<PAGE> 1
Centennial Government Trust
Officers and Trustees
James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Vice President, Treasurer and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Dorothy G. Warmack, Vice President
Carol E. Wolf, Vice President
Arthur J. Zimmer, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
Investment Adviser 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.
The financial statements included herein have been taken from
the records of the Trust without examination by the independent
auditors.
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.
For shareholder servicing, call:
1-800-525-9310 (in U.S.)
303-671-3200 (outside U.S.)
Or write:
Shareholder Services, Inc.
P.O. Box 5143
Denver, CO 80217-5143
RS0170.001.1296 [RECYCLE GRAPHIC] Printed on recycled paper
1996 Semiannual Report
Centennial
Government
Trust
December 31, 1996
<PAGE> 2
DEAR SHAREHOLDER:
The second half of 1996 was a period of uncertainty in the fixed income
markets, largely due to investor fears of rapid economic growth and
accelerating inflation. The 30-year Treasury rates rose above 7% in the second
quarter and remained relatively unchanged until the end of the third quarter.
That's when negative investor sentiment that led to the market downturn in June
and July began to subside.
The swing away from inflationary fears seemed complete in October with the
release of economic indicators showing a firm dollar, low inflation and slow
growth. When the Federal Reserve responded to these indicators with another
decision to leave rates alone, it appeared that concerns about rapid growth had
been overblown, and interest rates fell in response. The status quo outcome of
the presidential election also aided the decline in rates, and the bond market
experienced one of the most substantial post-election rallies in recent
history. With continued, sustainable non-inflationary growth of around 2% to
2.5%, and long-term rates at their lowest levels since April, the economy seems
to have settled into a comfortable path of neither too little nor too much
growth.
This decline in long-term Treasury rates over the past few months has caused
the return on money market instruments to decline marginally, but the positive
inflationary situation has helped to keep yields relatively strong. Money
market fund yields are usually between three and five percentage points less
than the yields on long-term bonds, and typically one percentage point above
inflation. Assuing that the annual inflation rate is about 2.5%, money market
yields would normally be about 3.5%, while longer-term yields might be as high
as 5.5%. However, the difference between money market yields and inflation is
currently greater than this formula would suggest. Part of the reason for this
irregularity is the successful way in which the Federal Reserve Board has
fought inflation.
As we head into 1997, money market funds continue to be a highly liquid
opportunity to earn steady income while protecting principal. This year, money
market funds turned out to be a good investment choice for the income-oriented
investor.
For the six months ended December 31, 1996, the Trust's compounded annualized
yield was 4.76%. Without compounding, the corresponding yield was 4.66%. The
seven-day annualized yields, with and without compounding on December 31, 1996
were 4.79% and 4.69%, respectively.(1)
<PAGE> 3
An investment in the Trust is neither insured nor guaranteed by the U.S.
government, and there is no assurance that the Trust will maintain a stable
$1.00 share price in the future.
Thank you for your confidence in Centennial Government Trust. We look forward
to helping you reach your investment goals in the future.
Sincerely,
/s/ James C. Swain
- --------------------
James C. Swain
Chairman
Centennial Government Trust
/s/ Bridget A. Macaskill
- ------------------------
Bridget A. Macaskill
President
Centennial Government Trust
January 22, 1997
1. Compounded yields assume reinvestment of dividends. Past performance is
not indicative of future results.
<PAGE> 4
STATEMENT OF INVESTMENTS December 31, 1996 (Unaudited)
Centennial Government Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
---------- ----------
<S> <C> <C>
U.S. GOVERNMENT AGENCIES - 83.1%
Federal Farm Credit Bank:
5.25%, 11/14/97(1).................................................................. $ 5,000,000 $ 4,995,788
5.26%, 1/27/97...................................................................... 5,000,000 4,981,006
5.29%, 11/6/97(1)................................................................... 10,000,000 9,995,852
5.32%, 8/20/97(1)................................................................... 15,000,000 14,995,408
5.43%, 12/17/97(1).................................................................. 10,000,000 9,991,509
5.52%, 4/1/97....................................................................... 15,000,000 14,997,438
5.93%, 7/1/97....................................................................... 5,145,000 5,156,424
Federal Home Loan Bank:
5.19%, 1/3/97....................................................................... 10,000,000 9,999,970
5.20%, 10/2/97(1)................................................................... 10,000,000 9,994,149
5.33%, 5/2/97....................................................................... 16,000,000 15,997,978
5.38%, 1/15/97...................................................................... 13,000,000 12,972,801
5.40%, 3/25/97...................................................................... 6,000,000 5,999,599
5.48%, 1/23/97...................................................................... 22,000,000 21,926,324
5.68%, 8/1/97(1).................................................................... 25,000,000 24,992,113
Federal Home Loan Mortgage Corp.:
5.21%, 2/20/97...................................................................... 19,000,000 18,862,514
5.22%, 2/12/97...................................................................... 15,000,000 14,908,650
5.22%, 2/7/97....................................................................... 12,907,000 12,837,754
5.23%, 2/3/97....................................................................... 44,200,000 43,988,274
5.24%, 2/10/97...................................................................... 29,000,000 28,831,156
5.25%, 1/30/97...................................................................... 9,500,000 9,459,823
5.25%, 2/28/97...................................................................... 20,000,000 19,830,833
5.29%, 1/14/97...................................................................... 28,000,000 27,946,411
5.33%, 1/7/97....................................................................... 5,000,000 4,995,558
5.34%, 1/15/97...................................................................... 15,000,000 14,968,850
5.37%, 3/31/97...................................................................... 10,000,000 9,867,242
5.38%, 3/21/97...................................................................... 4,000,000 3,952,819
5.38%, 3/25/97...................................................................... 5,000,000 4,937,981
5.40%, 1/17/97...................................................................... 14,000,000 13,966,222
5.46%, 1/30/97...................................................................... 18,379,000 18,298,163
5.50%, 1/10/97...................................................................... 18,500,000 18,474,562
5.70%, 1/2/97....................................................................... 15,600,000 15,597,183
Federal National Mortgage Assn.:
5.13%, 6/20/97(1)................................................................... 10,000,000 9,995,400
5.84%, 2/18/97(1)................................................................... 15,000,000 15,009,752
5.85%, 2/14/97(1)................................................................... 15,000,000 15,008,225
5.18%, 4/29/97...................................................................... 10,000,000 9,830,211
</TABLE>
3
<PAGE> 5
STATEMENT OF INVESTMENTS (Unaudited)(Continued)
Centennial Government Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
---------- ------------
<S> <C> <C>
U.S. GOVERNMENT AGENCIES (CONTINUED)
5.18%, 5/2/97....................................................................... $ 9,300,000 $ 9,138,082
5.20%, 2/24/97...................................................................... 30,000,000 29,766,000
5.22%, 3/17/97...................................................................... 19,500,000 19,287,937
5.22%, 3/6/97....................................................................... 20,000,000 19,814,400
5.22%, 3/6/97....................................................................... 7,000,000 6,935,040
5.25%, 4/11/97(1)................................................................... 26,200,000 26,191,360
5.30%, 3/13/97...................................................................... 9,000,000 8,905,925
5.36%, 9/2/97(1).................................................................... 20,000,000 19,991,515
5.40%, 7/16/97(1)................................................................... 10,000,000 9,997,241
5.45%, 1/14/97...................................................................... 20,000,000 19,960,639
5.54%, 5/5/97(1).................................................................... 5,000,000 4,999,088
Student Loan Marketing Assn.:
5.41%, 10/1/97(1)................................................................... 5,000,000 4,996,373
7.88%, 2/3/97....................................................................... 10,000,000 10,020,484
guaranteeing commercial paper of:
New Hampshire Higher Education Loan Corp. Commercial Paper Nts.:
Series 1995A, 5.28%, 1/15/97........................................................ 20,000,000 19,958,933
Series 1995A, 5.40%, 1/17/97........................................................ 12,693,000 12,662,537
Secondary Market Services, Inc. Education Loan Corp. Commercial Paper Nts.,
Series 1995A, 5.25%, 1/17/97........................................................ 85,685,000 85,481,467
Secondary Market Services, Inc. Education Loan Revenue Nts.:
Series 1995A, 5.28%, 1/6/97......................................................... 18,000,000 17,986,800
Series 1995A, 5.30%, 1/8/97......................................................... 17,447,000 17,429,020
Series 1995A, 5.31%, 1/24/97........................................................ 20,473,000 20,403,545
------------
Total U.S. Government Agencies (Cost $862,490,328)..................................... 862,490,328
------------
REPURCHASE AGREEMENTS - 16.7%
Repurchase agreement with Goldman, Sachs & Co.,
6.52%, dated 12/31/96, to be repurchased at $73,826,732
on 1/2/97, collateralized by U.S. Treasury Nts., 7.875%,
11/15/04, with a value of $75,299,017............................................... 73,800,000 73,800,000
</TABLE>
4
<PAGE> 6
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
Centennial Government Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
---------- ----------
<S> <C> <C>
REPURCHASE AGREEMENTS (CONTINUED)
Repurchase agreement with PaineWebber, Inc., 6.52%,
dated 12/31/96, to be repurchased at $100,036,222 on 1/2/97,
collateralized by Federal Home Loan Mortgage Corp.
Participation Nts., 8%, 7/1/26, with a value of $35,549,684,
and Federal National Mortgage Assn. Participation Nts.,
6.50% - 7.50%, 3/1/09 - 2/1/25, with a value of $75,985,064......................... $100,000,000 $ 100,000,000
--------------
Total Repurchase Agreements (Cost $173,800,000)........................................ 173,800,000
--------------
Total Investments, at Value............................................................ 99.8% 1,036,290,328
Other Assets Net of Liabilities........................................................ 0.2 1,690,131
----- --------------
Net Assets............................................................................. 100.0% $1,037,980,459
===== ==============
</TABLE>
1. Floating or variable rate obligation. 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 December 31, 1996. This instrument may
also 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.
5
<PAGE> 7
STATEMENT OF ASSETS AND LIABILITIES December 31, 1996 (Unaudited)
Centennial Government Trust
<TABLE>
<S> <C>
ASSETS:
Investments, at value (including repurchase agreements of
$173,800,000) - see accompanying statement ................ $ 1,036,290,328
Cash ......................................................... 13,085
Receivables:
Shares of beneficial interest sold ......................... 8,087,162
Interest ................................................... 2,716,750
Other ........................................................ 30,965
---------------
Total assets ............................................. 1,047,138,290
---------------
LIABILITIES:
Payables and other liabilities:
Shares of beneficial interest redeemed ..................... 8,910,489
Service plan fees .......................................... 80,420
Transfer and shareholder servicing agent fees .............. 28,933
Dividends .................................................. 8,085
Trustees' fees ............................................. 2,044
Other ...................................................... 127,860
---------------
Total liabilities ........................................ 9,157,831
NET ASSETS ................................................... $ 1,037,980,459
===============
COMPOSITION OF NET ASSETS:
Paid-in capital .............................................. $ 1,038,724,818
Accumulated net realized loss on investment transactions ..... (744,359)
---------------
NET ASSETS - applicable to 1,038,724,818 shares of beneficial
interest outstanding ...................................... $ 1,037,980,459
===============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 1.00
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE> 8
STATEMENT OF OPERATIONS For the Six Months Ended December 31, 1996 (Unaudited)
Centennial Government Trust
<TABLE>
<S> <C>
INVESTMENT INCOME - Interest ......................... $ 27,522,312
------------
EXPENSES:
Management fees - Note 3 ............................. 2,358,613
Service plan fees - Note 3 ........................... 1,021,871
Transfer and shareholder servicing agent fees - Note 3 316,023
Registration and filing fees ......................... 71,910
Custodian fees and expenses .......................... 62,972
Shareholder reports .................................. 25,584
Legal and auditing fees .............................. 16,414
Trustees' fees and expenses .......................... 10,203
Insurance expenses ................................... 7,176
Other ................................................ 1,883
------------
Total expenses ................................... 3,892,649
------------
NET INVESTMENT INCOME ................................ 23,629,663
NET REALIZED LOSS ON INVESTMENTS ..................... (7,132)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . $ 23,622,531
============
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1996 Year Ended
(Unaudited) June 30, 1996
---------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income ....................................... $ 23,629,663 $ 46,466,225
Net realized gain (loss) .................................... (7,132) 25,445
--------------- ---------------
Net increase in net assets resulting from operations ........ 23,622,531 46,491,670
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS ................. (23,629,663) (46,466,225)
BENEFICIAL INTEREST TRANSACTIONS:
Net increase in net assets resulting from beneficial interest
transactions - Note 2 .................................... 95,501,790 49,276,111
--------------- ---------------
NET ASSETS:
Total increase .............................................. 95,494,658 49,301,556
Beginning of period ......................................... 942,485,801 893,184,245
--------------- ---------------
End of period ............................................... $ 1,037,980,459 $ 942,485,801
=============== ===============
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE> 9
FINANCIAL HIGHLIGHTS
Centennial Government Trust
<TABLE>
<CAPTION>
Six Months Ended
December 31,
1996 Year Ended June 30,
-----------------------------------------------------------
(Unaudited) 1996 1995 1994 1993 1992
----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning
of period .............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations - net investment
income and net realized gain ........... .02 .05 .05 .03 .04 .04
Dividends and distributions to shareholders (.02) (.05) (.05) (.03) (.04) (.04)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= =========
TOTAL RETURN, AT
NET ASSET VALUE(1) ..................... 2.36% 4.91% 4.93% 2.84% 2.98% 4.75%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) ... $ 1,038 $ 942 $ 893 $ 613 $ 637 $ 575
Average net assets (in millions) .......... $ 1,017 $ 962 $ 719 $ 665 $ 633 $ 582
RATIOS TO AVERAGE NET ASSETS:
Net investment income ..................... 4.61%(2) 4.83% 4.81% 2.79% 2.81% 4.38%
Expenses .................................. 0.76%(2) 0.77% 0.80% 0.79% 0.79% 0.78%
</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.
2. Annualized.
See accompanying Notes to Financial Statements.
8
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 objective is to seek a high current
level of income consistent with preservation of capital and the maintenance of
liquidity, through investment in a diversified portfolio of short-term debt
instruments issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. The Trust's investment adviser is Centennial Asset Management
Corporation (the Manager), a subsidiary of OppenheimerFunds, Inc. (OFI). 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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
9
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
Centennial Government Trust
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>
Six Months Ended December 31, 1996 Year Ended June 30, 1996
------------------------------------ ------------------------------------
Shares Amount Shares Amount
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sold ...................... 1,481,099,068 $ 1,481,099,068 2,840,678,875 $ 2,840,678,875
Dividends and distributions
reinvested .............. 24,415,928 24,415,928 46,248,970 46,248,970
Redeemed .................. (1,410,013,206) (1,410,013,206) (2,837,651,734) (2,837,651,734)
--------------- --------------- --------------- ---------------
Net increase ............ 95,501,790 $ 95,501,790 49,276,111 $ 49,276,111
=============== =============== =============== ===============
</TABLE>
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 0.50% on the first
$250 million of average annual net assets with a reduction of 0.025% on each
$250 million thereafter, to 0.40% 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 OFI, 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 0.20% 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 six months ended December 31, 1996 the Trust paid $17,886 to a
broker/dealer affiliated with the Manager as reimbursement for
distribution-related expenses.
10
<PAGE> 12
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