Registration No. 33-02769
File No. 811-4563
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. __ / /
POST-EFFECTIVE AMENDMENT NO. 22 / X /
--
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
AMENDMENT NO. 21 / X /
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
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(Exact Name of Registrant as Specified in Charter)
3410 South Galena Street, Denver, Colorado 80231
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(Address of Principal Executive Offices)
1-303-671-3200
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(Registrant's Telephone Number)
Andrew J. Donohue, Esq.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On January 8, 1997 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
<PAGE>
/ / On ------- pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On ------- pursuant to paragraph (a)(2)
of rule 485.
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The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the Investment
Company Act of 1940. A Rule 24f-2 Notice for the Registrant's fiscal year ended
September 30, 1996, was filed on November 27, 1996.
<PAGE>
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FORM N-1A
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
1 Front Cover Page
2 Expenses
3 Financial Highlights; Performance of the Fund
4 Cover Page; Investment Objective and Policies
5 Expenses; How the Fund is Managed
5A Performance of the Fund
6 Dividends, Capital Gains and Taxes
7 How to Buy Shares; How to Exchange Shares; Special
Investor Services; Service Plan for Class A Shares;
Distribution and Service Plan for Class B Shares;
Distribution and Service Plan for Class C shares; How
to Sell Shares
8 How to Sell Shares; How to Exchange Shares; Special
Investor Services
9 *
Part B of
Form N-1A
Item No. Statement of Additional Information Heading
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Restrictions
14 Trustees and Officers of the Fund; How the Fund is
Managed
15 Trustees and Officers of the Fund - Major
Shareholders; How the Fund is Managed
16 How the Fund is Managed; Distribution and Service
Plans; Additional Information about the Fund; Back
Cover
17 How the Fund is Managed; Brokerage Policies of the
Fund
18 Additional Information about the Fund
<PAGE>
19 About Your Account - How to Buy Shares, How to Sell
Shares, How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 Distribution and Service Plans; How the Fund is
Managed; Additional Information about the Fund;
Financial Statements
22 Dividends, Capital Gains and Taxes
23 Financial Statements
- -------------------
*Not applicable or negative answer.
<PAGE>
Oppenheimer
Limited-Term Government Fund
Prospectus dated January 8, 1997
Oppenheimer Limited-Term Government Fund is a mutual fund that seeks high
current return and safety of principal. In seeking its objective, 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. The Fund also uses "hedging"
instruments to seek to reduce the risks of market and interest rate fluctuations
that affect the value of the securities the Fund holds.
While payments of principal and interest on certain U.S. Government
securities are guaranteed by the U.S. Government or its agencies or
instrumentalities, the net asset values of shares of the Fund and the Fund's
dividends are not guaranteed, and will fluctuate.
Under normal circumstances, the Fund seeks to maintain an average
effective portfolio duration (measured on a dollar-weighted basis) of not more
than three years. Please refer to "Investment Policies and Strategies" for more
information about the types of securities the Fund invests in and the risks of
investing in the Fund.
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
Januay 8, 1997 Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Fund's Transfer Agent, at 1-800-525-7048, or
write to the Transfer Agent at the address on the back cover. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference (which means
that it is legally part of this Prospectus).
(Oppenheimer funds logo)
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other agency, and
involve investment risks, including the possible loss of the principal amount
invested.
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
Contents
A B O U T T H E F U N D
3 Expenses
5 A Brief Overview of the Fund
7 Financial Highlights
11 Investment Objective and Policies
14 Investment Techniques and Strategies
19 How the Fund is Managed
20 Performance of the Fund
A B O U T Y O U R A C C O U N T
26 How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
39 Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
41 By Mail
By Telephone
By Check Writing
43 How to Exchange Shares
45 Shareholder Account Rules and Policies
46 Dividends, Capital Gains and Taxes
A-1 Appendix A : Special Sales Charge Arrangements
3
<PAGE>
A B O U T T H E F U N D
Expenses
The Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services and those expenses
are subtracted from the Fund's assets to calculate the Fund's net asset value
per share. All shareholders therefore pay those expenses indirectly.
Shareholders pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you understand
your direct expenses of investing in the Fund and your share of the Fund's
business operating expenses that you will bear indirectly. The numbers below are
based on the Fund's expenses during its last fiscal year ended September 30,
1996.
o Shareholder Transaction Expenses are charges you pay when you buy or
sell shares of the Fund. Please refer to "About Your Account" starting on page
26 for an explanation of how and when these charges apply.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Maximum Sales 3.50% None None
Charge on
Purchases (as a %
of offering price)
- ---------------------------------------------------------------------------------------------------------------
Maximum Sales Charge None None None
on Reinvested
Dividends
- ---------------------------------------------------------------------------------------------------------------
Maximum Deferred None(1) 4% in the 1% if
Sales Charge (as a first year, shares are
% of the lower declining redeemed
of the original to 1% in the within 12
offering price fifth year and months of
or redemption eliminated purchase(2)
proceeds) thereafter(2)
- ----------------------------------------------------------------------------------------------------------------
Exchange Fee None None None
- ----------------------------------------------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
4
<PAGE>
<FN>
(1) If you invest $1 million or more ($500,000 or more for purchases by
"Retirement Plans" as defined in "Class A Contingent Deferred Sales Charge" on
page 30) 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 -- Buying
Class A Shares," below.
(2) See "How to Buy Shares -- Buying Class B Shares,"
and "How to Buy Shares -- Buying Class C Shares" below, for more information on
the contingent deferred sales charges.
(3) There is a $10 transaction fee for
redemption proceeds paid by Federal Funds wire, but not for redemptions paid by
check or ACH transfer through AccountLink, or, with respect to Class A shares
only for which check writing privileges are used. See "How to Sell Shares".
</FN>
</TABLE>
o 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 advisor, OppenheimerFunds, Inc. (which is
referred to in this Prospectus as the "Manager"). The rates of the Manager's
fees are set forth in "How the Fund is Managed," below. The Fund has other
regular expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds the Fund's portfolio securities, audit fees and legal
expenses. Those expenses are detailed in the Fund's Financial Statements in the
Statement of Additional Information.
<TABLE>
<CAPTION>
Annual Fund Operating Expenses (as a percentage of average net
assets)
Class A Class B Class C
Shares Shares Shares
<S> <C> <C> <C>
- -------------------------------------------------------------------
Management Fees 0.44% 0.44% 0.44%
- -------------------------------------------------------------------
12b-1 Plan Fees 0.24% 1.00% 1.00%
- -------------------------------------------------------------------
Other Expenses 0.19% 0.18% 0.20%
- -------------------------------------------------------------------
Total Fund Operating 0.87% 1.62% 1.64%
Expenses
</TABLE>
The numbers in the chart above are based upon the Fund's
expenses in its fiscal year ended September 30, 1996. These
5
<PAGE>
amounts are shown as a percentage of the average net assets of each class of the
Fund's shares for that year. The "12b-1 Plan Fees" for Class A shares are the
service plan fees (which can be up to a maximum of 0.25% of average annual net
assets of that class), and for Class B and Class C shares, are the service plan
fees (which can be up to a maximum of 0.25%) and the asset-based sales charges
of 0.75%. These plans are described in greater detail in "How to Buy Shares."
The actual expenses for each class of shares in future years may be
more or less than the numbers in the chart, depending on a number of factors,
including the actual amount of the Fund's assets represented by each class of
shares.
o Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown below.
Assume that you make a $1,000 investment in each class of shares of the Fund,
and the Fund's annual return is 5%, and that its operating expenses for each
class are the ones shown in the Annual Fund Operating Expenses table above. If
you were to redeem your shares at the end of each period shown below, your
investment would incur the following expenses by the end of 1, 3, 5 and 10
years:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years*
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Class A Shares $44 $62 $82 $138
- --------------------------------------------------------------------------------------------------
Class B Shares $56 $71 $98 $154
- --------------------------------------------------------------------------------------------------
Class C Shares $27 $52 $89 $194
</TABLE>
If you did not redeem your investment, it would incur the following
expenses:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Class A Shares $44 $62 $82 $138
- --------------------------------------------------------------------------------------------------
Class B Shares $16 $51 $88 $154
- --------------------------------------------------------------------------------------------------
Class C Shares $17 $52 $89 $194
</TABLE>
* In the first example, expenses include the Class A initial sales charge and
the applicable Class B or Class C contingent deferred sales charge. In the
second example, Class A expenses include the
6
<PAGE>
initial sales charge, but Class B and Class C expenses do not include contingent
deferred sales charges. The Class B expenses in years 7 through 10 are based on
the Class A expenses shown above, because the Fund automatically converts your
Class B shares into Class A shares after 6 years. Because of the effect of the
asset-based sales charge and the contingent deferred sales charge on Class B and
Class C shares, long-term Class B and Class C shareholders could pay the
economic equivalent of more than the maximum front-end sales charge allowed
under applicable regulations. For Class B shareholders, the automatic conversion
of Class B shares into Class A shares is designed to minimize the likelihood
that this will occur. Please refer to "How to Buy Shares" for more information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment returns of
the Fund, all of which may be more or less than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete information can
be found. You should carefully read the entire Prospectus before making a
decision about investing in the Fund. Keep the Prospectus for reference after
you invest, particularly for information about your account, such as how to sell
or exchange shares.
o What is the Fund's Investment Objective? The Fund's investment
objective is to seek high current return and safety of principal.
o What Does the Fund Invest In? The Fund anticipates that under normal
circumstances (when the financial markets are not in an unstable or volatile
period), it will maintain an average effective portfolio duration (measured on a
dollar-weighted basis) of not more than three years. Portfolio "duration" is
explained in "Investment Policies and Strategies." The Fund invests only in
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities (these are called "U.S. Government Securities"), and
repurchase agreements on such securities. The Fund may also use hedging
instruments approved by its Board of Trustees to try to manage its investment
risks. The Fund's
7
<PAGE>
investments in U.S. Government Securities may include collateralized mortgage
obligations ("CMO's"). The Fund may also invest in "stripped" CMO's or
mortgage-backed securities. These investments are more fully explained in
"Investment Objectives and Policies," starting on page 11.
o Who Manages the Fund? The Fund's investment advisor is
OppenheimerFunds, Inc., which (including a subsidiary) advises investment
company portfolios having over $62 billion in assets at December 31, 1996. The
Manager is paid an advisory fee by the Fund, based on its net assets. The Fund's
portfolio manager, who is primarily responsible for the selection of the Fund's
securities, is David A. Rosenberg. The Fund's Board of Trustees, elected by
shareholders, oversees the investment advisor and the portfolio manager. Please
refer to "How the Fund is Managed," starting on page 19 for more information
about the Manager and its fees.
o How Risky is the Fund? Although U.S. Government Securities involve
little credit risk, their values will fluctuate (until maturity) depending on
prevailing interest rates. The magnitude of these fluctuations will often be
greater for longer-term debt securities than shorter-term securities. While the
Manager tries to reduce that risk by seeking to limit the average portfolio
duration, by diversifying investments, by carefully researching securities
before they are purchased for the portfolio, and in some cases, by using hedging
techniques, there is no guarantee of success in achieving the Fund's objective
and your shares may be worth more or less than their original cost when you
redeem them. Please refer to "Investment Polices and Strategies" starting on
page 11 for a more complete discussion of the Fund's investment risks.
o How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic Investment
Plan under AccountLink. Please refer to "How To Buy Shares" beginning on page 26
for more details.
o Will I Pay a Sales Charge to Buy Shares? The Fund has three classes
of shares. Each class of shares has the same investment portfolio, but different
expenses. Class A shares are offered with a front-end sales charge, starting at
3.5% and reduced for larger purchases. Class B and Class C shares are offered
without front-end sales charges, but may be subject to a contingent deferred
sales charge if redeemed within 5 years or 12 months, respectively, of purchase.
There is also an annual asset-based sales charge on
8
<PAGE>
Class B and Class C shares. Please review "How To Buy Shares" starting on page
26 for more details, including a discussion about factors you and your financial
advisor should consider in determining which class may be appropriate for you.
o How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer, or by writing a check against your current account (available for Class
A shares only). Please refer to "How To Sell Shares" on page 41. The Fund also
offers exchange privileges to other Oppenheimer funds, described in "How to
Exchange Shares" on starting on page 43.
o How Has the Fund Performed? The Fund measures its performance by
quoting a yield, dividend yield, average annual total return and cumulative
total return, which measure historical performance. Those returns can be
compared to the yields and total returns (over similar periods) of other mutual
funds. Of course, other funds may have different objectives, investments, and
levels of risk. The Fund's performance can also be compared to U.S. Government
bond indices, which we have done starting on page 24. Please remember that past
performance does not guarantee future results.
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data and expense ratios and
other data based on the Fund's average net assets. The information has been
audited by Deloitte & Touche LLP, the Fund's independent auditors, whose report
on the Fund's financial statements for the fiscal year ended September 30, 1996
is included in the Statement of Additional Information.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 10.44 $ 10.40 $ 11.04 $ 10.97 $ 10.75
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .75 .79 .72 .73 .81
Net realized and unrealized gain (loss) (.19) .01 (.64) .07 .22
- -------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .56 .80 .08 .80 1.03
- -------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.71) (.76) (.71) (.73) (.81)
Tax return of capital distribution (.03) -- (.01) -- --
Distributions from net realized gain -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.74) (.76) (.72) (.73) (.81)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.26 $ 10.44 $ 10.40 $ 11.04 $ 10.97
================================================================
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(3) 5.54% 8.03% 0.74% 7.61% 9.88%
- -------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $436,889 $346,015 $227,858 $178,944 $158,068
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $393,727 $274,313 $190,829 $161,318 $160,830
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.22% 7.64% 6.74% 6.70% 7.44%
Expenses 0.87% 0.91% 0.99% 1.02% 0.97%
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 71% 261% 226% 74% 154%
</TABLE>
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
1991 1990(1) 1989 1988 1987
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 10.18 $ 10.17 $ 10.14 $ 9.72 $ 10.51
- ----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .87 .89 .90 .89 .86(2)
Net realized and unrealized gain (loss) .57 .01 .03 .42 (.74)
- ----------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 1.44 .90 .93 1.31 .12
- ----------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.87) (.89) (.90) (.89) (.86)
Tax return of capital distribution -- -- -- -- --
Distributions from net realized gain -- -- -- -- (.05)
- ----------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.87) (.89) (.90) (.89) (.91)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.75 $ 10.18 $ 10.17 $ 10.14 $ 9.72
================================================================
- ----------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 14.69% 9.15% 9.65% 13.86% 0.95%
- ----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $167,974 $213,391 $237,819 $251,794 $287,181
- ----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $192,404 $218,528 $243,863 $267,557 $242,181
- ----------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.27% 8.77% 8.96% 8.75% 8.22%
Expenses 0.98% 0.90% 0.93% 0.96% 0.56%(2)
- ----------------------------------------------------------------------------------------------------------------
<PAGE>
Portfolio turnover rate(7) 112% 60% 61% 78% 73%
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------- ------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
1996 1995 1994 1993(6) 1996 1995(5)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 10.44 $ 10.41 $ 11.06 $10.96 $ 10.43 $ 10.32
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .67 .71 .62 .23 .66 .45
Net realized and unrealized gain (loss) (.19) .01 (.64) .10 (.18) .10
- ---------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .48 .72 (.02) .33 .48 .55
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.63) (.69) (.62) (.23) (.63) (.44)
Tax return of capital distribution (.03) -- (.01) -- (.03) --
Distributions from net realized gain -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.66) (.69) (.63) (.23) (.66) (.44)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.26 $ 10.44 $ 10.41 $11.06 $ 10.25 $ 10.43
===========================================================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(3) 4.74% 7.18% (0.17)% 3.02% 4.71% 5.47%
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $160,572 $121,178 $38,877 $5,077 $45,356 $ 14,569
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $147,017 $ 72,131 $15,801 $2,561 $32,349 $ 6,112
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.46% 6.80% 5.91% 4.81%(7) 6.34% 6.51%(7)
Expenses 1.62% 1.71% 1.79% 1.87%(7) 1.64% 1.80%(7)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 71% 261% 226% 74% 71% 261%
<FN>
1. On April 7, 1990, OppenheimerFunds, Inc. became the investment adviser to
the Fund.
2. Net investment income would have been $0.84 absent the voluntary
reimbursement or waiver of expenses, resulting in an expense ratio of 1.00%.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended September 30, 1996 were $603,877,225 and $415,889,318, respectively. For
the years ended September 30, 1995 and 1994, purchases and sales of investment
securities included mortgage "dollar-rolls."
5. For the period from February 1, 1995 (inception of offering) to September 30,
1995.
6. For the period from May 3, 1993 (inception of offering) to September 30,
1993.
7. Annualized.
</FN>
</TABLE>
Oppenheimer Limited-Term Government Fund
9
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks high current return and safety of
principal.
Investment Policies and Strategies. 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"), repurchase agreements on such securities, and hedging instruments
approved by its Board of Trustees.
U.S. Government Securities include the following types of
securities:
o U.S. Treasury Obligations. These include Treasury Bills (which have
maturities of one year or less when issued), Treasury Notes (which have
maturities of one to ten years when issued) and Treasury Bonds (which have
maturities generally greater than ten years when issued). The payment of
interest and repayment of principal at the maturity of U.S. Treasury obligations
are backed by the full faith and credit of the United States. That means that
the taxing power of the U.S. government is pledged to the payment of interest
and principal on those securities.
|X| Obligations Issued or Guaranteed by U.S. Government Agencies or
Instrumentalities. Debt securities issued or guaranteed by U.S. Government
agencies or instrumentalities have different levels of credit protection. Some
are supported by (a) the full faith and credit of the U.S. Government, such as
Government National Mortgage Association ("Ginnie Mae") 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"). Securities of U.S.
Government agencies and instrumentalities that are supported by the
discretionary authority of the U.S. Government to purchase such securities which
the Fund may purchase under (c) above include: Federal Land Banks, Farmers Home
Administration, Central Bank for Cooperatives, and Federal Intermediate Credit
Banks, Freddie Mac
10
<PAGE>
and Fannie Mae.
|X| Mortgage-Backed Securities. The Fund will invest in Ginnie Mae
certificates only of the "fully-modified pass-through" type. These are
guaranteed as to timely payment of principal and interest by the full faith and
credit of the United States Government. Ginnie Mae 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 Statement of Additional Information contains additional information
on U.S. Government securities. The effective maturity of a mortgage-backed
security may be shortened by unscheduled or early payment of principal and
interest on the underlying mortgages, which may affect the effective yield of
these securities. If principal is returned, it may be invested in instruments
having a higher or lower yield than the prepaid instruments, depending on
then-current market conditions. These securities therefore may not be completely
effective as a means of "locking in" attractive long-term interest rates. They
may also 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.
Maturity differs from effective duration, which is a volatility
measure. Please refer to "What Does the Duration of the Fund's Portfolio Mean?
on page 13 for an explanation of duration.
o Collateralized Mortgage Obligations. The Fund may invest in
collateralized mortgage obligations ("CMOs") that are issued or guaranteed by
the U.S. Government or its agencies or instrumentalities, or that are
collateralized by a portfolio of mortgages or mortgage-related securities
guaranteed by such an agency or instrumentality. Payment of the interest and
principal generated by the pool of mortgages is passed through to the holders as
the payments are received by the issuer of the CMO.
CMOs may be issued in a variety of classes or series
11
<PAGE>
("tranches") that have different maturities. The principal value of certain CMO
tranches may be more volatile than other types of mortgage-related securities
because of the possibility that the principal value of the CMO may be prepaid
earlier than the maturity of the CMO as a result of prepayments of the
underlying mortgage loans by the borrowers.
The Fund may invest in "stripped" mortgage-backed securities, CMOs or
other securities issued by agencies or instrumentalities of the U.S. Government.
Stripped mortgage-backed securities usually have two classes. The classes
receive different proportions of the interest and principal distributions on the
pool of mortgage assets that act as collateral for the security. In certain
cases, one class will receive all of the interest payments (and is known as an
"I/O"), while the other class will receive all of the principal value on
maturity (and is known as a "P/O").
The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the underlying
mortgages. Principal prepayments increase that sensitivity. Stripped securities
that pay "interest-only" are therefore subject to greater price volatility when
interest rates change. They have the additional risk that if the underlying
mortgages are prepaid, the Fund will lose the anticipated cash flow from the
interest on the prepaid mortgages and the value of the I/O strip will decline.
That risk is increased when general interest rates fall, and in times of rapidly
falling interest rates, the Fund might receive back less than its investment.
The value of "principal-only" securities generally increases as
interest rates decline and prepayment rates rise. The price of these securities
is typically more volatile than that of traditional bonds of the same maturity
that pay interest and principal at a fixed rate.
Stripped securities are generally purchased and sold by institutional
investors through investment banking firms. At present, established trading
markets have not yet developed for these securities. Therefore, some stripped
securities may be deemed "illiquid." The amount of illiquid stripped securities
the Fund can hold will be subject to the Fund's fundamental investment policy
limiting investments in illiquid securities to 5% of the Fund's assets,
described below.
The value of mortgage-backed securities may be affected by
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changes in the market's perception of the creditworthiness of the entity issuing
or guaranteeing them or by changes in government regulations and tax policies,
as well as by interest rate risks, described below. 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. Writing covered call
options is explained below, under "Investment Techniques and Strategies."
o What Does the "Duration" of the Fund's Portfolio Mean? The Fund
anticipates that under normal market conditions, it will maintain an average
effective portfolio duration of not more than three years. The Fund measures its
portfolio duration on a "dollar-weighted" basis. "Effective portfolio duration"
refers to the expected percentage change in the value of a bond resulting from a
change in general interest rates (measured by each 1% change in the rates on
U.S. Treasury securities). For example, if a bond has an effective duration of
three years, a 1% increase in general interest rates would be expected to cause
the bond to decline in value by about 3%. It is a measure of portfolio
volatility, and is one of the basic tools used by the Manager in selecting
securities for the Fund's portfolio.
However, the calculation of a bond's duration (or the duration of the
entire portfolio of bonds, in the case of the Fund) cannot be relied on as an
exact prediction of future volatility. Duration is calculated by using a number
of variables and assumptions based on the historical performance of similar
bonds, and duration can be affected by unexpected economic changes or other
events affecting a security. For example, in the case of CMOs, duration
calculations are based on historical rates of prepayments of underlying
mortgages, and if these mortgages are prepaid more rapidly than expected, the
calculation of duration for a particular CMO may not be correct.
Because unanticipated events may change the effective duration of
securities after the Fund buys them, there can be no assurance that the Fund
will achieve its targeted effective duration at all times. Even though the Fund
intends that its dollar-weighted average effective portfolio duration will
generally not exceed three years, certain market conditions may temporarily
increase the Fund's duration beyond its target. Additionally, the Fund may
invest in individual debt obligations of any maturity. "Investment
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Objective and Policies" in the Statement of Additional Information contains more
information on the Fund's calculation of effective portfolio duration.
o Interest Rate Risks. Although U.S. Government Securities involve
little credit risk, their market values will fluctuate until they mature,
depending on prevailing interest rates. When prevailing interest rates go up,
the market value of already issued debt securities tends to go down. When
interest rates go down, the market value of already issued debt securities tends
to go up. The magnitude of those fluctuations generally will be greater when the
average maturity of the Fund's portfolio securities is longer. Certain of the
Fund's investments, such as I/Os and P/Os, can be very sensitive to interest
rate changes and their values can be quite volatile. Because of this factor, the
Fund's share value and yield are not guaranteed and will fluctuate, and there
can be no assurance that the Fund's objective of seeking high current income and
conservation of principal will be achieved.
o Can the Fund's Investment Objective and Policies Change? The Fund has
an investment objective, described above, as well as investment policies it
follows to try to achieve its objective. Additionally, the Fund uses certain
investment techniques and strategies in carrying out those investment policies.
The Fund's investment policies and practices are not "fundamental" unless this
Prospectus or the Statement of Additional Information says that a particular
policy is "fundamental." The Fund's investment objective is a fundamental
policy.
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The term
"majority" is defined in the Investment Company Act to be a particular
percentage of outstanding voting shares (and this term is explained in the
Statement of Additional Information). The Fund's Board of Trustees may change
non-fundamental policies without shareholder approval, although significant
changes will be described in amendments to this Prospectus.
o Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." While short-term trading
increases portfolio turnover and may increase the Fund's
transaction costs, the Fund incurs little or no brokerage costs for
U.S. Government Securities. The Fund may sell U.S. Government
Securities without regard to the length of time the Fund has held
them. The Manager may take advantage of short-term differentials
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in yields when short-term trading is consistent with the objective of seeking
high current return and safety of principal.
High portfolio turnover may affect the ability of the Fund to qualify
as a "regulated investment company" under the Internal Revenue Code to enable
the Fund to obtain tax deductions for dividends and capital gains distributions
paid to shareholders. The Fund qualified in its fiscal year ended September 30,
1996 intends to do so in the future, although it reserves the right not to
qualify.
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 on their
use that may help to reduce some of the risks.
o "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. As a
matter of non-fundamental policy, when-issued securities may be sold prior to
the settlement date if the Fund determines that the sale is desirable for
investment reasons.
The Fund may also enter into "forward roll" transactions with banks or
other buyers that provide for future delivery of mortgage-backed securities in
which the Fund may invest. The Fund would be required to identify liquid
securities, either debt or equity, with its custodian bank in an amount equal to
its obligation under the roll.
o Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security
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<PAGE>
and simultaneously sells it to the vendor for delivery at a future date. As a
matter of fundamental policy, 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. Also 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 resale price on the delivery date, the Fund may
experience costs in disposing of the collateral and may experience losses if
there is any delay in doing so.
o Reverse Repurchase Agreements. Although the Fund currently does not
do so, it 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.
o Illiquid and Restricted Securities. Under the policies established by
the Fund's Board of Trustees, the Manager determines the liquidity of certain of
the Fund's investments. Investments may be illiquid because of the absence of an
active trading market, making it difficult to value them or dispose of them
promptly at an acceptable price. A restricted security is one that has a
contractual restriction on its resale or which cannot be sold publicly until it
is registered under the Securities Act of 1933. As a fundamental policy, the
Fund will not invest more than 5% of its total assets in illiquid or restricted
securities. The Manager monitors holdings of illiquid securities on an ongoing
basis and at times the Fund may be required to sell some holdings to maintain
adequate liquidity.
o Hedging. As described below, the Fund may purchase and sell certain
kinds of futures contracts, put and call options, and options on futures, or
enter into interest rate swap agreements. These are all referred to as "hedging
instruments." The Fund does not use hedging instruments for speculative
purposes, and has limits on the use of them, described below. The hedging
instruments the Fund may use are described below and in greater detail in "Other
Investment Techniques and Strategies" in the
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<PAGE>
Statement of Additional Information.
The Fund may buy and sell options and futures for a number of purposes.
It may do so to try to manage its exposure to the possibility that the prices of
its portfolio securities may decline, or to establish a position in the
securities market as a temporary substitute for purchasing individual
securities. It may do so to try to manage its exposure to changing interest
rates. Some of these strategies, such as selling futures, buying puts and
writing covered calls, hedge the Fund's portfolio against price fluctuations.
Other hedging strategies, such as buying futures and call options and
writing put options, tend to increase the Fund's exposure to the securities
market as a temporary substitute for purchasing securities. However, the Fund
may purchase futures contracts as a hedge with respect to certain assets, such
as I/O strips, whose values decline as interest rates decline. Writing put
options or covered call options may also provide income to the Fund for
liquidity purposes or raise cash for the Fund to distribute to shareholders.
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.
o Futures. The Fund may buy and sell futures contracts that relate to
interest rates (these are referred to as Interest Rate Futures). Interest Rate
Futures are described in "Hedging" in the Statement of Additional Information.
o Put and Call Options. The Fund may buy and sell certain kinds of put
options (puts) and call options (calls). Calls the Fund buys or sells must be
listed on a securities or commodities exchange, or quoted on the Automated
Quotation System ("NASDAQ") of the Nasdaq Stock Market, Inc., or traded in the
over-the-counter market. A call or put option may not be purchased if the value
of all of the Fund's put and call options would exceed 5% of the Fund's total
assets.
The Fund may buy calls only on securities or Interest Rate Futures, or
to terminate its obligation on a call the Fund previously wrote. The Fund may
write (that is, sell) covered call options.
When the Fund writes a call, it receives cash (called a
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<PAGE>
premium). The call gives the buyer the ability to buy the investment on which
the call was written from the Fund at the call price during the period in which
the call may be exercised. If the value of the investment does not rise above
the call price, it is likely that the call will lapse without being exercised,
while the Fund keeps the cash premium (and the investment). After the Fund
writes a call, not more than 25% of the Fund's total assets may be subject to
calls. Each call the Fund writes must be "covered" while it is outstanding. That
means the Fund owns the investment on which the call was written or securities
that are acceptable for the escrow requirements. The Fund may write calls on
Futures contracts it owns, but these calls must be covered by securities or
other liquid assets the Fund owns and segregates to enable it to satisfy its
obligations if the call is exercised.
The Fund may purchase put options. Buying a put on an investment gives
the Fund the right to sell the investment at a set price to a seller of a put on
that investment. The Fund can buy puts (whether or not it holds such securities
in its portfolio) or Interest Rate Futures. The Fund can buy a put on an
Interest Rate Future whether or not the Fund owns the particular Future in its
portfolio. The Fund may write puts on securities or Interest Rate Futures in an
amount up to 50% of its total assets only if such puts are covered by segregated
liquid assets. In writing puts, there is a risk that the Fund may be required to
buy the underlying security at a disadvantageous price.
o Interest Rate Swaps. In an interest rate swap, the Fund and another
party exchange their right to receive or their obligation to pay interest on a
security. For example, they may swap a right to receive floating rate payments
for fixed rate payments. The Fund enters into swaps only on securities it owns.
The Fund may not enter into swaps with respect to more than 25% of its total
assets. Also, the Fund will segregate liquid assets (such as cash or U.S.
Government securities) to cover any amounts it could owe under swaps that exceed
the amounts it is entitled to receive, and it will adjust that amount daily, as
needed. Income from interest rate swaps may be taxable.
o Hedging instruments can be volatile investments and may involve
special risks. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different from what is required for
normal portfolio management. If the Manager uses a hedging instrument at the
wrong time or judges market conditions incorrectly, hedging strategies may
reduce
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<PAGE>
the Fund's return. The Fund could also experience losses if the prices of its
futures and options positions were not correlated with its other investments or
if it could not close out a position because of an illiquid market for the
future or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. If a covered call written by the Fund is exercised on an investment
that has increased in value, the Fund will be required to sell the investment at
the call price and will not be able to realize any profit if the investment has
increased in value above the call price. In writing puts, there is a 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. The Fund could be
obligated to pay more under its swap agreements than it receives under them, as
a result of interest rate changes. These risks are described in greater detail
in the Statement of Additional Information.
o Derivative Investments. The Fund can invest in a number of different
kinds of "derivative investments." The Fund may use some types of derivatives
for hedging purposes and may invest in others because they offer the potential
for increased income and principal value. In general, a "derivative investment"
is a specially-designed investment whose performance is linked to the
performance of another investment or security, such as an option, future or
index. In the broadest sense, derivative investments include exchange-traded
options and futures contracts (please refer to "Hedging," above). CMO's,
interest rate swaps, and "interest-only" and "principal-only" securities may
also be considered derivative investments.
One risk of investing in derivative investments is that the company
issuing the instrument might not pay the amount due on the maturity of the
instrument. There is also the risk that the underlying investment or security
might not perform the way the Manager expected it to perform. The performance of
derivative investments may also be influenced by interest rate changes in the
U.S. and abroad. All of these risks can mean that the Fund will realize less
income than expected from its investments, or that it can lose part of the value
of its investments, which will affect the Fund's share price. Certain derivative
investments held by the Fund may trade in the over-the-counter markets and may
be illiquid. If that is the case, the Fund's investment in them will be limited
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as discussed in "Illiquid and Restricted Securities".
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:
o The Fund cannot 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.
The 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
Fund's Board of Trustees.
o The Fund cannot enter into a repurchase transaction that will cause
more than 25% of the Fund's total assets to be subject to such agreements.
o The Fund cannot 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. Such loans must be 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.
o The Fund cannot purchase restricted or illiquid securities (including
repurchase agreements of more than seven days' maturity and other securities
that are not readily marketable) if more than 5% of the Fund's total assets
would be invested in such securities.
o The Fund cannot 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.
o The Fund cannot deviate from its other fundamental policies described
in "Investment Objective and Policies" and "Other Investment Techniques and
Strategies" in the Statement of Additional Information.
Unless the Prospectus states that a percentage restriction
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applies on an ongoing basis, it applies only at the time the Fund makes the
investment, and the Fund need not sell securities to meet the percentage limits
if the value of the investment increases in proportion to the size of the Fund.
Other investment restrictions are listed in "Other Investment Restrictions" in
the Statement of Additional Information.
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 under
Massachusetts law for protecting the interests of shareholders. The Trustees
meet periodically throughout the year to oversee the Fund's activities, review
its performance, and review the actions of the Manager. "Trustees and Officers
of the Fund" in the Statement of Additional Information names the Trustees and
officers of the Fund and provides more information about them. Although the Fund
will not normally hold annual meetings of its shareholders, it may hold
shareholder meetings from time to time on important matters, and shareholders
have the right to call a meeting to remove a Trustee or to take other action
described in the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board has done
so, and the Fund currently has three classes of shares, Class A, Class B and
Class C. All classes invest in the same investment portfolio. Each class has its
own dividends and distributions, and pays certain expenses which may be
different for the different classes. Each class may have a different net asset
value. Each share has one vote at shareholder meetings, with fractional shares
voting proportionally on matters submitted to the vote of shareholders. Shares
of each class may have separate voting rights on matters in which interests of
one class are different from interests of another class, and shares of a
particular class vote as a class on matters that affect that class alone. Shares
are freely transferrable. Please refer to "How the Fund is Managed" in the
Statement of Additional Information on voting of shares.
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The Manager and Its Affiliates. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the Fund's
investments and handles its day-to-day business. The Manager carries out its
duties, subject to the policies established by the Board of Trustees, under an
Investment Advisory Agreement which states the Manager's responsibilities and
its fees. The Agreement sets forth the fees paid by the Fund to the Manager, and
describes the expenses that the Fund is responsible to pay to conduct its
business.
The Manager has operated as an investment advisor since 1959. The
Manager and its affiliates currently manages investment companies, including
other Oppenheimer funds, with assets of more than $62 billion as of December
31,1996, and with more than 3 million shareholder accounts. The Manager is owned
by Oppenheimer Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts Mutual Life
Insurance Company.
o Portfolio Manager. The Portfolio Manager of the Fund is
David A. Rosenberg. He is a Vice President of the Fund and of the
Manager and has been the person principally responsible for the
day-to-day management of the Fund's portfolio since January, 1994.
Mr. Rosenberg also serves as a portfolio manager of other
Oppenheimer funds. Previously he was an officer and portfolio
manager for Delaware Investment Advisors and for one of its mutual
funds.
o 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 average annual net assets in excess of $500 million. The Fund's
management fee for its fiscal year ended September 30, 1996, was 0.44% of
average annual net assets for Class A, Class B and Class C 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
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Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of Additional
Information. That section discusses how brokers and dealers are selected for the
Fund's portfolio transactions. Because the Fund purchases most of its portfolio
securities directly from the sellers and not through brokers, it therefore
incurs relatively little expenses for brokerage. From time to time it may use
brokers when buying portfolio securities. When deciding which brokers to use,
the Manager is permitted by the Investment Advisory Agreement to consider
whether brokers have sold shares of the Fund or any other funds for which the
Manager serves as investment advisor.
o The Distributor. The Fund's shares are sold through dealers, brokers
and other financial institutions that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager that acts as the
Fund's Distributor. The Distributor also distributes the shares of the other
Oppenheimer funds and is sub-distributor for funds managed by a subsidiary of
the Manager.
o The Transfer Agent. The Fund's transfer agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder servicing
agent for the Fund on an "at-cost" basis. It also acts as the shareholder
servicing agent for other Oppenheimer funds. Shareholders should direct
inquiries about their accounts, to the Transfer Agent at the address and
toll-free number shown below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total return"
and "yield" to illustrate its performance. The performance of each class of
shares is shown separately, because the performance of each class of shares will
usually be different as a result of the different kinds of expenses each class
bears. These returns measure the performance of a hypothetical account in the
Fund over various periods, and do not show the performance of each shareholder's
account (which will vary if dividends are received in cash, or shares are sold
or purchased). The Fund's performance data may help you see how well your
investment has done over time and to compare it to other mutual funds or market
indices, as we have done below.
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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 over time, depending on market
conditions, the composition of the portfolio, expenses and which class of shares
you purchase.
o Total Returns. There are different types of "total returns" used to
measure the Fund's performance. Total return is the change in value of a
hypothetical investment in the Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares.
The cumulative total return measures the change in value over the entire period
(for example, ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the cumulative total
return over the entire period. However, average annual total returns do not show
the Fund's actual year-by-year performance.
When total returns are quoted for Class A shares, normally the current
maximum initial sales charge has been deducted. When total returns are shown for
Class B or Class C shares, normally the contingent deferred sales charge that
applies to the period for which total return is shown has been deducted.
However, total returns may also be quoted at "net asset value," without
including the effect of the sales charge and those returns would be less if
sales charges were deducted.
o 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,
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<PAGE>
but may also be shown based on the Fund's net asset value per share. Yields for
Class B shares and Class C shares do not reflect the deduction of the contingent
deferred sales charge.
How Has the Fund Performed? Below is a discussion by the Manager of the Fund's
performance during its last fiscal year ended September 30, 1996, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
o Management's Discussion of Performance. The Fund exhibited strong
performance for the fiscal year ended September 30, 1996 which can be attributed
to two factors: (i) the Fund increased its investment in higher-yielding
mortgage backed securities which increased in value as prepayments declined; and
(ii) the Fund's overall average maturity of its portfolio was reduced which
contributed to the Fund's positive performance during periods of rising interest
rates. Rising interest rates in the United States during the past year led to a
generally declining fixed income market. To counteract the decline in yields on
U.S. Treasury securities, the Fund shifted more of its assets to the mortgage
backed securities market where higher yields could be obtained. Additionally,
shorter duration assets tend to outperform longer duration assets during periods
of rising interest rates. The Fund's portfolio and its portfolio manager's
strategies are subject to change.
o Comparing the Fund's Performance to the Market. The charts below show
the performance of hypothetical $10,000 investment in Class A, Class B and Class
C shares of the Fund held until September 30, 1996 in the case of Class A
shares, since March 10, 1986 (inception of Fund), in the case of Class B shares,
from the inception of the class on May 3, 1993 and in the case of Class C
shares, from the inception of the Class on February 1, 1995. In all cases all
dividends and capital gains distributions were reinvested in additional shares.
The Fund had a different investment advisor prior to April 7, 1990. The Fund's
maximum initial sales charge for Class A shares and contingent deferred sales
charges for Class B shares were reduced effective April 1, 1994, so that actual
results for prior periods would have been less. The graph reflects the deduction
of the 3.50% current maximum initial sales charge on Class A shares, the maximum
contingent deferred sales charge of 4% on Class B shares and the 1% contingent
deferred sales charge on Class C shares during the first year.
The graphs on the following pages compare the Fund's
25
<PAGE>
performance against the Lehman Brothers U.S. Government Bond Index, a
broad-based unmanaged index of U.S. Treasury issues, publicly- issued debt of
U.S. Government agencies and quasi-public corporations and corporate debt
guaranteed by the U.S. Government. That index is widely used to measure the
performance of the U.S. Government securities market. The graphs below also
compare the Fund's performance against the Lehman Brothers 1 - 3 Year Government
Bond Index, an unmanaged sector index of U.S. Treasury issues, publicly-issued
debt of U.S. Government agencies and quasi-public corporations and corporate
debt guaranteed by the U.S. Government with maturities of one to three years.
This secondary index comparison is included to reflect the adoption by the Fund,
effective May 1, 1994, of the investment policy that the Fund will, under normal
circumstances, seek to maintain a dollar-weighted average portfolio effective
duration of not more than three years.
Index performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none of the data
below shows the effect of taxes. Also, the Fund's performance reflects the
effect of Fund business and operating expenses. While index comparisons may be
useful to provide a benchmark for the Fund's performance, it must be noted that
the Fund's investments are not limited to the securities in any one index and
the index data does not reflect any assessment of the risk of the investments
included in the index.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
In:
Oppenheimer Limited-Term Government Fund, Lehman Bros. U.S.
Government Bond Index and Lehman Bros. 1-3 Year Government Bond
Index
[Graph]
Average Annual Total Returns of Class A Shares of the Fund at
9/30/961:
1 Year 5 Year Life
- ------- ------ ----
1.85% 5.56% 7.63%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
In:
Oppenheimer Limited-Term Government Fund, Lehman Bros. U.S.
26
<PAGE>
Government Bond Index and Lehman Bros. 1-3 Year Government Bond
Index
[Graph]
Average Annual Total Returns of Class B Shares of the Fund at
9/30/962:
1 Year Life
- ------ ------
.81% 3.75%
Total returns and the ending account values in the graphs show change in share
value and include reinvestment of all dividends and capital gains distributions.
1 The inception date of the Fund (Class A shares) was 3/10/86. The average
annual total returns and the ending account value are shown net of the current
3.50% maximum initial sales charge. 2 Class B shares of the Fund were first
publicly offered on 5/3/93. The average annual total returns reflect
reinvestment of all dividends and capital gains distributions and are shown net
of the applicable 4% and 2% contingent deferred sales charges, respectively, for
the one year period and life of the class. The ending account value for Class B
shares in the graph is net of the applicable 2% contingent deferred sales
charge. Past performance is not predictive of future performance. Graphs are not
drawn to same scale.
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
In:
Oppenheimer Limited-Term Government Fund, Lehman Bros. U.S.
Government Bond Index and Lehman Bros. 1-3 Year Government Bond
Index
[Graph]
Average Annual Total Returns of Class C Shares of the Fund at
9/30/963:
1 Year Life
- ------ -----
3.73% 6.15%
Total returns and ending account values in the graphs show change in share value
and include reinvestment of all dividends and
27
<PAGE>
capital gains distributions.
3 Class C shares of the Fund were first publicly offered on 2/1/95. The
cumulative total return and the ending account value in the graph reflect
reinvestment of all dividends and capital gains distributions and are shown net
of the 1% contingent deferred sales charge for the period. Past performance is
not predictive of future performance.
28
<PAGE>
A B O U T Y O U R A C C O U N T
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of shares.
The different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices.
o Class A Shares. If you buy Class A shares, you pay an initial sales
charge on investments up to $1 million (up to $500,000 for purchases by
"Retirement Plans" as defined in "Class A Contingent Deferred Sales Charge" on
page 30 Total returns and the ending account values in the graphs show change in
share value and include reinvestment of all dividends and capital gains
distributions. 1 The inception date of the Fund (Class A shares) was 3/10/86.
The average annual total returns and the ending account value are shown net of
the current 3.50% maximum initial sales charge. 2 Class B shares of the Fund
were first publicly offered on 5/3/93. The average annual total returns reflect
reinvestment of all dividends and capital gains distributions and are shown net
of the applicable 4% and 2% contingent deferred sales charges, respectively, for
the one year period and life of the class. The ending account value for Class B
shares in the graph is net of the applicable 2% contingent deferred sales
charge.). If you purchase Class A shares as part of an investment of at least $1
million ($500,000 for Retirement Plans) in shares of one or more Oppenheimer
funds, you will not pay an initial sales charge, but if you sell any of those
shares within 18 months of buying them, you may pay a contingent deferred sales
charge. The amount of that sales charge will vary depending on the amount you
invested. Sales charge rates are described in "Buying Class A Shares," below.
o 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 of buying
them, you will normally pay a contingent deferred sales charge. That sales
charge varies depending on how long you owned your shares as described in
"Buying Class B Shares" below.
o Class C Shares. If you buy Class C shares, you pay no sales charge at
the time of purchase, but if you sell your shares within 12 months of buying
them, you will normally pay a contingent deferred sales charge of 1%, as
discussed in "Buying Class C
29
<PAGE>
Shares," below.
Which Class of Shares Should You Choose? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. The Fund's operating costs that apply to a
class of shares and the effect of the different types of sales charges on your
investment will vary your investment results over time. The most important
factors are how much you plan to invest and how long you plan to hold your
investment. If your goals and objectives change over time and you plan to
purchase additional shares, you should re-evaluate those factors to see if you
should consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the sales
charge rates that apply to each class, and considered the effect of the
asset-based sales charge on Class B and Class C expenses (which, like all
expenses, will affect your investment return). For the sake of comparison, we
have assumed that there is a 10% rate of appreciation in your investment each
year. Of course, the actual performance of your investment cannot be predicted
and will vary, based on the Fund's actual investment returns, and the operating
expenses borne by each class of shares, and which class of shares you invest in.
The factors discussed below are not intended to be investment advice,
guidelines or recommendations, because each investor's financial considerations
are different. The discussion below of the factors to consider in purchasing a
particular class of shares assumes that you will purchase only one class of
shares and not a combination of shares of different classes.
o How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long you expect
to hold your investment will assist you in selecting the appropriate class of
shares. Because of the effect of class-based expenses your choice will also
depend on how much you invest. For example, the reduced sales charges available
for larger purchases of Class A shares may, over time, offset the effect of
paying an initial sales charge on your investment (which reduces the amount of
your investment dollars used to buy shares for your account), compared to the
effect over time or higher
30
<PAGE>
class-based expenses on the shares of Class B or Class C for which no initial
sales charge is paid.
o Investing for the Short Term. If you have a short term investment
horizon (that is, you plan to hold your shares for not more than five years),
you should probably consider purchasing Class A or Class C shares rather Class B
shares. Because of the effect of the Class B contingent deferred sales charge if
you redeem in less than seven years, as well as the effect of the Class B
asset-based sales charge on the investment return for that class in the
short-term, Class C shares might be the appropriate choice (especially for
investments of less than $100,000), because there is no initial sales charge on
Class C shares, and the contingent deferred sales charge does not apply to
amounts you sell after holding them one year.
However, if you plan to invest more than $100,000 for the shorter term,
then the more you invest and the more your investment horizon increases toward
five years Class C shares might not be as advantageous as Class A shares. That
is because the annual asset-based sales charge on Class C shares will have a
greater economic impact on your account over the longer term than the reduced
front-end sales charge available for larger purchases of Class A shares. For
example, Class A might be more advantageous than Class C (as well as Class B)
for investments of more than $100,000 expected to be held for 5 or 6 years (or
more), Class A shares may become more advantageous than class C (and B). If
investing $500,000 or more, Class A may be more advantageous as your investment
horizon approaches 3 years or more.
For investors who invest $1 million or more, in most cases Class A
shares will be the most advantageous choice, no matter how long you intend to
hold your shares. For that reason, the Distributor normally will not accept
purchase orders of $500,000 or more of Class B shares or $1 million or more of
Class C shares from a single investor.
o Investing for the Longer Term. If you are investing for the longer
term, for example, for retirement, and do not expect to need access to your
money for six years or more, Class B shares may be an appropriate consideration
if you plan to invest less than $100,000. If you plan to invest more than
$100,000 over the long term, Class A shares will likely be more advantageous
than Class B shares or Class C shares, as discussed above, because of the effect
of the expected lower expenses for Class A shares and the reduced
31
<PAGE>
initial sales charge available for larger investments in Class A shares under
the Fund's Right of Accumulation.
Of course all of these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical investment over
time, using the assumed annual performance return stated above, and therefore
you should analyze your options carefully.
o Are There Differences in Account Features That Matter To You? Because
some features (such as check writing) may not be available to Class B or C
shareholders, or other features (such as Automatic Withdrawal Plans) may not be
advisable (because of the effect of the contingent deferred sales charge in
non-retirement accounts) for Class B or Class C shareholders, you should
carefully review how you plan to use your investment account before deciding
which class of shares to buy. For example, share certificates are not available
for Class B or Class C shares and if you are considering using your shares as
collateral for a loan, this may be a factor to consider. Additionally, dividends
payable to Class B and Class C shareholders will be reduced by the additional
expenses borne by those classes that are not borne by Class A, such as the Class
B and Class C asset-based sales charges described below and in the Statement of
Additional Information.
o How Does It Affect Payments to My Broker? A salesperson, such as a
broker, or any other person who is entitled to receive compensation for selling
Fund shares, may receive different compensation for selling one class than for
selling another class. It is important that investors understand that the
purpose of the Class B and Class C contingent deferred sales charges and
asset-based sales charges are the same as the purpose of the front-end sales
charge on sales of Class A shares: to compensate the Distributor for commissions
it pays to dealers and financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans:
o 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
32
<PAGE>
through AccountLink.
o Under pension and profit-sharing plans, 401(k)plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of as little as
$250 (if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
o There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other Oppenheimer funds (a list of
them appears in the Statement of Additional Information, or you can ask your
dealer or call the Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
o 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, directly through the Distributor, or automatically from your bank
account through an Asset Builder Plan under the OppenheimerFunds AccountLink
service. The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase and redemption orders. When you buy
shares, be sure to specify Class A, Class B or Class C shares. If you do not
choose, your investment will be made in Class A shares.
o Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
o Buying Shares Through the Distributor. Complete an OppenheimerFunds
New Account Application and return it with a check payable to "OppenheimerFunds
Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If you
don't list a dealer on the application, the Distributor will act as your agent
in buying the shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for you.
o Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) member to
transmit funds electronically to purchase shares, to have the Transfer Agent
send redemption proceeds, or to transmit dividends and distributions.
33
<PAGE>
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH transfer
to buy shares. You can provide those instructions automatically, under an Asset
Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions used to
establish your account. Please refer to "AccountLink," below for more details.
o Asset Builder Plans. You may purchase shares of the Fund (and up to
four other Oppenheimer funds) automatically each month from your account at a
bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are in the Statement of Additional Information.
o At What Prices Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge that
applies) that is next determined after the Distributor receives the purchase
order in Denver, Colorado. In most cases, to enable you to receive that day's
offering price, the Distributor or its designated agent must receive your order
by the time of day The New York Stock Exchange closes, which is normally 4:00
P.M., New York time, but may be earlier on some days (all references to time in
this Prospectus mean "New York time"). The net asset value of each class of
shares is determined as of that time on each day The New York Stock Exchange is
open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your order
by the close of The New York Stock Exchange on a regular business day and
transmit it to the Distributor so that it is received before the Distributor's
close of business that day, which is normally 5:00 P.M. The Distributor, in its
sole discretion, may reject any purchase order for the Fund's shares.
Special Sales Charge Arrangements for Certain Persons. Appendix A to this
Prospectus sets forth conditions for the waiver of, or exemption from, sales
charges or the special sales charge rates that apply to purchases of shares of
the Fund (including purchases by exchange) by a person who was a shareholder of
one of the Former Quest for Value Funds (as defined in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales
34
<PAGE>
charge. However, in some cases, described below, where purchases are not subject
to an initial sales charge, and the offering price may be net asset value. In
some cases, reduced sales charges may be available, as described below. Out of
the amount you invest, the Fund receives the net asset value to invest for your
account. The sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor and allocated to
your dealer as commission. 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 Front-End
Sales Charge Sales Charge Commission as
As Percentage of As Percentage of As Percentage of
Amount of Purchase Offering Price Amount 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.
o Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more of the
Oppenheimer funds in the following cases:
o purchases aggregating $1 million or more, or
o purchases by a retirement plan qualified under sections 401(a) or
401(k) of the Internal Revenue Code, by a non-qualified deferred compensation
plan (not including Section 457 plans), employee benefit plan, group retirement
plan, an employee's 403(b)(7) custodial plan, SEP IRA, SARSEP, or SIMPLE plan
(all of these plans are collectively referred to as "Retirement Plans"), that:
(1) buys shares costing
35
<PAGE>
$500,000 or more or (2) has, at the time of purchase, 100 or more eligible
participants, or (3) certifies that it projects to have annual plan purchases of
$200,000 or more.
o purchases by an OppenheimerFunds Rollover IRA if the purchases are
made (1) through a broker, dealer, bank or registered investment advisor that
has made special arrangements with the Distributor for these purchases, or (2)
by a direct rollover of a distribution from a qualified retirement plan if the
administrator of that plan has made special arrangements with the Distributor
for those purchases.
The Distributor pays dealers of record commissions on those purchases
in an amount equal to (1) 1.0% for non-Retirement Plan accounts; and (ii) for
Retirement Plan accounts, 1.0% of the first $2.5 million, plus 0.50% of the next
$2.5 million, plus 0.25% of purchases over $5 million. That commission will be
paid only on those purchases that were not previously subject to a front-end
sales charge and dealer commission. No sales commission will be paid to the
dealer, broker or financial institution on sales of Class A shares purchased
with the redemption proceeds of shares of a mutual fund offered as an investment
option in a Retirement Plan in which Oppenheimer funds are also offered as
investment options under a special arrangement with the Distributor if the
purchase occurs more than 30 days after the addition of the Oppenheimer funds as
an investment option to the Retirement Plan.
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 may be equal to 1.0% of the lesser of (1) the
aggregate net asset value of the redeemed shares (not including shares purchased
by reinvestment of dividends or capital gain distributions) or (2) the original
offering price(which is the original net asset value) of the redeemed shares.
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 Oppenheimer funds you purchased subject to the Class A contingent
deferred sales charge.
In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
36
<PAGE>
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.
o 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.
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:
o Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can add
together Class A and Class B shares you purchase for your individual accounts,
or jointly, or for trust or custodial accounts on behalf of your children who
are minors. A fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit plans of the
same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and
Class B shares of the Fund and other Oppenheimer funds to reduce the sales
charge rate for current purchases of Class A shares. You can also include Class
A and Class B shares of Oppenheimer funds you previously purchased subject to an
initial or contingent deferred sales charge to reduce the sales charge rate for
current purchases of Class A shares, provided that you still hold your
investment in one of the Oppenheimer funds. The value of those shares will be
based on the greater of the amount you paid for the shares or their current
value (at offering price). The Oppenheimer funds are listed in "Reduced Sales
Charges" in the Statement of Additional Information, or a list can be obtained
from the Distributor. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
o Letter of Intent. Under a Letter of Intent, if you purchase Class A
shares or Class A and Class B shares of the Fund and other Oppenheimer funds
during a 13-month period, you can reduce the sales charge rate that applies to
your purchases of Class A shares. The total amount of your intended purchases of
both Class A and Class B shares will determine the reduced sales charge rate for
the Class A
37
<PAGE>
shares purchased during that period. More information is contained in the
Application and in "Reduced Sales Charges" in the Statement of Additional
Information.
o Waivers of Class A Sales Charges. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of this
policy in "Reduced Sales Charges" in the Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not subject
to any Class A sales charges:
o the Manager or its affiliates;
o 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;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o 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;
o 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);
o dealers, brokers or registered investment advisors that have entered
into an agreement with the Distributor providing specifically for the use of
shares of the Fund in particular investment products or employee benefit plans
made available to their clients (those clients may be charged a transaction fee
by their dealer, broker, bank or advisor for the purchase or sale of Fund
shares);
o (1) investment advisors and financial planners who charge an
advisory, consulting or other fee for their services and buy shares for their
own accounts or the accounts of their clients, (2) Retirement Plans and deferred
compensation plans and trusts used to fund those Plans (including, for example,
plans qualified or created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own accounts, in
each case if those purchases are made through a broker or agent or other
financial
38
<PAGE>
intermediary that has made special arrangements with the Distributor for those
purchases; and (3) clients of such investment advisors or financial planners who
buy shares for their own accounts may also purchase shares without sales charge
but only if their accounts are linked to a master account of their investment
advisor or financial planner on the books and records of the broker, agent or
financial intermediary with which the Distributor has made such special
arrangements (each of these investors may be charged a fee by the broker, agent
or financial intermediary for purchasing shares);
o directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those persons;
o accounts for which Oppenheimer Capital is the investment advisor (the
Distributor must be advised of this arrangement) and persons who are directors
or trustees of the company or trust which is the beneficial owner of such
accounts;
o any unit investment trust that has entered into an appropriate
agreement with the Distributor;
o a TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value Fund were
exchanged for Class A shares of that Fund due to the termination of the Class A
shares of that Fund due to the termination of the Class B and TRAC-2000 program
on November 24, 1995; or
o qualified retirement plans that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for Value Funds at
net asset value, with such shares to be held through DCXchange, a sub-transfer
agency mutual fund clearinghouse, provided that such arrangements are
consummated and share purchases commenced by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following transactions
are not subject to Class A sales charges:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
o shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or one of its affiliates
acts as sponsor;
o shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which reinvestment
arrangements have been made with the Distributor;
o shares purchased and paid for with the proceeds of shares redeemed in
the past 12 months from a mutual fund (other than a fund managed by the Manager
or any of its subsidiaries) on which an initial
39
<PAGE>
sales charge or contingent deferred sales charge was paid (this waiver also
applies to shares purchased by exchange of shares of Oppenheimer Money Market
Fund, Inc. that were purchased and paid for in this manner); this waiver must be
requested when the purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this waiver; and
o shares purchased with the proceeds of maturing principal of units of
any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge is also waived if
shares that would otherwise be subject to the contingent deferred sales charge
are redeemed in the following cases:
o to make Automatic Withdrawal Plan payments that are limited annually
to no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales charge, the
dealer agrees in writing to accept the dealer's portion of the commission
payable on the sale in installments of 1/18th of the commission per month (and
no further commission will be payable if the shares are redeemed within 18
months of purchase);
o for distributions from TRAC-2000 401(k) plan sponsored by the
Distributor due to the termination of the TRAC-2000 program;
o for distributions from Retirement Plans, deferred compensation plans
or other employee benefit plans for any of the following purposes: (1) following
the death or disability (as defined in the Internal Revenue Code) of the
participant or beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess contributions; (3)
to return contributions made due to a mistake of fact; (4) hardship withdrawals,
as defined in the plan; (5) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (6) to meet the minimum distribution
requirements of the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal Revenue Code;
(8) for retirement distributions or loans to participants or beneficiaries; (9)
separation from service; (10) participant-directed redemptions to purchase
shares of a mutual fund (other than a fund managed by the Manger or its
subsidiary) offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a special
arrangement with the Distributor; or (11) plan termination or "in-service
40
<PAGE>
distributions", if the redemption proceeds are rolled over directly to
an OppenheimerFunds IRA.
o 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.
Buying Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed within
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 contingent deferred sales charge will be based on the lesser
of the net asset value of the redeemed shares at the time of redemption or the
original purchase price (which is the original net asset value). The contingent
deferred sales charge is not imposed on the amount of your account value
represented by the increase in net asset value over the initial purchase price.
The Class B contingent deferred sales charge is paid to the Distributor to
compensate it for 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)
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<PAGE>
shares acquired by reinvestment of dividends and capital gains distributions,
(2) shares held for over 5 years, and (3) shares held the longest during the
5-year period. The contingent deferred sales charge is not imposed in the
circumstances described in "Waivers of Class B and Class C Sales Charges,"
below.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
<TABLE>
<CAPTION>
Years Since Beginning of Contingent Deferred Sales Charge
Month in which On Redemptions in That Year
Purchase Order Was Accepted (As % of Amount Subject to Charge)
<S> <C>
- ------------------------------------------------------------------
0-1 4.0%
- ------------------------------------------------------------------
1-2 3.0%
- ------------------------------------------------------------------
2-3 2.0%
- ------------------------------------------------------------------
3-4 2.0%
- ------------------------------------------------------------------
4-5 1.0%
- ------------------------------------------------------------------
5 and following None
</TABLE>
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the month in
which the purchase was made. Different contingent deferred sales charges applied
to redemptions of Class B shares prior to April 1, 1994.
o Automatic Conversion of Class B Shares. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares. This
conversion feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution and Service Plan,
described below. The conversion is based on the relative net asset value of the
two classes, and no sales load or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends and distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A, Class B and Class
C Shares" in the
42
<PAGE>
Statement of Additional Information.
Buying Class C Shares. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed within
12 months of their purchase, a contingent deferred sales charge of 1.0% will be
deducted from the redemption proceeds. That sales charge will not apply to
shares purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based on the lesser
of the net asset value of the redeemed shares at the time of redemption or the
original purchase price (which is the original net asset value). The contingent
deferred sales charge is not imposed on the amount of your account value
represented by the increase in net asset value over the initial purchase price.
The Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related services to the
Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 12 months, and (3) shares held the longest during the 12-month period.
All purchases are considered to have been made on the first regular business day
of the month in which the purchase was made.
o Distribution and Service Plans for Class B and Class C Shares. The
Fund has adopted Distribution and Service Plans for Class B and Class C shares
to compensate the Distributor for distributing Class B and C shares and
servicing accounts. Under the Plans, the Fund pays the Distributor an annual
"asset-based sales charge" of 0.75% per year on Class B shares that are
outstanding for 6 years or less and on Class C shares. The Distributor also
receives a service fee of 0.25% per year under each plan.
Under each Plan, both fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. The asset-based sales charge and service
fees increase Class B and Class C expenses by up to 1.00% of the net assets per
year of the respective class.
The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or C shares. Those
services are similar to those provided under the Class A Service Plan, described
above. The Distributor pays the 0.25% service fees to
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<PAGE>
dealers in advance for the first year after Class B or Class C shares have been
sold by the dealer and retains the service fee paid by the Fund in that year.
After the shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B or C
shares without a front-end sales charge while allowing the Distributor to
compensate dealers that sell those shares. The Fund pays the asset-based sales
charges to the Distributor for its services rendered in distributing Class B and
Class C shares. Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor include paying
and financing the payment of sales commissions, service fees and other costs of
distributing and selling Class B and Class C shares.
The Distributor currently pays sales commissions of 2.75% of the
purchase price of Class B shares to dealers from its own resources at the time
of sale. Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sales of Class B shares is 3.00% of the
purchase price. The Distributor retains the Class B asset-based sales charge.
The Distributor currently pays sales commissions of 0.75% of the
purchase price of Class C shares to dealers from its own resources at the time
of sale. Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class C shares is therefore
1.00% of the purchase price. The Distributor plans to pay the asset-based sales
charge as an ongoing commission to the dealer on Class C shares that have been
outstanding for a year or more.
The Distributor's actual expenses in selling Class B and C shares may
be more than the payments it receives from contingent deferred sales charges
collected on redeemed shares and from the Fund under the Distribution and
Service Plans for Class B and C shares. Therefore, those expenses may be carried
over and paid in future years. At September 30, 1996, the end of the Class B and
Class C Plan year, the Distributor had incurred unreimbursed expenses under the
Class B Plan of $4,393,354 (equal to 2.74% of the Fund's net assets represented
by Class B shares on that date), and unreimbursed expenses under the Class C
Plan of $612,203(equal to 1.35% of the Fund's net assets represented by Class C
shares on that date) which have been carried over into the present Plan year. If
either Plan is terminated by the Fund, the Board of Trustees may allow the Fund
to continue payments of the asset-based sales charge to the Distributor for
distributing shares before the Plan
44
<PAGE>
was terminated.
o Waivers of Class B and Class C Sales Charges. The Class B and Class C
contingent deferred sales charges will not be applied to shares purchased in
certain types of transactions nor will it apply to Class B and Class C shares
redeemed in certain circumstances as described below. The reasons for this
policy are in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers for Redemptions in Certain Cases. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares in
the following cases, if the Transfer Agent is notified that these conditions
apply to the redemption:
o distributions to participants or beneficiaries from Retirement Plans,
if the distributions are made (a) under an Automatic Withdrawal Plan after the
participant reaches age 59-1/2, as long as the payments are no more than 10% of
the account value annually (measured from the date the Transfer Agent receives
the request), or (b) following the death or disability (as defined in the
Internal Revenue Code) of the participant or beneficiary (the death or
disability must have occurred after the account was established);
o redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder including a trustee of a
"grantor" trust or revocable living trust for which the trustee is also the sole
beneficiary (the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a determination of
disability by the Social Security Administration);
o returns of excess contributions to Retirement Plans; o distributions
from retirement plans to make "substantially equal
periodic payments" as permitted in Section 72(t) of the Internal Revenue Code
that do not exceed 10% of the account value annually, measured from the date the
Transfer Agent receives the request; or
o distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as defined
in the Internal Revenue Code; (3) to meet minimum distribution requirements as
defined in the Internal Revenue Code; (4) to make "substantially equal periodic
payments" as described in Section 72(t) of the Internal Revenue Code; or (5) for
separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C shares
sold or issued in the following cases:
o shares sold to the Manager or its affiliates;
o 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;
45
<PAGE>
o shares issued in plans of reorganization to which the Fund is a
party; and
o shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send money
electronically between those accounts to perform a number of types of account
transactions. These include purchases of shares by telephone (either through a
service representative or by PhoneLink, described below), automatic investments
under Asset Builder Plans, and sending dividends and distributions or Automatic
Withdrawal Plan payments directly to your bank account. Please call the Transfer
Agent for more information.
AccountLink privileges should be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can request
AccountLink privileges by sending signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each shareholder listed in
the registration on your account as well as to your dealer representative of
record unless and until the Transfer Agent receives written instructions
terminating or changing those privileges. After you establish AccountLink for
your account, any change of bank account information must be made by
signature-guaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.
o 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.
o 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.
o Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
46
<PAGE>
established AccountLink privileges to link your bank account with the Fund, to
pay for these purchases.
o Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your Fund
account to another Oppenheimer funds account you have already established by
calling the special PhoneLink number. Please refer to "How to Exchange Shares,"
below, for details.
o Selling Shares. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account. Please refer to "How to Sell Shares," below for
details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that enable
you to sell shares automatically or exchange them to another Oppenheimer funds
account on a regular basis:
o Automatic Withdrawal Plans. If your Fund account is worth $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 Statement of Additional Information for more
details.
o Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of up to
five other Oppenheimer funds on a monthly, quarterly, semi-annual or annual
basis under an Automatic Exchange Plan. The minimum purchase for each other
Oppenheimer funds account is $25. These exchanges are subject to the terms of
the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A or Class B
shares of the Fund, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies to Class A shares that you
purchased subject to an initial sales charge and to Class A or Class B shares on
which you paid a contingent deferred sales charge when you redeemed them. This
privilege does not apply to Class C shares. You must be sure to ask the
Distributor for this privilege when you send your payment. Please consult the
Statement of Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your
47
<PAGE>
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:
o Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
o 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable
organizations
o SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment
o Pension and Profit-Sharing Plans for self-employed persons and
other employers
o 401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day. Your shares
will be sold at the next net asset value calculated after your order is received
and accepted by the Transfer Agent. The Fund offers you a number of ways to sell
your shares: in writing, or by using the Fund's check writing 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.
o 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.
48
<PAGE>
o 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):
o You wish to redeem more than $50,000 worth of shares and receive
a check
o The redemption check is not payable to all shareholders listed
on the account statement
o The redemption check is not sent to the address of record on
your account statement
o Shares are being transferred to a Fund account with a different
owner or name
o Shares are redeemed by someone other than the owners (such as an
Executor)
o Where Can I Have My Signature Guaranteed? The Transfer Agent
will accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If
you are signing as a fiduciary or on behalf of a corporation,
partnership or other business, or as a fiduciary you must also include
your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
o Your name
o The Fund's name
o Your Fund account number (from your account statement) o The dollar
amount or number of shares to be redeemed o Any special payment
instructions o Any share certificates for the shares you are selling o
The signatures of all registered owners exactly as the account
is registered, and
o 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:
OppenheimerFunds Services
P.O. Box 5270, Denver, Colorado 80217
49
<PAGE>
Send courier or Express Mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record may
also sell your shares by telephone. To receive the redemption price on a regular
business day, your call must be received by the Transfer Agent by the close of
The New York Stock Exchange that day, which is normally 4:00 P.M., but may be
earlier on some days. You may not redeem shares held in an OppenheimerFunds
retirement plan or under a share certificate by telephone.
o To redeem shares through a service representative, call
1-800-852-8457
o To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds wired to that bank account.
o Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed by
telephone, once in any 7-day period. The check must be payable to all owners of
record of the shares and must be sent to the address on the account statement.
This service is not available within 30 days of changing the address on an
account.
o Telephone Redemptions Through AccountLink or Wire. There are no
dollar limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH transfer 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
transferred.
Shareholders may also have the Transfer Agent send redemption proceeds
of $2,500 or more by Federal Funds wire to a designated commercial bank account
if the bank is a member of the Federal Reserve wire system. There is a $10 fee
for each Federal Funds wire. To place a wire redemption request, call the
Transfer Agent at 1-800-852-8457. The wire will normally be transmitted on the
next bank business day after the shares are redeemed. There is a possibility
that the wire may be delayed up to seven days to enable the Fund to sell
securities to pay the redemption proceeds. No dividends are accrued or paid on
the
50
<PAGE>
proceeds of shares that have been redeemed and are awaiting transmittal by wire.
To establish wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.
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.
o Checks can be written to the order of whomever you wish, but may not
be cashed at the Fund's bank or custodian.
o Check writing privileges are not available for accounts holding Class
B shares or Class C shares, or Class A shares that are subject to a contingent
deferred sales charge.
o Checks must be written for at least $100.
o 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.
o You may not write a check that would require the Fund to redeem
shares that were purchased by check or Asset Builder Plan payments within the
prior 10 days.
o Don't use your checks if you changed your Fund account number.
Selling Shares Through Your Dealer. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. Please call your dealer for more
information about this procedure and refer to "Special Arrangements for
Repurchase of Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
o Shares of the fund selected for exchange must be available for sale
in your state of residence.
o The prospectuses of this Fund and the fund whose shares you want
51
<PAGE>
to buy must offer the exchange privilege.
o 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.
o You must meet the minimum purchase requirements for the fund you
purchase by exchange.
o Before exchanging into a fund, you should obtain and read its
prospectus.
Shares of a particular class of the Fund may be exchanged only for
shares of the same class in the other Oppenheimer funds. For example, you can
exchange Class A shares of this Fund only for Class A shares of another fund. At
present, Oppenheimer Money Market Fund, Inc. offers only one class of shares,
which are considered to be Class A shares for this purpose. In some cases, sales
charges may be imposed on exchange transactions. Please refer to "How to
Exchange Shares" in the Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
o 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."
o 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 find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by calling a
service representative at 1-800-525-7048. That list can change from time to
time.
There are certain exchange policies you should be aware of:
o Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day on which
the Transfer Agent receives an exchange request that is in proper form by the
close of The New York Stock Exchange that day, which is normally 4:00 P.M. but
may be earlier on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 7 days if it determines it
would be disadvantaged by a same- day transfer of the proceeds to buy shares.
For example, the receipt of multiple exchange requests from a dealer in a
"market-timing" strategy might require the disposition of securities at a time
or price disadvantageous to the Fund.
o 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.
o 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.
o For tax purposes, exchanges of shares involve a redemption of the
shares of the Fund you own and a purchase of the shares of the other fund, which
may result in a capital gain or loss. For more information about taxes affecting
exchanges, please refer to "How to Exchange Shares" in the Statement of
Additional Information.
o 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
o Net Asset Value Per Share is determined for each class of shares as
of the close of The New York Stock Exchange which is normally 4:00 P.M., but may
be earlier on some days, on each day the Exchange is open by dividing the value
of the Fund's net assets attributable to a class by the number of shares of that
class that are outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine net asset value. In
general, securities values are based on market value. There are special
procedures for valuing illiquid and restricted securities and obligations for
which market values cannot be readily obtained. These procedures are described
more completely in the Statement of Additional Information.
o 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.
o 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
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<PAGE>
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.
o The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not use
reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund will be
liable for losses or expenses arising out of telephone instructions reasonably
believed to be genuine. If you are unable to reach the Transfer Agent during
periods of unusual market activity, you may not be able to complete a telephone
transaction and should consider placing your order by mail.
o 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.
o 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.
o The redemption price for shares will vary from day to day because the
value of the securities in the Fund's portfolio fluctuates, and the redemption
price, which is the net asset value per share, will normally be different for
Class A, Class B and Class C shares. Therefore, the redemption value of your
shares may be more or less than their original cost.
o Payment for redeemed shares is made ordinarily in cash and forwarded
by check or through AccountLink (as elected by the shareholder under the
redemption procedures described above) within 7 days after the Transfer Agent
receives redemption instructions in proper form, except under unusual
circumstances determined by the Securities and Exchange Commission delaying or
suspending such payments. For accounts registered in the name of a
broker-dealer, payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via AccountLink
53
<PAGE>
for recently purchased shares, but only until the purchase payment has cleared.
That delay may be as much as 10 days from the date the shares were purchased.
That delay may be avoided if you purchase shares by certified check or arrange
with your bank to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
o Involuntary redemptions of small accounts may be made by the Fund if
the account value has fallen below $200 for any reason other than 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.
o Under unusual circumstances, shares of the Fund may be redeemed "in
kind," which means that the redemption proceeds will be paid with securities
from the Fund's portfolio. Please refer to "How to Sell Shares" in the Statement
of Additional Information for more details.
o "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
Employer Identification Number when you sign your application, or if you violate
Internal Revenue Service regulations on tax reporting of income.
o The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be avoided
by redeeming your Fund shares directly through the Transfer Agent. Under the
circumstances described in "How to Buy Shares," you may be subject to a
contingent deferred sales charges when redeeming certain Class A, Class B and
Class C shares.
o To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048 to ask
that copies of those materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B
and Class C shares from net investment income each regular business day
and pays those dividends to shareholders monthly. Normally, dividends
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<PAGE>
are paid on the last business day 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. Dividends paid on Class A
shares generally are expected to be higher than for Class B and Class C shares
because expenses allocable to Class B and Class C shares will generally be
higher.
Commencing with the Fund's fiscal quarter beginning July 1, 1994, the
Fund adopted the practice, to the extent consistent with the amount of the
Fund's net investment income and other distributable income, of attempting to
pay dividends on Class A shares at a constant level, although the amount of such
dividends are subject to change 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 that Class.
The practice of attempting to pay dividends on Class A shares at a
constant level requires the Manager, consistent with the Fund's investment
objective and investment restrictions, to monitor the Fund's portfolio and
select higher yielding securities when deemed appropriate to maintain necessary
net investment income levels. The Fund anticipates paying dividends at the
targeted dividend level from net investment income and other distributable
income without any impact on the Fund's net asset value per share.
The Board of Trustees may change the Fund's targeted dividend level at
any time, without prior notice to shareholders. The Fund does not otherwise have
a fixed dividend rate and there can be no assurance as to the payment of any
dividends or the realization of any capital gains.
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, which is September 30th. 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:
55
<PAGE>
o 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.
o 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.
o 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.
o Reinvest Your Distributions In Another Oppenheimer Fund Account.
You can reinvest all distributions in another Oppenheimer fund account
you have established.
Taxes. If your account is not a tax-deferred retirement account, you should be
aware of the following tax implications of investing in the Fund. Long-term
capital gains are taxable as long-term capital gains when distributed to
shareholders. It does matter how long you held your shares. Dividends paid from
short-term capital gains and net investment income are taxable as ordinary
income. Distributions are subject to Federal income tax and may be subject to
state or local taxes. Your distributions are taxable when paid, whether you
reinvest them in additional shares or take them in cash. Every year the Fund
will send you and the IRS a statement showing the amount of each taxable
distribution you received in the previous year.
o "Buying a Distribution". If you buy shares 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.
o 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.
o Returns of Capital. In certain cases distributions made by the Fund
may be considered a non-taxable return of capital to shareholders. If that
occurs, it will be identified in notices to shareholders. A non-taxable return
of capital may reduce your tax basis in your Fund shares.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should
56
<PAGE>
consult with your tax advisor about the effect of an investment in the Fund on
your particular tax situation.
57
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for Class A,
Class B and Class C shares of the Fund described elsewhere in this Prospectus
are modified as described below for those shareholders of (i) Quest for Value
Fund, Inc., Quest for Value Growth and Income Fund, Quest for Value Opportunity
Fund, Quest for Value Small Capitalization Fund and Quest for Value Global
Equity Fund, Inc. on November 24, 1995, when OppenheimerFunds, Inc. became the
investment advisor to those funds, and (ii) Quest for Value U.S. Government
Income Fund, Quest for Value Investment Quality Income Fund, Quest for Value
Global Income Fund, Quest for Value New York Tax-Exempt Fund, Quest for Value
National Tax-Exempt Fund and Quest for Value California Tax- Exempt Fund when
those funds merged into various Oppenheimer funds on November 24, 1995. The
funds listed above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales charges
described in this Appendix apply to shares of the Fund (i) acquired by such
shareholder pursuant to an exchange of shares of one of the Oppenheimer funds
that was one of the Former Quest for Value Funds or (ii) received by such
shareholder pursuant to the merger of any of the Former Quest for Value Funds
into an Oppenheimer fund on November 24, 1995.
Class A Sales Charges
o Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
o Purchases by Groups, Associations and Certain Qualified Retirement Plans. The
following table sets forth the initial sales charge rates for Class A shares
purchased by a "Qualified Retirement Plan" through a single broker, dealer or
financial institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement Plan or that
Association purchased shares of any of the Former Quest for Value Funds or
received a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995. For this purpose only, a "Qualified Retirement Plan" includes
any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a single
employer.
58
<PAGE>
<TABLE>
<CAPTION>
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Qualified Retirement plans and Associations having 50
or more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages 30 to 31 of this Prospectus.
Purchases made under this arrangement qualify for the lower of the
sales charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an Association or the sales charge rate
that applies under the Rights of Accumulation described above in the Prospectus.
In addition, purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they qualified to
purchase shares of any of the Former Quest For Value Funds by virtue of
projected contributions or investments of $1 millon or more each year.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations, or as eligible employees in Qualified Retirement Plans
also may purchase shares for their individual or custodial accounts at these
reduced sales charge rates, upon request to the Fund's Distributor.
o Special Class A Contingent Deferred Sales Charge Rates.Class A shares of the
Fund purchased by exchange of shares of other Oppenheimer funds that were
acquired as a result of the merger of Former Quest for Value Funds into those
Oppenheimer funds, and which shares were subject to a Class A contingent
deferred sales charge prior to November 24, 1995 will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed within 18
months of the end of the calendar month in which they were purchased, at a rate
equal to 1.0% if the redemption occurs within 12 months of their initial
59
<PAGE>
purchase and at a rate of 0.50 of 1.0% if the redemption occurs in the
subsequent six months. Class A shares of any of the Former Quest Fund for Value
Funds purchased without an initial sales charge on or before November 22, 1995
will continue to be subject to the applicable contingent deferred sales charge
in effect as of that date as set forth in the then-current prospectus for such
fund.
o Waiver of Class A Sales Charges for Certain Shareholders. Class A shares of
the Fund purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:
o Shareholders of the Fund who were shareholders of the AMA Family of
Funds on February 28, 1991 and who acquired shares of any of the Former Quest
for Value Funds by merger of a portfolio of the AMA Family of Funds.
o Shareholders of the Fund who acquired shares of any Former Quest for
Value Fund by merger of any of the portfolios of the Unified Funds.
o Waiver of Class A Contingent Deferred Sales Charge in Certain Transactions.
The Class A contingent deferred sales charge will not apply to redemptions of
Class A shares of the Fund purchased by the following investors who were
shareholders of any Former Quest for Value Fund:
o Investors who purchased Class A shares from a dealer that is or was
not permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship under the Employee Retirement
Income Security Act of 1974 and regulations adopted under that law.
o Participants in Qualified Retirement Plans that purchased shares of
any of the Former Quest For Value Funds pursuant to a special "strategic
alliance" with the distributor of those funds. The Fund's Distributor will pay a
commission to the dealer for purchases of Fund shares as described above in
"Class A Contingent Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge Waivers
o Waivers for Redemptions of Shares Purchased Prior to March 6, 1995.In the
following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, B or C shares of the Fund acquired by merger of a Former
Quest for Value Fund into the Fund or by exchange from an Oppenheimer fund that
was a Former Quest for Value Fund or into which such fund merged, if those
shares were purchased prior to March 6, 1995: in connection with (i)
distributions to participants or beneficiaries of plans qualified under Section
401(a)
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<PAGE>
of the Internal Revenue Code or from custodial accounts under Section 403(b)(7)
of the Code, Individual Retirement Accounts, deferred compensation plans under
Section 457 of the Code, and other employee benefit plans, and returns of excess
contributions made to each type of plan, (ii) withdrawals under an automatic
withdrawal plan holding only either Class B or C shares if the annual withdrawal
does not exceed 10% of the initial value of the account, and (iii) liquidation
of a shareholder's account if the aggregate net asset value of shares held in
the account is less than the required minimum value of such accounts.
o Waivers for Redemptions of Shares Purchased on or After March 6, 1995 but
Prior to November 24, 1995. In the following cases, the contingent deferred
sales charge will be waived for redemptions of Class A, B or C shares of the
Fund acquired by merger of a Former Quest for Value Fund into the Fund or by
exchange from an Oppenheimer fund that was a Former Quest For Value Fund or into
which such fund merged, if those shares were purchased on or after March 6,
1995, but prior to November 24, 1995: (1) distributions to participants or
beneficiaries from Individual Retirement Accounts under Section 408(a) of the
Internal Revenue Code or retirement plans under Section 401(a), 401(k), 403(b)
and 457 of the Code, if those distributions are made either (a) to an individual
participant as a result of separation from service or (b) following the death or
disability (as defined in the Code) of the participant or beneficiary; (2)
returns of excess contributions to such retirement plans; (3) redemptions other
than from retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability by the U.S.
Social Security Administration); (4) withdrawals under an automatic withdrawal
plan (but only for Class B or C shares) where the annual withdrawals do not
exceed 10% of the initial value of the account; and (5) liquidation of a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the required minimum account value. A shareholder's account
will be credited with the amount of any contingent deferred sales charge paid on
the redemption of any Class A, B or C shares of the Fund described in this
section if within 90 days after that redemption, the proceeds are invested in
the same Class of shares in this Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to Quest for
Value prototype 401(k) plans that were maintained on the TRAC-2000 recordkeeping
system and that were transferred to an OppenheimerFunds prototype 401(k) plan
shall be eligible for an
61
<PAGE>
additional one-time payment by the Distributor of 1% of the value of the plan
assets transferred, but that payment may not exceed $5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to Quest for
Value prototype 401(k) plans that were maintained on the TRAC-2000 recordkeeping
system and (i) the shares held by those plans were exchanged for Class A shares,
or (ii) the plan assets were transferred to an OppenheimerFunds prototype 401(k)
plan, shall be eligible for an additional one-time payment by the Distributor of
1% of the value of the plan assets transferred, but that payment may not exceed
$5,000.
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<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 Lehman Brothers U.S. Government Bond
Index and Lehman Brothers 1-3 Year Government Bond Index - Change in
Value of a $10,000 Hypothetical Investment."
Linear graphs 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 from inception of the Fund (March 10, 1986) to fiscal
year-end September 30, 1996, (ii) Class B shares of the Fund during the period
May 3, 1993 (inception date for Class B shares) to September 30, 1996 and (iii)
Class C shares of the Fund during the period February 1, 1995 (inception date
for Class C shares) to September 30, 1996, in each case comparing such values
with the same investments over the same time periods with the Lehman Brothers
U.S. Government Bond Index and the Lehman Brothers 1-3 Year Government Bond
Index. Set forth below are the relevant data points that will appear on the
linear graphs. Additional information with respect to the foregoing, including a
description of the Lehman Brothers U.S. Government Bond Index and the Lehman
Brothers 1-3 Year Government Bond Index, is set forth in the Prospectus under
"Comparing the Fund's Performance to the Market."
<TABLE>
<CAPTION>
Oppenheimer Lehman Bros. Lehman Bros.
Limited-Term U.S. Govt. 1-3 Yr Govt.
Government: A Bond Index Bond Index
<S> <C> <C> <C>
03/10/86 $ 9,650 $10,000 $10,000
09/30/861 $10,140 $10,330 $10,463
09/30/87 $10,236 $10,266 $10,880
09/30/88 $11,655 $11,500 $11,833
09/30/89 $12,780 $12,780 $12,884
09/30/90 $13,950 $13,666 $14,085
09/30/91 $15,999 $15,778 $15,671
09/30/92 $17,579 $17,817 $17,226
09/30/93 $18,917 $19,791 $18,077
09/30/94 $19,057 $18,991 $18,284
09/30/95 $20,587 $21,568 $19,780
09/30/96 $20,676 $21,803 $19,975
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<PAGE>
Oppenheimer Lehman Bros. Lehman Bros.
Limited-Term U.S. Govt. 1-3 Yr Govt.
Government: B Bond Index Bond Index
05/03/932 $10,000 $10,000 $10,000
09/30/93 $10,282 $10,554 $10,213
09/30/94 $10,265 $10,128 $10,330
09/30/95 $10,811 $11,502 $11,175
09/30/96 $11,336 $11,997 $11,780
Oppenheimer Lehman Bros. Lehman Bros.
Limited-Term U.S. Govt. 1-3 Yr Govt.
Government: C Bond Index Bond Index
02/01/953 $10,000 $10,000 $10,000
09/30/95 $10,447 $11,110 $10,673
09/30/96 $11,044 $11,601 $11,277
- ------------------------
<FN>
1. For the period from 3/10/86 (commencement of operations) to
9/30/86.
2. The inception date for Class B shares is 5/3/93.
3. For the period from 2/1/95 (commencement of operations) to 9/30/96
</FN>
</TABLE>
64
<PAGE>
Oppenheimer Limited-Term Government Fund
6803 South Tucson Way
Englewood, Colorado 80012
1-800-525-7048
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
No dealer, broker, salesperson or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus or the Statement of Additional Information, and if given or
made, such information and representations must not be relied upon as having
been authorized by the Fund, OppenheimerFunds, Inc., OppenheimerFunds
Distributor, Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any state to any person to whom it is unlawful to make such an
offer in such state.
*Printed on recycled paper
<PAGE>
Oppenheimer Limited-Term Government Fund
6803 South Tucson Way, Englewood, Colorado 80012
1-800-525-7048
Statement of Additional Information dated January 8, 1997
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
January 8, 1997. It should be read together with the Prospectus which may be
obtained by writing to the Fund's Transfer Agent, OppenheimerFunds Services, at
P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer Agent at the
toll-free number shown above.
Contents Page
About the Fund
Investment Objective and Policies............................................2
Other Investment Techniques and Strategies................................5
Other Investment Restrictions.............................................14
How the Fund is Managed......................................................15
Organization and History..................................................15
Trustees and Officers of the Fund.........................................16
The Manager and Its Affiliates............................................20
Brokerage Policies of the Fund...............................................22
Performance of the Fund......................................................23
Distribution and Service Plans...............................................28
About Your Account
How to Buy Shares............................................................30
How to Sell Share............................................................37
How to Exchange Shares.......................................................43
Dividends, Capital Gains and Taxes...........................................45
Additional Information about the Fund........................................46
Financial Information About the Fund
Independent Auditors' Report.................................................47
Financial Statements.........................................................48
Appendix
Industry Classifications....................................................A-1
-1-
<PAGE>
ABOUT THE FUND
Investment Objective And Policies
Investment Policies and Strategies. The investment objective and policies of the
Fund are described in the Prospectus. Set forth below is supplemental
information about those policies and the types of securities in which the Fund
may invest, as well as the strategies the Fund may use to try to achieve its
objective. Certain capitalized terms used in this Statement of Additional
Information have the same meaning as those terms have in the Prospectus.
o U.S. Government Securities. The obligations of U.S. Government
agencies or instrumentalities in which the Fund may invest may or may not be
guaranteed or supported by the "full faith and credit" of the United States.
Some are backed by the right of the issuer to borrow from the U.S. Treasury;
others, by discretionary authority of the U.S. Government to purchase the
agencies' obligations; while others are supported only by the credit of the
instrumentality. All U.S. Treasury obligations are backed by the full faith and
credit of the United States. If the securities are not backed by the full faith
and credit of the United States, the owner of the securities must look
principally to the agency issuing the obligation for repayment and may not be
able to assert a claim against the United States in the event that the agency or
instrumentality does not meet its commitment. The Fund will invest in U.S.
Government Securities of such agencies and instrumentalities only when the
Fund's investment manager, OppenheimerFunds, Inc. (the "Manager") is satisfied
that the credit risk with respect to such instrumentality is minimal.
General changes in prevailing interest rates will affect the values of
the Fund's portfolio securities. The value will vary inversely to changes in
such rates. For example, if such rates go up after a security is purchased, the
value of the security will generally decline. A decrease in interest rates may
affect the maturity and duration, 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 anticipates that it will maintain
a dollar-weighted average portfolio effective duration of not more than three
years. However, because unanticipated events may change the effective duration
of securities after the Fund purchases them, there can be no assurance that the
Fund will achieve its targeted duration at all times. Additionally, the Fund may
invest in individual debt obligations of any maturity or duration The Manager
will in good faith determine the effective duration of debt obligations
purchased by the Fund and will consider various factors applicable to each type
of debt obligation, including those set forth below. Duration incorporates a
bond's yield, coupon interest payments, final maturity and call features into
one measure. For generic fixed-income securities, duration is calculated as the
average time of present- value-weighted cash flows divided by a small adjustment
factor, pursuant to a calculation known as modified Macaulay duration. Thus, for
any generic fixed-income security with interest payments
-2-
<PAGE>
occurring prior to the payment of principal, duration is also less than
maturity. Also, all other factors being equal, the lower the stated or coupon
rate of interest of a fixed-income security, the longer the duration of the
security; conversely, the higher the stated or coupon rate of interest of a
fixed-income security, the shorter the duration of the security.
Futures, options and options on futures have durations which, in
general, are closely related to the duration of the securities which underlie
them. Holding long futures or call option positions (backed by segregated liquid
assets) will lengthen the portfolio's duration. There are some situations,
however, where the standard modified Macaulay duration calculation does not
properly reflect the interest rate exposure of a security. For example, the
interest rate exposure is not properly captured by modified Macaulay duration in
the case of mortgage pass-though securities. The stated final maturity of such
securities is generally 30 years, but changes in prepayment rates are more
critical in determining the securities' price exposure to interest rates.
Indeed, the modified Macaulay calculation even falls short in calculating the
price sensitivity of callable bonds to interest rates. In these and other
similar situations, the Manager will use more sophisticated analytical
techniques that incorporate the economic life of a security as well as relevant
macroeconomic factors (e.g., mortgage prepayment rates) into the determination
of the Fund's effective duration.
The U.S. Government Securities in which the Fund may invest include the
following:
o Ginnie Mae Certificates. The Government National Mortgage Association
("Ginnie Mae") is a wholly-owned corporate instrumentality of the United States
within the U.S. Department of Housing and Urban Development. Ginnie Mae's
principal programs involve its guarantees of privately-issued securities backed
by pools of mortgages. Ginnie Mae 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 Ginnie Mae 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
Ginnie Mae Certificates, whether or not the interest on the underlying mortgages
has been collected by the issuers.
The Ginnie Mae Certificates purchased by the Fund are guaranteed as to
timely payment of principal and interest by Ginnie Mae. It is expected that
payments received by the issuers of Ginnie Mae Certificates on account of the
mortgages backing the Certificates will be sufficient to make the required
payments of principal of and interest on such Ginnie Mae Certificates, but if
such payments are insufficient for that purpose, the guaranty agreements between
the issuers of the Certificates and Ginnie Mae require the issuers to make
advances sufficient for such payments. If the issuers fail to make such
payments, Ginnie Mae will do so.
Under Federal law, the full faith and credit of the United States is
pledged to the payment of
-3-
<PAGE>
all amounts which may be required to be paid under any guaranty issued by Ginnie
Mae 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." Ginnie Mae 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.
Ginnie Mae 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, Ginnie Mae Certificates do not constitute a liability of, nor
evidence any recourse against, such issuers, but recourse is solely against
Ginnie Mae. Holders of Ginnie Mae 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 Ginnie Mae Certificates held by the Fund. All of the mortgages in the pools
relating to the Ginnie Mae 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 Ginnie Mae
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 Ginnie Mae 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.
o Federal Home Loan Mortgage Corporation ("Freddie Mac") Certificates.
Freddie Mac, a corporate instrumentality of the United States, issues Freddie
Mac Certificates representing interests in mortgage loans. Freddie Mac
guarantees to each registered holder of a Freddie Mac 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 Freddie Mac Certificate, in each case whether or not such amounts are
actually received. The obligations of Freddie Mac under its guarantees are
obligations solely of Freddie Mac and are not backed by the full faith and
credit of the United States.
o Federal National Mortgage Association ("Fannie Mae") Certificates.
Fannie Mae, a federally-chartered and privately-owned corporation, issues Fannie
Mae Certificates which are backed by a pool of mortgage loans. Fannie Mae
guarantees to each registered holder of a Fannie Mae 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 Fannie Mae Certificate, less
servicing and guarantee fees, and such holder's proportionate interest in the
full principal amount of any foreclosed or other liquidated
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mortgage loan, in each case whether or not such amounts are actually received.
The obligations of Fannie Mae under its guarantees are obligations solely of
Fannie Mae and are not backed by the full faith and credit of the United States
or any agency or instrumentality thereof other than Fannie Mae.
Other Investment Techniques And Strategies
o 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 for delivery on an agreed-upon
future date. An "approved vendor" is a U.S. commercial bank, the U.S. branch of
a foreign bank or a broker-dealer which has been designated a primary dealer in
government securities, which must meet the credit requirements set by the Fund's
Board of Trustees from time to time. 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 of 1940 (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
fully collateralize the repayment obligation. Additionally, the Manager will
impose creditworthiness requirements to confirm that the vendor is financially
sound and will continuously monitor the collateral's value. 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.
o Reverse Repurchase Agreements. The Fund does not intend to invest in
Reverse Repurchase Agreements. If it does, the Fund will identify to 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 may use reverse repurchase
agreements as a source of funds on a short-term basis (and not for leverage). As
a fundamental policy, the Fund 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. 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.
o Restricted and Illiquid Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the Fund
may have to cause those securities to be registered. The expenses of
registration of restricted securities may be negotiated by the Fund with the
issuer at the time such securities are purchased by the Fund, if such
registration is required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the security, a
considerable period may elapse between the time the decision is made to sell the
securities and the time the Fund would be permitted to sell them. The Fund would
bear the risks of any downward price fluctuation during that period. The Fund
may also acquire, through
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private placements, securities having contractual restrictions on their resale,
which might limit the Fund's ability to dispose of such securities and might
lower the amount realizable upon the sale of such securities.
o Loans of Portfolio Securities. The Fund may lend its portfolio
securities (other than in repurchase transactions) to brokers, dealers and other
financial institutions. These loans are limited to not more than 25% of the
Fund's total assets. 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', administrative or other fees the Fund
pays in connection with 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. The value of the securities
loaned is not expected to exceed 5% of the Fund's total assets in the coming
year.
o Mortgage-Backed Security Rolls. The Fund may enter into "forward
roll" transactions with respect to mortgage-backed securities in which it can
invest. In a forward roll transaction, which is considered to be a borrowing by
the Fund, the Fund will sell a mortgage security to selected banks or other
entities and simultaneously agree to repurchase a similar security (same type,
coupon and maturity) from the institution at a specified later date at an agreed
upon price. The mortgage securities that are repurchased will bear the same
interest rate as those sold, but generally will be collateralized by different
pools of mortgages with different prepayment histories than those sold. Risks of
mortgage-backed security rolls include: (1) the risk of prepayment prior to
maturity, (ii) the possibility that the Fund may not be entitled to receive
interest and principal payments on the securities sold and that the proceeds of
the sale may have to be invested in money market instruments (typically
repurchase agreements) maturing not later than the expiration of the roll, and
(iii) the possibility that the market value of the securities sold by the Fund
may decline below the price at which the Fund is obligated to purchase
securities. The Fund will enter into only "covered" rolls. Upon entering into a
mortgage-backed security roll, the Fund will be required to identify liquid
securities, either debt or equity, with its Custodian in amount equal to its
obligation under the roll.
o "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
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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 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. Although the Fund enters into such transactions with the
intention of actually receiving or delivering the securities, 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.
o Hedging. As described in the Prospectus, the Fund may employ one
or more types of Hedging Instruments to manage its exposure to changing
interest rates and securities prices. The
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Fund's strategy of hedging with Futures and options on Futures will be
incidental to the Fund's activities in the underlying cash market. Puts and
covered calls may also be written on U.S. Government Securities to attempt to
increase the Fund's income. For hedging purposes, the Fund may use Interest Rate
Futures and call and put options on debt securities and Interest Rate Futures
(all of the foregoing are referred to as "Hedging Instruments"). Hedging
Instruments may be used to attempt to do the following: (i) protect against
possible declines in the market value of the Fund's portfolio resulting from
downward trends in the debt securities markets (generally due to a rise in
interest rates), (ii) protect unrealized gains in the value of the Fund's debt
securities which have appreciated, (iii) facilitate selling debt securities for
investment reasons, (iv) establish a position in the debt securities markets as
a temporary substitute for purchasing particular debt securities, or (v) reduce
the risk of adverse currency fluctuations. A call or put may be purchased only
if, after such purchase, the value of the premiums on all call and put options
held by the Fund would not exceed 5% of the Fund's total assets. The Fund will
not use Futures and options on Futures for speculation.
The Hedging Instruments the Fund may use are described below.
The Fund may use hedging to attempt to protect against declines in the
market value of the Fund's portfolio, to permit the Fund to retain unrealized
gains in the value of portfolio securities which have appreciated, or to
facilitate selling securities for investment reasons. To do so the Fund may: (i)
sell Interest Rate Futures, (ii) purchase puts on such Futures or U.S.
Government Securities, or (iii) write covered calls on securities held by it or
on Futures. When hedging to attempt to protect against the possibility that
portfolio securities are not fully included in a rise in value of the debt
securities market, or to protect the value of certain assets in the Fund, such
as Interest Only strips, whose values decline as interest rates decline, 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.
o 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 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.
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<PAGE>
The Fund has retained the risk of loss should the price of the underlying
security decline during the call period, which may be offset to some extent by
the premium.
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." A profit or
loss will be realized, depending upon whether the net of the amount of the
option transaction costs and the premium received on the call written was more
or less than the price of the call subsequently purchased. A profit may also be
realized if the call expires unexercised, because the Fund retains the
underlying investment and the premium received. Any such profits are considered
short-term capital gains for Federal income tax purposes, and when distributed
by the Fund are taxable as ordinary income. If the Fund could not effect a
closing purchase transaction due to lack of a market, it would have to hold the
callable investments until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a futures
contract or a deliverable bond, provided that at the time the call is written,
the Fund covers the call by segregating in escrow an equivalent dollar amount of
liquid assets. The Fund will segregate additional liquid assets if the value of
the escrowed assets drops below 100% of the current value of the Future. In no
circumstances would an exercise notice require the Fund to deliver a futures
contract; it would simply put the Fund in a short futures position, which is
permitted by the Fund's hedging policies.
o 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. Similar to writing covered calls where the Fund must own the
security subject to the call or other securities acceptable for applicable for
escrow requirements, puts must be covered by segregated liquid assets equal to
exercise price of the put. The premium the Fund receives from writing a put
option represents a profit, as long as the price of the underlying investment
remains above the exercise price. However, the Fund has also assumed the
obligation during the option period to buy the underlying investment from the
buyer of the put at the exercise price, even though the value of the investment
may fall below the exercise price. If the put expires unexercised, the Fund (as
the writer of the put) realizes a gain in the amount of the premium less
transaction costs. If the put is exercised, the Fund must fulfill its obligation
to purchase the underlying investment at the exercise price, which will usually
exceed the market value of the investment at that time. In that case, the Fund
may incur a loss, equal to the sum of the current market value of the underlying
investment and the premium received minus the sum of the exercise price and any
transaction costs incurred.
When writing put options on securities, to secure its obligation to pay
for the underlying security, the Fund will deposit in escrow liquid assets with
a value equal to or greater than the exercise price of the put option. The Fund
therefore foregoes the opportunity of investing the segregated assets or writing
calls against those assets. As long as the obligation of the Fund as the put
writer continues, it may be assigned an exercise notice by the broker-dealer
through whom such
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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.
o 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 no more than 13 months). When
the Fund purchases a call (other than in a closing purchase transaction), it
pays a premium and, except as to calls on indices or Futures, has the right to
buy the underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price. When the Fund
purchases a call on a Future, it pays a premium, but settlement is in cash
rather than by delivery of the underlying investment to the Fund. In purchasing
a call, the Fund benefits only if the call is sold at a profit or if, during the
call period, the market price of the underlying investment is above the sum of
the exercise price, transaction costs and the premium paid, and the call is
exercised. If the call is not exercised or sold (whether or not at a profit), it
will become worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment.
The Fund may purchase put options ("puts") which relate to U.S.
Government Securities (whether or not it holds such securities in its portfolio)
or Futures. When the Fund purchases a put, it pays a premium and, except as to
puts on indices, has the right to sell the underlying investment to a seller of
a corresponding put on the same investment during the put period at a fixed
exercise price. Buying a put on an investment the Fund owns enables the Fund to
protect itself during the put period against a decline in the value of the
underlying investment below the exercise price by selling such underlying
investment at the exercise price to a seller of a corresponding put. If the
market price of the underlying investment is equal to or above the exercise
price and as a result the put is not exercised or resold, the put will become
worthless at its expiration date, and the Fund will lose its premium payment and
the right to sell the underlying investment. The put may, however, be sold prior
to expiration (whether or not at a profit.)
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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.
o Interest Rate Futures. The Fund may buy and sell Interest Rate
Futures. No price is paid or received upon the purchase or sale of an Interest
Rate Future. An Interest Rate Future obligates the seller to deliver and the
purchaser to take a specific type of debt security at a specific future date for
a fixed price. That obligation may be satisfied by actual delivery of the debt
security or by entering into an offsetting contract.
Upon entering into a Futures transaction, the Fund will be required to
deposit an initial margin payment in cash or U.S. Treasury bills with the
futures commission merchant (the "futures broker"). The initial margin will be
deposited with the Fund's Custodian in an account registered in the futures
broker's name; however the futures broker can gain access to that account only
under specified conditions. As the Future is marked to market to reflect changes
in its market value, subsequent margin payments, called variation margin, will
be made to or by the futures broker on a daily basis. 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.
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<PAGE>
o Interest Rate Swap Transactions. Swap agreements entail both interest
rate risk and credit risk. There is a risk that, based on movements of interest
rates in the future, the payments made by the Fund under a swap agreement will
have been greater than those received by it. Credit risk arises from the
possibility that the counterparty will default. If the counterparty to an
interest rate swap defaults, the Fund's loss will consist of the net amount of
contractual interest payments that the Fund has not yet received. The Manager
will monitor the creditworthiness of counterparties to the Fund's interest rate
swap transactions on an ongoing basis. The Fund may engage in interest rate
swaps only with respect to securities it holds, and not in excess of 25% of its
total assets.
The Fund will enter into swap transactions with appropriate
counterparties pursuant to master netting agreements. A master netting agreement
provides that all swaps done between the Fund and that counterparty under that
master agreement shall be regarded as parts of an integral agreement. If on any
date amounts are payable in the same currency in respect of one or more swap
transactions, the net amount payable on that date in that currency shall be
paid. In addition, the master netting agreement may provide that if one party
defaults generally or on one swap, the counterparty may terminate the swaps with
that party. Under such agreements, if there is a default resulting in a loss to
one party, the measure of that party's damages is calculated by reference to the
average cost of a replacement swap with respect to each swap (i.e., the
mark-to-market value at the time of the termination of each swap). The gains and
losses on all swaps are then netted, and the result is the counterparty's gain
or loss on termination. The termination of all swaps and the netting of gains
and losses on termination is generally referred to as "aggregation".
o Additional Information About Hedging Instruments and Their Use. The
Fund's Custodian, or a securities depository acting for the Custodian, will act
as the Fund's escrow agent, through the facilities of the Options Clearing
Corporation ("OCC"), as to the investments on which the Fund has written options
traded on exchanges or as to other acceptable escrow securities, so that no
margin will be required for such transactions. OCC will release the securities
covering a call on the expiration of the option or upon the Fund entering into a
closing purchase transaction. An option position may be closed out only on a
market which provides secondary trading for options of the same series, and
there is no assurance that a liquid secondary market will exist for any
particular option.
When the Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a primary U.S. Government securities dealer, which
would establish a formula price at which the Fund would have the absolute right
to repurchase that OTC option. That formula price would generally be based on a
multiple of the premium received for the option, plus the amount by which the
option is exercisable below the market price of the underlying security (that
is, the extent to which the option "is in-the-money"). 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.
o Regulatory Aspects of Hedging Instruments. The Fund is required to
operate within certain guidelines and restrictions with respect to its use of
futures and options thereon as established
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by the Commodities Futures Trading Commission ("CFTC"). In particular, the Fund
is excluded from registration as a "commodity pool operator" if it complies with
the requirements of Rule 4.5 adopted by the CFTC. The Rule does not limit the
percentage of the Fund's assets that may be used for Futures margin and related
options premiums for a bona fide hedging position. However, under the Rule the
Fund must limit its aggregate initial futures margin and related option premiums
to no more than 5% of the Fund's net assets for hedging strategies that are not
considered bona fide hedging strategies. Under the Rule, the Fund also must use
short futures and options on futures positions solely for bona fide hedging
purposes within the meaning and intent of the applicable provisions of the
Commodity Exchange Act.
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 advisor. 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.
o 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.
o 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
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<PAGE>
markets. First, all participants in the futures markets are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal relationship between the
cash and futures markets. Second, the liquidity of the futures markets depends
on participants entering into offsetting transactions rather than making or
taking delivery. To the extent participants decide to make or take delivery,
liquidity in the futures markets could be reduced, thus producing distortion.
Third, from the point of view of speculators, the deposit requirements in the
futures markets are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
If the Fund uses Hedging Instruments to establish a position in the
U.S. Government Securities markets as a temporary substitute for the purchase of
individual U.S. Government Securities (long hedging) by buying Interest Rate
Futures and/or calls on such Futures or on U.S. Government Securities, it is
possible that the market may decline; if the Fund then concludes not to invest
in such securities at that time because of concerns as to possible further
market decline or for other reasons, the Fund will realize a loss on the Hedging
Instruments that is not offset by a reduction in the price of the U.S.
Government Securities purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth in the
Prospectus. There are additional investment restrictions that the Fund must
follow that are also fundamental policies. Fundamental policies and the Fund's
investment objective, cannot be changed without the vote of a "majority" of the
Fund's outstanding voting securities. Under the Investment Company Act, such a
"majority" vote is defined as the vote of the holders of the lesser of (i) 67%
or more of the shares present or represented by proxy at a shareholder meeting,
if the holders of more than 50% of the outstanding shares are present, or (ii)
more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot:
(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 0.5% of the securities of such company together
own beneficially more than 5% of such securities;
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<PAGE>
(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).
For purposes of the Fund's policy not to concentrate its assets,
described in the last restriction above, the Fund has adopted the industry
classifications set forth in the Appendix to this Statement of Additional
Information. This is not a fundamental policy.
The percentage restrictions described above and in the Prospectus are
applicable only at the time of investment and require no action by the Fund as a
result of subsequent changes in value of the investments or the size of the
Fund.
How the Fund is Managed
Organization and History. The Fund was 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 applicants' expense, or the Trustees may take such other
action as set forth under Section 16(c) of the Investment Company Act.
Shares of the Fund represent an interest in the Fund proportionately
equal to the interest of each other share of the same class and entitle the
holder to one vote per share (and a fractional vote for a fractional share) on
matters submitted to their vote at shareholders' meetings. Shareholders of the
Fund vote together in the aggregate on certain matters at shareholders'
meetings, such as the election of Trustees and ratification of appointment of
auditors for the Trust. Shareholders of a particular class vote separately on
proposals which affect that class, and shareholders of a class which is not
affected by that matter are not entitled to vote on the proposal. Shareholders
of a class vote on certain amendments to the Distribution and/or Service Plans
if the amendments affect that
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<PAGE>
class.
The Trustees are authorized to create new series and classes of series.
The Trustees may reclassify unissued shares of the Trust or its series or
classes into additional series or classes of shares. The Trustees may also
divide or combine the shares of a class into a greater or lesser number of
shares provided that the proportionate beneficial interest of a shareholder in
the Fund is not changed. Shares do not have cumulative voting rights or
preemptive or subscription rights. Shares may be voted in person or by proxy.
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
set forth below. All of the Trustees are also Trustees, Directors or Managing
General Partners of Centennial America Fund, L.P., Centennial California Tax
Exempt Trust, Centennial Government Trust, Centennial Money Market Trust,
Centennial New York Tax Exempt Trust, Centennial Tax Exempt Trust, Daily Cash
Accumulation Fund, Inc., Oppenheimer Cash Reserves, Oppenheimer Champion Income
Fund, Oppenheimer Equity Income Fund, Oppenheimer Integrity Funds, Oppenheimer
International Bond Fund, Oppenheimer High Yield Fund, Oppenheimer Main Street
Funds, Inc., Oppenheimer Strategic Income Fund, Oppenheimer Strategic Income &
Growth Fund, Oppenheimer Municipal Fund, Oppenheimer Total Return Fund, Inc.,
Oppenheimer Variable Account Funds, Panorama Series Fund, Inc. and The New York
Tax-Exempt Income Fund, Inc., (the "Denver-based Oppenheimer funds"), except for
Mr. Fossel and Ms. Macaskill who are not Trustees or Directors Oppenheimer
Integrity Funds, Oppenheimer Strategic Income Fund, Oppenheimer Variable Account
Funds and Panorama Series Fund, Inc. Mr. Fossel also is not a trustee of
Centennial New York Tax Exempt Trust and he is not a Managing General Partner of
Centennial America Fund, L.P. Ms. Macaskill is President and Mr. Swain is
Chairman of the Denver-based Oppenheimer funds. Messrs. Bishop, Bowen, Donohue,
Farrar and Zack hold similar positions as officers of all such funds. As of
January 1, 1997, the Trustees and Officers of the Fund as a group owned less
than 1% of the Fund's outstanding Class A shares, less than 1% of the Fund's
outstanding Class B shares and less than 1% of the Fund's outstanding Class C
shares. The foregoing statement does not reflect ownership of shares held of
record by an employee benefit plan for employees of the Manager (for which plan
two of the Trustees and officers listed below, Ms. Macaskill and Mr. Donohue,
are trustees), other than
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<PAGE>
the shares beneficially owned under that plan by the officers of the Fund listed
below.
ROBERT G. AVIS, Trustee*; Age 65
One North Jefferson Avenue, 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
advisor and trust company, respectively).
WILLIAM A. BAKER, Trustee; Age 81
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
CHARLES CONRAD, JR., Trustee; Age 66
1501 Quail Street, Newport Beach, California 92660
Chairman and Chief Executive Officer of Universal Space Lines, Inc. (A
space services management company); formerly, Vice President of
McDonnell Douglas Space Systems Co. and associated with National
Aeronautics and Space Administration.
JON S. FOSSEL, Trustee*; Age 54
Box 44 Mead Street, Waccabuc, New York 10597
Member of the Board of Governors of the Investment Company Institute (a
national trade association of investment companies), Chairman of the
Investment Company Institute Education Foundation; Formerly Chairman
and a director of the Manager; formerly President and a director of
Oppenheimer Acquisition Corp.("OAC"), the Manager's parent holding
company; formerly a director of Shareholder Services, Inc. ("SSI") and
Shareholder Financial Services, Inc. ("SFSI"), transfer agent
subsidiaries of the Manager..
SAM FREEDMAN, Trustee; Age 56
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly, Chairman and Chief Executive Officer of OppenheimerFunds
Services (a transfer agent); Chairman, Chief Executive Officer and a
director of SSI; Chairman, Chief Executive Officer and director of
SFSI; Vice President and a director of OAC and a director of the
Manager.
RAYMOND J. KALINOWSKI, Trustee; Age 67
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc.(a computer products
training company), 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; Age 75
2552 E. Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting
firm).
ROBERT M. KIRCHNER, Trustee; Age 75
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<PAGE>
7500 East Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
BRIDGET A. MACASKILL, President and Trustee*; Age 48
Two World Trade Center, New York, New York 10048-0203
President, Chief Executive Officer and a director of the Manager and
HarbourView Asset Management Corporation ("HarbourView"), a subsidiary
of the Manager; Chairman and a director of SSI and SFSI; President and
a director of OAC and Oppenheimer Partnership Holdings Inc., a holding
company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management , Inc. ("Real Asset"); formerly an Executive Vice President
of the Manager.
NED M. STEEL, Trustee; Age 81
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting Nurse
Corporation of Colorado; formerly Senior Vice President and a director
of the Van Gilder Insurance Corp.
(insurance brokers).
JAMES C. SWAIN, Chairman, Chief Executive Officer and Trustee*; Age 63
6803 South Tucson Way, Englewood, CO 80012
Vice Chairman of the Manager; formerly President and a director of
Centennial Management Corporation, an investment advisor subsidiary of
the Manager ("Centennial") and formerly Chairman of the Board of SSI.
ANDREW J. DONOHUE, Vice President and Secretary; Age 46
Two World Trade Center, New York, New York 10048-0203
Executive Vice President and General Counsel of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"); President and a
director of Centennial; Executive Vice President, General Counsel and a
director of HarbourView, SFSI, SSI and Oppenheimer Partnership Holdings
Inc.; President and a director of Real Asset; General Counsel of OAC;
Executive Vice President, Chief Legal Officer and a director of
MultiSource Services, Inc. (A broker-dealer); an officer of other
Oppenheimer funds; formerly Senior Vice President and Associate General
Counsel of the Manager and the Distributor; 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 advisor); director and an officer of
First Investors Family of Funds and First Investors Life Insurance
Company.
GEORGE C. BOWEN, Vice President, Treasurer and Assistant Secretary; Age 60
6803 South Tucson Way, Englewood, CO 80012
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; Treasurer of OAC;
Vice President and Treasurer of Real Asset; Chief Executive Officer,
Treasurer and a director of MultiSource Services, Inc.; an officer of
other Oppenheimer funds.
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<PAGE>
DAVID ROSENBERG, Vice President and Portfolio Manager; Age 38
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; an officer of other Oppenheimer funds;
formerly an officer and portfolio manager for Delaware Investment
Advisors and for one of its mutual funds.
ROBERT G. ZACK, Assistant Secretary; Age 48
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 Oppenheimer
funds.
ROBERT J. BISHOP, Assistant Treasurer; Age 38
6803 South Tucson Way, Englewood, CO 80012
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the Manager,
prior to which he was an Accountant for Yale & Seffinger, P.C., an
accounting firm, and previously an Accountant and Commissions
Supervisor for Stuart James Company, Inc., a broker-dealer.
SCOTT T. FARRAR, Assistant Treasurer; Age 31
6803 South Tucson Way, Englewood, CO 80012
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly 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.
- ---------------------
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
o Remuneration of Trustees. The officers of the Fund and certain
Trustees of the Fund (Ms. Macaskill and Mr. Swain) who are affiliated with the
Manager receive no salary or fee from the Fund. Mr. Fossel did not receive any
salary or fees from the Fund prior to January 1, 1997. The remaining Trustees of
the Fund received the compensation shown below. Mr. Freedman became a Trustee
June 27, 1996 and received no compensation from the Fund before that date. The
compensation from the Fund was paid during fiscal year ended September 30, 1996.
The compensation from all of the other Denver- based Oppenheimer funds includes
the Fund and is compensation received as a director, trustee, managing general
partner or member of a committee of the Board of those funds during the calendar
year 1996. Compensation is paid for services in the positions listed beneath
their names:
<TABLE>
<CAPTION>
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from the Fund Oppenheimer funds(1)
<S> <C> <C>
Robert G. Avis $1,792 $58,003
Trustee
William A. Baker $2,463 $79,715
Audit and Review
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<PAGE>
Committee Chairman
and Trustee
Charles Conrad, Jr. $2,308 $74,717
Audit and Review
Committee Member
and Trustee
Sam Freedman $911 $29,502
Trustee
Raymond J. Kalinowski $2,292 $74,173
Risk Management Oversight
Committee Member and
Trustee
C. Howard Kast $2,292 $74,173
Risk Management
Oversight Committee Member
and Trustee
Robert M. Kirchner $2,308 $74,717
Audit and Review
Committee Member
and Trustee
Ned M. Steel $1,792 $58,003
Trustee
- -------------------------------------
(1) For the 1996 calendar year.
</TABLE>
Major Shareholders. As January 1 1997, no person owned of record or was known by
the Fund to own beneficially 5% or more of the Fund's outstanding Class A, Class
B or Class C shares.
The Manager and Its Affiliates. The 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 (Ms. Bridget A. Macaskill and Mr. James C. Swain) serve
as Trustees of the Fund.
The Manager and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees, including
portfolio managers, that would compete with or take advantage of the Fund's
portfolio transactions. Compliance with the Code of Ethics is carefully
monitored and strictly enforced by the Manager.
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<PAGE>
o 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 Investment
Advisory Agreement or by the Distributor under the Distribution Agreement are
paid by the Fund. The Investment 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, 1994, 1995, and 1996 the management fees
paid by the Fund to the Manager were $976,513, $1,599,989 and $2,529,645,
respectively.
The Investment Advisory Agreement contains no expense limitation.
However, because of state regulations limiting the fund expenses that previously
applied, the Manager had voluntarily undertaken that the Fund's total expenses
in any fiscal year (including the investment advisory fee but exclusive of
taxes, interest, brokerage commissions, distribution plan payments and any
extraordinary non-recurring expenses, including litigation) would not exceed the
most stringent state regulatory limitation applicable to the Fund. Due to
changes in federal securities laws, such state regulations no longer apply and
the Manager's undertaking is therefore inapplicable and has been withdrawn.
During the Fund's last fiscal year, the Fund's expenses did not exceed the most
stringent state regulatory limit and the voluntary undertaking was not invoked.
The Investment 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 Investment
Advisory Agreement, the Manager is not liable for any loss resulting from any
good faith errors or omissions in connection with any matters to which the
Agreement relates. The Investment Advisory Agreement permits the Manager to act
as investment advisor to any other person, firm or corporation.
o The Distributor. Under its Distribution Agreement with the Fund, the
Distributor acts as the Fund's principal underwriter in the continuous public
offering of the Fund's Class A, Class B and Class C shares but is not obligated
to sell a specific number of shares. Expenses normally attributable to sales
(other than those paid under the Distribution and Service Plans, but including
advertising and the cost of printing and mailing prospectuses other than those
furnished to existing shareholders), are borne by the Distributor. For the
fiscal year ended September 30, 1994, 1995, and 1996, the aggregate amount of
sales charges on sales of the Fund's Class A shares were $1,006,962, $2,605,966
and $2,342,696, respectively, of which $310,375, $681,961 and $631,567 was
retained by the Distributor and an affiliated broker-dealer during each of those
respective years. Contingent deferred sales charge collected by the Distributor
on the Fund's Class B shares for the period May 3, 1993 (commencement of the
offering of those shares) through September 30, 1994, for fiscal year
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<PAGE>
ended September 30, 1995 and for fiscal year ended September 30, 1996, totaled
$368,866, $170,089 and $395,003, respectively. Contingent deferred sales charge
collected by the Distributor on the Fund's Class C shares for the period
February 1, 1995 (commencement of the offering of those shares) through
September 30, 1995 and for fiscal year ended September 30, 1996, totaled $6,307
and $49,546, respectively. During fiscal year ended September 30, 1996,
commissions paid to broker-dealers by the Distributor on sales of the Fund's
Class B shares totaled $1,966,794 of which $113,402 was paid to an affiliated
broker-dealer. During fiscal year ended September 30, 1996, commissions paid to
broker-dealers by the Distributor on sales of the Fund's Class C shares totaled
$390,698 of which $14,752 was paid to an affiliated broker-dealer. For
additional information about distribution of the Fund's shares and the expenses
connected with such activities, please refer to "Distribution and Service
Plans," below.
o The Transfer Agent. OppenheimerFunds Services, the Fund's transfer
agent, is responsible for maintaining the Fund's shareholder registry and
shareholder accounting records, and for shareholder servicing and
administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the duties of
the Manager under the Investment Advisory Agreement is to arrange the portfolio
transactions for the Fund. The Investment 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 Investment
Advisory Agreement to employ such broker-dealers, including "affiliated"
brokers, as that term is defined in the Investment Company Act, as may, in its
best judgment based on all relevant factors, implement the policy of the Fund to
obtain, at reasonable expense, the "best execution" (prompt and reliable
execution at the most favorable price obtainable) of such transactions. The
Manager need not seek competitive commission bidding, but is expected to
minimize the commissions paid to the extent consistent with the interest and
policies of the Fund as established by its Board of Trustees.
Under the Investment Advisory Agreement, the Manager is authorized to
select brokers that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be higher than
another qualified broker would have charged, if a good faith determination is
made by the Manager and the commission is fair and reasonable in relation to the
services provided. Subject to the foregoing considerations, the Manager may also
consider sales of shares of the Fund and other investment companies managed by
the Manager or its affiliates as a factor in the selection of brokers for the
Fund's portfolio transactions.
Description of Brokerage Practices Followed by the Manager. Most purchases made
by the Fund are principal transactions at net prices, and the Fund incurs little
or no brokerage costs. Subject to the provisions of the Advisory Agreement, the
procedures and rules described above, allocations of brokerage are generally
made by the Manager's portfolio traders based upon recommendations from the
Manager's portfolio manager. In certain instances, portfolio managers may
directly place trades and allocate brokerage, also subject to the provisions of
the Investment Advisory Agreement and the
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<PAGE>
procedures and rules described above. In either case, brokerage is allocated
under the supervision of the Manager's executive officers. Transactions in
securities other than those for which an exchange is the primary market are
generally done with principals or market makers. Brokerage commissions are paid
primarily for effecting transactions in listed securities or for certain fixed
income agency transactions in the secondary market and 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 permits the Manager to use concessions on fixed price
offerings to obtain research, in the same manner as is permitted for agency
transactions. The Board also permits the Manager to use stated commissions on
secondary fixed-income trades to obtain research where the broker has
represented to the Manager that (i) the trade is not from the broker's own
inventory, (ii) the trade was executed by the broker on an agency basis at the
stated commission, and (iii) the trade is not a riskless principal transaction.
The research services provided by brokers broaden 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 Manager provides information as
to the commissions paid to brokers furnishing such services together with the
Manager's representation that 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
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<PAGE>
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 advertised 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, Class B and Class C
shares of the Fund are affected by portfolio quality, the type of investments
the Fund holds and its operating expenses allocated to a particular class.
o Standardized Yields
o Yield. The Fund's "yield" (referred to as "standardized yield") for a
given 30-day period for a class of shares is calculated using the following
formula set forth in rules adopted by the Securities and Exchange Commission
that apply to all funds that quote yields:
a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period
that were entitled to receive dividends.
d = the maximum offering price per share of the class on the last
day of the period, using the current maximum sales charge rate
adjusted for undistributed net investment income.
The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The SEC formula assumes that the
standardized yield for a 30-day period occurs at a constant rate for a six-month
period and is annualized at the end of the six-month period. This standardized
yield is not based on actual distributions paid by the Fund to shareholders in
the 30-day period, but is a hypothetical yield based upon the net investment
income from the Fund's portfolio investments calculated for that period. The
standardized yield may differ from the "dividend yield" of that class, described
below. Additionally, because each class of shares is subject to different
expenses, it is likely that the standardized yields of the Fund's classes of
shares will differ. For the 30-day period ended September 30, 1996, the
standardized yields for the Fund's Class A, Class B and Class C shares were
6.42%, 5.89% and 5.88%, respectively.
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o Dividend Yield and Distribution Return. From time to time the Fund
may quote a "dividend yield" or a "distribution return" for each class. Dividend
yield is based on the dividends paid on shares of a class from dividends derived
from net investment income during a stated period. Distribution return includes
dividends derived from net investment income and from realized capital gains
declared during a stated period. Under those calculations, the dividends and/or
distributions for that class declared during a stated period of one year or less
(for example, 30 days) are added together, and the sum is divided by the maximum
offering price per share of that class) on the last day of the period. When the
result is annualized for a period of less than one year, the "dividend
yield" is calculated as follows:
Dividend Yield of the Class =
Dividends of the Class
- ----------------------------------------------------
Max Offering Price of the Class (last day of period)
Divided by number of days (accrual period) x 365
The maximum offering price for Class A shares includes the current
maximum front-end sales charge. For Class B or Class C shares, the maximum
offering price is the net asset value per share, without considering the effect
of contingent deferred sales charges. From time to time similar yield or
distribution return calculations may also be made using the Class A net asset
value (instead of its respective maximum offering price) at the end of the
period.
The dividend yields on Class A shares for the 30-day period ended
September 30, 1996, were 7.15% and 7.41% 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, 1996, was 6.67% when calculated at net
asset value. The dividend yield on Class C shares for the 30-day period ended
September 30, 1996 was 6.67%. Distribution returns for the 30-day period ended
September 30, 1996 are the same as the above-quoted dividend yields. No portion
of the Class A, Class B or Class C dividends for the fiscal year ended September
30, 1996 were derived from realized capital gains.
o Total Return Information
o Average Annual Total Returns. The "average annual total return" of
each class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below) held
for a number of years ("n") to achieve an Ending Redeemable Value ("ERV") of
that investment according to the following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
o Cumulative Total Returns. The cumulative "total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as average
annual total return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
- ------- = Total Return
P
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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). For Class C shares, the
1.0% contingent deferred sales charge is applied to the investment result for
the one-year period (or less). Total returns also assume that all dividends and
capital gains distributions during the period are reinvested to buy additional
shares at net asset value per share, and that the investment is redeemed at the
end of the period.
The "average annual total returns" on an investment in Class A shares
of the Fund for the one year, five year and ten year periods ended September 30,
1996 were 5.54%, 6.31% and 7.92%, respectively.. The cumulative "total return"
on Class A shares for the period from March 10, 1986 (inception of the Fund)
through September 30, 1996 was 114.28%. For the fiscal year ended September 30,
1996 and the period from May 3, 1993 (the date Class B shares were first
publicly offered) through September 30, 1996, the average annual total returns
on an investment in Class B shares of the Fund were 4.74% and 4.25%,
respectively. The cumulative total return on an investment in Class B shares of
the Fund for the period from May 3, 1993 through September 30, 1996 was 15.23%.
For the fiscal year ended September 30, 1996 and the period from February 1,
1995 (the date Class C shares were first publicly offered), the average annual
total returns on an investment in Class C shares of the Fund were 4.71% and
6.15%, respectively. The cumulative total return on an investment in Class C
shares of the Fund for the period from February 1, 1995 to September 30, 1996
was 10.44%.
o Total Returns at Net Asset Value. From time to time the Fund may also
quote an "average annual total return at net asset value" or a cumulative "total
return at net asset value" for Class A, Class B or Class C shares. Each is based
on the difference in net asset value per share at the beginning and the end of
the period for a hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and takes into
consideration the reinvestment of dividends and capital gains distributions.
The average annual total returns at net asset value on an investment in
Class A shares of the Fund for the one and five-year periods ended September 30,
1996 and for the period from March 10, 1986 to September 30, 1996 were 10.43%,
7.62% and 8.30%, respectively. The average annual total returns at net asset
value on an investment in Class B shares of the Fund for the fiscal year ended
September 30, 1996 and for the period from May 3, 1993 to September 30, 1996
were 9.52% and 4.54%, respectively. The cumulative "total returns at net asset
value" on the Fund's Class A shares for the period from March 10, 1986 to
September 30, 1996, was 118.64%. The cumulative total return at net asset value
on the Fund's Class B shares for the period from May 3, 1993 through September
30, 1996 was 12.53%. The cumulative total return at net asset value on the
Fund's Class C shares for the period from February 1, 1995 through September 30,
1996 was 7.86%. Total return information may be useful to investors in reviewing
the performance of the Fund's Class A, Class B or Class C shares. However, when
comparing total return of an investment in Class A, Class B or Class C shares of
the Fund with that of other alternatives, investors should understand that as
the
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Fund invests in collateralized mortgage obligations, its shares are subject to
greater market risks than shares of funds having more conservative investment
policies and that the Fund is designed for investors who are willing to accept a
degree of risk of loss in hopes of realizing greater gains.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B or Class C shares by Lipper Analytical Services,
Inc. ("Lipper"), a widely- recognized independent mutual fund monitoring
service. Lipper monitors the performance of regulated investment companies,
including the Fund, and ranks their performance for various periods based on
categories relating to investment objectives. The performance of the Fund's
classes are ranked against (i) all other funds, excluding money market funds,
(ii) all other short-term U.S. Government funds, and (iii) all other U.S.
Government funds in a specific size category. The Lipper performance rankings
are based on total returns that include the reinvestment of capital gains
distributions and income dividends but does not take sales charges or taxes into
consideration.
From time to time the Fund may publish the star ranking of the
performance of its Class A, Class B or Class C shares by Morningstar, Inc., an
independent mutual fund monitoring service. Morningstar ranks mutual funds in
broad investment categories: domestic stock funds, international stock funds,
taxable bond funds, municipal bond funds, based on risk-adjusted total
investment returns. The Fund is ranked among taxable bond funds. Investment
return measures a fund's or class's one, three, five and ten-year average annual
total returns (depending on the inception of the fund or class) in excess of
90-day U.S. Treasury bill returns after considering the fund's sales charges and
expenses. Risk measures a fund's or class's performance below 90-day U.S.
Treasury bill returns. Risk and investment return are combined to produce star
rankings reflecting performance relative to the average fund in a fund's
category. Five stars is the "highest" ranking (top 10%), four stars is "above
average" (next 22.5%), three stars is "average" (next 35%), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%). The current star
ranking is the fund's or class's 3-year ranking or its combined 3-and 5-year
ranking (weighted 60%/40%, respectively, or its combined 3-,5- and 10-year
ranking (weighted 40%, 30% and 30%, respectively), depending on the inception of
the fund or class. Rankings are subject to change monthly.
The Fund may also compare its performance to that of other funds in its
Morningstar Category. In addition to its star rankings, Morningstar also
categorizes and compares a fund's 3-year performance based on Morningstar's
classification of the fund's investments and investment style, rather than how a
fund defines its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable bond) are
each further subdivided into categories based on types of investments and
investment styles. Those comparisons by Morningstar are based on the same risk
and return measurements as its star rankings but do not consider the effect of
sales charges.
The total return on an investment made in Class A, Class B or Class C
shares of the Fund may also be compared with the performance for the same period
of: (1) the Lehman Brothers U.S. Government Bond Index, an unmanaged index
including all U.S. Treasury issues, publicly- issued debt of U.S. Government
agencies and quasi-public corporations and U.S. Government-guaranteed corporate
debt that is widely regarded as a measure of the performance of the U.S.
Government bond market, (2) the Lehman Brothers 1-3 Year Government Bond Index,
an unmanaged sector index of
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<PAGE>
U.S. Treasury issues, publicly-issued debt of U.S. Government agencies and
quasi-public corporations and U.S. Government-guaranteed corporate debt with
maturities of one to three years, and (3) the Consumer Price Index, which is
generally considered to be a measure of inflation. The foregoing bond indices
include a factor for the reinvestment of interest but do not reflect expenses or
taxes. Other indices may provide useful comparisons. The performance of the
Fund's Class A, Class B and Class C shares may also be compared in publications
to (i) the performance of various market indices or other investments for which
reliable performance data is available, and (ii) to averages, performance
rankings or other benchmarks prepared by recognized mutual fund statistical
services.
From time to time the Fund may also include in its advertisements and
sales literature performance information about the Fund or rankings of the
Fund's performance cited in newspapers or periodicals, such as The New York
Times. These articles may include quotations of performance from other sources,
such as Lipper or Morningstar.
From time to time, the Fund's Manager may publish rankings or ratings
of the Manager (or the Transfer Agent), by independent third-parties, on the
investor services provided by them to shareholders of the Oppenheimer funds,
other than the performance rankings of the Oppenheimer funds themselves. These
ratings or rankings of shareholder/investor services by third parties may
compare the Oppenheimer funds services to those of other mutual fund families
selected by the rating or ranking services, and may be based upon the opinions
of the rating or ranking service itself, using its own research or judgment, or
based upon surveys of investors, brokers, shareholders or others. in relation to
other equity funds.
When comparing yield, total return and investment risk of an investment
in Class A, Class B or Class C shares of the Fund with other investments,
investors should understand that certain other investments have different risk
characteristics than an investment in shares of the Fund. For example,
certificates of deposit may have fixed rates of return and may be insured as to
principal and interest by the FDIC, while the Fund's returns will fluctuate and
its share values and returns are not guaranteed. U.S. Treasury securities are
guaranteed as to principal and interest by the full faith and credit of the U.S.
government.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A Shares and Distribution and
Service Plans for Class B and Class C shares of the Fund under Rule 12b-1 of the
Investment Company Act, pursuant to which the Fund will compensate the
Distributor in connection with the distribution and/or servicing of the shares
of that class, as described in the Prospectus. Each Plan has been approved by a
vote of (i) the Board of Trustees of the Fund, including a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on that Plan, and (ii) the holders of a "majority" (as defined in the
Investment Company Act) of the shares of each class.
In addition, under the Plans, the Manager and the Distributor, in their
sole discretion, from time to time may use their own resources (which, in the
case of the Manager, may include profits from the advisory fee it receives from
the Fund) to make payments to brokers, dealers or other
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<PAGE>
financial institutions (each is referred to as a "Recipient" under the Plans)
for distribution and administrative services they perform, and those payments
are at no cost to the Fund. The Distributor and the Manager may, in their sole
discretion increase or decrease the amount of payments they make 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 including its Independent
Trustees by a vote cast in person at a meeting called for the purpose of voting
on such continuance. Each Plan may be terminated at any time by the vote of a
majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the outstanding shares
of that class. No Plan may be amended to increase materially the amount of
payments to be made unless such amendment is approved by shareholders of the
class affected by the amendment. In addition, because Class B shares of the Fund
automatically convert into Class A shares after six years, the Fund is required
by a Securities and Exchange Commission rule to obtain the approval of Class B
as well as Class A shareholders for a proposed amendment to the Class A Plan
that would materially increase payments under the Class A Plan. Such approval
must be by a "majority" of the Class A and Class B shares (as defined in the
Investment Company Act), voting separately by class. All material amendments
must be approved by the Board and the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund is to provide
separate written reports to the Fund's Board of Trustees at least quarterly for
its review, detailing the amount of all payments made pursuant to each Plan, the
purpose for which the payments were made and the identity of each Recipient that
received any such payment and the purpose of the payments. 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. Any unreimbursed expenses incurred by the Distributor
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.
For the fiscal year ended September 30, 1996, payments under the Class
A Plan totaled $959,130, all of which was paid by the Distributor to Recipients,
including $49,926 paid to an affiliate of the Distributor.
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<PAGE>
The Class B and Class C Plans allow the service fee payments to be paid
by the Distributor to Recipients in advance for the first year Class B and Class
C shares are outstanding, and thereafter on a quarterly basis, as described in
the Prospectus. The advance payment is based on the net asset value of the Class
B and Class C shares sold. An exchange of shares does not entitle the Recipient
to an advance payment of the service fee. In the event Class B or Class C shares
are redeemed during the first year such shares are outstanding, the Recipient
will be obligated to repay a pro rata portion of the advance of the service fee
payment to the Distributor.
Although the Class B and the Class C Plans permit the Distributor to
retain both the asset-based sales charges and the service fee, or to pay
Recipients the service fee on a quarterly basis, without payment in advance, the
Distributor presently intends to pay the service fee to Recipients in the manner
described above. A minimum holding period may be established from time to time
under the Class B Plan and the Class C Plan by the Board. Initially, the Board
has set no minimum holding period. All payments under the Class B Plan and the
Class C Plan are subject to the limitations imposed by the Conduct Rules of the
National Association of Securities Dealers, Inc. 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 or Class C Plan and from contingent
deferred sales charges collected on redeemed Class B or Class C shares) the
sales commissions paid to authorized brokers or dealers. Payments under the
Class B Plan during the fiscal year ended September 30, 1996 totaled $1,467,201
of which the Distributor paid $12,012 to an affiliated broker-dealer and
retained $1,292,678 as reimbursement for Class B sales commissions and service
fee advances, as well as financing costs. Payments made under the Class C Plan
for fiscal year ended September 30, 1996 totaled $322,622 of which the
Distributor paid $1,687 to an affiliated broker-dealer and retained $290,375 as
reimbursement for Class C sales commissions and service fee advances, as well as
financing costs.
Asset-based sales charge payments are designed to permit an investor to
purchase shares of the Fund without the assessment of a front-end sales load and
at the same time permit the Distributor to compensate brokers and dealers in
connection with the sale of Class B and Class C shares of the Fund. The Class B
and Class C Plans provide for the Distributor to be compensated at a flat rate
whether the Distributor's distribution expenses are more or less than the
amounts paid by the Fund during that period. Such payments are made in
recognition that the Distributor (i) pays sales commissions to authorized
brokers and dealers at the time of sale, (ii) may finance such commissions
and/or the advance of the service fee payment to Recipients under those Plans or
provide such financing from its own resources, or from an affiliate, (iii)
employs personnel to support distribution of shares, and (iv) costs of sales
literature, advertising and prospectuses (other than those furnished to current
shareholders) and state "blue sky" registration fees and certain other
distribution expenses.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C Shares. The
availability of three classes of shares permits 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
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<PAGE>
expects to hold shares and other relevant circumstances. Investors should
understand that the purpose and function of the deferred sales charge and
asset-based sales charge with respect to Class B and Class C shares are the same
as those of the initial sales charge with respect to Class A shares. Any
salesperson or other person entitled to receive compensation for selling Fund
shares may receive different compensation with respect to one class of shares
than the other. The Distributor will not accept any order for $500,000 or $1
million or more of Class B or Class C shares, respectively, on behalf of a
single investor (not including dealer "street name" or omnibus accounts) because
generally it will be more advantageous for that investor to purchase Class A
shares of the Fund instead.
The three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different shareholder
privileges and features. The net income attributable to Class B and Class C
shares and the dividends payable on Class B and Class C shares will be reduced
by incremental expenses borne solely by that class, including the asset-based
sales charge to which Class B and Class C shares are subject.
The conversion of Class B shares to Class A shares after six years is
subject to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or tax advisor, to the effect
that the conversion of Class B shares does not constitute a taxable event for
the holder under Federal income tax law. If such a revenue ruling or opinion is
no longer available, the automatic conversion feature may be suspended, in which
event no further conversions of Class B shares would occur while such suspension
remained in effect. Although Class B shares could then be exchanged for Class A
shares on the basis of relative net asset value of the two classes, without the
imposition of a sales charge or fee, such exchange could constitute a taxable
event for the holder, and absent such exchange, Class B shares might continue to
be subject to the asset-based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B and Class C shares recognizes two
types of expenses. General expenses that do not pertain specifically to any
class are allocated pro rata to the shares of each class, based on the
percentage of the net assets of such class to the Fund's total 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,
Statements of Additional Information 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 Values Per Share. The net asset values per share of
Class A, Class B and Class C shares of the Fund are determined as of the close
of business of The New York Stock Exchange on each day the Exchange is open by
dividing the value of the Fund's net assets
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attributable to that class by the number of shares of that class outstanding.
The Exchange normally closes at 4:00 P.M., New York time, but may close earlier
on some days (for example, in case of weather emergencies or on days falling
before a holiday). The Exchange's most recent annual holiday schedule (which is
subject to change) states that it will close New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day; it may also close on other days. Trading may occur in U.S.
Government Securities at times when the Exchange is closed (including weekends
and holidays or after 4:00 P.M., on a regular business day). Because the net
asset values of the Fund will not be calculated at such times, if securities
held in the Fund's portfolio are traded at such times, the net asset values per
share of Class A, Class B and Class C shares of the Fund may be significantly
affected on such days when shareholders do not have the ability to purchase or
redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity securities
traded on a U.S. securities exchange or on NASDAQ for which last sale
information is regularly reported are valued at the last reported sale price on
their primary exchange or NASDAQ that day (or, in the absence of sales that day,
at values based on the last sale prices of the preceding trading day or closing
"bid" prices that day); (ii) securities traded on a foreign securities exchange
are valued generally at the last sales price available to the pricing service
approved by the Fund's Board of Trustees or to the Manager as reported by the
principal exchange on which the security is traded at its last trading session
on or immediately preceding the valuation date, or at the mean between "bid" and
"asked" prices obtained from the principal exchange or two active market makers
in the security on the basis of reasonable inquiry; (iii) long-term debt
securities having a remaining maturity in excess of 60 days are valued based on
the mean between the "bid" and "ask" prices determined by a portfolio pricing
service approved by the Fund's Board of Trustees or obtained by the Manager from
two active market makers in the security on the basis of reasonable inquiry;
(iv) debt instruments having a maturity of more than 397 days when issued, and
non-money market type instruments having a maturity of 397 days or less when
issued, which have a remaining maturity of 60 days or less are valued at the
mean between the "bid" and "ask" prices determined by a pricing service approved
by the Fund's Board of Trustees or obtained by the Manager from two active
market makers in the security on the basis of reasonable inquiry; (v) money
market debt securities that had a maturity of less than 397 days when issued
that have a remaining maturity of 60 days or less are valued at cost, adjusted
for amortization of premiums and accretion of discounts; and (vi) securities
(including restricted securities) not having readily-available market quotations
are valued at fair value determined under the Board's procedures. If the Manager
is unable to locate two market makers willing to give quotes (see (ii), (iii)
and (iv) above), the security may be priced at the mean between the "bid" and
"ask" prices provided by a single active market maker (which in certain cases
may be the "bid" price if no "ask" price is available).
In the case of U.S. Government Securities and mortgage-backed
securities, where last sale information is not generally available, such pricing
procedures may include "matrix" comparisons to the prices for comparable
instruments on the basis of quality, yield, maturity and other special factors
involved. The Manager may use pricing services approved by the Board of Trustees
to price U.S. Government Securities for which last sale information is not
generally available. The Manager will monitor the accuracy of such pricing
services, which may include comparing prices used for
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portfolio evaluation to actual sales prices of selected securities.
Puts, calls and Futures are valued at the last sales price on the
principal exchange on which they are traded or on NASDAQ, as applicable, as
determined by a pricing service approved by the Board of Trustees or by the
Manager. If there were no sales that day, value shall be the last sale price on
the preceding trading day if it is within the spread of the closing "bid" and
"ask" prices on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing "bid" price on the principal exchange or on
NASDAQ on the valuation date. If the put, call or future is not traded on an
exchange or on NASDAQ, it shall be valued at the mean between "bid" and "ask"
prices obtained by the Manager from two active market makers (which in certain
cases may be the "bid" price if no "ask" price is available).
AccountLink. When shares are purchased through AccountLink, each purchase must
be at least $25.00. Shares will be purchased on the regular business day the
Distributor is instructed to initiate the Automated Clearing House transfer to
buy the shares. Dividends will begin to accrue on shares purchased by the
proceeds of ACH transfers on the business day the Fund receives Federal Funds
for such purchase through the ACH system before the close of The New York Stock
Exchange. The Exchange normally closes at 4:00 P.M., but may close earlier on
certain days. If the Federal Funds are received on a business day after the
close of the Exchange, the shares will be purchased and dividends will begin to
accrue on the next regular business day. The proceeds of ACH transfers are
normally received by the Fund three days after the transfers are initiated. The
Distributor and the Fund are not responsible for any delays in purchasing shares
resulting from delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales charge
rate may be obtained for Class A shares under Right of Accumulation and Letters
of Intent because of the economies of sales efforts and reduction in expenses
realized by the Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in the Prospectus
because the Distributor or broker-dealer incurs little or no selling expenses.
The term "immediate family" refers to one's spouse, children, grandchildren,
grandparents, parents, parents-in- law, siblings, sons- and daughters-in-law, a
sibling's spouse, a spouse's siblings, aunts, uncles, nieces and nephews.
o The Oppenheimer funds. The Oppenheimer funds are those mutual funds
for which the Distributor acts as the distributor or the sub-Distributor and
include the following:
Limited Term New York Municipal Fund*
Oppenheimer Bond Fund for Growth
Oppenheimer Bond Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Champion Income Fund
Oppenheimer Developing Markets Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund
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<PAGE>
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Equity Income Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer New York Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Growth & Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust
Oppenheimer Value Stock Fund
Oppenheimer World Bond Fund
Rochester Fund Municipals*
the following "Money Market Funds":
Centennial Money Market Trust
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Centennial Government Trust
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
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* Shares of the Fund are not presently exchangeable for shares of these funds.
There is an initial sales charge on the purchase of Class A shares of
each of the Oppenheimer funds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund shares
may be subject to a CDSC).
o Letters of Intent. A Letter of Intent (referred to as a "Letter") is
an investor's statement in writing to the Distributor of the intention to
purchase Class A shares of the Fund or Class A and Class B shares of the Fund
and other Oppenheimer funds during a 13-month period (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 of shares which, when added to the
investor's holdings of shares of those funds, will equal or exceed the amount
specified in the Letter. Purchases made by reinvestment of dividends or
distributions of capital gains and purchases made at net asset value without
sales charge do not count toward satisfying the amount of the Letter. A Letter
enables an investor to count the Class A and Class B shares purchased under the
Letter to obtain the reduced sales charge rate on purchases of Class A shares of
the Fund (and other Oppenheimer funds) that applies under the Right of
Accumulation to current purchases of Class A shares. Each purchase of Class A
shares under the Letter will be made at the public offering price applicable to
a single lump-sum purchase of shares in the intended purchase 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
purchase amount, the investor agrees to pay the additional amount of sales
charge applicable to such purchases, as set forth in "Terms of Escrow," below
(as those terms may be amended from time to time). The investor agrees that
shares equal in value to 5% of the intended purchase amount will be held in
escrow by the Transfer Agent subject to the Terms of Escrow. Also, the investor
agrees to be bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and if such
terms are amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the Transfer
Agent will not hold shares in escrow. If the intended purchase amount under the
Letter entered into by an OppenheimerFunds prototype
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401(k) plan is not purchased by the plan by the end of the Letter of Intent
period, there will be no adjustment of commissions paid to the broker-dealer or
financial institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of Intent period
do not equal or exceed the intended purchase amount, the commissions previously
paid to the dealer of record for the account and the amount of sales charge
retained by the Distributor will be adjusted to the rates applicable to actual
total purchases. If total eligible purchases during the Letter of Intent period
exceed the intended 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.
o Terms of Escrow That Apply to Letters of Intent
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value to 5% of the
intended purchase amount specified in the Letter shall be held in escrow by the
Transfer Agent. For example, if the intended purchase amount 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.
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4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for redemption any
or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding of
which may be counted toward completion of a Letter) include (a) Class A shares
sold with a front-end sales charge or subject to a Class A contingent deferred
sales charge, (b) Class B shares acquired subject to a contingent deferred sales
charge, and (c) Class A shares or Class B shares acquired in exchange for either
(i) Class A shares of one of the other Oppenheimer funds that were acquired
subject to a Class A initial or contingent deferred sales charge or (ii) Class B
shares of one of the other Oppenheimer funds that were acquired subject to a
contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectus entitled "How to Exchange Shares," and the escrow will
be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank account, a
check (minimum $25) for the initial purchase must accompany the application.
Shares purchased by Asset Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in "How To Sell
Shares," in the Prospectus. Asset Builder Plans also enable shareholders of
Oppenheimer Cash Reserves to use those accounts for monthly automatic purchases
of shares of up to four other Oppenheimer funds.
There is a front-end sales charge on the purchase of Class A shares of
certain Oppenheimer funds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be obtained
from the Transfer Agent, completed and returned, and a prospectus of the
selected fund(s) should be obtained from the Distributor or your financial
advisor before initiating Asset Builder payments. The amount of the Asset
Builder investment may be changed or the automatic investments may be terminated
at any time by writing to the Transfer Agent. A reasonable period (approximately
15 days) is required after the Transfer Agent's receipt of such instructions to
implement them. The Fund reserves the right to amend, suspend, or discontinue
offering such plans at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the Fund's
shares (for example, when a purchase check is returned to the Fund unpaid)
causes a loss to be incurred when the net asset value of the Fund's shares on
the cancellation date is less than on the purchase date. That loss is equal to
the amount of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is responsible for that
loss. If the investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by redeeming
shares from any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Retirement Plans. In describing certain types of employee benefit plans that may
purchase Class A shares without being subject to the Class A contingent deferred
sales charge, the term "employee benefit plan" means any plan or arrangement,
whether or not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which Class
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A shares are purchased by a fiduciary or other person for the account of
participants who are employees of a single employer or of affiliated employers,
if the Fund account is registered in the name of the fiduciary or other person
for the benefit of participants in the plan.
The term "group retirement plan" means any qualified or non-qualified
retirement plan (including 457 plans, SEPs, SARSEPs, 403(b) plans, and SIMPLE
plans) for employees of a corporation or a sole proprietorship, members and
employees of a partnership or association or other organized group of persons
(the members of which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group participating in
the plan purchase Class A shares of the Fund through a single investment dealer,
broker or other financial institution designated by the group.
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.
o 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 check writing
privileges at any time without prior notice.
o Involuntary Redemptions. The Fund's Board of Trustees has the right
to cause the involuntary redemption of the shares held in any account if the
aggregate net asset value of those shares is less than $200 or such lesser
amount as the Board may fix. The Board of Trustees will not cause the
involuntary redemption of shares in an account if the aggregate net asset value
of the shares has fallen below the stated minimum solely as a result of market
fluctuations. Should the Board elect to exercise this right, it may also fix, in
accordance with the Investment Company Act, the requirements for any notice to
be given to the shareholders in question (not less than 30 days), or the Board
may set requirements for granting permission to the shareholder to increase the
investment, and set other terms and conditions so that the shares would not be
involuntarily redeemed.
o Selling Shares by Wire. The wire of redemption proceeds may be
delayed if the Fund's Custodian bank is not open for business on a day when the
Fund would normally authorize the wire to be made, which is usually the Fund's
next regular business day following the redemption. In those circumstances, the
wire will not be transmitted until the next bank business day on which the Fund
is open for business. No dividends will be paid on the proceeds of redeemed
shares awaiting transfer by wire.
o 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
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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 its portfolio securities described
above under "Determination of Net Asset Values Per Share" and such valuation
will be made as of the time the redemption price is determined.
Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of (i) Class A shares that you
purchased subject to an initial sales charge, or (ii) Class B shares on which
you paid a contingent deferred sales charge when you redeemed them, without
sales charge. This privilege does not apply to Class C shares. The reinvestment
may be made without sales charge only in Class A shares of the Fund or any of
the other Oppenheimer funds into which shares of the Fund are exchangeable as
described below, at the net asset value next computed after the Transfer Agent
receives the reinvestment order. The shareholder must ask the Distributor for
that privilege at the time of reinvestment. Any capital gain that was realized
when the shares were redeemed is taxable, and reinvestment will not alter any
capital gains tax payable on that gain. If there has been a capital loss on the
redemption, some or all of the loss may not be tax deductible, depending on the
timing and amount of the reinvestment. Under the Internal Revenue Code, if the
redemption proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Oppenheimer funds within 90
days of payment of the sales charge, the shareholder's basis in the shares of
the Fund that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from the redemption.
However, in that case, the sales charge would be added to the basis of the
shares acquired by the reinvestment of the redemption proceeds. The Fund may
amend, suspend or cease offering this reinvestment privilege at any time as to
shares redeemed after the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a contingent
deferred sales charge of either class at the time of transfer to the name of
another person or entity (whether the transfer occurs by absolute assignment,
gift or bequest, not involving, directly or indirectly, a public sale). The
transferred shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the transferred shares
in the same manner and at the same time as the transferring shareholder. If less
than all shares held in an account are transferred, and some but not all shares
in the account would be subject to a contingent deferred sales charge if
redeemed at the time of transfer, the priorities described in the Prospectus
under "How to Buy Shares" for the imposition of the Class B and Class C
contingent deferred sales charge will be followed in determining the order in
which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should
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be addressed to "Trustee, OppenheimerFunds Retirement Plans," c/o the Transfer
Agent at its address listed in "How To Sell Shares" in the Prospectus or on the
back cover of this Statement of Additional Information. The request must: (i)
state the reason for the distribution; (ii) state the owner's awareness of tax
penalties if the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption requirements.
Participants (other than self-employed persons maintaining a plan account in
their own name) in OppenheimerFunds-sponsored prototype pension or
profit-sharing or 401(k) plans may not directly redeem or exchange shares held
for their account under those plans. The employer or plan administrator must
sign the request. Distributions from pension 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 on behalf of their customers. The shareholder should contact the
broker or dealer to arrange this type of redemption. The repurchase price per
share will be the net asset value next computed after the Distributor receives
the order placed by the dealer or broker, except that if the Distributor
receives a repurchase order from a dealer or broker after the close of The New
York Stock Exchange on a regular business day, it will be processed at that
day's net asset value if the order was received by the dealer or broker from its
customer prior to the time the Exchange closes (normally, that is 4:00 P.M., but
may be earlier on some days) and the order was transmitted to and received by
the Distributor prior to its close of business that day (normally 5:00 P.M.).
Ordinarily, for accounts redeemed by a broker-dealer under this procedure,
payment will be made within three business days after the shares have been
redeemed upon the Distributor's receipt of the required redemption documents in
proper form, with the signature(s) of the registered owners guaranteed on the
redemption document as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(minimum $50) automatically on a monthly, quarterly, semi-annual or annual basis
under an Automatic Withdrawal Plan. Shares will be redeemed three business days
prior to the date requested by the shareholder for receipt of the payment.
Automatic withdrawals of up to $1,500 per month may be requested by telephone if
payments are to be made by check payable to all shareholders of record and sent
to the address of record for the account (and if the address has not been
changed within the prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this basis.
Payments are normally made by check, but shareholders having AccountLink
privileges (see "How To Buy Shares") may arrange to have Automatic Withdrawal
Plan payments
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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 share purchases while participating
in an Automatic Withdrawal Plan. Class B and Class C shareholders should not
establish withdrawal plans, because of the imposition of the Class B and Class C
contingent deferred sales charges on such withdrawals (except where the Class B
and Class C contingent deferred sales charge is waived as described in the
Prospectus under "Class B Contingent Deferred Sales Charge" or in "Class C
Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated below and
in the provisions of the OppenheimerFunds Application relating to such Plans, as
well as the Prospectus. These provisions may be amended from time to time by the
Fund and/or the Distributor. When adopted, such amendments will automatically
apply to existing Plans.
o Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed instructions)
to exchange a pre-determined amount of shares of the Fund for shares (of the
same class) of other Oppenheimer funds automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange Plan. The minimum amount
that may be exchanged to each other fund account is $25. Exchanges made under
these plans are subject to the restrictions that apply to exchanges as set forth
in "How to Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
o Automatic Withdrawal Plans. Fund shares will be redeemed as necessary
to meet withdrawal payments. Shares acquired without a sales charge will be
redeemed first and thereafter shares acquired with reinvested dividends and
capital gains distributions will be redeemed next, followed by shares acquired
with a sales charge, to the extent necessary to make withdrawal payments.
Depending upon the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a yield or
income on your investment.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan (the "Plan") as agent for the investor (the "Planholder") who executed the
Plan authorization and application submitted to the Transfer Agent. The Transfer
Agent and the Fund shall incur no liability to the Planholder for any action
taken or omitted by the Transfer Agent and the Fund 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.
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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 Oppenheimer funds
having more than one class of shares may be exchanged only for shares of the
same class of other Oppenheimer funds. Shares of the Oppenheimer funds that have
a single class without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, B and C shares except
Oppenheimer Money Market Fund, Inc., Centennial Tax Exempt Trust, Centennial
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Government Trust, Centennial New York Tax Exempt Trust, Centennial California
Tax Exempt Trust, Centennial America Fund, L.P. and Daily Cash Accumulation Fund
Inc., which only offer Class A shares and Oppenheimer Main Street California Tax
Exempt Fund which only offers Class A and Class B shares (Class B and Class C
shares of Oppenheimer Cash reserves are generally available only by exchange
from the same class of shares of other Oppenheimer funds or through
OppenheimerFunds sponsored 401 (k) plans). A current list showing which funds
offer which class can be obtained by calling the Distributor at 1-800-525-7048.
For accounts established on or before March 8, 1996 holding Class M
shares of Oppenheimer Bond Fund for Growth, Class M shares can be exchanged only
for Class A shares of other Oppenheimer funds, including Rochester Fund
Municipals and Limited Term New York Municipal Fund. Class A shares of Rochester
Fund Municipals or Limited Term New York Municipal Fund acquired on the exchange
of Class M shares of Oppenheimer Bond Fund for Growth may be exchanged for Class
M shares of that fund. For accounts of Oppenheimer Bond Fund for Growth
established after March 8, 1996, Class M shares may be exchanged for Class A
shares of other Oppenheimer funds except Rochester Fund Municipals and Limited
Term New York Municipals. Exchanges to Class M shares of Oppenheimer Bond Fund
for Growth are permitted from Class A shares of Oppenheimer Money Market Fund,
Inc. or Oppenheimer Cash Reserves that were acquired by exchange from Class M
shares. Otherwise no exchanges of any class of any Oppenheimer fund into Class M
shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any Money Market Fund. Shares of any Money Market Fund purchased
without a sales charge may be exchanged for shares of Oppenheimer funds offered
with a sales charge upon payment of the sales charge (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge).
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except Oppenheimer Cash
Reserves) or from any unit investment trust for which reinvestment arrangements
have been made with the Distributor may be exchanged at net asset value for
shares of any of the Oppenheimer funds.
No contingent deferred sales charge is imposed on exchanges of shares
of any class purchased subject to a contingent deferred sales charge. However,
shares of Oppenheimer Money Market Fund, Inc. purchased with the redemption
proceeds of shares of other mutual funds (other than funds managed by the
Manager or its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or the
investor's dealer must notify the Distributor of eligibility for this privilege
at the time the shares of Oppenheimer Money Market Fund, Inc. are purchased,
and, if requested, must supply proof of entitlement to this privilege. The Class
C contingent deferred sales charge is imposed on Class C shares acquired by
exchange if they are redeemed within 12 months of the initial purchase of the
exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an exchange, the
priorities described
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in "How To Buy Shares" in the Prospectus for the imposition of the Class B and
Class C contingent deferred sales charge will be followed in determining the
order in which the shares are exchanged. Shareholders should take into account
the effect of any exchange on the applicability and rate of any contingent
deferred sales charge that might be imposed in the subsequent redemption of
remaining shares. Shareholders owning shares of more than one class must specify
whether they intend to exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of more than one account. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may be less
than the number requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this Statement of
Additional Information or would include shares covered by a share certificate
that is not tendered with the request. In those cases, only the shares available
for exchange without restriction will be exchanged.
When exchanging shares by telephone, the shareholder must either have
an existing account in, or obtain and acknowledge receipt of a prospectus of,
the fund to which the exchange is to be made. For full or partial exchanges of
an account made by telephone, any special account features such as Asset Builder
Plans, Automatic Withdrawal Plans and retirement plan contributions will be
switched to the new account unless the Transfer Agent is instructed otherwise.
If all telephone lines are busy (which might occur, for example, during periods
of substantial market fluctuations), shareholders might not be able to request
exchanges by telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the "Redemption
Date"). Normally, shares of the fund to be acquired are purchased on the
Redemption Date, but such purchases may be delayed by either fund up to five
business days if it determines that it would be disadvantaged by an immediate
transfer of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it (for
example, if the receipt of multiple exchange 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 Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure that
the Fund selected is appropriate for his or her investment and should be aware
of the tax consequences of an exchange. For federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above, discusses some
of the tax consequences of reinvestment of redemption proceeds in such cases.
The Fund, the Distributor, and the Transfer Agent are unable to provide
investment, tax or legal advice to a shareholder in connection with an exchange
request or any other investment transaction.
Dividends, Capital Gains and Taxes
-44-
<PAGE>
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 three business
days following the trade date (i.e., to and including the day prior to
settlement of the repurchase). If all shares in an account are redeemed, all
dividends accrued on shares of the same class in the account will be paid
together with the redemption proceeds.
Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of Oppenheimer Money Market
Fund, Inc., as promptly as possible after the return of such checks to the
Transfer Agent, to enable the investor to earn a return on otherwise idle funds.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio, and
expenses borne by the Fund or borne separately by a class, as described in
"Alternative Sales Arrangements -- Class A, Class B and Class C shares" above.
Dividends are calculated in the same manner, at the same time and on the same
day for shares of each class. However, dividends on Class B and Class C shares
are expected to be lower than dividends on Class A shares as a result of the
asset-based sales charges on Class B and Class C shares, and will also differ in
amount as a consequence of any difference in net asset value between the
classes.
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. A return of capital is a return of a shareholder's
original investment and is therefore not to be considered a taxable
distribution. There is no fixed dividend rate and there can be no assurance as
to the payment of any dividends or the realization of any capital gains.
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on amounts
paid by it as dividends and distributions. The Fund qualified as a regulated
investment company in its last fiscal year and intends to qualify in future
years, but reserves the right not to qualify. The Internal Revenue Code contains
a number of complex tests to determine whether the Fund will qualify, and the
Fund might not meet those tests in a particular year. For example, if the Fund
derives 30% or more of its gross income from the sale of securities held less
than three months, it may fail to qualify (see "Tax Aspects of Covered Calls and
Hedging Instruments," above). If it does not qualify, the Fund will be treated
for tax purposes as an ordinary corporation and will receive no tax deduction
for payments of dividends and distributions made to shareholders.
Under the Internal Revenue Code, by December 31 each year the Fund must
distribute 98% of its taxable investment income earned from January 1 through
December 31 of that year and 98% of its capital gains realized in the period
from November 1 of the prior year through October 31 of
-45-
<PAGE>
the current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet those
requirements, the Fund's Board and the Manager might determine in a particular
year that it would be in the best interest of shareholders for the Fund not to
make such distributions at the required levels and to pay the excise tax on the
undistributed amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the same
class of any of the other Oppenheimer funds listed in "Reduced Sales Charges"
above, at net asset value without sales charge. To elect this option, the
shareholder must notify the 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 Transfer Agent to establish
an account. The investment will be made at net asset value per share in effect
at the close of business on the payable date of the dividend or distribution.
Dividends and/or distributions from certain of the Oppenheimer funds may be
invested in shares of this Fund on the same basis.
Additional Information About The Fund
The Custodian. Citibank, N.A. is the Custodian of the Fund's assets. The
Custodian's responsibilities include safeguarding and controlling the Fund's
portfolio securities, collecting income on the portfolio securities and handling
the delivery of such securities to and from the Fund. The Manager has
represented to the Fund that 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. The
Fund's cash balances with the Custodian in excess of $100,000 are not protected
by Federal deposit insurance. Those uninsured balances at times may be
substantial.
Independent Auditors. The independent auditors of the Fund audit the Fund's
financial statements and perform other related audit services. They also act as
auditors for certain other funds advised by the Manager and its affiliates.
-46-
<PAGE>
INDEPENDENT AUDITORS' REPORT
=====================================================================
The Board of Trustees and Shareholders of Oppenheimer Limited-Term
Government Fund:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Limited-Term
Government Fund as of September 30, 1996, the related statement of
operations for the year then ended, the statements of changes in net
assets for the years ended September 30, 1996 and 1995, and the
financial highlights for the period October 1, 1991 to September 30,
1996. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at September 30,
1996 by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and
financial highlights present fairly, in all material respects, the
financial position of Oppenheimer Limited-Term Government Fund at
September 30, 1996, 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.
/s/ Deloitte & Touche LLP
----------------------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
October 21, 1996
<PAGE>
STATEMENT OF INVESTMENTS September 30, 1996
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
======================================================================================================================
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS--70.0%
- ----------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--70.0%
- ----------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--58.3%
Federal Home Loan Mortgage Corp.:
Interest-Only Stripped Mtg.-Backed Security, Trust 177,
Cl. B, 15.389--15.793%, 7/15/26(1) $111,555,114 $41,292,822
Collateralized Mtg. Obligations, Gtd.
Multiclass Mtg. Participation Certificates:
Series 1360, Cl. PK, 10%, 12/15/20 15,030,000 16,993,219
7.50%, 10/15/26(2) 15,000,000 14,840,700
Series 1060, Cl. D, 8.20%, 7/15/19 400,997 404,005
Series 1065, Cl. H, 8.50%, 10/15/19 7,645,370 7,781,534
Series 1092, Cl. K, 8.50%, 6/15/21 15,000,000 15,773,400
Series 1097, Cl. L, 8.60%, 2/15/06 3,000,000 3,067,500
Series 1252, Cl. J, 8%, 5/15/22 7,000,000 7,039,340
Series 1455, Cl. J, 7.50%, 12/15/22 15,000,000 14,807,700
Series 25, Cl. F, 9.50%, 12/15/18 348,697 348,914
Series 45, Cl. D, 10%, 11/15/19 5,230,034 5,223,497
Series 5, Cl. Z, 9%, 5/15/19 3,191,469 3,348,176
Gtd. Multiclass Mtg. Participation Certificates:
10%, 8/1/21 3,744,375 4,070,613
11.50%, 6/1/20 2,200,876 2,522,754
11.75%, 1/1/16--4/1/19 3,224,597 3,688,932
13%, 8/1/15 4,220,974 5,033,512
7.50%, 5/1/26 10,031,643 9,929,722
9.25%, 11/1/08 427,157 448,835
--------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
11%, 11/1/15-- 5/15/19 17,650,278 19,840,727
11.50%, 8/15/13 2,152,600 2,470,782
11.75%, 9/1/03--11/1/15 751,412 842,276
12%, 8/1/16--4/15/19 6,559,550 7,616,440
13%, 8/1/10--12/1/15 6,168,795 7,351,740
7%, 10/15/26(2) 30,000,000 28,940,700
7%, 8/1/25--5/1/26 48,182,736 46,500,920
7.50%, 10/15/26(2) 5,000,000 4,940,650
7.50%, 6/1/25--8/1/25 11,969,861 11,857,705
8%, 10/15/26(2) 7,200,000 7,263,000
8.50%, 10/15/26(2) 5,000,000 5,128,150
9%, 8/1/19 789,369 829,532
STRIPS, Pass-Through Certificates, Trust 6, Cl. IP, 11.50%, 3/1/09 2,420,258 2,702,364
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Trust 1992-103, Cl. JB, 10.50%, 11/25/20 10,000,000 11,153,100
12.50%, 12/1/15 3,644,832 4,304,889
8%, 1/1/23 263,864 267,854
Trust 1989-4, Cl. D, 10%, 2/25/19 6,000,000 6,706,860
Trust 1990-143, Cl. J, 8.75%, 12/25/20 7,500,000 7,837,500
Trust 1990-18, Cl. K, 9.60%, 3/25/20 5,000,000 5,587,500
Trust 1991-169, Cl. PK, 8%, 10/25/21 595,000 607,644
Trust 1991-170, Cl. E, 8%, 12/25/06 2,500,000 2,603,900
Trust 1992-169, Cl. L, 7%, 9/25/22 5,500,000 5,065,115
</TABLE>
6 Oppenheimer Limited-Term Government Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FHLMC/FNMA/SPONSORED
(CONTINUED)
Interest-Only Stripped Mtg.-Backed Security:
Trust 218, Cl. 2, 11.836%, 4/1/23(1) $ 6,796,442 $ 2,264,065
Trust 240, Cl. 2, 9.686%--9.749%, 9/1/23(1) 18,603,630 6,426,973
Trust 252, Cl. 2, 11.047%, 11/1/23(1) 4,890,972 1,662,931
Trust 254, Cl. 2, 10.799%, 1/1/24(1) 19,549,084 6,671,125
Trust 257, Cl. 2, 10.982%, 2/1/24(1) 11,987,717 4,156,366
Principal-Only Stripped Mtg.-Backed Security:
Trust 148, Cl. G, 0.538%, 8/25/23(3) 8,891,258 4,729,038
Trust 4, Cl. J, 2.673%, 9/25/22(3) 3,400,000 1,742,500
------------
374,687,521
- ----------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--11.7%
Government National Mortgage Assn.:
10.50%, 1/15/16--7/15/21 3,369,102 3,726,273
11%, 2/15/98--2/15/01 1,109,936 1,176,255
11.50%, 1/15/13--5/15/13 752,799 864,478
13%, 2/15/11--9/15/14 72,342 85,899
7.50%, 10/15/26(2) 34,750,000 34,315,625
7.50%, 10/15/25--6/15/26 25,297,120 25,005,227
8%, 10/15/26(2) 10,000,000 10,093,800
8%, 9/15/07 158,198 162,957
8.50%, 9/15/21 66,250 68,701
9.50%, 9/15/17 159,459 172,221
------------
75,671,436
------------
Total Mortgage-Backed Obligations (Cost $453,576,570) 450,358,957
======================================================================================================================
U.S. GOVERNMENT OBLIGATIONS--44.9%
- ----------------------------------------------------------------------------------------------------------------------
TREASURY--44.9%
U.S. Treasury Bonds:
8.125%, 8/15/19 5,000,000 5,589,065
STRIPS, Zero Coupon, 7.342%, 11/15/21(4) 10,000,000 1,675,099
STRIPS, Zero Coupon, 7.19%, 8/15/22(4) 12,000,000 1,920,082
--------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6%, 8/31/97(5) 128,995,000 129,236,866
6.375%, 8/15/02 12,012,000 11,929,418
6.50%, 5/15/05 2,853,000 2,816,444
6.875%, 3/31/00 7,840,000 7,964,945
7.25%, 11/15/96--2/15/98 78,416,000 78,663,997
7.75%, 1/31/00 2,500,000 2,603,125
8%, 1/15/97 45,700,000 46,071,313
------------
Total U.S. Government Obligations (Cost $290,182,746) 288,470,354
</TABLE>
7 Oppenheimer Limited-Term Government Fund
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
======================================================================================================================
<S> <C> <C>
REPURCHASE AGREEMENT--0.3%
- ----------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Goldman, Sachs & Co., 5.62%, dated 9/30/96,
to be repurchased at $2,000,312 on 10/1/96, collateralized by U.S. Treasury
Bonds, 7.625%, 11/15/22, with a value of $2,043,143 (Cost $2,000,000) $2,000,000 $2,000,000
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $745,759,316) 115.2% 740,829,311
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER Assets (15.2) (98,012,027)
---------- -------------
NET ASSETS 100.0% $642,817,284
========== =============
</TABLE>
1. Interest-Only Strips represent the right to receive the monthly
interest payments on an underlying pool of mortgage loans. These
securities typically decline in price as interest rates decline. Most
other fixed-income securities increase in price when interest rates
decline. The principal amount of the underlying pool represents the
notional amount on which current interest is calculated. The price of
these securities is typically more sensitive to changes in prepayment
rates than traditional mortgage-backed securities (for example, GNMA
pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future
cash flows.
2. When-issued security to be delivered and settled after September 30,
1996.
3. Principal-Only Strips represent the right to receive the monthly
principal payments on an underlying pool of mortgage loans. The value of
these securities generally increases as interest rates decline and
prepayment rates rise. The price of these securities is typically more
volatile than that of coupon-bearing bonds of the same maturity.
Interest rates disclosed represent current yields based upon the current
cost basis and estimated timing of future cash flows.
4. For zero coupon bonds, the interest rate shown is the effective
yield on the date of purchase.
5. Securities with an aggregate market value of $6,011,250 are held in
collateralized accounts to cover initial margin requirements on open
futures sales contracts. See Note 5 of Notes to Financial Statements.
See accompanying Notes to Financial Statements.
8 Oppenheimer Limited-Term Government Fund
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES September 30, 1996
<TABLE>
<S> <C>
======================================================================================================================
ASSETS Investments, at value (cost $745,759,316)--see accompanying statement $740,829,311
--------------------------------------------------------------------------------------------------------------
Cash 375,421
--------------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 23,010,497
Interest and principal paydowns 7,070,560
Shares of beneficial interest sold 2,408,013
Daily variation on futures contracts--Note 5 101,812
--------------------------------------------------------------------------------------------------------------
Other 3,928
------------
Total assets 773,799,542
======================================================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased (including $104,687,336 purchased on a when-issued basis)--Note 1 127,628,898
Shares of beneficial interest redeemed 1,885,402
Dividends 956,712
Distribution and service plan fees 388,462
Transfer and shareholder servicing agent fees 21,854
Trustees' fees 6,066
Other 94,864
------------
Total liabilities 130,982,258
======================================================================================================================
NET ASSETS $642,817,284
============
======================================================================================================================
COMPOSITION OF
NET ASSETS
Paid-in capital $660,164,931
--------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (186)
--------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (11,806,675)
--------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments--Notes 3 and 5 (5,540,786)
------------
Net assets $642,817,284
============
======================================================================================================================
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $436,889,403 and 42,579,748 shares of beneficial interest outstanding) $10.26
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $10.63
--------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $160,572,232 and 15,651,147 shares of beneficial interest outstanding) $10.26
--------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $45,355,649 and 4,425,539 shares of beneficial interest outstanding) $10.25
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Limited-Term Government Fund
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended September 30, 1996
<TABLE>
<S> <C>
======================================================================================================================
INVESTMENT INCOME
Interest $46,303,392
======================================================================================================================
EXPENSES
Distribution and service plan fees--Note 4:
Class A 959,130
Class B 1,467,201
Class C 322,622
--------------------------------------------------------------------------------------------------------------
Management fees--Note 4 2,529,645
--------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 595,567
--------------------------------------------------------------------------------------------------------------
Shareholder reports 230,964
--------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 42,723
Class B 18,944
Class C 11,297
--------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 41,713
--------------------------------------------------------------------------------------------------------------
Legal and auditing fees 24,007
--------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 16,158
--------------------------------------------------------------------------------------------------------------
Other 64,141
-----------
Total expenses 6,324,112
======================================================================================================================
NET INVESTMENT INCOME 39,979,280
======================================================================================================================
REALIZED AND
UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments and options written (including premiums on options exercised) (8,315,542)
Closing of futures contracts 724,899
Closing of options written (888,706)
-----------
Net realized loss (8,479,349)
--------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (2,255,816)
-----------
Net realized and unrealized loss (10,735,165)
======================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $29,244,115
===========
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Limited-Term Government Fund
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1996 1995
======================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 39,979,280 $ 26,134,113
--------------------------------------------------------------------------------------------------------------
Net realized loss (8,479,349) (1,750,174)
--------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (2,255,816) 2,574,769
----------- ------------
Net increase in net assets resulting from operations 29,244,115 26,958,708
======================================================================================================================
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS
Dividends from net investment income:
Class A (26,704,976) (20,166,681)
Class B (8,852,431) (4,762,585)
Class C (1,884,621) (253,856)
--------------------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A (1,369,245) --
Class B (503,246) --
Class C (142,148) --
======================================================================================================================
BENEFICIAL INTEREST
TRANSACTIONS
Net increase in net assets resulting from beneficial interest
transactions--Note 2:
Class A 97,751,994 116,780,567
Class B 42,090,398 81,900,018
Class C 31,425,681 14,569,935
======================================================================================================================
NET ASSETS
Total increase 161,055,521 215,026,106
--------------------------------------------------------------------------------------------------------------
Beginning of period 481,761,763 266,735,657
------------ ------------
End of period [including undistributed (overdistributed) net
investment income of $(186) and $1,076,858, respectively] $642,817,284 $481,761,763
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Limited-Term Government Fund
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1996 1995 1994 1993 1992
==================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.44 $10.40 $11.04 $10.97 $10.75
- --------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .75 .79 .72 .73 .81
Net realized and unrealized
gain (loss) (.19) .01 (.64) .07 .22
------- ------- ------- -------- -------
Total income (loss) from
investment operations .56 .80 .08 .80 1.03
- --------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment
income (.71) (.76) (.71) (.73) (.81)
Tax return of capital distribution (.03) -- (.01) -- --
------- ------- ------- -------- -------
Total dividends and distributions
to shareholders (.74) (.76) (.72) (.73) (.81)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $10.26 $10.44 $10.40 $11.04 $10.97
======= ======= ======= ======== =======
==================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 5.54% 8.03% 0.74% 7.61% 9.88%
==================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $436,889 $346,015 $227,858 $178,944 $158,068
- --------------------------------------------------------------------------------------------------
Average net assets (in thousands) $393,727 $274,313 $190,829 $161,318 $160,830
- --------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.22% 7.64% 6.74% 6.70% 7.44%
Expenses 0.87% 0.91% 0.99% 1.02% 0.97%
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 71% 261% 226% 74% 154%
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------------------------- ------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPT. 30,
1996 1995 1994 1993(2) 1996 1995(1)
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.44 $10.41 $11.06 $10.96 $10.43 $10.32
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .67 .71 .62 .23 .66 .45
Net realized and unrealized
gain (loss) (.19) .01 (.64) .10 (.18) .10
------- ------- ------- -------- ------- -------
Total income (loss) from
investment operations .48 .72 (.02) .33 .48 .55
- ------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment
income (.63) (.69) (.62) (.23) (.63) (.44)
Tax return of capital distribution (.03) -- (.01) -- (.03) --
------- ------- ------- -------- ------- -------
Total dividends and distributions
to shareholders (.66) (.69) (.63) (.23) (.66) (.44)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.26 $10.44 $10.41 $11.06 $10.25 $10.43
======= ======= ======= ======== ======= =======
==================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 4.74% 7.18% (0.17)% 3.02% 4.71% 5.47%
==================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $160,572 $121,178 $38,877 $5,077 $45,356 $14,569
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $147,017 $72,131 $15,801 $2,561 $32,349 $6,112
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.46% 6.80% 5.91% 4.81%(4) 6.34% 6.51%(4)
Expenses 1.62% 1.71% 1.79% 1.87%(4) 1.64% 1.80%(4)
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 71% 261% 226% 74% 71% 261%
</TABLE>
1. For the period from February 1, 1995 (inception of offering) to September
30, 1995.
2. For the period from May 3, 1993 (inception of offering) to September 30,
1993.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended September 30, 1996 were $603,877,225 and $415,889,318, respectively. For
the years ended September 30, 1995 and 1994, purchases and sales of investment
securities included mortgage "dollar-rolls."
See accompanying Notes to Financial Statements.
12 Oppenheimer Limited-Term Government Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Limited-Term Government 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 objective
is to seek high current return and safety of principal. The Fund's
investment adviser is OppenheimerFunds, Inc. (the Manager). The Fund
offers Class A, Class B and Class C shares. Class A shares are sold with
a front-end sales charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All three classes of shares have
identical rights to earnings, assets and voting privileges, except that
each class has its own distribution and/or service plan, expenses
directly attributable to a particular class and exclusive voting rights
with respect to matters affecting a single class. 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 the close of
the New York Stock Exchange on each trading day. Listed and unlisted
securities for which such information is regularly reported are valued
at the last sale price of the day or, in the absence of sales, at values
based on the closing bid or the last sale price on the prior trading
day. Long-term and short-term "non-money market" debt securities are
valued by a portfolio pricing service approved by the Board of Trustees.
Such securities which cannot be valued by the approved portfolio pricing
service are valued using dealer-supplied valuations provided the Manager
is satisfied that the firm rendering the quotes is reliable and that the
quotes reflect current market value, or are valued under consistently
applied procedures established by the Board of Trustees to determine
fair value in good faith. Short-term "money market type" debt securities
having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of
any premium or discount. Options are valued based upon the last sale
price on the principal exchange on which the option is traded or, in the
absence of any transactions that day, the value is based upon the last
sale price on the prior trading date if it is within the spread between
the closing bid and asked prices. If the last sale price is outside the
spread, the closing bid is used.
------------------------------------------------------------------------
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for
securities that have been purchased by the Fund on a forward commitment
or when-issued basis can take place a month or more after the
transaction date. During the period, such securities do not earn
interest, are subject to market fluctuation and may increase or decrease
in value prior to their delivery. The Fund maintains, in a segregated
account with its custodian, assets with a market value equal to the
amount of its purchase commitments. The purchase of securities on a
when-issued or forward commitment basis may increase the volatility of
the Fund's net asset value to the extent the Fund makes such purchases
while remaining substantially fully invested. As of September 30, 1996,
the Fund had entered into outstanding when-issued or forward commitments
of $104,687,336.
In connection with its ability to purchase
securities on a when-issued or forward commitment basis, the Fund may
enter into mortgage "dollar-rolls" in which the Fund sells securities
for delivery in the current month and simultaneously contracts with the
same counterparty to repurchase similar (same type, coupon and
maturity) but not identical securities on a specified future date. The
Fund records each dollar-roll as a sale and a new purchase transaction.
------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian to take
possession, to have legally segregated in the Federal Reserve Book Entry
System or to have segregated within the custodian's vault, all
securities held as collateral for repurchase agreements. The market
value of the underlying securities is required to be at least 102% of
the resale price at the time of purchase. If the seller of the agreement
defaults and the value of the collateral declines, or if the seller
enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses
(other than those attributable to a specific class) and gains and losses
are allocated daily to each class of shares based upon the relative
proportion of net assets represented by such class. Operating expenses
directly attributable to a specific class are charged against the
operations of that class.
------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income, including any net realized
gain on investments not offset by loss carryovers, to shareholders.
Therefore, no federal income or excise tax provision is required. At
September 30, 1996, the Fund had available for federal tax purposes an
unused capital loss carryover of approximately $6,058,000, expiring
between 1997 and 2004.
13 Oppenheimer Limited-Term Government Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends
separately for Class A, Class B and Class C shares from net investment
income each day the New York Stock Exchange is open for business and pay
such dividends monthly. Distributions from net realized gains on
investments, if any, will be declared at least once each year.
------------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income
(loss) and net realized gain (loss) may differ for financial statement
and tax purposes primarily because of paydown gains and losses. The
character of the distributions made during the year from net investment
income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gain (loss) was
recorded by the Fund.
During the year ended September 30, 1996, the
Fund adjusted the classification of distributions to reflect the
differences between the financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly,
during the year ended September 30, 1996, amounts have been reclassified
to reflect a decrease in paid-in capital of $3,594,221, of which
$2,014,639 is considered a tax return of capital, a decrease in
undistributed net investment income of $1,599,657, and a decrease in
accumulated net realized loss on investments of $5,193,878.
------------------------------------------------------------------------
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 options written and unrealized appreciation
and depreciation are determined on an identified cost basis, which is
the same basis used for federal income tax purposes.
The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
================================================================================
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, 1996 YEAR ENDED SEPTEMBER 30, 1995(1)
------------------------------ --------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 21,513,142 $222,573,075 18,462,358 $ 191,899,002
Dividends reinvested 2,005,298 20,746,018 1,399,150 14,547,766
Issued in connection with the
acquisition of Oppenheimer Strategic
Short-Term Income Fund--Note 7 -- -- 1,615,189 16,862,577
Redeemed (14,074,194) (145,567,099) (10,247,223) (106,528,778)
----------- ------------ ----------- -------------
Net increase 9,444,246 $ 97,751,994 11,229,474 $ 116,780,567
=========== ============ =========== =============
-----------------------------------------------------------------------------------------------------------------------
Class B:
Sold 7,184,124 $ 74,533,887 8,638,202 $ 89,826,104
Dividends reinvested 612,492 6,335,732 310,362 3,231,003
Issued in connection with the
acquisition of Oppenheimer Strategic
Short-Term Income Fund--Note 7 -- -- 810,988 8,466,715
Redeemed (3,752,397) (38,779,221) (1,886,739) (19,623,804)
----------- ------------ ----------- -------------
Net increase 4,044,219 $ 42,090,398 7,872,813 $ 81,900,018
=========== ============ =========== =============
-----------------------------------------------------------------------------------------------------------------------
Class C:
Sold 3,837,630 $ 39,749,107 1,483,730 $ 15,478,180
Dividends reinvested 153,531 1,583,682 20,278 211,531
Redeemed (962,267) (9,907,108) (107,363) (1,119,776)
----------- ------------ ----------- -------------
Net increase 3,028,894 $ 31,425,681 1,396,645 $ 14,569,935
=========== ============ =========== =============
</TABLE>
1. For the year ended September 30, 1995 for Class A and Class B shares
and for the period from February 1, 1995 (inception of offering) to
September 30, 1995 for Class C shares.
14 Oppenheimer Limited-Term Government Fund
<PAGE>
================================================================================
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At September 30, 1996, net unrealized depreciation on investments of
$4,930,005 was composed of gross appreciation of $4,276,107, and gross
depreciation of $9,206,112.
================================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of
0.50% on the first $100 million of average annual net assets, 0.45% on
the next $150 million, 0.425% on the next $250 million and 0.40% 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, 1996,
commissions (sales charges paid by investors) on sales of Class A shares
totaled $2,342,696, of which $631,567 was retained by OppenheimerFunds
Distributor, Inc. (OFDI), a subsidiary of the Manager, as general
distributor, and by an affiliated broker/dealer. Sales charges advanced
to broker/dealers by OFDI on sales of the Fund's Class B and Class C
shares totaled $1,966,794 and $390,698 of which $113,402 and $14,752,
respectively, was paid to an affiliated broker/dealer. During the year
ended September 30, 1996, OFDI received contingent deferred sales
charges of $395,003 and $49,546, respectively, upon redemption of Class
B and Class C shares as compensation for sales commissions advanced by
OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of
the Manager, is the transfer and shareholder servicing agent for the
Fund, and for other registered investment companies. OFS's total costs
of providing such services are allocated ratably to these companies.
The Fund has adopted a Service Plan for Class
A shares to reimburse OFDI for a portion of its costs incurred in
connection with the personal service and maintenance of accounts that
hold Class A shares. Reimbursement is made quarterly at an annual rate
that may not exceed 0.25% of the average annual net assets of Class A
shares of the Fund. OFDI uses the service fee to reimburse brokers,
dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that
hold Class A shares. During the year ended September 30, 1996, OFDI paid
$49,926 to an affiliated broker/dealer as reimbursement for Class A
personal service and maintenance expenses.
The Fund has adopted compensation type
Distribution and Service Plans for Class B and Class C shares to
compensate OFDI for its services and costs in distributing Class B and
Class C shares and servicing accounts. Under the Plans, the Fund pays
OFDI an annual asset-based sales charge of 0.75% per year on Class B
shares and on Class C shares, as compensation for sales commissions paid
from its own resources at the time of sale and associated financing
costs. If the Plans are terminated by the Fund, the Board of Trustees
may allow the Fund to continue payments of the asset-based sales charge
to OFDI for certain expenses it incurred before the Plans were
terminated. OFDI also receives a service fee of 0.25% per year as
compensation for costs incurred in connection with the personal service
and maintenance of accounts that hold shares of the Fund, including
amounts paid to brokers, dealers, banks and other financial
institutions. Both fees are computed on the average annual net assets of
Class B and Class C shares, determined as of the close of each regular
business day. During the year ended September 30, 1996, OFDI paid
$12,012 and $1,687, respectively, to an affiliated broker/dealer as
compensation for Class B and Class C personal service and maintenance
expenses and retained $1,292,678 and $290,375, respectively, as
compensation for Class B and Class C sales commissions and service fee
advances, as well as financing costs. At September 30, 1996, OFDI had
incurred unreimbursed expenses of $4,393,354 for Class B and $612,203
for Class C.
================================================================================
5. FUTURES CONTRACTS
The Fund may buy and sell interest rate futures contracts in order to
gain exposure to or protect against changes in interest rates. The Fund
may also buy or write put or call options on these futures contracts.
The Fund generally sells futures contracts to
hedge against increases in interest rates and the resulting negative
effect on the value of fixed rate portfolio securities. The Fund may
also purchase futures contracts to gain exposure to changes in interest
rates as it may be more efficient or cost effective than actually buying
fixed income securities.
Upon entering into a futures contract, the
Fund is required to deposit either cash or securities in an amount
(initial margin) equal to a certain percentage of the contract value.
Subsequent payments (variation margin) are made or received by the Fund
each day. The variation margin payments are equal to the daily changes
in the contract value and are recorded as unrealized gains and losses.
The Fund recognizes a realized gain or loss when the contract is closed
or expires.
15 Oppenheimer Limited-Term Government Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
5. FUTURES CONTRACTS
(CONTINUED)
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a
receivable or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and
related options) include the possibility that there may be an illiquid
market and that a change in the value of the contract or option may not
correlate with changes in the value of the underlying securities.
At September 30, 1996, the Fund had outstanding futures contracts to
sell debt securities as follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
DATE FUTURES CONTRACTS SEPTEMBER 30, 1996 DEPRECIATION
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Nts. 12/96 372 $39,908,625 $589,250
---------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts. 12/96 20 2,183,750 8,750
---------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts. 12/96 213 22,491,469 12,781
----------- --------
$64,583,844 $610,781
=========== ========
</TABLE>
================================================================================
6. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and
covered call options on portfolio securities in order to produce
incremental earnings or protect against changes in the value of
portfolio securities.
The Fund generally purchases put options or
writes covered call options to hedge against adverse movements in the
value of portfolio holdings. When an option is written, the Fund
receives a premium and becomes obligated to sell or purchase the
underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last
sale price on the principal exchange on which the option is traded and
unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss upon the expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option, or the
cost of the security for a purchased put or call option is adjusted by
the amount of premium received or paid.
Securities designated to cover outstanding
call options are noted in the Statement of Investments where applicable.
Shares subject to call, expiration date, exercise price, premium
received and market value are detailed in a footnote to the Statement of
Investments. Options written are reported as a liability in the
Statement of Assets and Liabilities. Gains and losses are reported in
the Statement of Operations.
The risk in writing a call option is that the
Fund gives up the opportunity for profit if the market price of the
security increases and the option is exercised. The risk in writing a
put option is that the Fund may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an
option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not
exist.
Option activity for the year ended September 30, 1996 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
--------------------------- --------------------------
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
OPTIONS PREMIUMS OPTIONS PREMIUMS
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at September 30, 1995 -- $ -- -- $ --
-------------------------------------------------------------------------------------------------------------
Options written 37,500 294,922 33,874 1,307,684
-------------------------------------------------------------------------------------------------------------
Options exercised (37,500) (294,922) -- --
-------------------------------------------------------------------------------------------------------------
Options closed -- -- (33,874) (1,307,684)
------- --------- ------- -----------
Options outstanding at September 30, 1996 -- $ -- -- $ --
======= ========= ======= ===========
</TABLE>
================================================================================
7. ACQUISITION OF OPPENHEIMER
STRATEGIC SHORT-TERM
INCOME FUND
On September 22, 1995, the Fund acquired all of the net assets of
Oppenheimer Strategic Short-Term Income Fund, pursuant to an Agreement
and Plan of Reorganization approved by the Oppenheimer Strategic Short-
Term Income Fund shareholders on February 28, 1995. The Fund issued
1,615,189 and $810,988 shares of beneficial interest for Class A and
Class B, respectively, valued at $16,862,577 and $8,466,715 in exchange
for the net assets, resulting in combined Class A net assets of
$342,039,434 and Class B net assets of $118,635,825 on September 22,
1995. The net assets acquired included net unrealized depreciation of
$114,214. The exchange qualifies as a tax free reorganization for
federal income tax purposes.
<PAGE>
Appendix A
Industry Classifications
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
A-1
<PAGE>
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
<PAGE>
OPPENHEIMER LIMITED-TERM GOVERNMENT 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.
(b) Exhibits
(1) Amended and Restated Agreement and Declaration of
Trust dated June 23, 1995: Filed herewith.
(2) Amended By-Laws as of April 18, 1995: Filed
herewith.
(3) Not applicable.
(4) (i) Class A Specimen Share Certificate: Filed
C-1
<PAGE>
herewith.
(ii) Class B Specimen Share Certificate: Filed
herewith.
(iii) Class C Specimen Share Certificate: Filed
herewith.
(5) Investment Advisory Agreement dated October 22,
1990: Filed with Post-Effective Amendment No. 7 to Registrant's
Registration Statement, 12/3/90, refiled with Registrant's Post-
Effective Amendment No. 19, 12/2/94, pursuant to Item 102 of
Regulation S-T, and incorporated herein by reference.
(6) (i) 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 refiled with Registrant's
Post-Effective Amendment No. 19, 12/2/94, pursuant to Item 102 of
Regulation S-T, and incorporated herein by reference.
(ii) Form of Dealer Agreement of Oppenheimer Funds
Distributor, Inc.: Filed with Post-Effective Amendment No. 14
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94,
and incorporated herein by reference.
(iii) Form of Oppenheimer Funds Distributor, Inc.
Broker Agreement: Filed with Post-Effective Amendment No. 14
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94,
and incorporated herein by reference.
(iv) Form of Oppenheimer Funds Distributor, Inc.
Agency Agreement: Filed with Post-Effective Amendment No. 14
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94,
and incorporated herein by reference.
(v) Broker Agreement between Oppenheimer Fund
Management, Inc. and Newbridge Securities, dated 10/1/86:
Previously filed with Post-Effective Amendment No. 25 of
Oppenheimer Growth Fund (Reg. No. 2-45272), 11/1/86, refiled with
Post-Effective Amendment No. 47 of Oppenheimer Growth Fund (Reg.
No. 2-45272), 10/21/94, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(7) Not applicable.
C-2
<PAGE>
(8) Custodian Agreement dated 6/1/90 with Citibank,
N.A.: Filed with Registrant's Post-Effective Amendment No. 8,
2/1/91, refiled with Registrant's Post-Effective Amendment No. 19,
12/2/94 pursuant to Item 102 of Regulation S-T, and incorporated
herein by reference.
(9) Not applicable.
(10) Opinion and Consent of Counsel dated February 20, 1986:
Previously filed with Registrant's Registration Statement, and refiled with
Post-Effective Amendment No 20, 2/1/95, and incorporated herein by reference.
(11) Independent Auditors' Consent: Filed herewith.
(12) Not applicable.
(13) Subscription Agreement and Investment letter:
Previously filed with Registrant's Registration Statement, and
incorporated herein by reference.
(14) (i) Form of Individual Retirement Account (IRA)
Plan: Previously filed with Post-Effective Amendment No. 21 to the
Registration Statement of Oppenheimer U.S. Government Trust (File
No. 2-76645), 8/25/93, and incorporated herein by reference.
(ii) Form of Prototype Standardized and Non-
Standardized Profit Sharing and Money Purchase Pension Plan for
self-employed persons in corporations: Filed with Post-Effective
Amendment No. 15 to the Registration Statement of Oppenheimer
Mortgage Income Fund (Reg. No. 33-6614), 1/19/95, and incorporated
herein by reference.
(iii) Form of Tax Sheltered Retirement Plan and
Custody Agreement for employees of public schools and tax-exempt
organizations: Previously filed with Post-Effective Amendment No.
47 to the Registration Statement of Oppenheimer Growth Fund (File
No. 2-45272), 10/21/94, and incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA:
Previously filed with Post-Effective Amendment No. 42 to the
Registration Statement of Oppenheimer Equity Income Fund (Reg. No.
2-33043), 10/28/94, and incorporated herein by reference.
(v) Form of Prototype 401(k) Plan: Previously
C-3
<PAGE>
filed with Post-Effective Amendment No. 7 to the Registration
Statement of Oppenheimer Strategic Income Fund (Reg. No. 33-47378),
9/28/95, and incorporated herein by reference.
(15) (i) Service Plan and Agreement for Class A shares
dated 6/22/93 pursuant to Rule 12b-1: Previously filed with
Registrant's Post-Effective Amendment No. 16, 1/27/94, and
incorporated herein by reference.
(ii) Distribution and Service Plan and Agreement
for Class B shares dated 6/29/95 pursuant to Rule 12b-1: Filed with
Registrant's Post-Effective Amendment No. 21, 1/26/96, and
incorporated hererin by reference.
(iii) Distribution and Service Plan and Agreement
for Class C shares dated 6/29/95 pursuant to Rule 12b-1: Filed
with Registrant's Post-Effective Amendment No. 21, 1/26/96, and
incorporated hererin by reference.
(16) Performance Data Computation Schedule: Filed
herewith.
(17) (i) Financial Data Schedule for Class A shares:
Filed herewith.
(ii) Financial Data Schedule for Class B shares:
Filed herewith.
(iii) Financial Data Schedule for Class C shares:
Filed herewith.
(18) OppenheimerFunds Multiple Class Plan under Rule 18f-
3 dated 10/24/95: Previously filed with Post-Effective Amendment
No. 12 to the Registration Statement of Oppenheimer California Tax-
Exempt Fund (Reg. No. 33-23566), 11/1/95 and incorporated herein by
reference.
-- Powers of Attorney (including certified Board
resolutions): Filed herewith (Sam Freedman); Power of Attorney for
Bridget A. Macaskill previously filed with Post-Effective Amendment
No. 21 to Registrant's Registration Statement, 1/26/96, and
incorporated hererin by reference; all other Trustees filed with
Post-Effective Amendment No. 15 to Registrant's Registration
Statement, 12/3/93, and incorporated herein by reference.
C-4
<PAGE>
Item 25. Persons Controlled by or under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
Number of
Record Holders as
Title of Class of January 1, 1997
-------------- ------------------
Shares of Beneficial Interest
of Class A Shares 16,603
Shares of Beneficial Interest
of Class B Shares 8,737
Shares of Beneficial Interest
of Class C Shares 1,892
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.
C-5
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant;
it and certain subsidiaries and affiliates act in the same capacity to other
registered investment companies as described in Parts A and B hereof and listed
in Item 28(b) below.
(b) There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each officer
and director of OppenheimerFunds, Inc. is, or at any time during the past two
fiscal years has been, engaged for his/her own account or in the capacity of
director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Name & Current Position Other Business and Connections with
OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- -------------------------------
<S> <C>
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real
Asset Management, Inc. ("ORAMI");
formerly Vice President of Equity
Derivatives at Salomon Brothers,
Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; Senior
Vice President of HarbourView;
prior to March, 1996 he was the
senior equity portfolio manager for
the Panorama Series Fund, Inc. (the
"Company") and other mutual funds
and pension funds managed by G.R.
Phelps & Co. Inc. ("G.R. Phelps"),
the Company's former investment
adviser, which was a subsidiary of
Connecticut Mutual Life Insurance
Company; was also responsible for
managing the common stock
department and common stock
investments of Connecticut Mutual
Life Insurance Co.
C-6
<PAGE>
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds;
formerly a
Vice President
and Senior
Portfolio
Manager at
First of
America
Investment
Corp.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith Barney,
Inc.
David Bernard,
Vice President Previously a Regional Sales
Director for Retirement Plan
Services at Charles Schwab & Co.,
Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the
Oppenheimer Funds (listed below);
previously a Fund Controller for
OppenheimerFunds, Inc. (the
"Manager").
George Bowen,
Senior Vice President & Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President,
Assistant Secretary and Treasurer
of the Denver-based Oppenheimer
Funds. Vice President and Treasurer
of OppenheimerFunds Distributor,
Inc. (the "Distributor") and
HarbourView Asset Management
Corporation ("HarbourView"), an
investment adviser subsidiary of
the Manager; Senior Vice President,
Treasurer, Assistant Secretary and
C-7
<PAGE>
a director of
Centennial
Asset
Management
Corporation
("Centennial"),
an investment
adviser
subsidiary of
the Manager;
Vice
President,
Treasurer and
Secretary of
Shareholder
Services, Inc.
("SSI") and
Shareholder
Financial
Services, Inc.
("SFSI"),
transfer agent
subsidiaries
of the
Manager;
Director,
Treasurer and
Chief
Executive
Officer of
MultiSource
Services,
Inc.; Vice
President and
Treasurer of
Oppenheimer
Real Asset
Management,
Inc.;
President,
Treasurer and
Director of
Centennial
Capital
Corporation;
Vice President
and Treasurer
of Main Street
Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of
Educational Services for H.D. Vest
Investment Securities, Inc.
Michael A. Carbuto,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds; Vice
President of
Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed
Income for State Street Research &
Management Co.
Robert A. Densen,
Senior Vice President None.
C-8
<PAGE>
Robert Doll, Jr.,
Executive Vice President and
Director An officer
and/or
portfolio
manager of
certain
Oppenheimer
funds.
John Doney,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Secretary of the New York-based
Oppenheimer Funds; Vice President
and Secretary of the Denver-based
Oppenheimer Funds; Secretary of the
Oppenheimer Quest and Oppenheimer
Rochester Funds; Executive Vice
President, Director and General
Counsel of the Distributor;
President and a Director of
Centennial; Chief Legal Officer and
a Director of MultiSource Services,
Inc.; President and a Director of
Oppenheimer Real Asset Management,
Inc.; Executive Vice President,
General Counsel and Director of
SFSI and SSI; formerly Senior Vice
President and Associate General
Counsel of the Manager and the
Distributor.
George Evans,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Scott Farrar,
Vice President Assistant Treasurer of the New
York-based and Denver-based
Oppenheimer funds.
C-9
<PAGE>
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView Asset
Management Corporation, MultiSource
Services, Inc. and Centennial Asset
Management Corporation; Secretary,
Vice President and Director of
Centennial Capital Corporation;
Vice President and Secretary of
ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or
portfolio manager of certain
Oppenheimer funds. Formerly
Chairman of the Board and Director
of Rochester Fund Distributors,
Inc. ("RFD"), President and
Director of Fielding Management
Company, Inc. ("FMC"), President
and Director of Rochester Capital
Advisors, Inc. ("RCAI"), Managing
Partner of Rochester Capital
Advisors, L.P., President and
Director of Rochester Fund
Services, Inc. ("RFS"), President
and Director of Rochester Tax
Managed Fund, Inc.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following
positions: An officer of certain
Oppenheimer funds; Secretary and
General Counsel of Rochester
Capital Advisors, L.P. and
Secretary of Rochester Tax Managed
Fund, Inc.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President
C-10
<PAGE>
and Counsel of
OAC; formerly
he held the
following
positions:
Vice President
and a director
of HarbourView
and
Centennial, a
director of
SFSI and SSI,
an officer of
other
Oppenheimer
Funds.
Linda Gardner,
Assistant Vice President None.
Janelle Gellermann,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez,
Vice President, Director of
Marketing Communications Formerly 1st Vice President/
Director of Graphic and Print
Communications for Shearson Lehman
Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Caryn Halbrecht,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds;
formerly Vice
President of
Fixed Income
Portfolio
Management at
Bankers Trust.
Barbara Hennigar,
Executive Vice President and
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of
the Manager
President and
Director of
SFSI;
President and
Chief
Executive
Officer of
SSI.
C-11
<PAGE>
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Ronald Jamison,
Vice President Formerly Vice President and
Associate General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Formerly a
Managing
Director of
Global
Equities at
Paine Webber's
Mitchell
Hutchins
division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing Director
of Van Eck Global.
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Paul LaRocco,
Vice President An officer and/or portfolio manager
C-12
<PAGE>
of certain Oppenheimer funds.
Formerly a Securities Analyst for
Columbus Circle Investors.
Michael Levine,
Assistant Vice President None.
Stephen F. Libera,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; a Vice
President of HarbourView; prior to
March, 1996 he was the senior bond
portfolio manager for Panorama
Series Fund, Inc., other mutual
funds and pension accounts managed
by G.R. Phelps; was also
responsible for managing the public
fixed-income securities department
at Connecticut Mutual Life
Insurance Co.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and Trustee of
the New York-based and the Denver-
based Oppenheimer funds; President
and a Director of OAC, HarbourView
and Oppenheimer Partnership
Holdings, Inc.; Director of ORAMI;
Chairman and Director of SSI; a
Director of Oppenheimer Real Asset
Management, Inc.
Timothy Martin,
Assistant Vice President Formerly Vice President, Mortgage
Trading, at S.N. Phelps & Co.,
Salomon Brothers, and Kidder
C-13
<PAGE>
Peabody.
Sally Marzouk,
Vice President None.
Lisa Migan,
Assistant Vice President, None.
Robert J. Milnamow,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly a Portfolio Manager with
Phoenix Securities Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President
An officer
and/or
portfolio
manager of
certain
Oppenheimer
funds.
John Pirie,
Assistant Vice President Formerly a Vice President with
Cohane Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President Chairman and Director of the
Distributor.
C-14
<PAGE>
Jane Putnam,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Formerly
Senior
Investment
Officer and
Portfolio
Manager with
Chemical Bank.
Russell Read,
Vice President Consultant for Prudential Insurance
on behalf of the General Motors
Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly a Securities Analyst for
the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for
Metropolitan Life Insurance
Company.
Michael S. Rosen
Vice President; President:
Rochester Division An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly Vice President of RFS,
President and Director of RFD, Vice
President and Director of FMC, Vice
President and director of RCAI,
General Partner of RCA, an officer
and/or portfolio manager of certain
Oppenheimer funds.
David Rosenberg,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
C-15
<PAGE>
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly Vice President and
Portfolio Manager/Security Analyst
for Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of Dollar
Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of Citicorp
Investment Services.
Diane Sobin,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds;
formerly a
Vice President
and Senior
Portfolio
Manager for
Dean Witter
InterCapital,
Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President
None.
Donald W. Spiro,
Chairman Emeritus Vice
Chairman and
Trustee of the
New York-based
Oppenheimer
Funds;
formerly
Chairman of
the Manager
and the
Distributor.
Arthur Steinmetz,
Senior Vice President
An officer
and/or
portfolio
manager of
certain
Oppenheimer
funds.
C-16
<PAGE>
Ralph Stellmacher,
Senior Vice President
An officer
and/or
portfolio
manager of
certain
Oppenheimer
funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S.
Group Pension Strategy and
Marketing for Manulife Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; a Vice
President of HarbourView; prior to
March, 1996 he was an equity
portfolio manager for Panorama
Series Fund, Inc. and other mutual
funds and pension accounts managed
by G.R. Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director
or Managing Partner of the Denver-
based Oppenheimer Funds; President
and a Director
of Centennial; formerly President
and Director of OAMC, and Chairman
of the Board of SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund,
Oppenheimer Global Emerging Growth
Fund and Oppenheimer Enterprise
Fund. Formerly Managing Director
of Buckingham Capital Management.
C-17
<PAGE>
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the
Distributor and SFSI.
Ashwin Vasan,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds.
Jerry A. Webman,
Senior Vice President
Director of
New
York-based tax-
exempt fixed
income
Oppenheimer
Funds;
Formerly
Managing
Director and
Chief Fixed
Income
Strategist at
Prudential
Mutual Funds.
Christine Wells,
Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; Vice
President of HarbourView; prior to
March, 1996 he was an equity
portfolio manager for Panorama
Series Fund, Inc. and other mutual
funds and pension funds managed by
G.R. Phelps.
William L. Wilby,
Senior Vice President
An officer
and/or
portfolio
manager of
certain
Oppenheimer
funds; Vice
President of
HarbourView.
C-18
<PAGE>
Carol Wolf,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of Centennial; Vice
President, Finance and Accounting
and member of the Board of
Directors of the Junior League of
Denver, Inc.
Robert G. Zack,
Senior Vice President and
Assistant Secretary
Associate
General
Counsel of the
Manager;
Assistant
Secretary of
the
Oppenheimer
Funds;
Assistant
Secretary of
SSI, SFSI; an
officer of
other
Oppenheimer
Funds.
Arthur J. Zimmer,
Vice President An
officer and/or
portfolio
manager of
certain
Oppenheimer
funds; Vice
President of
Centennial.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds,
the Denver-based Oppenheimer Funds, and the Quest/Rochester
Oppenheimer Funds, set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer New York Municipal Fund
Oppenheimer Fund
C-19
<PAGE>
Oppenheimer Series Fund, Inc.
Oppenheimer Municipal Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Denver-based Oppenheimer Funds
- ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Quest/Rochester Funds
- ---------------------------------
Bond Fund Series - Oppenheimer Bond Fund For Growth
Oppenheimer Quest for Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
Rochester Portfolio Series - Limited Term
New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, Quest funds, OppenheimerFunds Distributor, Inc.,
HarbourView Asset Management Corp., Oppenheimer Partnership Holdings,
Inc., and Oppenheimer Acquisition Corp. is Two World Trade Center, New
York, New York 10048-0203.
C-20
<PAGE>
The address of the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., OppenheimerFunds
Services, Centennial Asset Management Corporation, Centennial Capital
Corp., Oppenheimer Real Asset Management, Inc. and Oppenheimer Real
Asset Management, Inc. is 6803 South Tucson Way, Englewood, Colorado
80012.
The address of MultiSource Services, Inc. is 1700 Lincoln Street,
Denver, Colorado 80203.
The address of Bond Fund Series - Oppenheimer Bond Fund For Growth,
Rochester Fund Municipals and Rochester Portfolio Series Limited Term New York
Municipal Fund is 350 Linden Oaks, Rochester, New York 14625-2807.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which OppenheimerFunds,
Inc. is the investment adviser, as described in Part A and B of this
Registration Statement and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
<TABLE>
<CAPTION>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C> <C>
George Clarence Bowen+ Vice President & Treasurer Vice President and
Treasurer of the
NY-based
Oppenheimer funds /
Vice President,
Secretary and
Treasurer of the
Denver-based Oppen-
heimer funds
Julie Bowers Vice President None
21 Dreamwold Road
C-21
<PAGE>
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce* Senior Vice President - None
Director - Financial
Institution Div.
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
3425 1/2 Irving Avenue So.
Minneapolis, MN 55408
Mary Crooks+ Senior Vice President None
E. Drew Devereaux ++ Assistant Vice President None
Andrew John Donohue* Executive Vice Secretary of
President, General the New York-based
Counsel and Director Oppenheimerfunds/
Vice President of
the Denver-based
Oppenheimer funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
C-22
<PAGE>
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President; Chairman:
Rochester Division None
Reed F. Finley Vice President - None
320 E. Maple, Ste. 254 Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Ronald R. Foster Senior Vice President None
139 Avant Lane
Cincinatti, OH 45249
Patricia Gadecki Vice President None
3906 Americana Drive
Tampa, FL 3334
Luiggino Galletto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
C-23
<PAGE>
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Ilene Kutno* Vice President - None
Director - Regional Sales
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Timothy G. Mulligan ++ Vice President None
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
C-24
<PAGE>
Wendy Murray Vice President None
114-B Larchmont Acres West
Larchmont, NY 10538
Joseph Norton Vice President None
2518 Fillmore Street
Apt. 1
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.,
Director -
Key Accounts
Minnie Ra Vice President - None
0895 Thirty-First Ave. Financial Institution Div.
Apt. 4
San Francisco, CA 94121
Michael Raso Vice President None
30 Hommocks Road
Apt. 30
Larchmont, NY 10538
C-25
<PAGE>
John C. Reinhardt ++ Vice President None
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen++ Vice President, President:
Rochester Division None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. 3D
Indianapolis, IN 46240
James Ruff* President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Wasington, DC 20007
Michael Sciortino Vice President None
3114 Hickory Run
Sugarland, TX 77479
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker ++ Vice President None
Michael Stenger Vice President None
8572 Saint Ives Place
Cincinnati, OH 45255
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
C-26
<PAGE>
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
* Two World Trade Center, New York, NY 10048-0203
+ 6803 South Tucson Way, Englewood, CO 80012
++ 350 Linden Oaks, Rochester, NY 14625-2807 (the "Rochester Division")
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
rules promulgated thereunder are in the possession of OppenheimerFunds, Inc. at
its offices at 6803 South Tucson Way, Englewood, Colorado 80012.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
C-27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Denver and State of Colorado on the 8th day of January, 1997.
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:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/James C. Swain* Chairman of the
- --------------------- Board of Trustees, January 8, 1997
James C. Swain Principal Executive
Officer
/s/ George C. Bowen* Chief Financial
- --------------------- and Accounting January 8, 1997
George C. Bowen Officer, Treasurer,
Vice President
/s/ Robert G. Avis* Trustee January 8, 1997
- ---------------------
Robert G. Avis
/s/Willaim A. Baker* Trustee January 8, 1997
- ----------------------
William A. Baker
C-28
<PAGE>
/s/ Charles Conrad, Jr.* Trustee January 8, 1997
- ------------------------
Charles Conrad, Jr.
/s/Jon S. Fossel* Trustee January 8, 1997
- -----------------------
Jon S. Fossel
/s/ Sam Freedman* Trustee January 8, 1997
- ------------------------
Sam Freedman
/s/Raymond J. Kalinowski* Trustee January 8, 1997
- -------------------------
Raymond J. Kalinowski
/s/C. Howard Kast* Trustee January 8, 1997
- -------------------------
C. Howard Kast
/s/Robert M. Kirchner* Trustee January 8, 1997
- -------------------------
Robert M. Kirchner
/s/Bridget A. Macaskill* President and
- ------------------------- Trustee January 8, 1997
Bridget A. Macaskill
/s/ Ned M. Steel* Trustee January 8, 1997
- -------------------------
Ned M. Steel
*By: /s/Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
</TABLE>
C-29
<PAGE>
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
Registration No. 33-02769
Post-Effective Amendment No.22
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
24(b)(1) Amended and Restated Declaration
of Trust dated June 23, 1995
24(b)(2) Amended Bylaws as amended through April
18, 1995
24(b)(4)(i) Class A Specimen Stock Certificate
24(b)(4)(ii) Class B Specimen Stock Certificate
24(b)(4)(iii) Class C Specimen Stock Certificate
24(b)(11) Independent Auditors' Consent
24(b)(16) Performance Data Computation Schedule
24(b)(17)(i) Financial Data Schedule for Class A
shares
24(b)(17)(ii) Financial Data Schedule for Class B
shares
24(b)(17)(iii) Financial Data Schedule for Class C
shares
- ---- Power of Attorney - Sam Freedman
</TABLE>
C-30
Exhibit 24(b)(1)
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made
this 23rd day of June, 1995, 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, April 29, 1993, May 1, 1994 and January 16, 1995; 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 have changed the quorum
requirements set forth in Section 3 of Article V; and
WHEREAS, the Trustees desire to make permitted changes to said
Declaration of Trust pursuant to Section 4 of Article IX.
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 pursuant to
this Amended and Restated Agreement and Declaration of 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
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<PAGE>
from time to time determine. The address of the Trust is 3410 South
Galena Street, Denver, Colorado 80231. 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
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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
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<PAGE>
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 (of 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
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<PAGE>
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 divide the single Series of shares of the Trust
having the same name as the Trust into three Classes designated Class A, Class B
and Class C. 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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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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
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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
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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;
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(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
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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
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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.
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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. Notwithstanding the foregoing, if any action to be taken by the
Shareholders or by a Series or Class at a meeting requires the affirmative vote
of more than 50% of all the votes entitled to be cast on the matter or requires
a majority of the outstanding voting securities (as defined in the 1940 Act),
then in such event the presence in person or by proxy of the holders of a
majority of the shares outstanding and entitled to vote at such a meeting shall
be a quorum for all purposes.
Except when a larger vote is required by any provisions of the
1940 Act, this Declaration of Trust or the By-Laws, and except for amendments to
this Declaration of Trust pursuant to Section 4 of Article IX hereof, 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.
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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.
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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 of 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
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in a manner consistent with the 1940 Act, obtained by dividing the value of the
net assets of such Series or the net assets allocated to such Class less the
liabilities chargeable or allocated to such Series or Class pursuant to the
provisions of Article III, by the total number of Shares of such Series or Class
outstanding at such time, all determined and computed in accordance with the
Trust's current prospectus and statement of additional information. The net
asset value of each said share may be calculated in such other manner which may
be approved by the Trustees and is consistent with the 1940 Act.
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 or 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.
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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 of 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.
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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
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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.
-22-
<PAGE>
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
-23-
<PAGE>
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 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 represented by proxy, or (ii) more than
50% of the outstanding Shares (the "required vote"), provided, however, if an
amendment shall affect the holders of one or more Series or Classes of Shares
but not the holders of Shares of all outstanding Series and Classes, such
amendment shall be authorized if approved by the required vote of the
Shareholders of each Series or Class affected and no vote of Shareholders of a
Series or Class 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 or Class
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.
-24-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the 23rd day of June, 1995.
/s/ William A. Baker /s/ Charles Conrad, Jr.
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 /s/ Robert M.Kirchner
Ned M. Steel, Trustee Robert M. Kirchner, Trustee
3236 S. Steele Street 2800 S. University Boulevard
Denver, Colorado Denver, Colorado 80210
/s/ Raymond J. Kalinowski /s/ C. Howard Kast
Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee
44 Portland Drive 2552 East Alameda
St. Louis, Missouri Denver, Colorado 80209
/s/ James C. Swain /s/ Jon S. Fossel
James C. Swain, Trustee Jon S. Fossel, Trustee
Box 44 - Mead Street Box 44 - Mead Street
Waccabuc, New York 10597 Waccabuc, New York 10597
/s/ Robert G. Avis
Robert G. Avis, Trustee
1706 Warson Estates Drive
St. Louis, MO 63124
Exhibit 24(b)(2)
AMENDED
BY-LAWS
OF
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
(as amended through April 18, 1995)
Section 1. Agreement and Declaration of
Trust and Principal Office
1.1. Agreement and Declaration of Trust. These By-Laws shall be subject
to the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of OPPENHEIMER LIMITED- TERM GOVERNMENT FUND, the
Massachusetts business trust established by the Agreement and Declaration of
Trust (the "Trust").
1.2. Principal Office of the Trust; Resident Agent. The principal
office of the Trust shall be located in Denver, Colorado. Its resident agent
in Massachusetts shall be Massachusetts Mutual Life Insurance Company, 1295
State Street, Springfield, Massachusetts 01111, Attention: Stephen L. Kuhn,
Esq., or such other person as the Trustees may from time to time select.
Section 2. Shareholders
2.1. Shareholder Meetings. Meetings of the shareholders may be called
at any time by the Trustees, by the Chairman or, if the Trustees and the
Chairman shall fail to call any meeting of shareholders for a period of 30 days
after written application of one or more shareholders who hold at least 25% of
all shares issued and outstanding and entitled to vote at the meeting, then such
shareholders may call such meeting. Each call of a meeting shall state the
place, date, hour and purposes of the meeting.
2.2. Place of Meetings. All meetings of the shareholders shall be held
at the principal office of the Trust, or, to the extent permitted by the
Declaration of Trust, at such other place within the United States as shall be
designated by the Trustees or the Chairman of the Trust.
2.3. Notice of Meetings. A written notice of each meeting of
shareholders, stating the place, date and hour and the purposes of the meeting,
shall be given at least seven days before the meeting to each shareholder
entitled to vote thereat by leaving such notice with him or at his residence or
usual place of business or by mailing it, postage prepaid, and addressed to such
shareholder at his address as it appears in the records of the Trust. Such
notice shall be given by the secretary or an assistant secretary or by an
officer designated by the Trustees. No notice of any meeting of shareholders
need be given to a shareholder if a written waiver of notice, executed before or
after the meeting by such shareholder or his attorney thereunto duly authorized,
is filed with the records of the meeting.
2.4. Ballots. No ballot shall be required for any election unless
requested by a shareholder present or represented at the meeting and entitled
to vote in the election.
2.5. Proxies and Voting. Shareholders entitled to vote may vote either
in person or by proxy in writing, which proxies shall be filed with the
secretary or other person responsible to record the proceedings of the meeting
before being voted. Unless otherwise specifically limited by their terms, such
proxies shall entitle the holders thereof to vote at any adjournment of such
meeting but shall not be valid after the final adjournment of such meeting. At
all meetings of shareholders, unless the voting is conducted by inspectors, all
questions relating to the qualification of
<PAGE>
voters, the validity of proxies and the acceptance or rejection of votes shall
be decided by the Chairman of the meeting.
Section 3. Trustees
3.1. Committee and Advisory Board. The Trustees may appoint from their
number an executive committee and other committees. Any such committee may be
abolished and reconstituted at any time and from time to time by the Trustees.
Except as the Trustees may otherwise determine, any such committee may make
rules for conduct of its business.
3.2. Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees. A regular
meeting of the Trustees may be held without call or notice immediately after and
at the same place as any meeting of the shareholders.
3.3. Special Meetings. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting, when called by
the Chairman or by two or more Trustees, sufficient notice thereof being given
to each Trustee by the secretary or an assistant secretary or by the officer or
one of the Trustees calling the meeting.
3.4. Notice. It shall be sufficient notice to a Trustee to send notice
by mail at least three days or by telegram at least twenty-four hours before the
meeting addressed to the Trustee at his or her usual or last known business or
residence address or to give notice to him or her in person or by telephone at
least twenty-four hours before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him or her
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of a meeting nor a
waiver of a notice need specify the purposes of the meeting.
3.5. Quorum. At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
3.6. Composition of Board. During the term this Section of the By-Laws
is in effect, no person shall be elected to serve as a member of the Board, and
the Board is prohibited from taking any action to nominate, elect or propose any
person to serve as a Board member, if his election would then cause the Board
not to be in compliance with the standards set forth in Section 15 (f) (1) (a)
of the Investment Company act of 1940, as amended (The "Act"), as such Section
of the Act may be amended from time to time. During the term this Section of the
By-Laws is in effect, any Board member who becomes an "interested person" (as
defined in the Act) and thereby causes the composition of the Board not to be in
compliance with the standards set forth in Section 15 (f) (1) (a) of the Act, as
such Section of the Act may be amended from time to time, shall cease
automatically, immediately upon the existence of such status as an "interested
person," to be qualified to serve as a Board member and shall cease to be a
Board member, without any further action required on the part of the remaining
Board members or the shareholders to remove such Board member from office. This
Section of the By-Laws may be altered or repealed only by a vote of a majority
of the outstanding shares of the Trust but shall expire automatically and cease
to be of any effect on such date as is three years from the closing of the Asset
Sale Agreement among Clayton Brown & Associates, Inc., Clayton Brown Advisors,
Inc., Clayton Brown Financial & Advertising Services, Inc., and Oppenheimer
Management Corporation.
3.7. Composition of Board. During the term this Section of the By-Laws
is in effect, and with respect to the Plan and Agreement of Merger herein below
identified, no person shall be elected to serve as a member of the Board, and
the Board is prohibited from taking any action to nominate, elect or propose any
person to serve as a Board member, if his election would then cause the Board
not to be in compliance with standards set forth in Section 15 (f) (1) (a) of
the Investment Company Act of 1940, as amended (The "Act"), as such Section of
the Act may be amended
<PAGE>
from time to time. During the term this Section of the By-Laws is in effect, any
Board member who becomes an "interested person" (as defined in the Act) and
thereby causes the composition of the Board not to be in compliance with the
standards set forth in Section 15 (f) (1) (a) of the Act, as such Section of the
Act may be amended from time to time, shall cease automatically, immediately
upon the existence of such status as an "interested person," to be qualified to
serve as a Board member and shall cease to be a Board member, without any
further action required on the part of the remaining Board members or the
shareholders to remove such Board member from office. This Section of the
By-Laws may be altered or repealed only by a vote of a majority of the
outstanding shares of the Trust but shall expire automatically and cease to be
of any effect on such date as is three years from the closing of the Plan and
Agreement of Merger among Mercantile House (Overseas) Limited, Oppenheimer
Acquisition Corp., OAC Merger Corp., and Maximum Holdings, Inc.
Section 4. Officers and Agents
4.1. Enumeration; Qualification. The officers of the Trust shall be a
Chairman of the Board, a president, a treasurer, a secretary and such other
officers, if any, as the Trustees from time to time may in their discretion
elect or appoint. The Trust may also have such agents, if any, as the Trustees
from time to time may in their discretion appoint. Any officer may be but none
need be a Trustee or shareholder.
4.2. Powers. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to his or her office as if the Trust were organized as a Massachusetts business
corporation and such other duties and powers as the Trustees may from time to
time designate.
4.3. Election. The Chairman, the president, the treasurer and the
secretary shall be elected annually by the Trustees at their last meeting in
each calendar year or at such other meeting in such year as the Trustees shall
determine. Other officers or agents, if any, may be elected or appointed by the
Trustees at said meeting or at any other time.
4.4. Tenure. The Chairman, president, treasurer and secretary shall
hold office until the first meeting of Trustees in each calendar year and until
their respective successors are chosen and qualified, or in each case until he
or she sooner dies, resigns, is removed or becomes disqualified. Each officer
shall hold office and each agent shall retain his or her authority at the
pleasure of the Trustees.
4.5. Chairman of the Board. The Chairman of the Board of Trustees shall
be the chief executive officer of the Trust; shall, subject to the control of
the Trustees, have general charge and supervision of the Trust; shall preside at
all meetings of the shareholders and of the Trustees at which he is present; and
shall see that all orders and resolutions of the Board of Trustees are carried
into effect (sometimes referred to herein as the "Chairman").
4.6. President and Vice Presidents. The president shall be the chief
administrative officer of the Trust. The president shall at the request or in
the absence or disability of the Chairman exercise the powers of the Chairman
and shall perform such other duties and have such other powers as the Trustees
shall prescribe from time to time. Any vice president shall at the request or in
the absence or disability of the president exercise the powers of the president
and perform such other duties and have such other powers as shall be designated
from time to time by the Trustees.
4.7. Treasurer and Controller. The treasurer shall be the chief
financial officer of the Trust and subject to any arrangement made by the
Trustees with a bank or trust company or other organization as custodian or
transfer or shareholder services agent, shall be in charge of its valuable
papers and shall have such other duties and powers as may be designated from
time to time by the Trustees or by the Chairman. The treasurer shall also be the
chief accounting officer of the Trust and shall have the duties and power
prescribed herein for the controller. Any assistant treasurer shall have such
duties and powers as shall be designated from time to time by the Trustees.
4.8. Secretary and Assistant Secretaries. The secretary shall
record all proceedings of the shareholders
<PAGE>
and the Trustees in books to be kept therefor, which books shall be kept at the
principal office of the Trust. In the absence of the secretary from any meeting
of shareholders or Trustees, an assistant secretary or if there be none or he or
she is absent, a temporary clerk chosen at the meeting shall record the
proceedings thereof in the aforesaid books.
Section 5. Resignation and Removals
Any Trustee or officer may resign at any time by delivering his or her
resignation in writing to the Chairman of the Board, the president or the
secretary or to a meeting of the Trustees. The Trustees may remove any officer
elected or appointed by them with or without cause by the vote of a majority of
the Trustees then in office. Except to the extent expressly provided in a
written agreement with the Trust, no Trustee, officer, or advisory board member
resigning, and no officer or advisory board member removed shall have any right
to any compensation for any period following his or her resignation or removal,
or any right to damages on account of such removal.
Section 6. Vacancies
A vacancy in the office of Trustee shall be filled in accordance with
the Declaration of Trust. Vacancies resulting from the death, resignation,
incapacity or removal of any officer may be filled by the Trustees. Each
successor of any such officer shall hold office for the unexpired term, and in
the case of the Chairman, the president, the treasurer and the secretary, until
his or her successor is chosen and qualified, or in each case until he or she
sooner dies, resigns is removed or becomes disqualified.
Section 7. Shares of Beneficial Interest
7.1. Share Certificates. No certificates certifying the ownership of
shares shall be issued except as the Trustees may otherwise authorize. In the
event that the Trustees authorize the issuance of share certificates, subject to
the provisions of Section 7.3, each shareholder shall be entitled to a
certificate stating the number of shares owned by him or her, in such form as
shall be prescribed from time to time by the Trustees. Such certificate shall be
signed by the Chairman, the President or a Vice President and by the Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary. Such signatures may be
facsimiles if the certificate is signed by a transfer or a shareholder services
agent or by a registrar, other than a Trustee, officer or employee of the Trust.
In case any officer who has signed or whose facsimile signature has been placed
on such certificate shall have ceased to be such officer before such certificate
is issued, it may be issued by the Trust with the same effect as if he or she
were such officer at the time of its issue.
In lieu of issuing certificates for shares, the Trustees or the
transfer or shareholder services agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
7.2. Loss of Certificates. In the case of the alleged loss or
destruction or the mutilation of a share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees may prescribe.
7.3. Discontinuance of Issuance of Certificates. The Trustees may at
any time discontinue the issuance of share certificates and may, by written
notice to each shareholder, require the surrender of share certificates to the
Trust for cancellation. Such surrender and cancellation shall not affect the
ownership of shares in the Trust.
Section 8. Record Date
The Trustees may fix in advance a time, which shall not be more than
120 days before the date of any meeting of shareholders or more than 60 days
before the date for the payment of any dividend or making of any other
distribution to shareholders, as the record date for determining the
shareholders having the right to notice and to vote at such meeting and any
adjournment thereof or the right to receive such dividend or distribution, and
in such case only shareholders of record on such record date shall have such
right, notwithstanding any transfer of shares on the
<PAGE>
books of the Trust after the record date.
Section 9. Seal
The seal of the Trust shall, subject to alteration by the Trustees,
consist of a flat-faced circular die with the word "Massachusetts" together with
the name of the Trust and the year of its organization, cut or engraved thereon;
but, unless otherwise required by the Trustees, the seal shall not be necessary
to be placed on, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the Trust.
Section 10. Execution of Papers
Except as the Trustees may generally or in particular cases authorize
the execution thereof in some other manner, all deeds, leases, transfers,
contracts, bonds, notes, checks, drafts and other obligations made, accepted or
endorsed by the Trust shall be executed, by the Chairman or the President or by
one of the Vice Presidents or by the Treasurer or by whomsoever else shall be
designated for that purpose by the vote of the Trustees and need not bear the
seal of the Trust.
Section 11. Fiscal Year
The fiscal year of the Trust shall end on such date in each year as the
Trustees shall from time to time determine.
Section 12. Amendments
These By-Laws may be amended or repealed, in whole or in part, by a
majority of the Trustees then in office at any meeting of the Trustees, or by
one or more writings signed by such majority.
Exhibit 24(b)(4)(i)
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
Class A Share Certificate (8-1/2" x 11")
I. FRONT OF CERTIFICATE (All text and other matter lies within
decorative border)
(upper left) box with heading: (upper right) box with heading:
NUMBER (OF SHARES) CLASS A SHARES
(certificate number above)
(centered below boxes)
Oppenheimer Limited-Term Government Fund
A MASSACHUSETTS BUSINESS TRUST
(at left) (at right)
THIS IS TO CERTIFY THAT SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 68380F 10 3
(at left)
is the owner of
(centered)
FULLY PAID CLASS A SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
- ------------------------------------------------------------------------
(hereinafter called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held subject
to all of the provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent. WITNESS the
facsimile seal of the Fund and the signatures of its duly authorized
officers.
(at left of seal) (at right of seal)
(signature) Dated:
- ------------------------- -------------------------
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
SEAL
<PAGE>
1986
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed vertically)
Countersigned
OPPENHEIMER SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMER MANAGEMENT CORPORATION)
Denver (Colo) Transfer Agent
By
Authorized Signature
<PAGE>
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as tenants with rights of survivorship
and not as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ________________
(State)
Additional abbreviations may also be used though not
in the above list.
For Value Received __________________ hereby sell(s), and transfer(s) unto
(at right) PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE (box below)
- -------------------------------------------------------------------------
(Please print or type name and address of assignee)
- ------------------------------------------------------------------------
- ----------------- Class A Shares of beneficial interest represented by the
within Certificate, and do hereby irrevocably constitute and appoint.
- --------------------- Attorney to transfer the said shares on the books of the
within named Fund with full power of substitution in the premises.
Dated: ---------------------
Signed: __________________________
-----------------------------------
(Both must sign if joint owners)
Signature(s) ----------------------
guaranteed Name of Guarantor
by ----------------------
Signature of Officer/Title
(text printed vertically to right of above paragraph) NOTICE: The signature(s)
to this assignment must correspond with the name(s) as written upon the face of
the certificate in every particular without alteration or enlargement or any
change whatever.
(text printed in box to left of signature guarantee) Signatures must be
guaranteed by a financial institution of the type described in the current
prospectus of the Fund.
(at left) (at right)
PLEASE NOTE: This document contains OppenheimerFunds
a watermark when viewed at an angle. logotype
It is invalid without this watermark.
- -------------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
Exhibit 24(b)(4)(ii)
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
Class B Share Certificate (8-1/2" x 11")
I. FRONT OF CERTIFICATE (All text and other matter lies within
decorative border)
(upper left) box with heading: (upper right) box with heading:
NUMBER (OF SHARES) CLASS B SHARES
(certificate number above)
(centered below boxes)
Oppenheimer Limited-Term Government Fund
A MASSACHUSETTS BUSINESS TRUST
(at left) (at right)
THIS IS TO CERTIFY THAT SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 68380F 20 2
(at left)
is the owner of
(centered)
FULLY PAID CLASS B SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
- ------------------------------------------------------------------------
(hereinafter called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held subject
to all of the provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent. WITNESS the
facsimile seal of the Fund and the signatures of its duly authorized
officers.
(at left of seal) (at right of seal)
(signature) Dated:
- ------------------------- -------------------------
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
SEAL
<PAGE>
1986
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed vertically)
Countersigned
OPPENHEIMER SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMER MANAGEMENT CORPORATION)
Denver (Colo) Transfer Agent
By
Authorized Signature
<PAGE>
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as tenants with rights of survivorship
and not as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ________________
(State)
Additional abbreviations may also be used though not
in the above list.
For Value Received __________________ hereby sell(s), and transfer(s) unto
(at right) PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE (box below)
- -------------------------------------------------------------------------
(Please print or type name and address of assignee)
- ------------------------------------------------------------------------
- ----------------- Class B Shares of beneficial interest represented by the
within Certificate, and do hereby irrevocably constitute and appoint.
- --------------------- Attorney to transfer the said shares on the books of the
within named Fund with full power of substitution in the premises.
Dated: ---------------------
Signed: __________________________
-----------------------------------
(Both must sign if joint owners)
Signature(s) ----------------------
guaranteed Name of Guarantor
by ----------------------
Signature of Officer/Title
(text printed vertically to right of above paragraph) NOTICE: The signature(s)
to this assignment must correspond with the name(s) as written upon the face of
the certificate in every particular without alteration or enlargement or any
change whatever.
(text printed in box to left of signature guarantee)
Signatures must be guaranteed by a financial institution of the type
<PAGE>
described in the current prospectus of the Fund.
(at left) (at right)
PLEASE NOTE: This document contains OppenheimerFunds
a watermark when viewed at an angle. logotype
It is invalid without this watermark.
- -------------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
Exhibit 24(b)(4)(iii)
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
Class C Share Certificate (8-1/2" x 11")
I. FRONT OF CERTIFICATE (All text and other matter lies within
decorative border)
(upper left) box with heading: (upper right) box with heading:
NUMBER (OF SHARES) CLASS C SHARES
(certificate number above)
(centered below boxes)
Oppenheimer Limited-Term Government Fund
A MASSACHUSETTS BUSINESS TRUST
(at left) (at right)
THIS IS TO CERTIFY THAT SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 68380F 30 1
(at left)
is the owner of
(centered)
FULLY PAID CLASS C SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
- ------------------------------------------------------------------------
(hereinafter called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held subject
to all of the provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent. WITNESS the
facsimile seal of the Fund and the signatures of its duly authorized
officers.
(at left of seal) (at right of seal)
(signature) Dated:
- ------------------------- -------------------------
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
SEAL
<PAGE>
1986
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed vertically)
Countersigned
OPPENHEIMER SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMER MANAGEMENT CORPORATION)
Denver (Colo) Transfer Agent
By
Authorized Signature
<PAGE>
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as tenants with rights of survivorship
and not as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ________________
(State)
Additional abbreviations may also be used though not
in the above list.
For Value Received __________________ hereby sell(s), and transfer(s) unto
(at right) PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE (box below)
- -------------------------------------------------------------------------
(Please print or type name and address of assignee)
- ------------------------------------------------------------------------
- ----------------- Class C Shares of beneficial interest represented by the
within Certificate, and do hereby irrevocably constitute and appoint.
- --------------------- Attorney to transfer the said shares on the books of the
within named Fund with full power of substitution in the premises.
Dated: ---------------------
Signed: __________________________
-----------------------------------
(Both must sign if joint owners)
Signature(s) ----------------------
guaranteed Name of Guarantor
by ----------------------
Signature of Officer/Title
(text printed vertically to right of above paragraph) NOTICE: The signature(s)
to this assignment must correspond with the name(s) as written upon the face of
the certificate in every particular without alteration or enlargement or any
change whatever.
(text printed in box to left of signature guarantee)
Signatures must be guaranteed by a financial institution of the type
<PAGE>
described in the current prospectus of the Fund.
(at left) (at right)
PLEASE NOTE: This document contains OppenheimerFunds
a watermark when viewed at an angle. logotype
It is invalid without this watermark.
- -------------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
Exhibit 24(b)(11)
INDEPENDENT AUDITORS' CONSENT
Oppenheimer Limited-Term Government Fund:
We consent to the use in this Post-Effective Amendment No. 22 to Registration
Statement No. 33-02769 of Oppenheimer Limited-Term Government Fund of our report
dated October 21,1996 appearing in the Statement of Additional Information,
which is a part of such Registration Statement, and to the reference to us under
the heading "Financial Highlights" appearing in the Prospectus, which is also a
part of such Registration Statement.
/s/ Deloitte & Touche, LLP
- --------------------------
DELOITTE & TOUCHE, LLP
Denver, Colorado
January 6,1997
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, for the past 10 years
which are as follows:
<TABLE>
<CAPTION>
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
<S> <C> <C> <C>
Class A Shares
09/30/86 0.0721000 0.0033000 10.500
10/31/86 0.0834000 0.0027000 10.600
11/28/86 0.0653000 0.0089000 10.770
12/31/86 0.0776000 0.0026000 10.770
01/30/87 0.0751000 0.0081000 10.840
02/27/87 0.0775000 0.0064000 10.840
03/31/87 0.0707000 0.0088000 10.740
04/30/87 0.0718000 0.0014000 10.310
05/29/87 0.0670000 0.0047000 10.190
06/30/87 0.0691000 0.0035000 10.280
07/31/87 0.0728000 0.0047000 10.220
08/31/87 0.0644000 0.0029000 10.070
09/30/87 0.0697000 0.0000000 9.720
10/30/87 0.0705000 0.0037000 9.980
11/30/87 0.0715000 0.0000000 10.050
12/31/87 0.0818000 0.0000000 10.080
01/29/88 0.0678000 0.0000000 10.370
02/29/88 0.0775000 0.0000000 10.400
03/31/88 0.0851000 0.0000000 10.240
04/30/88 0.0707000 0.0000000 10.110
05/31/88 0.0713000 0.0000000 9.970
06/30/88 0.0728000 0.0000000 10.150
07/29/88 0.0724000 0.0000000 10.050
08/31/88 0.0716000 0.0000000 9.990
09/30/88 0.0727000 0.0000000 10.140
10/31/88 0.0733000 0.0000000 10.270
11/30/88 0.0738000 0.0000000 10.060
12/30/88 0.0789000 0.0000000 9.920
01/31/89 0.0706000 0.0000000 10.000
02/28/89 0.0745000 0.0000000 9.870
03/31/89 0.0804000 0.0000000 9.800
04/28/89 0.0711000 0.0000000 9.890
05/31/89 0.0755000 0.0000000 10.090
06/30/89 0.0793000 0.0000000 10.290
07/31/89 0.0707000 0.0000000 10.370
08/31/89 0.0760000 0.0000000 10.190
09/29/89 0.0774000 0.0000000 10.170
10/31/89 0.0742000 0.0000000 10.300
11/28/89 0.0689000 0.0000000 10.330
12/29/89 0.0803000 0.0000000 10.310
01/31/90 0.0747814 0.0000000 10.160
02/28/90 0.0687114 0.0000000 10.130
03/31/90 0.0699998 0.0000000 10.090
04/30/90 0.0743303 0.0000000 9.950
05/31/90 0.0746956 0.0000000 10.150
</TABLE>
<PAGE>
Oppenheimer Limited-Term Government Fund
Page 2
<TABLE>
<CAPTION>
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
<S> <C> <C> <C>
Class A Shares (Continued)
06/29/90 0.0777131 0.0000000 10.230
07/31/90 0.0723585 0.0000000 10.320
08/31/90 0.0823358 0.0000000 10.190
09/28/90 0.0673692 0.0000000 10.180
10/31/90 0.0727164 0.0000000 10.200
11/30/90 0.0808407 0.0000000 10.330
12/31/90 0.0681017 0.0000000 10.440
01/31/91 0.0783065 0.0000000 10.500
02/28/91 0.0747562 0.0000000 10.490
03/28/91 0.0781908 0.0000000 10.480
04/30/91 0.0757259 0.0000000 10.500
05/31/91 0.0755207 0.0000000 10.490
06/28/91 0.0620867 0.0000000 10.440
07/31/91 0.0690000 0.0000000 10.490
08/30/91 0.0710580 0.0000000 10.630
09/30/91 0.0615000 0.0000000 10.750
10/31/91 0.0730000 0.0000000 10.800
11/29/91 0.0728009 0.0000000 10.830
12/31/91 0.0691008 0.0000000 11.130
01/31/92 0.0732125 0.0000000 10.810
02/28/92 0.0627001 0.0000000 10.780
03/31/92 0.0628505 0.0000000 10.690
04/30/92 0.0646637 0.0000000 10.690
05/29/92 0.0654686 0.0000000 10.830
06/30/92 0.0663112 0.0000000 10.920
07/31/92 0.0701033 0.0000000 10.940
08/31/92 0.0606374 0.0000000 10.960
09/30/92 0.0645706 0.0000000 10.970
10/30/92 0.0699545 0.0000000 10.810
11/30/92 0.0647536 0.0000000 10.740
12/31/92 0.0611165 0.0000000 10.810
01/29/93 0.0593000 0.0000000 10.910
02/26/93 0.0617000 0.0000000 10.940
03/31/93 0.0630000 0.0000000 10.930
04/30/93 0.0655000 0.0000000 10.960
05/28/93 0.0571000 0.0000000 10.920
06/30/93 0.0594000 0.0000000 11.030
07/30/93 0.0608000 0.0000000 11.020
08/31/93 0.0560000 0.0000000 11.100
09/30/93 0.0554000 0.0000000 11.040
10/29/93 0.0504000 0.0000000 11.050
11/30/94 0.0482000 0.0000000 10.930
12/31/93 0.0491000 0.0000000 10.950
01/31/94 0.0590745 0.0000000 10.980
02/28/94 0.0631240 0.0000000 10.970
03/31/94 0.0744039 0.0000000 10.790
04/29/94 0.0624594 0.0000000 10.530
05/31/94 0.0624444 0.0000000 10.530
06/30/94 0.0669156 0.0000000 10.510
07/29/94 0.0615000 0.0000000 10.530
</TABLE>
<PAGE>
Oppenheimer Limited-Term Government Fund
Page 3
<TABLE>
<CAPTION>
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
<S> <C> <C> <C>
Class A Shares (Continued)
08/31/94 0.0615009 0.0000000 10.490
09/30/94 0.0615000 0.0000000 10.400
10/31/94 0.0615000 0.0000000 10.380
11/30/94 0.0615000 0.0000000 10.290
12/30/94 0.0638000 0.0000000 10.240
01/31/95 0.0638000 0.0000000 10.320
02/28/95 0.0638000 0.0000000 10.410
03/31/95 0.0638000 0.0000000 10.430
04/28/95 0.0655000 0.0000000 10.440
05/31/95 0.0655000 0.0000000 10.480
06/30/95 0.0655000 0.0000000 10.450
07/31/95 0.0655000 0.0000000 10.410
08/31/95 0.0625000 0.0000000 10.440
09/29/95 0.0625000 0.0000000 10.440
10/31/95 0.0625000 0.0000000 10.460
11/30/95 0.0625000 0.0000000 10.500
12/29/95 0.0828651 0.0000000 10.490
01/31/96 0.0625000 0.0000000 10.500
02/29/96 0.0625000 0.0000000 10.400
03/29/96 0.0576400 0.0000000 10.340
04/30/96 0.0576400 0.0000000 10.290
05/31/96 0.0576400 0.0000000 10.230
06/28/96 0.0576400 0.0000000 10.250
07/31/96 0.0576400 0.0000000 10.240
08/30/96 0.0597500 0.0000000 10.220
09/30/96 0.0597500 0.0000000 10.260
Class B Shares
05/28/93 0.0351000 0.0000000 10.940
06/30/93 0.0479000 0.0000000 11.040
07/30/93 0.0491000 0.0000000 11.030
08/31/93 0.0482000 0.0000000 11.120
09/30/93 0.0475000 0.0000000 11.060
10/29/93 0.0424000 0.0000000 11.070
11/30/93 0.0406000 0.0000000 10.940
12/31/93 0.0417000 0.0000000 10.970
01/31/94 0.0515718 0.0000000 11.000
02/28/94 0.0562719 0.0000000 10.980
03/31/94 0.0654003 0.0000000 10.810
04/29/94 0.0557253 0.0000000 10.540
05/31/94 0.0546722 0.0000000 10.540
06/30/94 0.0588565 0.0000000 10.530
07/29/94 0.0544822 0.0000000 10.540
08/31/94 0.0549325 0.0000000 10.500
09/30/94 0.0554696 0.0000000 10.410
10/31/94 0.0561056 0.0000000 10.390
11/30/94 0.0559285 0.0000000 10.290
12/30/94 0.0579904 0.0000000 10.250
01/31/95 0.0581820 0.0000000 10.320
02/28/95 0.0582140 0.0000000 10.410
03/31/95 0.0569194 0.0000000 10.430
</TABLE>
<PAGE>
Oppenheimer Limited-Term Government Fund
Page 4
<TABLE>
<CAPTION>
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
<S> <C> <C> <C>
Class B Shares (Continued)
04/28/95 0.0600766 0.0000000 10.440
05/31/95 0.0595759 0.0000000 10.480
06/30/95 0.0594431 0.0000000 10.440
07/31/95 0.0592789 0.0000000 10.410
08/31/95 0.0554580 0.0000000 10.440
09/29/95 0.0553693 0.0000000 10.440
10/31/95 0.0557082 0.0000000 10.460
11/30/95 0.0557834 0.0000000 10.500
12/29/95 0.0760263 0.0000000 10.490
01/31/96 0.0558702 0.0000000 10.500
02/29/96 0.0561607 0.0000000 10.400
03/29/96 0.0510202 0.0000000 10.340
04/30/96 0.0503605 0.0000000 10.280
05/31/96 0.0513052 0.0000000 10.230
06/28/96 0.0517424 0.0000000 10.250
07/31/96 0.0509316 0.0000000 10.240
08/30/96 0.0527685 0.0000000 10.210
09/30/96 0.0538244 0.0000000 10.260
Class C Shares
02/28/95 0.0464340 0.0000000 10.400
03/31/95 0.0567388 0.0000000 10.420
04/28/95 0.0591782 0.0000000 10.440
05/31/95 0.0575040 0.0000000 10.470
06/30/95 0.0580004 0.0000000 10.440
07/31/95 0.0578878 0.0000000 10.400
08/31/95 0.0547113 0.0000000 10.440
09/29/95 0.0551876 0.0000000 10.430
10/31/95 0.0549467 0.0000000 10.450
11/30/95 0.0551958 0.0000000 10.490
12/29/95 0.0755870 0.0000000 10.480
01/31/96 0.0555680 0.0000000 10.490
02/29/96 0.0558401 0.0000000 10.390
03/29/96 0.0507642 0.0000000 10.330
04/30/96 0.0502827 0.0000000 10.280
05/31/96 0.0511894 0.0000000 10.220
06/28/96 0.0516634 0.0000000 10.240
07/31/96 0.0508162 0.0000000 10.230
08/30/96 0.0526600 0.0000000 10.200
09/30/96 0.0537837 0.0000000 10.250
</TABLE>
<PAGE>
Oppenheimer Limited-Term Government Fund
Page 5
1. Average Annual Total Returns for the Periods Ended 09/30/96:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 3.50%:
One Year Five Year
$1,018.46 1 $1,310.56 .2
(---------) - 1 = 1.85% (---------) - 1 = 5.56%
$1,000 $1,000
Ten Year
$2,067.68 .1
(---------) - 1 = 7.53%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 4.00% for the
first year, and 1.00% for the inception year:
One Year Inception
$1,008.11 1 $1,142.97 .2934
(---------) - 1 = 0.81% (---------) - 1 = 4.00%
$1,000 $1,000
Class C Shares
Example assuming a maximum contingent deferred sales charge of 1.00%:
One Year Inception
$1,037.31 1 $1,104.38 .6010
(---------) - 1 = 3.73% (---------) - 1 = 6.15%
$1,000 $1,000
<PAGE>
Oppenheimer Limited-Term Government Fund
Page 6
1. Average Annual Total Returns for the Periods Ended 09/30/96 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,055.39 1 $1,358.10 .2
(---------) - 1 = 5.54% (---------) - 1 = 6.31%
$1,000 $1,000
Ten Year
$2,142.77 .1
(---------) - 1 = 7.92%
$1,000
Class B Shares
One Year Inception
$1,047.41 1 $1,152.31 .2934
(---------) - 1 = 4.74% (---------) - 1 = 4.25%
$1,000 $1,000
Class C Shares
One Year Inception
$1,047.14 1 $1,104.38 .6010
(---------) - 1 = 4.71% (---------) - 1 = 6.15%
$1,000 $1,000
<PAGE>
Oppenheimer Limited-Term Government Fund
Page 7
2. Cumulative Total Returns for the Periods Ended 09/30/96:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum sales charge of 3.50%:
One Year Five Year
$1,018.46 - $1,000 $1,310.56 - $1,000
------------------ = 1.85% ------------------ = 31.06%
$1,000 $1,000
Ten Year
$2,067.68 - $1,000
------------------ = 106.77%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 4.00% for the
first year, and 1.00% for the inception year:
One Year Inception
$1,008.11 - $1,000 $1,142.97 - $1,000
------------------ = 0.81% ------------------ = 14.30%
$1,000 $1,000
Class C Shares
Example assuming a maximum contingent deferred sales charge of 1.00% for the
first year, and 0.00% for the inception year:
One Year Inception
$1,037.31 - $1,000 $1,104.38 - $1,000
------------------ = 3.73% ------------------ = 10.44%
$1,000 $1,000
<PAGE>
Oppenheimer Limited-Term Government Fund
Page 8
2. Cumulative Total Returns for the Periods Ended 09/30/96 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,055.39 - $1,000 $1,358.10 - $1,000
------------------ = 5.54% ------------------ = 35.81%
$1,000 $1,000
Ten Year
$2,142.77 - $1,000
------------------ = 114.28%
$1,000
Class B Shares
One Year Inception
$1,047.41 - $1,000 $1,152.31 - $1,000
------------------ = 4.74% ------------------ = 15.23%
$1,000 $1,000
Class C Shares
One Year Inception
$1,047.14 - $1,000 $1,104.38 - $1,000
------------------ = 4.71% ------------------ = 10.44%
$1,000 $1,000
<PAGE>
Oppenheimer Limited-Term Government Fund
Page 9
3. Standardized Yield for the 30-Day Period Ended 09/30/96:
The Fund's standardized yields are calculated using the following formula
set forth in the SEC rules:
a - b 6
Yield = 2 { (-------- + 1 ) - 1 }
cd or ce
The symbols above represent the following factors:
a = Dividends and interest earned during the 30-day period.
b = Expenses accrued for the period (net of any expense
reimbursements).
c = The average daily number of Fund shares outstanding during
the 30-day period that were entitled to receive dividends.
d = The Fund's maximum offering price (including sales charge)
per share on the last day of the period.
e = The Fund's net asset value (excluding contingent deferred
sales charge) per share on the last day of the period.
Class A Shares
Example, assuming a maximum sales charge of 3.50%:
$2,677,355.34 - $309,975.91 6
2{(--------------------------- + 1) - 1} = 6.42%
42,184,467 x $10.63
Class B Shares
Example at NAV:
$ 985,092.49 - $212,618.32 6
2{(--------------------------- + 1) - 1} = 5.89%
15,522,365 x $10.26
Class C Shares
Example at NAV:
$ 270,981.16 - $ 58,723.96 6
2{(--------------------------- + 1) - 1} = 5.88%
4,274,548 x $10.25
<PAGE>
Oppenheimer Limited-Term Government Fund
Page 10
4. DIVIDEND YIELDS FOR THE 30-DAY PERIOD ENDED 09/30/96:
The Fund's dividend yields are calculated using the following formula:
Dividend Yield = a x 12 / b or c
The symbols above represent the following factors:
a = The accrual dividend earned during the period.
b = The Fund's maximum offering price (including sales charge)
per share on the last day of the period.
c = The Fund's net asset value (excluding sales charge) per share on
the last day of the period.
Examples:
Class A Shares
Dividend Yield
at Maximum Offering $.0633713 x 12
---------------- = 7.15%
$10.63
Dividend Yield
at Net Asset Value $.0633713 x 12
---------------- = 7.41%
$10.26
Class B Shares
Dividend Yield
at Net Asset Value $.0570223 x 12
---------------- = 6.67%
$10.26
Class C Shares
Dividend Yield
at Net Asset Value $.0569812 x 12
---------------- = 6.67%
$10.25
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 788303
<NAME> Oppenheimer Limited-Term Government Fund - A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Sep-30-1996
<PERIOD-START> Oct-01-1995
<PERIOD-END> Sep-30-1996
<INVESTMENTS-AT-COST> 745,759,316
<INVESTMENTS-AT-VALUE> 740,829,311
<RECEIVABLES> 32,590,882
<ASSETS-OTHER> 3,928
<OTHER-ITEMS-ASSETS> 375,421
<TOTAL-ASSETS> 773,799,542
<PAYABLE-FOR-SECURITIES> 127,628,898
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,353,360
<TOTAL-LIABILITIES> 130,982,258
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<CIK> 788303
<NAME> Oppenheimer Limited-Term Government Fund - B
<S> <C>
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<CIK> 788303
<NAME> Oppenheimer Limited-Term Government Fund - C
<S> <C>
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</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints
Andrew J. Donohue or Robert G. Zack, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his capacity as a trustee of OPPENHEIMER
LIMITED-TERM GOVERNMENT FUND, a Massachusetts business trust (the "Fund"), to
sign on his behalf any and all Registration Statements (including any
post-effective amendments to Registration Statements) under the Securities Act
of 1933, the Investment Company Act of 1940 and any amendments and supplements
thereto, and any other documents in connection thereunder, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 27th day of June, 1996.
/s/ Sam Freedman
- ------------------
Sam Freedman
