--------------------------------------
Semiannual Report March 31, 1998
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OPPENHEIMER
Limited-Term
Government
Fund
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[LOGO]
OppenheimerFunds(SM)
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 Fund Performance
6 An Interview
with the Fund's
Manager
10 Statement of
Investments
14 Statement of
Assets and
Liabilities
16 Statement of
Operations
17 Statements of
Changes in
Net Assets
18 Financial Highlights
21 Notes to Financial
Statements
29 Officers and
Trustees
32 Information and
Services
Report highlights
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o 4-star Morningstar: The Fund's Class A shares have maintained an overall
4-star Morningstar ranking for the combined 3-, 5- and 10-year periods ended
March 31, 1998, among 1,403 (3-year), 831 (5-year), and 329 (10-year)
fixed-income funds.(1)
o Despite continued strength in the U.S. economy, inflation has remained low,
which has helped keep interest rates down.
o The Fund was well-positioned to benefit from low interest rates. To earn the
highest yields, we increased the Fund's percentage of U.S. Treasury bond
holdings and reduced our percentage of mortgage-backed securities.
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Cumulative Total Returns
- ---------------------------------------
For the 6-Month Period
Ended 3/31/98
Class A
Without With
Sales Chg.(2) Sales Chg.(3)
- ---------------------------------------
3.21% (0.41)%
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Class B
Without With
Sales Chg.(2) Sales Chg.(3)
- ---------------------------------------
2.83% (1.16)%
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Class C
Without With
Sales Chg.(2) Sales Chg.(3)
- ---------------------------------------
2.73% 1.74%
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Class Y
Without Since
Sales Chg.(2) Inception
- ---------------------------------------
N/A% 0.75%
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Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
In reviewing performance and rankings, please remember that past performance
does not guarantee future results. Investment return and principal value of 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.
1. Source: Morningstar, Inc., 3/31/98. Morningstar, Inc. ranks mutual funds
in broad investment classes, based on risk-adjusted returns after considering
sales charges and expenses. Return and risk are measured as performance above
and below the 90-day U.S. Treasury bill returns, respectively. Overall star
ranking is subject to change monthly. Top 10% are ranked 5 stars, next 22.5% are
4 stars, middle 35% are 3 stars, next 22.5% are 2 stars and bottom 10% are 1
star.
2. Includes changes in net asset value per share without deducting any sales
charges. This performance is not annualized.
3. Class A return includes the current maximum initial sales charge of 3.50%.
Class B return includes the applicable contingent deferred sales charge of 4%.
Class C return includes the contingent deferred sales charge of 1%. Class Y
shares have an inception date of 1/26/98 and are not available for sale to
individual investors. An explanation of the different performance calculations
is in the Fund's prospectus. Class B and C shares are subject to an annual 0.75%
asset-based sales charge.
2 Oppenheimer Limited-Term Government Fund
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James C. Swain
Chairman
Oppenheimer
International Bond Fund
[PHOTO OMITTED]
Bridget A. Macaskill
President
Oppenheimer
International Bond Fund
Dear shareholder,
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These have been very positive times for many American investors. The U.S.
economy has continued to grow at a moderate pace, unemployment has fallen to its
lowest level in 30 years and inflation has also fallen to a record low. In fact,
long-term interest rates have fallen to their lowest level since the government
began issuing 30-year Treasury bonds in 1977.
What benefits does this provide to the average American? First, when
unemployment levels are low, many individuals tend to feel a greater sense of
job security and can command higher wages because there are fewer unemployed
workers vying for their jobs. Second, many homeowners are opting to refinance
their existing home mortgage loans and take advantage of lower financing rates.
And third, because wages are increasing faster than the rate of inflation, a
paycheck may stretch farther and investors, as consumers, are able to enjoy a
higher level of disposable income. This extra income can be put to use in many
ways, including allocating more money to investment opportunities.
Some industry analysts have tempered such positive news by suggesting that
if the rate of inflation falls any lower, it might actually trigger a period of
deflation, where we see the prices of American goods and services decline. While
lower prices may sound like positive news, in reality it isn't: When prices fall
too low, it erodes the value of those goods to the producer. That is, when
economic conditions force a decrease in the price of goods, companies have to
sell more of those items in order to make the same amount of profit, which
translates into greater difficulties for corporations to improve their bottom
lines.
At OppenheimerFunds, we do not believe we will see a period of deflation
in the United States. The fundamental factors that have driven the U.S. market
still appear to be in place: an economy that's in its eighth year of expansion
with moderate growth, low unemployment, virtually no inflation and low interest
rates. However, because of economic uncertainties in other parts of the world,
particularly Asia, we expect to see slower growth for stocks in 1998 and a year
in which double-digit returns from the equity markets are unlikely. It's also
possible that we may see investors favor the fixed, more secure interest
payments offered from the bond markets.
In closing, we'd like to reassure you that as professional money managers,
we continue to keep a watchful eye on these situations and are closely
monitoring your fund's investments. In times like these, your financial advisor
can be of invaluable assistance to you in helping review your financial plan and
guide your investments accordingly.
Thank you for your confidence in OppenheimerFunds, The Right Way to
Invest. We look forward to helping you reach your investment goals in the
future.
/s/ James C. Swain /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
April 21, 1998
3 Oppenheimer Limited-Term Government Fund
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Avg Annual Total Returns
- ---------------------------------------
For the Periods Ended 3/31/98(1)
Class A
1 year 5 year 10 year
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4.23% 5.13% 7.52%
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Class B
Since
1 year 5 year Inception
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3.22% N/A 4.76%
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Class C
Since
1 year 5 year Inception
- ---------------------------------------
6.12% N/A 6.26%
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Class Y
Since
1 year 5 year Inception
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N/A N/A 0.75%
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Cumulative Total Return
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For the Period Ended 3/31/98(1)
Class A
5 year
- ---------------------------------------
28.41% $12,840(4)
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Performance update
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Oppenheimer Limited-Term Government Fund posted competitive returns for the
period largely due to its reduced position in mortgage-backed securities. The
Fund's Class A shares provided an average annual total return of 8.01%, without
sales charges, for the one-year period ended March 31, 1998.2 This performance
beat the average 7.95% total return for the same period provided by the Fund's
competitors in the short- to intermediate-term U.S. government category as
ranked by Lipper Analytical Services.(3)
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[The information below was represented by a line graph in the printed
materials.]
Oppenheimer Ltd Trm Gvt/A
Unit Value Base: Q1 93 = $10,000.00
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Q1 Q2 Q3 Q4
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93 $10,000.00 $10,259.86 $10,429.96 $10,484.76
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94 $10,518.99 $10,433.88 $10,507.63 $10,534.70
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95 $10,929.15 $11,157.13 $11,351.29 $11,633.35
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96 $11,669.19 $11,763.64 $11,979.71 $12,201.15
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97 $12,319.31 $12,634.58 $12,880.85 $13,131.54
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98 $13,307.18 -- -- --
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Lehman Bros Govt $TR
Unit Value Base: Q1 93 = $10,000.00
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Q1 Q2 Q3 Q4
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93 $10,000.00 $10,289.38 $10,623,21 $10,587.41
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94 $10,268.57 $10,150.80 $10.193.86 $10,230.41
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95 $10,711.80 $11,376.40 $11,577.00 $12,105.81
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96 $11,832.16 $11,887.85 $12,088.75 $12,441.46
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97 $12,340.40 $12,768.19 $13,196.29 $13,634.39
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98 $13,839.90 -- -- --
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1.Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Class A returns include the current maximum initial sales charge of 3.50%. Class
A shares were first publicly offered on 3/10/86. The Fund's maximum sales charge
for Class A shares was higher prior to 2/23/94, so actual performance may have
been lower. Class B returns include the applicable contingent deferred sales
charge of 4% (1-year) and 2% (since inception on 5/3/93). Class C returns for
the one-year result include the contingent deferred sales charge of 1%. Class C
shares have been available since 2/1/95. Class Y shares have an inception date
of 1/26/98 and are not available for sale to individual investors. An
explanation of the different performance calculations is in the Fund's
prospectus. Class B and C shares are subject to an annual 0.75% asset-based
sales charge. 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.
2. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
4 Oppenheimer Limited-Term Government Fund
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Standardized Yields(5)
- ---------------------------------------
For the 30 Days Ended 3/31/98
Class A
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5.00%
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Class B
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4.42%
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Class C
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4.42%
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Class Y
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5.55%
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Asset Allocation(7)
[GRAPHIC OMITTED]
[The following information was represented by a pie chart in the printed
materials.]
o Bonds 98.3%
o Cash Equivalents 1.7
Portfolio review
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Oppenheimer Limited-Term Government Fund is for investors looking for income and
safety of principal from a short duration bond portfolio.(6)
What We Look For
o Sectors of the government debt market that offer relative value.
o High income potential to help cushion against volatility.
o Diversification among different types of government securities, such as Fannie
Maes, Ginnie Maes, and U.S. Treasuries.
o Securities that are less sensitive to changes in interest rates.
Top 5 Holdings by Issuer
(Percentage of invested assets)(7)
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U.S. Notes & Bonds 52.6%
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Federal National Mortgage Assn. 27.8%
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Federal Home Loan Mortgage Corp. 11.0%
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Government National Mortgage Assn. 6.9%
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Repurchase Agreement 1.7%
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3. Source: Lipper Analytical Services, Inc., 3/31/98. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. The Fund's Class A shares were ranked 49 of 97 (1-year), 5 of 44
(5-year) and 1 of 13 (10-year) among short- to intermediate-term U.S.
Government funds for the periods ended 3/31/98.
4. Results of a hypothetical $10,000 investment in Class A shares on March
31,1993. Lehman Government Bond Index includes a broad range of government
bonds. It is an unmanaged index, including reinvestment of income, and cannot be
purchased directly by investors.
5. Standardized yield is based on net investment income for the 30-day period
ended 3/31/98. Falling net asset values will tend to artificially raise yields.
6. The Fund may be more volatile than certain short-term investments and may not
have the return potential of longer-term investments.
7. Portfolio data is as of 3/31/98, and is subject to change. Portfolio data is
dollar-weighted based on total market value of investments.
5 Oppenheimer Limited-Term Government Fund
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"Given our investment strategy, the Fund was well-positioned to benefit from
prevailing low interest rates."
An interview with your Fund's manager
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How did the Fund perform during the period?
Oppenheimer Limited-Term Government Fund's Class A shares provided a cumulative
total return of 3.21% without sales charges, for the six-month period ended
March 31, 1998.(1)
As of March 31, 1998, the monthly dividend payment on the Fund's Class A
shares has been slightly reduced, by 20 basis points, to approximately $0.0579
per share from its former rate of $0.0597 per share. The reason for this
adjustment is the moderate-growth, low-inflation economy the U.S. has been
enjoying: While favorable economic conditions have generated attractive prices
for U.S. government bond investments, they have also produced steep declines in
yields over the past 12 months. We plan to monitor Oppenheimer Limited-Term
Government Fund's dividend closely and consider adjustments biannually, to accom
modate changing market conditions.
What were the main influences on the market for U.S. government securities?
The Asian financial and economic crisis was the primary influence on the market
for U.S. government securities. The Asian crisis, which surfaced in late October
1997, caused turmoil in world stock markets. Many investors began to worry that
the bottom would fall out of the U.S. stock market, so they switched out of
stocks and into bonds as a "safe haven." Because of the widespread move out of
stocks and into bonds, bond prices rose. The increase in bond purchases caused
interest rates, which move in the opposite direction from bond prices, to fall.
1. lncludes changes in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
6 Oppenheimer Limited-Term Government Fund
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[PHOTO OMITTED]
Portfolio Management
Team (l to r)
Jerry Webman
(Portfolio Manager)
Gina Palmieri
Leslie Falconio
On January 12, 1998, the interest rate on 30-year Treasury bonds dipped to
5.69%, its lowest level since 30-year Treasuries began to be sold regularly in
1977.
Also influencing the market was the domestic economy, which showed no
signs of increasing inflation despite continued strong growth and low
unemployment. Historically, low unemployment has triggered higher inflation. The
reason is that in a "tight" labor market, companies compete for workers by
raising wages, then pass the cost on to consumers--resulting in higher prices,
and thus higher inflation. But, although wages have begun to rise, their cost is
being offset by lower prices on imported Asian goods and lower energy prices.
The net result is that inflation is still under control. Therefore, the economic
environment for U.S. government securities remains quite favorable.
Why is low inflation positive for the Fund?
With inflation currently so low, earning a 5.5% interest rate on a 10-year, U.S.
government-guaranteed Treasury bond is very attractive. Here's why: When you
subtract the current inflation rate from the interest rate on your bond, the
result is the real interest rate--that is, the interest rate without
inflation--that your bond is actually earning. A lower inflation number means a
higher real interest rate on your fixed-income investment.
7 Oppenheimer Limited-Term Government Fund
<PAGE>
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Mortgage-backed securities are pools of home mortgages that are securitized and
collateralized by government agencies, such as the Govern ment National Mort
gage Association (GNMA) and Federal National Mortgage Association (FNMA). GNMA
and FNMA are commonly referred to as Ginnie Mae and Fannie Mae, respectively.
An interview with your Fund's manager
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How did your strategy change over the period?
The most significant change in our strategy has been in the percentage of
mortgage-backed securities held by the Fund. Over the past few years, we've
generally maintained a substantial portion of the Fund--about 55%--in
mortgage-backed securities. These securities perform best when interest rates
are stable and do not appear likely to decline. That's because stable interest
rates reduce prepayment risk--the risk that homeowners will refinance their
mortgages when rates fall, which would return principal early to bondholders.
Prepayment risk is always higher when interest rates are falling.
The Fund began the past six-month period with a somewhat lower-than-normal
portion of mortgage-backed securities--about 52%--and a correspondingly higher
portion of U.S. Treasury bonds, primarily because we believed the impact of the
Asian crisis on the U.S. economy was imminent. Our concern was that slower
growth would compel the Federal Reserve to reignite the economy by lowering
interest rates--a scenario that would increase the prepayment risk for
mortgage-backed securities. As it turned out, the Fund was well-positioned to
benefit from prevailing low interest rates. In late January 1998, Asia's economy
and U.S. interest rates both began to stabilize. This created a more favorable
environment for mortgage-backed securities, so we began raising the Fund's
percentage of these securities again.
What changes have you made to the Fund's investments?
Within the Fund's mortgage-backed securities holdings, we have added securities
that we expect will be less vul nerable to prepayment risk. One example is
collateralized mortgage obligations (CMOs) structured to limit prepayment risk.
Owning diverse investments, such as CMOs,
8 Oppenheimer Limited-Term Government Fund
<PAGE>
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CMOs, Collateralized Mortgage Obligations, are also mortgage-backed securities,
but are bonds where the pools of home mortgages are separated into different
prepayment classes in order to provide varying levels of prepayment protection
in exchange for yield.
helps protect the Fund from the negative impact of any decrease in interest
rates. Within the Fund's U.S. Treasury holdings, we switched out of longer-term
into intermediate-term bonds, also as protection from interest-rate volatility.
What is your outlook for bond markets and the Fund?
The bond markets reflect Wall Street's view that the U.S. economy will soon
begin feeling the impact of Asia's crisis. The expectation is that the Federal
Reserve will hold interest rates, or even implement a rate cut. Consequently,
Treasury bond prices are up and interest rates are low. Over the next six
months, what remains to be seen is whether investors are overestimating or
underestimating the effect of Asia's problems on domestic growth. At
OppenheimerFunds, we believe Asia's problems will curtail U.S. economic growth
to a greater degree than most market observers expect. Furthermore, we now
believe Asia's impact will be felt later in 1998, rather than sooner. But
because investors are already factoring the effects of Asia into bond prices, we
do not expect yields on U.S. Treasury bonds to fall much further. However, we
will keep a close watch on economic indicators to gauge Asia's impact on U.S.
growth.
We will continue to take an active approach to managing the Fund by
strategically adjusting the percentage of U.S. Treasury bonds and
mortgage-backed securities as market conditions warrant. Within our holdings, we
plan to purchase U.S. Treasury bonds with maturities that offer the best
potential for price appreciation, and mortgage-backed securities that provide
opportunities for higher yield. Going forward, we will keep monitoring economic
and financial market developments, then reallocating investments when necessary.
We believe this active management style has helped the Fund perform well in
relation to its peers and is, in our view, The Right Way to Invest.
9 Oppenheimer Limited-Term Government Fund
<PAGE>
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Statement of Investments March 31, 1998 (Unaudited)
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<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
===========================================================================================
<S> <C> <C>
Mortgage-Backed Obligations--55.6%
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Government Agency--55.6%
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FHLMC/FNMA/Sponsored--47.2%
Federal Home Loan Mortgage Corp., Collateralized Mtg.
Obligations, Gtd. Multiclass Mtg. Participation Certificates:
Series 151, Cl. F, 9%, 5/15/21 $ 2,500,000 $ 2,698,807
Series 1065, Cl. H, 8.50%, 10/15/19 1,022,431 1,023,065
Series 1092, Cl. K, 8.50%, 6/15/21 5,000,000 5,445,019
Series 1097, Cl. L, 8.60%, 2/15/06 822,147 824,968
Series 1451, Cl. G, 7%, 9/15/06 2,442,000 2,482,856
Series 1455, Cl. J, 7.50%, 12/15/22 6,375,000 6,883,269
Series 1914, Cl. H, 6.50%, 8/15/24 2,500,000 2,452,325
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Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg.
Participation Certificates:
9.25%, 11/1/08 360,818 381,612
10%, 8/1/21 2,942,256 3,264,986
11.50%, 6/1/20 1,430,709 1,645,316
11.75%, 1/1/16 462,162 531,487
11.75%, 4/1/19 1,633,312 1,878,309
13%, 8/1/15 2,984,943 3,581,932
Series 1797, Cl. D, 6.17%, 7/15/08 5,000,000 4,932,800
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Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates:
Series 1603, Cl. J, 6.50%, 7/15/23 5,000,000 5,071,875
Series 1610, Cl. PM, 6.25%, 4/15/22 7,500,000 7,483,575
Series 1702-A, Cl. PD, 6.50%, 4/15/22 6,250,000 6,313,477
Series 1836, Cl. H, 6.50%, 9/15/24 5,000,000 5,037,500
Series 1914, Cl. G, 6.50%, 2/15/24 3,000,000 2,981,250
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Federal Home Loan Mortgage Corp., Interest-Only
Stripped Mtg.-Backed Security:
Series 164, Cl. A, 9.499%, 3/1/24(1) 11,785,646 3,517,279
Series 176, Cl. IO, 6.934%-8.296%, 6/1/26(1) 15,632,411 4,425,926
Series 177, Cl. B, 1.60%-9.715%, 1/1/24(1) 85,065,930 24,097,584
Series 194, Cl. IO, 6.50%, 7/1/26(1) 12,500,000 4,070,312
- -----------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Principal-Only
Stripped Mtg.-Backed Security:
Series 192, Cl. PO, 2.347%, 2/1/28(2) 12,456,907 8,579,695
Series 194, Cl. PO, 1.403%, 7/1/26(2) 12,500,000 8,322,266
Series 1690, Cl. B, 4.568%, 11/15/23(2) 4,730,402 2,696,329
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Federal National Mortgage Assn.:
6.50%, 5/1/13-4/1/28(3) 82,500,000 82,129,110
7%, 8/1/25-2/1/27 7,662,093 7,739,312
7%, 2/1/03-5/25/27(3) 80,790,000 81,575,690
7.50%, 6/1/25-8/1/25 9,095,206 9,330,046
</TABLE>
10 Oppenheimer Limited-Term Government Fund
<PAGE>
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<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
FHLMC/FNMA/Sponsored (continued)
Federal National Mortgage Assn.: (continued)
9%, 8/1/19 $ 577,513 $ 618,286
9.50%, 11/1/21 354,514 383,226
10.50%, 12/1/14 1,377,522 1,523,454
11%, 11/1/15-5/15/19 12,892,172 14,643,485
11.25%, 6/1/14 1,220,484 1,379,148
11.50%, 8/15/13 1,223,971 1,407,568
11.75%, 7/1/11-11/1/15 440,640 503,613
12%, 1/1/16-4/15/19 7,051,435 8,192,629
13%, 8/1/10-12/1/15 4,359,806 5,209,561
- -------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Trust 1992-34, Cl. G, 8%, 3/25/22 2,940,000 3,141,184
Trust 1992-51, Cl. H, 5%, 4/25/07 5,000,000 4,777,677
Trust 1992-188, Cl. PG, 6.65%, 1/25/17 4,000,000 4,028,720
- -------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates:
8%, 1/1/23 217,880 226,412
12.50%, 12/1/15 2,569,599 3,051,399
Trust 1990-18, Cl. K, 9.60%, 3/25/20 5,000,000 5,571,856
Trust 1991-169, Cl. PK, 8%, 10/25/21 595,000 626,791
Trust 1991-170, Cl. E, 8%, 12/25/06 2,500,000 2,616,160
Trust 1994-51, Cl. PH, 6.50%, 1/25/23 5,000,000 5,037,500
Trust 1996-64, Cl. PB, 6.50%, 1/18/19 1,500,000 1,509,797
Trust 1997-5, Cl. B, 7%, 9/18/17 4,000,000 4,032,480
Trust 1997-25, Cl. B, 7%, 12/18/22 3,420,000 3,473,742
Trust 1997-54, Cl. C, 6.50%, 9/18/24 5,000,000 4,928,125
Trust 1997-63, Cl. PC, 6.50%, 3/18/26 7,500,000 7,526,953
Trust G93-31, Cl. PN, 7%, 9/25/23 5,000,000 5,146,226
- -------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only
Stripped Mtg.-Backed Security:
Trust 276, Cl. 2, 11.338%-11.939%, 10/1/24(1) 25,912,237 7,793,916
Trust 292, Cl. 2, 11.121%, 12/1/24(1) 5,227,192 1,573,058
Trust 293, Cl. 2, 10.711%, 12/1/27(1) 9,811,403 2,952,619
Trust 294, Cl. 2, 8.672%, 2/1/28(1) 9,883,755 2,869,378
Trust 1997-9, Cl. H, 7.522%, 3/25/27(1) 10,000,000 4,212,500
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Federal National Mortgage Assn., Principal-Only
Stripped Mtg.-Backed Security:
Trust 277-C1, 26.424%, 4/1/27(2) 3,009,676 2,414,324
Trust 289-C1, 6.501%, 11/1/27(2) 12,176,799 9,026,052
Trust 1997-7, Cl. GA, 34.071%, 7/25/23(2) 2,980,588 2,080,823
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Federal National Mortgage Assn., STRIPS, Pass-Through Certificates,
Trust 6, Cl. IP, 11.50%, 3/1/09 1,798,614 2,049,845
------------
425,926,484
</TABLE>
11 Oppenheimer Limited-Term Government Fund
<PAGE>
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Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- -----------------------------------------------------------------------------------
<S> <C> <C>
GNMA/Guaranteed--8.4%
Government National Mortgage Assn.:
7%, 4/1/28(3) $ 29,725,000 $ 30,022,250
7.50%, 10/15/25-9/15/27 35,395,246 36,304,933
8%, 9/15/07 114,629 119,389
8.50%, 9/15/21 44,783 47,668
9.50%, 9/15/17 117,787 128,046
10.50%, 1/15/16-7/15/21 2,256,836 2,523,314
11%, 8/15/98-10/20/19 5,394,663 6,116,951
11.50%, 1/15/13-5/15/13 422,056 469,422
13%, 2/15/11-9/15/14 49,485 58,663
------------
75,790,636
------------
Total Mortgage-Backed Obligations (Cost $499,958,741) 501,717,120
===================================================================================
U.S. Government Obligations--64.1%
- -----------------------------------------------------------------------------------
U.S. Treasury Bonds:
8.125%, 8/15/19-8/15/21 4,903,000 6,180,131
STRIPS, 6.07%, 8/15/22(4) 24,000,000 5,573,976
- -----------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.50%, 2/15/08(5) 1,500,000 1,481,252
5.50%, 2/28/03 10,000,000 9,937,510
5.625%, 12/31/02 9,000,000 8,983,134
5.75%, 10/31/02-11/30/02 14,191,000 14,230,919
6.125%, 8/15/07 12,000,000 12,337,512
6.50%, 10/15/06 7,000,000 7,343,441
7.125%, 9/30/99 60,500,000 61,823,498
7.75%, 12/31/99-1/31/00 159,280,000 164,979,679
7.875%, 11/15/04 57,300,000 64,032,807
8.50%, 2/15/00 50,000,000 52,546,900
8.75%, 8/15/00 98,850,000 105,646,036
9.125%, 5/15/99 59,765,000 62,024,894
9.25%, 8/15/98 1,500,000 1,521,095
------------
Total U.S. Government Obligations (Cost $579,899,231) 578,642,784
</TABLE>
12 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Date Strike Contracts See Note 1
========================================================================================================
Call Options Purchased--0.0%
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. Treasury Bonds, 5.50%, 2/15/08 Call Opt.
(Cost $154,688) 4/98 99.68% 60,000 $ 32,812
<CAPTION>
Face
Amount
========================================================================================================
Repurchase Agreements--2.1%
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase agreement with J.P. Morgan Securities, Inc., 5.95%,
dated 3/31/98, to be repurchased at $18,803,107 on 4/1/98,
collateralized by U.S. Treasury Bonds, 8%-8.125%, 8/15/19-11/15/21,
with a value of $19,337,838 (Cost $18,800,000) $ 18,800,000 18,800,000
- --------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $1,098,812,660) 121.8% 1,099,192,716
- --------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (21.8) (196,447,526)
------------- ---------------
Net Assets 100.0% $ 902,745,190
============= ===============
</TABLE>
1. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
2. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
3. When-issued security to be delivered and settled after March 31, 1998.
4. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
5. Securities with an aggregate market value of $691,251 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
See accompanying Notes to Financial Statements.
13 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=========================================================================================
<S> <C>
Assets
Investments, at value (cost $1,098,812,660)--see accompanying statement $ 1,099,192,716
- -----------------------------------------------------------------------------------------
Cash 183,807
- -----------------------------------------------------------------------------------------
Receivables:
Investments sold 139,704,897
Interest and principal paydowns 11,962,936
Shares of beneficial interest sold 3,756,556
- -----------------------------------------------------------------------------------------
Other 55,520
---------------
Total assets 1,254,856,432
=========================================================================================
Liabilities
Payables and other liabilities:
Investments purchased (including $333,360,442 purchased on a
when-issued basis)--Note 1 345,785,248
Shares of beneficial interest redeemed 4,133,198
Dividends 1,172,293
Distribution and service plan fees 528,575
Daily variation on futures contracts--Note 5 189,242
Transfer and shareholder servicing agent fees 125,430
Other 177,256
---------------
Total liabilities 352,111,242
=========================================================================================
Net Assets $ 902,745,190
===============
=========================================================================================
Composition of Net Assets
Paid-in capital $ 916,564,317
- -----------------------------------------------------------------------------------------
Overdistributed net investment income (1,188,660)
- -----------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (13,073,368)
- -----------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Notes 3 and 5 442,901
---------------
Net assets $ 902,745,190
===============
</TABLE>
14 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
=============================================================================================
<S> <C>
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$592,720,032 and 57,730,107 shares of beneficial interest outstanding) $10.27
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $10.64
- ---------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $208,100,105 and
20,272,631 shares of beneficial interest outstanding) $10.27
- ---------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $101,924,057 and
9,942,081 shares of beneficial interest outstanding) $10.25
- ---------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $996 and 97 shares of beneficial interest outstanding) $10.27
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended March 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===================================================================================
<S> <C>
Investment Income
Interest $ 31,298,997
===================================================================================
Expenses
Distribution and service plan fees--Note 4:
Class A 677,116
Class B 971,503
Class C 429,099
- -----------------------------------------------------------------------------------
Management fees--Note 4 1,794,184
- -----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 452,260
- -----------------------------------------------------------------------------------
Registration and filing fees 91,498
- -----------------------------------------------------------------------------------
Shareholder reports 70,754
- -----------------------------------------------------------------------------------
Custodian fees and expenses 28,447
- -----------------------------------------------------------------------------------
Legal and auditing fees 20,992
- -----------------------------------------------------------------------------------
Trustees' fees and expenses 4,262
- -----------------------------------------------------------------------------------
Other 12,381
------------
Total expenses 4,552,496
===================================================================================
Net Investment Income 26,746,501
===================================================================================
Realized and Unrealized Gain (Loss)
Net realized loss on:
Investments (1,103,827)
Closing of futures contracts (997,821)
Closing of options written (241,766)
------------
Net realized loss (2,343,414)
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 438,416
------------
Net realized and unrealized loss (1,904,998)
===================================================================================
Net Increase in Net Assets Resulting from Operations $ 24,841,503
============
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
Staements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1998 September 30,
(Unaudited) 1997
=====================================================================================================
<S> <C> <C>
Operations
Net investment income $ 26,746,501 $ 46,225,071
- -----------------------------------------------------------------------------------------------------
Net realized loss (2,343,414) (4,149,934)
- -----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 438,416 5,545,271
------------- -------------
Net increase in net assets resulting from operations 24,841,503 47,620,408
=====================================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (19,276,285) (30,141,730)
Class B (6,008,369) (10,420,608)
Class C (2,650,305) (3,475,469)
Class Y (13) --
- -----------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A -- (700,992)
Class B -- (245,211)
Class C -- (98,310)
=====================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 70,164,886 85,939,817
Class B 25,353,396 22,254,728
Class C 28,776,433 27,993,027
Class Y 1,000 --
=====================================================================================================
Net Assets
Total increase 121,202,246 138,725,660
- -----------------------------------------------------------------------------------------------------
Beginning of period 781,542,944 642,817,284
------------- -------------
End of period (including overdistributed net investment
income of $1,188,660 and $189, respectively) $ 902,745,190 $ 781,542,944
============= =============
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------------
Six Months
Ended
March 31,
1998 Year Ended September 30,
(Unaudited) 1997 1996 1995 1994
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $10.30 $10.26 $10.44 $10.40 $11.04
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .34 .73 .75 .79 .72
Net realized and unrealized gain (loss) (.01) .03 (.19) .01 (.64)
------ ------ ------ ------ ------
Total income (loss) from investment
operations .33 .76 .56 .80 .08
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.36) (.71) (.71) (.76) (.71)
Tax return of capital distribution -- (.01) (.03) -- (.01)
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.36) (.72) (.74) (.76) (.72)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.27 $10.30 $10.26 $10.44 $10.40
====== ====== ====== ====== ======
====================================================================================================================================
Total Return, at Net Asset Value(4) 3.21% 7.62% 5.54% 8.03% 0.74%
====================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $592,720 $524,508 $436,889 $346,015 $227,858
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $559,675 $443,514 $393,727 $274,313 $190,829
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.63%(5) 7.13% 7.22% 7.64% 6.74%
Expenses 0.83%(5) 0.87% 0.87% 0.91% 0.99%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 62% 68% 71% 261% 226%
</TABLE>
1. For the period from January 26, 1998 (inception of offering) to March 31,
1998.
2. For the period from February 1, 1995 (inception of offering) to September 30,
1995.
3. For the period from May 3, 1993 (inception of offering) to September 30,
1993.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
18 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
---------- -----------------------------------------------------------------
Six Months
Ended
March 31,
1998 Year Ended September 30,
1993 (Unaudited) 1997 1996 1995
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $10.97 $10.30 $10.26 $10.44 $10.41
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .73 .31 .66 .67 .71
Net realized and unrealized gain (loss) .07 (.02) .02 (.19) .01
------ ------ ------ ------ ------
Total income (loss) from investment
operations .80 .29 .68 .48 .72
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.73) (.32) (.63) (.63) (.69)
Tax return of capital distribution -- -- (.01) (.03) --
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.73) (.32) (.64) (.66) (.69)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.04 $10.27 $10.30 $10.26 $10.44
====== ====== ====== ====== ======
====================================================================================================================================
Total Return, at Net Asset Value(4) 7.61% 2.83% 6.82% 4.74% 7.18%
====================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $178,944 $208,100 $183,476 $160,572 $121,178
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $161,318 $194,970 $171,496 $147,017 $72,131
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.70% 5.88%(5) 6.39% 6.46% 6.80%
Expenses 1.02% 1.59%(5) 1.62% 1.62% 1.71%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 74% 62% 68% 71% 261%
</TABLE>
------------------------------
1994 1993(3)
=======================================================================
Per Share Operating Data
Net asset value, beginning of period $11.06 $10.96
- -----------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .62 .23
Net realized and unrealized gain (loss) (.64) .10
------ ------
Total income (loss) from investment
operations (.02) .33
- -----------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.62) (.23)
Tax return of capital distribution (.01) --
------ ------
Total dividends and distributions
to shareholders (.63) (.23)
- -----------------------------------------------------------------------
Net asset value, end of period $10.41 $11.06
====== ======
=======================================================================
Total Return, at Net Asset Value(4) (0.17)% 3.02%
=======================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $38,877 $5,077
- -----------------------------------------------------------------------
Average net assets (in thousands) $15,801 $2,561
- -----------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.91% 4.81%(5)
Expenses 1.79% 1.87%(5)
- -----------------------------------------------------------------------
Portfolio turnover rate(6) 226% 74%
5. Annualized.
6. 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 and mortgage
dollar-rolls) for the period ended March 31, 1998 were $788,505,822 and
$590,235,426, respectively. Prior to the year ended September 30, 1995,
purchases and sales of investment securities included mortgage dollar-rolls.
19 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Class Y
--------------------------------------------------------- --------------
Six Months Period
Ended Ended
March 31, March 31,
1998 Year Ended September 30, 1998
(Unaudited) 1997 1996 1995(2) (Unaudited)(1)
================================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $10.29 $10.25 $10.43 $10.32 $10.32
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .31 .66 .66 .45 .13
Net realized and unrealized gain (loss) (.03) .02 (.18) .10 (.04)
------ ------ ------ ------ ------
Total income (loss) from investment
operations .28 .68 .48 .55 .09
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.32) (.63) (.63) (.44) (.14)
Tax return of capital distribution -- (.01) (.03) -- --
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.32) (.64) (.66) (.44) (.14)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.25 $10.29 $10.25 $10.43 $10.27
====== ====== ====== ====== ======
================================================================================================================================
Total Return, at Net Asset Value(4) 2.73% 6.83% 4.71% 5.47% 0.75%
================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $101,924 $73,559 $45,356 $14,569 $1
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $86,216 $57,506 $32,349 $6,112 $1
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.86%(5) 6.35% 6.34% 6.51%(5) 6.97%(5)
Expenses 1.59%(5) 1.62% 1.64% 1.80%(5) 0.58%(5)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 62% 68% 71% 261% 62%
</TABLE>
1. For the period from January 26, 1998 (inception of offering) to March 31,
1998.
2. For the period from February 1, 1995 (inception of offering) to September 30,
1995.
3. For the period from May 3, 1993 (inception of offering) to September 30,
1993.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
5. Annualized.
6. 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 and mortgage
dollar-rolls) for the period ended March 31, 1998 were $788,505,822 and
$590,235,426, respectively. Prior to the year ended September 30, 1995,
purchases and sales of investment securities included mortgage dollar-rolls.
See accompanying Notes to Financial Statements.
20 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
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 objective is to seek high
current return and safety of principal primarily through investments in U.S.
Government and agency securities. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C
and Class Y 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
classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own expenses directly attributable to
that class and exclusive voting rights with respect to matters affecting that
class. Classes A, B and C have separate distribution and/or service plans. No
such plan has been adopted for Class Y shares. Class B shares will automatically
convert to Class A shares six years after the date of purchase. The following is
a summary of significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of The New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Options are valued based upon the last sale price on the
principal exchange on which the option is traded or, in the absence of any
transactions that day, the value is based upon the last sale price on the prior
trading date if it is within the spread between the closing bid and asked
prices. If the last sale price is outside the spread, the closing bid is used.
21 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. During the
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of March 31, 1998,
the Fund had entered into outstanding when-issued or forward commitments of
$333,360,442.
In connection with its ability to purchase securities on a
when-issued or forward commitment basis, the Fund may enter into mortgage
"dollar-rolls" in which the Fund sells securities for delivery in the current
month and simultaneously contracts with the same counterparty to repurchase
similar (same type, coupon and maturity) but not identical securities on a
specified future date. The Fund records each dollar-roll as a sale and a new
purchase transaction.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
22 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. At September 30, 1997, the
Fund had available for federal tax purposes an unused capital loss carryover of
approximately $9,648,000, expiring between 2001 and 2005.
- --------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A, Class B, Class C and Class Y 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 its 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 fiscal year in which the
income or realized gain was recorded by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Discount on securities purchased is amortized
over the life of the respective securities, in accordance with federal income
tax requirements. Realized gains and losses on investments and options written
and unrealized appreciation and depreciation are determined on an identified
cost basis, which is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
23 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
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, 1998 Year Ended September 30, 1997
------------------------------- --------------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 24,524,499 $ 253,101,470 33,021,129 $ 339,328,054
Dividends reinvested 1,383,773 14,270,163 2,266,710 23,303,389
Redeemed (19,105,144) (197,206,747) (26,940,608) (276,691,626)
------------- ------------- ------------- -------------
Net increase 6,803,128 $ 70,164,886 8,347,231 $ 85,939,817
============= ============= ============= =============
- ---------------------------------------------------------------------------------------------------
Class B:
Sold 4,641,088 $ 47,900,193 6,061,213 $ 62,284,400
Dividends reinvested 412,829 4,257,416 722,567 7,426,989
Redeemed (2,598,041) (26,804,213) (4,618,172) (47,456,661)
------------- ------------- ------------- -------------
Net increase 2,455,876 $ 25,353,396 2,165,608 $ 22,254,728
============= ============= ============= =============
- ---------------------------------------------------------------------------------------------------
Class C:
Sold 4,572,296 $ 47,134,111 4,851,238 $ 49,789,058
Dividends reinvested 199,414 2,053,643 274,536 2,818,476
Redeemed (1,981,448) (20,411,321) (2,399,494) (24,614,507)
------------- ------------- ------------- -------------
Net increase 2,790,262 $ 28,776,433 2,726,280 $ 27,993,027
============= ============= ============= =============
- ---------------------------------------------------------------------------------------------------
Class Y:
Sold 97 $ 1,000 -- $ --
------------- ------------- ------------- -------------
Net increase 97 $ 1,000 -- $ --
============= ============= ============= =============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Investments
At March 31, 1998, net unrealized appreciation on investments of $380,056 was
composed of gross appreciation of $7,959,040, and gross depreciation of
$7,578,984.
24 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.50% on the first
$100 million of average annual net assets, 0.45% on the next $150 million,
0.425% on the next $250 million and 0.40% on average annual net assets in excess
of $500 million.
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, 1998, commissions (sales charges
paid by investors) on sales of Class A shares totaled $1,490,380, of which
$358,972 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary
of the Manager, as general distributor, and by an affiliated broker/dealer.
Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B
and Class C shares totaled $1,129,348 and $395,525, respectively, of which
$45,687 and $13,878, respectively, was paid to an affiliated broker/dealer.
During the six months ended March 31, 1998, OFDI received contingent deferred
sales charges of $224,976 and $34,504, respectively, upon redemption of Class B
and Class C shares as compensation for sales commissions advanced by OFDI at the
time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with the
personal service and maintenance of shareholder accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may not exceed
0.25% of the average annual net assets of Class A shares of the Fund. OFDI uses
the service fee to reimburse brokers, dealers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares. During the six months
ended March 31, 1998, OFDI paid $52,015 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
25 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates (continued)
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares for its
services rendered in distributing Class B and Class C shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers for providing personal
services for accounts that hold Class B and C shares. Each fee is computed on
the average annual net assets of Class B or Class C shares, determined as of the
close of each regular business day. During the six months ended March 31, 1998,
OFDI paid $6,762 and $7,771, respectively, to an affiliated broker/dealer as
compensation for Class B and Class C personal service and maintenance expenses
and retained $795,425 and $273,776, respectively, as compensation for Class B
and Class C sales commissions and service fee advances, as well as financing
costs. If either Plan is terminated by the Fund, the Board of Trustees may allow
the Fund to continue payments of the asset-based sales charge to OFDI for
distributing shares before the Plan was terminated. At March 31, 1998, OFDI had
incurred excess distribution and servicing costs of $5,158,532 for Class B and
$1,620,655 for Class C.
================================================================================
5. Futures Contracts
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also buy
or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the value of
fixed rate portfolio securities. The Fund may also purchase futures contracts to
gain exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to
deposit either cash or securities (initial margin) in an amount 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
and/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.
26 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
At March 31, 1998, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Unrealized
Expiration Number of Valuation as of Appreciation
Date Contracts March 31, 1998 (Depreciation)
- ---------------------------------------------------------------------------------------------
Contracts to Sell
- -----------------
<S> <C> <C> <C> <C>
U.S. Treasury Nts., 5 yr. 6/98 129 $14,044,875 $ 62,907
U.S. Treasury Nts., 10 yr. 6/98 88 9,889,000 13,063
U.S. Treasury Bonds, 30 yr. 6/98 35 4,208,750 (13,125)
---------
$ 62,845
=========
</TABLE>
================================================================================
6. Option Activity
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call
options to hedge against adverse movements in the value of portfolio holdings.
When an option is written, the Fund receives a premium and becomes obligated to
sell or purchase the underlying security at a fixed price, upon exercise of the
option.
Options are valued daily based upon the last sale price on the
principal exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in
the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
27 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
6. Option Activity (continued)
Written option activity for the six months ended March 31, 1998 was as follows:
Call Options
-----------------------
Number of Amount of
Options Premiums
- -------------------------------------------------------------------------------
Options outstanding at September 30, 1997 -- $ --
Options written 600 53,250
Options closed or expired (600) (53,250)
-------- --------
Options outstanding at March 31, 1998 -- $ --
======== ========
================================================================================
7. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the six months ended
March 31, 1998.
28 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Limited-Term Government Fund
- --------------------------------------------------------------------------------
================================================================================
Officers and Trustees James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Trustee, Vice President, Treasurer
and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Jerry A. Webman, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of Citibank, N.A.
Portfolio Securities
================================================================================
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 of 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.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, and are not insured by the FDIC or any other
agency, and involve investment risks, including
possible loss of the principal amount invested.
29 Oppenheimer Limited-Term Government Fund
<PAGE>
- --------------------------------------------------------------------------------
OppenheimerFunds Family
- --------------------------------------------------------------------------------
<TABLE>
==================================================================================================
<S> <C> <C>
Real Asset Funds
- --------------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
==================================================================================================
Global Stock Funds
- --------------------------------------------------------------------------------------------------
Developing Markets Fund International Growth Fund Quest Global Value Fund
International Small Global Fund Global Growth & Income Fund
Company Fund
==================================================================================================
Stock Funds
- --------------------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Disciplined Value Fund
Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund
==================================================================================================
Stock & Bond Funds
- --------------------------------------------------------------------------------------------------
Main Street Income & Total Return Fund Disciplined Allocation Fund
Growth Fund Quest Balanced Multiple Strategies Fund
Quest Opportunity Value Fund(1) Convertible Securities Fund(2)
Value Fund Equity Income Fund
==================================================================================================
Taxable Bond Funds
- --------------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
==================================================================================================
Municipal Funds
- --------------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
==================================================================================================
Money Market Funds(4)
- --------------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 5/18/98, the Fund's name was changed from "Quest Growth & Income Value
Fund."
2. On 4/28/98, the Fund's name was changed from "Bond Fund for Growth."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds seek to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in these funds. Oppenheimer funds are
distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center, New
York, NY 10048-0203.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
30 Oppenheimer Limited-Term Government Fund
<PAGE>
[GRAPHIC OMITTED]
<PAGE>
Internet
24-hr access to account information. Online
transactions now available
- --------------------------------------
www.oppenheimerfunds.com
- --------------------------------------
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- --------------------------------------
1-800-525-7048
- --------------------------------------
Account Transactions
Mon-Fri 8:30am-8pm ET
- --------------------------------------
1-800-852-8457
- --------------------------------------
PhoneLink
24-hr automated information
and automated transactions
- --------------------------------------
1-800-533-3310
- --------------------------------------
Telecommunication Device
for the Deaf (TDD)
Mon-Fri 8:30am-2pm 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
- --------------------------------------
Information and services
- --------------------------------------------------------------------------------
As an Oppenheimer fund 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 or by visiting our website. And, by
enrolling in AccountLink, a convenient service that "links" your Oppenheimer
funds accounts and your bank checking or savings account, you can use the
Telephone Transactions number or website to make investments.
For added convenience, you can get automated 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.
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 Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
[LOGO] OppenheimerFunds(SM)
Distributor, Inc.
RS0855.001.0398 May 29, 1998
