<PAGE>
Dear Shareholder:
Over the six-month period that ended December 31, 1999, Centennial Government
Trust produced an annualized yield of 4.34% and an annualized yield, including
the effects of compounding was 4.45%. On December 31, 1999, the Fund's seven-
day and compounded seven-day yields were 4.87% and 4.99%, respectively./1/
These returns were generally higher than the yields reported six months ago,
primarily because of higher short-term interest rates during the reporting pe-
riod.
When the reporting period began, the Federal Reserve had just initiated the
first interest-rate increase of 1999. The rate hike was a pre-emptive response
to concerns that stronger-than-expected economic growth might rekindle long-
dormant inflationary pressures. These inflation concerns were fueled by
positive economic news from overseas, where the worst of the economic malaise
appeared to be over for Japan, Asia and Latin America, and within the United
States, where unemployment reached historical lows and consumers appeared to be
spending more than they were earning. The Federal Reserve Board subsequently
raised interest rates twice more during the summer and fall of 1999,
effectively offsetting all of the previous year's rate cuts.
U.S. government securities were also affected by Y2K-related concerns. Although
the investment community's consensus opinion appeared to be that the U.S. fi-
nancial system was prepared for the advent of the year 2000, many government
agencies decided to play it safe by issuing relatively
1. Compounded yields assume reinvestment of dividends. Past performance
is not indicative of future results.
<PAGE>
longer term money-market securities over the summer and early fall of 1999.
These securities generally featured maturity dates in January and February of
2000, reducing the need for issuers to return to the marketplace close to year-
end 1999. However,because so many money market issuers came to market at the
same time, they were compelled to increase their securities'yields in order to
attract investor interest. Fund shareholders generally benefitedfrom these
higher yields.
Under these market conditions, we fo-cused primarily on enhancing the Fund's
yield in a way that was consistent with liquidity and capital preservation. We
generally found the most attractive yieldsin U.S. government agency securities,
which comprised 99% of the portfolio as of December 31. In contrast, we found
few oppor-tunities in U.S. Treasury bills, which werein relatively short supply
because of the federal budget surplus.
Thank you for your continued confi- dence and participation in Centennial
Government Trust. We look forward to helping you achieve your financial goals
in 2000 and beyond.
Sincerely,
/s/ James C. Swain
James C. Swain
Chairman
Centennial Government Trust
/s/ Bridget A. Macaskill
Bridget A. Macaskill
President
Centennial Government Trust
January 24, 2000
2
<PAGE>
Statement of Investments December 31, 1999 (Unaudited)
Centennial Government Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- -----------
<S> <C> <C>
Direct Bank Obligations--0.6%
Student Loan Marketing Assn., guaranteeing commercial
paper of Nebhelp, Inc.:
5.85%, 1/21/00(/1/).................................. $ 7,791,000 $ 7,765,679
-----------
U.S. Government Agencies--98.4%
Federal Farm Credit Bank:
5.60%, 3/1/00........................................ 22,980,000 22,970,558
5.81%, 4/20/00....................................... 20,536,000 20,171,429
Federal Home Loan Bank:
4.86%, 1/14/00....................................... 19,875,000 19,874,277
4.90%, 1/14/00....................................... 16,480,000 16,479,860
4.91%, 2/9/00........................................ 8,000,000 7,991,733
4.935%, 1/19/00...................................... 5,875,000 5,875,007
4.98%, 3/29/00....................................... 26,250,000 26,205,651
5.00%, 1/11/00....................................... 25,000,000 25,000,000
5.07%, 3/17/00....................................... 7,000,000 6,989,212
5.16%, 3/8/00-3/22/00................................ 29,700,000 29,656,187
5.48%, 1/31/00....................................... 35,000,000 34,840,125
5.58%, 2/24/00....................................... 25,000,000 24,790,750
5.59%, 2/25/00....................................... 25,000,000 24,786,493
5.79%, 4/10/00....................................... 15,679,000 15,426,829
5.923%, 4/7/00(/2/).................................. 15,000,000 14,998,442
5.953%, 4/14/00(/2/)................................. 25,000,000 24,998,579
Federal Home Loan Mortgage Corp.:
5.227%, 5/18/00(/2/)................................. 10,000,000 9,996,984
5.48%, 2/10/00....................................... 25,000,000 24,847,778
5.50%, 1/14/00....................................... 25,000,000 24,950,347
5.51%, 1/20/00-1/27/00............................... 50,000,000 49,827,813
5.52%, 1/21/00-2/2/00................................ 80,000,000 79,697,166
5.53%, 1/10/00....................................... 25,000,000 24,965,438
5.54%, 2/14/00-3/8/00................................ 38,145,000 37,840,190
5.55%, 2/23/00-2/29/00............................... 75,000,000 74,364,062
5.555%, 3/30/00...................................... 29,117,000 28,717,131
5.587%, 4/13/00...................................... 25,000,000 24,600,374
5.61%, 3/23/00....................................... 25,000,000 24,680,542
5.63%, 3/21/00....................................... 25,000,000 24,687,222
5.82%, 4/3/00-4/20/00................................ 38,190,000 37,574,588
6.25%, 1/5/00........................................ 65,000,000 64,954,861
</TABLE>
3
<PAGE>
Statement of Investments December 31, 1999 (Unaudited)(Continued)
Centennial Government Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- --------------
<S> <C> <C>
U.S. Government Agencies (Continued)
Federal National Mortgage Assn.:
4.82%, 1/28/00.................................... $26,000,000 $ 25,980,413
4.94%, 7/17/00(/2/)............................... 20,000,000 19,994,605
5.296%, 8/4/00(/2/)............................... 15,000,000 14,993,597
5.53%, 4/24/00.................................... 30,000,000 29,474,651
5.54%, 1/19/00.................................... 24,100,000 24,033,243
5.56%, 2/17/00.................................... 33,031,000 32,790,707
5.58%, 2/7/00..................................... 25,000,000 24,856,625
5.67%, 4/7/00..................................... 20,000,000 19,694,450
6.10%, 2/10/00.................................... 25,000,000 25,005,440
6.30%, 8/2/00(/2/)................................ 20,000,000 19,992,107
5.94%, 2/5/00(/2/)................................ 20,000,000 19,995,754
FNMA Master Credit Facility:
5.58%, 2/1/00..................................... 25,000,000 24,879,875
5.66%, 3/1/00..................................... 25,000,000 24,764,167
Overseas Private Investment Corp.:
5.725%, 1/20/07(/2/)(/3/)......................... 3,750,000 3,765,894
5.813%, 1/17/17(/2/)(/3/)......................... 2,876,986 2,905,415
Student Loan Marketing Assn.:
4.91%, 4/17/00(/2/)............................... 30,000,000 29,997,420
4.93%, 2/8/00..................................... 15,000,000 14,999,900
4.96%, 9/15/00(/2/)............................... 25,000,000 24,994,831
----------- --------------
Total U.S. Government Agencies..................... 1,235,878,722
--------------
Total Investments, at Value........................ 99.0% 1,243,644,401
--------------
Other Assets Net of Liabilities.................... 1.0 12,164,534
----------- --------------
Net Assets......................................... 100.0% $1,255,808,935
=========== ==============
</TABLE>
Direct bank obligations are generally traded on a discount basis; the interest
rate is the discount rate received by the Fund at the time of purchase. Other
securities normally bear interest at the rates shown.
1. Security issued in an exempt transaction without registration under the
Securities Act of 1933. Such securities amount to $7,765,679, or 0.62% of the
Trust's net assets, and have been determined to be liquid pursuant to
guidelines adopted by the Board of Trustees.
2. Represents the current interest rate for a variable or increasing rate
security.
3. Represents a restricted security which is considered illiquid, by virtue of
the absence of a readily available market or because of legal or contractual
restrictions on resale. Such securities amount to $6,671,309, or 0.53% 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.
4
<PAGE>
Statement of Assets and Liabilities December 31, 1999 (Unaudited)
Centennial Government Trust
<TABLE>
<S> <C>
ASSETS
Investments, at value--see accompanying statement............. $1,243,644,401
Cash.......................................................... 6,495,023
Receivables and other assets:
Shares of beneficial interest sold........................... 12,636,917
Interest..................................................... 6,689,494
Other........................................................ 68,520
--------------
Total assets................................................ 1,269,534,355
--------------
LIABILITIES
Payables and other liabilities:
Shares of beneficial interest redeemed....................... 13,078,242
Dividends.................................................... 171,403
Service plan fees............................................ 132,533
Transfer and shareholder servicing agent fees................ 65,802
Trustees' compensation....................................... 455
Other........................................................ 276,985
--------------
Total liabilities........................................... 13,725,420
--------------
NET ASSETS.................................................... $1,255,808,935
==============
COMPOSITION OF NET ASSETS
Paid-in capital............................................... $1,256,373,954
Accumulated net realized loss on investment transactions...... (565,019)
--------------
NET ASSETS--applicable to 1,256,373,954 shares of beneficial
interest outstanding......................................... $1,255,808,935
==============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER
SHARE........................................................ $1.00
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
Statement of Operations For the Six Months Ended December 31, 1999 (Unaudited)
Centennial Government Trust
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest........................................................... $33,588,183
-----------
EXPENSES
Management fees.................................................... 2,845,115
Service plan fees.................................................. 1,264,279
Transfer and shareholder servicing agent fees...................... 392,510
Shareholder reports................................................ 43,323
Custodian fees and expenses........................................ 24,046
Trustees' compensation............................................. 7,890
Other.............................................................. 206,926
-----------
Total expenses................................................... 4,784,089
Less expenses paid indirectly...................................... (16,726)
-----------
Net expenses....................................................... 4,767,363
-----------
NET INVESTMENT INCOME.............................................. 28,820,820
-----------
NET REALIZED LOSS ON INVESTMENTS................................... (3,267)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $28,817,553
===========
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
Statements of Changes in Net Assets
Centennial Government Trust
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
----------------- --------------
<S> <C> <C>
OPERATIONS
Net investment income....................... $ 28,820,820 $ 54,416,410
Net realized gain (loss).................... (3,267) 121,184
-------------- --------------
Net increase in net assets resulting from
operations................................. 28,817,553 54,537,594
-------------- --------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLD-
ERS........................................ (28,820,820) (54,416,410)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions........... 42,690,894 80,656,449
-------------- --------------
NET ASSETS
Total increase.............................. 42,687,627 80,777,633
Beginning of period......................... 1,213,121,308 1,132,343,675
-------------- --------------
End of period............................... $1,255,808,935 $1,213,121,308
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE>
Financial Highlights
Centennial Government Trust
<TABLE>
<CAPTION>
Six Months Ended
December 31, Year Ended June 30,
1999 (Unaudited) 1999 1998 1997 1996 1995
---------------- ------ ------ ------ ----- -----
<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 .04 .05 .05 .05 .05
Dividends and/or
distributions to
shareholders........... (.02) (.04) (.05) (.05) (.05) (.05)
------ ------ ------ ------ ----- -----
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00 $1.00
====== ====== ====== ====== ===== =====
TOTAL RETURN(/1/)....... 2.34% 4.47% 4.93% 4.75% 4.91% 4.93%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in millions)... $1,256 $1,213 $1,132 $1,027 $ 942 $ 893
Average net assets (in
millions).............. $1,256 $1,245 $1,117 $1,032 $ 962 $ 719
Ratios to average net
assets:(/2/)
Net investment income... 4.55% 4.37% 4.82% 4.65% 4.83% 4.81%
Expenses................ 0.76% 0.74% 0.75%(/3/) 0.76%(/3/) 0.77%(/3/) 0.80%(/3/)
</TABLE>
1. Assumes a $1,000 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. Total returns are not
annualized for periods less than one full year.
2. Anualized for periods less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses
paid indirectly.
8
<PAGE>
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 level of
current income that is consistent with the preservation of capital and the
maintenance of liquidity. The Trust's investment advisor 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.
Securities 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. As of June 30, 1999, the Trust had
available for federal income tax purposes an unused capital loss carryover of
approximately $550,000, which expires between 2003 and 2005.
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.
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Trust.
Other. Investment transactions are accounted for as of 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>
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,
1999 Year Ended June 30, 1999
------------------------------- -------------------------------
Shares Amount Shares Amount
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold.................... 1,795,210,024 $ 1,795,210,024 3,478,267,909 $ 3,478,267,909
Dividends and/or distri-
butions reinvested..... 29,836,266 29,836,266 53,427,071 53,427,071
Redeemed................ (1,782,355,396) (1,782,355,396) (3,451,038,531) (3,451,038,531)
-------------- --------------- -------------- ---------------
Net increase............ 42,690,894 $ 42,690,894 80,656,449 $ 80,656,449
============== =============== ============== ===============
</TABLE>
3. Management Fees and Other Transactions with Affiliates
Management Fees. 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 the Trust's net assets, 0.475% of the next
$250 million, 0.45% of the next $250 million, 0.425% of the next $250 million,
and 0.40% of the next $250 million, 0.375% of the next $250 million and 0.35%
of net assets in excess of $1.5 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. The Trust's management fee for the six months ended December 31, 1999
was 0.45% of average annual net assets, annualized for periods of less than one
full year.
Transfer Agent Fees. Shareholder Services, Inc. (SSI), a subsidiary of the
Manager, 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.
Service Plan Fees. 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, 1999, the
Trust paid $59,345 to a broker/dealer affiliated with the Manager as
reimbursement for distribution-related expenses.
10
<PAGE>
Centennial Government Trust
Officers and Trustees
James C. Swain, Trustee and
Chairman of the Board
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
George C. Bowen, Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Carol E. Wolf, Vice President
Arthur J. Zimmer, Vice President
Andrew J. Donohue, Vice President and
Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
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, Adam & Wolf, P.C.
The financial statements included herein have been taken
from the records of the Trust without examination of the
independent auditors.
This 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.
Denver, CO 80217-5143
1999 Semiannual Report
Centennial
Government
Trust
December 31, 1999
