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
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Oppenheimer Limited-Term Government Fund
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(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
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(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
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Date of fiscal year end: September 30
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Date of reporting period: 09/30/2007
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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. 60.3%
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Federal Home Loan Mortgage Corp. 18.5
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Countrywide Alternative Loan Trust 1.8
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Residential Accredit Loans, Inc. 1.5
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Government National Mortgage Assn. 1.1
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2007, and are based on the total market value of investments. For
more current Fund holdings, please visit www.oppenheimerfunds.com.
CREDIT ALLOCATION
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Agency 65.4%
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AAA 26.2
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Not Rated 8.4
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2007, and are based on the 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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10 | 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, 2007, 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 ended September
30, 2007, several factors contributed to Oppenheimer Limited-Term Government
Fund's generally competitive total return and favorable ranking among its peer
group of similarly managed funds.
First, prudent management of the Fund's duration, or exposure to interest
rate risk, proved to be a key contributor to performance for the period. We
began the 12-month reporting period with less interest rate sensitivity, or with
a shorter duration, than the benchmark. This decision was based on our
conviction at that time that the markets held an overly pessimistic view of
longer-term U.S. economic fundamentals and future growth. Through the end of
2006, rates proceeded to decline further, and we increased the magnitude of our
short duration posture slightly, since we continued to believe that these
downward shifts in rates were unwarranted in light of actual economic
fundamentals. By January, data began to contradict investors' expectations, and
as the markets' overall outlook adjusted, yields began rising. In this context,
our shorter duration positioning worked in the Fund's favor, boosting our
relative returns quite significantly.
As the fiscal year progressed, we continued to adjust the Fund's interest
rate sensitivity according to prevailing conditions and our proprietary models.
For example, by June 2007, we had moved to a neutral duration versus the
benchmark, since at that time, we believed longer-term forecasts as implied by
the yield curve had transitioned to more closely align with actual fundamentals.
Then, in July, a surge of delinquencies in the sub-prime mortgage market
prompted a wave of volatility and investor confidence shattered. Yields fell
markedly, and once again, we were convinced that the markets were assuming an
overly negative long-term outlook for interest rates. In light of that analysis,
we resumed our short duration positioning over the benchmark. While our decision
to move back to a less-than-market interest rate sensitivity in July cost us
marginal performance when rates continued to fall through the end of the period,
our overall interest rate strategy positively impacted the Fund's overall
performance for the 12-month period, more than compensating for those earlier
losses.
Another substantial benefit to returns was our active management of the
Fund's exposure to mortgage-backed securities (MBS). Our decision to maintain an
emphasis on higher-coupon residential MBS significantly added to returns.
Higher-coupon MBS typically hold greater sensitivity to prepayments than the
overall mortgage market. Since expecta-
11 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FUND PERFORMANCE DISCUSSION
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tions of prepayments as well as the actual level of prepayments slowed over the
reporting period, these types of MBS performed very well and added to the Fund's
returns.
Strategic adjustments in the Fund's overall allocation to MBS relative to
the benchmark also significantly benefited performance results. Prior to the
recent troubles in the sub-prime mortgage market, spread products, or
non-Treasury securities, had been posting varying degrees of outperformance over
like-duration Treasuries. As a result, the Fund's general overweight in MBS
provided a boon to returns particularly during the first half of the period.
Then, our decision to slightly underweight our exposure to the mortgage sector
in early 2007 particularly benefited relative returns, since soon after, many
areas of the mortgage-securities market suffered by association when trouble in
the sub-prime sector emerged. Finally, our decision to underweight our exposure
to agency debentures made a small but definitive contribution to performance,
since agencies have underperformed like-duration Treasuries throughout most of
the Fund's reporting period.
The most significant detractor to the Fund's recent performance emanated
from the pronounced flight to quality that investors engaged in during the final
weeks of the reporting period. Because of the Fund's current overweight exposure
to both MBS and commercial mortgage-backed securities (CMBS) relative to
Treasuries, the Fund was hurt slightly as investors shunned these sectors in
favor of Treasuries. On the positive side, this event represented only a
concentrated and limited portion of the overall reporting period. Moreover,
because the Fund entered the period of market turmoil from a position of
strength in terms of relative performance, the impact of this detracting factor
proved to be minimal.
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, 2007. 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.
12 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
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 and corporate debt
guaranteed by the U.S. Government with maturities of one to 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.
13 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FUND PERFORMANCE DISCUSSION
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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.]
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Lehman Brothers Lehman Brothers
Oppenheimer Limited-Term U.S. Government 1-3 Year Government
Government Fund (Class A) Bond Index Bond Index
09/30/1997 $ 9,650 $10,000 $10,000
12/31/1997 $ 9,828 $10,332 $10,167
03/31/1998 $ 9,959 $10,488 $10,313
06/30/1998 $10,090 $10,764 $10,472
09/30/1998 $10,393 $11,359 $10,793
12/31/1998 $10,504 $11,350 $10,876
03/31/1999 $10,569 $11,188 $10,942
06/30/1999 $10,583 $11,092 $11,000
09/30/1999 $10,682 $11,166 $11,137
12/31/1999 $10,741 $11,096 $11,199
03/31/2000 $10,852 $11,468 $11,340
06/30/2000 $11,023 $11,648 $11,534
09/30/2000 $11,251 $11,968 $11,788
12/31/2000 $11,529 $12,566 $12,114
03/31/2001 $11,764 $12,882 $12,453
06/30/2001 $11,863 $12,851 $12,603
09/30/2001 $12,262 $13,555 $13,046
12/31/2001 $12,328 $13,475 $13,148
03/31/2002 $12,410 $13,389 $13,150
06/30/2002 $12,678 $13,983 $13,482
09/30/2002 $12,962 $14,915 $13,810
12/31/2002 $13,072 $15,023 $13,938
03/31/2003 $13,134 $15,184 $14,032
06/30/2003 $13,184 $15,569 $14,139
09/30/2003 $13,223 $15,445 $14,197
12/31/2003 $13,241 $15,378 $14,219
03/31/2004 $13,355 $15,829 $14,374
06/30/2004 $13,251 $15,358 $14,212
09/30/2004 $13,384 $15,835 $14,363
12/31/2004 $13,455 $15,912 $14,370
03/31/2005 $13,421 $15,846 $14,335
06/30/2005 $13,571 $16,378 $14,506
09/30/2005 $13,578 $16,225 $14,519
12/31/2005 $13,661 $16,334 $14,619
03/31/2006 $13,736 $16,185 $14,680
06/30/2006 $13,784 $16,188 $14,777
09/30/2006 $14,091 $16,761 $15,074
12/31/2006 $14,258 $16,902 $15,222
03/31/2007 $14,464 $17,145 $15,436
06/30/2007 $14,527 $17,088 $15,548
09/30/2007 $14,831 $17,705 $15,937
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
9/30/07
1-Year 1.56% 5-Year 2.00% 10-Year 4.02%
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14 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
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.]
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Lehman Brothers Lehman Brothers
Oppenheimer Limited-Term U.S. Government 1-3 Year Government
Government Fund (Class B) Bond Index Bond Index
09/30/1997 $10,000 $10,000 $10,000
12/31/1997 $10,166 $10,332 $10,167
03/31/1998 $10,283 $10,488 $10,313
06/30/1998 $10,398 $10,764 $10,472
09/30/1998 $10,690 $11,359 $10,793
12/31/1998 $10,784 $11,350 $10,876
03/31/1999 $10,831 $11,188 $10,942
06/30/1999 $10,825 $11,092 $11,000
09/30/1999 $10,894 $11,166 $11,137
12/31/1999 $10,945 $11,096 $11,199
03/31/2000 $11,037 $11,468 $11,340
06/30/2000 $11,189 $11,648 $11,534
09/30/2000 $11,400 $11,968 $11,788
12/31/2000 $11,659 $12,566 $12,114
03/31/2001 $11,875 $12,882 $12,453
06/30/2001 $11,953 $12,851 $12,603
09/30/2001 $12,331 $13,555 $13,046
12/31/2001 $12,375 $13,475 $13,148
03/31/2002 $12,422 $13,389 $13,150
06/30/2002 $12,679 $13,983 $13,482
09/30/2002 $12,939 $14,915 $13,810
12/31/2002 $13,011 $15,023 $13,938
03/31/2003 $13,062 $15,184 $14,032
06/30/2003 $13,087 $15,569 $14,139
09/30/2003 $13,107 $15,445 $14,197
12/31/2003 $13,125 $15,378 $14,219
03/31/2004 $13,238 $15,829 $14,374
06/30/2004 $13,136 $15,358 $14,212
09/30/2004 $13,267 $15,835 $14,363
12/31/2004 $13,338 $15,912 $14,370
03/31/2005 $13,304 $15,846 $14,335
06/30/2005 $13,452 $16,378 $14,506
09/30/2005 $13,460 $16,225 $14,519
12/31/2005 $13,542 $16,334 $14,619
03/31/2006 $13,616 $16,185 $14,680
06/30/2006 $13,664 $16,188 $14,777
09/30/2006 $13,968 $16,761 $15,074
12/31/2006 $14,134 $16,902 $15,222
03/31/2007 $14,338 $17,145 $15,436
06/30/2007 $14,400 $17,088 $15,548
09/30/2007 $14,701 $17,705 $15,937
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
9/30/07
1-Year 0.37% 5-Year 1.76% 10-Year 3.93%
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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 19 FOR FURTHER
INFORMATION.
15 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FUND PERFORMANCE DISCUSSION
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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.]
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Lehman Brothers Lehman Brothers
Oppenheimer Limited-Term U.S. Government 1-3 Year Government
Government Fund (Class C) Bond Index Bond Index
09/30/1997 $10,000 $10,000 $10,000
12/31/1997 $10,157 $10,332 $10,167
03/31/1998 $10,273 $10,488 $10,313
06/30/1998 $10,388 $10,764 $10,472
09/30/1998 $10,681 $11,359 $10,793
12/31/1998 $10,785 $11,350 $10,876
03/31/1999 $10,821 $11,188 $10,942
06/30/1999 $10,815 $11,092 $11,000
09/30/1999 $10,896 $11,166 $11,137
12/31/1999 $10,935 $11,096 $11,199
03/31/2000 $11,028 $11,468 $11,340
06/30/2000 $11,180 $11,648 $11,534
09/30/2000 $11,402 $11,968 $11,788
12/31/2000 $11,662 $12,566 $12,114
03/31/2001 $11,878 $12,882 $12,453
06/30/2001 $11,945 $12,851 $12,603
09/30/2001 $12,323 $13,555 $13,046
12/31/2001 $12,367 $13,475 $13,148
03/31/2002 $12,426 $13,389 $13,150
06/30/2002 $12,671 $13,983 $13,482
09/30/2002 $12,932 $14,915 $13,810
12/31/2002 $13,020 $15,023 $13,938
03/31/2003 $13,060 $15,184 $14,032
06/30/2003 $13,087 $15,569 $14,139
09/30/2003 $13,089 $15,445 $14,197
12/31/2003 $13,097 $15,378 $14,219
03/31/2004 $13,186 $15,829 $14,374
06/30/2004 $13,059 $15,358 $14,212
09/30/2004 $13,166 $15,835 $14,363
12/31/2004 $13,211 $15,912 $14,370
03/31/2005 $13,153 $15,846 $14,335
06/30/2005 $13,275 $16,378 $14,506
09/30/2005 $13,256 $16,225 $14,519
12/31/2005 $13,313 $16,334 $14,619
03/31/2006 $13,360 $16,185 $14,680
06/30/2006 $13,382 $16,188 $14,777
09/30/2006 $13,655 $16,761 $15,074
12/31/2006 $13,791 $16,902 $15,222
03/31/2007 $13,965 $17,145 $15,436
06/30/2007 $13,999 $17,088 $15,548
09/30/2007 $14,265 $17,705 $15,937
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
9/30/07
1-Year 3.47% 5-Year 1.98% 10-Year 3.62%
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16 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
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.]
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Lehman Brothers Lehman Brothers
Oppenheimer Limited-Term U.S. Government 1-3 Year Government
Government Fund (Class N) Bond Index 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
12/31/2005 $11,535 $12,725 $11,834
03/31/2006 $11,591 $12,608 $11,883
06/30/2006 $11,625 $12,611 $11,962
09/30/2006 $11,876 $13,057 $12,202
12/31/2006 $12,010 $13,167 $12,322
03/31/2007 $12,176 $13,356 $12,495
06/30/2007 $12,221 $13,312 $12,586
09/30/2007 $12,469 $13,792 $12,901
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
9/30/07
1-Year 3.99% 5-Year 2.43% Since Inception (3/1/01) 3.41%
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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 19 FOR FURTHER
INFORMATION.
17 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FUND PERFORMANCE DISCUSSION
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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.]
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Lehman Brothers Lehman Brothers
Oppenheimer Limited-Term U.S. Government 1-3 Year Government
Government Fund (Class Y) Bond Index 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
12/31/2005 $14,170 $15,576 $14,243
03/31/2006 $14,271 $15,434 $14,302
06/30/2006 $14,315 $15,437 $14,396
09/30/2006 $14,643 $15,983 $14,686
12/31/2006 $14,826 $16,118 $14,830
03/31/2007 $15,050 $16,350 $15,038
06/30/2007 $15,124 $16,295 $15,147
09/30/2007 $15,450 $16,883 $15,526
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 9/30/07
1-Year 5.50% 5-Year 3.03% Since Inception (1/26/98) 4.60%
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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 19 FOR FURTHER
INFORMATION.
18 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES
- --------------------------------------------------------------------------------
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%.
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.
19 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES
- --------------------------------------------------------------------------------
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.
20 | 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, 2007.
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
21 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
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
4/1/07 9/30/07 SEPTEMBER 30, 2007
- ------------------------------------------------------------------------------
Class A Actual $ 1,000.00 $ 1,025.30 $ 3.56
- ------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,021.56 3.55
- ------------------------------------------------------------------------------
Class B Actual 1,000.00 1,020.50 7.37
- ------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,017.80 7.36
- ------------------------------------------------------------------------------
Class C Actual 1,000.00 1,021.50 7.37
- ------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,017.80 7.36
- ------------------------------------------------------------------------------
Class N Actual 1,000.00 1,024.10 4.83
- ------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,020.31 4.82
- ------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,026.60 2.29
- ------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,022.81 2.28
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, 2007 are as follows:
CLASS EXPENSE RATIOS
- -----------------------------
Class A 0.70%
- -----------------------------
Class B 1.45
- -----------------------------
Class C 1.45
- -----------------------------
Class N 0.95
- -----------------------------
Class Y 0.45
The expense ratios reflect reduction to custodian expenses and voluntary
waivers or reimbursements by the Fund's Manager 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 and reduction to custodian
expenses, if applicable.
- --------------------------------------------------------------------------------
22 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF INVESTMENTS September 30, 2007
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--6.2%
- -----------------------------------------------------------------------------------------------------------------------
Ace Securities Corp. Home Equity Loan Trust, Asset-Backed
Pass-Through Certificates, Series 2005-HE7, Cl. A2B, 5.311%, 11/25/35 1 $ 4,240,000 $ 4,214,668
- -----------------------------------------------------------------------------------------------------------------------
Aesop Funding II LLC, Automobile Asset-Backed Certificates,
Series 2005-1A, Cl. A2, 5.556%, 4/20/08 1,2 2,750,000 2,748,366
- -----------------------------------------------------------------------------------------------------------------------
Ameriquest Mortgage Securities, Inc., Home Equity Mtg. Obligations,
Series 2006-R1, Cl. A2B, 5.271%, 3/25/36 1 5,184,218 5,170,550
- -----------------------------------------------------------------------------------------------------------------------
Argent Securities Trust 2004-W8, Asset-Backed Pass-Through Certificates,
Series 2004-W8, Cl. A2, 5.611%, 5/25/34 1 6,830,731 6,745,711
- -----------------------------------------------------------------------------------------------------------------------
Argent Securities Trust 2006-W1, Asset-Backed Pass-Through Certificates,
Series 2006-W1, Cl. A2B, 5.291%, 3/25/36 1 9,860,000 9,776,012
- -----------------------------------------------------------------------------------------------------------------------
CWABS Asset-Backed Certificates Trust 2005-16, Asset-Backed Certificates,
Series 2005-16, Cl. 2AF2, 5.382%, 5/25/36 1 7,550,000 7,466,695
- -----------------------------------------------------------------------------------------------------------------------
CWABS Asset-Backed Certificates Trust 2005-17, Asset-Backed Certificates:
Series 2005-17, Cl. 1AF1, 5.331%, 5/25/36 1 1,163,286 1,161,417
Series 2005-17, Cl. 1AF2, 5.363%, 5/25/36 1 1,950,000 1,930,890
- -----------------------------------------------------------------------------------------------------------------------
CWABS Asset-Backed Certificates Trust 2005-6, Asset-Backed Certificates,
Series 2005-6, Cl. 2A2, 5.361%, 12/25/35 1 6,421,220 6,387,774
- -----------------------------------------------------------------------------------------------------------------------
CWABS Asset-Backed Certificates Trust 2006-25, Asset-Backed Certificates,
Series 2006-25, Cl. 2A2, 5.251%, 12/25/29 1 3,940,000 3,856,631
- -----------------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Trust 2005-FF10, Mtg. Pass-Through Certificates,
Series 2005-FF10, Cl. A3, 5.341%, 11/25/35 1 12,626,000 12,447,124
- -----------------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Trust 2006-FF10, Mtg. Pass-Through Certificates,
Series 2006-FF10, Cl. A3, 5.221%, 7/25/36 1 5,695,000 5,589,406
- -----------------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Trust 2006-FF5, Mtg. Pass-Through Certificates,
Series 2006-FF5, Cl. 2A1, 5.181%, 5/15/36 1 1,436,563 1,430,235
- -----------------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Trust 2006-FF9, Mtg. Pass-Through Certificates,
Series 2006-FF9, Cl. 2A2, 5.241%, 7/7/36 1 2,890,000 2,826,789
- -----------------------------------------------------------------------------------------------------------------------
Household Home Equity Loan Trust, Home Equity Loan
Pass-Through Certificates:
Series 2005-3, Cl. A1, 5.798%, 1/20/35 1 3,141,502 3,066,786
Series 2006-4, Cl. A2V, 5.606%, 3/20/36 1,3 1,435,000 1,415,415
- -----------------------------------------------------------------------------------------------------------------------
Lehman XS Trust, Mtg. Pass-Through Certificates:
Series 2005-10, Cl. 2A3B, 5.55%, 1/25/36 3,293,981 3,291,890
Series 2005-2, Cl. 2A1B, 5.18%, 8/25/35 1 2,873,524 2,873,726
Series 2005-4, Cl. 2A1B, 5.17%, 10/25/35 2,352,347 2,333,295
- -----------------------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors Trust 2006-WMC1,
Mtg. Asset-Backed Certificates, Series 2006-WMC1, Cl. A2B, 5.271%, 1/25/37 1 5,730,000 5,708,098
- -----------------------------------------------------------------------------------------------------------------------
Popular ABS Mortgage Pass-Through Trust 2005-6,
Mtg. Pass-Through Certificates, Series 2005-6, Cl. A3, 5.68%, 1/25/36 1 3,047,000 3,026,771
- -----------------------------------------------------------------------------------------------------------------------
RAMP Series 2006-RS4 Trust, Mtg. Asset-Backed Pass-Through
Certificates, Series 2006-RS4, Cl. A1, 5.211%, 7/25/36 1 1,720,784 1,714,671
- -----------------------------------------------------------------------------------------------------------------------
Specialty Underwriting & Residential Finance Trust, Home Equity
Asset-Backed Obligations, Series 2006-BC1, Cl. A2B, 5.281%, 12/25/36 1 15,840,000 15,576,567
23 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
- -----------------------------------------------------------------------------------------------------------------------
Structured Asset Investment Loan Trust,
Mtg. Pass-Through Certificates:
Series 2006-1, Cl. A2, 5.261%, 1/25/36 1 $ 9,860,000 $ 9,753,432
Series 2006-2, Cl. A1, 5.191%, 4/25/36 1 1,173,286 1,169,810
- -----------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Mtg. Pass-Through Certificates,
Series 2005-4XS, Cl. 3A1, 5.18%, 3/26/35 2,013,461 2,016,655
- -----------------------------------------------------------------------------------------------------------------------
Wells Fargo Home Equity Asset-Backed Securities 2006-2 Trust,
Home Equity Asset-Backed Certificates, Series 2006-2, Cl.A2, 5.42%, 7/25/36 1 5,630,000 5,564,275
---------------
Total Asset-Backed Securities (Cost $130,707,554) 129,263,659
- -----------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--88.2%
- -----------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--76.4%
- -----------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--75.2%
Fannie Mae Whole Loan, CMO Pass-Through Certificates,
Trust 2004-W9, Cl. 2A2, 7%, 2/25/44 10,723,457 11,165,379
- -----------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
4.50%, 5/15/19 613,367 591,839
5%, 8/15/33 19,891,677 19,043,577
6%, 5/15/18-3/15/33 38,053,564 38,494,790
6.50%, 4/15/18-12/15/30 16,198,530 16,637,906
7%, 8/15/16-4/15/32 3,711,000 3,851,931
7.50%, 2/15/32-4/25/36 15,647,520 16,411,691
8%, 4/15/16 2,570,663 2,717,680
8.50%, 3/15/31 482,466 517,108
9%, 8/15/22-5/15/25 679,137 730,371
10%, 12/25/10-8/16/21 220,332 234,888
11%, 12/15/20 156,559 179,121
11.50%, 2/15/16-12/3/20 317,804 355,811
11.75%, 1/15/16-4/15/19 49,307 54,402
12%, 6/15/15 46,776 50,939
12.50%, 7/15/19 121,510 133,085
13%, 8/15/15 134,007 147,618
- -----------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., CMO Gtd.
Multiclass Mtg. Participation Certificates:
Series 1095, Cl. D, 6.40%, 6/15/21 1 22,652 22,677
Series 2035, Cl. PC, 6.95%, 3/15/28 3,259,728 3,400,861
Series 2368, Cl. TG, 6%, 10/15/16 818,252 840,752
Series 2410, Cl. PF, 6.733%, 2/15/32 1 7,241,326 7,400,567
Series 2435, Cl. EQ, 6%, 5/15/31 6,879,901 6,948,586
Series 2641, Cl. CE, 3.50%, 9/15/25 3,358,850 3,306,461
Series 2727, Cl. UA, 3.50%, 10/15/22 1,714,760 1,697,760
Series 2736, Cl. DB, 3.30%, 11/15/26 10 23,040,261 22,543,244
Series 2777, Cl. PJ, 4%, 5/15/24 1,826,042 1,812,584
Series 2934, Cl. NA, 5%, 4/15/24 10 7,745,685 7,747,743
Series 3094, Cl. HS, 3.291%, 6/15/34 1 1,914,783 1,951,811
Series 3138, Cl. PA, 5.50%, 2/15/27 4 21,965,125 22,103,637
24 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp., CMO Gtd. Real Estate Mtg.
Investment Conduit Multiclass Pass-Through Certificates:
Series 151, Cl. F, 9%, 5/15/21 $ 78,692 $ 78,585
Series 1695, Cl. F, 5.647%, 3/15/24 1 5,241,150 5,297,813
Series 2006-11, Cl. PS, 5.752%, 3/25/36 1 3,051,281 3,172,579
Series 2055, Cl. ZM, 6.50%, 5/15/28 3,645,821 3,740,312
Series 2080, Cl. Z, 6.50%, 8/15/28 2,398,638 2,476,040
Series 2084, Cl. ZC, 6.50%, 8/15/28 2,065,516 2,123,098
Series 2122, Cl. FD, 6.103%, 2/15/29 1 2,868,503 2,873,407
Series 2132, Cl. FN, 6.565%, 3/15/29 1 4,324,681 4,358,458
Series 2195, Cl. LH, 6.50%, 10/15/29 6,607,279 6,711,640
Series 2220, Cl. PD, 8%, 3/15/30 810,854 863,801
Series 2281, Cl. Z, 6.50%, 2/15/31 10 9,766,995 10,001,184
Series 2319, Cl. BZ, 6.50%, 5/15/31 10 15,295,187 15,641,742
Series 2326, Cl. ZP, 6.50%, 6/15/31 3,934,021 4,068,862
Series 2344, Cl. FP, 6.703%, 8/15/31 1 2,539,321 2,579,604
Series 2351, Cl. PZ, 6.50%, 8/15/31 2,376,437 2,432,863
Series 2387, Cl. PD, 6%, 4/15/30 23,196 23,150
Series 2392, Cl. FB, 6.353%, 1/15/29 1 872,504 882,170
Series 2392, Cl. PV, 6%, 12/15/20 7,030,290 7,075,232
Series 2396, Cl. FE, 6.353%, 12/15/31 1 996,718 1,006,985
Series 2401, Cl. FA, 6.403%, 7/15/29 1 1,057,567 1,070,824
Series 2464, Cl. FI, 6.753%, 2/15/32 1 2,158,974 2,209,939
Series 2470, Cl. LF, 6.753%, 2/15/32 1 2,208,816 2,270,016
Series 2471, Cl. FD, 6.753%, 3/15/32 1 3,997,902 4,108,721
Series 2481, Cl. AF, 6.303%, 3/15/32 1 2,335,143 2,356,664
Series 2500, Cl. FD, 6.253%, 3/15/32 1 1,694,642 1,707,189
Series 2504, Cl. FP, 6.253%, 3/15/32 1 1,180,097 1,188,996
Series 2526, Cl. FE, 6.153%, 6/15/29 1 2,595,079 2,607,421
Series 2530, Cl. FD, 6.253%, 2/15/32 1 3,487,031 3,476,827
Series 2538, Cl. F, 6.353%, 12/15/32 1 687,231 692,615
Series 2550, Cl. FI, 6.103%, 11/15/32 1 2,510,098 2,517,673
Series 2551, Cl. FD, 6.153%, 1/15/33 1 1,996,300 2,003,688
Series 2662, Cl. DK, 4%, 2/15/16 10 16,906,525 16,841,564
Series 2676, Cl. KY, 5%, 9/15/23 4,862,000 4,577,679
Series 2832, Cl. PA, 4.50%, 4/15/19 1,339,370 1,337,337
Series 3025, Cl. SJ, 3.658%, 8/15/35 1 777,871 807,087
Series 3035, Cl. DM, 5.50%, 11/15/25 10 12,628,760 12,686,648
- -----------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 177, Cl. IO, 7.55%, 7/1/26 5 4,699,409 1,201,295
Series 192, Cl. IO, 11.50%, 2/1/28 5 1,054,778 270,525
Series 200, Cl. IO, 10.58%, 1/1/29 5 1,262,580 329,209
Series 2003-118, Cl. S, 8%, 12/25/33 5 15,220,279 2,017,871
Series 2005-87, Cl. SE, (1)%, 10/25/35 5 22,983,754 1,015,238
Series 2005-87, Cl. SG, 6.71%, 10/25/35 5 23,053,674 1,476,867
Series 205, Cl. IO, 4.46%, 9/1/29 5 6,426,929 1,707,202
Series 206, Cl. IO, (8.67)%, 12/1/29 5 298,348 82,881
Series 2074, Cl. S, (2.99)%, 7/17/28 5 1,335,672 90,642
25 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security: Continued
Series 2079, Cl. S, (4.51)%, 7/17/28 5 $ 2,142,302 $ 150,072
Series 218, Cl. IO, 13.74%, 2/1/32 5 3,074,269 772,501
Series 224, Cl. IO, 7.34%, 3/1/33 5 4,722,306 1,190,386
Series 243, Cl. 6, 9.32%, 12/15/32 5 3,148,981 797,162
Series 2470, Cl. AS, 5.72%, 3/15/32 5 2,033,371 190,838
Series 2493, Cl. S, (2.12)%, 9/15/29 5 1,705,345 167,996
Series 2526, Cl. SE, (2.15)%, 6/15/29 5 3,585,419 199,514
Series 2796, Cl. SD, (6.08)%, 7/15/26 5 672,201 53,838
Series 2819, Cl. S, (8.79)%, 6/15/34 5 28,761,946 2,250,061
Series 2920, Cl. S, (10.24)%, 1/15/35 5 15,552,605 808,339
Series 3000, Cl. SE, (11.24)%, 7/15/25 5 19,002,494 792,887
Series 3110, Cl. SL, 8.70%, 2/15/26 5 2,653,530 106,792
- -----------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Principal-Only Stripped
Mtg.-Backed Security:
Series 192, Cl. PO, 6.73%, 2/1/28 6 1,054,778 811,141
Series 216, Cl. PO, 6.24%, 12/1/31 6 2,828,260 2,162,674
- -----------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
4.50%, 5/25/18-8/25/20 65,116,666 62,865,117
4.50%, 10/1/21 7 15,650,000 15,072,906
5%, 2/25/18-3/25/34 193,128,059 188,262,824
5%, 10/1/21 7 33,709,000 33,040,079
5.50%, 11/25/21-7/25/34 350,661,931 344,763,611
5.50%, 10/1/21 7 3,250,000 3,242,382
5.863%, 1/25/12 8,881,153 9,089,117
6%, 7/25/14-10/25/33 98,274,121 99,237,183
6%, 10/1/21-8/25/34 7 32,869,281 33,276,766
6.50%, 6/25/17-11/25/31 69,632,477 71,545,430
7%, 7/25/13-2/25/36 25,068,745 26,044,613
7%, 10/1/36 7 2,037,000 2,102,567
7.50%, 2/25/27-8/25/33 42,400,978 44,507,761
8%, 6/25/17 2,924 3,077
8.50%, 7/25/32 224,664 241,564
9%, 8/25/19 18,546 20,081
9.50%, 11/25/21 16,035 17,390
10.50%, 12/25/14 56,792 61,196
11%, 11/25/15-8/13/19 954,575 1,071,738
11.25%, 3/10/16 171,851 195,332
11.50%, 8/8/19 181,504 203,526
12%, 1/25/16-8/25/16 302,657 334,032
12.50%, 8/25/15-12/25/15 99,986 111,978
13%, 9/8/15-8/25/26 286,154 320,278
- -----------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Grantor Trust, CMO,
Trust 2001-T6, Cl. B, 6.088%, 5/25/11 10 10,125,000 10,487,855
- -----------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Grantor Trust, CMO, Interest-Only
Stripped Mtg.-Backed Security, Trust 2001-T4, Cl. IO, 15.40%, 7/25/41 5 6,241,316 133,253
26 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., CMO Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates:
Trust 1988-7, Cl. Z, 9.25%, 4/25/18 $ 108,148 $ 115,463
Trust 1991-109, Cl. Z, 8.50%, 9/25/21 86,923 93,718
Trust 1992-15, Cl. KZ, 7%, 2/25/22 256,503 259,734
Trust 1992-34, Cl. G, 8%, 3/25/22 119,193 120,950
Trust 1997-16, Cl. PD, 7%, 3/18/27 5,149,796 5,409,317
Trust 1999-54, Cl. LH, 6.50%, 11/25/29 3,785,628 3,928,330
Trust 2001-69, Cl. PF, 6.131%, 12/25/31 1 4,781,666 4,849,765
Trust 2001-70, Cl. LR, 6%, 9/25/30 867,443 869,864
Trust 2002-19, Cl. PE, 6%, 4/25/17 1,639,487 1,683,994
Trust 2002-29, Cl. F, 6.131%, 4/25/32 1 2,354,272 2,414,399
Trust 2002-52, Cl. FD, 5.631%, 9/25/32 1 2,196,381 2,201,594
Trust 2002-53, Cl. FY, 5.631%, 8/25/32 1 3,029,369 3,053,464
Trust 2002-56, Cl. KW, 6%, 4/25/23 10,499,000 10,619,753
Trust 2002-64, Cl. FJ, 6.131%, 4/25/32 1 725,545 738,563
Trust 2002-65, Cl. FB, 6.131%, 7/25/32 1 4,620,242 4,711,073
Trust 2002-68, Cl. FH, 6.114%, 10/18/32 1 1,462,850 1,474,682
Trust 2002-74, Cl. KF, 5.481%, 3/25/17 1 1,783,999 1,790,638
Trust 2002-77, Cl. TF, 6.614%, 12/18/32 1 9,892,961 10,146,404
Trust 2002-82, Cl. FE, 6.131%, 12/25/32 1 2,949,006 3,040,357
Trust 2002-9, Cl. PC, 6%, 3/25/17 6,461,154 6,637,986
Trust 2002-90, Cl. FJ, 5.631%, 9/25/32 1 1,458,372 1,469,978
Trust 2002-90, Cl. FM, 5.631%, 9/25/32 1 1,402,281 1,413,441
Trust 2003-116, Cl. FA, 5.531%, 11/25/33 1 1,451,237 1,455,481
Trust 2003-130, Cl. CS, 3.838%, 12/25/33 1 3,107,433 2,869,377
Trust 2003-17, Cl. EQ, 5.50%, 3/25/23 3,676,000 3,574,915
Trust 2003-21, Cl. FK, 5.531%, 3/25/33 1 248,508 249,370
Trust 2003-81, Cl. NB, 4.50%, 11/25/14 10,730,000 10,616,639
Trust 2003-81, Cl. PW, 4%, 3/25/25 5,986,493 5,927,063
Trust 2003-84, Cl. AJ, 3%, 4/25/13 4,148,977 4,106,266
Trust 2003-84, Cl. GC, 4.50%, 5/25/15 12,873,000 12,737,127
Trust 2003-84, Cl. PW, 3%, 6/25/22 3,127,119 3,100,309
Trust 2004-101, Cl. BG, 5%, 1/25/20 8,529,000 8,353,214
Trust 2004-52, Cl. JR, 4.50%, 7/25/24 10,956,612 10,895,104
Trust 2005-100, Cl. BQ, 5.50%, 11/25/25 4,975,000 4,846,610
Trust 2005-109, Cl. AH, 5.50%, 12/25/25 8,359,788 8,054,488
Trust 2005-45, Cl. XA, 5.845%, 6/25/35 1 6,584,292 6,532,004
Trust 2005-59, Cl. NQ, 4.047%, 5/25/35 1 2,211,485 2,065,068
Trust 2005-67, Cl. BF, 5.855%, 8/25/35 1 9,113,433 9,037,281
Trust 2005-85, Cl. FA, 5.481%, 10/25/35 1 19,608,039 19,382,621
Trust 2006-24, Cl. DB, 5.50%, 4/25/26 1,575,050 1,556,831
Trust 2006-29, Cl. PA, 5.50%, 8/25/26 22,856,671 22,927,340
Trust 2006-44, Cl. OA, 5.50%, 12/25/26 14,658,392 14,725,844
Trust 2006-46, Cl. SW, 5.385%, 6/25/36 1 2,471,162 2,541,001
Trust 2006-50, Cl. KS, 5.385%, 6/25/36 1 3,795,372 3,704,686
Trust 2006-50, Cl. SA, 5.385%, 6/25/36 1 5,903,171 5,784,489
Trust 2006-50, Cl. SK, 5.385%, 6/25/36 1 4,969,374 4,988,614
Trust 2006-57, Cl. PA, 5.50%, 8/25/27 1,930,246 1,938,479
27 | 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:
Trust 2001-63, Cl. SD, 0.50%, 12/18/31 5 $ 3,313,677 $ 334,080
Trust 2001-68, Cl. SC, (0.20)%, 11/25/31 5 2,981,956 300,451
Trust 2001-81, Cl. S, 0.44%, 1/25/32 5 2,208,282 235,352
Trust 2002-28, Cl. SA, 0.11%, 4/25/32 5 1,805,818 163,528
Trust 2002-38, Cl. IO, (6)%, 4/25/32 5 2,382,932 153,345
Trust 2002-39, Cl. SD, (3.14)%, 3/18/32 5 2,556,969 247,143
Trust 2002-48, Cl. S, 0.61%, 7/25/32 5 3,007,977 279,238
Trust 2002-52, Cl. SD, (3.30)%, 9/25/32 5 2,196,381 212,698
Trust 2002-52, Cl. SL, 0.49%, 9/25/32 5 1,885,682 186,931
Trust 2002-53, Cl. SK, (2.71)%, 4/25/32 5 1,491,939 151,000
Trust 2002-56, Cl. SN, 1.50%, 7/25/32 5 4,085,343 388,661
Trust 2002-77, Cl. IS, (0.23)%, 12/18/32 5 3,410,828 338,510
Trust 2002-77, Cl. SH, 1.33%, 12/18/32 5 2,721,779 273,085
Trust 2002-9, Cl. MS, 0.60%, 3/25/32 5 3,346,716 324,440
Trust 2002-96, Cl. SK, 8.80%, 4/25/32 5 745,847 74,613
Trust 2003-33, Cl. IA, 11.66%, 5/25/33 5 582,695 140,403
Trust 2003-33, Cl. SP, 9.36%, 5/25/33 5 8,193,848 1,043,960
Trust 2003-4, Cl. S, 7.31%, 2/25/33 5 4,899,047 577,788
Trust 2005-40, Cl. SA, (5.36)%, 5/25/35 5 8,741,323 463,599
Trust 2005-63, Cl. SA, 0.07%, 10/25/31 5 10,687,890 660,505
Trust 2005-63, Cl. X, 50.21%, 10/25/31 5 126,521 3,569
Trust 2005-71, Cl. SA, (2.26)%, 8/25/25 5 11,984,751 783,909
Trust 2005-83, Cl. SL, 4.83%, 10/25/35 5 12,321,442 812,736
Trust 2006-119, Cl. MS, 13.19%, 12/25/36 5 11,843,306 735,321
Trust 2006-33, Cl. SP, 10.71%, 5/25/36 5 12,111,271 1,009,478
Trust 221, Cl. 2, 10.59%, 5/1/23 5 4,117,526 962,624
Trust 240, Cl. 2, 21.13%, 9/1/23 5 4,086,787 1,097,853
Trust 254, Cl. 2, 6.91%, 1/1/24 5 4,931,232 1,330,843
Trust 294, Cl. 2, 9.84%, 2/1/28 5 5,805,707 1,536,581
Trust 301, Cl. 2, 6.46%, 4/1/29 5 3,362,826 857,384
Trust 321, Cl. 2, 11.94%, 4/1/32 5 8,492,131 2,146,694
Trust 324, Cl. 2, 6.72%, 7/1/32 5 11,822,299 2,925,139
Trust 331, Cl. 10, 14.38%, 2/1/33 5 5,244,610 1,228,578
Trust 331, Cl. 5, 9.44%, 2/1/33 5 6,533,351 1,518,387
Trust 334, Cl. 5, 11.35%, 5/1/33 5 12,441,387 3,265,249
Trust 339, Cl. 7, 7.37%, 7/1/33 5 8,924,432 2,062,199
Trust 342, Cl. 2, 9.93%, 9/1/33 5 2,622,613 670,698
Trust 344, Cl. 2, 9.33%, 12/1/33 5 25,019,849 6,405,779
Trust 362, Cl. 12, 6.82%, 8/1/35 5 13,884,130 3,178,950
Trust 362, Cl. 13, 6.83%, 8/1/35 5 7,772,089 1,787,026
Trust 364, Cl. 15, 8.40%, 9/1/35 5 5,406,049 1,248,561
- -----------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only Stripped
Mtg.-Backed Security:
Trust 324, Cl. 1, 5.82%, 7/1/32 6 2,952,117 2,216,581
Trust 327, Cl. 1, 6.38%, 9/1/32 6 1,762,516 1,352,365
28 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., Stripped Mtg.-Backed Security,
Trust G, Cl. 2, 11.50%, 3/1/09 $ 37,635 $ 38,756
---------------
1,578,599,097
- -----------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--1.2%
Government National Mortgage Assn.:
6.50%, 1/29/24 283,921 291,300
7%, 1/29/09-2/8/30 2,102,517 2,203,018
7.50%, 5/29/28-8/29/28 868,297 912,073
8%, 1/29/08-9/29/28 181,186 192,698
8.50%, 8/15/17-9/29/21 1,086,936 1,162,615
9.50%, 9/29/17 3,422 3,724
10.50%, 2/29/16-7/15/21 158,136 180,859
11%, 11/8/19 207,667 233,049
11.50%, 4/29/13-7/29/19 46,767 52,474
13%, 3/1/11-9/29/14 6,640 7,524
- -----------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., CMO Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates,
Series 1999-32, Cl. ZB, 8%, 9/16/29 10 15,602,389 16,572,809
- -----------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security:
Series 1998-19, Cl. SB, (0.28)%, 7/16/28 5 4,355,851 324,677
Series 1998-6, Cl. SA, (0.73)%, 3/16/28 5 2,665,148 220,257
Series 2001-21, Cl. SB, (2.53)%, 1/16/27 5 4,727,736 379,679
Series 2006-47, Cl. SA, 14.94%, 8/16/36 5 29,341,584 1,793,636
---------------
24,530,392
- -----------------------------------------------------------------------------------------------------------------------
NON-AGENCY--11.8%
- -----------------------------------------------------------------------------------------------------------------------
COMMERCIAL--8.6%
Banc of America Commercial Mortgage, Inc., Commercial Mtg.
Pass-Through Certificates, Series 2005-3, Cl. A2, 4.501%, 7/10/43 9,170,000 9,046,570
- -----------------------------------------------------------------------------------------------------------------------
Banc of America Mortgage Securities, Inc., CMO Pass-Through
Certificates, Series 2004-8, Cl. 5A1, 6.50%, 5/25/32 5,551,948 5,603,478
- -----------------------------------------------------------------------------------------------------------------------
Citigroup/Deutsche Bank Commercial Mortgage Trust, Commercial
Mtg. Obligations, Series 2007-CD4, Cl. A2B, 5.205%, 12/11/49 3 12,180,000 12,138,377
- -----------------------------------------------------------------------------------------------------------------------
Countrywide Alternative Loan Trust, Mtg. Pass-Through Certificates,
Series 2007-8CB, Cl. A1, 5.50%, 5/25/37 19,107,818 19,046,864
- -----------------------------------------------------------------------------------------------------------------------
Deutsche Alt-A Securities Mortgage Loan Trust,
Mtg. Pass-Through Certificates:
Series 2006-AB2, Cl. A7, 5.961%, 6/25/36 3,254,747 3,255,838
Series 2006-AB4, Cl. A1A, 6.005%, 10/25/36 8,245,472 8,219,521
Series 2006-AB3, Cl. A7, 6.36%, 4/25/08 1,397,736 1,399,741
- -----------------------------------------------------------------------------------------------------------------------
First Horizon Alternative Mortgage Securities Trust,
Mtg. Pass-Through Certificates, Series 2007-FA2, Cl. 1A1, 5.50%, 4/25/37 4,648,182 4,641,044
29 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------
COMMERCIAL Continued
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 $ 2,893,679 $ 2,898,988
- -----------------------------------------------------------------------------------------------------------------------
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations:
Series 2004-C3, Cl. A2, 4.433%, 7/10/39 6,670,000 6,608,859
Series 2005-C3, Cl. A2, 4.853%, 7/10/45 5,240,000 5,217,106
- -----------------------------------------------------------------------------------------------------------------------
Greenwich Capital Commercial Funding Corp.,
Commercial Mtg. Pass-Through Certificates:
Series 2005-GG3, Cl. A2, 4.305%, 8/10/42 6,190,000 6,102,641
Series 2005-GG5, Cl. A2, 5.117%, 4/10/37 5,760,000 5,774,188
Series 2007-GG9, Cl. A2, 5.381%, 3/10/39 3 6,750,000 6,770,723
- -----------------------------------------------------------------------------------------------------------------------
HSI Asset Securitization Corp. Trust, CMO Pass-Through Certificates,
Series 2006-OPT1, Cl. 2A2, 5.271%, 12/25/35 1 4,930,000 4,867,373
- -----------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage Securities Corp.,
Commercial Mtg. Pass-Through Certificates:
Series 2005-LDP2, Cl. A2, 4.575%, 7/15/42 2,240,000 2,213,632
Series 2005-LDP4, Cl. A2, 4.79%, 10/15/42 7,550,000 7,497,341
Series 2007-LDPX, Cl. A2S, 5.305%, 1/15/49 11,830,000 11,808,511
Series 2007-LD12, Cl. A2, 5.827%, 2/15/51 5,010,000 5,102,546
- -----------------------------------------------------------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust, Commercial Mtg.
Pass-Through Certificates:
Series 2005-C5, Cl. A2, 4.885%, 9/15/30 6,340,000 6,325,334
Series 2007-C1, Cl. A2, 5.318%, 1/15/12 7,520,000 7,534,055
- -----------------------------------------------------------------------------------------------------------------------
Mastr Alternative Loan Trust, CMO Pass-Through Certificates:
Series 2004-9, Cl. A3, 4.70%, 8/25/34 1 620,012 618,087
Series 2004-6, Cl. 10A1, 6%, 7/25/34 7,283,402 7,300,017
- -----------------------------------------------------------------------------------------------------------------------
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through
Certificates, Series 1998-D6, Cl. A1B, 6.59%, 3/15/30 1,886,386 1,893,531
- -----------------------------------------------------------------------------------------------------------------------
RALI Series 2007-QS6 Trust, Mtg. Asset-Backed Pass-Through
Certificates, Series 2007-QS6, Cl. A114, 5.75%, 4/25/37 6,359,326 6,376,521
- -----------------------------------------------------------------------------------------------------------------------
Residential Asset Securitization Trust 2006-A9CB, CMO Pass-Through
Certificates, Series 2006-A9CB, Cl. A5, 6%, 9/25/36 9,308,746 9,317,659
- -----------------------------------------------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust 2005-C17, Commercial Mtg.
Pass-Through Certificates, Series 2005-C17, Cl. A2, 4.782%, 3/15/42 10,760,000 10,702,183
- -----------------------------------------------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust 2006-C29, Commercial Mtg.
Pass-Through Certificates, Series 2006-C29, Cl. A2, 5.272%, 11/15/48 2,115,000 2,116,402
---------------
180,397,130
- -----------------------------------------------------------------------------------------------------------------------
MULTIFAMILY--0.5%
Countrywide Home Loans, CMO, Series 2003-46, Cl. 1A2, 4.129%, 1/19/34 1 10,068,332 10,105,672
- -----------------------------------------------------------------------------------------------------------------------
WAMU, Mtg. Pass-Through Certificates,
Series 2005-AR8, Cl. 2AB1, 5.57%, 7/25/45 1 189,757 189,150
---------------
10,294,822
30 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------
OTHER--0.4%
Vendee Mortgage Trust, Interest-Only Stripped Mtg.-Backed Security:
Series 2002-2, Cl. IO, 16.04%, 1/15/32 5 $ 56,887,204 $ 899,034
Series 1999-3, Cl. IO, 9.89%, 10/15/29 5 47,866,320 484,635
Series 2001-3, Cl. IO, 6.17%, 5/15/31 3,5 22,209,068 257,243
Series 2003-1, Cl. IO, 5.97%, 11/15/32 5 114,384,186 6,072,245
Series 2002-3, Cl. IO, 5.54%, 8/15/32 5 76,044,233 1,698,068
---------------
9,411,225
- -----------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--2.3%
Countrywide Alternative Loan Trust, CMO:
Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32 10,349,652 10,473,975
Series 2005-J3, Cl. 3A1, 6.50%, 9/25/34 9,417,400 9,591,602
- -----------------------------------------------------------------------------------------------------------------------
RALI Series 2006-QS13 Trust:
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13,
Cl. 1A8, 6%, 9/25/36 6,350,603 6,355,799
Mtg. Asset-Backed Pass-Through Certificates, Series 2006-QS13,
Cl. 1A5, 6%, 9/25/36 14,847,139 15,023,112
- -----------------------------------------------------------------------------------------------------------------------
RALI Series 2007-QS6 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2007-QS6, Cl. A28, 5.75%, 4/25/37 5,813,703 5,882,576
---------------
47,327,064
---------------
Total Mortgage-Backed Obligations (Cost $1,837,878,668) 1,850,559,730
- -----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--8.7%
- -----------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Unsec. Nts.:
4.625%, 12/19/08-10/25/12 8 82,270,000 82,322,834
5.125%, 8/23/10 8 4,000,000 4,076,116
- -----------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Unsec. Nts.:
5%, 10/15/11 8 38,230,000 38,860,566
5.125%, 7/13/09 8 21,200,000 21,454,230
6%, 5/15/11 8 26,585,000 27,929,324
7.25%, 1/15/10 8,280,000 8,787,169
---------------
Total U.S. Government Obligations (Cost $181,709,206) 183,430,239
- -----------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.4%
- -----------------------------------------------------------------------------------------------------------------------
Undivided interest of 99.90% in joint repurchase agreement (Principal
Amount/Value $9,300,000, with a maturity value of $9,303,836) with UBS
Warburg LLC, 4.95%, dated 9/28/07, to be repurchased at $9,294,833 on
10/1/07, collateralized by Federal National Mortgage Assn., 6%, 3/1/36,
with a value of $9,500,907 (Cost $9,291,000) 9,291,000 9,291,000
- -----------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (excluding Investments Purchased with Cash
Collateral from Securities Loaned) (Cost $2,159,586,428) 2,172,544,628
31 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--2.9% 9
- -----------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--2.9%
Undivided interest of 6.08% in joint repurchase agreement (Principal
Amount/Value $1,000,000,000, with a maturity value of $1,000,425,000)
with Bank of America NA, 5.10%, dated 9/28/07, to be repurchased at
$60,867,454 on 10/1/07, collateralized by U.S. Agency Mortgages,
5%-5.50%, 5/1/33-6/1/35, with a value of $1,020,000,000
(Cost $60,841,596) $ 60,841,596 $ 60,841,596
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $2,220,428,024) 106.4% 2,233,386,224
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (6.4) (135,270,600)
--------------------------------
NET ASSETS 100.0% $2,098,115,624
================================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Represents the current interest rate for a variable or increasing rate
security.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $2,748,366 or 0.13% of the Fund's net
assets as of September 30, 2007.
3. Illiquid security. The aggregate value of illiquid securities as of September
30, 2007 was $20,581,758, which represents 0.98% of the Fund's net assets. See
Note 8 of accompanying Notes.
4. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures contracts. The aggregate market
value of such securities is $3,612,639. See Note 5 of accompanying Notes.
5. 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 $70,051,731 or 3.34% of the Fund's net assets
as of September 30, 2007.
6. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
These securities amount to $6,542,761 or 0.31% of the Fund's net assets as of
September 30, 2007.
7. When-issued security or forward commitment to be delivered and settled after
September 30, 2007. See Note 1 of accompanying Notes.
8. Partial or fully-loaned security. See Note 9 of accompanying Notes.
9. The security/securities have been segregated to satisfy the forward
commitment to return the cash collateral received in securities lending
transactions upon the borrower's return of the securities loaned. See Note 9 of
accompanying Notes.
32 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
PRINCIPAL
AMOUNT VALUE
SOLD SHORT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATION SOLD SHORT--(5.1)%
- -----------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., 5.50%, 10/1/36
(Proceeds $(106,985,217)) $ (109,150,000) $ (106,915,809)
10. All or a portion of the security was segregated by the Fund in the amount of
$109,150,000, which represented 102.09% of the market value of securities sold
short. See Note 1 of accompanying Notes.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF ASSETS AND LIABILITIES September 30, 2007
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------------------------
Investments, at value (cost $2,220,428,024)--see accompanying statement of
investments $2,233,386,224
- ----------------------------------------------------------------------------------------------------------
Cash 4,994,406
- ----------------------------------------------------------------------------------------------------------
Swaps, at value (premiums received $514,890) 279,712
- ----------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold (including $5,120,754 sold on a when-issued basis or forward
commitment) 114,948,932
Interest and principal paydowns 11,395,649
Shares of beneficial interest sold 2,893,483
Futures margins 278,054
Other 146,760
---------------
Total assets 2,368,323,220
- ----------------------------------------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------------------------------------
Short positions, at value (proceeds of $106,985,217)--see accompanying
statement of investments 106,915,809
- ----------------------------------------------------------------------------------------------------------
Return of collateral for securities loaned 60,841,596
- ----------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $91,930,065 purchased on a when-issued
basis or forward commitment) 96,071,726
Shares of beneficial interest redeemed 4,065,104
Distribution and service plan fees 1,037,925
Dividends 746,475
Transfer and shareholder servicing agent fees 327,558
Shareholder communications 131,976
Trustees' compensation 30,279
Other 39,148
---------------
Total liabilities 270,207,596
- ----------------------------------------------------------------------------------------------------------
NET ASSETS $2,098,115,624
===============
- ----------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ----------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 210,426
- ----------------------------------------------------------------------------------------------------------
Additional paid-in capital 2,175,427,630
- ----------------------------------------------------------------------------------------------------------
Accumulated net investment income 18,907,901
- ----------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (109,110,242)
- ----------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 12,679,909
---------------
NET ASSETS $2,098,115,624
===============
34 | 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 $1,175,824,086
and 117,868,903 shares of beneficial interest outstanding) $ 9.98
Maximum offering price per share (net asset value plus sales charge of 3.50% of offering price) $10.34
- ----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $194,616,184 and 19,516,342 shares
of beneficial interest outstanding) $ 9.97
- ----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $298,029,308 and 29,936,076 shares of
beneficial interest outstanding) $ 9.96
- ----------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $52,864,460 and 5,304,460 shares of
beneficial interest outstanding) $ 9.97
- ----------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$376,781,586 and 37,799,755 shares of beneficial interest outstanding) $ 9.97
- ----------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENT OF OPERATIONS For the Year Ended September 30, 2007
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------------
Interest $ 98,448,502
- ----------------------------------------------------------------------------------------------------------
Fee income 340,123
- ----------------------------------------------------------------------------------------------------------
Portfolio lending fees 11,117
- ----------------------------------------------------------------------------------------------------------
Other income 29,702
---------------
Total investment income 98,829,444
- ----------------------------------------------------------------------------------------------------------
EXPENSES
- ----------------------------------------------------------------------------------------------------------
Management fees 7,771,601
- ----------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 2,657,229
Class B 2,176,998
Class C 2,948,088
Class N 253,110
- ----------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 2,049,605
Class B 542,488
Class C 496,738
Class N 159,210
Class Y 285,595
- ----------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A 140,369
Class B 59,322
Class C 43,443
Class N 5,682
Class Y 52
- ----------------------------------------------------------------------------------------------------------
Trustees' compensation 44,538
- ----------------------------------------------------------------------------------------------------------
Accounting service fees 12,000
- ----------------------------------------------------------------------------------------------------------
Custodian fees and expenses 10,348
- ----------------------------------------------------------------------------------------------------------
Administration service fees 1,500
- ----------------------------------------------------------------------------------------------------------
Other 171,198
---------------
Total expenses 19,829,114
Less reduction to custodian expenses (615)
Less waivers and reimbursements of expenses (3,245,762)
---------------
Net expenses 16,582,737
- ----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 82,246,707
36 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
- ----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- ----------------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments $ 1,846,109
Closing and expiration of futures contracts (10,910,514)
Short positions (855,115)
Swap contracts (923,659)
---------------
Net realized loss (10,843,179)
- ----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 21,647,643
Futures contracts (225,809)
Short positions 69,408
Swap contracts 765,972
---------------
Net change in unrealized appreciation 22,257,214
- ----------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 93,660,742
===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2007 2006
- -------------------------------------------------------------------------------------------------------------------
OPERATIONS
- -------------------------------------------------------------------------------------------------------------------
Net investment income $ 82,246,707 $ 74,400,556
- -------------------------------------------------------------------------------------------------------------------
Net realized loss (10,843,179) (18,546,945)
- -------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 22,257,214 9,314,724
--------------------------------
Net increase in net assets resulting from operations 93,660,742 65,168,335
- -------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (53,576,515) (45,709,189)
Class B (9,178,810) (9,810,331)
Class C (12,365,272) (11,615,600)
Class N (2,372,791) (1,868,113)
Class Y (11,884,710) (5,395,808)
--------------------------------
(89,378,098) (74,399,041)
- -------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from beneficial
interest transactions:
Class A 114,229,628 (84,153,951)
Class B (57,319,295) (91,495,296)
Class C (19,496,871) (67,485,498)
Class N 4,921,276 (2,503,838)
Class Y 211,929,163 79,584,189
--------------------------------
254,263,901 (166,054,394)
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
Total increase (decrease) 258,546,545 (175,285,100)
- -------------------------------------------------------------------------------------------------------------------
Beginning of period 1,839,569,079 2,014,854,179
--------------------------------
End of period (including accumulated net investment income of
$18,907,901 and $23,615,172, respectively) $2,098,115,624 $1,839,569,079
================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED SEPTEMBER 30, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.96 $ 10.00 $ 10.17 $ 10.33 $ 10.35
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 1 .41 1 .31 1 .29 .22
Net realized and unrealized gain (loss) .06 (.04) (.16) (.17) (.01)
------------------------------------------------------------------------
Total from investment operations .51 .37 .15 .12 .21
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.49) (.41) (.32) (.28) (.23)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.98 $ 9.96 $ 10.00 $ 10.17 $ 10.33
========================================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 5.25% 3.78% 1.45% 1.22% 2.01%
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,175,824 $ 1,059,629 $ 1,149,202 $ 1,201,379 $ 1,369,364
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 1,088,598 $ 1,110,174 $ 1,171,442 $ 1,257,178 $ 1,476,397
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.54% 4.12% 3.11% 2.77% 2.14%
Total expenses 0.87% 0.89% 0.88% 0.88% 0.88%
Expenses after payments, waivers and/or
reimbursements and reduction to
custodian expenses 0.70% 0.70% 0.70% 0.79% 0.88%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 88% 4 109% 4 101% 4 75% 4 82%
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 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 less than one full year.
4. The portfolio turnover rate excludes purchase and sale transactions of To Be
Announced (TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- --------------------------------------------------------------------------------
Year Ended September 30, 2007 $ 1,670,333,689 $ 1,805,760,764
Year Ended September 30, 2006 $ 3,361,653,474 $ 3,577,036,177
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
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED SEPTEMBER 30, 2007 2006 2005 2004 2003
- ----------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.96 $ 10.00 $ 10.17 $ 10.32 $ 10.35
- ----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .38 1 .33 1 .24 1 .22 .14
Net realized and unrealized gain (loss) .05 (.04) (.17) (.16) (.02)
--------------------------------------------------------------
Total from investment operations .43 .29 .07 .06 .12
- ----------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income (.42) (.33) (.24) (.21) (.15)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.97 $ 9.96 $ 10.00 $ 10.17 $ 10.32
==============================================================
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 4.37% 3.01% 0.69% 0.56% 1.14%
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 194,616 $ 251,726 $ 344,928 $ 495,417 $ 723,564
- ----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 217,928 $ 292,613 $ 412,054 $ 586,747 $ 800,685
- ----------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.79% 3.35% 2.34% 1.99% 1.39%
Total expenses 1.70% 1.72% 1.69% 1.66% 1.62%
Expenses after payments, waivers and/or
reimbursements and reduction to
custodian expenses 1.45% 1.45% 1.45% 1.55% 1.62%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 88% 4 109% 4 101% 4 75% 4 82%
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 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 less than one full year.
4. The portfolio turnover rate excludes purchase and sale transactions of To Be
Announced (TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- --------------------------------------------------------------------------------
Year Ended September 30, 2007 $ 1,670,333,689 $ 1,805,760,764
Year Ended September 30, 2006 $ 3,361,653,474 $ 3,577,036,177
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.
40 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
CLASS C YEAR ENDED SEPTEMBER 30, 2007 2006 2005 2004 2003
- ----------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.94 $ 9.98 $ 10.15 $ 10.30 $ 10.33
- ----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .38 1 .33 1 .24 1 .22 .15
Net realized and unrealized gain (loss) .05 (.04) (.17) (.16) (.03)
--------------------------------------------------------------
Total from investment operations .43 .29 .07 .06 .12
- ----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.41) (.33) (.24) (.21) (.15)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.96 $ 9.94 $ 9.98 $ 10.15 $ 10.30
==============================================================
- ----------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 4.47% 3.01% 0.69% 0.58% 1.21%
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 298,029 $ 317,063 $ 386,310 $ 484,575 $ 685,735
- ----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 294,915 $ 345,520 $ 432,392 $ 565,671 $ 733,037
- ----------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.79% 3.36% 2.35% 2.03% 1.45%
Total expenses 1.61% 1.62% 1.60% 1.58% 1.56%
Expenses after payments, waivers and/or
reimbursements and reduction to
custodian expenses 1.45% 1.45% 1.45% 1.52% 1.56%
- ----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 88% 4 109% 4 101% 4 75% 4 82%
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 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 less than one full year.
4. The portfolio turnover rate excludes purchase and sale transactions of To Be
Announced (TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- --------------------------------------------------------------------------------
Year Ended September 30, 2007 $ 1,670,333,689 $ 1,805,760,764
Year Ended September 30, 2006 $ 3,361,653,474 $ 3,577,036,177
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.
41 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED SEPTEMBER 30, 2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.95 $ 9.99 $ 10.16 $ 10.32 $ 10.35
- -----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .43 1 .38 1 .29 1 .25 .19
Net realized and unrealized gain (loss) .05 (.04) (.17) (.16) (.03)
---------------------------------------------------------
Total from investment operations .48 .34 .12 .09 .16
- -----------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.46) (.38) (.29) (.25) (.19)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.97 $ 9.95 $ 9.99 $ 10.16 $ 10.32
=========================================================
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 4.99% 3.52% 1.20% 0.91% 1.58%
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 52,865 $ 47,868 $ 50,592 $ 47,472 $ 43,645
- -----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 50,753 $ 48,350 $ 50,758 $ 44,515 $ 35,965
- -----------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.29% 3.86% 2.86% 2.48% 1.75%
Total expenses 1.25% 1.27% 1.29% 1.26% 1.20%
Expenses after payments, waivers and/or
reimbursements and reduction to
custodian expenses 0.95% 0.95% 0.95% 1.08% 1.20%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 88% 4 109% 4 101% 4 75% 4 82%
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 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 less than one full year.
4. The portfolio turnover rate excludes purchase and sale transactions of To Be
Announced (TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- --------------------------------------------------------------------------------
Year Ended September 30, 2007 $ 1,670,333,689 $ 1,805,760,764
Year Ended September 30, 2006 $ 3,361,653,474 $ 3,577,036,177
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.
42 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
CLASS Y YEAR ENDED SEPTEMBER 30, 2007 2006 2005 2004 2003
- ---------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.95 $ 10.00 $ 10.17 $ 10.32 $ 10.34
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .48 1 .44 1 .34 1 .32 .26
Net realized and unrealized gain (loss) .05 (.06) (.17) (.15) (.01)
-------------------------------------------------------------
Total from investment operations .53 .38 .17 .17 .25
- ---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.51) (.43) (.34) (.32) (.27)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.97 $ 9.95 $ 10.00 $ 10.17 $ 10.32
=============================================================
- ---------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 5.50% 3.93% 1.69% 1.68% 2.41%
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 376,782 $ 163,283 $ 83,822 $ 258,937 $ 241,856
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 232,039 $ 121,899 $ 84,227 $ 248,689 $ 201,564
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.82% 4.43% 3.35% 3.13% 2.53%
Total expenses 0.55% 0.59% 0.57% 0.42% 0.44%
Expenses after payments, waivers and/or
reimbursements and reduction
to custodian expenses 0.45% 0.44% 0.45% 0.42% 0.44%
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 88% 4 109% 4 101% 4 75% 4 82%
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 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 less than one full year.
4. The portfolio turnover rate excludes purchase and sale transactions of To Be
Announced (TBA) mortgage-related securities as follows:
PURCHASE TRANSACTIONS SALE TRANSACTIONS
- --------------------------------------------------------------------------------
Year Ended September 30, 2007 $ 1,670,333,689 $ 1,805,760,764
Year Ended September 30, 2006 $ 3,361,653,474 $ 3,577,036,177
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.
43 | 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(R) 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, as 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 such principal exchange at its trading session ending at, or most
recently prior to, the time when the Fund's assets are valued. Options are
valued daily based upon the last sale price on the
44 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
principal exchange on which the option is traded. 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. Investments in open-end registered investment companies (including
affiliated funds) are valued at that fund's net asset value. 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 SOLD SHORT. The Fund may sell short when-issued securities for future
settlement when it holds securities that may be used to cover the short sales.
The value of the open short position is recorded as a liability, and the Fund
records an unrealized gain or loss for the value of the open short position. The
Fund records a realized gain or loss when the short position is closed out.
- --------------------------------------------------------------------------------
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 take place generally at least 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, 2007, the Fund had purchased
$91,930,065 of securities issued on a when-issued basis or forward commitment
and sold $5,120,754 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.
45 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
INVESTMENTS WITH OFF BALANCE SHEET RISK. The Fund enters into financial
instrument transactions (such as swaps, futures, options and other derivatives)
that may have off-balance sheet market risk. Off-balance sheet market risk
exists when the maximum potential loss on a particular financial instrument is
greater than the value of such financial instrument, as reflected in the Fund's
Statement of Assets and Liabilities.
- --------------------------------------------------------------------------------
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 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.
46 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NET UNREALIZED
APPRECIATION
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
--------------------------------------------------------------------------
$19,732,969 $-- $109,898,608 $12,673,491
1. As of September 30, 2007, the Fund had $98,803,111 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, 2007,
details of the capital loss carryforward(s) were as follows:
EXPIRING
------------------------------
2011 $ 16,833,987
2013 37,778,579
2014 18,093,354
2015 26,097,191
------------
Total $ 98,803,111
============
2. As of September 30, 2007, the Fund had $11,095,497 of post-October losses
available to offset future realized capital gains, if any. Such losses, if
unutilized, will expire in 2016.
3. During the fiscal year ended September 30, 2007, the Fund did not utilize any
capital loss carryforward.
4. During the fiscal year ended September 30, 2006, the Fund did not utilize any
capital loss carryforward.
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, 2007. Net assets of
the Fund were unaffected by the reclassifications.
INCREASE INCREASE
TO ACCUMULATED TO ACCUMULATED
NET INVESTMENT NET REALIZED
INCOME LOSS ON INVESTMENTS
--------------------------------------
$2,424,120 $2,424,120
The tax character of distributions paid during the years ended September 30,
2007 and September 30, 2006 was as follows:
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
-------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 89,378,098 $ 74,399,041
47 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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, 2007 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 $ 2,220,782,144
Federal tax cost of other investments (250,120,992)
---------------
Total federal tax cost $ 1,970,661,152
===============
Gross unrealized appreciation $ 25,718,768
Gross unrealized depreciation (13,045,277)
---------------
Net unrealized appreciation $ 12,673,491
===============
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Board of Trustees has adopted a compensation
deferral 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 compensation deferral 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.
- --------------------------------------------------------------------------------
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.
48 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
- --------------------------------------------------------------------------------
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, to the extent they are not
offset by positive cash balances maintained by the Fund, 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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.
- --------------------------------------------------------------------------------
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.
49 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2007 YEAR ENDED SEPTEMBER 30, 2006
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------
CLASS A
Sold 38,617,763 $ 383,790,627 33,124,392 $ 329,037,847
Dividends and/or
distributions reinvested 4,664,122 46,365,724 3,925,132 38,977,275
Redeemed (31,781,056) (315,926,723) (45,556,976) (452,169,073)
---------------------------------------------------------------
Net increase (decrease) 11,500,829 $ 114,229,628 (8,507,452) $ (84,153,951)
===============================================================
- ----------------------------------------------------------------------------------------------------
CLASS B
Sold 3,536,872 $ 35,129,468 3,960,483 $ 39,344,791
Dividends and/or
distributions reinvested 818,018 8,129,711 850,631 8,447,005
Redeemed (10,115,338) (100,578,474) (14,025,634) (139,287,092)
---------------------------------------------------------------
Net decrease (5,760,448) $ (57,319,295) (9,214,520) $ (91,495,296)
===============================================================
- ----------------------------------------------------------------------------------------------------
CLASS C
Sold 6,415,622 $ 63,588,007 5,604,078 $ 55,538,235
Dividends and/or
distributions reinvested 1,044,299 10,361,027 953,864 9,453,018
Redeemed (9,415,925) (93,445,905) (13,360,074) (132,476,751)
---------------------------------------------------------------
Net decrease (1,956,004) $ (19,496,871) (6,802,132) $ (67,485,498)
===============================================================
- ----------------------------------------------------------------------------------------------------
CLASS N
Sold 2,081,535 $ 20,675,387 1,672,193 $ 16,589,167
Dividends and/or
distributions reinvested 213,559 2,120,706 166,846 1,655,135
Redeemed (1,800,454) (17,874,817) (2,091,346) (20,748,140)
---------------------------------------------------------------
Net increase (decrease) 494,640 $ 4,921,276 (252,307) $ (2,503,838)
===============================================================
- ----------------------------------------------------------------------------------------------------
CLASS Y
Sold 23,316,655 $ 230,978,046 8,771,418 $ 87,052,881
Dividends and/or
distributions reinvested 1,194,013 11,858,111 544,310 5,395,808
Redeemed (3,114,388) (30,906,994) (1,297,451) (12,864,500)
---------------------------------------------------------------
Net increase 21,396,280 $ 211,929,163 8,018,277 $ 79,584,189
===============================================================
50 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations and investments in IMMF, for the year ended
September 30, 2007, were as follows:
PURCHASES SALES
- ---------------------------------------------------------------------
Investment securities $1,162,641,968 $ 578,444,499
U.S. government and government
agency obligations 475,109,474 771,081,519
To Be Announced (TBA)
mortgage-related securities 1,670,333,689 1,805,760,764
- ---------------------------------------------------------------------
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 an
annual rate of average net assets as shown in the following table:
FEE SCHEDULE
------------------------------------
Up to $100 million 0.500%
Next $150 million 0.450
Next $250 million 0.425
Over $500 million 0.400
- --------------------------------------------------------------------------------
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 SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year
for preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
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, 2007, the Fund paid
$3,540,783 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
periodically 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
51 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
periodically 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 periods. 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 determines its
uncompensated expenses under the plan at calendar quarter ends. The
Distributor's aggregate uncompensated expenses under the plan at September 30,
2007 for Class C and Class N shares were $16,995,830 and $1,609,198,
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 the CDSC retained by the Distributor on
the redemption of shares is shown in the following table 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, 2007 $262,683 $8,199 $255,717 $25,818 $5,062
- --------------------------------------------------------------------------------
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
52 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
year ended September 30, 2007, the Manager reimbursed the Fund $1,854,240,
$546,589, $467,102, $151,546 and $226,285 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. 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.
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 at 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.
53 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FUTURES CONTRACTS Continued
As of September 30, 2007, the Fund had outstanding futures contracts as follows:
UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS SEPTEMBER 30, 2007 (DEPRECIATION)
- ---------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
U.S. Long Bonds 12/19/07 545 $ 60,682,344 $ (300,772)
U.S. Treasury Nts., 2 yr. 12/31/07 1,375 284,689,453 889,317
---------------
588,545
---------------
CONTRACTS TO SELL
U.S. Treasury Nts., 5 yr. 12/31/07 1,178 126,082,813 (1,070,954)
U.S. Treasury Nts., 10 yr. 12/19/07 3,319 362,704,469 (659,892)
---------------
(1,730,846)
---------------
$ (1,142,301)
===============
- --------------------------------------------------------------------------------
6. CREDIT DEFAULT SWAP CONTRACTS
A credit default swap is a bilateral contract that enables an investor to buy or
sell protection against a defined-issuer credit event. The Fund may enter into
credit default swaps to hedge an existing position or to obtain exposure to a
security or market by purchasing or selling credit protection. The Fund may
enter into credit default swaps on a single security, or a basket of securities.
In a credit default swap contract, the purchaser of the contract will pay
a periodic interest fee, similar to an insurance premium, on the notional amount
of the swap contract to the counterparty (the seller of the contract). If there
is a credit event (for example, bankruptcy or a failure to timely pay interest
or principal), the purchaser will exercise the contract and will receive a
payment from the seller of the contract equal to the notional value of the
credit default swap contract less the value of the underlying security.
The periodic interest fees are accrued daily as a component of unrealized
appreciation (depreciation) and are recorded as realized gain (loss) upon
payment. In the event that the credit default swap is exercised due to a credit
event, the difference between the value of the underlying security and the
notional amount is recorded as realized gain (loss) and is included on the
Statement of Operations.
Credit default swaps are marked to market daily using primarily quotations
from counterparties and brokers. The value of the contracts is separately
disclosed on the Statement of Assets and Liabilities. The unrealized
appreciation (depreciation) related to the change in the valuation of the
notional amount of the swap is combined with the accrued interest due to (owed
by) the Fund at termination or settlement. The net change in this amount during
the period is included on the Statement of Operations.
Risks of credit default swaps include, but are not limited to, the cost of
paying for credit protection if there are no credit events, pricing transparency
when assessing the cost of a credit default swap, counterparty risk, adverse
pricing when purchasing bonds to satisfy its delivery obligation, and the need
to fund the delivery obligation (either cash
54 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
or defaulted securities depending on whether the Fund is the purchaser or seller
of the credit default swap contract, respectively).
Information regarding such credit default swaps as of September 30, 2007 is as
follows:
BUY/SELL NOTIONAL PAY/
REFERENCE CREDIT AMOUNT RECEIVED TERMINATION PREMIUM
COUNTERPARTY ENTITY PROTECTION (000S) FIXED RATE DATE RECEIVED VALUE
- -----------------------------------------------------------------------------------------------------------
Deutsche
Bank AG:
ABX.HE.AAA.06-2
Index Sell $ 5,150 0.11% 5/25/46 $ 257,469 $ (206,559)
ABX.HE.AAA.06-2
Index Sell 5,150 0.11 5/25/46 257,421 (206,559)
-----------------------
$ 514,890 $ (413,118)
=======================
- --------------------------------------------------------------------------------
7. TOTAL RETURN SWAP CONTRACTS
A total return swap is an agreement under which a set of future cash flows is
exchanged between two counterparties. One cash flow stream will typically be
based on a reference interest rate or index and the other on the total return of
a reference asset such as a security, a basket of securities, or an index. The
total return includes appreciation or depreciation on the reference asset, plus
any interest or dividend payments. Payments under the swap are based on an
agreed upon principal amount but since this principal amount is not exchanged,
it represents neither an asset nor a liability to either counterparty, and is
referred to as notional. Total return swaps are marked to market daily using
primarily quotations from counterparties and brokers. The value of the contracts
is separately disclosed on the Statement of Assets and Liabilities. The
unrealized appreciation (depreciation) related to the change in the valuation of
the notional amount of the swap is combined with the amount due to (owed by) the
Fund at termination or settlement. The net change in this amount during the
period is included on the Statement of Operations. The Fund also records any
periodic payments received from (paid to) the counterparty, including at
termination, under such contracts as realized gain (loss) on the Statement of
Operations. The primary risks associated with total return swaps are credit
risks (if the counterparty fails to meet its obligations) and market risk (if
there is no liquid market for the agreement or unfavorable changes occur in the
reference asset).
As of September 30, 2007, the Fund had entered into the following total return
swap agreements:
SWAP NOTIONAL RECEIVED BY TERMINATION
COUNTERPARTY AMOUNT PAID BY THE FUND THE FUND DATES VALUE
- --------------------------------------------------------------------------------------------------------------
If positive, the
If negative, the Total Return of the
absolute value of the Lehman Brothers
Lehman Brothers U.S. CMBS AAA
U.S. CMBS AAA 8.5+ Index plus
Deutsche Bank AG $32,200,000 8.5+ Index 60 basis points 2/1/08 $ 230,790
55 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. TOTAL RETURN SWAP CONTRACTS Continued
SWAP NOTIONAL RECEIVED BY TERMINATION
COUNTERPARTY AMOUNT PAID BY THE FUND THE FUND DATES VALUE
- ---------------------------------------------------------------------------------------------------------------
Lehman Brothers
Special Financing, Inc.:
If positive, the
If negative, the Total Return of the
absolute value of the Lehman Brothers
Lehman Brothers U.S. CMBS AAA
U.S. CMBS AAA 8.5+ Index plus
$18,370,000 8.5+ Index 32.5 basis points 11/1/07 $ 124,783
If positive, the
If negative, the Total Return of the
absolute value of the Lehman Brothers
Lehman Brothers U.S. CMBS AAA
U.S. CMBS AAA 8.5+ Index plus
11,359,000 8.5+ Index 60 basis points 2/1/08 77,568
If positive, the
If negative, the Total Return of the
absolute value of the Lehman Brothers
Lehman Brothers U.S. CMBS AAA
U.S. CMBS AAA 8.5+ Index minus
12,590,000 8.5+ Index 25 basis points 3/1/08 80,291
- ---------------------------------------------------------------------------------------------------------------
If positive, the
Total Return of the
If negative, the Lehman Brothers
absolute value of the U.S. CMBS AAA
Morgan Stanley Lehman Brothers 8.5+ Index plus
Capital Services, Inc. 10,200,000 CMBS AAA 8.5+ Index 110 basis points 1/31/08 76,353
- ---------------------------------------------------------------------------------------------------------------
If positive, the
Total Return of the
If negative, the Lehman Brothers
absolute value of the U.S. CMBS AAA
Lehman Brothers 8.5+ Index plus
UBS AG 14,520,000 CMBS AAA 8.5+ Index 60 basis points 2/1/08 103,045
----------
$ 692,830
==========
Abbreviation is as follows:
CMBS Commercial Mortgage Backed Securities
- --------------------------------------------------------------------------------
8. ILLIQUID SECURITIES
As of September 30, 2007, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund will not invest more than 10% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid securities. Securities that are
illiquid are marked with the applicable footnote on the Statement of
Investments.
56 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
- --------------------------------------------------------------------------------
9. 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
securities, letters of credit 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 each day. If the Fund is
undercollateralized at the close of business due to an increase in market value
of securities on loan, additional collateral is requested from the borrowing
counterparty and is delivered to the Fund on the next business day. Cash
collateral may be invested in approved investments and the Fund bears the risk
of any loss in value of these investments. The Fund retains a portion of the
interest earned from the collateral. 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. 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, 2007, the
Fund had on loan securities valued at $117,651,979, which are included in the
Statement of Assets and Liabilities as "Investments, at value" and, when
applicable, as "Receivable for Investments sold." Collateral of $119,813,499 was
received for the loans, $60,841,596 of which was received in cash and
subsequently invested in approved investments. In addition, collateral of
$58,971,903 was also received in the form of securities.
- --------------------------------------------------------------------------------
10. RECENT ACCOUNTING PRONOUNCEMENT
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
September 30, 2007, the Manager has evaluated the implications of FIN 48 and
does not currently anticipate a material impact to the Fund's financial
statements. The Manager will continue to monitor the Fund's tax positions
prospectively for potential future impacts.
In September 2006, ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a
single authoritative definition of fair value, sets out a framework for
measuring fair value and expands disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial
57 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10. RECENT ACCOUNTING PRONOUNCEMENT Continued
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. As of September 30, 2007, the Manager
does not believe the adoption of SFAS No. 157 will materially impact the
financial statement amounts; however, additional disclosures may be required
about the inputs used to develop the measurements and the effect of certain of
the measurements on changes in net assets for the period.
58 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 (the "Fund"), including the statement
of investments, as of September 30, 2007, 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 period then ended. 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 audits included 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, 2007, 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 the
Fund as of September 30, 2007, 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
period then ended, in conformity with accounting principles generally accepted
in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
November 14, 2007
59 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2008, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2007. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Recent tax legislation allows a regulated investment company to designate
distributions not designated as capital gain distributions, as either interest
related dividends or short-term capital gain dividends, both of which are exempt
from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal
year ended September 30, 2007, $85,526,188 or 95.69% of the ordinary
distributions paid by the Fund qualifies as an interest related dividend.
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.
60 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
61 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited
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- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the Fund's
investment advisory agreement (the "Agreement"). The Investment Company Act of
1940, as amended, requires that the Board request and evaluate, and that the
Manager provide, such information as may be reasonably necessary to evaluate the
terms of the Agreement. The Board employs an independent consultant to prepare a
report that provides information, including comparative information, that the
Board requests for that purpose. In addition, the Board receives information
throughout the year regarding Fund services, fees, expenses and performance.
The Manager and the independent consultant provided information to the
Board on the following factors: (i) the nature, quality and extent of the
Manager's services, (ii) the investment performance of the Fund and the Manager,
(iii) the fees and expenses of the Fund, including comparative expense
information, (iv) the profitability of the Manager and its affiliates, including
an analysis of the cost of providing services, (v) whether economies of scale
are realized as the Fund grows and whether fee levels reflect these economies of
scale for Fund investors and (vi) other benefits to the Manager from its
relationship with the Fund. Outlined below is a summary of the principal
information considered by the Board as well as the Board's conclusions.
The Board was aware that there are alternatives to retaining the Manager.
NATURE, QUALITY AND EXTENT OF SERVICES. The Board considered information
about the nature and extent of the services provided to the Fund and information
regarding the Manager's key personnel who provide such services. The Manager's
duties include providing the Fund with the services of the portfolio manager and
the Manager's investment team, who provide research, analysis and other advisory
services in regard to the Fund's investments; securities trading services;
oversight of third party service providers; monitoring compliance with
applicable Fund policies and procedures and adherence to the Fund's investment
restrictions. The Manager is responsible for providing certain administrative
services to the Fund as well. Those services include providing and supervising
all administrative and clerical personnel who are necessary in order to provide
effective corporate administration for the Fund; compiling and maintaining
records with respect to the Fund's operations; preparing and filing reports
required by the Securities and Exchange Commission; preparing periodic reports
regarding the operations of the Fund for its shareholders; preparing proxy
materials for shareholder meetings; and preparing the registration statements
required by Federal and state securities laws for the sale of the Fund's shares.
The Manager also provides the Fund with office space, facilities and equipment.
62 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
The Board also considered the quality of the services provided and the
quality of the Manager's resources that are available to the Fund. The Board
took account of the fact that the Manager has had over forty years of experience
as an investment adviser and that its assets under management rank it among the
top mutual fund managers in the United States. The Board evaluated the Manager's
administrative, accounting, legal and compliance services, and information the
Board has received regarding the experience and professional qualifications of
the Manager's key personnel and the size and functions of its staff providing
investment management services to the Fund. In its evaluation of the quality of
the portfolio management services provided, the Board considered the experience
of Angelo Manioudakis and the Manager's Core Plus investment team and analysts.
Mr. Manioudakis has been a portfolio manager of the fund since April 2002. The
Board members also considered the totality of their experiences with the Manager
as directors or trustees of the Fund and other funds advised by the Manager. In
light of the foregoing, the Board concluded that the Fund benefits from the
services provided under the Agreement as a result of the Manager's experience,
reputation, personnel, operations, and resources.
INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. During the year, the
Manager provided information on the investment performance of the Fund and the
Manager at each Board meeting, including comparative performance information.
The Board also reviewed information, prepared by the Manager and by the
independent consultant, comparing the Fund's historical performance to relevant
market indices and to the performance of other retail front-end load and no-load
short U.S. government funds. The Board noted that the Fund's one-year,
three-year, five-year and ten-year performance were better than its peer group
median.
COSTS OF SERVICES AND PROFITS REALIZED BY THE MANAGER. The Board
considered information regarding the Manager's costs in serving as the Fund's
investment adviser, including the costs associated with the personnel and
systems necessary to manage the Fund, and information regarding the Manager's
profitability from its relationship with the Fund. The Board reviewed the fees
paid to the Manager and the other expenses borne by the Fund. The Board also
considered the comparability of the fees charged and the services provided to
the Fund to the fees and services for other clients or accounts advised by the
Manager. The independent consultant provided comparative data in regard to the
fees and expenses of the Fund and other short U.S. government funds with
comparable asset levels and distribution features. The Board noted that the
Manager has agreed to voluntarily cap expenses at 0.70% of the average daily net
assets of Class A shares, 1.45% of the average daily net assets of Class
63 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
B and C shares, 0.95% of the average daily net assets of Class N shares, and
0.45% of the average daily net assets of Class Y shares. The Board noted that
the Fund's contractual and actual management fees are lower than its peer group
median.
ECONOMIES OF SCALE. The Board reviewed whether the Manager may realize
economies of scale in managing and supporting the Fund. The Board noted that the
Fund currently has management fee breakpoints, which are intended to share with
shareholders economies of scale that may exist as the Fund grows.
OTHER BENEFITS TO THE MANAGER. In addition to considering the profits
realized by the Manager, the Board considered information that was provided
regarding the direct and indirect benefits the Manager receives as a result of
its relationship with the Fund, including compensation paid to the Manager's
affiliates. The Board also considered that the Manager must be able to pay and
retain experienced professional personnel at competitive rates to provide
quality services to the Fund and that maintaining the financial viability of the
Manager is important in order for the Manager to continue to provide significant
services to the Fund and its shareholders.
CONCLUSIONS. These factors were also considered by the independent
Trustees meeting separately from the full Board, assisted by experienced counsel
to the Fund and to the independent Trustees. Fund counsel and the independent
Trustees' counsel are both independent of the Manager within the meaning and
intent of the Securities and Exchange Commission Rules.
Based on its review of the information it received and its evaluations
described above, the Board, including a majority of the independent Trustees,
decided to continue the Agreement for another year. In arriving at this
decision, the Board considered all of the above information, and considered the
terms and conditions of the Agreement, including the management fee, in light of
all of the surrounding circumstances.
64 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS
FUND, LENGTH OF SERVICE, AGE HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL,
TRUSTEES COLORADO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, OR UNTIL HIS OR
HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. ARMSTRONG, President, Colorado Christian University (since 2006); Chairman, Cherry Creek
Chairman of the Board of Mortgage Company (since 1991), Chairman, Centennial State Mortgage Company (since
Trustees (since 2003), Trustee 1994), Chairman, The El Paso Mortgage Company (since 1993); Chairman, Ambassador
(since 1999) Media Corporation (since 1984); Chairman, Broadway Ventures (since 1984); Director
Age: 70 of Helmerich & Payne, Inc. (oil and gas drilling/production company) (since 1992),
Campus Crusade for Christ (non-profit) (since 1991); Former Director, The Lynde and
Harry Bradley Foundation, Inc. (non-profit organization) (2002-2006); former
Chairman of: Transland Financial Services, Inc. (private mortgage banking company)
(1997-2003), Great Frontier Insurance (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.
GEORGE C. BOWEN, Assistant Secretary and Director of the Manager (December 1991-April 1999);
Trustee (since 1998) President, Treasurer and Director of Centennial Capital Corporation (June
Age: 71 1989-April 1999); Chief Executive Officer and Director of MultiSource Services,
Inc. (March 1996-April 1999); Mr. Bowen held several positions with
OppenheimerFunds, Inc. and with subsidiary or affiliated companies of
OppenheimerFunds, Inc. (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 site) (June
Trustee (since 2001) 2000-May 2006); Partner of PricewaterhouseCoopers LLP (accounting firm) (July
Age: 69 1974-June 1999); Chairman of Price Waterhouse LLP Global Investment Management
Industry Services Group (accounting firm) (July 1994-June 1998). Oversees 38
portfolios in the OppenheimerFunds complex.
JON S. FOSSEL, Director of UNUMProvident (insurance company) (since June 2002); Director of
Trustee (since 1990) Northwestern Energy Corp. (public utility corporation) (since November 2004);
Age: 65 Director of P.R. Pharmaceuticals (October 1999-October 2003); Director of Rocky
Mountain Elk Foundation (non-profit organization) (February 1998-February 2003 and
since February 2005); 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.
("OAC") (parent holding company of the Manager), Shareholders Services, 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 1984). Mr.
Trustee (since 1996) Freedman held several positions with the Manager and with subsidiary or affiliated
Age: 67 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 organization)
Trustee (since 2002) (since February 2000); Board Member of Middlebury College (educational
Age: 61 organization) (since December 2005); Director of The California Endowment
(philanthropic organization) (since April 2002); Director (February 2002-2005)
65 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
BEVERLY L. HAMILTON, and Chairman of Trustees (since 2006) of the Community Hospital of Monterey
Continued Peninsula; Director (October 1991-2005) and Vice Chairman (since 2006) of American
Funds' Emerging Markets Growth Fund, Inc. (mutual fund); President of ARCO
Investment Management Company (February 1991-April 2000); Member of the investment
committees of The Rockefeller Foundation (since 2001) and The University of
Michigan (since 2000); 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 Knowledge, Inc. (since 2006); Director of Jones International
Trustee (since 2002) University (educational organization) (since August 2005); Chairman, Chief
Age: 63 Executive Officer and Director of 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 Funds)
Trustee (since 2001) (investment company) (since 1996) and MML Series Investment Fund (investment
Age: 65 company) (since 1996); Trustee of Worcester Polytech Institute (since 1985);
Chairman (since 1994) of the Investment Committee 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); and Executive Vice
President of Peoples Heritage Financial Group, Inc. (commercial bank) (January
1999-July 1999). Oversees 40 portfolios in the OppenheimerFunds complex.
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INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH
AND OFFICER FLOOR, NEW YORK, NEW YORK 10281-1008. MR. MURPHY SERVES AS A TRUSTEE FOR AN
INDEFINITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL 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 of the Manager (since June 2001);
Trustee, President and President of the Manager (September 2000-March 2007); President and director or
Principal Executive Officer trustee of other Oppenheimer funds; President and Director of Oppenheimer
(since 2001) Acquisition Corp. ("OAC") (the Manager's parent holding company) and of Oppenheimer
Age: 58 Partnership Holdings, Inc. (holding company subsidiary of the Manager) (since July
2001); Director of OppenheimerFunds Distributor, Inc. (subsidiary of the Manager)
(November 2001-December 2006); Chairman and Director 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
66 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
JOHN V. MURPHY, Management Corporation and OFI Private Investments, Inc. (since July 2001);
Continued 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); Chairman (since October 2007) and Member of the Investment
Company Institute's Board of Governors (since October, 2003); Chief Operating
Officer of the Manager (September 2000-June 2001). Oversees 102 portfolios in the
OppenheimerFunds complex.
- ----------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS OF THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS. ZACK,
THE FUND GILLESPIE AND MS. BLOOMBERG, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, NEW
YORK, NEW YORK 10281-1008, FOR MESSRS. VANDEHEY, WIXTED, PETERSEN, SZILAGYI AND MS.
IVES, 6803 S. TUCSON WAY, CENTENNIAL, COLORADO 80112-3924; FOR MESSRS. MANIOUDAKIS,
BOMFIM, CAAN, GORD AND SWANEY, 470 ATLANTIC AVENUE, 11TH FLOOR, BOSTON,
MASSACHUSETTS 02210. EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS OR HER
RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
ANGELO MANIOUDAKIS, Senior Vice President of the Manager (since April 2002), of HarbourView Asset
Vice President and Portfolio Management Corporation (since April, 2002 and of OFI Institutional Asset
Manager (since 2002) Management, Inc. (since June 2002); Executive Director and portfolio manager for
Age: 41 Miller, Anderson & Sherrerd, a division of Morgan Stanley Investment Management
(August 1993-April 2002). An officer of 15 portfolios in the OppenheimerFunds
complex.
ANTULIO N. BOMFIM, Vice President of the Manager (since October 2003); Senior Economist at the Board
Vice President and Portfolio of Governors of the Federal Reserve System from June 1992 to October 2003. A
Manager (since 2006) portfolio manager of 12 portfolios in the OppenheimerFunds complex.
Age: 40
GEOFFREY CAAN, Vice President and Portfolio Manager of the Manager (since August 2003); Vice
Vice President and Portfolio President of ABN AMRO NA, Inc. (June 2002-August 2003); Vice President of Zurich
Manager (since 2006) Scudder Investments (January 1999-June 2002). A portfolio manager of 12 portfolios
Age: 38 in the OppenheimerFunds complex.
BENJAMIN J. GORD, Vice President of the Manager (since April 2002), of HarbourView Asset Management
Vice President and Portfolio Corporation (since April 2002) and of OFI Institutional Asset Management, Inc. (as
Manager (since 2006) of June 2002); Executive Director and senior fixed income analyst at Miller
Age: 45 Anderson & Sherrerd, a division of Morgan Stanley Investment Management (April
1992-March 2002). A portfolio manager of 12 portfolios in the OppenheimerFunds
complex.
THOMAS SWANEY, Vice President of the Manager (since April 2006); senior analyst, high grade
Vice President and Portfolio investment team (June 2002-March 2006); senior fixed income analyst at Miller
Manager (since 2006) Anderson & Sherrerd, a division of Morgan Stanley Investment Management (May
Age: 35 1998-May 2002). A portfolio manager of 12 portfolios in the OppenheimerFunds
complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since March
Vice President and Chief 2004); Chief Compliance Officer of the Manager, OppenheimerFunds Distributor, Inc.,
Compliance Officer Centennial Asset Management and Shareholder Services, Inc. (since March 2004); Vice
(since 2004) President of OppenheimerFunds Distributor, Inc., Centennial Asset Management
Age: 57 Corporation and Shareholder Services, Inc. (since June 1983). Former Vice President
and Director of Internal Audit of the Manager (1997-February 2004). An officer of
102 portfolios in the OppenheimerFunds complex.
67 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of
Treasurer and Principal the following: HarbourView Asset Management Corporation, Shareholder Financial
Financial & Accounting Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management, Inc.
Officer (since 1999) and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI Private
Age: 48 Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. (since
May 2000), OppenheimerFunds plc (since May 2000), OFI Institutional Asset
Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program
(charitable trust program established by the Manager) (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 102 portfolios in the OppenheimerFunds complex.
BRIAN PETERSEN, Vice President of the Manager (since February 2007); Assistant Vice President of
Assistant Treasurer the Manager (August 2002-February 2007); Manager/Financial Product Accounting of
(since 2004) the Manager (November 1998-July 2002). An officer of 102 portfolios in the
Age: 37 OppenheimerFunds complex.
BRIAN C. SZILAGYI, Assistant Vice President of the Manager (since July 2004); Director of Financial
Assistant Treasurer Reporting and Compliance of First Data Corporation (April 2003-July 2004); Manager
(since 2005) of Compliance of Berger Financial Group LLC (May 2001-March 2003); Director of
Age: 37 Mutual Fund Operations at American Data Services, Inc. (September 2000-May 2001).
An officer of 102 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March
Vice President and Secretary 2002) of the Manager; General Counsel and Director of the Distributor (since
(since 2001) December 2001); General Counsel of Centennial Asset Management Corporation (since
Age: 59 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
102 portfolios in the OppenheimerFunds complex.
LISA I. BLOOMBERG, Vice President and Associate Counsel of the Manager (since May 2004); First Vice
Assistant Secretary President (April 2001-April 2004), Associate General Counsel (December 2000-April
(since 2004) 2004), Corporate Vice President (May 1999-April 2001) and Assistant General Counsel
Age: 39 (May 1999-December 2000) of UBS Financial Services Inc. (formerly, PaineWebber
Incorporated). An officer of 102 portfolios in the OppenheimerFunds complex.
68 | OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
PHILLIP S. GILLESPIE, Senior Vice President and Deputy General Counsel of the Manager (since September
Assistant Secretary 2004); First Vice President (2000-September 2004), Director (2000-September 2004)
(since 2004) and Vice President (1998-2000) of Merrill Lynch Investment Management. An officer
Age: 43 of 102 portfolios in the OppenheimerFunds complex.
KATHLEEN T. IVES, Vice President (since June 1998) and Senior Counsel and Assistant Secretary (since
Assistant Secretary October 2003) of the Manager; Vice President (since 1999) and Assistant Secretary
(since 2001) (since October 2003) of the Distributor; Assistant Secretary of Centennial Asset
Age: 42 Management Corporation (since October 2003); Vice President and Assistant Secretary
of Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds
Legacy Program and Shareholder Financial Services, Inc. (since December 2001);
Assistant Counsel of the Manager (August 1994-October 2003). An officer of 102
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.
69 | 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, are audit committee financial experts and that
Messrs. Cameron and Bowen are "independent" for purposes of this Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $25,300 in fiscal 2007 and $35,000 in fiscal 2006.
(b) (b) Audit-Related 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 not such fees for 2007 and $40,000 for 2006 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 include: Review of management's assessment of the financial
statements disclosure impacts of an IRS private letter ruling.
(c) Tax 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 no such fees to the registrant 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 no such fees in fiscal 2007 and $8,580 in fiscal 2006.
The principal accountant for the audit of the registrant's annual financial
statements billed $32,732 in fiscal 2007 and no such fees in fiscal 2006 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 fees would include compliance review and professional services for 22c-2
program.
(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 $32,732 in fiscal 2007 and $45,580 in fiscal
2006 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) No such services were rendered.
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 09/30/2007, 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: 11/14/2007
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: 11/14/2007
By: /s/ Brian W. Wixted
---------------------------
Brian W. Wixted
Principal Financial Officer
Date: 11/14/2007