Dear Shareholder:
We are pleased to send you the annual report for Centennial Government Trust.
During the 12-month period ended June 30, 1995, the Trust's compounded
annualized yield was 4.94%. The corresponding yield without compounding was
4.82%. The seven-day annualized yields with and without compounding on June
30, 1995 were 5.43% and 5.30%, respectively.((1))
Between February 1994 and February 1995, the Fed raised interest rates as a
proactive attempt to preempt inflation and prolong the current cycle of
economic growth. These rate rises successfully kept the economy from
overheating, as economic data released throughout the first half of the year
suggested that the Fed had finally achieved its intended effect of slowing the
rate of economic growth.
Although lower interest rates are generally good news for the economy and the
securities markets, they do not benefit short-term savings vehicles like money
market funds. With a share price designed not to fluctuate, income is the only
variable in money market fund returns--and declining rates limit the amount
of income available from the types of safe, short-term securities in which
money market funds invest.
Yet in any environment, it's important to have a portion of your money
allocated to stable investments. Government money market funds are designed to
offer liquidity, a stable share price, and professional management aimed to
capture high yields.((2))
Moving forward, we believe the Fed will feel little pressure to increase
interest rates in the near term given the economy's slowdown--and rates on
money market funds will likely remain at current levels. If the Fed sees later
this year that the rate of growth has slowed less than initially anticipated,
it could move to raise rates again, which would boost yields. Or, if the Fed
discovers the economy has stalled, it could lower rates to stimulate growth.
Therefore, until the full extent of the economic slowdown is known, questions
about the direction of the economy will persist and money market funds should
remain an excellent defensive investment.
Thank you for your confidence in Centennial Government Trust. We look forward
to helping you continue to reach your investment goals in the future.
Sincerely,
/s/ Jon S. Fossel
Jon S. Fossel
President, Centennial Government Trust
/s/ James C. Swain
James C. Swain
Chairman, Centennial Government Trust
July 24, 1995
1. Compounded yields assume reinvestment of dividends. Past performance is not
indicative of future results.
2. The Fund is neither insured nor guaranteed by the U.S. government, and
there is no assurance that the Fund will maintain a stable $1 share price in
the future.
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1995
Centennial Government Trust
<TABLE>
<CAPTION>
Amortized
Face Cost
Amount See Note 1
-------------- ----------------
<S> <C> <C>
U.S. Government Obligations--68.7%
Federal Farm Credit Bank, 5.87%, 7/5/95 $21,400,000 $21,386,042
Federal Farm Credit Bank, 5.97%, 8/23/95((1)) 6,880,000 6,874,177
Federal Home Loan Bank, 5.40%, 11/29/95 20,000,000 19,547,000
Federal Home Loan Bank, 5.70%, 9/6/95 10,000,000 9,893,917
Federal Home Loan Bank, 6.40%, 7/6/95((1)) 10,000,000 9,996,807
Federal Home Loan Mortgage Corp., 5.70%, 9/6/95 10,500,000 10,388,613
Federal Home Loan Mortgage Corp., 5.73%, 9/25/95 25,607,000 25,256,483
Federal Home Loan Mortgage Corp., 5.74%, 9/14/95 30,000,000 29,641,250
Federal Home Loan Mortgage Corp., 5.78%-5.79%, 9/18/95 30,000,000 29,619,044
Federal Home Loan Mortgage Corp., 5.78%-5.79%, 9/8/95 15,000,000 14,833,633
Federal Home Loan Mortgage Corp., 5.80%, 9/5/95 12,000,000 11,872,400
Federal Home Loan Mortgage Corp., 5.81%, 8/28/95 9,500,000 9,411,075
Federal Home Loan Mortgage Corp., 5.85%, 8/7/95 20,000,000 19,879,750
Federal Home Loan Mortgage Corp., 5.86%, 8/15/95 8,150,000 8,090,301
Federal Home Loan Mortgage Corp., 5.87%, 7/5/95 6,000,000 5,996,087
Federal Home Loan Mortgage Corp., 5.87%, 7/7/95 8,700,000 8,691,489
Federal Home Loan Mortgage Corp., 5.87%-5.88%, 8/18/95 15,000,000 14,882,467
Federal Home Loan Mortgage Corp., 5.87%, 8/21/95 10,000,000 9,916,842
Federal Home Loan Mortgage Corp., 5.83%-5.87%, 8/8/95 19,255,000 19,136,085
Federal Home Loan Mortgage Corp., 5.88%, 8/11/95 10,000,000 9,933,033
Federal Home Loan Mortgage Corp., 5.88%-5.90%, 7/20/95 30,000,000 29,906,794
Federal Home Loan Mortgage Corp., 5.90%, 7/12/95 9,615,000 9,597,666
Federal Home Loan Mortgage Corp., 5.92%, 8/3/95 10,000,000 9,945,733
Federal National Mortgage Assn., 5.80%, 9/15/95 10,000,000 9,877,556
Federal National Mortgage Assn., 5.35%-5.39%, 12/7/95 30,000,000 29,288,475
Federal National Mortgage Assn., 5.74%, 9/21/95 10,000,000 9,869,256
Federal National Mortgage Assn., 5.74%, 9/6/95 5,000,000 4,946,586
Federal National Mortgage Assn., 5.75%, 9/20/95 10,000,000 9,870,625
Federal National Mortgage Assn., 5.80%, 9/1/95 11,500,000 11,385,128
Federal National Mortgage Assn., 5.70%-5.80%, 9/7/95 25,000,000 24,728,000
Federal National Mortgage Assn., 5.81%, 8/28/95 15,000,000 14,859,592
Federal National Mortgage Assn., 5.82%, 9/5/95 10,000,000 9,893,300
Federal National Mortgage Assn., 5.88%, 7/25/95 13,000,000 12,949,040
Federal National Mortgage Assn., 5.88%, 8/17/95 10,000,000 9,923,233
Federal National Mortgage Assn., 5.89%, 7/18/95 8,440,000 8,416,525
Federal National Mortgage Assn., 5.95%, 7/3/95((1)) 20,000,000 19,996,564
Federal National Mortgage Assn., 5.97%, 7/3/95((1)) 18,000,000 17,999,911
Student Loan Marketing Assn., guaranteeing commercial paper of
Secondary Market Services, Inc., Education Loan Revenue Notes Service,
Series A, 5.98%, 7/31/95 36,982,000 36,797,706
2
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED)
Centennial Government Trust
<CAPTION>
Amortized
Face Cost
Amount See Note 1
-------------- ----------------
<S> <C> <C>
U.S. Government Obligations (Continued)
Small Business Administration, 7%-10.625%, 7/3/95((2)) $ 36,665,238 $ 38,024,237
--------------
Total U.S. Government Obligations (Cost $613,522,422) 613,522,422
--------------
Repurchase Agreements--28.1%
Repurchase agreement with First Chicago Capital Markets, 6.125%, dated 6/30/95, to be
repurchased at $53,027,052 on 7/3/95, collateralized by U.S. Treasury Bills maturing
9/28/95, with a value of $54,114,795 53,000,000 53,000,000
Repurchase agreement with J.P. Morgan Securities, Inc., 6.18%, dated 6/30/95, to be
repurchased at $198,101,970 on 7/3/95, collateralized by Federal National Mortgage
Assn., 6.50%, 6/1/25, with a value of $89,819,240, and Federal Home Loan Mortgage
Corp., 7%-8.50%, 5/1/24-6/1/25, with a value of $115,083,759 198,000,000 198,000,000
--------------
Total Repurchase Agreements (Cost $251,000,000) 251,000,000
--------------
Total Investments, at Amortized Cost 96.8% 864,522,422
Other Assets Net of Liabilities 3.2 28,661,823
------------ --------------
Net Assets 100.0% $893,184,245
============ ==============
</TABLE>
1. Variable rate security. The interest rate, which is based on specific, or
an index of, market interest rates, is subject to change periodically and
is the effective rate on June 30, 1995.
2. Floating or variable rate obligation maturing in more than one year. The
interest rate, which is based on specific, or an index of, market interest
rates, is subject to change periodically and is the effective rate on June
30, 1995. This instrument may have a demand feature which allows the
recovery of principal at any time, or at specified intervals not exceeding
one year, on up to 30 days' notice. Maturity date shown represents
effective maturity based on variable rate and, if applicable, demand
feature.
See accompanying Notes to Financial Statements.
3
<PAGE>
Statement of Assets and Liabilities June 30, 1995
Centennial Government Trust
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments, at amortized cost (including repurchase agreements of $251,000,000)--see
accompanying statement $864,522,422
Cash 870,680
Receivables:
Shares of beneficial interest sold 37,431,740
Interest and principal paydowns 1,944,161
Other 87,332
--------------
Total assets 904,856,335
--------------
LIABILITIES:
Payables and other liabilities:
Shares of beneficial interest redeemed 9,548,763
Dividends 1,877,345
Service plan fees--Note 3 77,264
Transfer and shareholder servicing agent fees--Note 3 61,668
Trustees' fees 6,465
Other 100,585
--------------
Total liabilities 11,672,090
--------------
NET ASSETS $893,184,245
==============
COMPOSITION OF NET ASSETS:
Paid-in capital $893,946,917
Accumulated net realized loss from investment transactions (762,672)
--------------
NET ASSETS--applicable to 893,946,917 shares of beneficial interest outstanding $893,184,245
==============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $1.00
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
Statement of Operations For the Year Ended June 30, 1995
Centennial Government Trust
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME--Interest $40,294,537
-------------
EXPENSES:
Management fees--Note 3 3,414,212
Service plan fees--Note 3 1,426,765
Transfer and shareholder servicing agent fees--Note 3 448,934
Registration and filing fees 128,279
Custodian fees and expenses 113,005
Shareholder reports 112,611
Legal and auditing fees 27,768
Trustees' fees and expenses 20,657
Other 17,924
-------------
Total expenses 5,710,155
-------------
NET INVESTMENT INCOME 34,584,382
NET REALIZED LOSS ON INVESTMENTS (757,217)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $33,827,165
=============
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
Statements of Changes in Net Assets
Centennial Government Trust
<TABLE>
<CAPTION>
Year Ended June 30,
1995 1994
-------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 34,584,382 $ 18,573,358
Net realized gain (loss) on investments (757,217) 166,504
------------ --------------
Net increase in net assets resulting from operations 33,827,165 18,739,862
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (34,750,614) (18,663,114)
------------ --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net assets resulting from beneficial interest
transactions--Note 2 280,665,192 (23,735,954)
------------ --------------
NET ASSETS:
Total increase (decrease) 279,741,743 (23,659,206)
Beginning of period 613,442,502 637,101,708
------------ --------------
End of period $893,184,245 $613,442,502
============ ==============
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
Financial Highlights
Centennial Government Trust
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations--net investment income
and net realized gain on
investments .05 .03 .04 .04 .07 .08 .08 .06 .05 .07
Dividends and distributions to
shareholders (.05) (.03) (.04) (.04) (.07) (.08) (.08) (.06) (.05) (.07)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
TOTAL RETURN, AT NET ASSET VALUE ((1)) 4.93% 2.84% 2.98% 4.75% 6.86% 8.23% 8.16% 6.06% 5.27% 7.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
thousands) $893,184 $613,443 $637,102 $574,717 $533,154 $219,003 $151,898 $90,035 $67,042 $78,550
Average net assets (in thousands) $718,681 $665,494 $633,017 $581,563 $418,268 $200,570 $121,909 $82,815 $74,084 $68,515
Number of shares outstanding at end
of year (in thousands) 893,947 613,282 637,018 574,722 533,125 218,986 151,901 90,036 67,042 78,550
Ratios to average net assets:
Net investment income 4.81% 2.79% 2.81% 4.38% 6.44% 7.75% 8.11% 5.94% 5.17% 6.59%
Expenses .80% .79% .79% .78% .79% .84% .85% .90% .96% .93%
</TABLE>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends 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.
Total returns are not annualized for periods of less than one full year.
Total returns reflect changes in net investment income only.
See accompanying Notes to Financial Statements.
7
<PAGE>
Notes to Financial Statements
Centennial Government Trust
1. Significant Accounting Policies
Centennial Government Trust (the Trust) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Trust's investment advisor is Centennial Asset
Management Corporation (the Manager), a subsidiary of Oppenheimer Management
Corporation (OMC). The following is a summary of significant accounting
policies consistently followed by the Trust.
Investment Valuation--Portfolio securities are valued on the basis of amortized
cost, which approximates market value.
Repurchase Agreements--The Trust requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral
for repurchase agreements. The market value of the underlying securities is
required to be at least 102% of the resale price at the time of purchase. If
the seller of the agreement defaults and the value of the collateral
declines, or if the seller enters an insolvency proceeding, realization of
the value of the collateral by the Trust may be delayed or limited.
Federal Taxes--The Trust intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required.
Distributions to Shareholders--The Trust intends to declare dividends from net
investment income each day the New York Stock Exchange is open for business
and pay such dividends monthly. To effect its policy of maintaining a net
asset value of $1.00 per share, the Trust may withhold dividends or make
distributions of net realized gains.
Other--Investment transactions are accounted for on the date the investments
are purchased or sold (trade date). Realized gains and losses on investments
are determined on an identified cost basis, which is the same basis used for
federal income tax purposes.
2. Shares of Beneficial Interest
The Trust has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1995 Year Ended June 30, 1994
---------------------------------- ------------------------------------
Shares Amount Shares Amount
--------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
Sold 2,655,164,842 $ 2,655,164,842 2,133,375,320 $ 2,133,375,320
Dividends and distributions
reinvested 33,137,329 33,137,329 18,030,062 18,030,062
Redeemed (2,407,636,979) (2,407,636,979) (2,175,141,336) (2,175,141,336)
------------- ------------- ------------- ---------------
Net increase (decrease) 280,665,192 $ 280,665,192 (23,735,954) $ (23,735,954)
============= ============= ============= ===============
</TABLE>
8
<PAGE>
Notes to Financial Statements (Continued)
Centennial Government Trust
3. Management Fees and Other
Transactions with Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Trust which provides for a fee of .50% on the
first $250 million of average annual net assets with a reduction of .025% on
each $250 million thereafter, to .40% on net assets in excess of $1 billion.
The Manager has agreed to reimburse the Trust if aggregate expenses (with
specified exceptions) exceed the lesser of 1.50% of the first $30 million of
average annual net assets of the Trust, plus 1% of average annual net assets
in excess of $30 million; or 25% of the total annual investment income of the
Trust.
Shareholder Services, Inc. (SSI), a subsidiary of OMC, is the transfer and
shareholder servicing agent for the Trust, and for other registered
investment companies. SSI's total costs of providing such services are
allocated ratably to these companies.
Under an approved plan of distribution, the Trust may expend up to .20% of
its net assets annually to reimburse certain securities dealers and other
financial institutions and organizations for costs incurred in distributing
Trust shares. During the year ended June 30, 1995 the Trust paid $31,386 to a
broker/dealer affiliated with the Manager as reimbursement for
distribution-related expenses.
9
<PAGE>
Independent Auditors' Report
Centennial Government Trust
The Board of Trustees and Shareholders of Centennial Government Trust:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Centennial Government Trust as of
June 30, 1995, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended June 30, 1995 and
1994, and the financial highlights for the period July 1, 1985 to June 30,
1995. These financial statements and financial highlights are the
responsibility of the Trust'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 generally accepted auditing
standards. 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. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned at June 30, 1995 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Centennial
Government Trust at June 30, 1995, the results of its operations, the changes
in its net assets, and the financial highlights for the respective stated
periods, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
July 24, 1995
10
<PAGE>
Federal Income Tax Information (Unaudited)
Centennial Government Trust
In early 1996, shareholders will receive information regarding all dividends
and distributions paid to them by the Trust during calendar year 1995.
Regulations of the U.S. Treasury Department require the Trust to report this
information to the Internal Revenue Service.
None of the dividends paid by the Trust during the fiscal year ended June 30,
1995 are eligible for the corporate dividend-received deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Trust 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.
11
<PAGE>
Centennial Government Trust
Officers and Trustees
James C. Swain, Chairman and
Chief Executive Officer
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee and President
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President
Dorothy G. Warmack, Vice President
Carol E. Wolf, Vice President
Arthur J. Zimmer, Vice President
George C. Bowen, Vice President,
Secretary and Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
Investment Advisor and Distributor
Centennial Asset Management Corporation
Transfer and Shareholder Servicing Agent
Shareholder Services, Inc.
Custodian of Portfolio Securities
Citibank, N.A.
Independent Auditors
Deloitte & Touche LLP
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of Centennial Government Trust.
This report must be preceded or accompanied by a Prospectus of Centennial
Government Trust. For material information concerning the Trust, see the
Prospectus.
Shares of Centennial Government Trust are not deposits or obligations of any
bank, are not guaranteed by any bank, and are not insured by the FDIC or any
other agency, and involve investment risks, including possible loss of the
principal amount invested.
For shareholder servicing, call:
1-800-525-7048 (in U.S.)
303-671-3200 (outside U.S.)
Or write:
Shareholder Services, Inc.
P.O. Box 5270
Denver, CO 80217-5270
RA0170.001.0895
[LOGO]Printed on recycled paper.
[COVER]
1995 Annual Report
Centennial Government Trust
June 30, 1995
