<PAGE> 1
SEMIANNUAL REPORT MARCH 31, 1999
OPPENHEIMER
LIMITED-TERM
GOVERNMENT
FUND
[PHOTO]
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
CONTENTS
3 President's Letter
4 An interview with
Your Fund's
Manager
11 Financial
Statements
31 Officers and
Trustees
32 Information and
Services
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
- - DURING THE PERIOD, THE FUND OFFERED STRONG INCOME in a period of very low
inflation.
- - THE FEDERAL RESERVE BOARD LOWERED SHORT-TERM INTEREST RATES in an attempt to
prevent the U.S. economy from entering a recession.
- - BECAUSE THEY OFFERED VERY ATTRACTIVE YIELDS, we increased the proportion of
mortgage-backed securities during the period.
CUMULATIVE TOTAL RETURNS
For the 6-Month Period
Ended 3/31/99
CLASS A
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
1.70% -1.86%
- -----------------------------
CLASS B
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
1.32% -2.63%
- -----------------------------
CLASS C
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
1.32% 0.33%
- -----------------------------
CLASS Y
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
1.88% 1.88%
- -----------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. 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. THE FUND'S PERFORMANCE MAY FROM TIME TO TIME BE SUBJECT
TO SUBSTANTIAL SHORT-TERM CHANGES, PARTICULARLY DURING PERIODS OF MARKET OR
INTEREST RATE VOLATILITY. FOR UPDATES ON THE FUND'S PERFORMANCE, PLEASE CONTACT
YOUR FINANCIAL ADVISOR, CALL US AT 1-800-525-7048 OR VISIT OUR WEBSITE,
WWW.OPPENHEIMERFUNDS.COM.
1. Includes changes in net asset value per share without deducting any sales
charges.
2. 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 are offered only to certain institutional investors under special
agreement with the Distributor. Class B and C shares are subject to an annual
0.75% asset-based sales charge. An explanation of the different performance
calculations is in the Fund's prospectus.
2 Oppenheimer Limited-Term Government Fund
<PAGE> 3
[PHOTO]
JAMES C. SWAIN
Chairman
Oppenheimer
Limited-Term
Government Fund
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer
Limited-Term
Government Fund
DEAR SHAREHOLDER,
- --------------------------------------------------------------------------------
The strength of the U.S. economy continues to surprise and concern many
analysts. At a time when the majority of the world's economies are beleaguered
by financial strain, the U.S. economy has been growing at a remarkable rate.
With respect to the U.S. bond market, stronger than expected economic
growth has triggered concerns that the Federal Reserve may raise key interest
rates to forestall an acceleration of inflation. As a result, yields of longer
term taxable bonds have risen from their October 1998 lows, when investors had
bid up prices during the global "flight to quality." At the same time,
tax-exempt bond prices and yields have remained relatively stable.
In the U.S. stock market, it might appear at first glance that prices are
rising as rapidly as the economy is growing. However, a closer look reveals
that, with the exception of large-cap growth companies and the technology
industry, most stock prices remained relatively flat through March 31. What's
more, the disparity in valuations between large companies, which have led the
market's advance, and smaller ones, which have lagged, has become historically
wide.
What do these observations mean for your investments? In our view, actively
managed portfolios that are closely monitored by expert money managers may
provide better returns than passive index investing in 1999. That's because
selectivity is expected to be more critical to performance than it has been over
the past few years. In a potentially overvalued stock market and rising
interest-rate environment, the ability to identify the most promising securities
could become paramount.
Even though many equity investors may be tempted to focus their portfolio
on the technology sector, we suggest a more prudent course: broad
diversification beyond any single asset class, industry, capitalization range or
geographic region. We believe that the risks of this investment environment
require consideration of a broad range of investments and markets, including
bonds. That way, if one market experiences setbacks, one or more of the others
may help cushion the effects on your overall portfolio.
No matter what the financial markets have in store, we resolve to continue
working with your financial advisor to keep you apprised of potential risks and
opportunities. Providing you with the market information, professionally managed
investments and other resources you need to achieve your financial goals is an
important part of our enduring commitment to you as The Right Way to Invest.
/s/ JAMES C. SWAIN /s/ BRIDGET A. MACASKILL
James C. Swain Bridget A. Macaskill
April 22, 1999
3 Oppenheimer Limited-Term Government Fund
<PAGE> 4
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
HOW HAS THE FUND PERFORMED DURING THE LAST SIX MONTHS?
Reflecting rising yields in the Treasury market, Oppenheimer Limited-Term
Government Fund provided strong income during the six-month period that ended
March 31,1999. At the same time, the Fund continued to offer very low credit
risk with an average credit quality of AAA. The Fund's effective average
maturity of 2 years helped to insulate the portfolio against price declines
caused by rising interest rates.
COULD YOU EXPLAIN THE MOVEMENT IN INTEREST RATES DURING THE PERIOD?
Last fall, the Federal Reserve Board (the Fed) acted three times and
cumulatively cut the federal funds rate, the interest rate the Fed charges banks
to borrow, from 5.50% to 4.75%. Typically, cutting the federal funds rate can
result in lower yields for Treasury bills, notes, and bonds; lower the returns
on money market funds; and reduce corporate borrowing costs. At the time of the
Fed's decisions, the fixed income market was in turmoil and it appeared that the
U.S. economy could slip into a recession like many of its trading partners in
Asia and Latin America.
4 Oppenheimer Limited-Term Government Fund
<PAGE> 5
[PHOTO]
PORTFOLIO MANAGEMENT
TEAM (L TO R)
John Kowalik
(Portfolio Manager)
Leslie Falconio
Gina Palmieri
This time, the reduction of the federal funds rate resulted in an overall rise
in interest rates, as the Fed's action signaled the willingness of the United
States to help stabilize the global financial markets, which would slow
recessions and possibly increase economic growth.
By the beginning of 1999, it became clear that the U.S. economy was not
sliding into a recession, but was continuing to grow. Indeed, the Gross Domestic
Product rose at an annual rate of over 6% in the fourth quarter of 1998. Yields
on longer term government bonds, which are set by the forces of supply and
demand, continued to rise. This reflected investor concerns that a booming
economy means inflation could be around the corner. When bond investors expect
inflation, they demand higher yields to offset the potential erosion in their
purchasing power. During the period, the market may have overreacted by pushing
bond yields higher than is warranted, given the low level of inflation. As of
March 31, the U.S. inflation rate remains low and global economic problems still
exist, which could still slow down the U.S. economy.
5 Oppenheimer Limited-Term Government Fund
<PAGE> 6
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
AVG ANNUAL TOTAL RETURNS
For the Periods Ended 3/31/99(1)
CLASS A
1 year 5 year 10 year
- ---------------------------
2.41% 5.31% 7.69%
- ---------------------------
CLASS B
Since
1 year 5 year Inception
- ---------------------------
1.34% 5.09% 4.99%
- ---------------------------
CLASS C
Since
1 year 5 year Inception
- ---------------------------
4.34% N/A 6.04%
- ---------------------------
CLASS Y
Since
1 year 5 year Inception
- ---------------------------
6.49% N/A 6.13%
- ---------------------------
HOW DID THIS INTEREST RATE ENVIRONMENT AFFECT THE FUND'S PERFORMANCE?
On the one hand, rising interest rates caused bond prices to fall. Fortunately,
this effect on bond prices was modest in the Fund because the average maturity
is relatively short. On the other hand, rising yields can increase the amount of
income produced by the Fund over time.
In addition, mortgage-backed securities, which currently comprise about
half the Fund's assets, generally outperform Treasury notes during a period of
rising interest rates. As a result, the Fund produced a higher total return than
many other funds that had lower percentages of mortgage-backed securities.
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 would have
been lower. Class B returns include the applicable contingent deferred sales
charge of 4% (1-year), 2% (5-year) and 1% (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 offered only to certain institutional
investors under special agreement with the Distributor. Class B and C shares are
subject to an annual 0.75% asset-based sales charge. An explanation of the
different performance calculations is in the Fund's prospectus. 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.
6 Oppenheimer Limited-Term Government Fund
<PAGE> 7
WHAT HAS BEEN YOUR INVESTMENT STRATEGY
OVER THE PAST SIX MONTHS?
After cutting back during much of 1998, we have been adding to our allocation of
mortgage-backed securities, including issues by the Federal National Mortgage
Association (Fannie Mae) and the Government National Mortgage Association
(Ginnie Mae). This strategy, in which mortgages were increased from about 35% as
of October 1998 to 45% as of March 31, 1999, has been a major positive factor in
the Fund's performance. Mortgage-backed securities offer more yield than
Treasury bonds to compensate holders for the risk that if interest rates were to
fall suddenly, homeowners would likely refinance their mortgages at lower rates.
Such a sudden drop took place last fall, and mortgages did not appreciate as
much as Treasuries during this period. The market has stabilized and we believe
that mortgages still offer good value relative to Treasuries.
WHAT TYPES OF MORTGAGES HAVE DONE THE BEST?
The Fund can buy fractional interests in large pools of residential or
commercial mortgages, in the form of collateral mortgage obligations (CMOs),
which have collateral to secure payment of interest and principal. Short-term
CMOs have performed very well because they do not fluctuate in price as much as
longer term mortgages, and they continue to yield much more than a comparable
Treasury security.
7 Oppenheimer Limited-Term Government Fund
<PAGE> 8
AN INTERVIEW WITH YOUR FUND'S MANAGER
- --------------------------------------------------------------------------------
STANDARDIZED YIELDS(2)
For the 30 Days Ended 3/31/99
- ----------------------
CLASS A 4.78%
- ----------------------
CLASS B 4.20
- ----------------------
CLASS C 4.20
- ----------------------
CLASS Y 5.29
- ----------------------
One significant advantage of owning short-term CMOs is their relatively low
"extension risk." That is, the increased possibility that a mortgage will never
be refinanced in an environment of rapidly rising interest rates. When mortgage
securities increase in duration due to "extension," their sensitivity to
changing interest rates increases, which can effect their market risk.
WHAT IS YOUR OUTLOOK OVER THE NEXT FEW MONTHS?
This portfolio has the best relative performance in an environment of stable
interest rates. However, the U.S. economy has been so strong that inflation
continues to be a concern. With unemployment at just 4.4%, wages are rising, and
oil prices have recently rebounded sharply. If the economy does not slow down,
then it may be just a matter of time before we see interest rates rise in
anticipation of the Fed's tightening to reduce the high level of economic
activity and the resulting pressure on prices. If that happens, then most bond
portfolios will be under pressure from lower bond prices. However, Oppenheimer
Limited-Term Government Fund is conservatively positioned because
2. Standardized yield is based on net investment income for the 30-day period
ended March 31, 1999. Falling share prices will tend to artificially raise
yields.
8 Oppenheimer Limited-Term Government Fund
<PAGE> 9
CREDIT ALLOCATION(3)
[PIE CHART]
Treasury 50.5%
Gov't Agency 43.8
AAA 5.7
of its short average maturity, so the prices of its securities will tend not to
fall as much as longer maturity securities. In the meantime, our shareholders
continue to enjoy strong income from a fund that is conservatively managed, two
principal factors making Oppenheimer Limited-Term Government Fund part of The
Right Way to Invest.
TOP FIVE HOLDINGS BY ISSUER(4)
- ---------------------------------------------------------
U.S. Notes & Bonds 50.5%
- ---------------------------------------------------------
Federal National Mortgage Assn. 22.4
- ---------------------------------------------------------
Government National Mortgage Assn. 12.3
- ---------------------------------------------------------
Federal Home Loan Mortgage Corp. 10.5
- ---------------------------------------------------------
Repurchase Agreements 4.3
- ---------------------------------------------------------
3. Portfolio data is as of March 31, 1999, is subject to change, and is
dollar-weighted based on invested assets. The Fund may invest in securities of
any maturity, including those issued by federally chartered mortgage companies
whose interest and principal repayments are not guaranteed by the U.S.
government. U.S. Treasury securities are not rated but are deemed to have the
highest rating equivalency.
4. Portfolio is subject to change. Percentages are as of March 31, 1999, and are
based on invested assets.
9 Oppenheimer Limited-Term Government Fund
<PAGE> 10
FINANCIALS
- --------------------------------------------------------------------------------
10 Oppenheimer Limited-Term Government Fund
<PAGE> 11
STATEMENT OF INVESTMENTS March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
==================================================================================
MORTGAGE-BACKED OBLIGATIONS--46.3%
- ----------------------------------------------------------------------------------
GOVERNMENT AGENCY--46.3%
- ----------------------------------------------------------------------------------
<S> <C> <C>
FHLMC/FNMA/SPONSORED--33.7%
Federal Home Loan Mortgage Corp., Collateralized Mtg.
Obligations, Gtd. Multiclass Mtg. Participation
Certificates:
Series 151, Cl. F, 9%, 5/15/21 $ 1,886,636 $ 1,990,986
Series 1092, Cl. K, 8.50%, 6/15/21 4,685,648 4,917,026
Series 1451, Cl. G, 7%, 9/15/06 2,442,000 2,469,472
Series 1541, Cl. H, 7%, 10/15/22 6,500,000 6,630,000
Series 2111, Cl. PH, 6.50%, 2/15/28 3,000,000 3,000,000
Series 2113, Cl. MW, 6.50%, 1/15/29 7,000,000 6,829,375
- ----------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
Collateralized Mtg. Obligations:
Series 2134, Cl. D, 6.50%, 3/1/29 10,000,000 10,046,875
Series 2136, Cl. PQ, 6.50%, 3/1/29 5,000,000 4,989,062
- ----------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg.
Participation Certificates:
9.25%, 11/1/08 331,870 345,779
10%, 8/1/21 2,071,064 2,292,410
11.50%, 6/1/20 981,951 1,106,767
11.75%, 1/1/16 226,101 254,581
11.75%, 4/1/19 1,240,105 1,414,495
13%, 8/1/15 2,186,095 2,607,602
Series 1684, Cl. G, 6.50%, 3/15/23 10,000,000 10,225,000
Series 1702-A, Cl. PD, 6.50%, 4/15/22 6,250,000 6,361,312
Series 1797, Cl. D, 6.166%, 7/15/08 5,000,000 4,976,550
- ----------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates,
Series 1914, Cl. G, 6.50%, 2/15/24 10,000,000 10,034,300
</TABLE>
11 Oppenheimer Limited-Term Government Fund
<PAGE> 12
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
==================================================================================
<S> <C> <C>
FHLMC/FNMA/SPONSORED(CONTINUED)
Federal Home Loan Mortgage Corp., Interest-Only
Stripped Mtg.-Backed Security:
Series 164, Cl. A, 5.846%, 3/1/24(1) $ 10,555,666 $ 3,143,609
Series 176, Cl. IO, (3.301)%-38.64%, 6/1/26(1) 12,051,696 2,866,045
Series 183, Cl. IO, 9.368%-28.308%, 4/1/27(1) 10,425,762 2,485,893
Series 189, Cl. IO, 8.459%-9.311%, 11/1/27(1) 19,227,874 5,654,196
Series 192, Cl. IO, 17.244%-21.222%, 2/1/28(1) 17,469,289 4,621,174
Series 197, Cl. IO, 10.214%-15.287%, 4/1/28(1) 40,859,230 12,015,168
Series 199, Cl. IO, 13.931%-22.039%, 8/1/28(1) 52,750,829 14,943,322
Series 202, Cl. IO, 11.565%, 4/1/29(1) 7,000,000 2,065,000
Series 294, Cl. 2, 8.817%, 2/1/28(1) 2,346,396 578,533
Series 1627, Cl. PN, 11.864%, 9/15/22(1) 4,000,000 1,035,000
- ----------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Principal-Only
Stripped Mtg.-Backed Security,
Series 192, Cl. PO, 5.34%, 2/1/28(2) 6,718,957 4,995,125
- ----------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.-Government National
Mortgage Assn., Gtd. Multiclass Mtg.
Participation Certificates, Series 32,
Cl. TG, 7%, 1/25/21 2,000,000 2,044,360
- ----------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 5/1/28-1/1/29 118,774,226 118,265,879
7%, 7/1/13-2/1/27 20,290,658 20,690,364
7%, 4/25/27(3) 18,000,000 18,250,380
7.50%, 6/1/25-8/1/25 4,591,750 4,719,555
9%, 8/1/19 350,817 373,642
9.50%, 11/1/21 236,750 253,657
10.50%, 12/1/14 953,877 1,059,400
11%, 11/1/15-7/20/19 10,830,907 12,197,726
11.25%, 6/1/14 827,895 930,477
11.50%, 8/15/13-2/15/16 5,324,678 6,017,465
11.75%, 7/1/11-11/1/15 310,332 349,370
12%, 1/1/16-4/15/19 7,639,049 8,753,749
13%, 8/1/10-8/1/26 3,748,515 4,420,155
- ----------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg.
Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates:
Trust 1990-18, Cl. K, 9.60%, 3/25/20 4,528,320 4,841,046
Trust 1992-34, Cl. G, 8%, 3/25/22 2,940,000 3,059,423
Trust 1992-188, Cl. PG, 6.65%, 1/25/17 3,385,641 3,393,023
Trust 1993-183, Cl. G, 6%, 1/25/19 6,500,000 6,526,390
Trust 1994-27, Cl. PH, 6.50%, 9/25/22 4,000,000 4,071,240
Trust 1994-51, Cl. PF, 6.50%, 1/25/23 5,000,000 5,076,550
Trust 1997-63, Cl. PC, 6.50%, 3/18/26 7,500,000 7,560,900
</TABLE>
12 Oppenheimer Limited-Term Government Fund
<PAGE> 13
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------
<S> <C> <C>
FHLMC/FNMA/SPONSORED(CONTINUED)
Federal National Mortgage Assn., Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates:
8%, 1/1/23 $ 129,163 $ 134,615
12.50%, 12/1/15 1,814,343 2,132,421
Trust 1991-169, Cl. PK, 8%, 10/25/21 595,000 616,753
Trust 1991-170, Cl. E, 8%, 12/25/06 1,945,376 2,016,500
- ------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only
Stripped Mtg.-Backed Security, Trust 294,
Cl. 2, 9.032%-27.771%, 2/1/28(1) 44,619,702 11,001,545
- ------------------------------------------------------------------------------------
Federal National Mortgage Assn.,
Principal-Only Stripped Mtg.-Backed
Security, Trust 277, Cl. 1:
3.114%-4.726%, 2/1/28(2) 7,586,680 5,959,100
4.308%, 11/1/27(2) 18,071,510 15,016,296
12.712%, 4/1/27(2) 1,788,896 1,487,579
- ------------------------------------------------------------------------------------
Federal National Mortgage Assn., Stripped
Mtg.-Backed Security, Trust G, Cl. 2, 11.50%, 3/1/09 1,388,004 1,535,036
- ------------------------------------------------------------------------------------
Federal National Mortgage Assn. Unsec.
Nts., 5.25%, 1/15/09 20,000,000 19,112,400
------------
426,761,653
- ------------------------------------------------------------------------------------
GNMA/GUARANTEED--12.6%
Government National Mortgage Assn.:
6.50%, 1/15/24 3,408,107 3,403,984
7%, 1/15/28-8/15/28 8,893,060 9,036,601
7.50%, 4/15/27(3) 68,000,000 70,050,880
7.50%, 10/15/25-9/15/28 51,290,185 52,881,353
8%, 9/15/07-10/15/28 10,276,945 10,715,911
8.50%, 9/15/21 26,054 27,590
9.50%, 9/15/17 77,227 83,038
10.50%, 1/15/16-7/15/21 1,571,825 1,722,171
11%, 5/15/99-10/20/19 3,153,932 3,537,815
11.50%, 1/15/13-5/15/13 305,834 337,870
13%, 2/15/11-9/15/14 35,257 40,641
Collateralized Mtg. Obligations, Gtd.
Multiclass Mtg. Participation
Certificates, Series 1997-5, Cl. PC, 7%, 10/20/25 8,000,000 8,182,480
------------
160,020,334
============
Total Mortgage-Backed Obligations (Cost $580,252,724) 586,781,987
</TABLE>
13 Oppenheimer Limited-Term Government Fund
<PAGE> 14
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
=============================================================================================================
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--51.7%
- -------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
8.75%, 11/15/08(4) $ 40,000,000 $ 45,250,000
9.875%, 11/15/15 10,250,000 14,596,646
6.109%, 11/15/18(5) 84,400,000 26,058,247
- -------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
4.75%, 11/15/08 5,000,000 4,817,190
4.75%, 2/15/04 20,000,000 19,700,000
5.625%, 5/15/01 28,000,000 28,341,264
5.625%, 5/15/08 27,000,000 27,497,826
5.75%, 4/30/03 19,000,000 19,368,125
6.125%, 8/15/07 1,530,000 1,600,285
6.375%, 9/30/01 4,750,000 4,892,500
6.50%, 5/31/01 48,000,000 49,410,000
6.875%, 5/15/06 1,490,000 1,617,581
7.50%, 11/15/01 67,000,000 70,873,471
7.50%, 2/15/05 92,500,000 102,588,328
7.875%, 11/15/04 87,550,000 98,356,997
8.50%, 11/15/20 88,500,000 93,256,875
8.75%, 8/15/00(4) 44,550,000 46,749,656
------------
Total U.S. Government Obligations (Cost $662,074,431) 654,974,991
=============================================================================================================
REPURCHASE AGREEMENTS--4.4%
- -------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital
Markets, 4.85%, dated 3/31/99, to be repurchased at
$55,407,464 on 4/1/99, collateralized by U.S. Treasury
Nts., 7.50%, 11/15/01, with a value of $31,770,345 and
U.S. Treasury Bills, 5/20/99, with a value of $24,797,052 (Cost $55,400,000) 55,400,000 55,400,000
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,297,727,154) 102.4% 1,297,156,978
- -------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (2.4) (30,980,657)
----------- --------------
NET ASSETS 100.0% $1,266,176,321
=========== ==============
</TABLE>
14 Oppenheimer Limited-Term Government Fund
<PAGE> 15
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, 1999.
4. Securities with an aggregate market value of $103,043,481 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
5. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
See accompanying Notes to Financial Statements.
15 Oppenheimer Limited-Term Government Fund
<PAGE> 16
STATEMENT OF ASSETS AND LIABILITIES March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
==================================================================================
<S> <C>
ASSETS
Investments, at value (cost $1,297,727,154)--see accompanying
statement $1,297,156,978
- ----------------------------------------------------------------------------------
Receivables and other assets:
Investments sold (including $60,977,510 sold on a
when-issued basis)--Note 1 129,754,078
Interest and principal paydowns 17,399,369
Shares of beneficial interest sold 8,001,203
Daily variation on futures contracts--Note 5 328,092
Other 166,440
--------------
Total assets 1,452,806,160
==================================================================================
LIABILITIES
Bank overdraft 219,229
- ----------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $149,563,635
purchased on a when-issued basis)--Note 1 181,964,458
Shares of beneficial interest redeemed 2,089,256
Dividends 1,236,526
Distribution and service plan fees 717,164
Transfer and shareholder servicing agent fees 135,707
Custodian fees 17,402
Other 250,097
--------------
Total liabilities 186,629,839
==================================================================================
NET ASSETS $1,266,176,321
==============
==================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $1,283,504,893
- ----------------------------------------------------------------------------------
Undistributed net investment income 276,065
- ----------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (17,182,336)
- ----------------------------------------------------------------------------------
Net unrealized depreciation on investments--Notes 3 and 5 (422,301)
--------------
Net assets $1,266,176,321
==============
</TABLE>
16 Oppenheimer Limited-Term Government Fund
<PAGE> 17
<TABLE>
<CAPTION>
==================================================================================
<S> <C>
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$715,631,992 and 69,971,283 shares of beneficial interest outstanding) $10.23
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $10.60
- ----------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $358,661,898 and 35,075,228 shares of beneficial interest
outstanding) $10.23
- ----------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $191,881,439 and 18,791,282 shares of beneficial interest
outstanding) $10.21
- ----------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $992 and 97 shares of beneficial interest
outstanding) $10.23
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Limited-Term Government Fund
<PAGE> 18
STATEMENT OF OPERATIONS For the Six Months Ended March 31, 1999 (Unaudited)
<TABLE>
==================================================================================
<S> <C>
INVESTMENT INCOME
Interest $ 40,471,763
==================================================================================
EXPENSES
Management fees--Note 4 2,430,974
- ----------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 818,515
Class B 1,593,871
Class C 846,603
- ----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4:
Class A 440,065
Class B 211,813
Class C 112,631
- ----------------------------------------------------------------------------------
Registration and filing fees 125,231
- ----------------------------------------------------------------------------------
Shareholder reports 117,780
- ----------------------------------------------------------------------------------
Custodian fees and expenses 24,831
- ----------------------------------------------------------------------------------
Legal, auditing and other professional fees 15,389
- ----------------------------------------------------------------------------------
Accounting service fees--Note 4 6,094
- ----------------------------------------------------------------------------------
Insurance expenses 4,157
- ----------------------------------------------------------------------------------
Trustees' compensation 2,891
- ----------------------------------------------------------------------------------
Other 26,169
------------
Total expenses 6,777,014
==================================================================================
NET INVESTMENT INCOME 33,694,749
==================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (6,668,086)
Closing of futures contracts 4,798,630
------------
Net realized loss (1,869,456)
- ----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (14,489,629)
------------
Net realized and unrealized loss (16,359,085)
==================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 17,335,664
============
</TABLE>
See accompanying Notes to Financial Statements.
18 Oppenheimer Limited-Term Government Fund
<PAGE> 19
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30,
(UNAUDITED) 1998
=======================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 33,694,749 $ 55,975,556
- ---------------------------------------------------------------------------------------
Net realized loss (1,869,456) (5,166,494)
- ---------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (14,489,629) 14,062,843
------------ ------------
Net increase in net assets resulting from operations 17,335,664 64,871,905
=======================================================================================
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income:
Class A (20,382,155) (38,031,985)
Class B (8,513,201) (12,153,183)
Class C (4,523,107) (5,790,342)
Class Y (32) (46)
- ---------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A -- (1,307,734)
Class B -- (417,888)
Class C -- (199,101)
Class Y -- (2)
=======================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 90,169,523 106,066,201
Class B 85,757,252 91,996,096
Class C 50,710,340 69,044,172
Class Y -- 1,000
=======================================================================================
NET ASSETS
Total increase 210,554,284 274,079,093
- ---------------------------------------------------------------------------------------
Beginning of period 1,055,622,037 781,542,944
------------ ------------
End of period [including undistributed
(overdistributed) net investment income of
$276,065 and $(189), respectively] $1,266,176,321 $1,055,622,037
=============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer Limited-Term Government Fund
<PAGE> 20
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
1999 (UNAUDITED) 1998 1997 1996
============================================================================================================
<C> <S> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.37 $10.30 $10.26 $10.44
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .31 .67 .73 .75
Net realized and unrealized gain (loss) (.14) .10 .03 (.19)
------- ------- ------- -------
Total income (loss) from investment
operations .17 .77 .76 .56
- ------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.31) (.68) (.71) (.71)
Dividends in excess of net investment
income -- (.02) -- --
Tax return of capital distribution -- -- (.01) (.03)
------- ------- ------- -------
Total dividends and distributions to
shareholders (.31) (.70) (.72) (.74)
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.23 $10.37 $10.30 $10.26
======= ======= ======= =======
============================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 1.70% 7.70% 7.62% 5.54%
============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $715,632 $634,677 $524,508 $436,889
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $670,454 $584,171 $443,514 $393,727
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.14%(5) 6.52% 7.13% 7.22%
Expenses(6) 0.86%(5) 0.82% 0.87% 0.87%
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 91% 161% 68% 71%
</TABLE>
1. For the period from January 26, 1998 (inception of offering) to September
30, 1998.
2. For the period from February 1, 1995 (inception of offering) to September
30, 1995.
3. Per share amounts calculated on the average shares outstanding during the
period.
4. Assumes a $1,000 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.
20 Oppenheimer Limited-Term Government Fund
<PAGE> 21
<TABLE>
<CAPTION>
CLASS B
- ----------------------------- -------------------------------------------------------------
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
1995 1994 1999 (UNAUDITED) 1998 1997 1996
=============================================================================================
<S> <C> <C> <C> <C> <C>
$10.40 $11.04 $10.37 $10.30 $10.26 $10.44
- ---------------------------------------------------------------------------------------------
.79 .72 .28 .60 .66 .67
.01 (.64) (.14) .09 .02 (.19)
------- ------- ------- ------- ------- -------
.80 .08 .14 .69 .68 .48
- ---------------------------------------------------------------------------------------------
(.76) (.71) (.28) (.60) (.63) (.63)
-- -- -- (.02) -- --
-- (.01) -- -- (.01) (.03)
------- ------- ------- ------- ------- -------
(.76) (.72) (.28) (.62) (.64) (.66)
- ---------------------------------------------------------------------------------------------
$10.44 $10.40 $10.23 $10.37 $10.30 $10.26
======= ======= ======= ======= ======= =======
=============================================================================================
8.03% 0.74% 1.32% 6.90% 6.82% 4.74%
=============================================================================================
$346,015 $227,858 $358,662 $277,381 $183,476 $160,572
- ---------------------------------------------------------------------------------------------
$274,313 $190,829 $320,099 $210,362 $171,496 $147,017
- ---------------------------------------------------------------------------------------------
7.64% 6.74% 5.38%(5) 5.76% 6.39% 6.46%
0.91% 0.99% 1.62%(5) 1.58% 1.62% 1.62%
- ---------------------------------------------------------------------------------------------
261% 226% 91% 161% 68% 71%
</TABLE>
6. Beginning in fiscal 1995, the expense ratio reflects the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not been
adjusted.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities
and mortgage dollar-rolls) for the period ended March 31, 1999, were
$1,403,686,920 and $1,351,649,549, 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
21 Oppenheimer Limited-Term Government Fund
<PAGE> 22
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
CLASS B(CONTINUED) CLASS C
---------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31, SEPT. 30,
1995 1994 1999 (UNAUDITED) 1998
===================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.41 $11.06 $10.35 $10.29
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .71 .62 .28 .59(3)
Net realized and unrealized gain (loss) .01 (.64) (.14) .09(3)
----------- ----------- ----------- -----------
Total income (loss) from investment
operations .72 (.02) .14 .68
- -------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.69) (.62) (.28) (.61)
Dividends in excess of net investment
income -- -- -- (.01)
Tax return of capital distribution -- (.01) -- --
----------- ----------- ----------- -----------
Total dividends and distributions to
shareholders (.69) (.63) (.28) (.62)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.44 $10.41 $10.21 $10.35
===================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 7.18% (0.17)% 1.32% 6.81%
=========== =========== =========== ===========
===================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $121,178 $38,877 $191,881 $143,563
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $72,131 $15,801 $170,054 $100,604
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.80% 5.91% 5.37%(5) 5.73%
Expenses(6) 1.71% 1.79% 1.61%(5) 1.57%
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 261% 226% 91% 161%
</TABLE>
1. For the period from January 26, 1998 (inception of offering) to September
30, 1998.
2. For the period from February 1, 1995 (inception of offering) to September
30, 1995.
3. Per share amounts calculated on the average shares outstanding during the
period.
4. Assumes a $1,000 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.
22 Oppenheimer Limited-Term Government Fund
<PAGE> 23
<TABLE>
<CAPTION>
CLASS Y
- ------------------------------ ----------------------------
SIX MONTHS PERIOD
ENDED ENDED
MARCH 31, SEPT. 30,
1997 1996 1995(2) 1999 (UNAUDITED) 1998(1)
===============================================================================
<S> <C> <C> <C> <C>
$10.25 $10.43 $10.32 $10.37 $10.33
- -------------------------------------------------------------------------------
.66 .66 .45 .35 .47
.02 (.18) .10 (.16) .06
------ ------ ------ ------ ------
.68 .48 .55 .19 .53
- -------------------------------------------------------------------------------
(.63) (.63) (.44) (.33) (.47)
-- -- -- -- (.02)
(.01) (.03) -- -- --
------ ------ ------ ------ ------
(.64) (.66) (.44) (.33) (.49)
- -------------------------------------------------------------------------------
$10.29 $10.25 $10.43 $10.23 $10.37
====== ====== ====== ====== ======
===============================================================================
6.83% 4.71% 5.47% 1.88% 5.30%
===============================================================================
$73,559 $45,356 $14,569 $1 $1
- -------------------------------------------------------------------------------
$57,506 $32,349 $ 6,112 $1 $1
- -------------------------------------------------------------------------------
6.35% 6.34% 6.51%(5) 6.59%(5) 6.82%(5)
1.62% 1.64% 1.80%(5) 0.42%(5) 0.43%(5)
- --------------------------------------------------------------------------------
68% 71% 261% 91% 161%
</TABLE>
6. Beginning in fiscal 1995, the expense ratio reflects the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not been
adjusted.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities
and mortgage dollar-rolls) for the period ended March 31, 1999, were
$1,403,686,920 and $1,351,649,549, 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
23 Oppenheimer Limited-Term Government Fund
<PAGE> 24
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. 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.
24 Oppenheimer Limited-Term Government Fund
<PAGE> 25
===============================================================================
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, 1999,
the Fund had entered into outstanding when-issued or forward commitments of
$88,586,125.
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, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), 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.
25 Oppenheimer Limited-Term Government Fund
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
===============================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately
for Class A, Class B, 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.
26 Oppenheimer Limited-Term Government Fund
<PAGE> 27
===============================================================================
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, 1999 YEAR ENDED SEPTEMBER 30, 1998
------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 31,203,805 $321,753,480 46,472,235 $478,261,632
Dividends reinvested 1,585,042 16,327,902 2,895,623 29,794,401
Redeemed (24,039,967) (247,911,859) (39,072,434) (401,989,832)
------------ ------------ ------------ -------------
Net increase 8,748,880$ $ 90,169,523 10,295,424 $106,066,201
============ ============ ============ =============
- ----------------------------------------------------------------------------------------------
Class B:
Sold 13,562,546 $139,864,414 14,069,222 $144,687,126
Dividends reinvested 603,999 6,218,721 871,211 8,965,350
Redeemed (5,851,348) (60,325,883) (5,997,157) (61,656,380)
------------ ------------ ------------ -------------
Net increase 8,315,197$ $ 85,757,252 8,943,276 $ 91,996,096
============ ============ ============ =============
- ----------------------------------------------------------------------------------------------
Class C:
Sold 8,862,356 $ 91,267,815 11,346,525 $116,547,257
Dividends reinvested 337,350 3,469,255 448,545 4,607,623
Redeemed (4,277,335) (44,026,730) (5,077,978) (52,110,708)
------------ ------------ ------------ -------------
Net increase 4,922,371 $ 50,710,340 6,717,092 $ 69,044,172
============ ============ ============ =============
- ----------------------------------------------------------------------------------------------
Class Y:
Sold -- -- 97 $ 1,000
------------ ------------ ------------ -------------
Net increase -- -- 97 $ 1,000
============ ============ ============ =============
</TABLE>
===============================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
As of March 31, 1999, net unrealized depreciation on investments of $570,176 was
composed of gross appreciation of $11,047,275, and gross depreciation of
$11,617,451.
27 Oppenheimer Limited-Term Government Fund
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
===============================================================================
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% of the first
$100 million of average annual net assets of the Fund, 0.45% of the next $150
million, 0.425% of the next $250 million and 0.40% of average annual net assets
in excess of $500 million. The Fund's management fee for the six months ended
March 31, 1999, was 0.42% of average annual net assets for each class of shares.
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, 1999, commissions (sales charges paid
by investors) on sales of Class A shares totaled $2,308,830, of which $513,387
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 A,
Class B and Class C shares totaled $722,241, $2,680,746 and $720,716,
respectively. Amounts paid to an affiliated broker/dealer for Class B and Class
C shares were $156,765 and $17,646, respectively. During the six months ended
March 31, 1999, OFDI received contingent deferred sales charges of $190,333,
$427,404 and $60,595, respectively, upon redemption of Class A, 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 other Oppenheimer
funds. OFS's total costs of providing such services are allocated ratably to
these funds.
Expenses paid indirectly represent a reduction of custodian fees for
earnings on cash balances maintained by the Fund.
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, 1999, OFDI paid
$59,139 to an affiliated broker/dealer as reimbursement for Class A personal
service and maintenance expenses.
28 Oppenheimer Limited-Term Government Fund
<PAGE> 29
===============================================================================
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 Class 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,
1999, OFDI paid $9,549 and $11,734, respectively, to an affiliated broker/dealer
as compensation for Class B and Class C personal service and maintenance
expenses and retained $1,346,083 and $611,714, 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. As of March 31, 1999,
OFDI had incurred excess distribution and servicing costs of $7,691,244 for
Class B and $2,955,287 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.
29 Oppenheimer Limited-Term Government Fund
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
===============================================================================
5. FUTURES CONTRACTS (CONTINUED)
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.
As of March 31, 1999, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
NUMBER OF VALUATION AS OF UNREALIZED
CONTRACT DESCRIPTION EXPIRATION DATE CONTRACTS MARCH 31, 1999 APPRECIATION
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONTRACTS TO SELL
- -----------------
U.S. Treasury Bonds, 10 yr. 6/99 304 $34,865,000 $ 68,406
U.S. Treasury Bonds, 30 yr. 6/99 381 45,934,313 22,938
U.S. Treasury Nts., 5 yr. 6/99 248 27,636,500 56,531
--------
$147,875
========
</TABLE>
===============================================================================
6. 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, 1999.
30 Oppenheimer Limited-Term Government Fund
<PAGE> 31
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
John S. Kowalik, 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, are not insured by the FDIC or any other
agency, and involve investment risks, including the
possible loss of the principal amount invested.
31 Oppenheimer Limited-Term Government Fund
<PAGE> 32
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As an Oppenheimer fund shareholder, you have some special privileges. Whether
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When you want to make a transaction, you can do it easily by calling our
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For added convenience, you can get automated information with
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PhoneLink gives you access to a variety of fund, account, and market
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You can count on us whenever you need assistance. That's why the
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So call us today, or visit us at our website at www.oppenheimerfunds.com--
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[OPPENHEIMERFUNDS LOGO]
RS0855.001.0399 May 28, 1999
