
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209,265
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209,156
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4,510,907
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</TABLE>
