<TABLE>
<CAPTION>
Centennial Government Trust 1997 Annual Report
<S> <C> <C>
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 Centennial
George C. Bowen, Vice President, Treasurer Government
and Assistant Secretary Trust
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 June 30, 1997
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.
For shareholder servicing, call:
1-800-525-9310 (in U.S.)
303-768-3200 (outside U.S.)
Or write:
Shareholder Services, Inc.
P.O. Box 5143
Denver, CO 80217-5143
</TABLE>
RA0170.001.0697 [RECYCLE LOGO] Printed on recycled paper
<PAGE>
Dear Shareholder:
The job of a money market portfolio is to provide liquidity, safety of
principal and a yield that keeps pace with inflation. During the fiscal year
ended June 30, 1997, your Centennial Government Trust achieved those
objectives.
For the fiscal year ended June 30, 1997, the Centennial Government Trust had a
compounded annual yield of 4.77%. Without compounding, the corresponding yield
was 4.66%. The seven-day annualized yields, with and without compounding, for
the year ended June 30, 1997 were 4.93% and 4.81%, respectively. (1) It's
important to remember that 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.
The U.S. economy is in the midst of one of its best periods in decades, with
growth in 1997 reaching an annual rate of 4%, up from about 2% in 1995.
Unemployment has fallen to its lowest level since the early 1970s. Meanwhile,
inflation is dormant, despite the strengthening economy.
As a result, interest rates have remained under control. Although 30-year
Treasury rates have risen above 7% several times during the past twelve months,
yields on short-term securities, such as U.S. Treasury bills and other
government notes, have hovered closer to 5%.
In comparison, the annual inflation rate is generally agreed to be about 2.50%.
(2) That means that the difference between money market yields and inflation is
roughly 3 percentage points, twice the normal "spread." Considering their low
level of risk and their traditional role as an alternative to cash, today's
money market fund yields are quite attractive.
On March 25, 1997, the Federal Reserve Board raised short-term interest rates
by 0.25%. Many market observers predicted the Fed's attempt to slow down the
economy, since the Gross Domestic Product during the first quarter of 1997 was
growing at a 5.8% annual rate. Although the March action came as no surprise,
the next question was whether the Fed was going to raise interest rates
further. However, the Fed often behaves unexpectedly. Many investors expected
the Fed to raise interest rates another 0.25% at its May 20, 1997 meeting.
Instead, the Fed left interest rates unchanged, satisfied that the economy was
slowing down.
Rather than try to make such predictions, our strategy is to "ladder" the
portfolio with some securities maturing in a few days, some maturing in a
month, some maturing in two months and so on. With a relatively broad maturity
spectrum, the portfolio is less affected by Fed moves up or down. At the same
time, the portfolio is able to enjoy higher income typically available on
longer-term money market securities.
<PAGE>
Thank you for your confidence in Centennial Government Trust. We look forward
to helping you reach your investment goals in the future.
Sincerely,
- --------------------------------------
[GRAPHIC OMITTED]
James C. Swain
Chairman
Centennial Government Trust
- ---------------------------------------
[GRAPHIC OMITTED]
Bridget A. Macaskill
President
Centennial Government Trust
July 22, 1997
1. Compounded yields assume reinvestment of dividends. Past performance does
not guarantee future results.
2. Data: Labor Dept.
2
<PAGE>
Statement of Investments June 30, 1997
Centennial Government Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------- ---------------
<S> <C> <C>
U.S. Government Obligations--83.5%
Federal Farm Credit Bank:
5.25%, 5/28/98(1) ............... $10,000,000 $ 9,998,250
5.27%-5.50%, 9/2/97 ............ 18,875,000 18,863,307
5.45%-5.48%, 7/2/97 ............ 15,950,000 15,947,580
5.497%, 12/17/97(1) ............ 10,000,000 9,995,900
5.50%, 11/14/97(1) ............... 5,000,000 4,998,193
5.54%, 11/6/97(1) ............... 10,000,000 9,998,282
5.55%, 2/3/98(1) ............... 10,000,000 9,996,041
5.57%, 8/20/97(1) ............... 15,000,000 14,999,006
5.66%, 1/2/98(1) ............... 10,000,000 9,996,731
5.93%, 7/1/97 .................. 5,145,000 5,145,000
Federal Home Loan Bank:
5.28%, 5/28/98(1) ............... 5,000,000 5,000,000
5.43%, 9/3/97 .................. 29,000,000 28,720,053
5.44%, 7/2/97 .................. 18,000,000 17,997,280
5.46%, 8/1/97 .................. 3,500,000 3,483,228
5.507%, 4/14/98(1) ............... 5,000,000 4,997,103
5.521%, 10/2/97(1) ............... 10,000,000 9,998,014
5.67%, 8/1/97(1) ............... 25,000,000 24,998,847
6%, 9/24/97 ..................... 11,000,000 11,006,848
Federal Home Loan Mortgage Corp.:
5.41%, 7/28/97 .................. 24,000,000 23,902,620
5.43%, 9/16/97 .................. 33,000,000 32,616,732
5.44%, 7/2/97 .................. 8,220,000 8,218,758
5.44%, 8/22/97 .................. 10,939,000 10,853,044
5.44%, 8/5/97 .................. 8,779,000 8,732,569
5.46%, 8/1/97 .................. 21,000,000 20,901,265
5.46%, 8/26/97 .................. 19,289,000 19,123,044
5.48%, 9/10/97 .................. 5,000,000 4,945,961
5.55%, 7/23/97 .................. 2,665,000 2,655,961
Federal National Mortgage Assn.:
5.25%, 7/16/97(1) ............... 10,000,000 9,999,789
5.26%, 9/9/97(1) ............... 10,000,000 9,999,311
5.36%, 9/2/97(1) ............... 20,000,000 19,997,809
5.39%, 7/17/97 .................. 22,000,000 21,997,054
5.42%, 7/23/97 .................. 19,000,000 18,937,068
5.43%-5.44%, 8/18/97 ............ 14,500,000 14,394,953
5.44%, 8/4/97 .................. 17,430,000 17,340,449
</TABLE>
3
<PAGE>
Statement of Investments June 30, 1997 (Continued)
Centennial Government Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- -------------
<S> <C> <C>
U.S. Government Obligations (Continued)
Federal National Mortgage Assn.: (Continued)
5.44%-5.50%, 7/3/97 ................................................ $51,680,000 $ 51,664,286
5.45%, 9/15/97 ...................................................... 12,000,000 11,861,933
5.45%, 9/19/97 ...................................................... 10,000,000 9,878,889
5.47%, 9/4/97 ...................................................... 11,035,000 10,926,014
5.48%, 8/27/97 ...................................................... 10,000,000 9,913,233
5.48%-5.55%, 7/10/97 ................................................ 5,885,000 5,876,903
5.49%, 9/8/97 ...................................................... 5,000,000 4,947,388
5.50%, 7/2/97 ...................................................... 20,300,000 20,296,899
5.52%, 1/15/98(1) ................................................... 5,000,000 4,998,667
5.528%, 12/3/97(1) ................................................... 10,000,000 9,998,499
5.528%, 2/13/98(1) ................................................... 25,000,000 25,000,000
5.55%, 7/18/97 ...................................................... 10,000,000 9,973,792
5.56%, 5/22/98(1) ................................................... 10,000,000 9,995,655
6.07%, 9/2/97 ...................................................... 8,200,000 8,204,193
Overseas Private Investment Corp.:
5.788%, 7/20/97(1)(2) ................................................ 5,000,000 5,028,712
5.812%, 7/20/97(1)(2) ................................................ 4,000,000 4,045,326
Student Loan Marketing Assn.:
5.18%, 11/20/97(1) ................................................... 23,645,000 23,621,474
5.82%, 1/23/98 ...................................................... 10,000,000 9,999,153
guaranteeing commercial paper of:
Secondary Market Services, Inc., Education Loan Revenue Nts. Services:
5.26%, 10/1/97(1) ................................................... 5,000,000 4,998,778
5.28%, 2/5/98(1) ................................................... 10,000,000 9,997,726
New Hampshire Higher Education Loan Corp.:
5.45%, 7/21/97 ...................................................... 7,445,000 7,422,458
5.50%, 7/7/97 ...................................................... 8,881,000 8,872,859
USA Group Secondary Market Services, Inc.:
5.45%, 7/14/97 ...................................................... 35,729,000 35,658,683
5.45%, 7/7/97 ...................................................... 9,500,000 9,491,371
5.47%, 7/24/97 ...................................................... 6,700,000 6,676,585
5.47%-5.48%, 7/30/97 ................................................ 32,973,000 32,827,537
5.48%, 7/28/97 ...................................................... 24,780,000 24,678,154
5.52%, 7/15/97 ...................................................... 20,213,000 20,169,609
------------
Total U.S. Government Obligations .................................... 857,780,826
------------
</TABLE>
4
<PAGE>
Statement of Investments June 30, 1997 (Continued)
Centennial Government Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
-------------- --------------
<S> <C> <C>
Repurchase Agreements--14.3%
Repurchase agreement with PaineWebber, Inc., 6.15%, dated 6/30/97, to be
repurchased at $147,125,130 on 7/1/97, collateralized by Federal Home
Loan Mortgage Corp. Participation Nts., 7%, 11/1/26, with a value of
$91,515,239, and Federal National Mortgage Assn. Participation Nts., 7%-8%,
8/1/11-4/1/25, with a value of $58,791,028 ................................. $ 147,100,000 $ 147,100,000
------------- --------------
Total Investments, at Value ............................................. 97.8% 1,004,880,826
Other Assets Net of Liabilities .......................................... 2.2 22,555,089
------------- --------------
Net Assets ............................................................... 100.0% $1,027,435,915
============= ==============
</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 June 30, 1997. 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.
2. Restricted securities which are considered illiquid, by virtue of the
absence of a readily available market or because of legal or contractual
restrictions on resale, amount to $9,074,038, or 0.88% of the Trust's net
assets. The Trust may not invest more than 10% of its net assets
(determined at the time of purchase) in illiquid securities.
See accompanying Notes to Financial Statements.
5
<PAGE>
Statement of Assets and Liabilities June 30, 1997
Centennial Government Trust
<TABLE>
<S> <C>
ASSETS:
Investments, at value (including repurchase agreements of $147,100,000)
-see accompanying statement .......................................... $1,004,880,826
Cash .................................................................. 218,156
Receivables:
Shares of beneficial interest sold ................................. 30,920,521
Interest ............................................................ 4,462,889
Other ............................................................... 29,406
--------------
Total assets ...................................................... 1,040,511,798
--------------
LIABILITIES:
Payables and other liabilities:
Shares of beneficial interest redeemed .............................. 11,328,418
Dividends ............................................................ 1,467,315
Shareholder reports ................................................ 75,722
Transfer and shareholder servicing agent fees ........................ 74,811
Service plan fees ................................................... 74,752
Other ............................................................... 54,865
--------------
Total liabilities ................................................... 13,075,883
--------------
NET ASSETS ............................................................ $1,027,435,915
==============
COMPOSITION OF NET ASSETS:
Paid-in capital ...................................................... $1,028,178,174
Accumulated net realized loss on investment transactions ............ (742,259)
--------------
NET ASSETS-applicable to 1,028,178,174 shares of beneficial
interest outstanding ................................................ $1,027,435,915
==============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE ...... $ 1.00
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
Statement of Operations For the Year Ended June 30, 1997
Centennial Government Trust
<TABLE>
<S> <C>
INVESTMENT INCOME-Interest ................................. $55,779,821
-----------
EXPENSES:
Management fees-Note 3 .................................... 4,743,430
Service plan fees-Note 3 ................................. 2,060,666
Transfer and shareholder servicing agent fees-Note 3 ...... 640,887
Registration and filing fees .............................. 140,144
Custodian fees and expenses .............................. 116,584
Shareholder reports ....................................... 60,451
Legal and auditing fees .................................... 35,328
Trustees' fees and expenses .............................. 18,243
Insurance expenses ....................................... 16,643
Other ...................................................... 1,876
-----------
Total expenses .......................................... 7,834,252
-----------
NET INVESTMENT INCOME .................................... 47,945,569
NET REALIZED LOSS ON INVESTMENTS ........................... (5,032)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...... $47,940,537
===========
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE>
Statements of Changes in Net Assets
Centennial Government Trust
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------
1997 1996
---------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income .................................... $ 47,945,569 $ 46,466,225
Net realized gain (loss) ................................. (5,032) 25,445
-------------- --------------
Net increase in net assets resulting from operations ...... 47,940,537 46,491,670
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS ............... (47,945,569) (46,466,225)
BENEFICIAL INTEREST TRANSACTIONS:
Net increase in net assets resulting from beneficial interest
transactions-Note 2 ....................................... 84,955,146 49,276,111
-------------- --------------
NET ASSETS:
Total increase ............................................. 84,950,114 49,301,556
Beginning of period ....................................... 942,485,801 893,184,245
-------------- --------------
End of period ............................................. $1,027,435,915 $ 942,485,801
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE>
Financial Highlights
Centennial Government Trust
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- -------
<S> <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
Income from investment
operations-net investment
income and net realized gain ..................... .05 .05 .05 .03 .04
Dividends and distributions to shareholders ...... (.05) (.05) (.05) (.03) (.04)
----- ----- ----- ----- -----
Net asset value, end of period .................. $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
TOTAL RETURN, AT
NET ASSET VALUE(1) .............................. 4.75% 4.91% 4.93% 2.84% 2.98%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) ......... $1,027 $942 $ 893 $ 613 $ 637
Average net assets (in millions) .................. $1,032 $962 $ 719 $ 665 $ 633
Ratios to average net assets:
Net investment income ........................... 4.65% 4.83% 4.81% 2.79% 2.81%
Expenses .......................................... 0.76% 0.77% 0.80% 0.79% 0.79%
</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
reflect changes in net investment income only.
See accompanying Notes to Financial Statements.
9
<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 objective is to seek a high level of
current 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. At June 30, 1997, the Trust had
available for federal income tax purposes an unused capital loss carryover of
approximately $737,000, which expires between 2003 and 2005.
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.
10
<PAGE>
Notes to Financial Statements (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>
Year Ended June 30, 1997 Year Ended June 30, 1996
---------------------------------------- --------------------------------------
Shares Amount Shares Amount
----------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Sold ..................... 2,931,272,745 $ 2,931,272,745 2,840,678,875 $ 2,840,678,875
Dividends and distributions
reinvested ............... 46,820,017 46,820,017 46,248,970 46,248,970
Redeemed .................. (2,893,137,616) (2,893,137,616) (2,837,651,734) (2,837,651,734)
---------------- ---------------- ---------------- ----------------
Net increase ............... 84,955,146 $ 84,955,146 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% of the
first $250 million of net assets; 0.475% of the next $250 million of net
assets; 0.45% of the next $250 million of net assets; 0.425% of the next $250
million of net assets; and 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 year ended June 30, 1997, the Trust paid $52,891 to a broker/dealer
affiliated with the Manager as reimbursement for distribution-related expenses.
11
<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,
1997, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended June 30, 1997 and 1996,
and the financial highlights for the period July 1, 1992 to June 30, 1997.
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, 1997 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, 1997, 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 22, 1997
12
<PAGE>
Federal Income Tax Information (Unaudited)
Centennial Government Trust
In early 1998, shareholders will receive information regarding all dividends
and distributions paid to them by the Trust during calendar year 1997.
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,
1997 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 adviser for specific guidance.
13
