<PAGE> 1
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
Semiannual Report March 31, 1995
"We need
our money
to work hard
[PHOTO] and we
need to feel
comfortable
about how
it's invested."
[LOGO] OPPENHEIMER FUNDS
<PAGE> 2
This Fund is for people who want higher returns than traditional short-term
investments, without giving up the comfort.(1)
NEWS
STANDARDIZED YIELD
For the 30 Days Ended 3/31/95(2)
Class A
6.56%
Class B
5.98%
Class C
5.96%
THE FUND'S CLASS A SHARES
ARE RANKED **** AMONG
680 TAXABLE BOND FUNDS AS
OF 3/31/95.(3)
- -------------------------------------------------------------------------------
HOW YOUR FUND IS MANAGED
- -------------------------------------------------------------------------------
Oppenheimer Limited-Term Government Fund seeks high current return by investing
in a portfolio of fixed income securities, emphasizing securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities, and
mortgage-backed certificates. The Fund also invests in collateralized mortgage
obligations and mortgage-backed stripped securities.(4) The Fund is designed to
offer a greater degree of stability than longer-term fixed income investments
because it intends to maintain an average effective portfolio duration of not
more than three years.
- -------------------------------------------------------------------------------
PERFORMANCE
- -------------------------------------------------------------------------------
Total returns at net asset value for the 6 months ended 3/31/95 for Class A and
B shares were 4.01% and 3.56%, respectively.(5)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 3/31/95 and since inception
of the Class on 3/10/86 were 0.26%, 7.64% and 7.84%, respectively. For Class B
shares, average annual total returns for the 1-year period ended 3/31/95 and
since inception of the Class on 5/3/93 were -0.92% and 1.79%, respectively.(6)
- -------------------------------------------------------------------------------
OUTLOOK
- -------------------------------------------------------------------------------
"The investments on which this Fund focuses historically have provided high
risk-adjusted returns in the government market, and the past year was no
exception. In the most turbulent bond markets in decades, the Fund produced a
positive return, and is positioned to perform well going forward."
David Rosenberg, Portfolio Manager
March 31, 1995
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 is not guaranteed and will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost.
1. The Fund may be more volatile than certain short-term investments and may not
have the return potential of longer-term investments.
2. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 3/31/95, divided by the maximum offering price
at the end of the period, compounded semiannually and then annualized. Falling
net asset values will tend to artificially raise yields.
3. Source: Morningstar Mutual Funds, 3/31/95. Morningstar, Inc., an independent
mutual fund monitoring service, produces proprietary monthly rankings of funds
in broad investment categories (equity, taxable bond, tax-exempt bond or
"hybrid") based on risk-adjusted investment return, after considering sales
charges and expenses. Investment return measures a fund's (or class's) 3-, 5-
and 10-year (depending on the inception of the class or fund) average annual
total returns in excess of 90-day U.S. Treasury bill returns. Risk measures a
fund's (or class's) performance below 90-day U.S. Treasury bill returns. Risk
and returns 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%), 4 stars is above average and 1 star is the lowest (bottom
1%). The current 4-star ranking is a weighted average of the 3- and 5-year
rankings for the class, which were both 4 stars, weighted 40%/60%. The Fund was
ranked among 680 taxable bond funds. Rankings are subject to change. The Fund's
Class A, B and C shares have the same portfolio.
4. These securities involve risks from early prepayment of underlying mortgages
that can affect the Fund's income and principal value.
5. Based on the change in net asset value per share from 9/30/94 to 3/31/95,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
6. Class A returns show hypothetical investments on 4/1/94, 3/31/90 and 3/10/86
(inception of class), after deducting the current maximum initial sales charge
of 3.50%. Prior to 2/1/94, the maximum Class A sales charge was higher, and
actual account performance would have been less. Class B returns show
hypothetical investments on 4/1/94 and 5/3/93 (inception of class) and the
deduction of the applicable contingent deferred sales charge of 5% (1-year) and
4% (since inception). Certain Class C share performance data is not yet
available because Class C shares were first publicly offered on 2/1/95. The
Fund's investment policy of limiting average portfolio duration was adopted on
5/1/94, and the Fund had a different advisor prior to 4/7/90. An explanation of
the different total returns is in the Fund's prospectus.
2 Oppenheimer Limited-Term Government Fund
<PAGE> 3
[PHOTO]
James C. Swain
Chairman
Oppenheimer
Limited-Term
Government Fund
[PHOTO]
Jon S. Fossel
President
Oppenheimer
Limited-Term
Government Fund
Dear OppenheimerFunds Shareholder,
1994 was marked by one of the greatest tests the bond markets faced in more than
six decades. As the U.S. Federal Reserve undertook the most aggressive moves in
its history to raise interest rates, bond prices and bond mutual funds declined
across the board. Changing interest rates are a fact of life and they affect the
short-term performance of all bond markets. That is why we believe the best
measure of any fixed income mutual fund is its performance over the long term.
And we believe the long-term outlook for the bond markets is very positive.
To see how greatly the U.S. bond market has improved since last fall, we
need look no further than the market's reaction to the Fed's most recent
short-term rate increase in February. While the markets had already anticipated
this move, unlike previous rate increases, long-term interest rates continued to
decline and bonds rallied further. Although the Fed could raise rates again, we
believe that this positive environment will prove more than momentary as a
result of several factors.
First, concerns about the effects of inflation on bond prices are fading
fast. By most indicators, economic growth is slowing to a pace that can be
sustained without reigniting inflation or causing a recession. Second, at
current prices, bonds are producing some of the best inflation-adjusted returns
in years. With the actual inflation rate running just over 3 percent today, many
fixed income investors are clearly being rewarded in the current yield
environment. Attracted by the strong, real returns bonds offer, investors are
returning to bonds in a significant way. This rising demand is providing solid
support for bond prices. Third, as the Fed concludes its tightening efforts--and
recent reports suggest that point is near--long-term interest rates will likely
stay within their current range, and could decline further. Of course, rates
could rise later this year if future reports indicate that the economy isn't
slowing as quickly as it seems to be today; however, we believe that over the
longer term, the downward trend of rates will continue.
Two uncertainties affecting the fixed income markets are foreign investors'
attitudes toward U.S. debt and the weakness of the U.S. dollar abroad relative
to other major currencies. But investors' attitudes overseas and the dollar's
decline, in our view, should prove temporary. Both have been driven by the
government's moves to support the Mexican peso, a widening trade deficit, and
Congress's apparent inability to limit the Federal budget deficit.
We believe the trade deficit will narrow with increasing U.S. exports as
European economies come out of recession and emerging world markets stabilize.
Additionally, the need to support the peso has begun to decline as Mexico's
tough domestic economic policy has gained credibility. Finally, we are confident
that Congress will be able to get the budget deficit issue dealt with because
Americans are demanding it.
Of course, no one can predict the future with perfect clarity. The bond
markets are always subject to fluctuations and, as we saw in 1994, the shifts
can sometimes be sharp. Overall, however, we believe the outlook for the bond
markets today appears positive.
Your portfolio manager discusses the outlook for your Fund on the following
pages. We appreciate your trust, and we'll continue to do our best to help you
meet your long-term investment objectives.
/s/ James C. Swain /s/ Jon S. Fossell
- ------------------ ------------------
James C. Swain Jon S. Fossel
April 24, 1995
3 Oppenheimer Limited-Term Government Fund
<PAGE> 4
Q+A [PHOTO]
Q Can you sum up this Fund's goal?
An interview with your Fund's manager.
THE FUND PERFORMED WELL OVER THE PAST SIX MONTHS. WHAT ACCOUNTS FOR THAT
PERFORMANCE?
It's partly due to the nature of the Fund's portfolio and partly to our
management approach.
Looking first at the portfolio, the Fund seeks to maintain an average
effective duration of no more than three years. As you know, in 1994's rocky
interest rate environment, short-term securities performed well.
[PHOTO]
At the same time--and just as important--we don't overreach for return in
managing the Fund. Instead of stretching for yield or taking unnecessary risks,
our goal is to produce a competitive level of income while holding price
volatility to below-market levels.
Shareholders expect an attractive yield and relative stability in a
government fund, and that is precisely what we intend to deliver.
DOESN'T LIMITING RISK LIMIT RETURNS OVER THE LONG TERM?
Not necessarily. In favorable bond markets, this Fund may modestly underperform
other government securities funds that take on higher risks. But when interest
rates are rising, as they were in 1994, the Fund tends to hold its principal
value better than many other government bond funds. This approach has produced
superior returns in the past, and we believe that it will continue to do so.
ARE YOU FINDING OPPORTUNITIES TO IMPROVE YIELD AND REDUCE RISK TODAY?
Yes, and we're taking full advantage of them in three ways:
First, we're carefully controlling the portfolio's duration--a technical
measure of a bond portfolio's sensitivity to changing interest rates. The
Federal Reserve may be nearing the end of its tightening, but we don't have a
crystal ball
4 Oppenheimer Limited-Term Government Fund
<PAGE> 5
FACING PAGE
Top left: David Rosenberg,
Portfolio Manager
Top right: Art Steinmetz, Senior
VP, Fixed Income Investments,
Portfolio Management Team
Bottom left: Len Darling, Executive
VP, Director of Fixed Income Invest-
ments, consults with Jon Fossel
THIS PAGE
Right: David Rosenberg with
Gina Palmieri, Mortgage Analyst
Below: Eva Zeff, Assistant VP
Fixed Income Investments
Portfolio Management Team
A We aim
to produce
competitive
income
while holding
price volatility
to below-
market levels.
that tells us where interest rates are heading. We're still taking a cautious
approach.
Second, we're focusing on market sectors that carry lower risk in the
current economic and interest-rate environment.
Third, we're taking a "barbell" approach to portfolio construction,
focusing our investments heavily on bonds with shorter maturities, to take
advantage of their relative price stability, and longer maturities, which offer
attractive real rates of return over inflation. The combined effect is a
portfolio whose average effective duration is not more than three years.
[PHOTO]
HOW DO THOSE APPROACHES TRANSLATE INTO SPECIFIC INVESTMENT STRATEGIES?
We're deemphasizing our holdings in mortgage-backed securities, which tend to
have higher prepayment uncertainties as interest-rate volatility increases. And
we've increased our position in U.S. Treasury securities, which have no credit
risk. We're also watching a number of technical factors closely, including
changing relationships between bond yields and maturities, so we can identify
the best relative values in the market.(1)
WHAT'S YOUR OUTLOOK FOR THE FUND AND THE GOVERNMENT SECURITIES MARKET?
In the near term, we remain cautious, given the uncertainties in the economy.
Looking out longer, however, we're extremely optimistic. It's difficult to
remember a time when this sector of the market offered better real,
inflation-adjusted returns or more opportunities, and we feel the Fund is well
positioned to take advantage of the opportunities the market offers. / /
[PHOTO]
(1.) The Fund's portfolio is subject to change.
5 Oppenheimer Limited-Term Government Fund
<PAGE> 6
- ------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS March 31, 1995 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
============================================================================================================
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS--69.1%
- ------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--69.1%
- ------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--48.3%
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations, Gtd.
Multiclass Mtg. Participation Certificates:
10%, 11/15/19 $11,716,590 $ 12,109,797
8.20%, 7/15/19 1,227,001 1,244,265
9.25%, 11/1/08 498,076 514,010
10%, 6/15/20 8,000,000 8,862,319
6.65%, 4/15/21 12,500,000 11,573,374
8.50%, 10/15/19 17,543,184 17,901,415
9%, 12/15/20 14,750,000 15,078,924
Series 1057, Cl. C, 8%, 3/15/21 4,263,553 4,273,189
Series 1092, Cl. K, 8.50%, 6/15/21 15,000,000 15,567,300
Series 1097, Cl. L, 8.60%, 2/15/06 3,000,000 3,075,030
Series F, 9.50%, 12/15/18 2,226,528 2,268,989
- ------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg.
Participation Certificates:
10%, 8/1/21 2,822,130 3,017,168
10%, 8/1/21 1,575,556 1,684,428
11.75%, 1/1/16 1,124,517 1,243,294
11.75%, 4/1/19 3,592,842 3,972,337
- ------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates:
12.50%, 12/1/15 5,193,738 5,859,187
13%, 6/1/15 66,547 75,107
13%, 8/1/10 53,654 60,319
8%, 1/1/23 375,113 374,498
9%, 8/1/19 1,147,767 1,188,593
10.50%, 11/25/20 10,000,000 11,337,399
8%, 7/25/19 8,000,000 8,078,879
Series 1991-169, Cl. PK, 8%, 10/25/21 595,000 594,637
- ------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 218, Cl. 2, 7.50%, 4/25/23(1) 5,900,129 2,102,843
Trust 222, Cl. 2, 7%, 6/25/23(1) 67,937,606 24,181,542
Trust 257, Cl. 2, 7%, 2/25/24(1) 13,371,689 4,893,203
- ------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed
Security, Trust 148, Cl. G, Zero Coupon, 8/25/23(2) 8,891,258 3,734,329
- ------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., STRIPS, Series G, Cl. 2, 11.50%, 3/1/09 3,191,271 3,548,794
------------
168,415,169
- ------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--20.8%
Government National Mortgage Assn.:
10.50%, 1/15/16-7/15/19 4,164,994 4,594,536
11%, 2/15/98-2/15/01 1,913,436 2,028,961
11.50%, 1/15/13-5/15/13 1,291,378 1,427,293
11.75%, 1/15/14(3) 960,892 1,050,976
13%, 2/15/11-9/15/14 108,806 124,885
7.50%, 4/1/25-5/1/25(3) 40,000,000 40,837,501
8%, 9/15/07-7/15/23 1,534,966 1,534,104
8.50%, 9/15/21-12/15/24 17,240,088 17,521,593
9%, 11/15/16 3,119,397 3,244,391
9.50%, 9/15/17 219,521 231,038
------------
72,595,278
------------
Total Mortgage-Backed Obligations (Cost $242,609,770) 241,010,447
</TABLE>
6 Oppenheimer Limited-Term Government Fund
<PAGE> 7
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
============================================================================================================
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--39.4%
- ------------------------------------------------------------------------------------------------------------
TREASURY--39.4%
U.S. Treasury Bonds, 11.625%, 11/15/02 $ 2,000,000 $ 2,515,000
U.S. Treasury Bonds, 8.125%, 8/15/19 3,933,000 4,170,207
U.S. Treasury Nts.:
10.50%, 8/15/95 3,000,000 3,046,875
7.625%, 5/31/96 19,300,000 19,517,125
8%, 10/15/96 8,240,000 8,394,500
8.25%, 7/15/98 5,000,000 5,187,500
8.50%, 4/15/97 10,500,000 10,837,962
8.875%, 11/15/97 11,500,000 12,039,063
9.25%, 1/15/96 32,505,000 33,185,554
9.375%, 4/15/96(4) 37,797,000 38,848,246
------------
Total U.S. Government Obligations (Cost $139,698,430) 137,742,032
</TABLE>
<TABLE>
<CAPTION>
SHARES
============================================================================================================
<S> <C> <C>
PUT OPTIONS PURCHASED--0.0%
- ------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., 6.50% (Cost $51,563) 20,000 9,375
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT
============================================================================================================
<S> <C> <C>
REPURCHASE AGREEMENTS--1.0%
Repurchase agreement with First Chicago Capital Markets,
6.25%, dated 3/31/95, to be repurchased at $3,501,823 on 4/3/95,
collateralized by U.S. Treasury Nts., 7.25%, 11/30/96, with a
value of $3,573,930 (Cost $3,500,000) $ 3,500,000 3,500,000
- ------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $385,859,763) 109.5% 382,261,854
- ------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (9.5) (33,306,491)
----------- ------------
NET ASSETS 100.0% $348,955,363
=========== ============
</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).
2. 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.
3. When-issued security to be delivered and settled after March 31, 1995.
4. Securities with an aggregate market value of $421,403 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts, as follows:
<TABLE>
<CAPTION>
NUMBER OF
TYPE OF CONTRACT CONTRACTS FACE AMOUNT
- --------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Nts., 6/95 403 $40,300,000
</TABLE>
The market value of the open contracts was $41,571,969 at March 31, 1995, with a
net unrealized loss of $156,281.
See accompanying Notes to Financial Statements.
7 Oppenheimer Limited-Term Government Fund
<PAGE> 8
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES March 31, 1995 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
============================================================================================================
<S> <C>
ASSETS
Investments, at value (cost $385,859,763)--see accompanying statement $382,261,854
- ------------------------------------------------------------------------------------------------------------
Cash 215,366
- ------------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 20,738,693
Interest and principal paydowns 5,761,365
Shares of beneficial interest sold 3,404,991
Receivable for daily variation on futures contracts 68,462
- ------------------------------------------------------------------------------------------------------------
Other 44,969
------------
Total assets 412,495,700
============================================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased 61,598,458
Shares of beneficial interest redeemed 1,089,849
Dividends 584,209
Distribution and service plan fees--Note 4 192,707
Transfer and shareholder servicing agent fees--Note 4 3,785
Trustees' fees 139
Other 71,190
------------
Total liabilities 63,540,337
============================================================================================================
NET ASSETS $348,955,363
============
============================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $360,107,511
- ------------------------------------------------------------------------------------------------------------
Undistributed net investment income 421,286
- ------------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment transactions (7,819,244)
- ------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments--Note 3 (3,754,190)
------------
Net assets $348,955,363
============
============================================================================================================
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $274,872,477 and 26,366,128 shares of beneficial interest outstanding) $10.43
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $10.81
- ------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $72,130,147 and 6,917,484 shares of beneficial interest outstanding) $10.43
- ------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $1,952,739 and 187,455 shares of beneficial interest outstanding) $10.42
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Limited-Term Government Fund
<PAGE> 9
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Six Months Ended March 31, 1995 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
============================================================================================================
<S> <C>
INVESTMENT INCOME
Interest $12,852,786
============================================================================================================
EXPENSES
Management fees--Note 4 694,013
- ------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 294,152
Class B--Note 4 262,746
Class C--Note 4 1,388
- ------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 165,222
- ------------------------------------------------------------------------------------------------------------
Shareholder reports 37,306
- ------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 27,441
- ------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 1,478
Class B 12,837
Class C 34
- ------------------------------------------------------------------------------------------------------------
Legal and auditing fees 10,367
- ------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 227
- ------------------------------------------------------------------------------------------------------------
Other 7,358
-----------
Total expenses 1,514,569
============================================================================================================
NET INVESTMENT INCOME 11,338,217
============================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND OPTIONS WRITTEN
Net realized gain on:
Investments (1,466,570)
Closing of futures contracts 300,141
Closing of options written (95,325)
-----------
Net realized loss (1,261,754)
- ------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 1,991,335
-----------
Net realized and unrealized gain on investments and options written 729,581
============================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $12,067,798
===========
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Limited-Term Government Fund
<PAGE> 10
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1995 SEPTEMBER 30,
(UNAUDITED) 1994
==================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 11,338,217 $ 13,788,048
- ------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and options written (1,261,754) 787,066
- ------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 1,991,335 (12,973,109)
------------ ------------
Net increase in net assets resulting from operations 12,067,798 1,602,005
==================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A ($.379 and $.709 per share, respectively) (9,070,381) (12,491,113)
Class B ($.344 and $.62 per share, respectively) (1,730,732) (900,631)
Class C ($.10 per share) (8,276) --
- ------------------------------------------------------------------------------------------------------------------
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 TRANSACTIONS
Net increase in net assets resulting from Class A beneficial
interest transactions--Note 2 46,078,914 60,069,439
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B beneficial
interest transactions--Note 2 32,933,453 34,737,604
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class C beneficial
interest transactions--Note 2 1,948,930 --
==================================================================================================================
NET ASSETS
Total increase 82,219,706 82,714,736
- ------------------------------------------------------------------------------------------------------------------
Beginning of period 266,735,657 184,020,921
------------ ------------
End of period [including undistributed (overdistributed)
net investment income of $421,286 and ($107,542), respectively] $348,955,363 $266,735,657
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Limited-Term Government Fund
<PAGE> 11
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------
SIX MONTHS
ENDED
MARCH 31,
1995 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1994 1993 1992 1991 1990(3)
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.40 $11.04 $10.97 $10.75 $10.18 $10.17
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .40 .72 .73 .81 .87 .89
Net realized and unrealized gain (loss)
on investments and options written .01 (.64) .07 .22 .57 .01
-------- -------- -------- -------- -------- --------
Total income (loss) from investment
operations .41 .08 .80 1.03 1.44 .90
- ---------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (.38) (.71) (.73) (.81) (.87) (.89)
Dividends in excess of net
investment income -- --(4) -- -- -- --
Tax return of capital distribution -- (.01) -- -- -- --
-------- -------- -------- -------- -------- --------
Total dividends and distributions
to shareholders (.38) (.72) (.73) (.81) (.87) (.89)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.43 $10.40 $11.04 $10.97 $10.75 $10.18
======== ======== ======== ======== ======== ========
=====================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 4.01% .74% 7.61% 9.88% 14.69% 9.15%
=====================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $274,872 $227,858 $178,944 $158,068 $167,974 $213,391
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $248,389 $190,829 $161,318 $160,830 $192,404 $218,528
- ---------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 26,366 21,906 16,206 14,416 15,624 20,964
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.70%(6) 6.74% 6.70% 7.44% 8.27% 8.77%
Expenses .86%(6) .99% 1.02% .97% .98% .90%
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 102% 226% 74% 154% 112% 60%
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
------------------------------------- -----------
Six Months Period
Ended Year Ended
March 31, Ended March 31,
1995 Sept. 30, 1995(1)
(Unaudited) 1994 1993(2) (Unaudited)
=====================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.41 $11.06 $10.96 $10.32
- -----------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .36 .62 .23 .10
Net realized and unrealized gain (loss)
on investments and options written -- (.64) .10 .10
------- ------- ------ ------
Total income (loss) from investment
operations .36 (.02) .33 .20
- -----------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (.34) (.62) (.23) (.10)
Dividends in excess of net
investment income -- --(4) -- --
Tax return of capital distribution -- (.01) -- --
------- ------- ------ ------
Total dividends and distributions
to shareholders (.34) (.63) (.23) (.10)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $10.43 $10.41 $11.06 $10.42
======= ======= ====== ======
=====================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 3.56% (.17)% 3.02% 1.97%
=====================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $72,130 $38,877 $5,077 $1,953
- -----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $52,779 $15,801 $2,561 $ 861
- -----------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 6,917 3,734 459 187
- -----------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.84%(6) 5.91% 4.81%(6) 6.09%(6)
Expenses 1.68%(6) 1.79% 1.87%(6) 1.62%(6)
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 102% 226% 74% 102%
</TABLE>
1. For the period from February 1, 1995 (inception of offering) to March 31,
1995.
2. For the period from May 3, 1993 (inception of offering) to September 30,
1993.
3. On April 7, 1990, Oppenheimer Management Corporation became the investment
advisor to the Fund.
4. Less than $.001 per share.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
6. Annualized.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the six
months ended March 31, 1995 were $109,348,621 and $76,299,622, respectively.
See accompanying Notes to Financial Statements.
11 Oppenheimer Limited-Term Government Fund
<PAGE> 12
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- -------------------------------------------------------------------------------
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 advisor is Oppenheimer
Management Corporation (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
asked price or the last sale price on the prior trading day. Long-term and
short-term ''non-money market'' debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Such securities which cannot
be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or 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. Forward contracts are valued based on the closing
prices of the forward currency contract rates in the London foreign exchange
markets on a daily basis as provided by a reliable bank or dealer. Options are
valued based upon the last sale price on the principal exchange on which the
option is traded or, in the absence of any transactions that day, the value is
based upon the last sale price on the prior trading date if it is within the
spread between the closing bid and asked prices. If the last sale price is
outside the spread, the closing bid or asked price closest to the last
reported sale price is used.
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
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. 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.
- -------------------------------------------------------------------------------
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.
12 Oppenheimer Limited-Term Government Fund
<PAGE> 13
===============================================================================
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>
SIX MONTHS ENDED MARCH 31, 1995(1) YEAR ENDED SEPTEMBER 30, 1994
---------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 8,523,018 $88,061,524 11,073,786 $117,379,950
Dividends reinvested 631,491 6,531,231 817,206 8,727,397
Redeemed (4,694,409) (48,513,841) (6,191,329) (66,037,908)
---------- ----------- ---------- ------------
Net increase 4,460,100 $46,078,914 5,699,663 $ 60,069,439
========== =========== ========== ============
- -------------------------------------------------------------------------------------------
Class B:
Sold 3,841,229 $39,730,443 3,707,813 $ 39,327,532
Dividends reinvested 116,445 1,205,459 68,487 725,648
Redeemed (774,305) (8,002,449) (501,397) (5,315,576)
---------- ----------- ---------- ------------
Net increase 3,183,369 $32,933,453 3,274,903 $ 34,737,604
========== =========== ========== ============
- -------------------------------------------------------------------------------------------
Class C:
Sold 186,711 $ 1,941,181 -- $ --
Dividends reinvested 769 8,014 -- --
Redeemed (25) (265) -- --
---------- ----------- ---------- ------------
Net increase 187,455 $ 1,948,930 -- $ --
========== =========== ========== ============
</TABLE>
1. For the six months ended March 31, 1995 for Class A and Class B shares and
for the period from February 1, 1995 (inception of offering) to March 31, 1995
for Class C shares.
===============================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At March 31, 1995, net unrealized depreciation on investments of $3,754,190 was
composed of gross appreciation of $4,001,595, and gross depreciation of
$7,755,785.
===============================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for an annual fee of .50% on the
first $100 million of net assets, .45% on the next $150 million, .425% on the
next $250 million and .40% on net assets in excess of $500 million. The Manager
has agreed to reimburse the Fund if aggregate expenses (with specified
exceptions) exceed the most stringent state 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 six months ended March 31, 1995, commissions (sales charges paid by
investors) on sales of Class A shares totaled $882,227, of which $258,589 was
retained by Oppenheimer Funds 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 shares
totaled $856,585, of which $62,265 was paid to an affiliated broker/dealer.
Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class C
shares totaled $17,357, of which $752 was paid to an affiliated broker/dealer.
During the six months ended March 31, 1995, OFDI received contingent deferred
sales charges of $69,808 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 institutions. In
addition, Class B and Class C shares are subject to an asset-based sales charge
of .75% of net assets annually, to reimburse OFDI for sales commissions paid
from its own resources at the time of sale and associated financing costs. In
the event of termination or discontinuance of the Class B or Class C plan, the
Board of Trustees may allow the Fund to continue payment of the asset-based
sales charge to OFDI for distribution expenses incurred on Class B or Class C
shares sold prior to termination or discontinuance of the plan. During the six
months ended March 31, 1995, OFDI paid $9,480 and $1,541, respectively, to an
affiliated broker/dealer as reimbursement for Class A and Class B personal
service and maintenance expenses and retained $251,086 and $1,388, respectively,
as reimbursement for Class B and Class C sales commissions and service fee
advances, as well as financing costs.
13 Oppenheimer Limited-Term Government Fund
<PAGE> 14
- -------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- -------------------------------------------------------------------------------
5. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write covered call options
onportfolio 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. Shares subject to call, expiration date, exercise
price, premium received and market value are detailed in a footnote to the
Statement of Investments. Options written are reported as a liability in the
Statement of Assets and Liabilities. Gains and losses are reported in the
Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may
incur a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market
does not exist.
Written option activity for the six months ended March 31, 1995, was as
follows:
<TABLE>
<CAPTION>
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
- ----------------------------------------------------------------------------
<S> <C> <C>
Put Option Activity
Options outstanding at September 30, 1994 60,000 $121,875
Options written -- --
Options expired prior to exercise -- --
Options closed (60,000) (121,875)
------- --------
Options outstanding at March 31, 1995 -- --
======= ========
</TABLE>
===============================================================================
6. FUTURES CONTRACTS
The Fund may buy andsell futures contracts in order to gain exposure to or
protect against changes in interest rates. The Fund may also buy or write put
or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities. The Fund will segregate
assets to cover its commitments under futures contracts.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or expires.
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 March 31, 1995, the Fund had outstanding futures contracts to sell debt
securities as follows:
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF VALUATION AS OF UNREALIZED
SECURITY DATE FUTURES CONTRACTS MARCH 31, 1995 DEPRECIATION
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Nts. 6/95 403 $41,571,969 $(156,281)
</TABLE>
14 Oppenheimer Limited-Term Government Fund
<PAGE> 15
- -------------------------------------------------------------------------------
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
- -------------------------------------------------------------------------------
===============================================================================
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 SERVICING AGENT
Oppenheimer Shareholder Services
===============================================================================
CUSTODIAN OF PORTFOLIO SECURITIES
Citibank, N.A.
===============================================================================
INDEPENDENT AUDITORS
Deloitte & Touche LLP
===============================================================================
LEGAL COUNSEL
Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein have been taken from the records of the
Fund without examination by the independent auditors. 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.
15 Oppenheimer Limited-Term Government Fund
<PAGE> 16
===============================================================================
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-8 p.m. ET
Saturday 10 a.m.-2 p.m. ET
1-800-525-7048
TELEPHONE TRANSACTIONS
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-852-8457
PHONELINK
24 hours a day, automated
information and transactions
1-800-533-3310
TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-843-4461
OPPENHEIMERFUNDS
INFORMATION HOTLINE
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
RS0855.001.0595 May 31, 1995
"How may I help you?"
As an OppenheimerFunds shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your OppenheimerFunds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get auto-mated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
[PHOTO]
Jennifer Leonard, Customer Service Representative
Oppenheimer Shareholder Services
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the OppenheimerFunds' transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
- -------------------------------------------------------------------------------
[LOGO] OPPENHEIMERFUNDS(R)
----------------
Oppenheimer Funds Distributor, Inc. Bulk Rate
P.O. Box 5270 U.S. Postage
Denver, CO 80217-5270 PAID
Permit No. 11
Philadelphia, PA
----------------
