UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-4563
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(Address of principal executive offices) (Zip code)
ROBERT G. ZACK, ESQ.
OPPENHEIMERFUNDS, INC.
TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: September 30
Date of reporting period: September 30, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP FIVE HOLDINGS BY ISSUER
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Federal National Mortgage Assn. 53.7%
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Federal Home Loan Mortgage Corp. 21.7
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Federal Home Loan Bank 8.0
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Tennessee Valley Authority 1.6
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Banc of America Commercial Mortgage, Inc. 1.0
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2005, and are based on total market value of investments. For more
current Fund holdings, please visit www.oppenheimerfunds.com.
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CREDIT ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Agency 42.2%
AAA 57.5
Not Rated 0.3
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2005, and are subject to change, and based on total market value
of investments. While the Fund seeks to maintain an average effective maturity
of 3-years, 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.
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9 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED SEPTEMBER 30, 2005, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. For the fiscal year that ended
September 30, 2005, several factors contributed to Oppenheimer Limited-Term
Government Fund's competitive total return and yield, as well as its favorable
ranking among its peers, amidst somewhat challenging macro conditions. First,
our active management of the Fund's exposure (vis-a-vis the benchmark) to
mortgage-related securities benefited performance. In the first half of the
Fund's fiscal year, this segment of the U.S. government securities market
enjoyed solid outperformance over Treasuries while providing favorable relative
yield. As such, our decision to substantially overweight our exposure to
mortgage-backed securities over the first half of the review period definitively
added to performance.
With a landscape of stable mortgage rates and tame prepayments, mortgages
investors had little to complain about throughout the period. This stability
fostered consistent demand for mortgage securities from money managers, banks
and foreign investors throughout the period. This being said, midway through the
period we felt certain sectors of the mortgage market had become less attractive
and we subsequently trimmed some of our overall mortgage exposure. Some of our
emphasis instead was shifted to commercial mortgage-backed securities and agency
debentures, segments of the market that continued to outperform treasuries over
the later half of the period, while residential mortgages only kept pace with
treasuries. As a result, this tactical shift supported Fund returns.
Throughout the year, our emphasis on higher-coupon mortgages within our
residential-mortgage exposure proved to be another boon to returns. As
valuations became what we considered unattractive in some areas of the mortgage
sector, we trimmed our overall risk by reducing our exposure to lower-coupon
issues while maintaining our emphasis on higher-coupon mortgages, which have
continued to outperform in an environment of tame prepayments.
Our overall exposure to and emphasis on U.S. government agency-related
debt also added to returns. Agency debentures delivered additional yield
relative to Treasuries this period, and thanks in part to limited overall
supply, this segment of the government securities markets enjoyed moderate
spread tightening versus Treasuries, thereby outperforming from a total return
perspective.
Finally, the portfolio's interest-rate exposure, also known as "duration,"
provided a definitive impact to Fund performance. When we entered the period,
the Fund's portfolio held less interest-rate sensitivity than did the benchmark.
This decision was based on our
10 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
belief that the markets were "off" in their expectations for a slow rate of
convergence between short and long rates at that time. In short, we were of the
opinion that longer-term rates were artificially low. When rates spiked in
March, our duration positioning substantially added to returns, particularly
versus many of our peers. However, as the first half of 2005 came to a close,
longer-term interest rates had returned to their lowest levels of the year.
Therefore, we further reduced our interest-rate sensitivity as we became even
more convinced that the markets were underestimating the extent of rate
increases moving forward. As the period ended, we maintained a moderate
underweight duration position versus our benchmark, having reduced our extreme
underweight position in July after interest rates increased moderately.
While it is difficult to identify a factor that detracted from the Fund's
performance, had we been more aggressive in adjusting our interest-rate
sensitivity, the additional returns we enjoyed from this factor might have been
more significant. However, our disciplined investment process does not include
reacting to short-term interest-rate volatility or other short-term, macro
conditions. Furthermore, we believe to do so would have introduced unnecessary
risk to the Fund's portfolio. We believe that the Fund's performance results, as
well as its favorable peer ranking this period, exhibit the tried-and-true
strength of our investment process and approach, which includes seeking to
minimize risk to principal whenever possible.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until September 30, 2005. In the case of Class A, Class B and Class C
shares, performance is measured over a ten-fiscal-year period. In the case of
Class N shares, performance is measured from inception of the Class on March 1,
2001. In the case of Class Y shares, performance is measured from the inception
of the Class on January 26, 1998. The Fund's performance reflects the deduction
of the maximum initial sales charge on Class A shares, the applicable contingent
deferred sales charge on Class B, Class C and Class N shares, and reinvestments
of all dividends and capital gains distributions.
The Fund's performance is compared to the performance of the Lehman
Brothers U.S. Government Bond Index and the Lehman Brothers 1-3 Year Government
Bond Index. The Lehman Brothers U.S. Government Bond Index is a broad-based
unmanaged index of U.S. Treasury issues, publicly-issued debt of U.S. Government
agencies and quasi-public corporations and corporate debt guaranteed by the U.S.
Government. This index is widely used to measure the performance of the U.S.
Government securities market. The Lehman Brothers 1-3 Year Government Bond Index
is an unmanaged sector index of U.S. Treasury issues, publicly-issued debt of
U.S. Government agencies and quasi-public corporations
11 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FUND PERFORMANCE DISCUSSION
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and corporate debt guaranteed by the U.S. Government with maturities of one to
three years. This secondary index comparison is included to reflect the adoption
by the Fund, effective May 1, 1994, of the investment policy that the Fund will,
under normal circumstances, seek to maintain a dollar-weighted average portfolio
effective duration of not more than three years. Index performance reflects the
reinvestment of dividends but does not consider the effect of capital gains or
transaction costs, and none of the data in the graphs that follow shows the
effect of taxes. The Fund's performance reflects the effects of Fund business
and operating expenses. While index comparisons may be useful to provide a
benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the securities in the indices.
12 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Limited-Term Government Fund (Class A)
Lehman Brothers U.S. Government Bond Index
Lehman Brothers 1-3 Year Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Limited-Term
Government Fund Lehman Brothers U.S. Lehman Brothers 1-3 Year
(Class A) Government Bond Index Government Bond Index
09/30/1995 9,650 10,000 10,000
12/31/1995 9,890 10,457 10,246
03/31/1996 9,920 10,220 10,285
06/30/1996 10,001 10,269 10,393
09/30/1996 10,185 10,442 10,566
12/31/1996 10,373 10,746 10,766
03/31/1997 10,473 10,659 10,835
06/30/1997 10,741 11,029 11,076
09/30/1997 10,961 11,398 11,293
12/31/1997 11,163 11,777 11,482
03/31/1998 11,312 11,954 11,647
06/30/1998 11,460 12,269 11,827
09/30/1998 11,804 12,948 12,189
12/31/1998 11,931 12,937 12,282
03/31/1999 12,004 12,753 12,357
06/30/1999 12,020 12,644 12,423
09/30/1999 12,133 12,728 12,578
12/31/1999 12,200 12,648 12,647
03/31/2000 12,326 13,072 12,807
06/30/2000 12,520 13,276 13,026
09/30/2000 12,779 13,642 13,313
12/31/2000 13,094 14,323 13,681
03/31/2001 13,362 14,683 14,064
06/30/2001 13,475 14,648 14,233
09/30/2001 13,927 15,451 14,734
12/31/2001 14,003 15,359 14,848
03/31/2002 14,096 15,262 14,851
06/30/2002 14,400 15,939 15,225
09/30/2002 14,723 17,001 15,596
12/31/2002 14,847 17,124 15,741
03/31/2003 14,918 17,308 15,847
06/30/2003 14,975 17,746 15,968
09/30/2003 15,019 17,605 16,033
12/31/2003 15,039 17,528 16,058
03/31/2004 15,169 18,042 16,233
06/30/2004 15,051 17,505 16,050
09/30/2004 15,202 18,049 16,220
12/31/2004 15,283 18,137 16,229
03/31/2005 15,244 18,062 16,189
06/30/2005 15,414 18,669 16,382
09/30/2005 15,423 18,494 16,397
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
9/30/05
1-Year -2.10% 5-Year 3.09% 10-Year 4.43%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 3.50%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 4% (1-YEAR) AND 1% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, 10-YEAR RETURN FOR CLASS B SHARES USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR FURTHER
INFORMATION.
13 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FUND PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Limited-Term Government Fund (Class B)
Lehman Brothers U.S. Government Bond Index
Lehman Brothers 1-3 Year Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Limited-Term
Government Fund Lehman Brothers U.S. Lehman Brothers 1-3 Year
(Class B) Government Bond Index Government Bond Index
09/30/1995 10,000 10,000 10,000
12/31/1995 10,229 10,457 10,246
03/31/1996 10,241 10,220 10,285
06/30/1996 10,305 10,269 10,393
09/30/1996 10,474 10,442 10,566
12/31/1996 10,648 10,746 10,766
03/31/1997 10,731 10,659 10,835
06/30/1997 10,985 11,029 11,076
09/30/1997 11,189 11,398 11,293
12/31/1997 11,375 11,777 11,482
03/31/1998 11,506 11,954 11,647
06/30/1998 11,634 12,269 11,827
09/30/1998 11,961 12,948 12,189
12/31/1998 12,066 12,937 12,282
03/31/1999 12,119 12,753 12,357
06/30/1999 12,112 12,644 12,423
09/30/1999 12,190 12,728 12,578
12/31/1999 12,246 12,648 12,647
03/31/2000 12,349 13,072 12,807
06/30/2000 12,519 13,276 13,026
09/30/2000 12,755 13,642 13,313
12/31/2000 13,045 14,323 13,681
03/31/2001 13,287 14,683 14,064
06/30/2001 13,374 14,648 14,233
09/30/2001 13,805 15,451 14,734
12/31/2001 13,880 15,359 14,848
03/31/2002 13,972 15,262 14,851
06/30/2002 14,274 15,939 15,225
09/30/2002 14,594 17,001 15,596
12/31/2002 14,717 17,124 15,741
03/31/2003 14,788 17,308 15,847
06/30/2003 14,843 17,746 15,968
09/30/2003 14,887 17,605 16,033
12/31/2003 14,908 17,528 16,058
03/31/2004 15,036 18,042 16,233
06/30/2004 14,919 17,505 16,050
09/30/2004 15,069 18,049 16,220
12/31/2004 15,149 18,137 16,229
03/31/2005 15,110 18,062 16,189
06/30/2005 15,279 18,669 16,382
09/30/2005 15,287 18,494 16,397
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
9/30/05
1-Year -3.24% 5-Year 2.88% 10-Year 4.34%
14 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Limited-Term Government Fund (Class C)
Lehman Brothers U.S. Government Bond Index
Lehman Brothers 1-3 Year Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Limited-Term
Government Fund Lehman Brothers U.S. Lehman Brothers 1-3 Year
(Class C) Government Bond Index Government Bond Index
09/30/1995 10,000 10,000 10,000
12/31/1995 10,227 10,457 10,246
03/31/1996 10,239 10,220 10,285
06/30/1996 10,302 10,269 10,393
09/30/1996 10,471 10,442 10,566
12/31/1996 10,635 10,746 10,766
03/31/1997 10,729 10,659 10,835
06/30/1997 10,983 11,029 11,076
09/30/1997 11,187 11,398 11,293
12/31/1997 11,362 11,777 11,482
03/31/1998 11,493 11,954 11,647
06/30/1998 11,621 12,269 11,827
09/30/1998 11,948 12,948 12,189
12/31/1998 12,065 12,937 12,282
03/31/1999 12,106 12,753 12,357
06/30/1999 12,099 12,644 12,423
09/30/1999 12,189 12,728 12,578
12/31/1999 12,233 12,648 12,647
03/31/2000 12,336 13,072 12,807
06/30/2000 12,507 13,276 13,026
09/30/2000 12,755 13,642 13,313
12/31/2000 13,046 14,323 13,681
03/31/2001 13,288 14,683 14,064
06/30/2001 13,362 14,648 14,233
09/30/2001 13,786 15,451 14,734
12/31/2001 13,834 15,359 14,848
03/31/2002 13,901 15,262 14,851
06/30/2002 14,175 15,939 15,225
09/30/2002 14,467 17,001 15,596
12/31/2002 14,565 17,124 15,741
03/31/2003 14,610 17,308 15,847
06/30/2003 14,640 17,746 15,968
09/30/2003 14,643 17,605 16,033
12/31/2003 14,651 17,528 16,058
03/31/2004 14,751 18,042 16,233
06/30/2004 14,609 17,505 16,050
09/30/2004 14,728 18,049 16,220
12/31/2004 14,779 18,137 16,229
03/31/2005 14,714 18,062 16,189
06/30/2005 14,850 18,669 16,382
09/30/2005 14,830 18,494 16,397
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
9/30/05
1-Year -0.30% 5-Year 3.06% 10-Year 4.02%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 3.50%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 4% (1-YEAR) AND 1% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, 10-YEAR RETURN FOR CLASS B SHARES USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR FURTHER
INFORMATION.
15 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FUND PERFORMANCE DISCUSSION
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CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Limited-Term Government Fund (Class N)
Lehman Brothers U.S. Government Bond Index
Lehman Brothers 1-3 Year Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Limited-Term
Government Fund Lehman Brothers U.S. Lehman Brothers 1-3 Year
(Class N) Government Bond Index Government Bond Index
03/01/2001 10,000 10,000 10,000
03/31/2001 10,059 10,035 10,081
06/30/2001 10,143 10,011 10,202
09/30/2001 10,473 10,560 10,561
12/31/2001 10,526 10,497 10,643
03/31/2002 10,590 10,431 10,645
06/30/2002 10,812 10,893 10,913
09/30/2002 11,059 11,619 11,179
12/31/2002 11,136 11,704 11,283
03/31/2003 11,183 11,829 11,359
06/30/2003 11,212 12,128 11,446
09/30/2003 11,235 12,032 11,492
12/31/2003 11,239 11,979 11,510
03/31/2004 11,326 12,331 11,635
06/30/2004 11,232 11,964 11,504
09/30/2004 11,337 12,336 11,626
12/31/2004 11,390 12,396 11,633
03/31/2005 11,354 12,344 11,604
06/30/2005 11,474 12,759 11,742
09/30/2005 11,473 12,640 11,753
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
9/30/05
1-Year 0.22% 5-Year N/A Since Inception (3/1/01) 3.04%
16 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Limited-Term Government Fund (Class Y)
Lehman Brothers U.S. Government Bond Index
Lehman Brothers 1-3 Year Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
Limited-Term
Government Fund Lehman Brothers U.S. Lehman Brothers 1-3 Year
(Class Y) Government Bond Index Government Bond Index
01/26/1998 10,000 10,000 10,000
03/31/1998 10,075 10,001 10,048
06/30/1998 10,215 10,265 10,203
09/30/1998 10,530 10,832 10,515
12/31/1998 10,651 10,823 10,595
03/31/1999 10,728 10,669 10,660
06/30/1999 10,752 10,578 10,717
09/30/1999 10,862 10,648 10,850
12/31/1999 10,932 10,581 10,910
03/31/2000 11,056 10,936 11,048
06/30/2000 11,240 11,107 11,237
09/30/2000 11,482 11,413 11,485
12/31/2000 11,771 11,983 11,802
03/31/2001 12,018 12,284 12,132
06/30/2001 12,132 12,255 12,278
09/30/2001 12,537 12,926 12,710
12/31/2001 12,616 12,849 12,809
03/31/2002 12,700 12,768 12,811
06/30/2002 13,002 13,335 13,134
09/30/2002 13,306 14,223 13,454
12/31/2002 13,429 14,326 13,579
03/31/2003 13,520 14,480 13,670
06/30/2003 13,572 14,846 13,775
09/30/2003 13,626 14,728 13,831
12/31/2003 13,661 14,664 13,852
03/31/2004 13,792 15,094 14,004
06/30/2004 13,694 14,645 13,846
09/30/2004 13,855 15,100 13,992
12/31/2004 13,924 15,174 14,000
03/31/2005 13,896 15,111 13,965
06/30/2005 14,059 15,619 14,132
09/30/2005 14,090 15,472 14,145
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 9/30/05
1-Year 1.69% 5-Year 4.18% Since Inception (1/26/98) 4.57%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 3.50%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 4% (1-YEAR) AND 1% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, 10-YEAR RETURN FOR CLASS B SHARES USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR FURTHER
INFORMATION.
17 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES
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Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
Investors should consider the Fund's investment objectives, risks, and other
charges and expenses carefully before investing. The Fund's prospectus contains
this and other information about the Fund, and may be obtained by asking your
financial advisor, calling us at 1.800.525.7048 or visiting our website at
www.oppenheimerfunds.com. Read the prospectus carefully before investing.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 3/10/86. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 3.50%. The Fund's maximum sales charge for Class A shares was lower
prior to 2/23/94, so actual performance may have been higher.
CLASS B shares of the Fund were first publicly offered on 5/3/93. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 4% (1-year) and 1% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the 10-year return for Class B uses
Class A performance for the period after conversion. Class B shares are subject
to an annual 0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 2/1/95. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
18 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
CLASS Y shares of the Fund were first publicly offered on 1/26/98. Class Y
shares are offered only to certain institutional investors under special
agreement with the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
19 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended September 30, 2005.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in
20 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(4/1/05) (9/30/05) SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,011.70 $3.54
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,021.56 3.55
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,007.90 7.32
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,017.80 7.36
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,007.90 7.32
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,017.80 7.36
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,010.50 4.80
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,020.31 4.82
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,013.90 2.32
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,022.76 2.34
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended September 30, 2005 are as follows:
CLASS EXPENSE RATIOS
- ------------------------
Class A 0.70%
- ------------------------
Class B 1.45
- ------------------------
Class C 1.45
- ------------------------
Class N 0.95
- ------------------------
Class Y 0.46
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Manager and Transfer Agent that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Fund's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements.
- --------------------------------------------------------------------------------
21 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF INVESTMENTS September 30, 2005
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--7.2%
- -----------------------------------------------------------------------------------------------------------------------------
Aesop Funding II LLC, Automobile Asset-Backed Certificates,
Series 2005-1A, Cl. A2, 3.856%, 4/20/08 1 $ 2,750,000 $ 2,752,002
- -----------------------------------------------------------------------------------------------------------------------------
BMW Vehicle Owner Trust, Automobile Loan Certificates,
Series 2005-A, Cl. A2, 3.66%, 12/26/07 10,710,000 10,685,746
- -----------------------------------------------------------------------------------------------------------------------------
Capital Auto Receivables Asset Trust, Automobile Mtg.-Backed Nts.:
Series 2004-2, Cl. A3, 3.58%, 1/15/09 10,070,000 9,893,322
Series 2005-1, Cl. A2B, 3.73%, 7/16/07 5,250,000 5,244,337
- -----------------------------------------------------------------------------------------------------------------------------
Centex Home Equity Co. LLC, Home Equity Loan Asset-Backed Certificates:
Series 2004-D, Cl. AF1, 2.98%, 4/25/20 2,284,315 2,272,022
Series 2005-B, Cl. AF1, 4.02%, 3/26/35 2,294,606 2,282,659
- -----------------------------------------------------------------------------------------------------------------------------
Chase Funding Mortgage Loan Asset-Backed Certificates,
Home Equity Mtg. Obligations:
Series 2003-5, Cl. 1A2, 2.451%, 11/25/18 472,140 471,031
Series 2004-1, Cl. 1A2, 2.427%, 6/25/19 3,003,204 2,994,494
- -----------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Auto Owner Trust, Automobile Loan Pass-Through Certificates:
Series 2002-A, Cl. A4, 4.24%, 9/15/08 1,429,596 1,430,786
Series 2005-A, Cl. A2, 3.72%, 12/15/07 9,002,000 8,965,917
- -----------------------------------------------------------------------------------------------------------------------------
Countrywide Asset-Backed Certificates, Inc., Home Equity Asset-Backed
Certificates, Series 2005-7, Cl. AF1B, 4.317%, 11/25/35 7,296,411 7,270,228
- -----------------------------------------------------------------------------------------------------------------------------
DaimlerChrysler Auto Trust, Automobile Loan Pass-Through Certificates,
Series 2005-B, Cl. A2, 3.75%, 12/8/07 9,240,000 9,222,160
- -----------------------------------------------------------------------------------------------------------------------------
Equity One ABS, Inc., Home Equity Mtg. Pass-Through Certificates,
Series 2004-3, Cl. AF2, 3.80%, 7/25/34 1,740,000 1,732,109
- -----------------------------------------------------------------------------------------------------------------------------
Ford Credit Auto Owner Trust, Automobile Loan Pass-Through Certificates:
Series 2003-B, Cl. A3A, 1.89%, 1/15/07 2,688,599 2,677,313
Series 2004-A, Cl. A2, 2.13%, 10/15/06 4,817,660 4,811,110
Series 2005-B, Cl. A2, 3.77%, 9/15/07 8,537,565 8,526,404
- -----------------------------------------------------------------------------------------------------------------------------
Honda Auto Receivables Owner Trust, Automobile Receivable
Obligations, Series 2005-3, Cl. A2, 3.73%, 10/18/07 8,452,000 8,413,725
- -----------------------------------------------------------------------------------------------------------------------------
Lehman XS Trust, Home Equity Obligations:
Series 2005-2, Cl. 2A1B, 5.18%, 8/25/35 11,623,907 11,671,653
Series 2005-4, Cl. 2A1B, 5.17%, 10/25/35 7,360,000 7,392,200
- -----------------------------------------------------------------------------------------------------------------------------
Popular ABS Mortgage Pass-Through Trust, Home Equity Pass-Through
Certificates, Series 2005-1, Cl. AF2, 3.914%, 5/25/35 1,880,000 1,853,458
- -----------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Collateralized Mtg. Obligations
Pass-Through Certificates, Series 2005-4XS, Cl. 3A1, 5.18%, 3/26/35 13,801,121 13,828,200
- -----------------------------------------------------------------------------------------------------------------------------
USAA Auto Owner Trust, Automobile Loan Asset-Backed Nts.,
Series 2004-2, Cl. A2, 2.41%, 2/15/07 3,289,578 3,284,999
- -----------------------------------------------------------------------------------------------------------------------------
Volkswagen Auto Lease Trust, Automobile Lease Asset-Backed Securities:
Series 2004-A, Cl. A2, 2.47%, 1/22/07 6,238,807 6,221,463
Series 2005-A, Cl. A2, 3.52%, 4/20/07 7,893,000 7,866,631
22 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
- -----------------------------------------------------------------------------------------------------------------------------
Wachovia Auto Owner Trust, Automobile Receivable Nts., Series 2004-B,
Cl. A2, 2.40%, 5/21/07 $ 3,403,453 $ 3,394,570
----------------
Total Asset-Backed Securities (Cost $145,713,092) 145,158,539
- -----------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--59.7%
- -----------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--49.9%
- -----------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--49.2%
Fannie Mae Whole Loan, Collateralized Mtg. Obligations Pass-Through
Certificates, Trust 2004-W9, Cl. 2A2, 7%, 2/25/44 18,835,509 19,759,616
- -----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
4.50%, 5/1/19 807,270 791,326
6%, 10/1/22-10/1/34 70,132,506 71,489,659
6.50%, 4/1/18-12/1/30 15,648,252 16,178,179
7%, 8/1/16-4/1/32 6,380,750 6,670,668
7.50%, 2/1/32 455,490 483,049
8%, 4/1/16 4,876,443 5,216,035
8.50%, 3/1/31 912,231 991,930
9%, 8/1/22-5/1/25 1,222,005 1,329,093
9.25%, 11/1/08 11,031 11,257
10%, 12/25/10-8/1/21 470,507 507,109
11%, 11/1/20 270,562 307,607
11.50%, 2/1/16-6/1/20 93,714 103,102
11.75%, 1/1/16-4/1/19 123,973 135,908
12%, 6/1/15 119,593 131,763
12.50%, 7/1/19 243,472 269,871
13%, 8/1/15 259,409 288,765
- -----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates:
Series 2035, Cl. PC, 6.95%, 3/15/28 5,232,776 5,441,875
Series 2790, Cl. DY, 5.50%, 5/15/25 11,120,000 11,166,121
- -----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Pass-Through Participation Certificates, Series 151, Cl. F, 9%, 5/15/21 141,472 141,391
- -----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment
Conduit Multiclass Pass-Through Certificates:
Series 1669, Cl. G, 6.50%, 2/15/23 724,111 724,476
Series 2055, Cl. ZM, 6.50%, 5/15/28 5,716,989 5,875,228
Series 2080, Cl. Z, 6.50%, 8/15/28 3,671,006 3,763,277
Series 2220, Cl. PD, 8%, 3/15/30 1,278,384 1,363,348
Series 2326, Cl. ZP, 6.50%, 6/15/31 6,697,139 6,899,548
Series 2387, Cl. PD, 6%, 4/15/30 1,189,218 1,198,624
Series 2410, Cl. NE, 6.50%, 9/15/30 318,104 318,455
Series 2456, Cl. BD, 6%, 3/15/30 2,044,862 2,052,640
Series 2498, Cl. PC, 5.50%, 10/15/14 290,037 290,332
Series 2500, Cl. FD, 4.268%, 3/15/32 1 3,042,790 3,067,098
Series 2526, Cl. FE, 4.168%, 6/15/29 1 4,030,971 4,052,335
Series 2551, Cl. FD, 4.168%, 1/15/33 1 3,137,222 3,161,720
23 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment
Conduit Multiclass Pass-Through Certificates: Continued
Series 2583, Cl. KA, 5.50%, 3/15/22 $ 635,209 $ 637,645
Series 2583, Cl. PA, 5.50%, 3/15/22 7,578,175 7,607,232
- -----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed
Security:
Series 177, Cl. B, 0.59%, 7/1/26 2 7,523,466 1,495,276
Series 192, Cl. IO, 6.696%, 2/1/28 2 1,655,088 300,996
Series 200, Cl. IO, 5.471%, 1/1/29 2 1,959,798 370,953
Series 205, Cl. IO, (0.49)%, 9/1/29 2 10,626,714 2,017,258
Series 206, Cl. IO, (16.82)%, 12/1/29 2 523,734 108,734
Series 218, Cl. IO, 8.68%, 2/1/32 2 3,625,185 693,460
Series 2074, Cl. S, 7.031%, 7/17/28 2 2,147,460 239,073
Series 2079, Cl. S, 6.435%, 7/17/28 2 3,384,275 378,471
Series 2493, Cl. S, 10.854%, 9/15/29 2 2,819,731 260,929
Series 2526, Cl. SE, 6.77%, 6/15/29 2 5,569,277 378,785
Series 2796, Cl. SD, 6.137%, 7/15/26 2 1,076,152 88,157
Series 2819, Cl. S, 1.797%, 6/15/34 2 49,006,962 4,376,724
Series 2920, Cl. S, 8.859%, 1/15/35 2 26,557,455 1,490,651
Series 3000, Cl. SE, 29.13%, 7/15/25 2 28,186,809 1,362,550
- -----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
4.50%, 10/1/20 3 54,528,000 53,403,360
5%, 2/1/18-6/1/18 22,536,712 22,503,993
5%, 10/1/35-11/1/35 3 61,993,000 60,679,225
5.50%, 5/1/24-1/1/34 79,923,510 80,025,781
5.50%, 10/1/20-10/1/35 3 95,962,000 96,021,295
5.863%, 1/1/12 14,125,286 14,850,501
6%, 8/1/16-11/1/32 55,406,727 56,861,602
6%, 11/1/20-11/1/35 3 56,967,000 58,055,131
6.50%, 9/1/23-3/1/34 61,790,780 63,807,854
6.50%, 10/1/34-11/1/35 3 130,346,545 134,202,757
7%, 7/1/13-6/1/32 28,856,398 30,204,652
7.50%, 2/1/27-1/1/30 4,199,300 4,455,819
8%, 6/1/17-1/1/23 21,006 22,504
8.50%, 7/1/32 663,145 721,280
9%, 8/1/19 30,855 33,720
9.50%, 11/1/21 25,024 27,439
10.50%, 12/1/14 212,603 229,668
11%, 11/1/15-7/20/19 1,668,961 1,853,765
11.25%, 6/1/14-2/15/16 355,711 392,287
11.50%, 7/15/19-11/17/20 810,213 895,908
11.75%, 7/1/11-6/1/13 18,424 20,154
12%, 1/1/16-8/1/16 700,498 771,460
12.50%, 8/1/15-12/1/15 263,974 293,900
13%, 8/15/15-8/1/26 516,170 576,697
24 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn. Grantor Trust:
Commercial Mtg. Obligations, Interest-Only Stripped Mtg.-Backed
Security, Trust 2001-T4, Cl. IO, 1.687%, 7/25/41 2 $ 10,605,784 $ 226,150
Commercial Mtg. Obligations, Trust 2001-T6, Cl. B, 6.088%, 5/25/11 10,125,000 10,780,770
- -----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Trust 1988-7, Cl. Z, 9.25%, 4/25/18 157,637 168,641
Trust 1991-109, Cl. Z, 8.50%, 9/25/21 120,927 129,173
Trust 1992-34, Cl. G, 8%, 3/25/22 223,011 228,069
Trust 1997-16, Cl. PD, 7%, 3/18/27 7,975,172 8,319,159
Trust 2001-42, Cl. QF, 4.81%, 9/25/31 1 15,177,778 15,501,687
Trust 2001-70, Cl. LR, 6%, 9/25/30 3,023,363 3,055,199
Trust 2001-72, Cl. NH, 6%, 4/25/30 2,031,633 2,042,869
Trust 2001-74, Cl. PD, 6%, 5/25/30 823,216 826,912
Trust 2002-52, Cl. FD, 4.141%, 9/25/32 1 3,866,386 3,884,267
Trust 2002-52, Cl. FG, 4.33%, 9/25/32 1 4,312,064 4,353,521
Trust 2002-77, Cl. WF, 4.189%, 12/18/32 1 4,927,411 4,959,781
Trust 2002-94, Cl. MA, 4.50%, 8/25/09 814,316 813,078
Trust 2003-10, Cl. HP, 5%, 2/25/18 12,330,000 12,292,757
Trust 2003-17, Cl. EQ, 5.50%, 3/25/23 3,676,000 3,721,067
Trust 2003-21, Cl. FK, 4.041%, 3/25/33 1 409,725 412,522
Trust 2004-101, Cl. BG, 5%, 1/25/20 8,529,000 8,525,327
- -----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Interest-Only Stripped Mtg.-Backed Security:
Trust 2002-28, Cl. SA, 3.773%, 4/25/32 2 2,871,238 252,941
Trust 2002-38, Cl. SO, 3.181%, 4/25/32 2 4,194,780 291,804
Trust 2002-39, Cl. SD, (0.759)%, 3/18/32 2 4,501,143 428,079
Trust 2002-48, Cl. S, 3.23%, 7/25/32 2 4,770,845 444,699
Trust 2002-52, Cl. SL, 3.193%, 9/25/32 2 2,998,222 283,336
Trust 2002-53, Cl. SK, (0.46)%, 4/25/32 2 2,626,326 266,154
Trust 2002-56, Cl. SN, 4.809%, 7/25/32 2 6,479,617 600,309
Trust 2002-77, Cl. IS, 3.876%, 12/18/32 2 6,004,230 595,420
- -----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed
Security:
Trust 221, Cl. 2, 2.50%, 5/1/23 2 3,695,282 725,257
Trust 240, Cl. 2, 7.75%, 9/1/23 2 6,065,676 1,161,675
Trust 294, Cl. 2, 1.04%, 2/1/28 2 6,301,832 1,247,915
Trust 301, Cl. 2, (0.674)%, 4/1/29 2 5,332,133 1,000,577
Trust 321, Cl. 2, 1%, 3/1/32 2 13,502,427 2,847,845
Trust 324, Cl. 2, (4.62)%, 6/1/32 2 18,750,926 3,772,540
Trust 327, Cl. 2, 6.896%, 8/1/32 2 9,018,390 1,738,245
Trust 329, Cl. 2, 4.959%, 1/1/33 2 2,568,519 547,528
Trust 333, Cl. 2, 5.60%, 3/1/33 2 15,040,152 3,250,471
Trust 338, Cl. 2, 4.46%, 6/1/33 2 13,474,888 2,913,721
Trust 346, Cl. 2, 10.29%, 12/1/33 2 9,672,854 2,066,189
Trust 350, Cl. 2, 8.668%, 2/1/34 2 13,684,778 2,916,878
Trust 2001-63, Cl. SD, 7.783%, 12/18/31 2 4,712,822 408,881
Trust 2001-68, Cl. SC, 6.153%, 11/25/31 2 4,414,068 431,454
25 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed
Security: Continued
Trust 2001-81, Cl. S, 4.542%, 1/25/32 2 $ 3,566,520 $ 332,118
Trust 2002-9, Cl. MS, 3.043%, 3/25/32 2 5,334,250 517,874
Trust 2002-52, Cl. SD, (0.566)%, 9/25/32 2 3,866,386 375,762
Trust 2002-77, Cl. SH, 9.375%, 12/18/32 2 4,315,683 431,635
Trust 2003-4, Cl. S, 17.135%, 2/25/33 2 7,293,024 759,716
Trust 2005-40, Cl. SA, 11.533%, 5/25/35 2 16,067,412 951,162
Trust 2005-63, Cl. SA, 19.708%, 10/25/31 2 17,271,089 917,777
Trust 2005-63, Cl. X, 48.782%, 10/25/31 2 204,451 4,239
Trust 2005-71, Cl. SA, 22.845%, 8/25/25 2 18,039,013 1,027,228
- -----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Stripped Mtg.-Backed Security,
Trust G, Cl. 2, 11.50%, 3/1/09 147,752 157,567
----------------
990,806,996
- -----------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--0.7%
Government National Mortgage Assn.:
6.50%, 1/15/24 444,957 464,159
7%, 1/15/09-1/20/30 3,566,057 3,750,987
7.50%, 1/15/28-8/15/28 1,385,767 1,473,419
8%, 9/15/07-10/15/28 351,767 376,353
8.50%, 8/15/17-9/15/21 1,763,987 1,914,828
9.50%, 9/15/17 6,971 7,702
10.50%, 2/15/16-7/15/21 254,369 286,497
11%, 10/20/19 362,067 397,879
11.50%, 3/15/13-7/15/19 87,798 97,000
13%, 2/15/11-9/15/14 11,717 13,152
- -----------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security:
Series 1998-6, Cl. SA, 7.993%, 3/16/28 2 4,158,393 424,344
Series 1998-19, Cl. SB, 5.766%, 7/16/28 2 6,792,807 753,747
Series 2001-21, Cl. SB, 4.769%, 1/16/27 2 7,704,243 599,423
- -----------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., Commercial Mtg. Obligations,
Trust 2002-9, Cl. A, 4.691%, 6/16/16 3,310,194 3,308,939
----------------
13,868,429
- -----------------------------------------------------------------------------------------------------------------------------
NON-AGENCY--9.8%
- -----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL--8.4%
Banc of America Commercial Mortgage, Inc., Commercial Mtg.
Pass-Through Certificates:
Series 2004-6, Cl. A3, 4.512%, 12/10/42 4,500,000 4,401,474
Series 2005-2, Cl. A4, 4.783%, 7/10/43 11,180,000 11,087,828
Series 2005-3, Cl. A2, 4.501%, 7/10/43 9,170,000 9,023,439
26 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL Continued
Banc of America Mortgage Securities, Inc., Collateralized Mtg.
Obligations Pass-Through Certificates:
Series 2004-8, Cl. 5A1, 6.50%, 5/25/32 $ 8,760,101 $ 8,927,094
Series 2004-E, Cl. 2A9, 3.712%, 6/25/34 2,532,025 2,532,008
Series 2005-E, Cl. 2A2, 4.989%, 6/25/35 1 2,468,954 2,464,477
- -----------------------------------------------------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage Securities, Inc., Commercial Mtg.
Obligations, Series 2005-PWR7, Cl. A2, 4.945%, 2/11/41 3,680,000 3,679,340
- -----------------------------------------------------------------------------------------------------------------------------
Countrywide Alternative Loan Trust, Collateralized Mtg. Obligations,
Series 2005-J3, Cl. 3A1, 6.50%, 9/25/34 15,971,294 16,308,853
- -----------------------------------------------------------------------------------------------------------------------------
First Union National Bank/Lehman Brothers/Bank of America Commercial
Mtg. Trust, Pass-Through Certificates, Series 1998-C2, Cl. A2, 6.56%, 11/18/35 6,999,540 7,266,410
- -----------------------------------------------------------------------------------------------------------------------------
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations:
Series 2004-C3, Cl. A2, 4.433%, 7/10/39 6,670,000 6,597,374
Series 2005-CA, Cl. A3, 4.578%, 6/10/48 3,100,000 3,046,059
Series 2005-C3, Cl. A2, 4.853%, 7/10/45 5,240,000 5,250,427
- -----------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Securities, Inc., Commercial Mtg.
Pass-Through Certificates:
Series 1997-C1, Cl. A3, 6.869%, 7/15/29 4,556,733 4,697,441
Series 2004-C3, Cl. A4, 4.547%, 12/10/41 4,960,000 4,859,439
- -----------------------------------------------------------------------------------------------------------------------------
Greenwich Capital Commercial Funding Corp., Commercial Mtg.
Pass-Through Certificates, Series 2005-G G3, Cl. A2, 4.305%, 8/10/42 6,190,000 6,071,769
- -----------------------------------------------------------------------------------------------------------------------------
GS Mortgage Securities Corp. II, Commercial Mtg. Pass-Through Certificates:
Series 2004-C1, Cl. A1, 3.659%, 10/10/28 5,713,194 5,567,168
Series 2004-GG2, Cl. A3, 4.602%, 8/10/38 4,235,000 4,209,900
- -----------------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial
Mtg. Pass-Through Certificates, Series 2005-LDP2, Cl. A2, 4.575%, 7/15/42 2,240,000 2,213,439
- -----------------------------------------------------------------------------------------------------------------------------
LB-UBS Securities Commercial Mortgage Trust, Commercial Mtg.
Pass-Through Certificates, Series 2005-C5, Cl. A2, 4.885%, 9/15/40 6,340,000 6,352,781
- -----------------------------------------------------------------------------------------------------------------------------
Mastr Alternative Loan Trust, Pass-Through Collateralized Mtg.
Obligations, Series 2004-6, Cl. 10A1, 6%, 7/25/34 12,048,152 12,192,468
- -----------------------------------------------------------------------------------------------------------------------------
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through
Certificates, Series 1998-D6, Cl. A1B, 6.59%, 3/15/30 7,900,000 8,254,486
- -----------------------------------------------------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust, Commercial Mtg. Obligations:
Series 2005-C17, Cl. A2, 4.782%, 3/15/42 10,760,000 10,730,497
Series 2005-C20, Cl. A5, 5.087%, 7/15/42 6,350,000 6,372,544
- -----------------------------------------------------------------------------------------------------------------------------
Washington Mutual Mortgage Securities Corp., Collateralized Mtg.
Pass-Through Certificates, Series 2005-AR5, Cl. A1, 4.684%, 5/25/35 1 9,695,778 9,700,817
- -----------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities Trust, Collateralized Mtg. Obligations:
Series 2004-DD, Cl. 2 A1, 4.53%, 1/25/35 1 5,825,181 5,814,468
Series 2004-W, Cl. A2, 4.594%, 11/25/34 1 1,303,526 1,300,503
----------------
168,922,503
27 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
OTHER--0.5%
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial
Mtg. Pass-Through Certificates, Series 2005-LDP4, Cl. A2, 4.79%, 10/15/42 $ 7,550,000 $ 7,531,578
- -----------------------------------------------------------------------------------------------------------------------------
Vendee Mortgage Trust, Interest-Only Stripped Mtg.-Backed Security:
Series 2002-3, Cl. IO, 4.763%, 8/15/32 2 5,368,449 91,986
Series 2003-1, Cl. IO, 7.525%, 11/15/32 2 10,632,914 165,517
- -----------------------------------------------------------------------------------------------------------------------------
Washington Mutual Mortgage Securities Corp., Collateralized Mtg.
Pass-Through Certificates, Series 2005-AR8, Cl. 2AB1, 4.08%, 7/25/45 1 3,455,194 3,455,194
----------------
11,244,275
- -----------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--0.9%
Countrywide Alternative Loan Trust, Collateralized Mtg. Obligations,
Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32 3 17,821,751 18,100,216
----------------
Total Mortgage-Backed Obligations (Cost $1,213,120,698) 1,202,942,419
- -----------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--51.2%
- -----------------------------------------------------------------------------------------------------------------------------
Fannie Mae Unsec. Nts.:
3.58%, 1/31/07 4 36,630,000 34,593,116
3.69%, 10/5/07 4 69,495,000 63,660,825
- -----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank Unsec. Bonds:
2.75%, 11/15/06 52,400,000 51,488,764
2.875%, 5/22/06 40,400,000 40,051,590
3.50%, 11/15/07 6,470,000 6,353,954
Series 1Y06, 2.375%, 2/15/06 75,000,000 74,571,000
Series S706, 5.375%, 5/15/06 17,900,000 18,015,598
- -----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Unsec. Nts.:
2.75%, 8/15/06 65,735,000 64,867,364
3.625%, 9/15/06-2/15/07 139,695,000 138,429,870
4%, 8/17/07 42,780,000 42,540,432
4.125%, 7/12/10 18,430,000 18,147,763
5.25%, 1/15/06 9,440,000 9,471,718
5.50%, 7/15/06 48,656,000 49,099,743
6.625%, 9/15/09 5 16,820,000 18,110,800
- -----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Unsec. Nts.:
2.20%, 12/4/06 81,700,000 79,714,036
3.01%, 6/2/06 13,030,000 12,915,152
3.25%, 7/31/06 18,305,000 18,149,426
4%, 2/28/07 14,690,000 14,610,938
4.25%, 9/15/07-8/15/10 72,430,000 72,109,778
5.50%, 2/15/06 114,715,000 115,347,768
6%, 5/15/08-5/15/11 40,110,000 42,478,956
6.625%, 9/15/09 8,605,000 9,255,168
- -----------------------------------------------------------------------------------------------------------------------------
Tennessee Valley Authority Bonds:
5.375%, 11/13/08 18,205,000 18,711,991
Series A, 6.79%, 5/23/12 17,048,000 19,161,424
----------------
Total U.S. Government Obligations (Cost $1,041,413,747) 1,031,857,174
28 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
VALUE
SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $2,400,247,537) 118.1% $2,379,958,132
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (18.1) (365,103,953)
---------------------------------------
NET ASSETS 100.0% $2,014,854,179
=======================================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Represents the current interest rate for a variable or increasing rate
security.
2. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows. These securities amount to $49,332,613 or 2.45% of the Fund's net assets
as of September 30, 2005.
3. When-issued security or forward commitment to be delivered and settled after
September 30, 2005. See Note 1 of Notes to Financial Statements.
4. Zero coupon bond reflects effective yield on the date of purchase.
5. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures sales contracts. The aggregate
market value of such securities is $17,550,895. See Note 5 of Notes to Financial
Statements.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF ASSETS AND LIABILITIES September 30, 2005
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------------------------------------
Investments, at value (cost $2,400,247,537)--see accompanying statement of investments $ 2,379,958,132
- ---------------------------------------------------------------------------------------------------------
Cash 4,651,353
- ---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold on a when-issued basis or forward commitment 107,322,667
Interest and principal paydowns 11,928,597
Shares of beneficial interest sold 2,716,771
Futures margins 584,966
Other 94,035
----------------
Total assets 2,507,256,521
- ---------------------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------------------
Unrealized depreciation on swap contracts 636,607
- ---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $478,658,166 purchased on
a when-issued basis or forward commitment) 480,448,678
Shares of beneficial interest redeemed 9,045,007
Distribution and service plan fees 1,233,313
Dividends 409,894
Transfer and shareholder servicing agent fees 368,135
Shareholder communications 132,969
Trustees' compensation 58,599
Other 69,140
----------------
Total liabilities 492,402,342
- ---------------------------------------------------------------------------------------------------------
NET ASSETS $ 2,014,854,179
================
- ---------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ---------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 201,508
- ---------------------------------------------------------------------------------------------------------
Additional paid-in capital 2,086,644,692
- ---------------------------------------------------------------------------------------------------------
Accumulated net investment income 17,358,984
- ---------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (70,458,976)
- ---------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (18,892,029)
----------------
NET ASSETS $ 2,014,854,179
================
30 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ---------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $1,149,201,786
and 114,875,526 shares of beneficial interest outstanding) $10.00
Maximum offering price per share (net asset value plus sales charge of 3.50% of offering price) $10.36
- ---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $344,928,264 and 34,491,310 shares
of beneficial interest outstanding) $10.00
- ---------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $386,310,397 and 38,694,212 shares
of beneficial interest outstanding) $ 9.98
- ---------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $50,591,982 and 5,062,127 shares
of beneficial interest outstanding) $ 9.99
- ---------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $83,821,750 and 8,385,198 shares of beneficial interest outstanding) $10.00
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF OPERATIONS For the Year Ended September 30, 2005
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------
INVESTMENT INCOME
- -----------------------------------------------------------------------
Interest $ 70,372,113
- -----------------------------------------------------------------------
Fee income 11,144,225
- -----------------------------------------------------------------------
Portfolio lending fees 322,476
- -----------------------------------------------------------------------
Other income 38,143
-------------
Total investment income 81,876,957
- -----------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------
Management fees 8,839,599
- -----------------------------------------------------------------------
Distribution and service plan fees:
Class A 2,875,441
Class B 4,119,744
Class C 4,319,055
Class N 253,037
- -----------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 2,270,949
Class B 977,482
Class C 696,588
Class N 176,130
Class Y 117,873
- -----------------------------------------------------------------------
Shareholder communications:
Class A 149,466
Class B 93,561
Class C 52,076
Class N 6,403
- -----------------------------------------------------------------------
Custodian fees and expenses 92,376
- -----------------------------------------------------------------------
Trustees' compensation 49,775
- -----------------------------------------------------------------------
Accounting service fees 12,000
- -----------------------------------------------------------------------
Other 219,592
-------------
Total expenses 25,321,147
Less reduction to custodian expenses (55,194)
Less waivers and reimbursements of expenses (3,924,716)
-------------
Net expenses 21,341,237
- -----------------------------------------------------------------------
NET INVESTMENT INCOME 60,535,720
32 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
- ---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- ---------------------------------------------------------------------------
Net realized gain (loss) on:
Investments $ (13,837,471)
Closing of futures contracts 829,427
Swap contracts (20,780)
----------------
Net realized loss (13,028,824)
- ---------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments (24,057,301)
Futures contracts 1,992,308
Swap contracts (656,008)
----------------
Net change in unrealized depreciation (22,721,001)
- ---------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 24,785,895
================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2005 2004
- --------------------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------------------
Net investment income $ 60,535,720 $ 66,822,614
- --------------------------------------------------------------------------------------------------
Net realized loss (13,028,824) (30,156,913)
- --------------------------------------------------------------------------------------------------
Net change in unrealized depreciation (22,721,001) (11,166,484)
----------------------------------
Net increase in net assets resulting from operations 24,785,895 25,499,217
- --------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (36,424,594) (34,769,506)
Class B (9,659,784) (11,684,683)
Class C (10,175,034) (11,473,120)
Class N (1,452,293) (1,102,337)
Class Y (2,823,513) (7,793,465)
- --------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from beneficial interest transactions:
Class A (32,465,253) (148,840,842)
Class B (143,703,813) (219,134,910)
Class C (91,072,694) (192,428,031)
Class N 3,976,753 4,502,092
Class Y (173,911,342) 20,841,663
- --------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------
Total decrease (472,925,672) (576,383,922)
- --------------------------------------------------------------------------------------------------
Beginning of period 2,487,779,851 3,064,163,773
----------------------------------
End of period (including accumulated net investment
income of $17,358,984 and $11,567,134, respectively) $ 2,014,854,179 $ 2,487,779,851
==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED SEPTEMBER 30, 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.17 $ 10.33 $ 10.35 $ 10.22 $ 9.93
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .31 1 .29 .22 .44 .50
Net realized and unrealized gain (loss) (.16) (.17) (.01) .13 .37
--------------------------------------------------------------------------
Total from investment operations .15 .12 .21 .57 .87
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.32) (.28) (.23) (.44) (.58)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.00 $ 10.17 $ 10.33 $ 10.35 $ 10.22
==========================================================================
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 1.45% 1.22% 2.01% 5.72% 8.98%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,149,202 $ 1,201,379 $ 1,369,364 $ 1,355,382 $ 786,012
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 1,171,442 $ 1,257,178 $ 1,476,397 $ 968,852 $ 681,977
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.11% 2.77% 2.14% 4.27% 4.96%
Total expenses 0.88% 0.88% 0.88% 0.88% 0.85%
Expenses after payments and waivers and
reduction to custodian expenses 0.70% 0.79% 0.88% 0.88% 0.85%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 101% 4 75% 4 82% 161% 97%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- -------------------------------------------------------------------------
Year Ended September 30, 2005 $ 6,727,092,497 $ 6,985,663,762
Year Ended September 30, 2004 9,662,274,960 10,097,758,478
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED SEPTEMBER 30, 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.17 $ 10.32 $ 10.35 $ 10.22 $ 9.93
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .24 1 .22 .14 .37 .43
Net realized and unrealized gain (loss) (.17) (.16) (.02) .12 .36
--------------------------------------------------------------------------
Total from investment operations .07 .06 .12 .49 .79
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.24) (.21) (.15) (.36) (.50)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.00 $ 10.17 $ 10.32 $ 10.35 $ 10.22
==========================================================================
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 0.69% 0.56% 1.14% 4.93% 8.17%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 344,928 $ 495,417 $ 723,564 $ 759,144 $ 425,088
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 412,054 $ 586,747 $ 800,685 $ 523,711 $ 353,905
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 2.34% 1.99% 1.39% 3.50% 4.20%
Total expenses 1.69% 1.66% 1.62% 1.63% 1.60%
Expenses after payments and waivers and
reduction to custodian expenses 1.45% 1.55% 1.62% 1.63% 1.60%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 101% 4 75% 4 82% 161% 97%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- -------------------------------------------------------------------------
Year Ended September 30, 2005 $ 6,727,092,497 $ 6,985,663,762
Year Ended September 30, 2004 9,662,274,960 10,097,758,478
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
CLASS C YEAR ENDED SEPTEMBER 30, 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.15 $ 10.30 $ 10.33 $ 10.20 $ 9.92
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .24 1 .22 .15 .36 .44
Net realized and unrealized gain (loss) (.17) (.16) (.03) .13 .34
--------------------------------------------------------------------------
Total from investment operations .07 .06 .12 .49 .78
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.24) (.21) (.15) (.36) (.50)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.98 $ 10.15 $ 10.30 $ 10.33 $ 10.20
==========================================================================
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 0.69% 0.58% 1.21% 4.95% 8.08%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 386,310 $ 484,575 $ 685,735 $ 656,959 $ 248,537
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 432,392 $ 565,671 $ 733,037 $ 407,864 $ 190,885
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 2.35% 2.03% 1.45% 3.43% 4.21%
Total expenses 1.60% 1.58% 1.56% 1.62% 1.60%
Expenses after payments and waivers and
reduction to custodian expenses 1.45% 1.52% 1.56% 1.62% 1.60%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 101% 4 75% 4 82% 161% 97%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- -------------------------------------------------------------------------
Year Ended September 30, 2005 $ 6,727,092,497 $ 6,985,663,762
Year Ended September 30, 2004 9,662,274,960 10,097,758,478
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED SEPTEMBER 30, 2005 2004 2003 2002 2001 1
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.16 $ 10.32 $ 10.35 $ 10.21 $ 10.06
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .29 2 .25 .19 .37 .32
Net realized and unrealized gain (loss) (.17) (.16) (.03) .19 .15
---------------------------------------------------------------------------
Total from investment operations .12 .09 .16 .56 .47
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.29) (.25) (.19) (.42) (.32)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.99 $ 10.16 $ 10.32 $ 10.35 $ 10.21
===========================================================================
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 1.20% 0.91% 1.58% 5.60% 4.74%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 50,592 $ 47,472 $ 43,645 $ 24,101 $ 1,922
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 50,758 $ 44,515 $ 35,965 $ 8,750 $ 597
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 2.86% 2.48% 1.75% 3.62% 5.29%
Total expenses 1.29% 1.26% 1.20% 1.11% 0.87%
Expenses after payments and waivers and
reduction to custodian expenses 0.95% 1.08% 1.20% 1.11% 0.87%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 101% 5 75% 5 82% 161% 97%
1. For the period from March 1, 2001 (inception of offering) to September 30,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
4. Annualized for periods of less than one full year.
5. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- -------------------------------------------------------------------------
Year Ended September 30, 2005 $ 6,727,092,497 $ 6,985,663,762
Year Ended September 30, 2004 9,662,274,960 10,097,758,478
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
CLASS Y YEAR ENDED SEPTEMBER 30, 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.17 $ 10.32 $ 10.34 $ 10.21 $ 9.93
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .34 1 .32 .26 .47 .56
Net realized and unrealized gain (loss) (.17) (.15) (.01) .14 .33
--------------------------------------------------------------------------
Total from investment operations .17 .17 .25 .61 .89
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.34) (.32) (.27) (.48) (.61)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.00 $ 10.17 $ 10.32 $ 10.34 $ 10.21
==========================================================================
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 1.69% 1.68% 2.41% 6.13% 9.19%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 83,822 $ 258,937 $ 241,856 $ 141,508 $ 42,527
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 84,227 $ 248,689 $ 201,564 $ 86,883 $ 22,239
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.35% 3.13% 2.53% 4.54% 5.14%
Total expenses 0.57% 0.42% 0.44% 0.49% 0.71%
Expenses after payments and waivers and
reduction to custodian expenses 0.45% 0.42% 0.44% 0.49% 0.71%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 101% 4 75% 4 82% 161% 97%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- -------------------------------------------------------------------------
Year Ended September 30, 2005 $ 6,727,092,497 $ 6,985,663,762
Year Ended September 30, 2004 9,662,274,960 10,097,758,478
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Limited-Term Government Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an 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, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, Class C and Class N shares are
sold without a front-end sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class N shares are sold only through retirement
plans. Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
may impose charges on those accounts. All classes of shares have identical
rights and voting privileges with respect to the Fund in general and exclusive
voting rights on matters that affect that class alone. Earnings, net assets and
net asset value per share may differ due to each class having its own expenses,
such as transfer and shareholder servicing agent fees and shareholder
communications, directly attributable to that class. Class A, B, C and N 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.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities listed or traded on National
Stock Exchanges or other domestic exchanges are valued based on the last sale
price of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ prior to the time when the Fund's assets are valued. In
the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing "bid" and "asked"
prices, and if not, at the closing bid price. Securities traded on foreign
exchanges are valued based on the last sale price on the principal exchange on
which the security is traded, in the country that is identified by the portfolio
pricing service, prior to the time when the Fund's assets are valued. In the
absence of a sale, the security is valued at the official closing price on the
principal exchange. Corporate, government and municipal debt instruments having
a remaining maturity in excess of sixty days and all mortgage-backed securities
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded on a commodities or futures exchange will be valued at the
final settlement price or official closing price on the principal exchange as
reported by
40 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
such principal exchange at its trading session ending at, or most recently prior
to, the time when the Fund's assets are valued. Securities (including restricted
securities) for which market quotations are not readily available are valued at
their fair value. Foreign and domestic securities whose values have been
materially affected by what the Manager identifies as a significant event
occurring before the Fund's assets are valued but after the close of their
respective exchanges will be fair valued. Fair value is determined in good faith
using consistently applied procedures under the supervision of the Board of
Trustees. Short-term "money market type" debt securities with remaining
maturities of sixty days or less are valued at amortized cost (which
approximates market value).
- --------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Fund may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this 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
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward commitment may increase the volatility of the Fund's net asset
value to the extent the Fund executes such transactions while remaining
substantially fully invested. The Fund may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of September 30, 2005, the Fund had purchased
$478,658,166 of securities issued on a when-issued basis or forward commitment
and sold $107,322,667 of securities issued on a when-issued basis or forward
commitment.
In connection with its ability to purchase or sell securities on a
when-issued basis, the Fund may enter into forward roll transactions with
respect to mortgage-related securities. Forward roll transactions require the
sale of securities for delivery in the current month, and a simultaneous
agreement with the same counterparty to repurchase similar (same type, coupon
and maturity) but not identical securities on a specified future date. The Fund
records the incremental difference between the forward purchase and sale of each
forward roll as realized gain (loss) on investments or as fee income in the case
of such transactions that have an associated fee in lieu of a difference in the
forward purchase and sale price.
Risks of entering into forward roll transactions include the potential
inability of the counterparty to meet the terms of the agreement; the potential
of the Fund to receive inferior securities at redelivery as compared to the
securities sold to the counterparty; counterparty credit risk; and the potential
pay down speed variance between the mortgage-related pools.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to
41 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
DEPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3,4 TAX PURPOSES
- --------------------------------------------------------------------------------
$ 16,766,344 $ -- $ 68,213,535 $ 20,499,049
1. As of September 30, 2005, the Fund had $54,612,566 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of September 30, 2005,
details of the capital loss carryforwards were as follows:
EXPIRING
-----------------------
2011 $ 16,833,987
2013 37,778,579
------------
Total $ 54,612,566
============
2. As of September 30, 2005, the Fund had $13,600,969 of post-October losses
available to offset future realized capital gains, if any. Such losses, if
unutilized, will expire in 2014.
3. During the fiscal year ended September 30, 2005, the Fund did not utilize any
capital loss carryforward.
4. During the fiscal year ended September 30, 2004, the Fund utilized
$37,876,495 of capital loss carryforward to offset capital gains realized in
that fiscal year.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for September 30, 2005. Net assets of
the Fund were unaffected by the reclassifications.
42 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
INCREASE TO INCREASE TO
ACCUMULATED ACCUMULATED NET
NET INVESTMENT REALIZED LOSS
INCOME ON INVESTMENTS
--------------------------------
$ 5,791,348 $ 5,791,348
The tax character of distributions paid during the years ended September 30,
2005 and September 30, 2004 was as follows:
YEAR ENDED YEAR ENDED
SEPT. 30, 2005 SEPT. 30, 2004
----------------------------------------------------------
Distributions paid from:
Ordinary income $ 60,535,218 $ 66,823,111
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of September 30, 2005 are noted below. The
primary difference between book and tax appreciation or depreciation of
securities and other investments, if applicable, is attributable to the tax
deferral of losses or tax realization of financial statement unrealized gain or
loss.
Federal tax cost of securities $ 2,400,584,441
Federal tax cost of other investments (173,019,006)
---------------
Total federal tax cost $ 2,227,565,435
===============
Gross unrealized appreciation $ 5,173,566
Gross unrealized depreciation (25,672,615)
---------------
Net unrealized depreciation $ (20,499,049)
===============
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred
compensation plan for independent trustees that enables trustees to elect to
defer receipt of all or a portion of the annual compensation they are entitled
to receive from the Fund. For purposes of determining the amount owed to the
Trustee under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or in other Oppenheimer funds
selected by the Trustee. The Fund purchases shares of the funds selected for
deferral by the Trustee in amounts equal to his or her deemed investment,
resulting in a Fund asset equal to the deferred compensation liability. Such
assets are included as a component of "Other" within the asset section of the
Statement of Assets and Liabilities. Deferral of trustees' fees under the plan
will not affect the net assets of the Fund, and will not materially affect the
Fund's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income distributions, if any, are declared
daily and paid monthly. Capital gain distributions, if any, are declared and
paid annually.
43 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts at a rate equal to the Federal
Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if
applicable, represents earnings on cash balances maintained by the Fund during
the period. Such interest expense and other custodian fees may be paid with
these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. 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.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED SEPTEMBER 30, 2005 YEAR ENDED SEPTEMBER 30, 2004
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------
CLASS A
Sold 38,337,232 $ 387,267,089 40,630,083 $ 416,196,670
Dividends and/or
distributions reinvested 3,066,260 30,928,765 2,826,916 28,910,881
Redeemed (44,614,244) (450,661,107) (57,989,648) (593,948,393)
-------------------------------------------------------------
Net decrease (3,210,752) $ (32,465,253) (14,532,649) $(148,840,842)
=============================================================
- ---------------------------------------------------------------------------------------
CLASS B
Sold 4,212,607 $ 42,534,890 7,347,600 $ 75,191,905
Dividends and/or
distributions reinvested 807,935 8,150,076 936,022 9,570,054
Redeemed (19,242,001) (194,388,779) (29,671,231) (303,896,869)
-------------------------------------------------------------
Net decrease (14,221,459) $(143,703,813) (21,387,609) $(219,134,910)
=============================================================
44 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
YEAR ENDED SEPTEMBER 30, 2005 YEAR ENDED SEPTEMBER 30, 2004
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------
CLASS C
Sold 7,186,582 $ 72,471,759 10,486,684 $ 107,208,148
Dividends and/or
distributions reinvested 805,282 8,107,614 862,892 8,809,433
Redeemed (17,024,609) (171,652,067) (30,168,509) (308,445,612)
-----------------------------------------------------------------
Net decrease (9,032,745) $ (91,072,694) (18,818,933) $ (192,428,031)
=================================================================
- -------------------------------------------------------------------------------------------
CLASS N
Sold 2,667,582 $ 26,898,049 2,509,487 $ 25,690,585
Dividends and/or
distributions reinvested 127,477 1,284,398 94,971 969,952
Redeemed (2,403,568) (24,205,694) (2,164,858) (22,158,445)
-----------------------------------------------------------------
Net increase 391,491 $ 3,976,753 439,600 $ 4,502,092
=================================================================
- -------------------------------------------------------------------------------------------
CLASS Y
Sold 5,396,842 $ 54,355,722 10,414,242 $ 106,381,723
Dividends and/or
distributions reinvested 185,913 1,871,852 14,407 146,759
Redeemed (22,667,861) (230,138,916) (8,398,917) (85,686,819)
-----------------------------------------------------------------
Net increase (decrease) (17,085,106) $(173,911,342) 2,029,732 $ 20,841,663
=================================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended September 30, 2005, were as
follows:
PURCHASES SALES
- ---------------------------------------------------------------
Investment securities $1,102,233,851 $ 942,907,109
U.S. government and
government agency obligations 968,328,052 1,376,794,928
To Be Announced (TBA)
mortgage-related securities 6,727,092,497 6,985,663,762
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at annual
rate 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.
- --------------------------------------------------------------------------------
ACCOUNTING FEES. 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.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for
preparing and filing the Fund's tax returns.
45 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended September 30, 2005, the Fund paid
$4,246,701 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor currently uses all of those fees to
pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of 0.25% per year under each plan. If either the Class B, Class C or
Class N plan is terminated by the Fund or by the shareholders of a class, the
Board of Trustees and its independent trustees must determine whether the
Distributor shall be entitled to payment from the Fund of all or a portion of
the service fee and/or asset-based sales charge in respect to shares sold prior
to the effective date of such termination. The Distributor's aggregate
uncompensated expenses under the plan at September 30, 2005 for Class C and
Class N shares were $14,010,003 and $1,129,331, respectively. Fees incurred by
the Fund under the plans are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and
46 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
the CDSC retained by the Distributor on the redemption of shares is shown in the
table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -------------------------------------------------------------------------------------------------------
September 30, 2005 $ 574,271 $ 7,055 $ 962,593 $ 66,370 $ 80,932
- -------------------------------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily undertaken
to limit the "Expenses after payments and waivers and reduction to custodian
expenses" for all classes of shares so that "Expenses after payments and waivers
and reduction to custodian expenses," as percentages of average daily net
assets, will not exceed the following annual rates: 0.70% for the Class A
shares; 1.45% for the Class B and Class C shares, respectively; 0.95% for the
Class N shares and 0.45% for the Class Y shares. During the year ended September
30, 2005, the Manager reimbursed the Fund $2,066,794, $958,289, $634,314,
$164,219 and $94,267 for Class A, Class B, Class C, Class N and Class Y shares,
respectively. The Manager may amend or terminate this voluntary expense
limitation arrangement at any time without notice to shareholders.
OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class.
During the year ended September 30, 2005, OFS waived $4,619 and $2,214 for Class
N and Class Y shares, respectively. This undertaking may be amended or withdrawn
at any time.
- --------------------------------------------------------------------------------
5. FUTURES CONTRACTS
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy and
sell futures contracts that relate to broadly based securities indices
(financial futures) or debt securities (interest rate futures) in order to gain
exposure to or protection from changes in market value of stocks and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.
The Fund generally sells futures contracts as a hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures contracts to gain exposure to market changes as it may
be more efficient or cost effective than actually buying 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 has expired.
47 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FUTURES CONTRACTS Continued
Cash held by the broker to cover initial margin requirements on open
futures contracts is noted in the Statement of Assets and Liabilities.
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. Realized gains and losses are
reported in the Statement of Operations as the closing and expiration of futures
contracts. The net change in unrealized appreciation and depreciation is
reported in the Statement of Operations.
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 September 30, 2005, the Fund had outstanding futures contracts as follows:
VALUATION AS OF UNREALIZED
EXPIRATION NUMBER OF SEPTEMBER 30, APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS 2005 (DEPRECIATION)
- -------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
U.S. Long Bonds 12/20/05 349 $ 39,927,781 $ (892,782)
U.S. Treasury Nts., 2 yr. 12/30/05 352 72,473,500 (154,771)
---------------
(1,047,553)
---------------
CONTRACTS TO SELL
U.S. Treasury Nts., 5 yr. 12/20/05 839 89,655,016 523,141
U.S. Treasury Nts., 10 yr. 12/20/05 1,774 195,001,406 2,558,394
---------------
3,081,535
---------------
$ 2,033,982
===============
- --------------------------------------------------------------------------------
6. TOTAL RETURN SWAP CONTRACTS
The Fund may enter into a total return swap transaction to maintain a total
return on a particular investment, or portion of its portfolio, or for other
non-speculative purposes. Because the principal amount is not exchanged, it
represents neither an asset nor a liability to either counterparty, and is
referred to as notional. The Fund records an increase or decrease to unrealized
gain (loss), in the amount due to or owed by the Fund at termination or
settlement. Total return swaps are subject to risks (if the counterparty fails
to meet its obligations).
48 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
As of September 30, 2005, the Fund had entered into the following total return
swap agreements:
PAID RECEIVED
BY THE RATE BY THE RATE
FUND AT AS OF FUND AT AS OF
SWAP NOTIONAL SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30, TERMINATION UNREALIZED
COUNTERPARTY AMOUNT 2005 2005 2005 2005 DATE DEPRECIATION
- -----------------------------------------------------------------------------------------------------
One-Month
LIBOR minus Value of
0.25% Total Return
(+ or -) of Lehman
Rate Brothers
UBS AG $46,110,000 Received 5.04893% CMBS Index (1.36)%* 12/1/05 $625,408
* Represents an additional amount paid by the Fund at September 30, 2005.
Index abbreviations are as follows:
CMBS Commercial Mortgage Backed Securities
LIBOR London-Interbank Offered Rate
- --------------------------------------------------------------------------------
7. INTEREST RATE SWAP CONTRACTS
The Fund may enter into an interest rate swap transaction to maintain a total
return or yield spread on a particular investment, or portion of its portfolio,
or for other non-speculative purposes. Interest rate swaps involve the exchange
of commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. The coupon payments are based on an agreed
upon principal amount and a specified index. Because the principal amount is not
exchanged, it represents neither an asset nor a liability to either
counterparty, and is referred to as notional. The Fund records an increase or
decrease to unrealized gain (loss), in the amount due to or owed by the Fund at
termination or settlement.
Interest rate swaps are subject to credit risk (if the counterparty fails to
meet its obligations) and interest rate risk. The Fund could be obligated to pay
more under its swap agreements than it receives under them, as a result of
interest rate changes.
As of September 30, 2005, the Fund had entered into the following interest rate
swap agreements:
RATE RATE
PAID RECEIVED
BY THE BY THE
FUND AT FUND AT
SWAP NOTIONAL SEPT. 30, SEPT. 30, FLOATING TERMINATION UNREALIZED
COUNTERPARTY AMOUNT 2005 2005 RATE INDEX DATE DEPRECIATION
- --------------------------------------------------------------------------------------
Morgan
Stanley
Capital
Services, Three-Month
Inc. $1,000,00 3.53% 1.895% LIBOR 4/2/06 $11,199
Index abbreviations are as follows:
LIBOR London-Interbank Offered Rate
49 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. SECURITIES LENDING
The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of US
Treasury obligations or cash, against the loaned securities and maintains
collateral in an amount not less than 100% of the market value of the loaned
securities during the period of the loan. The market value of the loaned
securities is determined at the close of business of the funds and any
additional required collateral is delivered to the Fund on the next business
day. If the borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the Fund could experience delays and
cost in recovering the securities loaned or in gaining access to the collateral.
Cash collateral is invested in cash equivalents. The Fund retains a portion of
the interest earned from the collateral. The Fund continues to receive the
economic benefit of interest or dividends paid on the securities loaned in the
form of a substitute payment received from the borrower. As of September 30,
2005, the Fund had no securities on loan.
- --------------------------------------------------------------------------------
9. LITIGATION
A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor, as well as 51 of the
Oppenheimer funds (as "Nominal Defendants") including the Fund, 30 present and
former Directors or Trustees and 8 present and former officers of the funds.
This complaint, initially filed in the U.S. District Court for the Southern
District of New York on January 10, 2005 and amended on March 4, 2005,
consolidates into a single action and amends six individual previously-filed
putative derivative and class action complaints. Like those prior complaints,
the complaint alleges that the Manager charged excessive fees for distribution
and other costs, improperly used assets of the funds in the form of directed
brokerage commissions and 12b-1 fees to pay brokers to promote sales of the
funds, and failed to properly disclose the use of assets of the funds to make
those payments in violation of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary duties
to shareholders of the funds under the Investment Company Act of 1940 and at
common law. The complaint seeks unspecified compensatory and punitive damages,
rescission of the funds' investment advisory agreements, an accounting of all
fees paid, and an award of attorneys' fees and litigation expenses.
The defendants believe that the allegations contained in the Complaints are
without merit and that they have meritorious defenses against the claims
asserted. The defendants intend to defend these lawsuits vigorously and to
contest any claimed liability. The defendants believe that it is premature to
render any opinion as to the likelihood of an outcome unfavorable to them and
that no estimate can yet be made with any degree of certainty as to the amount
or range of any potential loss.
50 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER LIMITED-TERM GOVERNMENT
FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Limited-Term Government Fund, including the statement of
investments, as of September 30, 2005, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit includes consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of September 30, 2005, by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Limited-Term Government Fund as of September 30, 2005, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the periods presented, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
November 18, 2005
51 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FEDERAL INCOME TAX INFORMATION Unaudited
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In early 2006, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2005. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
52 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
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The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file Form N-PX, with its complete proxy voting record for the 12 months ended
June 30th, no later than August 31st of each year. The Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
53 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
TRUSTEES AND OFFICERS Unaudited
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NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER
THE FUND, LENGTH OF SERVICE, TRUSTEESHIPS/DIRECTORSHIPS HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX
AGE CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY,
TRUSTEES CENTENNIAL, CO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, OR
UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. ARMSTRONG, Chairman of the following private mortgage banking companies: Cherry Creek
Chairman of the Board Mortgage Company (since 1991), Centennial State Mortgage Company (since
of Trustees (since 2003) 1994), and The El Paso Mortgage Company (since 1993); Chairman of the fol-
and Trustee (since 1999) lowing private companies: Ambassador Media Corporation (since 1984) and
Age: 68 Broadway Ventures (since 1984); Director of the following: Helmerich &
Payne, Inc. (oil and gas drilling/production company) (since 1992), Campus
Crusade for Christ (since 1991) and The Lynde and Harry Bradley
Foundation, Inc. (non-profit organization) (since 2002); former Chairman
of the following: Transland Financial Services, Inc. (private mortgage
banking company) (1997-2003), Great Frontier Insurance (insurance agency)
(1995-2000), Frontier Real Estate, Inc. (residential real estate
brokerage) (1994-2000) and Frontier Title (title insurance agency)
(1995-2000); former Director of the following: UNUMProvident (insurance
company) (1991-2004), Storage Technology Corporation (computer equipment
company) (1991-2003) and International Family Entertainment (television
channel) (1992-1997); U.S. Senator (January 1979-January 1991). Oversees
38 portfolios in the OppenheimerFunds complex.
ROBERT G. AVIS, Director and President of A.G. Edwards Capital, Inc. (General Partner of
Trustee (since 1993) private equity funds) (until February 2001); Chairman, President and Chief
Age: 74 Executive Officer of A.G. Edwards Capital, Inc. (until March 2000);
Director of A.G. Edwards & Sons, Inc. (brokerage company) (until 2000) and
A.G. Edwards Trust Company (investment adviser) (until 2000); Vice
Chairman and Director of A.G. Edwards, Inc. (until March 1999); Vice
Chairman of A.G. Edwards & Sons, Inc. (until March 1999); Chairman of A.G.
Edwards Trust Company (until March 1999) and A.G.E. Asset Management
(investment adviser) (until March 1999). Oversees 38 portfolios in the
OppenheimerFunds complex.
GEORGE C. BOWEN, Assistant Secretary and Director of Centennial Asset Management
Trustee (since 1998) Corporation (December 1991-April 1999); President, Treasurer and Director
Age: 69 of Centennial Capital Corporation (June 1989-April 1999); Chief Executive
Officer and Director of MultiSource Services, Inc. (March 1996-April
1999); Mr. Bowen held several positions with the Manager and with
subsidiary or affiliated companies of the Manager (September 1987-April
1999). Oversees 38 portfolios in the OppenheimerFunds complex.
EDWARD L. CAMERON, Member of The Life Guard of Mount Vernon (George Washington historical
Trustee (since 2001) site) (since June 2000); Director of Genetic ID, Inc. (biotech company)
Age: 67 (March 2001-May 2002); Partner at PricewaterhouseCoopers LLP (accounting
firm) (July 1974-June 1999); Chairman of Price Waterhouse LLP Global
Investment Management Industry Services Group (July 1994-June 1998).
Oversees 38 portfolios in the OppenheimerFunds complex.
JON S. FOSSEL, Director of UNUMProvident (insurance company) (since June 2002); Director
Trustee (since 1990) of Northwestern Energy Corp. (public utility corporation) (since November
Age: 63 2004); Director of P.R. Pharmaceuticals (October 1999-October 2003);
Director of Rocky Mountain Elk Foundation (non-profit organization)
(February 1998-February 2003); Chairman and Director (until October 1996)
and President and Chief Executive Officer (until October 1995) of the
Manager; President, Chief Executive Officer and Director of the following:
Oppenheimer Acquisition Corp.
54 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
JON S. FOSSEL, ("OAC") (parent holding company of the Manager), Shareholders Services,
Continued Inc. and Shareholder Financial Services, Inc. (until October 1995).
Oversees 38 portfolios in the OppenheimerFunds complex.
SAM FREEDMAN, Director of Colorado Uplift (charitable organization) (since September
Trustee (since 1996) 1984). Mr. Freedman held several positions with the Manager and with
Age: 65 subsidiary or affiliated companies of the Manager (until October 1994).
Oversees 38 portfolios in the OppenheimerFunds complex.
BEVERLY L. HAMILTON, Trustee of Monterey Institute for International Studies (educational
Trustee (since 2002) organization) (since February 2000); Director of The California Endowment
Age: 59 (philanthropic organization) (since April 2002); Director of Community
Hospital of Monterey Peninsula (since February 2002); Director of American
Funds' Emerging Markets Growth Fund, Inc. (mutual fund) (since October
1991); President of ARCO Investment Management Company (February
1991-April 2000); Member of the investment committees of The Rockefeller
Foundation and The University of Michigan; Advisor at Credit Suisse First
Boston's Sprout venture capital unit (venture capital fund) (1994-January
2005); Trustee of MassMutual Institutional Funds (investment company)
(1996-June 2004); Trustee of MML Series Investment Fund (investment
company) (April 1989-June 2004); Member of the investment committee of
Hartford Hospital (2000-2003); and Advisor to Unilever (Holland) pension
fund (2000-2003). Oversees 38 portfolios in the OppenheimerFunds complex.
ROBERT J. MALONE, Director of Jones International University (educational organization)
Trustee (since 2002) (since August 2005); Chairman, Chief Executive Officer and Director of
Age: 61 Steele Street State Bank (commercial banking) (since August 2003);
Director of Colorado UpLIFT (charitable organization) (since 1986);
Trustee of the Gallagher Family Foundation (non-profit organization)
(since 2000); Former Chairman of U.S. Bank-Colorado (subsidiary of U.S.
Bancorp and formerly Colorado National Bank) (July 1996-April 1999);
Director of Commercial Assets, Inc. (real estate investment trust)
(1993-2000); Director of Jones Knowledge, Inc. (2001-July 2004); and
Director of U.S. Exploration, Inc. (oil and gas exploration) (1997-
February 2004). Oversees 38 portfolios in the OppenheimerFunds complex.
F. WILLIAM MARSHALL, JR., Trustee of MassMutual Select Funds (formerly MassMutual Institutional
Trustee (since 2001) Funds) (investment company) (since 1996) and MML Series Investment Fund
Age: 63 (investment company) (since 1996), the Springfield Library and Museum
Association (museums) (since 1995) and the Community Music School of
Springfield (music school) (since 1996); Chairman and Trustee (since 2003)
and Chairman of the Investment Committee (since 1994) of the Worcester
Polytech Institute (private university); President and Treasurer of the
SIS Funds (private charitable fund) (since January 1999); Chairman of SIS
& Family Bank, F.S.B. (formerly SIS Bank) (commercial bank) (January
1999-July 1999); Member of the Investment Committee of the Community
Foundation of Western Massachusetts (1998-2003); and Executive Vice
President of Peoples Heritage Financial Group, Inc. (commercial bank)
(January 1999-July 1999). Oversees 40 portfolios in the OppenheimerFunds
complex.
55 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
TRUSTEES AND OFFICERS Unaudited / Continued
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INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY
AND OFFICER STREET, 11TH FLOOR, NEW YORK, NY 10281-1008. MR. MURPHY SERVES AS A
TRUSTEE FOR AN INDEFINITE TERM AND AS AN OFFICER FOR AN ANNUAL TERM, OR
UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL. MR. MURPHY IS AN
INTERESTED TRUSTEE DUE TO HIS POSITIONS WITH OPPENHEIMERFUNDS, INC. AND
ITS AFFILIATES.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and
President and President (since September 2000) of the Manager; President and Director or
Principal Executive Officer Trustee of other Oppenheimer funds; President and Director of OAC and of
(since 2001) Oppenheimer Partnership Holdings, Inc. (holding company subsidiary of the
and Trustee Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc.
(since 2001) (subsidiary of the Manager) (since November 2001); Chairman and Director
Age: 56 of Shareholder Services, Inc. and of Shareholder Financial Services,
Inc. (transfer agent subsidiaries of the Manager) (since July 2001);
President and Director of OppenheimerFunds Legacy Program (charitable
trust program established by the Manager) (since July 2001); Director of
the following investment advisory subsidiaries of the Manager: OFI
Institutional Asset Management, Inc., Centennial Asset Management
Corporation, Trinity Investment Management Corporation and Tremont Capital
Management, Inc. (since November 2001), HarbourView Asset Management
Corporation and OFI Private Investments, Inc. (since July 2001); President
(since November 2001) and Director (since July 2001) of Oppenheimer Real
Asset Management, Inc.; Executive Vice President of Massachusetts Mutual
Life Insurance Company (OAC's parent company) (since February 1997);
Director of DLB Acquisition Corporation (holding company parent of Babson
Capital Management LLC) (since June 1995); Member of the Investment
Company Institute's Board of Governors (since October 3, 2003); Chief
Operating Officer of the Manager (September 2000-June 2001); President and
Trustee of MML Series Investment Fund and MassMutual Select Funds
(openend investment companies) (November 1999-November 2001); Director of
C.M. Life Insurance Company (September 1999-August 2000); President, Chief
Executive Officer and Director of MML Bay State Life Insurance Company
(September 1999-August 2000); Director of Emerald Isle Bancorp and
Hibernia Savings Bank (whollyowned subsidiary of Emerald Isle Bancorp)
(June 1989-June 1998). Oversees 77 portfolios as a Trustee or Director and
10 additional portfolios as an officer in the OppenheimerFunds complex.
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OTHER OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS.
OF THE FUND MANIOUDAKIS AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH
FLOOR, NEW YORK, NY 10281-1008, FOR MESSRS. VANDEHEY AND WIXTED 6803 S.
TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN ANNUAL
TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
ANGELO G. MANIOUDAKIS, Senior Vice President of the Manager (since April 2002), of HarbourView
Vice President (since 2002) Asset Management Corporation (since April 2002 and of OFI Institutional
Age: 39 Asset Management, Inc. (since June 2002). Formerly Executive Director and
portfolio manager for Miller, Anderson & Sherrerd, a division of Morgan
Stanley Investment Management (August 1993-April 2002). An officer of 14
portfolios in the OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since
Vice President and March 2004); Vice President of OppenheimerFunds Distributor, Inc.,
Chief Compliance Officer Centennial Asset Management Corporation and Shareholder Services, Inc.
(since 2004) (since June 1983); Vice President and Director of Internal Audit of the
Age: 55 Manager (1997-February 2004). An officer of 87 portfolios in the
OppenheimerFunds complex.
56 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999);
Treasurer and Treasurer of the following: HarbourView Asset Management Corporation,
Principal Financial and Shareholder Financial Services, Inc., Shareholder Services, Inc.,
Accounting Officer Oppenheimer Real Asset Management Corporation, and Oppenheimer Partnership
(since 1999) Holdings, Inc. (since March 1999), OFI Private Investments, Inc. (since
Age: 46 March 2000), OppenheimerFunds International Ltd. and OppenheimerFunds plc
(since May 2000), OFI Institutional Asset Management, Inc. (since November
2000), and OppenheimerFunds Legacy Program (since June 2003); Treasurer
and Chief Financial Officer of OFI Trust Company (trust company subsidiary
of the Manager) (since May 2000); Assistant Treasurer of the following:
OAC (since March 1999), Centennial Asset Management Corporation (March
1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June
2003); Principal and Chief Operating Officer of Bankers Trust
Company-Mutual Fund Services Division (March 1995-March 1999). An officer
of 87 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since
Vice President and Secretary March 2002) of the Manager; General Counsel and Director of the
(since 2001) Distributor (since December 2001); General Counsel of Centennial Asset
Age: 57 Management Corporation (since December 2001); Senior Vice President and
General Counsel of HarbourView Asset Management Corporation (since
December 2001); Secretary and General Counsel of OAC (since November
2001); Assistant Secretary (since September 1997) and Director (since
November 2001) of OppenheimerFunds International Ltd. and OppenheimerFunds
plc; Vice President and Director of Oppenheimer Partnership Holdings, Inc.
(since December 2002); Director of Oppenheimer Real Asset Management, Inc.
(since November 2001); Senior Vice President, General Counsel and Director
of Shareholder Financial Services, Inc. and Shareholder Services, Inc.
(since December 2001); Senior Vice President, General Counsel and Director
of OFI Private Investments, Inc. and OFI Trust Company (since November
2001); Vice President of OppenheimerFunds Legacy Program (since June
2003); Senior Vice President and General Counsel of OFI Institutional
Asset Management, Inc. (since November 2001); Director of OppenheimerFunds
(Asia) Limited (since December 2003); Senior Vice President (May
1985-December 2003), Acting General Counsel (November 2001-February 2002)
and Associate General Counsel (May 1981-October 2001) of the Manager;
Assistant Secretary of the following: Shareholder Services, Inc. (May
1985-November 2001), Shareholder Financial Services, Inc. (November
1989-November 2001), and OppenheimerFunds International Ltd. (September
1997-November 2001). An officer of 87 portfolios in the OppenheimerFunds
complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE, UPON
REQUEST, BY CALLING 1.800.525.7048.
57 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees of the registrant has determined that Edward L. Cameron,
the Chairman of the Board's Audit Committee, and George C. Bowen, a member of
the Board's Audit Committee, possess the technical attributes identified in
Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit committee
financial experts," and has designated Messrs. Cameron and
Bowen as the Audit Committee's financial experts. Messrs. Cameron and Bowen are
"independent" Trustees pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $33,500 in fiscal 2005 and $32,500 in fiscal 2004.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the last two fiscal
years.
The principal accountant for the audit of the registrant's annual financial
statements billed $15,000 in fiscal 2005 and no such fees in fiscal 2004 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services: seed money audits.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed to the registrant no such fees during the last two fiscal
years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
(e) (1) During its regularly scheduled periodic meetings, the registrant's
audit committee will pre-approve all audit, audit-related, tax and other
services to be provided by the principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its Chairman
for any subsequent new engagements that arise between regularly scheduled
meeting dates provided that any fees such pre-approved are presented to
the audit committee at its next regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe waived
provided that: 1) the aggregate amount of all such services provided
constitutes no more than five percent of the total amount of fees paid by
the registrant to it principal accountant during the fiscal year in which
services are provided 2) such services were not recognized by the
registrant at the time of engagement as non-audit services and 3) such
services are promptly brought to the attention of the audit committee of
the registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $15,000 in fiscal 2005 and no such fees in
fiscal 2004 to the registrant and the registrant's investment adviser or
any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant related to
non-audit fees. Those billings did not include any prohibited non-audit
services as defined by the Securities Exchange Act of 1934.
(h) The registrant's audit committee of the board of trustees has considered
whether the provision of non-audit services that were rendered to the
registrant's investment adviser, and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Governance Committee (the "Committee") will evaluate potential
Board candidates to assess their qualifications. The Committee shall have
the authority, upon approval of the Board, to retain an executive search
firm to assist in this effort. The Committee may consider recommendations
by business and personal contacts of current Board members and by
executive search firms which the Committee may engage from time to time
and may also consider shareholder recommendations. The Committee may
consider the advice and recommendation of the Funds' investment manager
and its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and whether the individual would be
deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute
to the Board. There are no differences in the manner in which the
Committee evaluates nominees for trustees based on whether the nominee is
recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where
required, to shareholders. Recommendations for trustee nominees should, at
a minimum, be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of September 30, 2005, the registrant's principal executive
officer and principal financial officer found the registrant's disclosure
controls and procedures to provide reasonable assurances that information
required to be disclosed by the registrant in the reports that it files under
the Securities Exchange Act of 1934 (a) is accumulated and communicated to
registrant's management, including its principal executive officer and principal
financial officer, to allow timely decisions regarding required disclosure, and
(b) is recorded, processed, summarized and reported, within the time periods
specified in the rules and forms adopted by the U.S. Securities and Exchange
Commission.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer Limited-Term Government Fund
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: November 16, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: November 16, 2005
By: /s/ Brian W. Wixted
-------------------
Brian W. Wixted
Principal Financial Officer
Date: November 16, 2005