OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
Supplement dated January 3, 1995 to the
Prospectus dated May 1, 1994, Revised August 4, 1994
The Prospectus is amended as follows:
1. The section entitled "At What Price Are Shares Sold?" on page 13
is amended by revising the second sentences to read as follows: "In most
cases, to enable you to receive that day's offering price, the Distributor
must receive your order by the time of day The New York Stock Exchange
closes, which is normally 4:00 P.M., New York time, but may be earlier on
some days (all references to time in this Prospectus mean 'New York
time')."
. . . "If you buy shares through a dealer, the dealer must receive your
order by the close of The New York Stock Exchange on a regular business
day and transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M."
2. The following paragraph is added under the Class A sales charge
table on page 14:
In addition to paying dealers the regular commission for sales
of Class A shares stated in the sales charge table above and the
commission for sales of Class B shares described in
"Distribution and Service Plan for Class B Shares" on page 17
below, the Distributor will pay the following additional
commission for shares of the Fund sold in "qualifying
transactions" from January 16, 1995, through April 17, 1995: (1)
.75% of the offering price of Class A shares and (2) .50% of the
offering price of Class B shares sold by a registered
representative of a participating broker or dealer or a sales
representative of a participating financial institution that has
a sales agreement with the Distributor. "Qualifying
transactions" are sales in the amount of $150,000 or more
(calculated at offering price) of Class A and/or Class B shares
(if available) of any one or more of the following
OppenheimerFunds: the Fund, Oppenheimer Main Street Income &
Growth Fund, Oppenheimer Champion High Yield Fund, Oppenheimer
Global Fund, Oppenheimer Total Return Fund, Inc., Oppenheimer
High Yield Fund, and Oppenheimer Strategic Income Fund.
"Qualifying transactions" do not include sales of Class A shares
(a) at net asset value without sales charge, (b) subject to a
contingent deferred sales charge, or (c) intended but not yet
transacted under a Letter of Intent.
3. The section entitled "Selling Shares by Telephone" is amended by
revising the second sentence of the first paragraph starting on page 19
to read as follows: "To receive the redemption price on a regular business
day, your call must be received by the Transfer Agent by the close of The
New York Stock Exchange that day, which is normally 4:00 P.M., but may be
earlier on some days."
4. The section entitled "How To Exchange Shares" is amended by
revising the first sentence in the first "bulleted" paragraph following
"Telephone Exchange Requests" on page 21 to read as follows: "Shares are
normally redeemed from one fund and purchased from the other fund in the
exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that is in proper form by the
close of The New York Stock Exchange that day, which is normally 4:00 P.M.
but may be earlier on some days."
5. The first sentence of the section entitled "Net Asset Value Per
Share" under "Shareholder Account Rules and Policies" on page 21 is
revised to read as follows: "Net Asset Value Per Share is determined for
each class of shares as of the close of The New York Stock Exchange on
each regular business day by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class that are
outstanding."
6. The first sentence of the second paragraph under the heading
"Comparing the Fund's Performance to the Market" on page 12 is revised to
read as follows:
The Fund's performance is compared to the performance of the
Lehman Brothers U.S. Government Bond Index, a broadly-based,
unmanaged index of U.S. Government securities, including
Treasury securities and government agency securities, which is
widely used to measure the performance of the Government
securities market.
January 3, 1995
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OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
Supplement Dated January 3, 1995
to the Statement of Additional Information
dated May 1, 1994
The Statement of Additional Information is revised as follows:
1. The supplement dated August 4, 1994 to the Statement of Additional
Information is replaced by this supplement.
2. The fourth paragraph on page 2 is replaced by the following:
Under normal circumstances, the Fund anticipates that it will
maintain a dollar-weighted average portfolio effective duration
of not more than three years. Subject to that limitation, the
Fund may invest in individual debt obligations of any maturity
or duration. The Manager will in good faith determine the
effective duration of debt obligations purchased by the Fund and
will consider various factors applicable to each type of debt
obligation, including those set forth below. Duration
incorporates a bond's yield, coupon interest payments, final
maturity and call features into one measure. For generic fixed-
income securities, duration is calculated as the average time
of present-value-weighted cash flows divided by a small
adjustment factor, pursuant to a calculation known as modified
Macaulay duration. Thus, for any generic fixed-income security
with interest payments occurring prior to the payment of
principal, duration is also less than maturity. Also, all other
factors being equal, the lower the stated or coupon rate of
interest of a fixed-income security, the longer the duration of
the security; conversely, the higher the stated or coupon rate
of interest of a fixed-income security, the shorter the duration
of the security.
Futures, options and options on futures have durations which,
in general, are closely related to the duration of the
securities which underlie them. Holding long futures or call
option positions (backed by segregated liquid assets) will
lengthen the portfolio's duration. There are some situations,
however, where the standard modified Macaulay duration
calculation does not properly reflect the interest rate exposure
of a security. For example, the interest rate exposure is not
properly captured by modified Macaulay duration in the case of
mortgage pass-though securities. The stated final maturity of
such securities is generally 30 years, but changes in prepayment
rates are more critical in determining the securities' price
exposure to interest rates. Indeed, the modified Macaulay
calculation even falls short in calculating the price
sensitivity of callable bonds to interest rates. In these and
other similar situations, the Manager will use more
sophisticated analytical techniques that incorporate the
economic life of a security as well as relevant macroeconomic
factors (e.g., mortgage prepayment rates) into the determination
of the Fund's effective duration.
3. The first sentence of the first paragraph of the section
entitled "Determination of Net Asset Value Per Share" on page 26 is
amended to read as follows, and a new second sentence is added to that
paragraph as follows: "The net asset values per share of Class A and Class
B shares of the Fund are determined as of the close of business of The New
York Stock Exchange on each day that the Exchange is open by dividing the
Fund's net assets attributable to a class by the number of shares of that
class that are outstanding. The Exchange normally closes at 4:00 P.M.,
New York time, but may close earlier on some days (for example, in case
of weather emergencies or on days falling before a holiday)."
Additionally, the existing third sentence of that paragraph is revised to
read as follows: "Trading may occur in U.S. Government Securities at times
when The New York Stock Exchange is closed (including weekends and
holidays or after the close of the Exchange on a regular business day)."
4. The final sentence beginning on page 35 under "How To Exchange
Shares" is revised to read as follows:
However, when Class A shares acquired by exchange of Class A
shares purchased subject to a Class A CDSC are redeemed within
18 months of the end of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A CDSC is
imposed on the redeemed shares (see "Class A Contingent Deferred
Sales Charge" in the Prospectus), and the Class B CDSC is
imposed on Class B shares redeemed within five years of the
initial purchase of the exchanged Class B shares.
January 3, 1995
