<PAGE> 1
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
ANNUAL REPORT SEPTEMBER 30, 1994
(OPPENHEIMER FUNDS(R) LOGO)
[PHOTO OF COUPLE STROLLING ARM-IN-ARM]
"WE NEED STEADY INCOME WITHOUT A LOT OF RISK.
BUT WE WERE WORRIED ABOUT THE IMPACT CHANGING
INTEREST RATES WOULD HAVE ON OUR INVESTMENT.
"OUR FINANCIAL ADVISOR RECOMMENDED THIS FUND
BECAUSE OF ITS SHORTER-TERM AVERAGE MATURITY,
WHICH MEANS IT IS LESS AFFECTED BY INTEREST
RATE CHANGES THAN LONGER-TERM BOND FUNDS."
<PAGE> 2
FUND FACTS
IN THIS REPORT:
ANSWERS TO TIMELY
QUESTIONS YOU
SHOULD ASK YOUR
FUND'S MANAGERS.
* HOW DID THE FUND RESPOND TO RISING INTEREST RATES IN 1994?
* WHY ARE YOU EMPHASIZING MORTGAGE-BACKED SECURITIES?
FACTS EVERY SHAREHOLDER SHOULD KNOW ABOUT
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
- ----------------------------------------------------------------------------
1 The Fund seeks high current return with safety of
principal by investing in shorter-term government
securities, including U.S. Treasury bonds and notes, GNMAs
and other mortgage-backed securities.
- ----------------------------------------------------------------------------
2 The Fund's standardized yield for the 30 days ended
9/30/94 was 6.14% for Class A shares and 5.55% for Class B
shares.(1)
- ----------------------------------------------------------------------------
3 Total return at net asset value for the 12-month period
ended September 30, 1994 for Class A shares was 0.74% and
-0.17% for Class B shares.(2)
- ----------------------------------------------------------------------------
4 Average annual total returns for Class A shares for the 1-
and 5-year periods ended 9/30/94 and since inception of
the Fund on 3/10/86 were -2.78%, 7.55% and 7.81%,
respectively. Average annual total returns for Class B
shares for the 1-year period ended 9/30/94 and since
inception of the Class on 5/3/93 were -4.16% and -0.25%,
respectively.(3)
- ----------------------------------------------------------------------------
5 "While the Fund's focus on shorter-term government
securities is always important to conservative,
quality-conscious investors, it really paid off in 1994's
turbulent bond markets. The Fund combined a very
attractive level of income compared to money market funds
and other short-term investments, with much greater
principal stability than investments in longer-term
bonds."
Portfolio Manager David Rosenberg, September 30, 1994
(1) Standardized yield is net investment income calculated on a
yield-to-maturity basis for the 30-day period ended 9/30/94, divided by the
maximum offering price for Class A shares at the end of the period,
compounded semiannually and then annualized. Falling net asset values will
tend to artificially raise yields.
(2) Based on the change in net asset value per share for the periods shown,
without deducting any sales charges. Such performance would have been lower
if sales charges were taken into account.
(3) Average annual total returns are based on a hypothetical investment
held until 9/30/94, after deducting the current maximum initial sales
charge of 3.50% for Class A shares and the contingent deferred sales charge
of 4% (1-year) and 3% (since inception) for Class B shares. The Fund's
maximum sales charge rate for Class A shares was lower during a portion of
some of the periods shown, and actual investment results will be different
as a result of the change.
All figures assume reinvestment of dividends and capital gains
distributions.
Past performance is not indicative of future results. Investment and
principal value on an investment in the Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original cost.
2 Oppenheimer Limited-Term Government Fund
<PAGE> 3
REPORT TO SHAREHOLDERS
ABOVE AVERAGE
TOTAL RETURN
Total return for the 1-year
period ended 9/30/94
- --------------------------------
Oppenheimer 0.74%
Limited-Term
Government Fund
Class A (at NAV)(5)
- --------------------------------
Oppenheimer -0.17%
Limited-Term
Government Fund
Class B (at NAV)(5)
- --------------------------------
Lipper short-term -1.23%
U.S. government
funds average(6)
The year ended September 30, 1994 was a challenging period for the nation's
bond markets, and it is a pleasure to report that Oppenheimer Limited-Term
Government Fund met its objectives well, providing an attractive yield from
a conservative portfolio of government securities. As of September 30, the
Fund's 30-day standardized yield was 6.14% for Class A shares and 5.55% for
Class B shares.(4)
Over the past six months, your managers have taken steps that
should benefit the Fund's performance in the future. Most importantly, they
shifted investments away from traditional short-term U.S. Treasury
securities, adding significantly to investments in mortgage-backed
securities issued by agencies or instrumentalities of the U.S. government.
Mortgage-backed securities, which made up 67.5% of the portfolio on
September 30, offer significant yield advantages over Treasuries.
As was announced several months ago, the Fund's dividend rate was
fixed for its Class A shares. While that dividend rate may be subject to
change in the future, as market conditions change, shareholders can look
forward to an income stream to help them meet their objectives.
Looking ahead, your managers believe the Fed's moves to fend off
inflation have been successful, and that the economy will continue to grow
at a steady, sustainable pace. In this environment, your managers continue
to look for opportunities to enhance the Fund's yield while conservatively
managing risk to limit the impact if interest rates go higher.
We appreciate the confidence you have placed in Oppenheimer
Limited-Term Government Fund, and we look forward to continuing to help you
meet your investment objectives in the future.
/s/ JAMES C. SWAIN /s/ JON. S. FOSSEL
- ----------------------------- -------------------------------
James C. Swain Jon S. Fossel
Chairman President
Oppenheimer Limited-Term Oppenheimer Limited-Term
Government Fund Government Fund
October 21, 1994
(4) See footnote 1, page 2.
(5) See footnote 2, page 2.
(6) Source: Lipper Analytical Services, an independent mutual fund
monitoring service, 9/30/94. The Lipper total return average for the period
shown was for 100 short-term U.S. government funds. The average is shown
for comparative purposes only. Lipper performance rankings do not take
sales charges into consideration.
3 Oppenheimer Limited-Term Government Fund
<PAGE> 4
STATEMENT OF INVESTMENTS September 30, 1994
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
=======================================================================================================================
U.S. GOVERNMENT OBLIGATIONS--99.1%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGENCY: FULL FAITH Government National Mortgage Assn.:
AND CREDIT--16.3% 11%, 2/15/98 $ 58,509 $ 62,030
11%, 3/15/98 100,782 106,847
11%, 8/15/98 43,306 45,913
11%, 10/15/98 17,506 18,560
11%, 12/15/98 66,927 70,955
11%, 3/15/99 674 721
11%, 5/15/99 46,370 49,580
11%, 3/15/00 19,695 21,208
11%, 5/15/00 146,308 157,539
11%, 6/15/00 91,860 98,912
11%, 7/15/00 24,680 26,576
11%, 8/15/00 145,105 156,243
11%, 9/15/00 212,134 228,417
11%, 10/15/00 183,069 197,120
11%, 11/15/00 530,952 571,709
11%, 12/15/00 288,273 310,401
11%, 1/15/01 198,715 215,255
11%, 2/15/01 34,701 37,590
8%, 9/15/07 219,347 219,111
13%, 2/15/11 77,733 89,520
13%, 10/15/12 17,741 20,452
13%, 9/15/14 18,351 21,189
10.50%, 1/15/16 53,935 58,811
10.50%, 2/15/16 731,073 797,148
10.50%, 3/15/16 73,376 80,008
10.50%, 4/15/16 137,348 149,762
10.50%, 5/15/16 213,014 232,266
10.50%, 6/15/16 162,002 176,644
10.50%, 10/15/16 18,571 20,250
9%, 11/15/16 3,411,426 3,535,670
10.50%, 12/15/16 51,868 56,556
10.50%, 7/15/17 227,351 247,959
10.50%, 8/15/17 142,284 155,181
9.50%, 9/15/17 252,265 266,410
10.50%, 10/15/17 20,002 21,816
10.50%, 11/15/17 305,386 333,069
10.50%, 12/15/17 412,422 449,807
10.50%, 2/15/18 271,894 296,607
10.50%, 4/15/18 16,902 18,439
10.50%, 6/15/18 103,003 112,366
10.50%, 10/15/18 62,262 67,922
10.50%, 11/15/18 381,374 416,038
10.50%, 12/15/18 182,940 199,568
10.50%, 3/15/19 349,512 381,365
10.50%, 5/15/19 217,354 237,162
10.50%, 6/15/19 175,563 191,563
10.50%, 7/15/19 388,539 423,948
8.50%, 9/15/21 98,377 99,650
8%, 6/15/22 522,247 508,586
8.50%, 11/15/22 552,770 553,694
8%, 12/15/22 357,932 348,569
</TABLE>
4 Oppenheimer Limited-Term Government Fund
<PAGE> 5
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGENCY: FULL FAITH 8%, 7/15/23 $ 492,526 $ 479,292
AND CREDIT (CONTINUED) 8%, 8/15/24 1,011,632 983,813
8%, 9/15/24 29,589,266 28,760,847
------------
43,386,634
- -----------------------------------------------------------------------------------------------------------------------------
AGENCY: GOVERNMENT Federal Home Loan Mortgage Corp.
SPONSORED--50.6% Collateralized Mtg. Obligations:
8.60%, 2/15/06 3,000,000 3,040,110
9.25%, 11/1/08 549,414 567,567
11.75%, 1/1/16 1,220,932 1,338,814
9.50%, 12/15/18 2,884,956 2,958,437
8.20%, 7/15/19 1,486,723 1,513,811
8.50%, 10/15/19 20,287,989 20,784,639
10%, 11/15/19 14,136,921 14,730,106
8%, 3/15/21 7,370,553 7,423,694
6.65%, 4/15/21 12,500,000 11,259,499
8.50%, 6/15/21 15,000,000 15,156,299
8%, 8/1/21 1,582,755 1,685,366
10%, 8/1/21 2,845,112 3,030,044
------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
STRIPS, 11.50%, 3/1/09 3,481,182 3,845,620
13%, 8/1/10-6/1/15 67,080 75,662
13%, 6/1/15 100,266 113,159
8%, 7/25/19 8,000,000 7,927,279
9%, 8/1/19 1,240,316 1,278,940
8%, 10/25/21 595,000 575,454
Principal-Only Stripped Mtg.-Backed
Security, Trust 157, Class E, 0%, 5/25/22(1) 8,229,466 5,588,383
8%, 1/1/23 378,172 369,781
Interest-Only Stripped Mtg.-Backed
Security, Trust 221, Class 2, 7.50%, 5/25/23(2) 24,914,713 9,335,232
Principal-Only Stripped Mtg.-Backed
Security, Trust 148, Class G, 0%, 8/25/23(1) 8,891,258 4,238,453
Interest-Only Stripped Mtg.-Backed
Security, Trust 240, Class 2, 7%, 9/25/23(2) 6,005,462 2,270,815
Interest-Only Stripped Mtg.-Backed
Security, Trust 252, Class 2, 7.50%, 11/30/23(2) 13,305,289 5,051,852
Interest-Only Stripped Mtg.-Backed
Security, Trust 252, Class 2, 7%, 2/25/24(2) 28,309,954 10,863,945
------------
135,022,961
- -----------------------------------------------------------------------------------------------------------------------------
TREASURY--32.2% U.S. Treasury Bonds:
8.50%, 11/15/95 18,100,000 18,569,458
------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
9.25%, 1/15/96 32,505,000 33,693,444
9.375%, 4/15/96(3) 25,300,000 26,406,875
7.625%, 5/31/96 7,000,000 7,133,433
------------
85,803,210
------------
Total U.S. Government Obligations (Cost $269,913,018) $264,212,805
</TABLE>
5 Oppenheimer Limited-Term Government Fund
<PAGE> 6
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
DATE/PRICE UNITS SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PUT OPTIONS PURCHASED--0.0% U.S. Treasury Nt., 7.50% (Cost $95,313) Oct./$96.67 10,000 $ 98,438
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $270,008,331) 99.1% 264,311,243
- ------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES .9 2,424,414
------ ------------
NET ASSETS 100.0% $266,735,657
====== ============
</TABLE>
(1) Principal-Only Strips represent the
right to receive the monthly principal
payments on an underlying pool of
mortgage loans. The value of these
securities generally increases as
interest rates decline and prepayment
rates rise. The price of these securities
is typically more volatile than that of
coupon-bearing bonds of the same
maturity.
(2) Interest-Only Strips represent the
right to receive the monthly interest
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).
(3) Securities with an aggregate market
value of $5,218,750 are held in escrow to
cover initial margin requirements on open
interest rate futures sales contracts, as
follows:
<TABLE>
<CAPTION>
Number of
Type of Contract Contracts Face Amount
--------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Nts., 12/94 50 $5,000,000
</TABLE>
The market value of the open contracts
was $5,073,438 at September 30, 1994,
with a net unrealized gain of $17,188.
See accompanying Notes to Financial
Statements.
6 Oppenheimer Limited-Term Government Fund
<PAGE> 7
STATEMENT OF ASSETS AND LIABILITIES September 30, 1994
<TABLE>
<S> <C> <C>
===========================================================================================================================
ASSETS Investments, at value (cost $270,008,331)--see accompanying statement $264,311,243
----------------------------------------------------------------------------------------------------
Unrealized appreciation on forward contracts 17,188
----------------------------------------------------------------------------------------------------
Receivables:
Interest and principal paydowns 4,767,307
Shares of beneficial interest sold 3,114,491
----------------------------------------------------------------------------------------------------
Other 10,905
------------
Total assets 272,221,134
==========================================================================================================================
LIABILITIES Bank overdraft 1,327,374
----------------------------------------------------------------------------------------------------
Options written at value (premiums received $121,875)--
see accompanying statement--Note 6 187,500
----------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 3,627,877
Distribution and service plan fees--Note 4 152,606
Other 190,120
------------
Total liabilities 5,485,477
==========================================================================================================================
NET ASSETS $266,735,657
------------
==========================================================================================================================
COMPOSITION OF Paid-in capital $279,146,214
NET ASSETS ----------------------------------------------------------------------------------------------------
Overdistributed net investment income (107,542)
----------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment transactions (6,557,490)
----------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and options written--Note 3 (5,745,525)
------------
Net assets $266,735,657
============
==========================================================================================================================
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $227,858,341 and 21,906,028 shares of beneficial interest outstanding) $10.40
Maximum offering price per share (net asset
value plus sales charge of 3.50% of offering price) $10.78
----------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $38,877,316 and 3,734,115 shares of beneficial interest outstanding) $10.41
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer Limited-Term Government Fund
<PAGE> 8
STATEMENT OF OPERATIONS For the Year Ended September 30, 1994
<TABLE>
<S> <C> <C>
=========================================================================================================================
INVESTMENT INCOME Interest $15,966,654
=========================================================================================================================
EXPENSES Management fees--Note 4 976,513
-------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 450,597
Class B--Note 4 156,771
-------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 181,126
Class B 12,815
-------------------------------------------------------------------------------------------
Shareholder reports 154,767
-------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 121,480
-------------------------------------------------------------------------------------------
Custodian fees and expenses 37,490
-------------------------------------------------------------------------------------------
Legal and auditing fees 21,052
-------------------------------------------------------------------------------------------
Trustees' fees and expenses 6,654
-------------------------------------------------------------------------------------------
Other 59,341
-----------
Total expenses 2,178,606
=========================================================================================================================
NET INVESTMENT INCOME 13,788,048
=========================================================================================================================
REALIZED AND UNREALIZED Net realized gain on investments and options written 787,066
GAIN (LOSS) ON INVESTMENTS
-------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments
and options written (12,973,109)
-----------
Net realized and unrealized loss on investments and options written (12,186,043)
=========================================================================================================================
NET INCREASE IN NET ASSETS $ 1,602,005
RESULTING FROM OPERATIONS ===========
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Limited-Term Government Fund
<PAGE> 9
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1994 1993
===========================================================================================================================
<S> <C> <C> <C>
OPERATIONS Net investment income $ 13,788,048 $ 10,852,752
----------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and options written 787,066 (1,271,113)
----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation
on investments and options written (12,973,109) 2,440,150
------------ ------------
Net increase in net assets resulting from operations 1,602,005 12,021,789
===========================================================================================================================
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.709 and $.734 per share, respectively) (12,491,113) (10,773,584)
SHAREHOLDERS Class B ($.62 and $.226 per share, respectively) (900,631) (79,168)
----------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A ($.002 per share) (44,628) --
Class B ($.002 per share) (7,614) --
----------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A ($.01 per share) (213,840) --
Class B ($.01 per share) (36,486) --
===========================================================================================================================
BENEFICIAL INTEREST Net increase in net assets resulting from Class A
TRANSACTIONS beneficial interest transactions--Note 2 60,069,439 19,721,192
----------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions--Note 2 34,737,604 5,062,554
===========================================================================================================================
NET ASSETS Total increase 82,714,736 25,952,783
----------------------------------------------------------------------------------------------
Beginning of year 184,020,921 158,068,138
------------ ------------
End of year (including overdistributed net
investment income of $107,542 in 1994) $266,735,657 $184,020,921
------------ ------------
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Limited-Term Government Fund
<PAGE> 10
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
YEAR ENDED
SEPTEMBER 30,
1994 1993 1992 1991 1990(3) 1989 1988
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.04 $10.97 $10.75 $10.18 $10.17 $10.14 $9.72
- ----------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .72 .73 .81 .87 .89 .90 .89
Net realized and unrealized
gain (loss) on investments
and options written (.64) .07 .22 .57 .01 .03 .42
------ ------ ----- ------ ------ ------ -----
Total income (loss) from
investment operations .08 .80 1.03 1.44 .90 .93 1.31
- ----------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net
investment income (.71) (.73) (.81) (.87) (.89) (.90) (.89)
Dividends in excess
of net investment income --(5) -- -- -- -- -- --
Tax return of capital distribution (.01) -- -- -- -- -- --
Distributions from net
realized gain on investments
and options written -- -- -- -- -- -- --
------ ------ ----- ------ ------ ------ -----
Total dividends and
distributions to shareholders (.72) (.73) (.81) (.87) (.89) (.90) (.89)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.40 $11.04 $10.97 $10.75 $10.18 $10.17 $10.14
====== ====== ===== ====== ====== ====== =====
==========================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(6) .74% 7.61% 9.88% 14.69% 9.15% 9.65% 13.86%
==========================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $227,858 $178,944 $158,068 $167,974 $213,391 $237,819 $251,794
- ----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $190,829 $161,318 $160,830 $192,404 $218,528 $243,863 $267,557
- ----------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 21,906 16,206 14,416 15,624 20,964 23,395 24,834
- ----------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.74% 6.70% 7.44% 8.27% 8.77% 8.96% 8.75%
Expenses .99% 1.02% .97% .98% .90% .93% .96%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 226% 74% 154% 112% 60% 61% 78%
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------- -------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1987 1986(2) 1994 1993(1)
============================================================ ===================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.51 $10.56 $11.06 $10.96
- ----------------------------------------------------------- ------------------
Income (loss) from investment
operations:
Net investment income .86(4) .57(4) .62 .23
Net realized and unrealized
gain (loss) on investments
and options written (.74) (.05) (.64) .10
------ ------ ------ ------
Total income (loss) from
investment operations .12 .52 (.02) .33
- ----------------------------------------------------------- -------------------
Dividends and distributions to
shareholders:
Dividends from net
investment income (.86) (.57) (.62) (.23)
Dividends in excess
of net investment income -- -- --(5) --
Tax return of capital distribution -- -- (.01) --
Distributions from net
realized gain on investments
and options written (.05) -- -- --
------ ------ ------ ------
Total dividends and
distributions to shareholders (.91) (.57) (.63) (.23)
- ----------------------------------------------------------- -------------------
Net asset value, end of period $9.72 $10.51 $10.41 $11.06
====== ====== ====== ======
=========================================================== ===================
TOTAL RETURN, AT NET ASSET VALUE(6) .95% 4.97% (.17)% 3.02%
=========================================================== ===================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $287,181 $127,797 $38,877 $5,077
- ----------------------------------------------------------- -------------------
Average net assets (in thousands) $242,181 $105,123 $15,801 $2,561
- ----------------------------------------------------------- -------------------
Number of shares outstanding
at end of period (in thousands) 29,560 12,162 3,734 459
- ----------------------------------------------------------- -------------------
Ratios to average net assets:
Net investment income 8.22% 7.93%(7) 5.91% 4.81%(7)
Expenses .56%(4) .08%(4)(7) 1.79% 1.87%(7)
- ----------------------------------------------------------- -------------------
Portfolio turnover rate(8) 73% 471% 226% 74%
</TABLE>
(1) For the period from May 3, 1993 (inception of offering) to September 30,
1993.
(2) For the period from March 10, 1986 (commencement of operations) to September
30, 1986.
(3) On April 7, 1990, Oppenheimer Management Corporation became the investment
advisor to the Fund.
(4) Net investment income would have been $.84 and $.52 absent the voluntary
reimbursement or waiver of expenses, resulting in an expense ratio of 1.00% and
1.07% for 1987 and 1986, respectively.
(5) Less than $.001 per share.
(6) Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns.
(7) Annualized.
(8) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the year ended September 30, 1994 were $526,239,879 and $445,474,809,
respectively.
See accompanying Notes to Financial Statements.
10 Oppenheimer Limited-Term Government Fund
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
==============================================================================================================================
1. SIGNIFICANT Oppenheimer Limited-Term Government Fund (the Fund), formerly named Oppenheimer
ACCOUNTING POLICIES Government Securities Fund, is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Fund's investment
advisor is Oppenheimer Management Corporation (the Manager). The Fund offers both Class
A and Class B shares. Class A shares are sold with a front-end sales charge. Class B
shares may be subject to a contingent deferred sales charge. Both classes of shares have
identical rights to earnings, assets and voting privileges, except that each class has its
own distribution 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 4:00 p.m. (New York time) on each
trading day. Long-term debt securities are valued by a portfolio pricing service approved
by the Board of Trustees. Long-term debt securities which cannot be valued by the
approved portfolio pricing service are valued by averaging the mean between the bid and
asked prices obtained from two active market makers in such securities. Short-term debt
securities having a remaining maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization to maturity of any premium or
discount. Securities for which market quotes are not readily available are valued under
procedures established by the Board of Trustees to determine fair value in good faith. An
option is valued based upon the last sale price on the principal exchange on which the
option is traded or, in the absence of any transactions that day, the value is based upon
the last sale on the prior trading date if it is within the spread between the closing
bid and asked prices. If the last sale price is outside the spread, the closing bid or
asked price closest to the last reported sale price is used.
-----------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class) and gains and losses are allocated daily to each
class of shares based upon the relative proportion of net assets represented by such class.
Operating expenses directly attributable to a specific class are charged against the
operations of that class.
-----------------------------------------------------------------------------
FEDERAL INCOME TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to distribute all of
its taxable income, including any net realized gain on investments not offset by loss
carryovers, to shareholders. Therefore, no federal income tax provision is required. At
September 30, 1994, the Fund had available for federal income tax purposes an unused
capital loss carryover of approximately $6,558,000, $3,182,000 of which will expire in
1996, $3,040,000 in 1997, $40,000 in 2001 and $296,000 in 2002.
-----------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately for
Class A and Class B shares from net investment income each day the New York Stock Exchange
is open for business and pay such dividends monthly. Distributions from net realized gains
on investments, if any, will be declared at least once each year.
-----------------------------------------------------------------------------
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective October 1, 1993,
the Fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by
Investment Companies. As a result, the Fund changed the classification of distributions to
shareholders to better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations. Accordingly, subsequent
to September 30, 1993, amounts have been reclassified to reflect an increase in paid-in
capital of $102,759, a decrease in undistributed net investment income of $55,299, and a
decrease in undistributed capital loss on investments of $47,460. During the year ended
September 30, 1994, in accordance with Statement of Position 93-2, undistributed net
investment income was decreased by $145,791, paid-in capital was decreased by $250,326 and
undistributed capital loss was decreased by $396,117.
----------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Discount on securities purchased is amortized over the
life of the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for federal income tax
purposes.
</TABLE>
11 Oppenheimer Limited-Term Government Fund
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (Continued)
<TABLE>
<S> <C>
=================================================================================================================================
2. SHARES OF The Fund has authorized an unlimited number of no par value shares of beneficial interest
BENEFICIAL INTEREST of each class. Transactions in shares of beneficial interest were as follows:
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1994 YEAR ENDED SEPTEMBER 30, 1993(1)
------------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A:
Sold 11,073,786 $117,379,950 3,635,741 $39,788,867
Dividends reinvested 817,206 8,727,397 653,622 7,145,654
Issued in connection with the
acquisition of Main Street
Government Securities Fund--Note 5 -- -- 898,047 9,977,301
Redeemed (6,191,329) (66,037,908) (3,396,764) (37,190,630)
========== ============ ========== ===========
Net increase 5,699,663 $ 60,069,439 1,790,646 $19,721,192
========== ============ ========== ===========
-------------------------------------------------------------------------------------------------
CLASS B:
Sold 3,707,813 $ 39,327,532 462,985 $ 5,104,320
Dividends reinvested 68,487 725,648 3,699 40,944
Redeemed (501,397) (5,315,576) (7,472) (82,710)
========= ============ ========== ===========
Net increase 3,274,903 $ 34,737,604 459,212 $ 5,062,554
========= ============ ========== ===========
</TABLE>
(1) For the year ended September 30, 1993 for
Class A shares and for the period from May 3,
1993 (inception of offering) to September 30,
1993 for Class B shares.
<TABLE>
<S> <C>
=================================================================================================================================
3. UNREALIZED GAINS AND At September 30, 1994, net unrealized depreciation on investments and options written of
LOSSES ON INVESTMENTS $5,745,525 was composed of gross appreciation of $2,598,784, and gross depreciation of
$8,344,309.
=================================================================================================================================
4. MANAGEMENT FEES Management fees paid to the Manager were in accordance with the investment advisory
AND OTHER agreement with the Fund which provides for an annual fee of .50% on the first
TRANSACTIONS $100 million of net assets, .45% on the next $150 million, .425% on the next $250 million
WITH AFFILIATES and .40% on net assets in excess of $500 million. The Manager has agreed to reimburse the
Fund if aggregate expenses (with specified exceptions) exceed the most stringent
applicable regulatory limit on Fund expenses.
The Manager acts as the accounting agent for the Fund at an annual
fee of $12,000, plus out-of-pocket costs and expenses reasonably incurred.
For the year ended September 30, 1994, commissions (sales charges
paid by investors) on sales of Class A shares totaled $1,006,962, of which $310,375
was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the Manager,
as general distributor, and by an affiliated broker/dealer. During the year ended
September 30, 1994, OFDI received contingent deferred sales charges of $36,866 upon
redemption of Class B shares as reimbursement for sales commissions advanced by OFDI at
the time of sale of such shares.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is
the transfer and shareholder servicing agent for the Fund, and for other registered
investment companies. OSS's total costs of providing such services are allocated ratably
to these companies.
Under separate approved plans, each class may expend up to .25% of
its net assets annually to reimburse OFDI for costs incurred in connection with the
personal service and maintenance of accounts that hold shares of the Fund, including
amounts paid to brokers, dealers, banks and other financial institutions. In addition,
Class B shares are subject to an asset-based sales charge of .75% of net assets annually,
to reimburse OFDI for sales commissions paid from its own resources at the time of sale
and associated financing costs. In the event of termination or discontinuance of the Class
B plan, the Board of Trustees may allow the Fund to continue payment of the asset-based
sales charge to OFDI for distribution expenses incurred on Class B shares sold prior to
termination or discontinuance of the plan. During the year ended September 30, 1994, OFDI
paid $4,697 and $246, respectively, to an affiliated broker/dealer as reimbursement for
Class A and Class B personal service and maintenance expenses and retained $154,274 as
reimbursement for Class B sales commissions and service plan advances, as well as
financing costs.
</TABLE>
12 Oppenheimer Limited-Term Government Fund
<PAGE> 13
<TABLE>
<S> <C>
=================================================================================================================================
5. ACQUISITION OF On August 27, 1993, the Fund acquired all of the net assets of Main Street Government
MAIN STREET Securities Fund (MSGSF), pursuant to an Agreement and Plan of Reorganization
GOVERNMENT approved by the MSGSF shareholders on August 26, 1993. The Fund issued 898,047 shares
SECURITIES FUND of beneficial interest, valued at $9,977,301, in exchange for the net assets, resulting
in combined net assets of $182,832,580 on August 27, 1993. The net assets acquired
included net unrealized appreciation of $402,810 and capital loss carryovers for federal
income tax purposes of $39,537. The exchange was tax-free.
=================================================================================================================================
6. OPTION ACTIVITY Option activity for the year ended September 30, 1994 was as follows:
<CAPTION>
CALL OPTIONS PUT OPTIONS
------------------------ --------------------------
NUMBER AMOUNT OF NUMBER AMOUNT OF
OF OPTIONS PREMIUMS OF OPTIONS PREMIUMS
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at September 30, 1993 -- $ -- -- $ --
Options written 25,800 120,938 95,000 262,500
Options expired prior to exercise -- -- -- --
Options exercised -- -- -- --
Options closed (25,800) (120,938) (35,000) (140,625)
========= ========= ======= =========
Options outstanding at September 30, 1994 -- $ -- 60,000 $ 121,875
========= ========= ======= =========
</TABLE>
At September 30, 1994, the Fund had outstanding
put options written with an expiration date of
10/12/94 and an exercise price of 100.018. The
market value was $187,500.
<TABLE>
<S> <C>
====================================================================================================
FEDERAL INCOME TAX INFORMATION (Unaudited)
=================================================================================================================================
In early 1995, shareholders will receive information regarding all dividends and distributions paid to
them by the Fund during calendar year 1994. Regulations of the U.S. Treasury Department require the
Fund to report this information to the Internal Revenue Service.
None of the dividends paid by the Fund during the fiscal year ended September 30,
1994 are eligible for the corporate dividend-received deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of the complexity of
the federal regulations which may affect your individual tax return and the many variations in state
and local tax regulations, we recommend that you consult your tax advisor for specific guidance.
</TABLE>
13 Oppenheimer Limited-Term Government Fund
<PAGE> 14
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, 1994, the related statement of operations for the year
then ended, the statements of changes in net assets for the years ended
September 30, 1994 and 1993, and the financial highlights for the period
October 1, 1989 to September 30, 1994. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights (except for total return) for the
period March 10, 1986 (commencement of operations) to September 30, 1989 were
audited by other auditors whose report dated November 2, 1989, expressed an
unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
at September 30, 1994 by correspondence with the custodian and brokers. 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, 1994, the results of its
operations, the changes in its net assets, and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
October 21, 1994
14 Oppenheimer Limited-Term Government Fund
<PAGE> 15
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<TABLE>
<S> <C>
==============================================================================================================================
OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief Executive
Officer
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee and President
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President
David A. Rosenberg, Vice President
George C. Bowen, Vice President, Secretary and
Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
==============================================================================================================================
INVESTMENT ADVISOR Oppenheimer Management Corporation
==============================================================================================================================
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
==============================================================================================================================
TRANSFER AND SHAREHOLDER Oppenheimer Shareholder Services
SERVICING AGENT
==============================================================================================================================
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
==============================================================================================================================
INDEPENDENT AUDITORS Deloitte & Touche LLP
==============================================================================================================================
LEGAL COUNSEL Myer, Swanson & Adams, P.C.
This is a copy of a report to shareholders of Oppenheimer Limited-Term Government Fund.
This report must be preceded or accompanied by a Prospectus of Oppenheimer Limited-Term
Government Fund. For material information concerning the Fund, see the Prospectus.
</TABLE>
15 Oppenheimer Limited-Term Government Fund
<PAGE> 16
'Talk to a Customer Service
Representative.
Monday through Friday from
8:30 a.m. to 8:00 p.m., and
Saturday from 10:00 a.m.
to 2:00 p.m. ET.
Make account transactions with a
Customer Service Representative.
Monday through Friday from
8:30 a.m. to 8:00 p.m. ET.
Get automated information or
make automated transcactions.
24 hours a day, 7 days a week.
Service for the hearing impaired.
Monday through Friday from
8:30 a.m. to 8:00 p.m. ET.
Hear timely and insightful
messages on the economy and
issues that affect your finances.
24 hours a day, 7 days a week.
"Just as OppenheimerFunds offers over 35 different mutual funds designed to
help meet virtually every investment need, Oppenheimer Shareholder Services
offers a variety of services to satisfy your individual needs. Whenever you
require help, we're only a toll-free phone call away.
"For personalized assistance
and account information, call our General
Information number to speak with our
knowledgeable Customer Service
Representatives and get the help you need. [Photograph of
"When you want to make account Barbara Hennigar
transactions, it's easy for you to redeem Chief Executive Officer
shares, exchange shares, or conduct Oppenheimer Shareholder
AccountLink transactions, simply by calling Services.]
our Telephone Transactions number.
"And for added convenience,
OppenheimerFunds' Phone Link, an automated
voice response system is available 24 hours
a day, 7 days a week. PhoneLink gives you access to a variety of fund,
account, and market information. You can even make purchases,
- ------------ exchanges and redemptions using your touch-tone phone. Of
1 9 9 3 course, PhoneLink will always give you the option to
AWARD of speak with a Customer Service Representative during the hours
EXCELLENCE shown to the left.
[LOGO] icsa "When you invest in OppenheimerFunds, you know
- ------------ you'll receive a high level of customer service. The
International International Customer Service Association knows it, too, as
Customer it awarded Oppenheimer Shareholder Services a 1993 Award of
Service Excellence for consistenly demonstrating superior customer
Association service.
"Whatever your needs, we're ready to assist you."
[Logo] OppenheimerFunds(R) -------------------
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P.O. Box 5270 U.S. Postage
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Hackensack, NJ
--------------------
