April 26, 1994
Securities and Exchange Commission
450 Fifth Street, NW
Judiciary Plaza
Washington, DC 20549
Re: Oppenheimer Limited-Term Government Fund
Reg. No. 33-02769; File No. 811-4563
Written Representation of Counsel
To the Securities and Exchange Commission:
On behalf of Oppenheimer Limited-Term Government Fund (the
"Fund") and pursuant to Paragraph (e) of Rule 485 under the Securities Act
of 1933, as amended (the "1933 Act"), and in connection with an Amendment
on Form N-1A which is Post-Effective Amendment No. 18 to the 1933 Act
Registration Statement of the Fund and Amendment No. 17 to its
Registration Statement under the Investment Company Act of 1940, as
amended, the undersigned counsel, who prepared or reviewed such Amendment,
hereby represents to the Commission, for filing with such Amendment, that
said Amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b) of said Rule 485.
Very truly yours,
/s/ Mitchell J. Lindauer
--------------------------
Vice President &
Assistant General Counsel
(212) 323-0254
Oppenheimer
Limited-Term Government Fund
Prospectus dated May 1, 1994.
Oppenheimer Limited-Term Government Fund (the "Fund") is a mutual
fund that seeks high current return and safety of principal. Its previous
name was "Oppenheimer Government Securities Fund." The Fund invests
principally in obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, including mortgage-backed securities
issued by Government National Mortgage Association ("GNMA"). While
payments of principal and interest on certain U.S. Government securities
(including the GNMA Certificates which the Fund will hold) are guaranteed
by the U.S. Government or its agencies or instrumentalities, neither the
principal value of those securities nor the net asset value of shares of
the Fund is guaranteed, and therefore the Fund's net asset value per share
is subject to fluctuations due to changes in the value of its portfolio
securities. Under normal circumstances, the Fund will maintain an
effective dollar-weighted average portfolio maturity of not more than
three years.
The Fund offers two classes of shares: (1) Class A shares, which are
sold at a public offering price that includes a front-end sales charge,
and (2) Class B shares, which are sold without a front-end sales charge,
although you may pay a sales charge when you redeem your shares, depending
on how long you own them. Class B shares are also subject to an annual
"asset-based sales charge." Each class of shares bears different
expenses. In deciding which class of shares to buy, you should consider
how much you plan to purchase, how long you plan to keep your shares, and
other factors discussed in "How to Buy Shares" starting on page 15.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the May 1, 1994, Statement of Additional Information. For a free
copy, call Oppenheimer Shareholder Services, the Fund's Transfer Agent,
at 1-800-525-7048, or write to the Transfer Agent at the address on the
back cover. The Statement of Additional Information has been filed with
the Securities and Exchange Commission ("SEC") and is incorporated into
this Prospectus by reference (which means that it is legally part of this
Prospectus).
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of
principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
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
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange
Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services and
those expenses are reflected in the Fund's net asset value per share. As
a shareholder, you pay those expenses indirectly. Shareholders pay other
expenses directly, such as sales 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 operating expenses that you might expect
to bear indirectly. The calculations are based on the Fund's expenses
during its fiscal year ended September 30, 1993.
- - Shareholder Transaction Expenses are charges you pay when you buy or
sell shares of the Fund. Please refer to pages 12 through 20 for an
explanation of how and when these charges apply.
Class A Shares Class B Shares
Maximum Sales Charge on Purchases
(as a % of offering price) 3.50%(1) None
Sales Charge on Reinvested Dividends None None
Deferred Sales Charge
(as a % of the lower of the original
purchase price or redemption proceeds) None(2) 4% of the
first year,
declining to
1% in the fifth
year and
eliminated
thereafter(1)
Redemption Fee None(3) None(2)
Exchange Fee $5.00 $5.00
__________
(1) The sales charge and deferred sales charge rates reflect the
current rates applicable to purchases of Fund shares.
(2) If you invest more than $1 million in Class A shares, you may have to
pay a sales charge of up to 1% if you sell your shares within 18 calendar
months from the end of the calendar month during which you purchased those
shares. See "How to Buy Shares - Class A Shares," below.
(3) There is a $15 transaction fee for redemptions paid by Federal Funds
wire, but not for redemptions paid by check, or by Automated Clearing
House ("ACH") transfer through AccountLink, or for which check writing
privileges are used. See "How to Sell Shares."
- Annual Fund Operating Expenses are paid out of the Fund's assets and
represent the Fund's expenses in operating its business. For example, the
Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (the "Manager") and other regular expenses for
services, such as transfer agent fees, custodial fees paid to the bank
that holds its portfolio securities, audit fees and legal and other
expenses. The following numbers are projections of the Fund's business
expenses based on the Fund's expenses in its last fiscal year. These
amounts are shown as a percentage of average net assets of each class of
the Fund's shares for that year. The "12b-1 Distribution Plan Fees" for
Class A shares are the Service Plan Fees (which are a maximum of 0.25% of
average annual net assets of that class), and for Class B shares, are the
Service Plan Fees (maximum of 0.25%) and the asset-based sales charge of
0.75%. The actual expense numbers 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 May 3, 1993. Therefore, the Annual
Fund Operating Expenses shown for Class B are based on expenses for the
period from May 3, 1993 through December 31, 1993.
Class A Shares Class B Shares
Management Fees 0.48% 0.47%
12b-1 Distribution Plan Fees 0.25% 1.00%
(includes shareholder Service
Plan Fees)
Other Expenses 0.29% 0.40%
Total Fund Operating Expenses 1.02 1.87%
- Examples. To try to show the effect of the 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 chart 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 each
period shown:
1 year 3 years 5 years 10 years*
Class A Shares $45 $66 $89 $155
Class B Shares $69 $89 $121 $176
If you did not redeem your investment, it would incur the following
expenses:
Class A Shares $45 $66 $89 $155
Class B Shares $19 $59 $101 $176
* 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. Long-term Class B shareholders
could pay the economic equivalent of more than the maximum front-end sales
charge allowed under applicable regulations, because of the effect of the
asset-based sales charge and contingent deferred sales charge. The
automatic conversion is designed to minimize the likelihood that this will
occur. Please refer to "How to Buy Shares - 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 will vary.
<PAGE>
Financial Highlights
The table on this page 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. The information for the fiscal years
ended September 30, 1990, 1991, 1992 and 1993, has been audited by
Deloitte & Touche, the Fund's independent auditors, whose report on the
Fund's financial statements for the fiscal year ended September 30, 1993
is included in the Statement of Additional Information. The information
in the table for the fiscal periods prior to October 1, 1990 (except for
total return) was audited by the Fund's previous independent auditors.
The public offerings of Class B shares commence on May 3, 1993.
<TABLE>
<CAPTION>
Class A Class B
Year Ended Period Ended
September 30, September 30,
1993 1992 1991 1990+++ 1989 1988 1987 1986++ 1993++++
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $ 10.97 $ 10.75 $ 10.18 $ 10.17 $ 10.14 $ 9.72 $ 10.51 $ 10.56 $10.96
Income from investment
operations:
Net investment income .73 .81 .87 .89 .90 .89 .86+ .57+ .23
Net realized and
unrealized gain (loss)
on investments .07 .22 .57 .01 .03 .42 (.74) (.05) .10
Total income from
investment operations .80 1.03 1.44 .90 .93 1.31 .12 .52 .33
Dividends and
distributions to
shareholders:
Dividends from net
investment income (.73) (.81) (.87) (.89) (.90) (.89) (.86) (.57) (.23)
Distributions from net
realized gain on
investments -- -- -- -- -- -- (.05) -- --
Total dividends and
distributions to
shareholders (.73) (.81) (.87) (.89) (.90) (.89) (.91) (.57) (.23)
Net asset value, end of
period $ 11.04 $ 10.97 $ 10.75 $ 10.18 $ 10.17 $ 10.14 $ 9.72 $ 10.51 $11.06
Total Return, at Net Asset
Value** 7.61% 9.88% 14.69% 9.15% 9.65% 13.86% .95% 4.97% 3.02%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $178,944 $158,068 $167,974 $213,391 $237,819 $251,794 $287,181 $127,797 $5,077
Average net assets (in
thousands) $161,318 $160,830 $192,404 $218,528 $243,863 $267,557 $242,181 $105,123 $2,561
Number of shares
outstanding at end of
period (in thousands) 16,206 14,416 15,624 20,964 23,395 24,834 29,560 12,162 459
Ratios to average net
assets:
Net investment income 6.70% 7.44% 8.27% 8.77% 8.96% 8.75% 8.22% 7.93%*
4.81%*
Expenses 1.02% .97% .98% .90% .93% .96% .56%+ .08%*+ 1.87%*
Portfolio turnover rate*** 74% 154% 112% 60% 61% 78% 73% 471% 74%
<FN>
* Annualized.
** Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption
at the net asset value calculated on the last business day of the fiscal
period. Sales charges are not reflected in the total returns.
*** The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the year ended September 30, 1993 were
$129,069,391 and $118,835,073, respectively.
+ Net investment income would have been $.84 and $.52 absent the voluntary
reimbursement or waiver of expenses, resulting in an expense ratio of
1.00% and 1.07% for 1987 and 1986, respectively.
++ For the period from March 10, 1986 (commencement of operations) to
September 30, 1986.
+++ On April 7, 1990, Oppenheimer Management Corporation became the
investment adviser to the Fund.
++++ For the period from May 3, 1993 (inception of offering) to September
30, 1993.
</TABLE>
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks high current return and safety of principal.
As a matter of fundamental policy the Fund seeks its objective by
investing only in obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities ("U.S. Government Securities"), and
repurchase agreements on such securities, and may write covered calls and
use hedging instruments approved by its Board of Trustees (the "Board").
U.S. Government Securities include the following:
-U.S. Treasury Obligations. These include Treasury Bills (which have
maturities of one year or less), Treasury Notes (which have maturities of
one to ten years) and Treasury Bonds (which have maturities generally
greater than ten years); U.S. Treasury obligations are backed by the full
faith and credit of the United States; and
-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
GNMA modified pass-through certificates; (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"). Agencies and instrumentalities the
securities of which 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.
The Fund will invest in GNMA certificates only of the "fully-modified
pass-through" type, which are guaranteed as to timely payment of principal
and interest by the full faith and credit of the United States Government.
GNMA certificates are debt securities that represent an interest in a pool
of mortgages that are insured by the Federal Housing Administration or the
Farmers Home Administration, or are guaranteed by the Veterans
Administration. The Fund may also invest in other mortgage-backed
securities that are issued or guaranteed by agencies or instrumentalities
of the U.S. Government, such as Freddie Mac and Fannie Mae. 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.
Investment Policies and Strategies. The Fund will maintain an effective
dollar-weighted average portfolio maturity of not more than three years
under normal circumstances. In calculating maturity, the Fund will
consider various factors, including anticipated payments of principal.
See "Investment Objective and Policies" in the Statement of Additional
Information for more information on the Fund's calculation of portfolio
maturity.
Although U.S. Government Securities involve little credit risk, their
values will fluctuate depending on prevailing interest rates. 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 will
be achieved. The magnitude of those fluctuations generally will be
greater when the average maturity of the Fund's portfolio securities is
longer. See "Investment Objective and Policies" in the Statement of
Additional Information for further information on U.S. Government
Securities. 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 calls is explained below, under "Other
Investment Techniques and Strategies."
- Can the Fund's Investment Objective and Policies Change? The Fund
has an investment objective, which is 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 policies. The Fund's investment policies and
practices are not "fundamental" unless the Prospectus or Statement of
Additional Information says that a particular policy is "fundamental."
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
level of vote by outstanding voting shares (and this term is explained in
the Statement of Additional Information). The Fund's investment objective
is a fundamental policy. 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.
- Portfolio Turnover. U.S. Government Securities may be purchased or
sold without regard to the length of time they have been held. The
Manager attempts to take advantage of short-term differentials in yields
when short-term trading is consistent, with the objective of seeking
income while seeking safety of principal. While short-term trading
increases portfolio turnover, the Fund incurs little or no brokerage costs
for U.S. Government Securities. See "Dividends, Capital Gains and Taxes"
in this Prospectus and "Brokerage Policies of the Fund" in the Statement
of Additional Information for further details.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below, which involve
certain risks. The Statement of Additional Information contains more
detailed information about these practices, including limitations designed
to reduce some of the risks.
- Loans of Portfolio Securities. The Fund may lend its portfolio
securities amounting to not more than 25% of its total assets to brokers,
dealers and other financial institutions, subject to certain conditions
described in the Statement of Additional Information. The Fund presently
does not intend to lend its portfolio securities, but if it does, the
value of securities loaned is not expected to exceed 5% of the value of
the Fund's total assets in the coming year.
- - Writing Covered Calls. As part of the Fund's investment objective, to
earn additional income the Fund may write (sell) call options on U.S.
Government Securities. The Fund receives premiums from the calls it
writes. The calls are "covered" in that the Fund must own the securities
that are subject to the call (although it may substitute other qualifying
securities). There is no limit on the amount of the Fund's total assets
that may be subject to calls. In writing calls there are risks that the
Fund may forgo profits on an increase in the price of the underlying
security if the call is exercised. In addition, the Fund could experience
capital losses that might cause previously-distributed income to be re-
characterized for tax purposes as a return of capital to shareholders.
- - "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. As a matter
of fundamental policy, the Fund will not enter into when-issued or delayed
delivery transactions unless the acceptance and delivery of the security
to the Fund is mandatory, occurs within 120 days of the trade date, and
is settled in cash on the settlement date.
- - Repurchase Agreements. The Fund may enter into repurchase agreements,
subject to the following limits. The Fund will not enter into repurchase
transactions that will cause more than 25% of the Fund's net assets to be
subject to repurchase agreements having a maturity of seven days or less,
or that will cause more than 5% of the Fund's net assets to be subject to
repurchase agreements having a maturity beyond seven days. As a matter
of fundamental policy, the Fund will not enter into repurchase agreements
unless ownership and control of the securities subject to the agreement
are transferred to the Fund. Repurchase agreements must be fully
collateralized. However, if the vendor fails to pay the re-sale price on
the delivery date, the Fund may experience costs in disposing of the
collateral and 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. For
further information, see "Other Investment Techniques and Strategies -
Reverse Repurchase Agreements" in the Statement of Additional Information.
- Hedging With Options and Futures Contracts. The Fund may buy and
sell options and futures contracts to manage its exposure to changing
interest rates and securities prices. Some of these strategies, such as
selling futures, buying puts and writing calls, hedge the Fund's portfolio
against price fluctuations. Other hedging strategies, such as buying
futures, writing puts and buying calls, tend to increase market exposure.
The Fund may invest in interest rate futures, interest rate swap
transactions, and call and put options on U.S. Government Securities and
Interest Rate Futures. All of these are referred to as "hedging
instruments."
A call or put may not be purchased if the value of all of the Fund's
call and put options would exceed 5% of the value of the Fund's total
assets. The Fund's option writing activities generally will not exceed
100% of its assets, in the aggregate. Writing puts requires the
segregation of liquid assets to cover the put. The Fund will not write a
put if it will require more than 50% of the Fund's net assets to be
segregated to cover the put obligation. The Fund does not use hedging
instruments for speculative purposes.
The use of hedging instruments may involve special risks. Options and
futures can be volatile investments and involve certain risks. 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. In selling
calls there are risks that the Fund may forego profits on an increase in
the price of the underlying security if the call is exercised. In
addition, the Fund could experience capital losses that might cause
previously distributed income to be recharacterized for tax purposes as
a return of capital to shareholders.
There are special risks in particular hedging strategies. For example,
in writing puts, there is the risk that the Fund may be required to buy
the underlying security at a disadvantageous price. Interest rate swaps
are subject to credit risks (if the other party fails to meet its
obligations) and also to interest rate risks, because 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 and the hedging
strategies the Fund may use are described in greater detail in the
Statement of Additional Information.
Other Investment Restrictions. The Fund has other investment
restrictions which, are "fundamental" policies.
Under these fundamental policies, the Fund cannot do any of the
following: (a) invest in any security other than U.S. Government
Securities, including repurchase agreements thereon; the Fund may write
covered calls and use hedging instruments approved by the Board; (b)
borrow money, except from banks for temporary purposes in amounts not in
excess of 5% of the value of its assets; no assets of the Fund may be
pledged, mortgaged or hypothecated other than to secure a borrowing, and
then in amounts not exceeding 7.5% of the Fund's total assets; borrowings
may not be made for leverage, but only for liquidity purposes to satisfy
redemption requests when liquidation of portfolio securities is considered
inconvenient or disadvantageous; however, the Fund may enter into reverse
repurchase agreements and when-issued and delayed delivery transactions
as described herein; such prohibition against pledging, mortgaging or
hypothecating assets does not bar the Fund from escrow arrangements for
options trading or collateral or margin arrangements in connection with
hedging instruments approved by the Board; (c) enter into a repurchase
transaction that will cause more than 25% of the Fund's total assets to
be subject to such agreements; (d) make loans, except that the Fund may
purchase or hold debt obligations and enter into repurchase transactions
and may lend its portfolio securities in amounts not exceeding 25% of the
total assets of the Fund if such loans are collateralized by cash or U.S.
Government Securities in amounts equal at all times to at least 100% of
the value of the securities loaned, including accrued interest; (e)
purchase restricted or illiquid securities (including repurchase
agreements of more than seven days' duration and other securities that are
not readily marketable) if more than 5% of the Fund's total assets would
be invested in such securities; (f) purchase any securities (other than
U.S. Government Securities) that would cause more than 5% of the Fund's
total assets to be invested in securities of a single issuer, or purchase
more than 10% of the outstanding voting securities of an issuer; or (g)
deviate from its other fundamental policies described in "Investment
Objective and Policies" and "Other Investment Techniques and Strategies"
in the Statement of Additional Information.
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.<R/>
How the Fund is Managed
Organization and History. The Fund was organized in 1986 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. Organized as a series fund, the Fund
presently has only one series.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
"Trustees and Officers of the Fund" in the Statement of Additional
Information names the Trustees and provides more information about them
and the officers of the Fund. Although the Fund is not required by law
to hold annual meetings, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call a
meeting to remove a Trustee or to take other action described in the
Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. 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. The Board has done so, and the Fund currently
has two classes of shares, Class A and Class B. Each share has one vote
at shareholder meetings, with fractional shares voting proportionally.
Only shares of a class vote together on matters that affect that class
alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager, which
handles its day-to-day business. The Manager carries out its duties,
subject to the policies established by the Board of Trustees, under an
Investment Advisory Agreement which states the Manager's responsibilities
and its fees, and describes the expenses that the Fund pays to conduct its
business.
The Manager has operated as an investment adviser since 1959. The
Manager and its affiliates currently manage investment companies,
including other OppenheimerFunds, with assets of more than $27 billion as
of December 31, 1993, and with more than 1.8 million shareholder accounts.
The Manager is owned by Oppenheimer Acquisition Corp., a holding company
that is owned in part by senior officers of the Manager and controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company.
- - Portfolio Manager. The Portfolio Manager of the Fund (who is also a
Vice President of the Fund) is David Rosenberg, a Vice President of the
Manager. He has been responsible for the day-to-day management of the
Fund's portfolio since January, 1994. Mr. Rosenberg also serves as a
portfolio manager of another OppenheimerFund. 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: 0.500% of the first $100 million of the Fund's
average annual net assets, 0.450% of the next $150 million, 0.425% of the
next $250 million and 0.400% of net assets in excess of $500 million. The
Fund's management fee for its last fiscal year was 0.48% of average annual
net assets for Class A shares and 0.47% for Class B shares.
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 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 expense for brokerage.
From time to time it may use brokers when buying portfolio securities.
When deciding which brokers to use, the Manager is permitted by the
investment advisory agreement to consider whether brokers have sold shares
of the Fund or any other funds for which the Manager serves as investment
adviser.
- - The Distributor. The Fund's shares are sold through dealers and
brokers that have a sales agreement with Oppenheimer Funds Distributor,
Inc., a subsidiary of the Manager that acts as the Distributor. The
Distributor also distributes the shares of other mutual funds managed by
the Manager (the "OppenheimerFunds") and is sub-distributor for funds
managed by a subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other OppenheimerFunds
on an "at-cost" basis. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free numbers shown
below in this Prospectus or on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses certain terms
to illustrate its performance: "total return" and "yield." These terms
are used to show the performance of each class of shares separately,
because the performance of each class of shares will usually be different,
as a result of the different kinds of expenses each class bears. This
performance information may be useful to help you see how well your
investment has done and to compare it to other funds or market indices,
as we have done below.
It is important to understand that the Fund's yields and total returns
represent past performance and should not be considered to be predictions
of future returns or performance. This performance data is described
below, but more detailed information about how total returns and yields
are calculated is contained in the Statement of Additional Information,
which also contains information about other ways to measure and compare
the Fund's performance. The Fund's investment performance will vary,
depending on market conditions, the composition of the portfolio, expenses
and which class of shares you purchase.
- Total Returns. There are different types of "total returns" used
to measure the Fund's performance. Total return is the change in value
of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares. The cumulative total return measures the change in
value over the entire period (for example, ten years). An average annual
total return shows the average rate of return for each year in a period
that would produce the cumulative total return over the entire period.
However, average annual total returns do not show the Fund's actual year-
by-year performance.
When total returns are quoted for Class A shares, they reflect the
payment of the maximum initial sales charge. Total returns may be also
quoted "at net asset value," without considering the effect of the sales
charge, and those returns would be reduced if sales charges were deducted.
When total returns are shown for a one-year period for Class B shares,
they reflect the effect of the contingent deferred sales charge. They may
also be shown based on the change in net asset value, without considering
the effect of the contingent deferred sales charge.
- 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 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 September 30,
1993, followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.
- Management's Discussion of Performance. During the Fund's fiscal
year ended September 30, 1993, U.S. interest rates continued to decline
and the economy remained in a slow-growth mode. During the past fiscal
year, the Manager maintained a majority of the Fund's investments in
mortgage-backed securities, so as to help maximize current income, and,
to safeguard the Fund's portfolio from risks associated with a rise in
interest rates, shifted a portion of the Fund's assets from long-term U.S.
Treasury bonds to short-term U.S. Treasury notes.
- Comparing the Fund's Performance to the Market. The chart below
shows the performance of a hypothetical $10,000 investment in each Class
of shares of the Fund held until September 30, 1993; in the case of Class
A shares, since March 10, 1986, and in the case of Class B shares, from
the inception of the Class on May 3, 1993, with all dividends and capital
gains distributions reinvested in additional shares. The graph reflects
the deduction of the current 3.50% maximum initial sales charge on Class
A shares and the current 4% maximum contingent deferred sales charge on
Class B shares.
The Fund's performance is compared to the performance of the Lehman
Aggregate Bond Index, a broad-based, unmanaged index of U.S. corporate
bond issues, U.S. government securities and mortgage-backed securities,
to measure the performance of the domestic debt securities market. Index
performance reflects reinvestment of income but not capital gains or
transaction costs, and none of the data below shows the effect of taxes.
Also, the Fund's performance data 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 and the
index data does not reflect any assessment of the risk of the investments
included in the index.
Oppenheimer Limited-Term Government Fund
Comparison of Change in Value
of $10,000 Hypothetical Investment to
Lehman Brothers U.S. Government Bond Index
(Graph)
Past Performance is not predictive of future performance.
Oppenheimer Limited-Term Government Fund
Average Annual Total Returns at 9/30/93
1 Year 5 Years Life*
Class A: 3.84% 9.39% 8.79%
Cumulative Total Return at 9/30/93
Class B: 1 Year Life**
N/A (1.18%)
____________
* The Fund began operations on 3/10/86.
** Class B shares of the Fund were first publicly sold on May 3, 1993.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors two different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.
- - Class A Shares. If you buy Class A shares, you pay an initial sales
charge (on investments up to $1 million). If you purchase Class A shares
as part of an investment of at least $1 million in shares of one or more
OppenheimerFunds, and you sell any of those shares within 18 months after
your purchase, you will pay a contingent deferred sales charge, which will
vary depending on the amount you invested.
- 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 five years,
you will normally pay a contingent deferred sales charge that varies
depending on how long you own your shares.
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 advisors.
- - How Much Do You Plan To Invest? If you plan to invest a substantial
amount, the reduced sales charges available for larger purchases of Class
A shares may be more beneficial to you, and for purchases over $1 million,
the contingent deferred sales charge on Class A shares may be more
beneficial. The Distributor will not accept any order for $1 million or
more for Class B shares on behalf of a single investor for that reason.
- How Long Do You Expect To Hold Your Investment? While future
financial needs cannot be predicted with certainty, investors who prefer
not to pay an initial sales charge and who plan to hold their shares for
more than five years might consider Class B shares. Investors who plan to
redeem shares within five years might prefer Class A shares.
- - Are There Differences In Account Features That Matter To You? Because
some account features may not be available for Class B shareholders, such
as checkwriting, you should carefully review how you plan to use your
investment account before deciding which class of shares is better for
you. Additionally, the dividends payable to Class B shareholders will be
reduced by the additional expenses borne solely by that class, such as the
asset-based sales charge to which Class B shares are subject, as described
below and in the Statement of Additional Information.
- - How Does It Affect Payments To My Broker? A salesperson or any other
person who is entitled to receive compensation for selling Fund shares may
receive different compensation for selling one class than for selling
another class. It is important that investors understand that the purpose
of the contingent deferred sales charge and asset-based sales charge for
Class B shares is the same as the purpose of the front-end sales charge
on sales of Class A shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7) custodial
plans and military allotment plans, you can make initial and subsequent
investments for as little as $25; and subsequent purchases of at least $25
can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250
(if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares by
reinvesting dividends from the Fund or other OppenheimerFunds (a list of
them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.
- How Are Shares Purchased? You can buy shares several ways -- through
any dealer, broker or financial institution that has a sales agreement
with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan under
the OppenheimerFunds AccountLink service. When you buy shares, be sure to
specify Class A or Class B shares. If you do not choose, your investment
will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an OppenheimerFunds
New Account Application and return it with a check payable to "Oppenheimer
Funds Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217.
If you don't list a dealer on the application, the Distributor will act
as your agent in buying the shares.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member, to transmit funds electronically to purchase shares, to send
redemption proceeds, and to transmit dividends and distributions. Shares
are purchased for your account on the regular business day the Distributor
is instructed by you to initiate the ACH transfer to buy shares. You can
provide those instructions automatically, under an Asset Builder Plan,
described below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You must request AccountLink privileges
on the application or dealer settlement instructions used to establish
your account. Please refer to "AccountLink," below for more details.
- At What Prices Are Shares Sold? Shares are sold at the public
offering price based on the net asset value that is next determined after
the Distributor receives the purchase order in Denver. In most cases, to
receive that day's offering price, the Distributor must receive your order
by 4:00 P.M., New York time (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 4:00 P.M., 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.
- Asset Builder Plans. You may purchase shares of the Fund (and up to
four other OppenheimerFunds) automatically each month from your account
at a bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
Class A Shares. Class A shares are sold at their offering price, which
is normally net asset value plus an initial sales charge. However, in
some cases, described below, where purchases are not subject to an initial
sales charge, the offering price may be net asset value. In some cases,
reduced sales charges may be available, as described below. When you
invest, the Fund receives the net asset value for your account. The sales
charge varies depending on the amount of your purchase and a portion may
be retained by the Distributor and allocated to your dealer. Different
sales charge rates and commissions applied to sales of Class A shares
prior to April 1, 1994. The current sales charge rates and commissions
paid to dealers and brokers are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Front-End Sales Charge
As a Percentage of:
----------------------- Commission as
Amount of Offering Amount Percentage of
Purchase Price Invested Offering Price
<S> <C> <C> <C>
- ----------------------------------------------------------------------
Less than $100,000 3.50% 3.63% 3.00%
$100,000 or more but
less than $250,000 3.00% 3.09% 2.50%
$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% 1.50%
- -----------------------------------------------------------------------
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial sales
charge on purchases of Class A shares of any one or more OppenheimerFunds
aggregating $1 million or more. However, the Distributor pays dealers of
record commissions on such purchases in an amount equal to the sum of 1.0%
of the first $2.5 million, plus 0.50% of the next $2.5 million, plus 0.25%
of share purchases over $5 million. However, that commission will be paid
only on the amount of those purchases in excess of $1 million that were
not previously subject to a front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
the aggregate net asset value of either (1) the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate commissions the Distributor paid to your dealer on all Class A
shares of all OppenheimerFunds you purchased subject to the Class A
contingent deferred sales charge. In determining whether a contingent
deferred sales charge is payable, the Fund will first redeem shares that
are not subject to the sales charge, including shares purchased by
reinvestment of dividends and capital gains, and then will redeem other
shares in the order that you purchased them. The Class A contingent
deferred sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's Exchange Privilege (described below). However,
if the shares acquired by exchange are redeemed within 18 months of the
end of the calendar month of the purchase of the exchanged shares, the
sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance up
to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of OppenheimerFunds (other
than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
The Distributor sponsors an annual sales conference to which a dealer firm
is eligible to send, with a guest, a registered representative who sells
more than $2.5 million of Class A shares of OppenheimerFunds (other than
money market funds) in a calendar year, or the dealer may, at its option,
receive the equivalent cash value of that award as additional
commission.
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. You and your spouse can cumulate Class A
shares you purchase for your own accounts, or jointly, or on behalf of
your children who are minors, under trust or custodial accounts. A
fiduciary can cumulate shares purchased for a trust, estate or other
fiduciary account (including one or more employee benefit plans of the
same employer) that has multiple accounts.
Additionally, you can cumulate current purchases of Class A shares of
the Fund and other OppenheimerFunds with Class A shares of
OppenheimerFunds you previously purchased subject to a sales charge,
provided that you still hold your investment in one of the
OppenheimerFunds; the value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The OppenheimerFunds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from the
Transfer Agent. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
- Letter of Intent. Under a Letter of Intent, you may purchase Class
A shares of the Fund and other OppenheimerFunds during a 13-month period
at the reduced sales charge rate that applies to the aggregate amount of
the intended purchases, including purchases made up to 90 days before the
date of the Letter. More information is contained in the Application and
in "Reduced Sales Charges" in the Statement of Additional Information.
- - Group Programs. Reduced sales charges are available to participants in
a group sales program if the administrator of the program has entered into
an agreement with the Distributor providing, among other things, that all
participants' purchases are made by a single group order and payment for
each investment period and that requisite data about such participants and
purchases be provided to the Transfer Agent in acceptable computer format.
The sales charge for such purchases will be at the rate in the table above
that applies to combined current purchases (minimum $25 per participant
per period) of shares of the Fund, Oppenheimer Intermediate Tax-Exempt
Bond Fund and Oppenheimer Insured Tax-Exempt Bond Fund by all participants
in such program based upon the current value (at offering price) of shares
of such funds held by all participants in such program at the time of
purchase. No certificates will be issued for shares held by program
participants and dividends and distributions must be reinvested in
accounts held by such participants. Automatic Withdrawal Plans (described
below) may not be used for such accounts. The Fund and the Distributor
reserve the right to amend, suspend or cease offering such programs at any
time without prior notice.
- Waivers of Class A Sales Charges. No sales charge is imposed on
sales of Class A shares to the following investors: (1) the Manager or its
affiliates; (2) present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced Sales
Charges" in the Statement of Additional Information) of the Fund, the
Manager and its affiliates, and retirement plans established by them for
their employees; (3) registered management investment companies, or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; (4) dealers or brokers that
have a sales agreement with the Distributor, if they purchase shares for
their own accounts or for retirement plans for their employees; (5)
employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered
into sales arrangements with such dealers or brokers (and are identified
to the Distributor) or with the Distributor; the purchaser must certify
to the Distributor at the time of purchase that the purchase is for the
purchaser's own account (or for the benefit of such employee's spouse or
minor children); (6) dealers, brokers or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular investment
products made available to their clients.
Additionally, no sales charge is imposed on shares that are (a) issued
in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which the Fund is a party or (b) purchased by the
reinvestment of loan repayments by a participant in a retirement plan for
which the Manager or its affiliates acts as sponsor, or (c) purchased by
the reinvestment of dividends or other distributions reinvested from the
Fund or other OppenheimerFunds (other than the Cash Reserves Funds) or
unit investment trusts for which reinvestment arrangements have been made
with the Distributor. There is a further discussion of this policy in
"Reduced Sales Charges" in the Statement of Additional Information.
The Class A contingent deferred sales charge is also waived if shares
are redeemed in the following cases: (1) retirement distributions or loans
to participants or beneficiaries from qualified retirement plans, deferred
compensation plans or other employee benefit plans ("Retirement Plans"),
(2) returns of excess contributions made to Retirement Plans, (3)
Automatic Withdrawal Plan payments that are limited to no more than 12%
of the original account value annually, and (4) involuntary redemptions
of shares by operation of law or under the procedures set forth in the
Fund's Declaration of Trust or adopted by the Board of Trustees.
- Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Reimbursement is made quarterly at an
annual rate that may not exceed 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor uses all of those fees to
compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares and to reimburse itself (if the
Fund's Board of Trustees authorizes such reimbursements, which it has not
yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.
Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed
within five years of their purchase, a contingent deferred sales charge
will be deducted from the redemption proceeds. That sales charge will not
apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original
purchase price. The contingent deferred sales charge is not imposed on the
amount of your account value represented by the increase in net asset
value over the initial purchase price (including increases due to the
reinvestment of dividends and capital gains distributions). The Class B
contingent deferred sales charge is paid to the Distributor to reimburse
its expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 6 years, and (3) shares held the longest during the
6-year period.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Contingent Deferred Sales Charge
Years Since Purchase on Redemptions in that Year
Payment Was Made (As % of Amount Subject to Charge)
- --------------------- ----------------------------------
0 - 1 4.0%
1 - 2 3.0%
2 - 3 2.0%
3 - 4 2.0%
4 - 5 1.0%
5 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made. Different contingent deferred sales
charges applied to redemptions of Class B shares prior to April 1,
1994.
- Waivers of Class B Sales Charge. The Class B contingent deferred
sales charge will be waived if the shareholder requests it for any of the
following redemptions: (1) distributions to participants or beneficiaries
from Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2, as
long as the payments are no more than 10% of the account value annually
(measured from the date the Transfer Agent receives the request), or (b)
following the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary; (2) redemptions from accounts
other than Retirement Plans following the death or disability of the
shareholder (you must provide evidence of a determination of disability
by the Social Security Administration), and (3) returns of excess
contributions to Retirement Plans.
The contingent deferred sales charge is also waived on Class B shares
in the following cases: (i) shares sold to the Manager or its affiliates;
(ii) shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or
the Distributor for that purpose; (iii) shares issued in plans of
reorganization to which the Fund is a party; and (iv) shares redeemed in
involuntary redemptions as described above. Further details about this
policy are contained in "Reduced Sales Charges" in the Statement of
Additional Information.
- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class
B Distribution Plan, described below. The conversion is based on the
relative net asset value of the two classes, and no sales load or other
charge is imposed. When Class B shares convert, any other Class B shares
that were acquired by the reinvestment of dividends and distributions on
the converted shares will also convert to Class A shares. The conversion
feature is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A and Class B Shares" in the
Statement of Additional Information.
- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for its services and costs in distributing Class B shares
and servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares that
are outstanding for 6 years or less. The Distributor also receives a
service fee of 0.25% per year. Both fees are computed on the average
annual net assets of Class B shares, determined as of the close of each
regular business day. The asset-based sales charge allows investors to buy
Class B shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell Class B shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class B shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class B expenses by up to 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor currently pays sales commissions of 2.75%
of the purchase price to dealers from its own resources at the time of
sale. The Distributor retains the asset-based sales charge to recoup the
sales commissions it pays, the advances of service fee payments it makes,
and its financing costs.
Because the Distributor's actual expenses in selling Class B 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 B shares, those expenses may be
carried over and paid in future years. At September 30, 1993, the end of
the Plan year, the Distributor had incurred unreimbursed expenses under
the Plan of $212,641 (equal to 4.19% of the Fund's net assets represented
by Class B shares on that date), which have been carried over into the
present Plan year. 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.
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, including purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use to
buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges on signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives
written instructions terminating or changing those privileges. After you
establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the
Transfer Agent signed by all shareholders who own the account.
- Using AccountLink to Buy Shares. Purchases may be made by telephone
only after your account has been established. To purchase shares in
amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be used
on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number: 1-
800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to $100,000
by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.
- Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number. Please refer to "How
to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is $5,000 or more,
you can establish an Automatic Withdrawal Plan to receive payments of at
least $50 on a monthly, quarterly, semi-annual or annual basis. The checks
may be sent to you or sent automatically to your bank account on
AccountLink. You may even set up certain types of withdrawals of up to
$1,500 per month by telephone. You should consult the Application and
Statement of Additional Information for more details.
- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of
up to five other OppenheimerFunds on a monthly, quarterly, semi-annual or
annual basis under an Automatic Exchange Plan. The minimum purchase for
each other OppenheimerFunds account is $25. These exchanges are subject
to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Fund shares,
you have up to 6 months to reinvest all or part of the redemption proceeds
in Class A shares of the Fund or other OppenheimerFunds without paying
sales charge. This privilege applies to Class A shares that you sell, and
Class B shares on which you paid a contingent deferred sales charge when
you redeemed them. 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 and SAR-SEPs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment
- Pension and Profit-Sharing Plans for self-employed persons and small
business owners
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing, by using the Fund's
Checkwriting privilege or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described above.
If you have questions about any of these procedures, and especially if you
are redeeming shares in a special situation, such as due to the death of
the owner, or from a retirement plan, please call the Transfer Agent
first, at 1-800-525-7048, for assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must submit
a Withholding form with your request to avoid delay. If your retirement
plan account is held for you by your employer, you must arrange for the
distribution request to be sent by the plan administrator or trustee.
There are additional details in the Statement of Additional Information.
- Certain Requests Require a Signature Guarantee. To protect you and
the Fund from fraud, certain redemption requests must be in writing and
must include a signature guarantee in the following situations (there may
be other situations also requiring a signature guarantee):
- - You wish to redeem more than $50,000 worth of shares and receive a check
- - The check is not payable to all shareholders listed on the account
statement
- - The check is not sent to the address of record on your 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 from a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If you
are signing as a fiduciary or on behalf of a corporation, partnership or
other business, you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
- Your name
- The Fund's name
- Your Fund account number (from your statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling, and
- Any special requirements or documents requested by the Transfer Agent
to assure proper authorization of the person asking to sell shares.
Use the following address for requests by mail:
Oppenheimer Shareholder Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by 4:00 P.M. 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, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds wired to that account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, once in each 7-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account. This service is not available within 30 days of changing the
address on an account.
- Telephone Redemptions Through AccountLink or Wire. Shareholders may
also request wires of redemption proceeds of $2,500 or more in Federal
Funds to a designated commercial bank account if the bank is a member of
the Federal Reserve wire system. To place a wire redemption request, call
the Transfer Agent at 1-800-852-8457. There is a $15 fee for each Federal
Funds 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.
Check Writing. 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 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 15 days.
- Don't use your checks if you changed your Fund account number.
The Fund will charge a $10 fee for any check that is not paid because
(1) the owners of the account told the Fund not to pay the check, or (2)
the check was for more than the account balance, or (3) the check did not
have the proper signatures, (4) or the check was written for less than
$100.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. A $5 service fee will be deducted from the fund
account you are exchanging into to help defray administrative costs. That
charge is waived for automated exchanges between already established
accounts on PhoneLink described below. To exchange shares, you must meet
several conditions:
- Shares of the fund selected for exchange must be available for sale
in your state of residence.
- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege.
- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day.
- You must meet the minimum purchase requirements for the fund you
purchase by exchange.
- Before exchanging into a fund, you should obtain and read its
prospectus.
Shares of a particular class may be exchanged only for shares of the
same class in the other OppenheimerFunds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, not all of the OppenheimerFunds offer the same classes of shares.
If a fund has only one class of shares that does not have a class
designation, they are "Class A" shares for exchange purposes. In some
cases, sales charges may be imposed on exchange transactions. Certain
OppenheimerFunds offer Class A shares and either Class B or Class C
shares, and a list can be obtained by calling the Distributor at 1-800-
525-7048. Please refer to "How to Exchange Shares" in the Statement of
Additional Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same names and address. Shares held under certificates may not
be exchanged by telephone.
You can obtain a list of eligible OppenheimerFunds in the Statement
of Additional Information or by calling the Transfer Agent at 1-800-525-
7048. Exchanges of shares involve a redemption of the shares of the fund
you own and a purchase of shares of the other fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request by 4:00 P.M. that
is in proper form, but either fund may delay the purchase of shares of the
fund you are exchanging into if it determines it would be disadvantaged
by a same-day transfer of the proceeds to buy shares. For example, the
receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might require the disposition of securities at a time or price
disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege
at any time. Although the Fund will attempt to provide you notice
whenever it is reasonably able to do so, it may impose these changes at
any time.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of shares
as of 4:00 P.M. each day The New York Stock Exchange is open by dividing
the value of the Fund's net assets attributable to a class by the number
of shares of that class that are outstanding. The Fund's Board of
Trustees has established procedures to value the Fund's securities to
determine net asset value. In general, securities values are based on
market value. There are special procedures for valuing illiquid and
restricted securities, obligations for which market values cannot be
readily obtained, and call options and hedging instruments. These
procedures are described more completely in the Statement of Additional
Information.
- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise it will not 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 and Class B shares. Therefore, the redemption
value of your shares may be more or less than their original cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. The Transfer Agent may
delay forwarding a check or processing a payment via AccountLink for
recently purchased shares, but only until the purchase payment has
cleared. That delay may be as much as 15 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 $1,000 for reasons other than the
fact that the market value of shares has dropped, and in some cases
involuntary redemptions may be made to repay the Distributor for losses
from the cancellation of share purchase orders.
- Under unusual circumstances, shares of the Fund may be redeemed
"in kind," which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to the Statement of
Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or taxpayer identification number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of dividends.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A and Class B shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report and
updated prospectus to shareholders having the same 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 and Class
B shares from net investment income each regular business day and pays
those dividends to shareholders monthly. Normally, dividends are paid on
the fourth Wednesday of every month, but the Board of Trustees can change
that date. Distributions may be made monthly from any net short-term
capital gains the Fund realizes in selling securities. It is expected
that distributions paid with respect to Class A shares will generally be
higher than for Class B shares because expenses allocable to Class B
shares will generally be higher.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of dividends and capital gains following the
end of its fiscal year. Long-term capital gains will be separately
identified in the tax information the Fund sends you after the end of the
year. Short-term capital gains are treated as dividends for tax purposes.
There can be no assurance that the Fund will pay any capital gains
distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- - Reinvest All Distributions In The Fund. You can elect to reinvest all
dividends and long-term capital gains distributions in additional shares
of the Fund.
- - Reinvest Capital Gains Only. You can elect to reinvest long-term
capital gains in the Fund while receiving dividends by check or sent to
your bank account on AccountLink.
- - Receive All Distributions In Cash. You can elect to receive a check for
all dividends and long-term capital gains distributions or have them sent
to your bank on AccountLink.
- - Reinvest Your Distributions In Another OppenheimerFunds Account. You
can reinvest all distributions in another OppenheimerFunds account you
have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. Dividends paid from short-term capital gains
and net investment income are taxable as ordinary income. Distributions
are subject to federal income tax and may be subject to state or local
taxes. Your distributions are taxable when paid, whether you reinvest
them in additional shares or take them in cash. Every year the Fund will
send you and the IRS a statement showing the amount of each taxable
distribution you received in the previous year.
- "Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy shares on
or just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.
- Taxes on Transactions: Share redemptions, including redemptions
for exchanges, are subject to capital gains tax. A capital gain or loss
is the difference between the price you paid for the shares and the price
you received when you sold them.
- Returns of Capital: In certain cases 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.<R/>
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
Graphic material included in Prospectus of Oppenheimer Limited-Term
Government Fund: "Comparison of Total Return of Oppenheimer Limited-Term
Government Fund with the Lehman Brothers U.S. Government Bond Index -
Change in Value of a $10,000 Hypothetical Investment."
A linear graph will be included in the Prospectus of Oppenheimer
Limited-Term Government Fund (the "Fund") depicting the initial account
value and subsequent account value of a hypothetical $10,000 investment
in (i) Class A shares of the Fund during each of the Fund's fiscal years
since the commencement of the Fund's operations (March 10, 1986) and (ii)
Class B shares of the Fund during the period May 3, 1993 (first public
offering of Class B shares) to September 30, 1993, in each case comparing
such values with the same investments over the same time periods with the
Lehman Brothers U.S. Government Bond Index. Set forth below are the
relevant data points that will appear on the linear graph. Additional
information with respect to the foregoing, including a description of the
Lehman Brothers U.S. Government Bond Index, is set forth in the Prospectus
under "Fund Performance Information - Management's Discussion of
Performance."
Oppenheimer
Fiscal Year Limited-Term Lehman Brothers
(Period) Ended Government Fund U.S. Government
Index Class A Shares Bond Index
- --------------- --------------- -------------------
03/10/86 * $ 9,650 $10,000
09/30/86 $10,130 (1) $10,330
09/30/87 $10,226 $10,266
09/30/88 $11,643 $11,500
09/30/89 $12,767 $12,780
09/30/90 $13,935 $13,666
09/30/91 $15,982 $15,778
09/30/92 $17,560 $17,817
09/30/93 $18,896 $19,791
Oppenheimer
Fiscal Year Limited-Term Lehman Brothers
(Period) Ended Government Fund U.S. Government
Index Class B Shares Bond Index
- --------------- --------------- -------------------
5/03/93 $10,000 $10,000
9/30/93 $ 9,882 (2) $10,552
- -------------------------------
* The Fund commenced operations on March 10, 1986.
(1) From commencement of operations (3/10/86) to 9/30/86.
(2) From commencement of first public offering of Class B shares
(5/03/93) to 9/30/93.
No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional Information,
and if given or made, such information and representations must not be
relied upon as having been authorized by the Fund, Oppenheimer Management
Corporation, Oppenheimer Funds Distributor, Inc. or any affiliate
thereof. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in
any state to any person to whom it is unlawful to make such an offer in
such state.
Oppenheimer Limited-Term Government Fund
3410 South Galena Street
Denver, CO 80231
1-800-525-7048
Investment Advisor Prospectus
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc. OPPENHEIMER
Two World Trade Center Limited-Term
New York, New York 10048-0203 Government Fund
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities Dated May 1, 1994
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche
1560 Broadway
Denver, Colorado 80202
Legal Counsel (OppenheimerFunds Logo)
Myer, Swanson & Adams, P.C.
1600 Broadway
Denver, Colorado 80202
PR855.0494.R *Printed on recycled paper
<PAGE>
No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional Information,
and if given or made, such information and representations must not be
relied upon as having been authorized by the Fund, Oppenheimer Management
Corporation, Oppenheimer Funds Distributor, Inc. or any affiliate
thereof. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in
any state to any person to whom it is unlawful to make such an offer in
such state.
Oppenheimer Limited-Term Government Fund
3410 South Galena Street
Denver, CO 80231
1-800-525-7048
Investment Advisor Prospectus
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc. OPPENHEIMER
Two World Trade Center Limited-Term
New York, New York 10048-0203 Government Fund
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities Dated May 1, 1994
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche
1560 Broadway
Denver, Colorado 80202
Legal Counsel (OppenheimerFunds Logo)
Myer, Swanson & Adams, P.C.
1600 Broadway
Denver, Colorado 80202
PR856.0494.R *Printed on recycled paper
<PAGE>
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
Statement of Additional Information dated May 1, 1994.
This Statement of Additional Information of Oppenheimer Limited-Term
Government Fund is not a Prospectus. This document contains additional
information about the Fund and supplements information in the Prospectus
dated May 1, 1994. It should be read together with the Prospectus which
may be obtained by writing to the Fund's Transfer Agent, Oppenheimer
Shareholder Services, at P.O. Box 5270, Denver, Colorado 80217 or by
calling the Transfer Agent at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies
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
<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 invests, as well as the strategies the Fund may use to
try to achieve its objective. Capitalized terms used in this Statement
of Additional Information have the same meaning as those terms have in the
Prospectus.
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. The Fund will invest in U.S. Government Securities of such
agencies and instrumentalities only when the Fund's investment manager,
Oppenheimer Management Corporation (the "Manager") is satisfied that the
credit risk with respect to such instrumentality is minimal.
General changes in prevailing interest rates will affect the values
of the Fund's portfolio securities. The value will vary inversely to
changes in such rates. For example, if such rates go up after a security
is purchased, the value of the security will generally decline. A
decrease in interest rates may affect the maturity and yield of mortgage-
backed securities by increasing unscheduled prepayments of the underlying
mortgages. With its objective of seeking high current return and safety
of principal, 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).
Under normal circumstances the Fund will maintain a dollar-weighted
average portfolio maturity of not more than three years. The Manager will
in good faith determine the maturity of debt obligations purchased by the
Fund and will consider various factors applicable to each type of debt
obligation, including those set forth below. In determining the maturity
of mortgage-backed securities, the Manager reviews the prepayment history
of the obligation and similar securities, current interest rates and
median estimates of maturity for the obligation available from dealers.
With respect to hedging instruments, the Manager looks at the term of both
the hedging instrument and the underlying security and the relationship
between the instruments. Subject to the requirement that the dollar
weighted average portfolio maturity will not exceed three years, the Fund
may invest in individual debt obligations of any maturity, including
obligations with a remaining stated maturity of more than three years.
<PAGE>
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 order to generate income while
providing liquidity. In a repurchase transaction, the Fund acquires a
security from, and simultaneously resells it to, an approved vendor (a
U.S. commercial bank, 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 credit requirements set by the Fund's Board of Trustees from
time to time), for delivery on an agreed upon future date. The sale price
exceeds the purchase price by an amount that reflects an agreed-upon
interest rate effective for the period during which the repurchase
agreement is in effect. The majority of these transactions run from day
to day, and delivery pursuant to resale typically will occur within one
to five days of the purchase. Repurchase agreements are considered
"loans" under the Investment Company Act, collateralized by the underlying
security. The Fund's repurchase agreements will require that at all times
while the repurchase agreement is in effect, the collateral's value must
equal or exceed the repurchase price to collateralize the 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. If the vendor of a
repurchase agreement fails to pay the agreed-upon resale price on the
delivery date, the Fund's risks in such event may include any costs of
disposing of the collateral, and any loss from any delay in foreclosing
on the collateral.
- 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), and will not enter
into reverse repurchase agreements in amounts exceeding 25% of the total
assets of the Fund. 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. The Fund will not enter into
reverse repurchase agreements in an amount which, when combined with all
other borrowings by the Fund, will exceed 5% of the Fund's total assets.
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 (other than in repurchase transactions) to brokers, dealers and
other financial institutions subject to the restrictions stated in the
Prospectus. Under applicable regulatory requirements (which are subject
to change), the loan collateral must, on each business day, at least equal
the market value of the loaned securities and must consist of cash, bank
letters of credit, U.S. Government Securities, or other cash equivalents
in which the Fund is permitted to invest. To be acceptable as collateral,
letters of credit must obligate a bank to pay amounts demanded by the Fund
if the demand meets the terms of the letter. Such terms and the issuing
bank must be satisfactory to the Fund. In a portfolio securities lending
transaction, the Fund receives from the borrower an amount equal to the
interest paid or the dividends declared on the loaned securities during
the term of the loan as well as the interest on the collateral securities,
less any finders' or administrative fees the Fund pays in arranging the
loan. The Fund may share the interest it receives on the collateral
securities with the borrower as long as it realizes at least a minimum
amount of interest required by the lending guidelines established by its
Board of Trustees. In connection with securities lending, the Fund might
experience risks of delay in receiving additional collateral, or risks of
delay in recovery of the securities, or loss of rights in the collateral
should the borrower fail financially. The Fund will not lend its
portfolio securities to any officer, trustee, employee or affiliate of
the Fund or its Manager. The terms of the Fund's loans must meet certain
tests under the Internal Revenue Code and permit the Fund to reacquire
loaned securities on five business days' notice or in time to vote on any
important matter.
- "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. The Fund does not intend to make such
purchases for speculative purposes. Such securities may bear interest at
a lower rate than longer-term securities. The commitment to purchase a
security for which payment will be made on a future date may be deemed a
separate security and involve a risk of loss if the value of the security
declines prior to the settlement date. During the period between
commitment by the Fund and settlement (generally within two months but not
to exceed 120 days), no payment is made for the securities purchased by
the purchaser, and no interest accrues to the purchaser from the
transaction. Such securities are subject to market fluctuation; the value
at delivery may be less than the purchase price. The Fund will maintain
a segregated account with its Custodian, consisting of cash, U.S.
Government securities or other high grade debt obligations at least equal
to the value of purchase commitments until payment is made.
The Fund will engage in when-issued transactions in order to secure
what is considered to be an advantageous price and yield at the time of
entering into the obligation. When the Fund engages in when-issued or
delayed delivery transactions, it relies on the buyer or seller, as the
case may be, to consummate the transaction. Failure of the buyer or
seller to do so may result in the Fund losing the opportunity to obtain
a price and yield considered to be advantageous. At the time the Fund
makes a commitment to purchase or sell a security on a when-issued or
forward commitment basis, it records the transaction and reflects the
value of the security purchased, or if a sale, the proceeds to be
received, in determining its net asset value. If the Fund chooses to (i)
dispose of the right to acquire a when-issued security prior to its
acquisition or (ii) dispose of its right to deliver or receive against a
forward commitment, it may incur a gain or loss.
To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objective and policies and not
for the purposes of investment leverage. The Fund enters into such
transactions only with the intention of actually receiving or delivering
the securities, although (as noted above), when-issued securities and
forward commitments may be sold prior to settlement date. In addition,
changes in interest rates before settlement in a direction other than that
expected by the Manager will affect the value of such securities and may
cause a loss to the Fund.
When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and prices.
For instance, in periods of rising interest rates and falling prices, the
Fund might sell securities in its portfolio on a forward commitment basis
to attempt to limit its exposure to anticipated falling prices. In
periods of falling interest rates and rising prices, the Fund might sell
portfolio securities and purchase the same or similar securities on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields.
- 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 lapses unexercised,
because the Fund retains the underlying investment and the premium
received. Any such profits are considered short-term capital gains for
Federal income tax purposes, and when distributed by the Fund are taxable
as ordinary income. 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.
- Hedging with Options and Futures Contracts. 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 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 (all of the foregoing are referred to as "Hedging
Instruments"). Hedging Instruments may be used to attempt to: (i) protect
against possible declines in the market value of the Fund's portfolio
resulting from downward trends in the debt securities markets (generally
due to a rise in interest rates), (ii) protect unrealized gains in the
value of the Fund's debt securities which have appreciated, (iii)
facilitate selling debt securities for investment reasons, (iv) establish
a position in the debt securities markets as a temporary substitute for
purchasing particular debt securities, or (v) reduce the risk of adverse
currency fluctuations. A call or put may be purchased only if, after such
purchase, the value of all call and put options held by the Fund would not
exceed 5% of the Fund's total assets. The Fund will not use Futures and
options on Futures for speculation. The Hedging Instruments the Fund may
use are described below.
When hedging to attempt to protect against declines in the market
value of the Fund's portfolio, to permit the Fund to retain unrealized
gains in the value of portfolio securities which have appreciated, or to
facilitate selling securities for investment reasons, the Fund may: (i)
sell Futures, (ii) purchase puts on such Futures or U.S. Government
Securities, or (iii) write calls on securities held by it or on Futures.
When hedging to attempt to protect against the possibility that portfolio
securities are not fully included in a rise in value of the debt
securities market, the Fund may: (i) 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.
Additional Information about the Hedging Instruments the Fund may use is
provided below. At present, the Fund does not intend to enter into
Futures and options on Futures if, after any such purchase, the sum of
margin deposits on Futures and premiums paid on Futures options exceeds
5% of the value of the Fund's total assets. In the future, the Fund may
employ Hedging Instruments and strategies that are not presently
contemplated but which may be developed, to the extent such investment
methods are consistent with the Fund's investment objective, legally
permissible and adequately disclosed.
- Writing 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 lapses unexercised, the Fund
(as the writer of the put) realizes a gain in the amount of the premium.
If the put is exercised, the Fund must fulfill its obligation to purchase
the underlying investment at the exercise price, which will usually exceed
the market value of the investment at that time. In that case, the Fund
may incur a loss, equal to the sum of the current market value of the
underlying investment and the premium received minus the sum of the
exercise price and any transaction costs incurred.
When writing put options on securities, to secure its obligation to
pay for the underlying security, the Fund will deposit in escrow liquid
assets with a value equal to or greater than the exercise price of the put
option. The Fund therefore forgoes the opportunity of investing the
segregated assets or writing calls against those assets. As long as the
obligation of the Fund as the put writer continues, it may be assigned an
exercise notice by the broker-dealer through whom such option was sold,
requiring the Fund to take delivery of the underlying security against
payment of the exercise price. The Fund has no control over when it may
be required to purchase the underlying security, since it may be assigned
an exercise notice at any time prior to the termination of its obligation
as the writer of the put. This obligation terminates upon expiration of
the put, or such earlier time at which the Fund effects a closing purchase
transaction by purchasing a put of the same series as that previously
sold. Once the Fund has been assigned an exercise notice, it is
thereafter not allowed to effect a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize a
profit on an outstanding put option it has written or to prevent an
underlying security from being put. Furthermore, effecting such a closing
purchase transaction will permit the Fund to write another put option to
the extent that the exercise price thereof is secured by the deposited
assets, or to utilize the proceeds from the sale of such assets for other
investments by the Fund. The Fund will realize a profit or loss from a
closing purchase transaction if the cost of the transaction is less or
more than the premium received from writing the option. As above for
writing covered calls, any and all such profits described herein from
writing puts are considered short-term gains for Federal tax purposes, and
when distributed by the Fund, are taxable as ordinary income.
- Purchasing Calls and Puts. 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 call price plus the transaction costs
and the premium paid and the call is exercised. If the call is not
exercised or sold (whether or not at a profit), it will become worthless
at its expiration date and the Fund will lose its premium payment and the
right to purchase the underlying investment.
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 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. Prior to expiration of the
Future, if the Fund elects to close out its position by taking an opposite
position, a final determination of variation margin is made, additional
cash is required to be paid by or released to the Fund, and any loss or
gain is realized for tax purposes. Although Interest Rate Futures by
their terms call for settlement by delivery or acquisition of debt
securities, in most cases the obligation is fulfilled by entering into an
offsetting position. All futures transactions are effected through a
clearinghouse associated with the exchange on which the contracts are
traded.
- 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. Subject to the limitations described
in the Prospectus, 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 on the expiration of the option or upon the
Fund's entering into a closing transaction. An option position may be
closed out only on a market which provides secondary trading for options
of the same series, and there is no assurance that a liquid secondary
market will exist for any particular option.
When the Fund writes an over-the-counter ("OTC") option, it will
enter into an arrangement with a primary U.S. Government securities
dealer, which would establish a formula price at which the Fund would have
the absolute right to repurchase that OTC option. That formula price
would generally be based on a multiple of the premium received for the
option, plus the amount by which the option is exercisable below the
market price of the underlying security (that is, the extent to which the
option "is in-the-money"). When the Fund writes an OTC option, it will
treat as illiquid (for purposes of the limit on its assets that may be
invested in illiquid securities, stated in the Prospectus) the mark-to-
market value of any OTC option held by it. The Securities and Exchange
Commission ("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 must operate
within certain restrictions as to its long and short positions in Futures
and options thereon under a rule (the "CFTC Rule") adopted by the
Commodity Futures Trading Commission (the "CFTC") under the Commodity
Exchange Act (the "CEA"), which excludes the Fund from registration with
the CFTC as a "commodity pool operator" (as defined under the CEA) if the
Fund complies with the CFTC Rule. Under these restrictions the Fund will
not, as to any positions, whether short, long or a combination thereof,
enter into Futures and options thereon for which the aggregate initial
margins and premiums exceed 5% of the fair market value of its total
assets, with certain exclusions as defined in the CFTC Rule. Under the
restrictions, the Fund also must, as to its short positions, use Futures
and options thereon solely for bona-fide hedging purposes within the
meaning and intent of the applicable provisions of the CEA.
Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one
or more accounts or through one or more different exchanges through one
or more or 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 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 (i) 67% or more of the shares present or
represented by proxy at a shareholders meeting, if the holders of more
than 50% of the outstanding shares are present, or (ii) more than 50% of
the outstanding shares.
Under these additional restrictions, the Fund may not: (1) purchase
or sell real estate, commodities or commodity contracts; however, the Fund
may use hedging instruments approved by its Board whether or not such
hedging instruments are considered commodities or commodity contracts; (2)
invest in interests in oil, gas, or other mineral exploration or
development programs; (3) purchase securities on margin or make short
sales of securities; however the Fund may make margin deposits in
connection with its use of hedging instruments approved by its Board; (4)
underwrite securities except to the extent the Fund may be deemed to be
an underwriter in connection with the sale of securities held in its
portfolio; (5) invest in securities of other investment companies, except
as they may be acquired as part of a merger, consolidation or other
acquisition; (6) enter into reverse repurchase agreements that will cause
more than 25% of the Fund's total assets to be subject to such agreements;
(7) make investments for the purpose of exercising control of management;
(8) purchase or retain securities of any company if, to the knowledge of
the Fund, its officers and trustees and officers and directors of the
Manager who individually own more than .5% of the securities of such
company together own beneficially more than 5% of such securities; (9)
purchase or retain securities of issuers having a record of less than
three years' continuous operation (such period may include the operation
of predecessor companies or enterprises if the issuer came into existence
as a result of a merger, consolidation or reorganization, or the purchase
of substantially all of the assets of the predecessor companies or
enterprises); (10) purchase or sell standby commitments; or (11) invest
more than 25% of its assets in a single industry (neither the U.S.
Government nor any of its agencies or instrumentalities are considered an
industry for the purposes of this restriction).
How the Fund is Managed
Organization and History. The Fund was established in 1986 as First
Trust Fund-U.S. Government Series and changed its name to Oppenheimer
Government Securities Fund on July 10, 1992, and on May 1, 1994 to
Oppenheimer Limited-Term Government Fund.
As a Massachusetts business Trust, the Fund is not required to hold,
and does not plan to hold, regular annual meetings of shareholders. The
Fund will hold meetings when required to do so by the Investment Company
Act or other applicable law, or when a shareholder meeting is called by
the Trustees or upon proper request of the shareholders. Shareholders
have the right, upon the declaration in writing or vote of two-thirds of
the outstanding shares of the Fund, to remove a Trustee. The Trustees
will call a meeting of shareholders to vote on the removal of a Trustee
upon the written request of the record holders of at least 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 applicant's 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 Fund, and any
shareholder of the Fund, agrees under the Fund's Declaration of Trust to
look solely to the assets of the Fund for satisfaction of any claim or
demand which may arise out of any dealings with the Fund, 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. All
of the Trustees are also trustees, directors or managing general partners
of Oppenheimer Total Return Fund, Inc., Oppenheimer Equity Income Fund,
Oppenheimer High Yield Fund, Oppenheimer Cash Reserves, Oppenheimer Tax-
Exempt Cash Reserves, Oppenheimer Tax-Exempt Bond Fund, The New York Tax-
Exempt Income Fund, Inc., Centennial America Fund, L.P., Oppenheimer
Champion High Yield Fund, Oppenheimer Main Street Funds, Inc., Oppenheimer
Strategic Funds Trust, Oppenheimer Integrity Funds, Oppenheimer Strategic
Income & Growth Fund, Oppenheimer Strategic Investment Grade Bond Fund,
Oppenheimer Strategic Short-Term Income Fund and Oppenheimer Variable
Account Funds; as well as the following "Centennial Funds": Daily Cash
Accumulation Fund, Inc., Centennial Money Market Trust, Centennial
Government Trust, Centennial New York Tax Exempt Trust, Centennial Tax
Exempt Trust and Centennial California Tax Exempt Trust, (all of the
foregoing funds are collectively referred to as the "Denver
OppenheimerFunds"). Mr. Fossel is President and Mr. Swain is Chairman of
the Denver OppenheimerFunds. As of March 29, 1994, the Trustees and
officers of the Fund as a group owned less than 1% of the Fund's
outstanding shares.
Robert G. Avis, Trustee*
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment
adviser and trust company, respectively).
William A. Baker, Trustee
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Trustee
6824 Vista de Oro, des Cruces, New Mexico 88005
Vice President of McDonnell Douglas Ltd.; formerly associated with the
National Aeronautics and Space Administration.
Jon S. Fossel, President and Trustee*
Two World Trade Center, New York, New York 10048-0203
Chairman, Chief Executive Officer and a director of the Manager; President
and a director of Oppenheimer Acquisition Corp. ("OAC"), the Manager's
parent holding company; President and a director of HarbourView Asset
Management Corporation ("HarbourView"), a subsidiary of the Manager; a
director of Shareholder Services, Inc. ("SSI") and Shareholder Financial
Services, Inc. ("SFSI"), transfer agent subsidiaries of the Manager;
formerly President of the Manager.
Raymond J. Kalinowski, Trustee
44 Portland Drive, St. Louis, Missouri 63131
Formerly Vice Chairman and a director of A.G. Edwards, Inc., parent
holding company of A.G. Edwards & Sons, Inc. (a broker-dealer), of which
he was a Senior Vice President.
C. Howard Kast, Trustee
2552 East Alameda, Denver, Colorado 80209
Formerly the Managing Partner of Deloitte, Haskins & Sells (an accounting
firm).
Robert M. Kirchner, Trustee
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Ned M. Steel, Trustee
3416 S. Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; formerly Senior Vice
President and a director ofVan Gilder Insurance Corp. (insurance brokers).
James C. Swain, Chairman and Trustee*
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman of the Manager; President and Director of Centennial Asset
Management Corporation, an investment adviser subsidiary of the Manager
("Centennial"); formerly President and Director of Oppenheimer Asset
Management Corporation ("OAMC"), an investment adviser which was a
subsidiary of the Manager, and Chairman of the Board of SSI.
Andrew J. Donohue, Vice President
Executive Vice President and General Counsel of Oppenheimer Management
Corporation ("OMC") (the "Manager") and Oppenheimer Funds Distributor,
Inc. (the "Distributor"); an officer of other OppenheimerFunds; formerly
Senior Vice President and Associate General Counsel of the Manager and the
Distributor; Partner in, Kraft & McManimon (a law firm); an officer of
First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser); director
and an officer of First Investors Family of Funds and First Investors Life
Insurance Company.
George C. Bowen, Vice President, Secretary and Treasurer
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice
President, Treasurer and Secretary of SSI and SFSI; an officer of other
OppenheimerFunds; formerly Senior Vice President/Comptroller and Secretary
of OAMC.
David Rosenberg, Vice President and Portfolio Manager
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; an officer of other OppenheimerFunds;
previously an officer and portfolio manager for Delaware Investment
Advisors and for one of its mutual funds.
Robert G. Zack, Assistant Secretary
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI and SFSI; an officer of other OppenheimerFunds.
Robert Bishop, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; previously a Fund Controller for the Manager,
prior to which he was an Accountant for Resolution Trust Corporation and
previously an Accountant and Commissions Supervisor for Stuart James
Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; previously a Fund Controller for the Manager,
prior to which he was an International Mutual Fund Supervisor for Brown
Brothers Harriman & Co., a bank, and previously a Senior Fund Accountant
for State Street Bank & Trust Company, before which he was a sales
representative for Central Colorado Planning.
__________________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
- Remuneration of Trustees. The officers of the Fund are
affiliated with the Manager; they and the Trustees of the Fund who are
affiliated with the Manager (Mr. Swain and Mr. Fossel who is both an
officer and Trustee) and receive no salary or fee from the Fund. During
the Fund's fiscal year ended September 30, 1993, the remuneration
(including expense reimbursements) paid to all Trustees of the Fund
(excluding Mr. Fossel and Mr. Swain) as a group for services as Trustees
and as members of one or more committees of the Board totaled $9,331.
Major Shareholders. As March 29, 1994, no person owned of record or
was known by the Fund to own beneficially 5% or more of the Fund's
outstanding Class A or Class B shares.
How The Fund Is Managed
The Manager and Its Affiliates. The Fund's Manager is wholly-owned by
Oppenheimer Acquisition Corporation ("OAC"), a holding company controlled
by Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and two of whom (Mr. Jon S. Fossel and Mr.
James C. Swain) serve as Trustees of the Fund.
- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the 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. For the Fund's fiscal years ended September 30,
1991, 1992, and 1993 the management fees paid by the Fund to the Manager
were $912,906, $773,822 and $781,718, respectively.
The Fund also paid the Manager $12,000 during each of the fiscal
years ended September 30, 1991 and September 30, 1992 and $12,000 during
the fiscal year ended September 30, 1993 for accounting services permitted
by the advisory agreement. In addition, the Fund reimbursed the Manager
its expenses of $1,125 and $1,500 during the fiscal year ended September
30, 1992 and 1993, respectively, for tax services.
Under the advisory agreement, the Manager has undertaken that if the
total expenses of the Fund in any fiscal year should exceed the most
stringent state regulatory requirements on expense limitations applicable
to the Fund, the Manager's compensation under the advisory agreement will
be redcued by the amount of such excess. For the purpose of such
calculation, there shall be excluded any expense borne directly or
indirectly by the Fund which is permitted to be excluded from the
computation of such limitation by such statute or state regulatory
authority. At present, that limitation is imposed by California, and
limits expenses (with specific exclusions) to 2.5% of the first $30
million of average net assets, 2% of the next $70 million of average net
assets and 1.5% of average net assets in excess of $100 million. 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, 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 omissions in connection with any matters to which the
Agreement relates. The advisory agreement permits the Manager to act as
investment adviser for any other person, firm or corporation and to use
the name "Oppenheimer" in connection with other investment companies for
which it may act as investment adviser or general distributor. If the
Manager or one of its affiliates shall no longer act as investment adviser
to the Fund, the right of the Fund to use the name "Oppenheimer" as part
of its name may be withdrawn.
- The Distributor. Under its 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 and Class B shares but
is not obligated to sell a specific number of shares. Expenses normally
attributable to sales, including advertising and the cost of printing and
mailing prospectuses, other than those furnished to existing shareholders,
are borne by the Distributor. In the fiscal year ended September 30,
1991, Clayton Brown, as distributor, retained commissions in the amount
of $40,260 for selling shares of the Fund and reallowed $150,908 in that
year to other dealers. In the fiscal year ended September 30, 1991, the
Distributor, which served as sub-distributor, received no reallowance of
commissions from Clayton Brown. For the fiscal year ended September 30,
1992 and 1993, commissions (sales charges paid by investors) on sales of
Fund shares totaled $192,406 and $289,261, respectively, of which $28,268
and $85,929 was retained by the Distributor and an affiliated broker-
dealer during those respective years. For additional information about
distribution of the Fund's shares and the expenses connected with such
activities, please refer to "Distribution and Service Plans," below.
- The Transfer Agent. Oppenheimer Shareholder Services, the Fund's
transfer agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder servicing
and administrative functions.
Brokerage Policies Of The Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company
Act, as may, in its best judgment based on all relevant factors, implement
the policy of the Fund to obtain, at reasonable expense, the "best
execution" (prompt and reliable execution at the most favorable price
obtainable) of such transactions. The Manager need not seek competitive
commission bidding, but is expected to minimize the commissions paid to
the extent consistent with the interest and policies of the Fund as
established by its Board of Trustees.
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 made by portfolio managers of the Manager
under the supervision of the Manager's executive officers. Transactions
in securities other than those for which an exchange is the primary market
are generally done with principals or market makers. Brokerage
commissions are paid primarily for effecting transactions in listed
securities and otherwise only if it appears likely that a better price or
execution can be obtained.
When the Fund engages in an option transaction, ordinarily the same
broker will be used for the purchase or sale of the option and any
transaction in the securities to which the option relates. When possible,
concurrent orders to purchase or sell the same security by more than one
of the accounts managed by the Manager and its affiliates are combined.
The transactions effected pursuant to such combined orders are averaged
as to price and allocated in accordance with the purchase or sale orders
actually placed for each account.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid in
commission dollars. The Board of Trustees has permitted the Manager to
use concessions on fixed price offerings to obtain research, in the same
manner as is permitted for agency transactions.
The research services provided by brokers broadens the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "independent" Trustees of the Fund (those Trustees
of the Fund who are not "interested persons" as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the advisory agreement or the Distribution Plans described
below) annually reviews information furnished by the Manager as to the
commissions paid to brokers furnishing such services so that the Board may
ascertain whether the amount of such commissions was reasonably related
to the value or benefit of such services.
Performance of the Fund
Yield and Total Return Information. From time to time the
"standardized yield," "dividend yield," "average annual total return",
"total return," and "total return at net asset value" of an investment in
a class of the Fund may be advertised. An explanation of how yields and
total returns are calculated for each class and the components of those
calculations is set forth below. The Fund's maximum sales charge rate on
Class A shares was higher prior to April 1, 1994, and actual investment
performance would be affected by that change.
The Fund's advertisement of its performance must, under applicable
rules of the Securities and Exchange Commission, include the average
annual total returns for each class of shares of the Fund for the 1, 5 and
10-year periods (or the life of the class, if less) as of the most
recently ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare the Fund's performance
to the performance of other funds for the same periods. However, a number
of factors should be considered before using such information as a basis
for comparison with other investments. An investment in the Fund is not
insured; its yields and 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 and Class B 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. The Fund's "yield" (referred to as
"standardized yield") for a given 30-day period for a class of shares is
calculated using the following formula set forth in rules adopted by the
Securities and Exchange Commission that apply to all funds that quote
yields:
a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of the class on the last
day of the period, using the current maximum sales charge rate
adjusted for undistributed net investment income.
The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The SEC formula assumes that
the standardized yield for a 30-day period occurs at a constant rate for
a six-month period and is annualized at the end of the six-month period.
This standardized yield is not based on actual distributions paid by the
Fund to shareholders in the 30-day period, but is a hypothetical yield
based upon the net investment income from the Fund's portfolio investments
calculated for that period. The standardized yield may differ from the
"dividend yield" of that class, described below. Additionally, because
each class of shares is subject to different expenses, it is likely that
the standardized yields of the Fund's classes of shares will differ. For
the 30-day period ended September 30, 1993, the standardized yields for
the Fund's Class A and Class B shares were 5.98% and 5.30%,
respectively.
- Dividend Yield and Distribution Return. From time to time the
Fund may quote a "dividend yield" or a "distribution return" for each
class. Dividend yield is based on the Class A or Class B share dividends
derived from net investment income during a stated period. Distribution
return includes dividends derived from net investment income and from
realized capital gains declared during a stated period. Under those
calculations, the dividends and/or distributions for that class declared
during a stated period of one year or less (for example, 30 days) are
added together, and the sum is divided by the maximum offering price per
share of that class) on the last day of the period. When the result is
annualized for a period of less than one year, the "dividend yield" is
calculated as follows:
Dividend Yield of the Class =
Dividends of the Class
- ----------------------------------------------------
Max Offering Price of the Class (last day of period)
Divided by number of days (accrual period) x 365
The maximum offering price for Class A shares includes the current
maximum front-end sales charge. For Class B 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 September 30, 1993,
were 5.90% and 6.11% when calculated at maximum offering price and at net
asset value, respectively. The dividend yield on Class B shares for the
30-day period ended September 30, 1993, was 5.22% when calculated at net
asset value.
- 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"), 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
- ------- = Cumulative Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 3.50% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as discussed below). For Class B shares, the payment of the
current contingent deferred sales charge (4.0% for the first year, 3.0%
for the second year, 2.0% for the third and fourth years, 1.0% in the
fifth 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). 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 year and five
year periods ended September 30, 1993 were 3.84% and 9.39%, respectively,
and for the period from March 10, 1986 (commencement of operations) to
September 30, 1993, was 8.79%. The "total return" on Class A shares for
the period from March 10, 1986 through September 30, 1993 was 88.96%. For
the fiscal period from May 3, 1993, through September 30, 1993, the
average annual total return and the cumulative total return on an
investment in Class B shares of the Fund were (2.86%) and (1.18%),
respectively.
- 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 or Class B
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 sales
charges) and takes into consideration the reinvestment of dividends and
capital gains distributions. The cumulative "total returns at net asset
value" on the Fund's Class A shares for the fiscal year ended September
30, 1993, was 7.61%. The cumulative total return at net asset value on
the Fund's Class B shares for the fiscal period from May 3, 1993 through
September 30, 1993 was 2.82%.<R/>
Other Performance Comparisons. From time to time the Fund may publish
the ranking of its Class A or Class B 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 is ranked against (i) all other
funds, excluding money market funds, and (ii) all other short U.S.
Government funds. The Lipper performance rankings are based on total
return that includes 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 or Class B shares by Morningstar, Inc., an independent
mutual fund monitoring service that ranks mutual funds, including the
Fund, in broad investment categories (equity, taxable bond, tax-exempt and
other) monthly, based upon each fund's three, five and ten-year average
annual total returns (when available) and a risk adjustment factor that
reflects Fund performance relative to three-month U.S. Treasury bill
monthly returns. Such returns are adjusted for fees and sales loads.
There are five ranking categories with a corresponding number of stars:
highest (5), above average (4), neutral (3), below average (2) and lowest
(1). Ten percent of the funds, series or classes in an investment
category receive 5 stars, 22.5% receive 4 stars, 35% receive 3 stars,
22.5% receive 2 stars, and the bottom 10% receive one star. Morningstar
ranks the Class A and Class B shares of the Fund in relation to other
taxable bond funds.
The total return on an investment made in Class A or Class B shares of
the Fund may 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 corporation and U.S. Government-guaranteed
corporate debt, and is widely regarded as a measure of the performance of
the U.S. Government bond market, and the Consumer Price Index, which is
generally considered to be a measure of inflation. The foregoing bond
index includes a factor for the reinvestment of interest but does not
reflect expenses or taxes. Other indices may be used from time to
time.
From time to time the Fund may also include in its advertisements and
sales literature performance information about the Fund or rankings of the
Fund's performance cited in newspapers or periodicals, such as The New
York Times. These articles may include quotations of performance from
other sources, such as Lipper or Morningstar.
When comparing yield, total return and investment risk of an
investment in Class A or Class B 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 a
Distribution and Service Plan for Class B shares of the Fund under Rule
12b-1 of the Investment Company Act, pursuant to which the Fund will
reimburse the Distributor for all or a portion of its costs incurred 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 Plan for the Class B shares, that vote was cast
by the Manager as the then-sole initial holder of Class B 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. The
Distributor and the Manager may, in their sole discretion
increase or decrease the amount of payments they make to Recipients from
their own resources.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as such continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Either 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. Neither 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. All material amendments must be approved by the Independent
Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at least
quarterly on the amount of all payments made pursuant to each Plan, the
purpose for which the payment was made and the identity of each Recipient
that received any such payment. The report for the Class B Plan shall
also include the distribution costs for that quarter, and such costs for
previous fiscal periods that are carried forward, as explained in the
Prospectus and below. Those reports, including the allocations on which
they are based, will be subject to the review and approval of the
Independent Trustees in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and nomination
of those Trustees of the Fund who are not "interested persons" of the Fund
is committed to the discretion of the Independent Trustees. This does not
prevent the involvement of others in such selection and nomination if the
final decision on any such selection or nomination is approved by a
majority of the Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Trustees. Initially, the Board of Trustees has set the
fee at the maximum rate and set no minimum amount.
For the fiscal year ended September 30, 1993, payments under the
Class A Plan totaled $404,118, all of which was paid by the Distributor
to Recipients, including $2,339 paid to an affiliate of the Distributor.
For the period February 1, 1992 to September 30, 1992, pursuant to the
Class A Plan, the Fund reimbursed the Distributor $192,377, of which $117
was paid to an affiliated broker and $2,431 was retained by the
Distributor. For the period October 1, 1991 to January 31, 1992, pursuant
to the Plan the Fund reimbursed Clayton Brown & Associates, Inc., the
Fund's distributor prior to February 1, 1992, $193,609, of which $125,883
was paid to Recipients by that firm and $67,726 was retained by Clayton
Brown.
Any unreimbursed expenses incurred with respect to Class A shares for
any fiscal quarter by the Distributor may not be recovered under the Class
A Plan in subsequent fiscal quarters. Payments received by the
Distributor under the Plan for Class A shares will not be used to pay any
interest expense, carrying charges, or other financial costs, or
allocation of overhead by the Distributor.
The Class B Plan allows the service fee payment to be paid by the
Distributor to Recipients in advance for the first year Class B shares are
outstanding, and thereafter on a quarterly basis, as described in the
Prospectus. Service fee payments by the Distributor to Recipients will
be made (i) in advance for the first year Class B shares are outstanding,
following the purchase of shares, in an amount equal to 0.25% of the net
asset value of the shares purchased by the Recipient or its customers and
(ii) thereafter, on a quarterly basis, computed as of the close of
business each day at an annual rate of 0.25% of the average daily net
asset value of Class B shares held in accounts of the Recipient or its
customers. An exchange of shares does not entitle the Recipient to an
advance payment of the service fee. In the event Class B shares are
redeemed during the first year such shares are outstanding, the Recipient
will be obligated to repay a pro rata portion of the advance of the
service fee payment to the Distributor.
Although the Class B Plan permits the Distributor to retain both the
asset-based sales charges and the service fee on Class B 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 Plan by the Board.
Initially, the Board has set no minimum holding period. All payments
under the Class B Plan become 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
Distributor anticipates that it will take a number of years for it to
recoup (from the Fund's payments to the Distributor under the Class B Plan
and from contingent deferred sales charges collected on redeemed Class B
shares) the sales commissions paid to authorized brokers or dealers. For
the Fiscal period from May 3, 1993 through September 30, 1993, payments
under the Class B plan totaled $10,203.
Asset-based sales charge payments are designed to permit an investor
to purchase shares of the Fund without the assessment of a front-end sales
load and at the same time permit the Distributor to compensate brokers and
dealers in connection with the sale of Class B shares of the Fund. The
Distributor's actual distribution expenses for any given year may exceed
the aggregate of payments received pursuant to the Class B Plan and from
contingent deferred sales charges, and such expenses will be carried
forward and paid in future years. The Fund will be charged only for
interest expenses, carrying charges or other financial costs that are
directly related to the carry-forward of actual distribution expenses.
For example, if the Distributor incurred distribution expenses of $4
million in a given fiscal year, of which $2,000,000 was recovered in the
form of contingent deferred sales charges paid by investors and $1,600,000
were reimbursed in the form of payments made by the Fund to the
Distributor under the Class B Plan, the balance of $400,000 (plus
interest) would be subject to recovery in future fiscal years from such
sources.
The Class B Plan allows for the carry-forward of distribution
expenses, to be recovered from asset-based sales charges in subsequent
fiscal periods, as described in the Prospectus. The asset-based sales
charge paid to the Distributor by the Fund under the Class B Plan is
intended to allow the Distributor to recoup the cost of sales commissions
paid to authorized brokers and dealers at the time of sale, plus financing
costs, as described in the Prospectus. Such payments may also be used to
pay for the following expenses in connection with the distribution of
Class B shares: (i) financing the advance of the service fee payment to
Recipients under the Class B Plan, (ii) compensation and expenses of
personnel employed by the Distributor to support distribution of Class B
shares, and (iii) costs of sales literature, advertising and prospectuses
(other than those furnished to current shareholders) and state "blue sky"
registration fees.
About Your Account
Alternative Sales Arrangements - Class A and Class B Shares. The
Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares that is more beneficial to the investor depending on the
amount of the purchase, the length of time the investor expects to hold
shares and other relevant circumstances. Investors should understand that
the purpose and function of the deferred sales charge and asset-based
sales charge with respect to Class B shares are the same as those of the
initial sales charge with respect to Class A shares. Any salesperson or
other person entitled to receive compensation for selling Fund shares may
receive different compensation with respect to one class of shares than
the other. The Distributor will not accept any order for $1 million or
more of Class B shares on behalf of a single investor (not including
dealer "street name" or omnibus accounts) because generally it will be
more advantageous for that investor to purchase Class A shares of the Fund
instead.
The two 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 shares and the dividends payable on Class B shares will be reduced by
incremental expenses borne solely by that class, including the asset-based
sales charge to which Class B shares are subject.
The conversion of Matured Class B shares to Class A shares is subject
to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or tax adviser, to the
effect that the conversion of Matured 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 Matured
Class B shares would occur while such suspension remained in effect.
Although Matured Class B shares could then be exchanged for Class A shares
on the basis of relative net asset value of the two classes, without the
imposition of a sales charge or fee, such exchange could constitute a
taxable event for the holder, and absent such exchange, Class B shares
might continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A and Class B shares recognizes two
types of expenses. General expenses that do not pertain specifically to
either 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 net
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, Additional Statements and other materials for current
shareholders, (iv) fees to unaffiliated Trustees, (v) custodian expenses,
(vi) share issuance costs, (vii) organization and start-up costs, (viii)
interest, taxes and brokerage commissions, and (ix) non-recurring
expenses, such as litigation costs. Other expenses that are directly
attributable to a class are allocated equally to each outstanding share
within that class. Such expenses include (i) Distribution and/or Service
Plan fees, (ii) incremental transfer and shareholder servicing agent fees
and expenses, (iii) registration fees and (iv) shareholder meeting
expenses, to the extent that such expenses pertain to a specific class
rather than to the Fund as a whole.
Determination of Net Asset Value Per Share. The net asset values per
share of Class A and Class B shares of the Fund are determined as of 4:00
P.M. New York time each day The New York Stock Exchange (the "NYSE") 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 NYSE's most
recent annual holiday schedule (which is subject to change) states that
it will close New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day; it may
also close on other days. Trading may occur in U.S. Government Securities
at times when the NYSE is closed (including weekends and holidays or after
4:00 P.M., on a regular business day). Because the net asset values of
the Fund will not be calculated at such times, if securities held in the
Fund's portfolio are traded at such times, the net asset values per share
of Class A and Class B shares of the Fund may be significantly affected
on such days when shareholders do not have the ability to purchase or
redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a securities exchange or on NASDAQ for which last
sale information is regularly reported are valued at the last reported
sale prices on their primary exchange or NASDAQ that day (or, in the
absence of sales that day, at values based on the last sales prices of the
preceding trading day, or closing bid and asked prices); (ii) securities
traded on NASDAQ and other unlisted equity securities for which last sales
prices are not regularly reported but for which over-the-counter market
quotations are readily available are valued at the highest closing bid
price at the time of valuation, or, if no closing bid price is reported,
on the basis of a closing bid price obtained from a dealer who maintains
an active market in that security; (iii) securities (including restricted
securities) not having readily-available market quotations are valued at
fair value under the Board's procedures; (iv) debt securities having a
maturity in excess of 60 days are valued at the mean between the bid and
asked prices determined by a portfolio pricing service approved by the
Fund's Board of Trustees or obtained from active market makers in the
security on the basis of reasonable inquiry; and (v) short-term debt
securities having a remaining maturity of 60 days or less are valued at
cost, adjusted for amortization of premiums and accretion of
discounts.
In the case of U.S. Government Securities and mortgage-backed
securities, when last sale information is not generally available, such
pricing procedures may include "matrix" comparisons to the prices for
comparable instruments on the basis of quality, yield, maturity, and other
special factors involved. The Fund's Board of Trustees has authorized the
Manager to employ a pricing service to price U.S. Government Securities
for which last sale information is not generally available. The Trustees
will monitor the accuracy of such pricing services by comparing prices
used for portfolio evaluation to actual sales prices of selected
securities.
Calls, puts and Futures held by the Fund are valued at the last sale
prices on the principal exchanges on which they are traded, or on NASDAQ,
as applicable, or, if there are no sales that day, in accordance with (i)
above. When the Fund writes an option, an amount equal to the premium
received by the Fund is included in the Fund's Statement of Assets and
Liabilities as an asset, and an equivalent deferred credit is included in
the liability section. The deferred credit is "marked-to-market" to
reflect the current market value of the option.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy the shares. Dividends will begin to accrue on such shares
on the day the Fund receives Federal Funds for such purchase through the
ACH system before 4:00 P.M., which is normally 3 days after the ACH
transfer is initiated. The Distributor and the Fund are not responsible
for any delays. If the Federal Funds are received after 4:00 P.M.,
dividends will begin to accrue on the next regular business day after such
Federal Funds are received.
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 incurs
little or no selling expenses. The term "immediate family" refers to
one's spouse, children, grandchildren, grandparents, parents, parents-in-
law, brothers and sisters, sons- and daughters-in-law, a sibling's spouse
and a spouse's siblings.
- The OppenheimerFunds. The OppenheimerFunds are those mutual funds
for which the Distributor acts as the distributor or the sub-Distributor
and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Bond
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund
Oppenheimer Global Bio-Tech Fund
Oppenheimer Global Environment Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income Fund
the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Tax-Exempt Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A shares
of each of the OppenheimerFunds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a CDSC).
- Letters of Intent. A Letter of Intent ("Letter") is the
investor's statement of intention to purchase Class A shares of the Fund
(and other eligible OppenheimerFunds) sold with a front-end sales charge
during the 13-month period from the investor's first purchase pursuant to
the Letter (the "Letter of Intent period"), which may, at the investor's
request, include purchases made up to 90 days prior to the date of the
Letter. The Letter states the investor's intention to make the aggregate
amount of purchases (excluding any purchases made by reinvestments of
dividends or distributions or purchases made at net asset value without
sales charge), which together with the investor's holdings of such funds
(calculated at their respective public offering prices calculated on the
date of the Letter) will equal or exceed the amount specified in the
Letter to obtain the reduced sales charge rate (as set forth in the
Prospectus) applicable to purchases of shares in that amount (the
"intended amount"). Each purchase under the Letter will be made at the
public offering price applicable to a single lump-sum purchase of shares
in the intended amount, as described in the Prospectus.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended 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 amount will be held in escrow by the Transfer Agent subject to
the Terms of Escrow. Also, the investor agrees to be bound by the terms
of the Prospectus, this Statement of Additional Information and the
Application used for such Letter of Intent, and if such terms are amended,
as they may be from time to time by the Fund, that those amendments will
apply automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended 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 amount and exceed the
amount needed to qualify for the next sales charge rate reduction set
forth in the applicable prospectus, the sales charges paid will be
adjusted to the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid to the
dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be
used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly
after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value to 5% of the
intended amount specified in the Letter shall be held in escrow by the
Transfer Agent. For example, if the intended amount specified under the
Letter is $50,000, the escrow shall be shares valued in the amount of
$2,500 (computed at the public offering price adjusted for a $50,000
purchase). Any dividends and capital gains distributions on the escrowed
shares will be credited to the investor's account.
2. If the total minimum investment specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended amount
specified in the Letter, the investor must remit to the Distributor an
amount equal to the difference between the dollar amount of sales charges
actually paid and the amount of sales charges which would have been paid
if the total amount purchased had been made at a single time. Such sales
charge adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is not paid
within twenty days after a request from the Distributor or the dealer, the
Distributor will, within sixty days of the expiration of the Letter,
redeem the number of escrowed shares necessary to realize such difference
in sales charges. Full and fractional shares remaining after such
redemption will be released from escrow. If a request is received to
redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of the Letter) do not include
any shares sold without a front-end sales charge or without being subject
to a Class A contingent deferred sales charge unless (for the purpose of
determining completion of the obligation to purchase shares under the
Letter) the shares were acquired in exchange for shares of one of the
OppenheimerFunds whose shares were acquired by payment of a sales charge.
6. Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as described
in the section of the Prospectus entitled "Exchange Privilege," and the
escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Tax-Exempt Cash Reserves or
Oppenheimer Cash Reserves to use those accounts for monthly automatic
purchases of shares of up to four other Eligible Funds.
There is a sales charge on the purchase of certain Eligible Funds.
An application should be obtained from the Transfer Agent, completed and
returned, and a prospectus of the selected fund(s) (available from the
Distributor) should be obtained before initiating Asset Builder payments.
The amount of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
Check Writing. When a check is presented to the Bank for clearance, the
Bank will ask the Fund to redeem a sufficient number of full and
fractional shares in the shareholder's account to cover the amount of the
check. This enables the shareholder to continue receiving dividends on
those shares until the check is presented to the Fund. Checks may not be
presented for payment at the offices of the Bank or the Fund's Custodian.
This limitation does not affect the use of checks for the payment of bills
or to obtain cash at other banks. The Fund reserves the right to amend,
suspend or discontinue offering checkwriting privileges at any time
without prior notice.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
- Involuntary Redemptions. The Fund's Board of Trustees has the
right to cause the involuntary redemption of the shares held in any
account if the aggregate net asset value of such shares is less than
$1,000 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 such 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 may set requirements
for permission to increase the investment, and 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, if 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, 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 Value Per Share" and such valuation will be
made as of the time the redemption price is determined.
- Wire Redemption Procedures. Under the Wire Redemption Procedure
discussed in the Prospectus, the Federal Funds 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,
or (ii) Class B shares that were subject to the Class B contingent
deferred sales charge when redeemed, in Class A shares of the Fund or any
of the other OppenheimerFunds into which shares of the Fund are
exchangeable as described below, at the net asset value next computed
after receipt by the Transfer Agent of the reinvestment order. The
shareholder must ask the Distributor for such privilege at the time of
reinvestment. Any capital gain that was realized when the shares were
redeemed is taxable, and reinvestment will not alter any capital gains tax
payable on that gain. If there has been a capital loss on the redemption,
some or all of the loss may not be tax deductible, depending on the timing
and amount of the reinvestment. Under the Internal Revenue Code, if the
redemption proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the OppenheimerFunds within
90 days of payment of the sales charge, the shareholder's basis in the
shares of the Fund that were redeemed may not include the amount of the
sales charge paid. That would reduce the loss or increase the gain
recognized from the redemption. However, in that case, the sales charge
would be added to the basis of the shares acquired by the reinvestment of
the redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation.
Transfer of Shares. Shares are not subject to the payment of a contingent
deferred sales charge of either class at the time of transfer to the name
of another person or entity (whether the transfer occurs by absolute
assignment, gift or bequest, not involving, directly or indirectly, a
public sale). The transferred shares will remain subject to the
contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B contingent deferred
sales charge will be followed in determining the order in which shares are
transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, or pension or
profit-sharing plans should be addressed to "Trustee, OppenheimerFunds
Retirement Plans," c/o the Transfer Agent at its address listed in "How
To Sell Shares" in the Prospectus. The request must: (i) state the reason
for the distribution; (ii) state the owner's awareness of tax penalties
if the distribution is premature; and (iii) conform to the requirements
of the plan and the Fund's other redemption requirements. Participants
(other than self-employed persons) in OppenheimerFunds-sponsored pension
or profit-sharing plans may not directly request redemption of their
accounts. The employer or plan administrator must sign the request.
Distributions from pension and profit sharing plans are subject to special
requirements under the Internal Revenue Code and certain documents
(available from the Transfer Agent) must be completed before the
distribution may be made. Distributions from retirement plans are subject
to withholding requirements under the Internal Revenue Code, and IRS Form
W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed.
Unless the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that tax be
withheld from any distribution even if the shareholder elects not to have
tax withheld. The Fund, the Manager, the Distributor, the Trustee and the
Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price will be the net asset
value next computed after the receipt of an order placed by such dealer
or broker, except that orders received from dealers or brokers after 4:00
P.M. on a regular business day will be processed at that day's net asset
value if such orders were received by the dealer or broker from its
customers prior to 4:00 P.M., and were transmitted to and received by the
Distributor prior to its close of business that day (normally 5:00 P.M.).
Payment ordinarily will be made within seven days after the Distributor's
receipt of the required documents, with signature(s) guaranteed as
described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are by check
payable to all shareholders of record and sent to the address of record
for the account (and if the address has not been changed within the prior
30 days). Required minimum distributions from OppenheimerFunds-sponsored
retirement plans may not be arranged on this basis. Payments are normally
made by check, but shareholders having AccountLink privileges (see "How
To Buy Shares") may arrange to have Automatic Withdrawal Plan payments
transferred to the bank account designated on the OppenheimerFunds New
Account Application or signature-guaranteed instructions. The Fund cannot
guarantee receipt of the 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
purchases while participating in an Automatic Withdrawal Plan. Class B
shareholders should not establish withdrawal plans, because of the
imposition of the Class B contingent deferred sales charge on such
withdrawals (except where the Class B contingent deferred sales charge is
waived as described in "Class B Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of shares of
the Fund for shares (of the same class) of other OppenheimerFunds
automatically on a monthly, quarterly, semi-annual or annual basis under
an Automatic Exchange Plan. The minimum amount that may be exchanged to
each other fund account is $25. Exchanges made under these plans are
subject to the restrictions that apply to exchanges as set forth in
"Exchange Privilege" in the Prospectus and "How to Exchange Shares" below
in this Statement of Additional Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and thereafter shares acquired with
reinvested dividends and capital gains distributions will be redeemed
next, followed by shares acquired with a sales charge, to the extent
necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made under
such plans should not be considered as a yield or income on your
investment.
The transfer agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. The Transfer Agent shall incur no liability to the
Planholder for any action taken or omitted by the Transfer Agent in good
faith to administer the Plan. Certificates will not be issued for shares
of the Fund purchased for and held under the Plan, but the Transfer Agent
will credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or AccountLink payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (receipt of payment on the date selected cannot be
guaranteed), according to the choice specified in writing by the
Planholder.
The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written notice
(in proper form in accordance with the requirements of the then-current
Prospectus of the Fund) to redeem all, or any part of, the shares held
under the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing
to the Transfer Agent. A Plan may also be terminated at any time by the
Transfer Agent upon receiving directions to that effect from the Fund.
The Transfer Agent will also terminate a Plan upon receipt of evidence
satisfactory to it of the death or legal incapacity of the Planholder.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed from the account will be held in uncertificated
form in the name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her executor or
guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued
without causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.
How to Exchange Shares. As stated in the Prospectus, shares of a
particular class of OppenheimerFunds having more than one class of shares
may be exchanged only for shares of the same class of other
OppenheimerFunds. All of the OppenheimerFunds offer Class A shares, but
only the following other OppenheimerFunds offer Class B shares:
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Value Stock Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer High Yield Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Cash Reserves (Class B shares are only available by exchange)
Oppenheimer Special Fund
Oppenheimer Equity Income Fund
Oppenheimer Global Fund
Oppenheimer Discovery Fund
Class A shares of OppenheimerFunds may be exchanged for shares of any
Money Market Fund; shares of any Money Market Fund purchased without a
sales charge may be exchanged for shares of OppenheimerFunds offered with
a sales charge upon payment of the sales charge (or, if applicable, may
be used to purchase shares of OppenheimerFunds subject to a CDSC); and
shares of this Fund acquired by reinvestment of dividends or distributions
from any other of the OppenheimerFunds or from any unit investment trust
for which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the
OppenheimerFunds. No CDSC is imposed on exchanges of shares of either
class purchased subject to a CDSC. However, when Class A shares acquired
by exchange of Class A shares purchased subject to a Class A CDSC are
redeemed within 18 months of the end of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A CDSC is imposed on
the redeemed shares (see "Class A Contingent Deferred Sales Charge" in the
Prospectus), and the Class B CDSC is imposed on Class B shares redeemed
within six years of the initial purchase of the exchanged Class B shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or shares covered by a share
certificate that is not tendered with the request. In those cases, only
the shares available for exchange without restriction will be exchanged.
When Class B 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 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 both classes must specify whether they intend to exchange
Class A or Class B shares.
When exchanging shares by telephone, the shareholder must either have
an existing account in, or acknowledge receipt of a prospectus of, the
fund to which the exchange is to be made. For full or partial exchanges
of an account made by telephone, any special account features such as
Asset Builder Plans, Automatic Withdrawal Plans and retirement plan
contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
request from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different OppenheimerFunds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on shares held of
record at the time of the previous determination of net asset value, or
as otherwise described in "How to Buy Shares." Daily dividends on newly
purchased shares will not be declared or paid until such time as Federal
Funds (funds credited to a member bank's account at the Federal Reserve
Bank) are available from the purchase payment for such shares. Normally,
purchase checks received from investors are converted to Federal Funds on
the next business day. Dividends will be declared on shares repurchased
by a dealer or broker for four business days following the trade date
(i.e., to and including the day prior to settlement of the repurchase).
If all shares in an account are redeemed, all dividends accrued on shares
of the same class in the account will be paid together with the redemption
proceeds.
Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of Oppenheimer Money
Market Fund, Inc., as promptly as possible after the return of such checks
to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio,
and expenses borne by the Fund or borne separately by a class, as
described in "Alternative Sales Arrangements -- Class A and Class B,"
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
shares are expected to be lower as a result of the asset-based sales
charge on Class B shares, and Class B dividends will also differ in amount
as a consequence of any difference in net asset value between Class A and
Class B shares.
Distributions may be made annually in December out of any net short-
term or long-term capital gains realized from the sale of securities,
premiums from expired calls written by the Fund and net profits from
Hedging Instruments and closing purchase transactions realized in the
twelve months ending on October 31 of the current year. Any difference
between the net asset value of Class A and Class B shares will be
reflected in such distributions. Distributions from net short-term
capital gains are taxable to shareholders as ordinary income and when paid
by the Fund are considered "dividends." The Fund may make a supplemental
distribution of capital gains and ordinary income following the end of its
fiscal year. Any long-term capital gains distributions will be identified
separately when paid and when tax information is distributed by the Fund.
If prior distributions must be re-characterized at the end of the fiscal
year as a result of the effect of the Fund's investment policies,
shareholders may have a non-taxable return of capital, which will be
identified in notices to shareholders. There is no fixed dividend rate
(although the Fund may have a targeted dividend rate for Class A shares)
and there can be no assurance as to the payment of any dividends or the
realization of any capital gains.
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on
amounts paid by it as dividends and distributions. The Fund qualified as
a regulated investment company in its last fiscal year and intends to
qualify in future years, but reserves the right not to qualify. The
Internal Revenue Code contains a number of complex tests to determine
whether the Fund will qualify, and the Fund might not meet those tests in
a particular year. For example, if the Fund derives 30% or more of its
gross income from the sale of securities held less than three months, it
may fail to qualify (see "Tax Aspects of Covered Calls and Hedging
Instruments," above). If it does not qualify, the Fund will be treated for
tax purposes as an ordinary corporation and will receive no tax deduction
for payments of dividends and distributions made to shareholders.
Under the Internal Revenue Code, by December 31 each year the Fund
must distribute 98% of its taxable investment income earned from January
1 through December 31 of that year and 98% of its capital gains realized
in the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Fund's Board and the Manager might determine in
a particular year that it would be in the best interest of shareholders
for the Fund not to make such distributions at the required levels and to
pay the excise tax on the undistributed amounts. That would reduce the
amount of income or capital gains available for distribution to
shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or capital gains distributions in shares of
the same class of any of the other OppenheimerFunds listed in "Reduced
Sales Charges" above, at net asset value without sales charge. Class B
shareholders should be aware that as of the date of this Statement of
Additional Information, not all of the OppenheimerFunds offer Class B
shares. The names of the funds that offer Class B shares as of the date
of this document can be obtained by referring to "How to Exchange Shares,"
above or by calling the Distributor at 1-800-525-7048, see also
"Exchanges of Class B Shares" above. To elect this option, the
shareholder must notify the Transfer Agent in writing and either have an
existing account in the fund selected for reinvestment or must obtain a
prospectus for that fund and an application from the Distributor to
establish an account. The investment will be made at the net asset value
per share in effect at the close of business on the payable date of the
dividend or distribution. Dividends and/or distributions from certain of
the OppenheimerFunds may be invested in shares of this Fund on the same
basis.
Additional Information About The Fund
The Custodian. Citibank, N.A. is the Custodian of the Fund's assets. The
Custodian's responsibilities include safeguarding and controlling the
Fund's portfolio securities, collecting income on the portfolio securities
and handling the delivery of such securities to and from the Fund. The
Manager has represented to the Fund that the banking relationships between
the Manager and with the Custodian have been and will continue to be
unrelated to and unaffected by the relationship between the Fund and the
Custodian. It will be the practice of the Fund to deal with the
Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates.
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 Government Securities Fund:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Government
Securities Fund as of September 30, 1993, the related statement of
operations for the year then ended, the statements of changes in net
assets for the years ended September 30, 1993 and 1992, and the financial
highlights for the period October 1, 1989 to September 30, 1993. 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.
The financial highlights (except for total return) for the period March
10, 1986 (commencement of operations) to September 30, 1989 were audited
by other auditors whose report dated November 2, 1989, expressed an
unqualified opinion on those financial highlights.
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 also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at September 30, 1993 by correspondence
with the custodian. 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer
Government Securities Fund at September 30, 1993, the results of its
operations, the changes in its net assets, and the financial highlights
for the respective stated periods, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE
/s/ Deloitte & Touche
Denver, Colorado
October 21, 1993
Statement of Investments September 30, 1993
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <S> <C> <C>
Repurchase Agreements
- -- 3.4% Repurchase agreement with J.P. Morgan Securities, Inc., 3.30%, $ 6,300,000 $ 6,300,000
dated 9/30/93 and maturing 10/1/93, collateralized by U.S.
Treasury Bills, 3.05%, 3/24/94, with a value of $6,427,272 (Cost
$6,300,000)
Long-Term U.S. Government
Obligations -- 95.9%
Agency - Full Faith Government National Mortgage Assn.:
and Credit -- 19.8% 8%, 9/15/07 283,031 304,567
13%, 2/15/11 101,081 120,167
13%, 10/15/12 24,278 28,839
13%, 9/15/14 23,897 28,331
10.50%, 1/15/16 136,693 154,059
10.50%, 2/15/16 920,362 1,037,294
10.50%, 3/15/16 81,287 91,615
10.50%, 4/15/16 227,775 256,713
10.50%, 5/15/16 313,408 353,226
10.50%, 6/15/16 279,369 314,863
10.50%, 10/15/16 41,533 46,810
10.50%, 11/15/16 5,227,355 5,635,192
10.50%, 12/15/16 76,832 86,594
10.50%, 7/15/17 543,709 612,760
10.50%, 8/15/17 196,993 222,011
10.50%, 9/15/17 423,419 461,345
10.50%, 10/15/17 103,364 116,491
10.50%, 11/15/17 401,447 452,431
10.50%, 12/15/17 777,894 876,686
10.50%, 2/15/18 398,578 449,193
10.50%, 4/15/18 71,184 80,223
10.50%, 6/15/18 162,381 183,001
10.50%, 10/15/18 165,032 185,990
10.50%, 11/15/18 561,683 633,011
10.50%, 12/15/18 244,088 275,085
10.50%, 3/15/19 792,344 892,988
10.50%, 5/15/19 411,335 463,582
10.50%, 6/15/19 238,357 268,633
10.50%, 7/15/19 732,761 825,837
8.50%, 9/15/21 163,325 173,661
9%, 12/15/21 760,795 815,352
7%, 10/15/22 2,316,439 2,391,399
7.50%, 11/15/22 15,126,513 15,862,114
8.50%, 11/15/22 899,081 955,571
8%, 12/15/22 632,279 669,191
36,324,825
Agency - Government Federal Home Loan Mortgage Corp. Collateralized
Sponsored -- 48.6% Mtg. Obligations:
8%, 3/15/21 10,000,000 10,356,699
9%, 3/15/21 575,390 581,932
8.50%, 6/15/21 15,000,000 16,153,498
Agency - Government Federal National Mortgage Assn.:
Sponsored (continued) 13%, 8/1/10 $ 77,620 $ 89,506
13%, 6/1/15 101,101 116,485
9%, 8/1/19 2,524,993 2,695,784
8%, 1/1/23 480,063 502,626
7%, 8/1/23 26,409,807 27,070,053
Collateralized Mtg. Obligations, Guaranteed Real Estate
Mtg. Investment Conduit Pass-Through Certificates:
8.50%, 1/25/00 1,000,000 1,030,930
11.50%, 3/1/09 5,073,719 5,772,943
9%, 12/25/18 15,000,000 15,898,199
8%, 7/25/19 8,000,000 8,452,320
8%, 10/25/21 595,000 636,251
89,357,226
Treasury -- 27.5% U.S. Treasury Bonds:
STRIPS, 0%, 8/15/02 2,500,000 1,538,165
STRIPS, 0%, 11/15/07 6,000,000 2,512,458
8%, 11/15/21 4,000,000 4,904,960
7.125%, 2/15/23 2,400,000 2,691,744
U.S. Treasury Nts.:
5.50%, 11/30/93 600,000 602,436
13.125%, 5/15/94 3,400,000 3,607,161
3.875%, 4/30/95 2,900,000 2,907,221
4.625%, 8/15/95 1,400,000 1,420,552
5.125%, 11/15/95 6,500,000 6,662,434
4.25%, 5/15/96 3,000,000 3,010,290
6.25%, 1/31/97 2,000,000 2,114,980
6.875%, 3/31/97 152,000 163,968
6.75%, 5/31/97 50,000 53,796
5.50%, 9/30/97 2,000,000 2,068,120
5.75%, 10/31/97 1,800,000 1,877,058
5.125%, 3/31/98 1,000,000 1,017,810
5.125%, 4/30/98 2,880,000 2,929,478
5.375%, 5/31/98 10,000,000 10,265,599
6.375%, 7/15/99 100,000 107,343
7.50%, 11/15/01 200,000 229,062
50,684,635
Total Long-Term U.S. Government Obligations (Cost $169,139,102) 176,366,686
Total Investments, at Value (Cost $175,439,102) 99.3% 182,666,686
Other Assets Net of Liabilities .7 1,354,235
Net Assets 100.0% $184,020,921
</TABLE>
See accompanying notes to financial statements.
Statement of Assets and Liabilities September 30, 1993
<TABLE>
<S> <S> <C>
Assets Investments, at value (cost $175,439,102) - see accompanying statement $182,666,686
Cash 200,558
Receivables:
Interest and principal paydowns 1,842,389
Shares of beneficial interest sold 544,295
Other 13,414
Total assets 185,267,342
Liabilities Payables and other liabilities:
Shares of beneficial interest redeemed 796,365
Dividends 251,291
Distribution assistance - Note 4 112,549
Other 86,216
Total liabilities 1,246,421
Net Assets $184,020,921
Composition of Paid-in capital $184,486,738
Net Assets Accumulated net realized loss from investment transactions (7,693,401)
Net unrealized appreciation of investments - Note 3 7,227,584
Net Assets $184,020,921
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets of
$178,944,257 and 16,206,365 shares of beneficial interest outstanding) $ 11.04
Maximum offering price per share (net asset value plus sales charge of 4.75% of $ 11.59
offering price)
Class B Shares:
Net asset value, redemption price and offering price per share (based on net $ 11.06
assets of $5,076,664 and 459,212 shares of beneficial interest outstanding)
</TABLE>
See accompanying notes to financial statements.
Statement of Operations For the Year Ended September 30, 1993
<TABLE>
<S> <S> <C>
Investment Income Interest $12,511,005
Expenses Management fees - Note 4 781,718
Distribution assistance:
Class A - Note 4 404,118
Class B - Note 4 10,203
Transfer and shareholder servicing agent fees - Note 4 194,925
Shareholder reports 100,269
Registration and filing fees:
Class A 86,223
Class B 3,037
Legal and auditing fees 31,802
Custodian fees and expenses 27,421
Trustees' fees and expenses 9,331
Other 9,206
Total expenses 1,658,253
Net Investment Income 10,852,752
Realized and Net realized loss on investments (1,271,113)
Unrealized Gain Net change in unrealized appreciation of investments - Note 5 2,440,150
(Loss) On Investments
Net Realized and Unrealized Gain on Investments 1,169,037
Net Increase in Net Assets Resulting from Operations $12,021,789
</TABLE>
See accompanying notes to financial statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended September 30,
1993 1992
<S> <S> <C> <C>
Operations Net investment income $ 10,852,752 $ 11,976,156
Net realized gain (loss) on investments (1,271,113) 5,701,636
Net change in unrealized appreciation or
depreciation of investments 2,440,150 (2,278,258)
Net increase in net assets resulting from operations 12,021,789 15,399,534
Dividends to Class A ($.734 and $.81 per share, respectively) (10,773,584) (11,934,940)
Shareholders from Class B ($.226 per share) (79,168) --
Net Investment Income
Beneficial Interest Net increase (decrease) in net assets resulting from
Transactions Class A beneficial interest transactions - Note 2 19,721,192 (13,370,195)
Net increase in net assets resulting from Class B
beneficial interest transactions - Note 2 5,062,554 --
Net Assets Total increase (decrease) in net assets 25,952,783 (9,905,601)
Beginning of year 158,068,138 167,973,739
End of year $184,020,921 $158,068,138
</TABLE>
See accompanying notes to financial statements.
Financial Highlights
<TABLE>
<CAPTION>
Class A Class B
Year Ended Period Ended
September 30, September 30,
1993 1992 1991 1990+++ 1989 1988 1987 1986++ 1993++++
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value, beginning
of period $ 10.97 $ 10.75 $ 10.18 $ 10.17 $ 10.14 $ 9.72 $ 10.51 $ 10.56 $10.96
Income from investment
operations:
Net investment income .73 .81 .87 .89 .90 .89 .86+ .57+ .23
Net realized and
unrealized gain (loss)
on investments .07 .22 .57 .01 .03 .42 (.74) (.05) .10
Total income from
investment operations .80 1.03 1.44 .90 .93 1.31 .12 .52 .33
Dividends and
distributions to
shareholders:
Dividends from net
investment income (.73) (.81) (.87) (.89) (.90) (.89) (.86) (.57) (.23)
Distributions from net
realized gain on
investments -- -- -- -- -- -- (.05) -- --
Total dividends and
distributions to
shareholders (.73) (.81) (.87) (.89) (.90) (.89) (.91) (.57) (.23)
Net asset value, end of
period $ 11.04 $ 10.97 $ 10.75 $ 10.18 $ 10.17 $ 10.14 $ 9.72 $ 10.51 $11.06
Total Return, at Net Asset
Value** 7.61% 9.88% 14.69% 9.15% 9.65% 13.86% .95% 4.97% 3.02%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $178,944 $158,068 $167,974 $213,391 $237,819 $251,794 $287,181 $127,797 $5,077
Average net assets (in
thousands) $161,318 $160,830 $192,404 $218,528 $243,863 $267,557 $242,181 $105,123 $2,561
Number of shares
outstanding at end of
period (in thousands) 16,206 14,416 15,624 20,964 23,395 24,834 29,560 12,162 459
Ratios to average net
assets:
Net investment income 6.70% 7.44% 8.27% 8.77% 8.96% 8.75% 8.22% 7.93%*
4.81%*
Expenses 1.02% .97% .98% .90% .93% .96% .56%+ .08%*+ 1.87%*
Portfolio turnover rate*** 74% 154% 112% 60% 61% 78% 73% 471% 74%
<FN>
* Annualized.
** Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all
dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns.
*** The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of
portfolio securities owned during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities
(excluding short-term securities) for the year ended September 30, 1993 were $129,069,391 and $118,835,073,
respectively.
+ Net investment income would have been $.84 and $.52 absent the voluntary reimbursement or waiver of expenses,
resulting in an expense ratio of 1.00% and 1.07% for 1987 and 1986, respectively.
++ For the period from March 10, 1986 (commencement of operations) to September 30, 1986.
+++ On April 7, 1990, Oppenheimer Management Corporation became the investment adviser to the Fund.
++++ For the period from May 3, 1993 (inception of offering) to September 30, 1993.
</TABLE>
See accompanying notes to financial statements.
Notes to Financial Statements
1. Significant Accounting Policies Oppenheimer Government Securities Fund (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
adviser is Oppenheimer Management Corporation (the Manager). The Fund offers
both Class A and Class B shares. Class A shares are sold with a front-end
sales charge. Class B shares may be subject to a contingent deferred sales
charge. Both classes of shares have identical rights to earnings, assets and
voting privileges, except that each class has its own distribution plan,
expenses directly attributable to a particular class and exclusive voting
rights with respect to matters affecting a single class. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
Investment Valuation - Portfolio securities are valued at 4:00 p.m. (New York
time) on each trading day. Long-term debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Long-term debt securities
which cannot be valued by the approved portfolio pricing service are valued by
averaging the mean between the bid and asked prices obtained from two active
market makers in such securities. Short-term debt securities having a
remaining maturity of 60 days or less are valued at cost (or last determined
market value) adjusted for amortization to maturity of any premium or
discount. Securities for which market quotes are not readily available are
valued under procedures established by the Board of Trustees to determine fair
value in good faith.
Repurchase Agreements - The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. If the seller of the agreement defaults and the value
of the collateral declines, or if the seller enters an insolvency proceeding,
realization of the value of the collateral by the Fund may be delayed or
limited.
Allocation of Income, Expenses and Gains and Losses - Income, expenses (other
than those attributable to a specific class) and gains and losses are
allocated daily to each class of shares based upon the relative proportion of
net assets represented by such class. Operating expenses directly attributable
to a specific class are charged against the operations of that class.
Federal Income Taxes - The Fund intends to continue to comply with provisions
of the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income tax provision is required. At September 30, 1993, the Fund had
available for federal income tax purposes an unused capital loss carryover of
approximately $6,222,000, $3,182,000 of which will expire in 1996 and
$3,040,000 in 1997.
Distributions to Shareholders - The Fund intends to declare dividends
separately for Class A and Class B 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.
Other - Investment transactions are accounted for on the date the investments
are purchased or sold (trade date). Discount on securities purchased is
amortized over the life of the respective securities, in accordance with
federal income tax requirements. Realized gains and losses on investments and
unrealized appreciation and depreciation are determined on an identified cost
basis, which is the same basis used for federal income tax purposes.
2. Shares of Beneficial Interest The Fund has authorized an unlimited number
of no par value shares of beneficial interest of each class. Transactions in
shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended September 30, 1993+ Year Ended September 30, 1992
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Class A:
Sold 3,635,741 $ 39,788,867 2,643,007 $ 28,691,545
Dividends reinvested 653,622 7,145,654 656,421 7,130,596
Issued in connection with the acquisition
of Main Street Government Securities Fund - Note 5 898,047 9,977,301 -- --
Redeemed (3,396,764) (37,190,630) (4,507,573) (49,192,336)
Net increase (decrease) 1,790,646 $ 19,721,192 (1,208,145) $(13,370,195)
Class B:
Sold 462,985 $ 5,104,320 -- $ --
Dividends reinvested 3,699 40,944 -- --
Redeemed (7,472) (82,710) -- --
Net increase 459,212 $ 5,062,554 -- $ --
<FN>
+For the year ended September 30, 1993 for Class A shares and for the period from May 3, 1993 (inception of offering) to
September 30, 1993 for Class B shares.
</TABLE>
3. Unrealized Gains and Losses on Investments At September 30, 1993, net
unrealized appreciation of investments of $7,227,584 was composed of gross
appreciation of $7,564,312, and gross depreciation of $336,728.
4. Management Fees and Other Transactions with Affiliates Management fees paid
to the Manager were in accordance with the investment advisory agreement with
the Fund which provides for an annual fee of .50% on the first $100 million of
net assets, .45% on the next $150 million, .425% on the next $250 million and
.40% on net assets in excess of $500 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 acts as the accounting agent for the Fund at an annual fee of
$12,000, plus out-of-pocket costs and expenses reasonably incurred.
For the year ended September 30, 1993, commissions (sales charges paid by
investors) on sales of Class A shares totaled $289,261, of which $67,922 was
retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker-dealer. During
the year ended September 30, 1993, OFDI received contingent deferred sales
charges of $361 upon redemption of Class B shares.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of providing such services
are allocated ratably to these companies.
Under separate approved plans of distribution, each class may expend up to
.25% of its net assets annually to reimburse OFDI for costs incurred in
distributing shares of the Fund, including amounts paid to brokers, dealers,
banks and other institutions. In addition, Class B shares are subject to an
asset-based sales charge of .75% of net assets annually, to reimburse OFDI for
sales commissions paid from its own resources at the time of sale and
associated financing costs. In the event of termination or discontinuance of
the Class B plan of distribution, the Fund would be contractually obligated to
pay OFDI for any expenses not previously reimbursed or recovered through
contingent deferred sales charges. During the year ended September 30, 1993,
OFDI paid $1,339 to an affiliated broker-dealer as reimbursement for Class A
distribution-related expenses and retained $10,203 as reimbursement for Class
B distribution-related expenses and sales commissions.
5. Acquisition of Main Street Government Securities Fund On August 27, 1993,
the Fund acquired all of the net assets of Main Street Government Securities
Fund (MSGSF), pursuant to an Agreement and Plan of Reorganization approved by
the MSGSF shareholders on August 26, 1993. The Fund issued 898,047 shares of
beneficial interest, valued at $9,977,301, in exchange for the net assets,
resulting in combined net assets of $182,832,580 on August 27, 1993. The net
assets acquired included net unrealized appreciation of $402,810 and capital
loss carryovers for federal income tax purposes of $39,537. The exchange was
tax-free.
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson & Adams, P.C.
1600 Broadway
Denver, Colorado 80202
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
(formerly named "Oppenheimer Government Securities Fund")
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a)Financial Statements
(1) Financial Highlights (see Parts A and B): Filed herewith
(2) Independent Auditors' Report (see Part B): Filed herewith
(3) Statement of Investments (see Part B): Filed herewith
(4) Statement of Assets and Liabilities (see Part B): Filed herewith
(5) Statement of Operations (see Part B): Filed herewith
(6) Statements of Changes in Net Assets (see Part B): Filed herewith
(7) Notes to Financial Statements (see Part B): Filed herewith
(8) Independent Auditors' Consent: Filed herewith
(b) Exhibits
(1) Amended and Restated Agreement and Declaration of Trust dated April
29, 1993 - Previously filed with Post-Effective Amendment No. 15 to
Registrant's Registration Statement, 12/3/93, and incorporated herein by
reference.
(i) Amended and Restated Agreement and Declaration of Trust dated May
1, 1994: Filed herewith
(2) Amended By-Laws as of August, 1990 - Previously filed with
Post-Effective Amendment No. 8 to Registrant's Registration Statement,
2/1/91, and incorporated herein by reference.
(3) Not applicable.
(4)(i) Class A Specimen Share Certificate - Previously filed with
Post-Effective Amendment No. 15 to Registrant's Registration Statement,
12/3/93, and incorporated herein by reference.
(ii) Class B Specimen Share Certificate - Previously filed with Post-
Effective Amendment No. 15 to Registrant's Registration Statement,
12/3/93, and incorporated herein by reference.
(5) Investment Advisory Agreement dated October 22, 1990 - Filed with
Post-Effective Amendment No. 7 to Registrant's Registration Statement,
12/3/90, and incorporated herein by reference.
(6)(a) General Distributor's Agreement dated October 13, 1992, with
Oppenheimer Fund Management, Inc. - Filed with Post-Effective Amendment
No. 12 of the Registrant's Registration Statement, 12/2/92, and
incorporated herein by reference.
(b) Form of Dealer Agreement of Oppenheimer Fund Management, Inc. -
Filed with Post-Effective Amendment No. 12 of the Registrant's
Registration Statement, 12/2/92, and incorporated herein by reference.
(c) Form of Oppenheimer Fund Management, Inc. Broker Agreement - Filed
with Post-Effective Amendment No. 12 of the Registrant's Registration
Statement, 12/2/92, and incorporated herein by reference.
(d) Form of Oppenheimer Fund Management, Inc. Agency Agreement - Filed
with Post-Effective Amendment No. 12 of the Registrant's Registration
Statement, 12/2/92, and incorporated herein by reference.
(7) Not applicable.
(8) Custodian Agreement dated 6/1/90 with Citibank, N.A. - Filed with
Post-Effective Amendment No. 8, 2/1/91, to Registrant's Registration
Statement and incorporated herein by reference.
(9) Agreement and Plan of Reorganization dated 4/28/93 between
Registrant and Main Street Funds, Inc. - Government Securities Fund -
Filed with Post-Effective Amendment no. 11 to Registration Statement of
Oppenheimer Main Street Funds, Inc., 8/25/93, and incorporated herein by
reference.
(10) Opinion and Consent of Counsel - Filed with Registrant's
Registration Statement and incorporated herein by reference.
(11) Not applicable.
(12) Not applicable.
(13) Subscription Agreement and Investment letter - Filed with
Registrant's Registration Statement and incorporated herein by reference.
(14)(a) Form of Prototype Standardized and Non-Standardized Profit
Sharing Plans and Money Purchase Pension Plans for self-employed persons
and corporations - Filed with Post-Effective Amendment No. 3 to the
Registration Statement of Oppenheimer Global Growth & Income Fund (File
No. 33-23799), 1/31/92, and incorporated herein by reference.
(b) Form of Individual Retirement Account Trust Agreement -Filed with
Post-Effective Amendment No. 21 to the Registration Statement of
Oppenheimer U.S. Government Trust (Reg. No. 2-76645), 8/25/93, and
incorporated herein by reference.
(c) Form of SEP-IRA - Filed with Post-Effective Amendment No. 36 to the
Registration Statement of Oppenheimer Equity Income Fund (Registration
No. 2-33043), 10/23/91, and incorporated herein by reference.
(d) Form of Tax-Sheltered Retirement Plan and Custody Agreement for
employees of public schools and tax-exempt organizations - Filed with
Post-Effective Amendment No. 22 of Oppenheimer Directors Fund (File No.
2-62240), and incorporated herein by reference.
(e) Form of SAR-SEP Simplified Employee Pension IRA: Filed with Post-
Effective Amendment No. 20, of Oppenheimer Integrity Funds (Reg. No. 2-
76547), 3/1/94, and incorporated herein by reference.
(15)(a) Service Plan and Agreement for Class A shares dated 6/22/93
pursuant to Rule 12b-1 - Previously filed with Post-Effective Amendment
No. 16, 1/27/94 to Registrant's Registration Statement and incorporated
herein by reference.
(b) Distribution and Service Plan and Agreement for Class B shares dated
6/22/93 pursuant to Rule 12b-1 - Previously filed with Post-Effective
Amendment No. 16, 1/27/94 to Registrant's Registration Statement and
incorporated herein by reference.
(16) Performance Data Computation Schedule: Filed herewith.
- -- Powers of Attorney (including certified Board resolutions) - Filed
with Post-Effective Amendment No. 15 to Registrant's Registration
Statement, 12/3/93, 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 March 29, 1994
- ----------------------------- --------------------------
Shares of Beneficial Interest
of Class A Shares 8,670
Shares of Beneficial Interest
of Class B Shares 530
ITEM 27. Indemnification
Reference is made to Article VIII of Registrant's Agreement and
Declaration of Trust filed as Exhibit 24(b)(1) to this Registration
Statement and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons
of Registrant pursuant to the foregoing provisions or otherwise,
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid by a
trustee, officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such trustee,
officer or controlling person, Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
ITEM 28. Business and Other Connections of Investment Adviser
(a) Oppenheimer Management Corporation is the investment adviser of the
Registrant; it and certain subsidiaries act in the same capacity to other
registered investment companies as described in Parts A and B of this
Registration Statement.
(b) For information as to the business, profession, vocation or employment
of a substantial nature of each of the officers and directors of
Oppenheimer Management Corporation, reference is made to Part B of this
Registration Statement and to the registration on Form ADV by Oppenheimer
Management Corporation filed under the Investment Advisers Act of 1940,
which is incorporated herein by reference.
ITEM 29. Principal Underwriters
(a) Oppenheimer Funds Distributor, Inc. is the General Distributor of the
Registrant's shares and is also the general distributor of certain of the
other open-end registered investment companies for which Oppenheimer
Management Corporation is the investment adviser, as described in Parts
A and B of the Registration Statement.
(b) The information contained in Form BD of Oppenheimer Funds Distributor,
Inc., filed under the Securities Exchange Act of 1934, is incorporated
herein by reference.
(c) Not applicable.
ITEM 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and rules promulgated thereunder are in the possession of Oppenheimer
Management Corporation at its offices at 3410 South Galena Street, Denver,
Colorado 80231.
ITEM 31. Management Services
Not applicable.
ITEM 32. Undertakings
(a) Not applicable.
(b) 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 effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Denver and State
of Colorado on the 26th day of April, 1994.
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
by: /s/ James C. Swain*
------------------------
James C. Swain, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities on the dates indicated:
Signatures: Title Date
/s/ James C. Swain * Chairman of the Board April 26, 1994
- ---------------------- of Trustees
James C. Swain
/s/ Jon S. Fossel * Trustee April 26, 1994
- ----------------------
Jon S. Fossel
/s/ George Bowen * Treasurer and April 26, 1994
- ---------------------- Principal Financial
George Bowen and Accounting Officer
/s/ Robert G. Avis * Trustee April 26, 1994
- ----------------------
Robert G. Avis
/s/ William A. Baker * Trustee April 26, 1994
- ----------------------
William A. Baker
/s/ Charles Conrad, Jr.* Trustee April 26, 1994
- ----------------------
Charles Conrad, Jr.
/s/ Raymond J. Kalinowski* Trustee April 26, 1994
- ----------------------
Raymond J. Kalinowski
/s/ C. Howard Kast * Trustee April 26, 1994
- ----------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee April 26, 1994
- ----------------------
Robert M. Kirchner
/s/ Ned M. Steel * Trustee April 26, 1994
- ---------------------
Ned M. Steel
/s/ Robert G. Zack
*By: --------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
EXHIBIT INDEX
-------------
Item No. Description
- -------- -----------
24(a)(8) Independent Auditors' Consent
24(b)(1)(i) Amended and Restated Agreement and Declaration of Trust
dated May 1, 1994
24(b)(16) Performance Data Computation Schedule
INDEPENDENT AUDITORS' CONSENT
Oppenheimer Limited-Term Government Fund
(formerly named "Oppenheimer Government
Securities Fund"):
We hereby consent to the use in Post-Effective Amendment No. 18 to
Registration Statement No. 33-02769 of our report dated October 21,
1993 on the financial statements of Oppenheimer Government
Securities Fund appearing in the Statement of Additional
Information, which is a part of such Registration Statement, and to
the reference to us under the caption "Financial Highlights"
appearing in the Prospectus, which is also a part of such
Registration Statement.
/s/ Deloitte & Touche
- ---------------------
DELOITTE & TOUCHE
Denver, Colorado
April 18, 1994
CUMMINGS\ELINK\855CON
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made as of this
1st day of May, 1994, by the Trustees whose signatures are set forth below
(together with all other persons from time to time duly elected, qualified
and serving as Trustees in accordance with the provision of Article IV
hereof, the "Trustees"), and by the holders of shares of beneficial
interest heretofore issued or to be issued hereunder as hereinafter
provided.
WITNESSETH WHEREAS, the Trustees previously formed a trust for the
purposes of carrying on the business of a management investment company
under an Agreement and Declaration of Trust dated January 16, 1986 as
amended February 14, 1986, June 26, 1992 and April 29, 1993; and in
furtherance of such purposes, the Trustees have acquired and may hereafter
acquire assets and properties, to hold and manage as trustees of a
Massachusetts voluntary association with transferable shares in accordance
with the provisions hereinafter set forth; and
WHEREAS, the Trustees of the Trust desire to make a permitted change in
the Trust's Amended and Restated Declaration of Trust, without shareholder
approval, to change the name of the Trust to "Oppenheimer Limited-Term
Government Fund," and have approved such change at a meeting duly called
for said purpose on February 23, 1994.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets and properties, which they may from time to
time acquire in any manner as Trustees hereunder IN TRUST to manage and
dispose of the same upon the following terms and conditions for the pro
rata benefit of the holders from time to time of Shares in the Trust as
hereinafter set forth.
ARTICLE I
Name and Definitions
Name and Registered Agent
Section 1. This Trust shall be known as "Oppenheimer Limited-Term
Government Fund" and the Trustees shall conduct the business of the Trust
under that name or any other name as they may from time to time determine.
The registered agent for the Trust in Massachusetts shall be Massachusetts
Mutual Life Insurance Company, 1295 State Street, Springfield,
Massachusetts 01111, Attention: Stephen Kuhn, Esq., or such other person
as the Trustees may from time to time designate.
Definitions
Section 2. Whenever used herein, unless otherwise required by the context
or specifically provided:
(a)The "Trust" refers to the Massachusetts voluntary association
established by this Agreement and Declaration of Trust, as it may be
amended from time to time, pursuant to Massachusetts General Laws, Chapter
182;
(b)"Trustees" refers to the Trustees of the Trust named herein or elected
in accordance with Article IV and then in office;
(c)"Shares" mean the transferable units of interest into which the
beneficial interest in the Trust or any Series or Class of the Trust shall
be divided from time to time, and includes fractions of Shares as well as
whole Shares;
(d)"Shareholder" means a record owner of Shares;
(e)The "1940 Act" refers to the Investment Company Act of 1940 (and any
successor statute) and the Rules and Regulations thereunder, all as
amended from time to time;
(f)The terms "Affiliated Person," "Assignment," "Commission," "Interested
Person," "Principal Underwriter" and "vote of a majority of the
outstanding voting securities" and other terms which are defined in the
1940 Act shall have the meanings given them in the 1940 Act;
(g)"Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time;
(h)"By-Laws" shall mean the By-Laws of the Trust as amended from time to
time;
(i)"Net asset value" shall have the meaning set forth in Section 5 of
Article VI hereof;
(j)"Class" means a class of a Series of Shares established and designated
in accordance with the provisions of this Declaration of Trust; and
(k)"Series" means the Series of Shares established and designated in
accordance with the provisions of this Declaration of Trust.
ARTICLE II
Nature and Purpose
The Trust is a voluntary association (commonly known as a business trust)
of the type referred to in Chapter 182 of the General Laws of the
Commonwealth of Massachusetts. The Trust is not intended to be, shall not
be deemed to be, and shall not be treated as, a general or a limited
partnership, joint venture, corporation or joint stock company, nor shall
the Trustees or Shareholders or any of them for any purpose be deemed to
be, or be treated in any way whatsoever as though they were, liable or
responsible hereunder as partners or joint venturers. The purpose of the
Trust is to engage in, operate and carry on the business of an open-end
management investment company and to do any and all acts or other things
as are necessary, convenient, appropriate, incidental or customary in
connection therewith.
ARTICLE III
Shares
Division of Beneficial Interest
Section 1. The beneficial interest in the Trust shall be divided into
Shares, all without par value, but the Trustees shall have the authority
from time to time, without obtaining Shareholder approval, to create one
or more Series of Shares in addition to the Series specifically
established and designated in Section 3 of this Article III, and to divide
the shares of any Series into two or more Classes pursuant to Section 2
of this Article III, all as they deem necessary or desirable, to establish
and designate such Series and Classes, and to fix and determine the
relative rights and preferences as between the different Series or Classes
of Shares as to right of redemption and the price, terms and manner of
redemption, liabilities and expenses to be borne by any Series or Class,
special and relative rights as to dividends and other distributions and
on liquidation, sinking or purchase fund provisions, conversion on
liquidation, conversion rights, and conditions under which the several
Series or Classes shall have individual voting rights or no voting rights.
Except as aforesaid, all Shares of the different Series shall be
identical.
(a)The number of authorized Shares and the number of Shares of each Series
and each Class of a Series that may be issued is unlimited, and the
Trustees may issue Shares of any Series or Class of any Series for such
consideration and on such terms as they may determine (or for no
consideration if pursuant to a Share dividend or split-up), all without
action or approval of the Shareholders. All Shares when so issued on the
terms determined by the Trustees shall be fully paid and non-assessable.
The Trustees may classify or reclassify any unissued Shares or any Shares
previously issued and reacquired of any Series into one or more Series or
Classes of Series that may be established and designated from time to
time; and the Trustees may from time to time divide or combine the Shares
of any Series or Class into a greater or lesser number without thereby
changing the proportionate beneficial interests in the Series or Class.
The Trustees may hold as treasury Shares (or the same or some other
Series), reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Shares
of any Series reacquired by the Trust.
(b)The establishment and designation of any Series or any Class of any
Series in addition to that established and designated in Section 3 of this
Article III shall be effective upon the execution by a majority of the
Trustees of an instrument setting forth such establishment and designation
and the relative rights and preferences of such Series or such Class of
such Series or as otherwise provided in such instrument. At any time that
there are no Shares outstanding of any particular Series previously
established and designated, and as provided in Article IX, Section 1, the
Trustees may by an instrument executed by a majority of their number
abolish that Series and the establishment and designation thereof. Each
instrument referred to in this paragraph shall be an amendment to this
Declaration of Trust, and the Trustees may make any such amendment without
shareholder approval.
Section 2. The Trustees shall have the authority from time to time to
divide the Shares of any Series into two or more Classes as they deem
necessary or desirable, and to establish and designate such Classes. In
such event, each Class of a Series shall represent interests in the
designated Series of the Trust and have such voting, dividend, liquidation
and other rights as may be established and designated by the Trustees.
Expenses and liabilities related directly or indirectly to the Shares of
a Class of a Series may be borne solely by such Class (as shall be
determined by the Trustees) and, as provided in Article V, a Class of a
Series may have exclusive voting rights with respect to matters relating
solely to such Class. The bearing of expenses and liabilities solely by
a Class of Shares of a Series shall be appropriately reflected (in the
manner determined by the Trustees) in the net asset value, dividend and
liquidation rights of the Shares of such Class of a Series. The division
of the Shares of a Series into Classes and the terms and conditions
pursuant to which the Shares of the Classes of a Series will be issued
must be made in compliance with the 1940 Act. No division of Shares of
a Series into Classes shall result in the creation of a Class of Shares
having a preference as to dividends or distributions or a preference in
the event of any liquidation, termination or winding up of the Trust, to
the extent such a preference is prohibited by Section 18 of the 1940 Act
as to the Trust.
The relative rights and preferences of Shares of different Classes shall
be the same in all respects except that, unless and until the Board of
Trustees shall determine otherwise: (i) when a vote of Shareholders is
required under this Declaration of Trust or when a meeting of Shareholders
is called by the Board of Trustees, the Shares of a Class shall vote
exclusively on matters that affect that Class only, (ii) the expenses
related to a Class shall be borne solely by such Class (as determined and
allocated to such Class by the Trustees from time to time in a manner
consistent with Sections 2 and 3 of this Article III); and (iii) pursuant
to Section 10 of Article III, the Shares of each Class shall have such
other rights and preferences as are set forth from time to time in the
then-effective Prospectus and/or Statement of Additional Information
relating to the Shares. Dividends and distributions on one class may
differ from the dividends and distributions on another Class, and the net
asset value of the Shares of one Class may differ from the net asset value
of the Shares of another Class.
Section 3. Without limiting the authority of the Trustees set forth in
Section 1 of this Article III to establish and designate any further
Series, the Trustees hereby establish one Series of Shares known as
"Oppenheimer Limited-Term Government Fund." The Shares of that Series
shall be divided into two Classes, which shall be designated "Class A" and
"Class B," as follows: the Shares of the Trust outstanding since the
inception of the Trust are hereby designated Class A Shares, and the
Shares of the Class initially created upon the division of the Shares of
that Series into two Classes are hereby designated Class B Shares. The
Shares of that Series and any Shares of any further Series or Classes that
may from time to time be established and designated by the Trustees shall
(unless the Trustees otherwise determine with respect to some further
Series or Classes at the time of establishing and designating the same)
have the following relative rights and preferences:
(a)Assets Belonging to Series. All consideration received by the Trust
for the issue or sale of Shares of a particular Series, together with all
assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to that Series for all purposes,
subject only to the rights of creditors, and shall be so recorded upon the
books of account of the Trust. Such consideration, assets, income,
earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds, in whatever form
the same may be, together with any General Items allocated to that Series
as provided in the following sentence, are herein referred to as "assets
belonging to" that Series. In the event that there are any assets,
income, earnings, profits and proceeds thereof, funds or payments which
are not readily identifiable as belonging to any particular Series
(collectively "General Items"), the Trustees shall allocate such General
Items to and among any one or more of the Series established and
designated from time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable; and any General Items so
allocated to a particular Series shall belong to that Series. Each such
allocation by the Trustees shall be conclusive and binding upon the
shareholders of all Series for all purposes.
(b)(1)Liabilities Belonging to the Series. The liabilities, expenses,
costs, charges and reserves attributable to each Series shall be charged
and allocated to the assets belonging to each particular Series. Any
general liabilities, expenses, costs, charges and reserves of the Trust
which are not identifiable as belong to any particular Series shall be
allocated and charged by the Trustees to and among any one or more of the
Series established and designated from time to time in such manner and on
such basis as the Trustees in their sole discretion deem fair and
equitable. The liabilities, expenses, costs, charges and reserves
allocated and so charged to each Series are herein referred to as
"liabilities belonging to" that Series. Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall be conclusive
and binding upon the shareholders of all Series for all purposes.
(2)Liabilities Belonging to a Class. If a Series is divided into more
than one Class, the liabilities, expenses, costs, charges and reserves
attributable to a Class shall be charged and allocated to the Class to
which such liabilities, expenses, costs, charges or reserves are
attributable. Any general liabilities, expenses, costs, charges or
reserves belonging to the Series which are not identifiable as belonging
to any particular Class shall be allocated and charged by the Trustees to
and among any one or more of the Classes established and designated from
time to time in such manner and on such basis as the Trustees in their
sole discretion deem fair and equitable. The liabilities, expenses,
costs, charges and reserves allocated and so charged to each Class are
herein referred to as "liabilities belonging to" that Class. Each
allocation of liabilities, expenses, costs, charges and reserves by the
Trustees shall be conclusive and binding upon the holders of all Classes
for all purposes.
(c) Dividends. Dividends and distributions on Shares of a particular
Series or Class may be paid to the holders of Shares of that Series or
Class, with such frequency as the Trustees may determine, which may be
daily or otherwise pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Trustees may determine,
from such of the income, capital gains accrued or realized, and capital
and surplus, from the assets belonging to that Series, as the Trustees may
determine, after providing for actual and accrued liabilities belonging
to such Series or Class. All dividends and distributions on Shares of a
particular Series or Class shall be distributed pro rata to the holders
of such Series or Class in proportion to the number of Shares of such
Series or Class held by such holders at the date and time of record
established for the payment of such dividends or distributions, except
that in connection with any dividend or distribution program or procedure
the Trustees may determine that the Shareholder's purchase order and/or
payment have not been received by the time or times established by the
Trustees under such program or procedure. Such dividends and
distributions may be made in cash or Shares or a combination thereof as
determined by the Trustees or pursuant to any program that the Trustees
may have in effect at the time for the election by each Shareholder of the
mode of the making of such dividend or distribution to that Shareholder.
Any such dividend or distribution paid in Shares will be paid at the net
asset value thereof as determined in accordance with Section 5 of Article
VI.
(d)Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of all Classes of each Series that have been
established and designated shall be entitled to receive, as a Series or
Class, when and as declared by the Trustees the excess of the assets
belonging to that Series over the liabilities belonging to that Series or
Class. The assets so distributable to the Shareholders of any particular
Class and Series shall be distributed among such Shareholders in
proportion to the number of Shares of such Class of that Series held by
them and recorded on the books of the Trust.
(e)Transfer. All Shares of each particular Series shall be transferable,
but transfers of Shares of a particular Class or Series will be recorded
on the Share transfer records of the Trust applicable to such Class of
that Series only at such times as Shareholders shall have the right to
require the Trust to redeem Shares of such Series or Class of that Series
and at such other times as may be permitted by the Trustees.
(f)Equality. Each Share of a Series shall represent an equal
proportionate interest in the assets belonging to that Series (subject to
the liabilities belonging to such Class of that Series), and each Share
of any particular Series shall be equal to each other Share of that
Series; but the provisions of this sentence shall not restrict any
distinctions permissible under this Article III that may exist with
respect to Shares of the different Classes of a Series. The Trustees may
from time to time divide or combine the Shares of any particular Class or
Series into a greater or lesser number of Shares of that Class or Series
without thereby changing the proportionate beneficial interest in the
assets belonging to the Class or Series or in any way affecting the rights
of Shares of any other Class or Series.
(g)Fractions. Any fractional Share of any Class and Series, if any such
fractional Share is outstanding, shall carry proportionately all the
rights and obligations of a whole Share of that Class and Series,
including those rights and obligations with respect to voting, receipt of
dividends and distributions, redemption of Shares, and liquidation of the
Trust.
(h)Conversion Rights. Subject to compliance with the requirements of the
1940 Act, the Trustees shall have the authority to provide that (i)
holders of Shares of any Series shall have the right to exchange said
Shares into Shares of one or more other Series of Shares, (ii) holders of
Shares of any Class shall have the right to exchange said Shares into
Shares of one or more other Classes of the same or a different Series,
and/or (iii) the Trust shall have the right to carry out the aforesaid
exchanges, in each case in accordance with such requirement and procedures
as may be established by the Trustees. Except as otherwise determined by
the Trustees in their sole discretion, Shareholders shall have no exchange
or conversion right with respect to their Shares.
(i) Preemptive Rights. Shareholders shall have no preemptive or other
rights to receive, purchase or subscribe for any additional Shares or
other securities issued by the Trust. The Shareholders shall have no
appraisal rights with respect to their Shares.
Ownership of Shares
Section 4. The ownership and transfer of Shares shall be recorded on the
books of the Trust or its transfer agent or similar agent, which books
shall be maintained separately for the Shares of each Class and Series.
No certificates certifying the ownership of Shares shall be issued except
as the Trustees may otherwise determine from time to time. The Trustees
may make such rules as they consider appropriate for the issuance of Share
certificates, the use of facsimile signatures, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or
any transfer or similar agent of the Trust, as the case may be, shall be
conclusive as to who are the Shareholders of each Series or Class and as
to the number of Shares of each Series and Class held from time to time
by each Shareholder.
Investments in the Trust
Section 5. The Trustees may issues Shares of the Trust to such persons
and on such terms and, subject to any requirements of law, for such
consideration, which may consist of cash or tangible or intangible
property or a combination thereof, as they may from to time to time
authorize.
Right to Refuse Orders
Section 6. The Trust by action of its Trustees shall have the right to
refuse to accept any subscription for its Shares at any time without any
cause or reason therefor whatsoever. Without limiting the foregoing, the
Trust shall have the right not to accept subscriptions under circumstances
or in amounts as the Trustees in their sole discretion consider to be
disadvantageous to existing Shareholders, and the Trustees may from time
to time set minimum and/or maximum amounts which may be invested in Shares
by a subscriber. The Trustees may authorize any distributor, principal
underwriter, custodian, transfer agent or other person to accept orders
for the purchase or sale of Shares that conform to such authorized terms
and to reject any purchase or sale orders for Shares whether or not
conforming to such authorized terms.
Time for Determining Sales Price
Section 7. The time or times as of which the net asset value shall be
determined for the purpose of determining the sales price for Shares
issued pursuant to this Article III shall be at such times as the Trustees
may establish from time to time in accordance with applicable provisions
of the 1940 Act.
Order in Proper Form
Section 8. The criteria for determining what constitutes an order in
proper form and the time of receipt of such an order by the Trust shall
be prescribed by resolution of the Trustees and such criteria may be
established in the Trust's then current prospectus or established by the
Trust's distributor or transfer agent, subject to approval of the
Trustees.
When Shares Become Outstanding
Section 9. Shares subscribed for and for which an order in proper form
has been received shall be deemed to be outstanding as of the time of
acceptance of the order therefor and the determination of the net price
thereof, which price shall be then deemed to be an asset of the Trust.
Merger or Consolidation
Section 10. In connection with the acquisition of all or substantially
all the assets or stock of another investment company, investment trust,
or of a company classified as a personal holding company under Federal
Income Tax laws, the Trustees may issue or cause to be issued Shares of
a Series or Class and accept in payment therefor, in lieu of cash, such
assets at their market value, or such stock at the market value of the
assets held by such investment company or investment trust, either with
or without adjustment for contingent costs or liabilities.
Status of Shares and Limitation of Personal Liability
Section 11. Shares shall be deemed to be personal property giving only
the rights provided in this instrument. Every Shareholder by virtue of
having become a Shareholder shall be held to have expressly assented and
agreed to the terms of the Declaration of Trust and to have become a party
thereto. The death of a Shareholder during the continuance of the Trust
shall not operate to terminate the same nor entitle the representative of
any deceased Shareholder to an accounting or to take any action in court
or elsewhere against the Trust or the Trustees, but only to succeed to the
rights of said decedent under this Trust. Ownership of Shares shall not
entitle the Shareholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the same
or for an accounting, nor shall the ownership of Shares constitute the
Shareholders partners. Neither the Trust nor the Trustees, nor any
officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor except as specifically provided herein to
call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay.
Shareholder Inspection Rights
Section 12. Any Shareholder or his or her agent may inspect and copy
during normal business hours any of the following documents of the Trust:
By-Laws, minutes of the proceedings of the Shareholders and annual
financial statements of the Trust, including a balance sheet and financial
statements of operations. The foregoing rights of inspection of
Shareholders of the Trust are the exclusive and sole rights of the
Shareholders with respect thereto and no Shareholder of the Trust shall
have, as a Shareholder, the right to inspect or copy any of the books,
records or other documents of the Trust except as specifically provided
in this Section 12 of this Article III or except as otherwise determined
by the Trustees.
ARTICLE IV
The Trustees
Number, Designation, Election, Term, Etc.
Section 1.
(a)Number. The Trustees who have executed this Amended and Restated
Declaration of Trust may increase or decrease the number of Trustees to
a number other than the number theretofore determined which number shall
not be less than three nor more than fifteen. No decrease in the number
of Trustees shall have the effect of removing any Trustee from office
prior to the expiration of his or her term, but the number of Trustees may
be decreased in conjunction with the removal of a Trustee pursuant to
subsection (d) of this Section 1.
(b)Term. Each Trustee, whether now incumbent or hereafter becoming a
Trustees, shall serve as a Trustee until the next meeting of Shareholders,
if any, called for the purpose of considering the election or re-election
of such Trustee or of a successor to such Trustee, and until the election
and qualification of his successor, if any, elected at such meeting, or
until such Trustee sooner dies, resigns, retires or is removed. Upon the
election and qualification of a new Trustee, the Trust estate shall vest
in the new Trustee (together with the continuing or other new Trustees)
without any further act or conveyance.
(c)Resignation and Retirement. Any Trustee may resign his or her trust
or retire as a Trustee, by written instrument signed by him or her and
delivered to the other Trustees or to any officer of the Trust, and such
resignation or retirement shall take effect upon such delivery or upon
such later date as is specified in such instrument.
(d)Removal. Any Trustee may be removed for cause at any time by written
instrument, signed by at least a majority of the number of Trustees prior
to such removal, specifying the date upon which such removal shall become
effective. Any Trustee may be removed with or without cause (i) by the
vote of the Shareholders entitled to be cast on the matter voting together
without regard to Series or Class at any meeting called for such purpose,
or (ii) by a written consent filed with the custodian of the Trust's
portfolio securities and executed by the Shareholders entitled to vote
more than fifty percent (50%) of the votes entitled to be cast on the
matter voting together without regard to Series or Class.
Whenever ten or more Shareholders of record who have been such for at
least six months preceding the date of application, and who hold in the
aggregate Shares constituting at least one percent of the outstanding
Shares of the Trust, shall apply to the Trustees in writing, stating that
they wish to communicate with other Shareholders with a view to obtaining
signatures to a request for a meeting to consider removal of a Trustee and
accompanied by a form of communication and request that they wish to
transmit, the Trustees shall within five business days after receipt of
such application inform such applicants as to the approximate cost of
mailing to the Shareholders of record the proposed communication and form
of request. Upon the written request of such applicants, accompanied by
a tender of the material to be mailed and of the reasonable expenses of
mailing, the Trustees shall, within reasonable promptness, mail such
material to all Shareholders of record at their addresses as recorded on
the books of the Trust. Notwithstanding the foregoing, the Trustees may
refuse to mail such material on the basis and in accordance with the
procedures set forth in the last two paragraphs of Section 16(c) of the
1940 Act.
(e)Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement,
removal or incapacity of any of the Trustees, or resulting from an
increase in the number of Trustees by the other Trustees may (but so long
as there are at least three remaining Trustees, need not unless required
by the 1940 Act) be filled either by a majority of the remaining Trustees,
even if less than a quorum, through the appointment in writing of such
other person as such remaining Trustees in their discretion shall
determine or, whenever deemed appropriate by the remaining Trustees, by
the election by the Shareholders, at a meeting called for such purpose,
of a person to fill such vacancy, and such appointment or election shall
be effective upon the written acceptance of the person named therein to
serve as a Trustee and agreement by such person to be bound by the
provisions of this Declaration of Trust, except that any such appointment
or election in anticipation of a vacancy to occur by reason of retirement,
resignation, or increase in number of Trustees to be effective at a later
date shall become effective only at or after the effective date of said
retirement, resignation, or increase in number of Trustees. As soon as
any Trustee so appointed or elected shall have accepted such appointment
or election and shall have agreed in writing to be bound by this
Declaration of Trust and the appointment or election is effective, the
Trust estate shall vest in the new Trustee, together with the continuing
Trustees, without any further act or conveyance.
(f)Mandatory Election by Shareholders. Notwithstanding the foregoing
provisions of this Section 1, the Trustees shall call a meeting of the
Shareholders for the election of one or more Trustees at such time or
times as may be required in order that the provisions of the 1940 Act may
be complied with, and the authority hereinabove provided for the Trustees
to appoint any successor Trustee or Trustees shall be restricted if such
appointment would result in failure of the Trust to comply with any
provision of the 1940 Act.
(g)Effect of Death, Resignation, Etc. The death, resignation, retirement,
removal or incapacity of the Trustees, or any one of them, shall not
operate to annul or terminate the Trust or to revoke or terminate any
existing agency or contract created or entered into pursuant to the terms
of this Declaration of Trust.
(h)No Accounting. Except under circumstances which would justify his or
her removal for cause, no person ceasing to be a Trustee as a result of
his or her death, resignation, retirement, removal or incapacity (nor the
estate of any such person) shall be required to make an accounting to the
Shareholders or remaining Trustees upon such cessation.
Powers
Section 2. The Trustees, subject only to the specific limitations
contained in this Declaration of Trust or otherwise imposed by the 1940
Act or other applicable law, shall have, without further or other
authorization and free from any power or control of the Shareholders,
full, absolute and exclusive power, control and authority over the Trust
assets and the business and affairs of the Trust to the same extent as if
the Trustees were the sole and absolute owners thereof in their own right
and to do all such acts and things as in their sole judgment and
discretion are necessary and incidental to, or desirable for, the carrying
out of any of the purposes of the Trust or conducting the business of the
Trust. Any determination made in good faith by the Trustees of the
purposes of the Trust or the existence of any power or authority hereunder
shall be conclusive. In construing the provisions of this Declaration of
Trust, there shall be a presumption in favor of the grant of power and
authority to the Trustees. Without limiting the foregoing, the Trustees
may adopt By-Laws not inconsistent with this Declaration of Trust
containing provisions relating to the business of the Trust, the conduct
of its affairs, its rights or powers and the rights or powers of its
Shareholders, Trustees, officers, employees and other agents and may amend
and repeal them to the extent that such By-Laws do not reserve that right
to the Shareholders; fill vacancies in their number, including vacancies
resulting from increases in their number, unless a vote of the Trust's
Shareholders is required to fill such vacancies pursuant to the 1940 Act;
elect and remove such officers and appoint and terminate such agents as
they consider appropriate; appoint from their own number, and terminate,
any one or more committees consisting of two or more Trustees, including
an executive committee which may, when the Trustees are not in session,
exercise some or all of the powers and authority of the Trustees as the
Trustees may determine; appoint an advisory board, the members of which
shall not be Trustees and need not be Shareholders; employ one or more
investment advisers or managers as provided in Section 6 of this Article
IV; employ one or more custodians of the assets of the Trust and authorize
such custodians to employ subcustodians and to deposit all or any part of
such assets in a system or systems for the central handling of securities;
retain a transfer agent or a Shareholder services agent, or both, provide
for the distribution of Shares by the Trust, through one or more principal
underwriters or otherwise; set record dates for the determination of
Shareholders with respect to various matters; and in general delegate such
authority as they consider desirable to any officer of the Trust, to any
committee of the Trustees and to any agent or employee of the Trust or to
any such custodian or underwriter.
In furtherance of and not in limitation of the foregoing, the Trustees
shall have power and authority:
(a)To invest and reinvest in, to buy or otherwise acquire, to hold, for
investment or otherwise, to sell or otherwise dispose of, to lend or to
pledge, to trade in or deal in securities or interests of all kinds,
however evidenced, or obligations of all kinds, however evidenced, or
rights, warrants, or contracts to acquire such securities, interests, or
obligations, of any private or public company, corporation, association,
general or limited partnership, trust or other enterprise or organization,
foreign or domestic, or issued or guaranteed by any national or state
government, foreign or domestic, or their agencies, instrumentalities or
subdivisions (including but not limited to, bonds, debentures, bills, time
notes and all other evidences of indebtedness); negotiable or non-
negotiable instruments; any and all futures contracts; government
securities and money market instruments (including but not limited to,
bank certificates of deposit, finance paper, commercial paper, bankers
acceptances, and all kinds of repurchase agreements);
(b)To invest and reinvest in, to buy or otherwise acquire, to hold, for
investment or otherwise, to sell or otherwise dispose of foreign
currencies, and funds and exchanges, and make deposits in banks, savings
banks, trust companies, and savings and loan associations, foreign or
domestic;
(c)To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop, and dispose of (by sale or otherwise) any property,
real or personal, and any interest therein;
(d)To sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust;
(e)To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper;
(f)To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(g)To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the name
of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depository or a nominee or nominees or otherwise;
(h)To consent or to participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security or
property of which is or was held in the Trust; to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or
issuer, and to pay calls or subscriptions with respect to any security
held in the Trust;
(i)To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit
any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority
with relation to any security (whether or not so deposited or transferred)
as the Trustees shall deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such committee, depositary or
trustee as the Trustees shall deem proper;
(j)To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not limited
to claims for taxes;
(k)To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(l)To borrow funds;
(m)To endorse or guarantee the payment of any notes or other obligations
of any person; to make contracts of guaranty or suretyship, or otherwise
assume liability for payment thereof; and to mortgage and pledge the Trust
property or any part thereof to secure any of or all such obligations;
(n)To purchase and pay for entirely out of Trust property such insurance
as they may deem necessary or appropriate for the conduct of the business,
including, without limitation, insurance policies insuring the agents of
the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers or managers, principal
underwriters, or independent contractors of the Trust individually against
all claims and liabilities of every nature arising by reason of holding,
being or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such person as
Shareholder, Trustee, officer, employee, agent, investment adviser or
manager, principal underwriter, or independent contractor, including any
action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person
against such liability; and
(o)To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing,
share bonus, share purchase, savings, thrift and other retirement,
incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing
such retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
The Trustees shall not in any way be bound or limited by any present
future law or custom in regard to investments by trustees of common law
trusts. Except as otherwise provided herein or from time to time in the
By-Laws, any action to be taken by the Trustees may be taken by a majority
of the Trustees present at a meeting of Trustees (if a quorum be present),
within or without Massachusetts, including any meeting held by means of
a conference telephone or other communications equipment by means of which
all persons participating in the meeting can communicate with each other
simultaneously and participation by such means shall constitute presence
in person at a meeting, or by written consents of a majority of the
Trustees then in office.
Payment of Expenses
Section 3. Consistent with the provisions of Section 3 of Article III,
the Trustees are authorized to pay or to cause to be paid out of the
principal or income of the Trust or of its respective Series and Classes,
or partly out of principal and partly out of income, as they deem fair,
all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, or in connection with the management thereof,
including, but not limited to, the Trustees' compensation and such
expenses and charges for the services of the Trust's officers, employees,
investment adviser or manager, principal underwriter, auditor, counsel,
custodian, transfer agent, shareholder servicing agent, and such other
agents or independent contractors and such other expenses and charges as
the Trustees may deem necessary or proper to incur.
Section 4. The Trustees shall have the power, as frequently as they may
determine, to cause each Shareholder to pay directly, in advance or
arrears, for charges of the Trust's custodian or transfer or shareholder
service or similar agent, an amount fixed from time to time by the
Trustees, by setting off such charges due from such Shareholder from
declared but unpaid dividends owed such Shareholder and/or by reducing the
number of Shares in the account of such Shareholder by that number of full
and/or fractional Shares which represents the outstanding amount of such
charges due from such Shareholder.
Ownership of Assets of the Trust
Section 5. Title to all of the assets of each Series of the Trust and of
the Trust shall at all times be considered as vested in the Trustees.
Advisory, Management and Distribution
Section 6. Subject to a favorable vote of a majority of the outstanding
voting securities of a Series of the Trust, the Trustees may on behalf of
such Series, at any time and from time to time, contract for exclusive or
nonexclusive advisory and/or management services with a corporation,
trust, association or other organization, every such contract to comply
with such requirements and restrictions as may be set forth in the By-
Laws; and any such contract may contain such other terms interpretive of
or in addition to said requirements and restrictions as the Trustees may
determine, including, without limitation, authority to determine from time
to time what investments shall be purchased, held, sold or exchanged and
what portion, if any, of the assets of such Series shall be held
uninvested and to make changes in such Series' investments. The Trustees
may also, at any time and from time to time, contract with a corporation,
trust association or other organization, appointing it exclusive or
nonexclusive distributor or principal underwriter for the Shares, every
such contract to comply with such requirements and restrictions as may be
set forth in the By-Laws; and any such contract may contain such other
terms interpretive of or in addition to said requirements and restrictions
as the Trustees may determine.
The fact that:
(a)any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
advisor, principal underwriter, or distributor or agent of or for any
corporation, trust, association, or other organization, or of or for any
parent or affiliate of any organization, with which an advisory or
management or principal underwriter's or distributor's contract, or
transfer, Shareholder services or other agency contract may have been or
may hereafter be made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has interest in the Trust, or that
(b)any corporation, trust, association or other organization with which
an advisory or management or principal underwriter's or distributor's
contract, or transfer, Shareholder services or other agency contract may
have been or may hereafter be made also has an advisory or management
contract, or principal underwriter's or distributor's contract, or
transfer, Shareholder services or other agency contract with one or more
other corporations, trusts, associations, or other organizations, or has
other businesses or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing
the same or create any liability or accountability to the Trust or its
Shareholders.
ARTICLE V
Shareholders' Voting Powers and Meetings
Voting Powers
Section 1. The Shareholders shall have power to vote only: (a) for the
election or removal of Trustees as provided in Article IV, Section 1; (b)
with respect to any investment advisor or manager as provided in Article
IV, Section 6; (c) with respect to any termination or reorganization of
the Trust or any series thereof to the extent and as provided in Article
IX, Section 1; (d) with respect to any amendment of this Declaration of
Trust to the extent and as provided in Article IX, Section 4; (e) to the
same extent as the stockholders of a Massachusetts business corporation
as to whether or not a court action, proceeding or claim should or should
not be brought or maintained derivatively or as a class action on behalf
of the Trust or the Shareholders; and (f) with respect to such additional
matters relating to the Trust as may be required by law, the 1940 Act,
this Declaration of Trust, the By-Laws or any then-effective registration
of the Trust filed with the Securities and Exchange Commission (or any
successor agency) or any state, or as the Trustees may consider necessary
or desirable.
Each whole share shall be entitled to one vote as to any matter on which
it is entitled to vote and each fractional share shall be entitled to a
proportionate fractional vote. Notwithstanding any other provision of the
Declaration of Trust, on any matter submitted to a vote of Shareholders
all Shares of the Trust then entitled to vote shall be voted by individual
Series and not in the aggregate, except (a) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series; and
(b) when the Trustees have determined that the matter affects only the
interests of one or more Series or Class of Series, then only Shareholders
of such Series or Class shall be entitled to vote thereon. There shall
be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy.
A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to the
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or
on behalf of a Shareholder shall be deemed valid unless challenged at or
prior to its exercise and the burden of proving invalidity shall rest on
the challenger.
Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of
Trust or the By-Laws to be taken by Shareholders.
Shareholder Meetings
Section 2. Meetings of Shareholders (including meetings involving only
one or more but less than all Series or Classes) may be called and held
from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders as herein provided or
upon any other matter deemed by the Trustees to be necessary or desirable.
Such meetings shall be held at the principal office of the Trust as set
forth in the By-Laws of the Trust, or at any such other place within the
United States as may be designated in the call thereof, which call shall
be made by the Trustees or the Chairman of the Trust. Meetings of
Shareholders may be called by the Trustees or such other person or persons
as may be specified in the By-Laws and shall be called by the Trustees or
such other person or persons as may be specified in the By-Laws upon
written application by Shareholders holding at least 25% (or ten percent
(10%) if the purpose of the meeting is to determine if a Trustee is to be
removed from office) of the Shares then outstanding requesting a meeting
be called for a purpose requiring action by the Shareholders as provided
herein or in the By-Laws which purpose shall be specified in any such
written application.
Shareholders shall be entitled to at least seven days' written notice of
any meeting of the Shareholders.
Quorum and Required Vote
Section 3. The presence at a meeting of Shareholders in person or by
proxy of Shareholders entitled to vote at least thirty percent (30%) of
all votes entitled to be cast at the meeting of each Series or Class
entitled to vote as a Series or Class shall be a quorum for the
transaction of business at a Shareholders' meeting, except that where any
provision of law or of this Declaration of Trust permits or requires that
the holders of Shares shall vote in the aggregate and not as a Series or
Class, then the presence in person or by proxy of Shareholders entitled
to vote at least thirty percent (30%) of all votes entitled to be cast at
the meeting (without regard to Series or Class) shall constitute a quorum.
Any lesser number, however, shall be sufficient for adjournments. Any
adjourned session or sessions may be held within a reasonable time after
the date set for the original meeting without the necessity of further
notice.
Except when a larger vote is required by any provisions of the 1940 Act,
this Declaration of Trust or the By-Laws, a majority of the Shares of each
Series or Class voted on any matter shall decide such matter insofar as
that Series or Class is concerned, provided that where any provision of
law or of this Declaration of Trust permits or requires that the holders
of Shares vote in the aggregate and not as a Series or Class, then a
majority of the Shares voted on the matter (without regard to Series or
Class) shall decide such matter and a plurality shall elect a Trustee.
Action by Written Consent
Section 4. Any action taken by Shareholders may be taken without a
meeting if Shareholders entitled to vote more than fifty percent (50%) of
the votes entitled to be cast on the matter of each Series or Class or,
where any provision of law or of this Declaration of Trust permits or
requires that the holders of Shares vote in the aggregate and not as a
Series or Class, if Shareholders entitled to vote more than fifty percent
(50%) of the votes entitled to be cast thereon (without regard to Series
or Class) (or in either case such larger vote as shall be required by any
provision of this Declaration of Trust or the By-Laws) consent to the
action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
Additional Provisions
Section 5. The By-Laws may include further provisions for Shareholders'
votes and meetings and related matters not inconsistent with the
provisions hereof.
ARTICLE VI
Redemptions and Repurchases, and
Determination of Net Asset Value
Redemptions and Repurchases
Section 1. Any holder of Shares of the Trust may by presentation of a
request in proper form, together with his or her certificates, if any, for
such Shares, in proper form, for transfer to the Trust or duly authorized
agent of the Trust, request redemption of his or her shares for the net
asset value thereof determined and computed in accordance with the
provisions of this Section 1 and the provisions of Section 5 of this
Article VI.
Upon receipt by the Trust or its duly authorized agent, as the case may
be, of such a request for redemption of Shares in proper form, such Shares
shall be redeemed at the net asset value per share of the particular
Series or Class next determined after such request is received or
determined as of such other time fixed by the Trustees as may be permitted
or required by the 1940 Act. The criteria for determining what
constitutes a proper request for redemption and the time of receipt of
such request shall be fixed by the Trustees, and such criteria may be
established in the Trust's then current prospectus or established by the
Trust's distributor or transfer agent, subject to approval by the
Trustees.
This obligation of the Trust to redeem its Shares of each Series or Class
as set forth above in this Section 1 shall be subject to the condition
that such obligation may be suspended by the Trust by or under authority
of the Trustees during any period or periods when and to the extent
permissible under the 1940 Act. If there is such a suspension, any
Shareholder may withdraw any request for redemption which has been
received by the Trust during any such period and the applicable net asset
value with respect to which would but for such suspension be calculated
as of a time during such period. Upon such withdrawal, the Trust shall
return to the Shareholder the certificates therefor, if any.
The Trust may also purchase, repurchase or redeem Shares in accordance
with such other methods, upon such other terms and subject to such other
conditions as the Trustees may from time to time authorize at a price not
exceeding the net asset value of such Shares in effect when the purchase
or repurchase or any contract to purchase or repurchase is made. Shares
of any Series or Class redeemed or repurchased by the Trust hereunder
shall be canceled upon such redemption or repurchase without further
action by the Trust or the Trustees and the number of issued and
outstanding Shares of such Series shall thereupon be reduced by such
amount, or Shares redeemed or repurchased may be held by the Trust for
resale.
Payment for Shares Redeemed
Section 2. Payment of the redemption price for Shares redeemed pursuant
to this Article VI shall be made by the Trust or its duly authorized agent
after receipt by the Trust or its duly authorized agent of a request for
redemption in proper for (together with any certificates for such Shares
as provided in Section 1 above) in accordance with procedures and subject
to conditions prescribed by the Trustees; provided, however, that payment
may be postponed during the period in which the redemption of Shares is
suspended under Section 1 above. Subject to any generally applicable
limitation imposed by the Trustees, any payment on redemption, purchase
or repurchase by the Trust of Shares may, if authorized by the Trustees,
be made wholly or partly in kind, instead of cash. Such payment in kind
shall be made by distributing securities or other property, constituting,
in the opinion of the Trustees, a fair representation of the various types
of securities and other property then held by the Series of Shares being
redeemed, purchased or repurchased (but not necessarily involving a
portion of each of the Series' holdings) and taken at their value used in
determining the net asset value of the Shares in respect of which payment
is made.
Redemptions at the Option of the Trust
Section 3. The Trust shall have the right at its option and at any time
and from time to time to redeem Shares of any Shareholder at the net asset
value thereof as determined in accordance with Section 5 of this Article
VI, if at such time such Shareholder owns fewer Shares of a Series or
Class than, or Shares of a Series or Class having an aggregate net asset
value of less than, an amount determined from time to time by the
Trustees. Any such redemption at the option of the Trust shall be made
in accordance with such other criteria and procedures for determining the
Shares to be redeemed, the redemption date and the means of effecting such
redemptions as the Trustees may from time to time authorize.
Additional Provisions Relating to Redemptions and Repurchases
Section 4. The completion of redemption, purchase or repurchase of Shares
shall constitute a full discharge of the Trust and the Trustees with
respect to such Shares. No dividend or distribution (including, without
limitation, any distribution paid upon termination of the Trust or of any
Series or Class) with respect to, nor any redemption or repurchase of, the
Shares of any Series or Class shall be effected by the Trust other than
from the assets of such Series.
Determination of Net Asset Value
Section 5. The term "net asset value" of each Share or a Series or Class
as of any particular time shall be the quotient, rounded to such extent
as the Trustees shall determine from time to time in a manner consistent
with the 1940 Act, obtained by dividing the value, as at such time, of the
net assets of such Series or Class (i.e., the value of the assets of such
Series less the liabilities chargeable or allocated to such Series or
Class pursuant to the provisions of Article III, exclusive of liabilities
represented by the Shares of such Series or Class) by the total number of
Shares of such Series outstanding at such time, all determined and
computed in accordance with the Trust's current prospectus and statement
of additional information.
The Trustees, or any officer, or officers or agent of the Trust designated
for the purpose by the Trustees shall determine the net asset value of the
Shares of each Series or Class, and the Trustees shall fix the time or
times as of which the net asset value of the Shares of each Series or
Class shall be determined and shall fix the periods during which any such
net asset value shall be effective as to sales, redemptions and
repurchases of, and other transactions in, the Shares of such Series of
Class, except as such time and periods for any such transaction may be
fixed by other provision of this Declaration of Trust or by the By-Laws.
Determinations in accordance with this Section 5 made in good faith shall
be binding on all parties concerned.
How Long Shares are Outstanding
Section 6. Shares of the Trust surrendered to the Trust for redemption
by it pursuant to the provisions of Section 1 of this Article VI shall be
deemed to be outstanding until the redemption price thereof is determined
pursuant to this Article VI and, thereupon and until paid, the redemption
price thereof shall be deemed to be a liability of the Trust. Shares of
the Trust purchased by the Trust in the open market shall be deemed to be
outstanding until confirmation of purchase thereof by the Trust and,
thereupon and until paid, the purchase price thereof shall be deemed to
be a liability of the Trust. Shares of the Trust redeemed by the Trust
pursuant to Section 3 of this Article VI shall be deemed to be outstanding
until said Shares are deemed to be redeemed in accordance with procedures
adopted by the Trustees pursuant to said Section 3.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Compensation
Section 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust if the rate thereof is prescribed in advance
by such Trustees. Nothing herein shall in any way prevent the employment
of any Trustee for advisory, management, legal, accounting, investment
banking or other services and payment for the same by the Trust, it being
recognized that such employment may result in such Trustee being
considered an Affiliated Person or an Interested Person.
Limitation of Liability
Section 2. The Trustees shall not be responsible or liable in any event
for any neglect or wrongdoing of any officer, agent, employee, investment
advisor or manager, principal underwriter or custodian, nor shall any
Trustee be responsible for the act or omission of any other Trustee.
Nothing in this Declaration of Trust shall protect any Trustee against any
liability to which such Trustee would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate, Share or undertaking
and every other act or thing whatsoever executed or done by or on behalf
of the Trust or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee and neither
such Trustees or Trustee nor the Shareholders shall be personally liable
thereon.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice
that this Declaration of Trust is on file with the Secretary of The
Commonwealth of Massachusetts and shall recite that the same was executed
or made by or on behalf of the Trust by them as Trustees or Trustee or as
officers or officer and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders
individually but are binding only upon the assets and property of the
Trust or a particular Series or Shares, and may contain such further
recital as he or she or they may deem appropriate, but the omission
thereof shall not operate to bind any Trustees or Trustee or officers or
officer of Shareholders or Shareholder individually.
All persons extending credit to, contracting with or having any claim
against the Trust or a particular Series of Shares shall look only to the
assets of the Trust or the assets of that particular Series of Shares, as
the case may be, for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of the Trust's
officers, employees or agents, whether past present or future, shall be
personally liable therefor.
Trustees' Good Faith Action, Expert Advice, No Bond or Surety
Section 3. The exercise by the Trustees of their powers and discretion
hereunder shall be binding upon everyone interested. A Trustee shall be
liable only for or her his own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
the office of Trustee, and for nothing else, and shall not be liable for
errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust and their duties as Trustees
hereunder, and shall be under no liability for any act or omission in
accordance with such advice of for failing to follow such advice. In
discharging their duties, the Trustees, when acting in good faith, shall
be entitled to rely upon the books of account of the Trust and upon
written reports made to the Trustees by any officer appointed by them, any
independent public accountant and (with respect to the subject matter of
the contract involved) any officer, partner or responsible employee of any
other party to any contract entered into pursuant to Section 2 of Article
IV. The Trustees shall not be required to give any bond as such, nor any
surety if a bond is required.
Liability of Third Persons Dealing with Trustees
Section 4. No person dealing with the Trustees shall be bound to make any
inquiry concerning the validity of any transaction made or to be made by
the Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
ARTICLE VIII
Indemnification
Subject to the exceptions and limitations contained in this Article, every
person who is, or has been, a Trustee or officer of the Trust (including
persons who serve at the request of the Trust as directors, officers or
trustees of another organization in which the Trust has an interest as a
shareholder, creditor or otherwise) hereinafter referred to as a "Covered
Person," shall be indemnified by the Trust to the fullest extent permitted
by law against liability and against all expenses reasonably incurred or
paid by him or her in connection with any claim, action, suit or
proceedings in which he or she becomes involved as a party or otherwise
by virtue of his or her being or having been such a Trustee, director or
officer and against amounts paid or incurred by him or her in settlement
thereof.
No indemnification shall be provided to a Covered Person:
(a)against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court of other body before which the proceeding
was brought that he or she engaged in willful misfeasance bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his or her office;
(b)with respect to any matter as to which he or she shall have been
finally adjudicated not to have acted in good faith in the reasonable
belief that his or her action was in the best interests of the Trust; or
(c)in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a
payment by a Covered Person, unless there has been either a determination
that such Covered Person did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his or her office by the court of other body approving the
settlement or other disposition or a reasonable determination, based on
a review of readily available facts (as opposed to a full trial-type
inquiry) that he or she did not engage in such conduct:
(i)by a vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or
(ii)by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Covered Person may now or hereafter be entitled,
shall continue as to a person who has ceased to be such a Covered Person
and shall inure to the benefit of the heirs, executors and administrators
of such a person. Nothing contained herein shall affect any rights to
indemnification to which the Trust personnel other than Covered Persons
may be entitled by contract or otherwise under law.
Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding subject to a claim for indemnification under
this Article shall be advanced by the Trust prior to final disposition
thereof upon receipt of an undertaking by or on behalf of the recipient
to repay such amount if it is ultimately determined that he or she is not
entitled to indemnification under this Article, provided that either:
(1)such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any
such advances; or
(2)a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the
matter) or independent legal counsel in a written opinion shall determine,
based upon a review of the readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Article, a "Disinterested Trustee" is one (a) who is not
an "interested person" of the Trust (as defined by the 1940 Act including
anyone who has been exempted from being an "interested person" by any
rule, regulation or order of the Securities and Exchange Commission), and
(b) against whom none of such actions, suits or other proceedings or
another action, suit or other proceeding on the same or similar grounds
is then or has been pending.
As used in this Article, the words "claim," "action," "suit" or
"proceeding" shall apply to all claims, actions, suits or proceedings
(civil, criminal or other, including appeals), actual or threatened; and
the words "liability" and "expenses" shall include without limitation
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or in the case
of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of the particular Series
of Shares of which he or she is or was a Shareholder to be held harmless
from and indemnified against all loss and expense arising from such
liability; provided, however, there shall be no liability or obligation
of the Trust arising hereunder to reimburse any Shareholder for taxes paid
by reason of such Shareholder's ownership of Shares or for losses suffered
by reason of any changes in value of any trust assets.
ARTICLE IX
Miscellaneous
Duration, Termination and Reorganization of Trust
Section 1. Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any time by
the Trustees by written notice to the Shareholders without a vote of the
Shareholders of the Trust or by the vote of the Shareholders entitled to
vote more than fifty percent (50%) of the votes of each Series entitled
to be cast on the matter. Any Series or Class of Shares may be terminated
at any time by the Trustees by written notice to the Shareholders of such
Series or Class without a vote of the Shareholders of such Series or Class
or by the vote of the Shareholders of such Series or Class entitled to
vote more than fifty percent (50%) of the votes entitled to be cast on the
matter.
Upon termination of the Trust or of any one or more Series or Classes of
Shares, after paying or otherwise providing for all charges, taxes,
expenses and liabilities, whether due or accrued or anticipated, of the
particular Series or Class as may be determined by the Trustees, the Trust
shall in accordance with such procedures as the Trustees consider
appropriate reduce the remaining assets of the particular Series to
distributable form in cash or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the Series
involved, ratably according to the number of Shares of such Series held
by the several Shareholders of such Series on the date of termination.
At any time by the affirmative vote of the Shareholders of the affected
Series entitled to vote more than fifty percent (50%) of all the votes
entitled to be cast on the matter, the Trustees may sell, convey and
transfer the assets of the Trust, or the assets belonging to any one or
more Series, to another trust, partnership, association or corporation
organized under the laws of any state of the United States, or to the
Trust to be held as assets belonging to another Series of the Trust, in
exchange for cash, shares or other securities (including, in the case of
a transfer to another Series of the Trust, in exchange for cash, shares
or other securities (including, in the case of a transfer to another
Series of the Trust, Shares of such other Series)) with such transfer
being made subject to, or with the assumption by the transferee of, the
liabilities belonging to each Series the assets of which are so
distributed. Following such transfer, the Trustees shall distribute such
cash, shares or other securities (giving due effect to the assets and
liabilities belonging to and any other differences among the various
Series the assets belonging to which have so been transferred) among the
Shareholders of the Series the assets belonging to which have been so
transferred; and if all of the assets of the Trust have been so
transferred, the Trust shall be terminated.
Filing of Copies, References, Headings
Section 2. The original or a copy of this instrument and of each
amendment hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each
amendment hereto shall be filed by the Trust with the Secretary of The
Commonwealth of Massachusetts and with the Boston City Clerk, as well as
any other governmental office where such filing may from time to time be
required. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such amendments have been
made and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy
certified by an officer of the Trust to be a copy of this instrument or
of any such amendments. In this instrument and in any such amendment,
references to this instrument, and all expressions like "herein,"
"hereof," and "hereunder," shall be deemed to refer to this instrument as
amended from time to time. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or
affect the meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of which
shall be deemed an original.
Applicable Law
Section 3. This Declaration of Trust is created under and is to be
governed by and construed and administered according to the laws of the
Commonwealth of Massachusetts. The Trust shall be of the type commonly
called a Massachusetts business trust, and without limiting the provisions
hereof, the Trust may exercise all powers which are ordinarily exercised
by such a trust.
Amendments
Section 4. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when
authorized so to do by vote of Shareholders holding more than fifty
percent (50%) of the Shares of each Series entitled to vote, except that
an amendment which shall affect the holders of one or more Series of
Classes of Shares but not the holders of all outstanding Series and
Classes shall be authorized by vote of the Shareholders holding more than
fifty percent (50%) of the Shares entitled to vote of each Series or Class
affected and no vote of Shareholders of a Series not affected shall be
required. Amendments having the purpose of changing the name of the Trust
or of supplying any omission, curing any ambiguity or curing, correcting
or supplementing any provision which is defective or inconsistent with the
1940 Act or with the requirements of the Internal Revenue Code and the
regulations thereunder for the trust's obtaining the most favorable
treatment thereunder available to regulated investment companies or of
establishing and designating or abolishing any Series of Shares in
accordance with Section 1 of Article III hereof shall not require
authorization by Shareholder vote.
Use of the Name
Section 5. The use of the name of the Trust and of any Series or Class
of shares of the Trust is granted pursuant to a royalty-free, non-
exclusive license from Oppenheimer Management Corporation ("OMC"), and
such license shall allow OMC to inspect and, subject to the control of the
Trustees, to control the nature and quality of services offered by the
Trust under such name. The license may be terminated by OMC upon
termination of any advisory, management or supervisory contact between OMC
and the Trust or without cause upon 60 days' written notice to the Trust
by OMC in which case neither the Trust nor any Series or class of the
Trust shall have any further right to use the name "Oppenheimer" in its
name or otherwise, and the Trust, its Shareholders, and its officers and
Trustees shall promptly take whatever action may be necessary to change
its name accordingly.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the 1st day of May, 1994.
/s/ William A. Baker, Trustee /s/ Charles Conrad, Jr., Trustee
- --------------------------------- ---------------------------------
William A. Baker, Trustee Charles Conrad, Jr., Trustee
197 Desert Lakes Drive 19411 Merion Court
Palm Springs, California 92264 Huntington Beach, California 92648
/s/ Ned M. Steel, Trustee /s/ Robert M. Kirchner, Trustee
- ---------------------------------- ----------------------------------
Ned M. Steele, Trustee Robert M. Kirchner, Trustee
3236 S. Steele Street 2800 S. University Boulevard
Denver, Colorado Denver, Colorado 80210
/s/ Raymond J. Kalinowski, Trustee /s/ C. Howard Kast, Trustee
- ---------------------------------- ----------------------------------
- -
Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee
44 Portland Drive 2552 East Alameda
St. Louis, Missouri Denver, Colorado 80209
/s/ James C. Swain, Trustee /s/ Jon S. Fossel, Trustee
- ----------------------------------- ----------------------------------
- -
James, C. Swain, Trustee Jon S. Fossel, Trustee
23554 Wayne's Way Box 44 - Mead Street
Golden, California 80401 Waccabuc, New York 10597
/s/ Robert G. Avis, Trustee
- -----------------------------------
Robert G. Avis, Trustee
1706 Warson Estates Drive
St. Louis, Missouri 63124
CUMMINGS/ELINK/855DOT
Oppenheimer Limited-Term Government 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, 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
03/31/86 0.0835000 0.0000 10.560
04/30/86 0.0968000 0.0000 10.460
05/30/86 0.0821000 0.0000 10.330
06/30/86 0.0673000 0.0000 10.350
07/31/86 0.0882000 0.0000 10.430
08/29/86 0.0771000 0.0000 10.620
09/30/86 0.0721000 0.0033 10.500
10/31/86 0.0834000 0.0027 10.600
11/28/86 0.0653000 0.0089 10.770
12/31/86 0.0776000 0.0026 10.770
01/30/87 0.0751000 0.0081 10.840
02/27/87 0.0775000 0.0064 10.840
03/31/87 0.0707000 0.0088 10.740
04/30/87 0.0718000 0.0014 10.310
05/29/87 0.0670000 0.0047 10.190
06/30/87 0.0691000 0.0035 10.280
07/31/87 0.0728000 0.0047 10.220
08/31/87 0.0644000 0.0029 10.070
09/30/87 0.0697000 0.0000 9.720
10/30/87 0.0705000 0.0037 9.980
11/30/87 0.0715000 0.0000 10.050
12/31/87 0.0818000 0.0000 10.080
01/29/88 0.0678000 0.0000 10.370
02/29/88 0.0775000 0.0000 10.400
03/31/88 0.0851000 0.0000 10.240
04/30/88 0.0707000 0.0000 10.110
05/31/88 0.0713000 0.0000 9.970
06/30/88 0.0728000 0.0000 10.150
07/29/88 0.0724000 0.0000 10.050
08/31/88 0.0716000 0.0000 9.990
09/30/88 0.0727000 0.0000 10.140
10/31/88 0.0733000 0.0000 10.270
11/30/88 0.0738000 0.0000 10.060
12/30/88 0.0789000 0.0000 9.920
01/31/89 0.0706000 0.0000 10.000
02/28/89 0.0745000 0.0000 9.870
03/31/89 0.0804000 0.0000 9.800
04/28/89 0.0711000 0.0000 9.890
05/31/89 0.0755000 0.0000 10.090
Oppenheimer Limited-Term Government Fund
Page 2
April 28, 1994
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
06/30/89 0.0793000 0.0000 10.290
07/31/89 0.0707000 0.0000 10.370
08/31/89 0.0760000 0.0000 10.190
09/29/89 0.0774000 0.0000 10.170
10/31/89 0.0742000 0.0000 10.300
11/28/89 0.0689000 0.0000 10.330
12/29/89 0.0803000 0.0000 10.310
01/31/90 0.0747814 0.0000 10.160
02/28/90 0.0687114 0.0000 10.130
03/31/90 0.0699998 0.0000 10.090
04/30/90 0.0743303 0.0000 9.950
05/31/90 0.0746956 0.0000 10.150
06/29/90 0.0777131 0.0000 10.230
07/31/90 0.0723585 0.0000 10.320
08/31/90 0.0823358 0.0000 10.190
09/28/90 0.0673692 0.0000 10.180
10/31/90 0.0727164 0.0000 10.200
11/30/90 0.0808407 0.0000 10.330
12/31/90 0.0681017 0.0000 10.440
01/31/91 0.0783065 0.0000 10.500
02/28/91 0.0747562 0.0000 10.490
03/28/91 0.0781908 0.0000 10.480
04/30/91 0.0757259 0.0000 10.500
05/31/91 0.0755207 0.0000 10.490
06/28/91 0.0620867 0.0000 10.440
07/31/91 0.0690000 0.0000 10.490
08/30/91 0.0710580 0.0000 10.630
09/30/91 0.0615000 0.0000 10.750
10/31/91 0.0730000 0.0000 10.800
11/29/91 0.0728009 0.0000 10.830
12/31/91 0.0691008 0.0000 11.130
01/31/92 0.0732125 0.0000 10.810
02/28/92 0.0627001 0.0000 10.780
03/31/92 0.0628505 0.0000 10.690
04/30/92 0.0646637 0.0000 10.690
05/29/92 0.0654686 0.0000 10.830
06/30/92 0.0663112 0.0000 10.920
07/31/92 0.0701033 0.0000 10.940
08/31/92 0.0606374 0.0000 10.960
09/30/92 0.0645706 0.0000 10.970
10/30/92 0.0699545 0.0000 10.810
11/30/92 0.0647536 0.0000 10.740
12/31/92 0.0611165 0.0000 10.810
01/29/93 0.0592500 0.0000 10.910
02/26/93 0.0616820 0.0000 10.940
03/31/93 0.0629625 0.0000 10.930
04/30/93 0.0654777 0.0000 10.960
05/28/93 0.0570559 0.0000 10.920
Oppenheimer Limited-Term Government Fund
Page 3
April 28, 1994
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
06/30/93 0.0593520 0.0000 11.030
07/30/93 0.0607871 0.0000 11.020
08/31/93 0.0560480 0.0000 11.100
09/30/93 0.0554467 0.0000 11.040
Class B Shares
05/28/93 0.0350596 0.0000 10.940
06/30/93 0.0478994 0.0000 11.040
07/30/93 0.0491367 0.0000 11.030
08/31/93 0.0482353 0.0000 11.120
09/30/93 0.0474955 0.0000 11.060
Oppenheimer Limited-Term Government Fund
Page 4
April 28, 1994
1. AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 9/30/93:
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 3.50%:
One Year Five Year Inception (03/10/86)
$1,038.42 1 $1,566.12 .2 $1,889.59 .1324
(---------) - 1 = 3.84% (---------) - 1 = 9.39% (---------) - 1 = 8.79%
$1,000 $1,000 $1,000
Examples, at NAV:
One Year Five Year Inception (03/10/86)
$1,076.08 1 $1,622.93 .2 $1,958.13 .1324
(---------) - 1 = 7.61% (---------) - 1 = 10.17% (---------) - 1 = 9.30%
$1,000 $1,000 $1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 4.00% for
the first year:
Inception (5/3/93)
$988.24 2.4492
(-------) - 1 = <2.86%>
$1,000
Examples, at NAV:
Inception (5/3/93)
$1,028.24 2.4492
(---------) - 1 = 7.06%
$1,000
Oppenheimer Limited-Term Government Fund
Page 5
April 28, 1994
2. CUMULATIVE TOTAL RETURNS FOR THE PERIODS ENDED 9/30/93:
The formula for calculating cumulative total return is as follows:
ERV - P
------- = Cumulative Total Return
P
Class A Shares
Examples, assuming a current maximum sales charge:
One Year Five Year Inception
$1,038.42 - 1,000 $1,566.12 - 1,000 $1,889.59 - 1,000
- ----------------- = 3.84% ---------------- = 56.61% ------------------ = 88.96%
$1,000 $1,000 $1,000
Examples, at NAV:
One Year Five Year Inception
$1,076.08 - 1,000 $1,622.93 - 1,000 $1,958.13 - 1,000
- ----------------- = 7.61% ----------------- = 62.29% ----------------- = 95.81%
$1,000 $1,000
Class B Shares
Examples, assuming a current maximum contingent deferred sales charge:
Inception
$988.24 - $1,000
------------------------ = <1.18%>
$1,000
Examples, at NAV:
Inception
$1,028.24 - $1,000
-------------------------- = 2.82%
$1,000
Oppenheimer Limited-Term Government Fund
Page 6
April 28, 1994
3. STANDARDIZED YIELDS FOR THE 30-DAY PERIOD ENDED 9/30/93:
The Fund's standardized yield is calculated using the following formula
set forth in the SEC rules:
a - b 6
Standardized 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 current sales charge)
per share on the last day of the period.
e = The Fund's net asset value (excluding current sales charge)
per share on the last day of the period.
Examples:
Class A Shares
$1,070,925.48 - $158,669.63 6
2 {( --------------------------- + 1) - 1} = 5.98%
16,211,368 x $11.44
Class B Shares
$25,547.83 - $6,898.88 6
2 {( ---------------------- + 1) - 1} = 5.30%
386,176 x $11.06
Oppenheimer Limited-Term Government Fund
Page 7
April 28, 1994
4. DIVIDEND YIELDS FOR THE 30-DAY PERIOD ENDED 9/30/92:
The Fund's dividend yields are calculated using the following
formula:
a/30 x 365
Dividend Yield = ----------
b or c
The symbols above represent the following factors:
a = The accrual dividend earned during the period.
b = The Fund's maximum offering price (including current sales
charge) per share on the last day of the period.
c = The Fund's net asset value (excluding sales charge) per
share on the last day of the period.
Examples:
Class A Shares
Dividend Yield$.0554467/30 days x 365
at Maximum Offer----------------------- = 5.90%
$11.44
Dividend Yield$.0554467/30 days x 365
at Net Asset Value----------------------- = 6.11%
$11.04
Class B Shares
Dividend Yield$.0474955/30 days x 365
at Net Asset Value----------------------- = 5.22%
$11.06
