<PAGE>
OPPENHEIMER U.S. GOVERNMENT TRUST
SEMI-ANNUAL REPORT DECEMBER 31, 1993
[LOGO]
[GRAPHIC]
"INVESTMENT INCOME LETS ME ENJOY LIFE.
"AND INVESTING IN GOVERNMENT SECURITIES
CAN PROVIDE PEACE OF MIND.
"THIS FUND HAS DELIVERED BOTH."
<PAGE>
-------------------------------------------------------
FUND FACTS
- --------------------------------------------------------------------------------
Six Facts Every Shareholder Should Know About
Oppenheimer U.S. Government Trust
-------------------------------------------------------
1 The Fund seeks high current income, preservation
of capital, and maintenance of liquidity through
investments in fixed income securities issued or
guaranteed by the U.S. Government or its agencies
or instrumentalities. The Fund's shares, however,
are not backed by the U.S. Government.
-------------------------------------------------------
In this report: 2 For the 30 days ended December 31, 1993, the
Fund's standardized yield for Class A shares was
Answers to timely 6.56%.(1)
questions you should -------------------------------------------------------
ask your Fund's 3 Dividends paid over the last 6 and 12 months per
managers. Class A share totaled $0.311 and $0.639,
respectively.
/ / Has the prospect -------------------------------------------------------
of rising interest 4 The Fund's total return at net asset value for
rates in a Class A shares was 1.93% for the 6 months ended
strengthening economy December 31, 1993. For the 12-month period ended
changed the Fund's on that date, the total return at net asset value
investment strategy? for Class A shares was 8.00%.(2)
-------------------------------------------------------
/ / Has the surge in 5 The Fund's portfolio allocation on December 31,
mortgage refinancings 1993 was:(3)
affected the Fund's
investment emphasis FNMA 43.5%
or performance? GNMA 28.5% [GRAPHIC]
U.S. TREASURY NOTES AND BONDS 20.7%
FHLMC 4.5%
CASH EQUIVALENTS 2.8%
-------------------------------------------------------
6 "No one can forecast interest rate changes
accurately, and we don't think it's wise to manage
money based on guesses about what future rates
will be. Instead, we take a conservative approach,
managing the Fund to provide attractive returns in
any interest rate environment."
PORTFOLIO MANAGER, ART STEINMETZ,
DECEMBER 31, 1993
1. Standardized yield is net investment income calculated on a yield to maturity
basis for the 30-day period ended 12/31/93, divided by the maximum offering
price for Class A shares at the end of the period, compounded semi-annually and
then annualized.
2. Based on the change in net asset value per Class A share from 6/30/93 and
12/31/92 to 12/31/93. The Fund's average annual total returns per Class A
share, after deducting the current maximum sales charge of 4.75%, for the 1- and
5-year periods and the life of the Fund since inception on 8/16/85 ended
12/31/93 were 2.87%, 8.45%, and 8.51%, respectively. Certain Class C performance
data is not yet available, as Class C shares were first offered on 12/1/93. All
performance figures assume reinvestment of dividends and capital gains
distributions. The Fund's maximum sales charge was higher during a portion of
the periods shown, and actual investment results will be different as a result
of that change.
3. The Fund's portfolio is subject to change.
Past performance is not indicative of future results. An investment in the Fund
will fluctuate in value so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
2 Oppenheimer U.S. Government Trust
<PAGE>
-------------------------------------------------
REPORT TO SHAREHOLDERS
- --------------------------------------------------------------------------------
Oppenheimer U.S. Government Trust provided Class
A shareholders with a standardized yield of 6.56%
for the 30-day period ended December 31, 1993.(4)
The Fund also continued to provide attractive
total returns. For Class A shareholders, total
return at net asset value for the 12 months ended
December 31 was 8.00%.(6)
Given the current economic
environment, marked by moderate growth and low
inflation and interest rates, we continued to
emphasize mortgage-backed securities, which have
historically outperformed both traditional U.S.
Treasury securities and comparable investments in
both yield and total return.
Over the last six months, the
- ---------------------------- mortgage sector, which composed 76.5% of the
INVESTMENT RETURNS portfolio at December 31, continued to be
affected by prepayments. Prepayments occur when
As of December 31, 1993 homeowners take advantage of low interest rates
- ---------------------------- and refinance their mortgages. However, our
strategy of holding mortgage-backed securities
Oppenheimer 6.56% that are less sensitive to refinancing--notably
U.S. Government low-coupon securities, where there is little
Trust A(4) incentive for prepayment, and very high-coupon
(standardized yield) mortgages, which have already experienced
- ---------------------------- prepayments--allowed the Fund to be less
Three-month 3.06% affected by refinancing.
Treasury bill rate(5) Despite some concern about the
- ---------------------------- prospect for higher interest rates, we don't
Average rate of 3.04% expect to see much change in the overall level of
1-year CDs(5) economic activity, inflation, or interest rate
- ---------------------------- levels in the near term.
Average money 2.35% With rates near all-time lows,
market fund(5) however, we continue to manage this Fund
conservatively. We have shortened the maturity of
the U.S. Treasury portion of the portfolio
somewhat, shifting our investments from long-term
bonds to shorter-term Treasury notes and bills.
This strategy should help protect shareholders'
principal should interest rates rise, and
- ---------------------------- positions us to buy higher-yielding longer-term
"THE FUND CONTINUED bonds after rising rates have reduced their
TO PROVIDE prices.
ATTRACTIVE TOTAL Looking ahead, the outlook for the
RETURNS." Fund appears to be bright. While the economy is
strengthening, there is nothing on the horizon to
suggest that inflation or interest rates will
rise significantly in the near term.
We appreciate the confidence you
have placed in Oppenheimer U.S. Government Trust.
We look forward to continuing to serve you and to
helping you meet your financial goals in the
future.
/s/ Donald W. Spiro
Donald W. Spiro
President, Oppenheimer U.S. Government Trust
January 21, 1994
4. See footnote 1, page 2.
5. Source of CD and money market fund data: BANK RATE MONITOR, 12/31/93. The CD
rate is an average rate of 12-month certificates of deposit available for
purchase from 12 regional banks on 12/31/93. CDs are insured by the FDIC and may
provide a guaranteed return, whereas the Fund's yield and share value may
fluctuate and are not insured by the FDIC. The average money market fund yield
is the average yield for the 30-day period ended 12/31/93 for 10 selected money
market funds. The share value of money market funds generally does not
fluctuate. Source of U.S. Treasury bill rate is Bloomberg, L.P., 12/31/93.
Principal and interest payments on Treasury bonds are guaranteed by the U.S.
government.
6. See footnote 2, page 2.
3 Oppenheimer U.S. Government Trust
<PAGE>
STATEMENT OF INVESTMENTS December 31, 1993 (Unaudited)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--2.7%
- ---------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets,
3.125%, dated 12/31/93 and maturing 1/3/94, collateralized
by U.S. Treasury Nts., 8.50%, 2/15/00, with a value of
$10,205,934 (Cost $10,000,000) $10,000,000 $10,000,000
- ---------------------------------------------------------------------------------------------------------------------------------
LONG-TERM U.S. GOVERNMENT OBLIGATIONS--97.3%
- ---------------------------------------------------------------------------------------------------------------------------------
AGENCY: FULL FAITH AND Government National Mortgage Assn.:
CREDIT--28.5% 10.50%, 8/15/11 20,828 23,584
10.50%, 2/15/13 9,128 10,330
10.50%, 6/15/13 351,250 397,520
10.50%, 7/15/13 190,201 215,256
10.50%, 8/15/13 453,148 512,841
10.50%, 8/15/15 137,684 155,729
10.50%, 9/15/15 72,669 82,192
10.50%, 10/15/15 27,475 31,076
10.50%, 11/15/15 97,585 110,374
10.50%, 12/15/15 49,509 55,998
10.50%, 1/15/16 306,545 346,635
10.50%, 2/15/16 2,155,025 2,436,860
10.50%, 3/15/16 328,885 371,897
10.50%, 4/15/16 66,891 75,639
10.50%, 5/15/16 98,785 111,704
10.50%, 6/15/16 528,881 585,774
10.50%, 8/15/16 169,377 191,528
10.50%, 10/15/16 222,002 251,035
10.50%, 11/15/16 403,698 456,494
10.50%, 6/15/17 238,899 270,083
10.50%, 7/15/17 122,519 138,511
10.50%, 8/15/17 3,524,271 3,894,954
10.50%, 10/15/17 743,909 841,010
10.50%, 11/15/17 96,553 109,156
10.50%, 12/15/17 3,915,426 4,426,504
10.50%, 1/15/18 323,953 366,178
10.50%, 3/15/18 296,091 334,684
10.50%, 6/15/18 89,763 101,463
10.50%, 8/15/18 25,169 28,449
10.50%, 9/15/18 621,528 702,537
8.85%, 12/15/18 1,707,250 1,929,602
10.50%, 12/15/18 59,722 67,506
10.50%, 1/15/19 163,710 185,032
10.50%, 3/15/19 112,162 126,770
10.50%, 4/15/19 4,603 5,203
10.50%, 5/15/19 844,901 954,942
10.50%, 6/15/19 3,968,313 4,450,752
10.50%, 7/15/19 118,185 133,577
10.50%, 8/15/19 1,636,347 1,849,485
9%, 2/15/20 12,875,469 13,837,265
10.50%, 5/15/20 141,428 159,840
11%, 7/20/20 290,837 331,575
9%, 10/15/20 267,894 287,906
10.50%, 10/15/20 43,551 49,221
</TABLE>
4 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
AGENCY: FULL FAITH AND CREDIT 9%, 3/15/21 $2,196,214 $2,358,207
(CONTINUED) 10.50%, 5/15/21 169,404 191,001
8.50%, 9/15/21 2,649,875 2,813,558
9%, 9/15/21 2,836,563 3,045,787
7.50%, 10/15/21 18,748,020 19,482,753
9%, 1/15/22 204,213 219,210
7.50%, 11/15/22 32,106,219 33,364,459
------------
103,479,646
- --------------------------------------------------------------------------------------------------------------------------------
AGENCY: GOVERNMENT Federal Home Loan Mortgage Corp., Collateralized Mortgage
SPONSORED--48.1% Obligations, Guaranteed Multiclass Mortgage Participation
Certificates:
14%, 1/11/11 951,417 1,105,737
6.80%, 3/15/16 15,000,000 15,373,050
----------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mortgage
Obligations, Guaranteed Real Estate Mortgage Investment
Conduit Pass-Through Certificates:
8.50%, 1/25/00 11,250,000 11,491,086
8%, 3/25/01 11,700,000 12,111,839
8.75%, 11/25/05 4,000,000 4,286,440
13%, 11/1/12 384,659 448,293
8%, 7/25/19 18,000,000 18,910,080
8.75%, 12/25/20 18,500,000 19,866,407
9%, 7/1/21 3,005,353 3,208,004
9%, 7/15/21 4,000,000 4,202,920
7%, 12/25/21 29,617,000 29,728,656
8%, 12/1/22 51,464,194 53,972,555
------------
174,705,067
- ---------------------------------------------------------------------------------------------------------------------------------
TREASURY--20.7% U.S. Treasury Bonds:
STRIPS, 0%, 8/15/02 7,000,000 4,234,258
10.375%, 11/15/12 4,000,000 5,523,719
8%, 11/15/21 4,000,000 4,738,719
7.125%, 2/15/23 23,600,000 25,546,762
----------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
13.125%, 5/15/94 16,000,000 16,579,839
5.125%, 2/28/96 200,000 200,936
4.25%, 5/15/96 10,500,000 10,470,389
4.375%, 8/15/96 7,000,000 6,991,180
5.125%, 3/31/98 1,100,000 1,103,773
------------
75,389,575
------------
Total Long-Term U.S. Government Obligations (Cost $337,058,771) 353,574,288
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $347,058,771) 100.0% 363,574,288
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (150,533)
------------ ------------
NET ASSETS 100.0% $363,423,755
------------ ------------
------------ ------------
</TABLE>
See accompanying Notes to Financial Statements.
5 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES December 31, 1993 (Unaudited)
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS Investments, at value (cost $347,058,771)--see accompanying statement $363,574,288
----------------------------------------------------------------------------------------------
Receivables:
Interest and principal paydowns 3,144,328
Shares of beneficial interest sold 156,812
Investments sold 42,939
----------------------------------------------------------------------------------------------
Other 62,478
------------
Total assets 366,980,845
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Bank overdraft 255,682
----------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 2,494,621
Dividends 336,779
Distribution assistance--Note 4 236,515
Other 233,493
------------
Total liabilities 3,557,090
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $363,423,755
------------
------------
- ---------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $362,564,220
NET ASSETS ----------------------------------------------------------------------------------------------
Undistributed net investment income 1,071,215
----------------------------------------------------------------------------------------------
Accumulated net realized loss from investment and written option transactions (16,727,197)
---------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 16,515,517
------------
Net assets $363,423,755
------------
------------
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets of
$362,992,000 and 36,910,018 shares of beneficial interest outstanding) $ 9.83
Maximum offering price per share (net asset value plus sales charge of 4.75%
of offering price) $ 10.32
----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $431,755 and 43,943 shares of beneficial interest outstanding) $ 9.83
</TABLE>
See accompanying Notes to Financial Statements.
6 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Six Months Ended December 31, 1993 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME Interest $14,465,131
- ---------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 4 1,377,287
----------------------------------------------------------------------------------------------
Distribution assistance:
Class A--Note 4 469,497
Class C--Note 4 181
----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 162,312
----------------------------------------------------------------------------------------------
Shareholder reports 78,553
----------------------------------------------------------------------------------------------
Trustees' fees and expenses 37,885
----------------------------------------------------------------------------------------------
Custodian fees and expenses 28,307
----------------------------------------------------------------------------------------------
Legal and auditing fees 19,917
----------------------------------------------------------------------------------------------
Registration and filing fees 42
----------------------------------------------------------------------------------------------
Other 26,536
------------
Total expenses 2,200,517
- ---------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 12,264,614
- ---------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized loss on investments (4,885,258)
GAIN (LOSS) ON INVESTMENTS ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments:
Beginning of period 16,427,613
End of period--Note 3 16,515,517
------------
Net change 87,904
------------
Net realized and unrealized loss on investments (4,797,354)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $7,467,260
------------
------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
1993 (UNAUDITED) 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS Net investment income $ 12,264,614 $27,729,894
----------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and options written (4,885,258) 4,056,978
----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation
on investments 87,904 5,024,826
------------ ------------
Net increase in net assets resulting from operations 7,467,260 36,811,698
- ---------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO Dividends from net investment income:
SHAREHOLDERS Class A ($.311 and $.678 per share, respectively) (11,768,905) (27,733,632)
Class C ($.039 per share) (852) --
- ---------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net decrease in net assets resulting from Class A
TRANSACTIONS beneficial interest transactions--Note 2 (13,622,330) (24,025,195)
----------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class C
beneficial interest transactions--Note 2 432,830 --
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total decrease (17,491,997) (14,947,129)
----------------------------------------------------------------------------------------------
Beginning of period 380,915,752 395,862,881
------------ ------------
End of period (including undistributed net investment
income of $1,071,215 and $576,358, respectively) $363,423,755 $380,915,752
------------ ------------
------------ ------------
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
CLASS A CLASS C
---------------------------------------------------------------------------- ------------
SIX MONTHS ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1993 YEAR ENDED JUNE 30, 1993(1)
(UNAUDITED) 1993 1992 1991 1990 1989 (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $9.95 $9.73 $9.25 $9.24 $9.54 $9.59 $9.83
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .29 .68 .69 .83 .90 .91 .04
Net realized and unrealized gain (loss)
on investments and options written (.10) .22 .48 .02 (.32) (.05) --
------- ------- ------- ------ ------ ------ ------
Total income from
investment operations .19 .90 1.17 .85 .58 .86 .04
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net
investment income (.31) (.68) (.69) (.84) (.88) (.91) (.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.83 $9.95 $9.73 $9.25 $9.24 $9.54 $9.83
------- ------- ------- ------ ------ ------ ------
------- ------- ------- ------ ------ ------ ------
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 1.93% 9.55% 13.05% 9.53% 6.34% 9.51% .50%
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $362,992 $380,916 $395,863 $342,220 $264,728 $232,593 $432
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $379,704 $401,789 $376,532 $299,144 $253,085 $210,060 $224
- ---------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 36,910 38,279 40,697 36,987 28,650 24,393 44
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.67%(3) 6.90% 7.23% 8.93% 9.60% 9.65% 1.21%(3)
Expenses 1.20%(3) 1.17% 1.17% 1.19% 1.16% 1.19% .34%(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 5.3% 96.8% 207.8% 133.9% 125.5% 76.9% 5.3%
<FN>
1. For the period from December 1, 1993 (inception of offering) to December 31, 1993.
2. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all
dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net
asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market
value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities
(excluding short-term securities) for the six months ended December 31, 1993 were $19,428,125 and $384,420,807, respectively.
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer U.S. Government Trust
<PAGE>
------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- -------------------------------------------------------------------------------
1. SIGNIFICANT Oppenheimer U.S. Government Trust (the Fund) is
ACCOUNTING POLICIES registered under the Investment Company Act of
1940, as amended, as a diversified, open-end
management investment company. The Fund's
investment advisor is Oppenheimer Management
Corporation (the Manager). The Fund offers both
Class A and Class C shares. Class A shares are
sold with a front-end sales charge. Class C shares
may be subject to a contingent deferred sales
charge. Both classes of shares have identical
rights to earnings, assets and voting privileges,
except that each class has its own distribution
plan, expenses directly attributable to a
particular class and exclusive voting rights with
respect to matters affecting a single class. The
following is a summary of significant accounting
policies consistently followed by the Fund.
-------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are
valued at 4:00 p.m. (New York time) on each
trading day. Long-term debt securities are valued
by a portfolio pricing service approved by the
Board of Trustees. Long-term debt securities which
cannot be valued by the approved portfolio pricing
service are valued by averaging the mean between
the bid and asked prices obtained from two active
market makers in such securities. Short-term debt
securities having a remaining maturity of 60 days
or less are valued at cost (or last determined
market value) adjusted for amortization to
maturity of any premium or discount. Securities
for which market quotes are not readily available
are valued under procedures established by the
Board of Trustees to determine fair value in good
faith. A call option is valued based upon the last
sales price on the principal exchange on which the
option is traded or, in the absence of any
transactions that day, the value is based upon the
last sale on the prior trading date if it is
within the spread between the closing bid and
asked prices. If the last sale price is outside
the spread, the closing bid or asked price closest
to the last reported sale price is used.
-------------------------------------------------
REPURCHASE AGREEMENTS. The Fund 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. 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 Fund may be delayed or
limited.
-------------------------------------------------
ALLOCATION OF INCOME, EXPENSES AND GAINS AND
LOSSES. Income, expenses (other than those
attributable to a specific class) and gains and
losses are allocated daily to each class of shares
based upon the relative proportion of net assets
represented by such class. Operating expenses
directly attributable to a specific class are
charged against the operations of that class.
-------------------------------------------------
FEDERAL INCOME TAXES. The Fund 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,
including any net realized gain on investments not
offset by loss carryovers, to shareholders.
Therefore, no federal income tax provision is
required. At December 31, 1993, the Fund had
available for federal income tax purposes an
unused capital loss carryover of approximately
$10,688,000, $3,330,000 of which will expire in
1998 and $7,358,000 in 1999.
-------------------------------------------------
TRUSTEES' FEES AND EXPENSES. The Fund has adopted
a nonfunded retirement plan for the Fund's
independent trustees. Benefits are based on years
of service and fees paid to each trustee during
the years of service. During the six months ended
December 31, 1993, a provision of $9,075 was made
for the Fund's projected benefit obligations,
resulting in an accumulated liability of $108,425
at December 31, 1993. No payments have been made
under the plan.
--------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to
declare dividends separately for Class A and Class
C shares from net investment income each regular
business day and pay such dividends monthly.
Distributions from net realized gains on
investments, if any, will be declared at least
once each year.
-------------------------------------------------
OTHER. Investment transactions are accounted for
on the date the investments are purchased or sold
(trade date). Discount on securities purchased is
amortized over the life of the respective
securities, in accordance with federal income tax
requirements. Realized gains and losses on
investments and unrealized appreciation and
depreciation are determined on an identified cost
basis, which is the same basis used for federal
income tax purposes.
9 Oppenheimer U.S. Government Trust
<PAGE>
--------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF The Fund has authorized an unlimited number of no
BENEFICAL INTEREST par value shares of beneficial interest of each
class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31, 1993(1) YEAR ENDED JUNE 30, 1993
------------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
Class A:
Sold 3,592,511 $ 35,705,552 10,114,092 $ 99,121,952
Dividends reinvested 963,368 9,569,194 2,059,182 20,214,713
Redeemed (5,924,812) (58,897,076) (14,590,989) (143,361,860)
---------- ------------ ---------- -------------
Net decrease (1,368,933) $(13,622,330) (2,417,715) $ (24,025,195)
---------- ------------ ---------- -------------
---------- ------------ ---------- -------------
- -------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 43,863 $ 432,050 -- $ --
Dividends reinvested 80 780 -- --
--------- ------------ ---------- -------------
Net increase 43,943 $ 432,830 -- $ --
--------- ------------ ---------- -------------
--------- ------------ ---------- -------------
<FN>
1. For the six months ended December 31, 1993 for Class A shares and for the period from
December 1,1993 (inception of offering) to December 31, 1993 for Class C shares.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. UNREALIZED GAINS AND At December 31, 1993, net unrealized appreciation
LOSSES ON INVESTMENTS on investments of $16,515,517 was composed of
gross appreciation of $18,395,494, and gross
depreciation of $1,879,977.
- -------------------------------------------------------------------------------
4. MANAGEMENT FEES Management fees paid to the Manager were in
AND OTHER TRANSACTIONS accordance with the investment advisory agreement
WITH AFFILIATES with the Fund which provides for an annual fee of
.75% on the first $200 million of net assets, .70%
on the next $200 million, .65% on the next $400
million and .60% on net assets in excess of $800
million. The Manager has voluntarily agreed to
reduce its fees by .05% at each net asset level
effective January 1, 1994, with a further decrease
of .05% by net asset level on July 1, 1994. The
Manager has agreed to reimburse the Fund if
aggregate expenses (with specified exceptions)
exceed the most stringent applicable regulatory
limit on Fund expenses.
For the six months ended December 31, 1993,
commissions (sales charges paid by investors) on
sales of Class A shares totaled $446,220, of which
$146,053 was retained by Oppenheimer Funds
Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an
affiliated broker/dealer.
Oppenheimer Shareholder Services (OSS), a division
of the Manager, is the transfer and shareholder
servicing agent for the Fund, and for other
registered investment companies. OSS's total costs
of providing such services are allocated ratably
to these companies.
Under separate approved plans of distribution,
each class may expend up to .25% of its net assets
annually to reimburse OFDI for costs incurred in
distributing shares of the Fund, including amounts
paid to brokers, dealers, banks and other
financial institutions. In addition, Class C
shares are subject to an asset-based sales charge
of .75% of net assets annually, to reimburse OFDI
for sales commissions paid from its own resources
at the time of sale and associated financing
costs. In the event of termination or
discontinuance of the Class C plan of
distribution, the Fund would be contractually
obligated to pay OFDI for any expenses not
previously reimbursed or recovered through
contingent deferred sales charges. During the six
months ended December 31, 1993, OFDI paid $28,875
to an affiliated broker/dealer as reimbursement
for Class A distribution-related expenses and
retained $181 as reimbursement for Class C
distribution-related expenses and sales
commissions.
10 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
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OPPENHEIMER U.S. GOVERNMENT TRUST
- --------------------------------------------------------------------------------
<S> <C>
--------------------------------------------------------------------------------------------------------
OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees
Leo Cheme, Trustee
Edmund T. Delaney, Trustee
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Donald W. Spiro, Trustee and President
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Arthur P. Steinmetz, Vice President
George C. Bowen, Treasurer
Lynn M. Coluccy, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
--------------------------------------------------------------------------------------------------------
INVESTMENT ADVISOR Oppenheimer Management Corporation
--------------------------------------------------------------------------------------------------------
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
--------------------------------------------------------------------------------------------------------
TRANSFER AND SHAREHOLDER Oppenheimer Shareholder Services
SERVICING AGENT
--------------------------------------------------------------------------------------------------------
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
--------------------------------------------------------------------------------------------------------
INDEPENDENT AUDITORS KPMG Peat Marwick
--------------------------------------------------------------------------------------------------------
LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
--------------------------------------------------------------------------------------------------------
The financial statements included herein have been taken from the records of the Fund
without examination by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer U.S. Government Trust. This
report must be preceded or accompanied by a Prospectus of Oppenheimer U.S. Government
Trust. For material information concerning the Fund, see the Prospectus.
</TABLE>
11 Oppenheimer U.S. Government Trust
<PAGE>
"HOW MAY I HELP YOU?"
GENERAL INFORMATION
1-800-525-7048
Talk to a Customer Service Representative.
Monday through Friday from
8:30 a.m. to 8:00 p.m., and Saturday from 10:00 a.m.
to 2:00 p.m. ET.
TELEPHONE TRANSACTIONS
1-800-852-8457
Make account transactions with a Customer Service Representative.
Monday through Friday from
8:30 a.m. to 8:00 p.m. ET.
PHONELINK
1-800-533-3310
Get automated information or make automated transactions.
24 hours a day, 7 days a week.
TELECOMMUNICATION
DEVICE FOR THE DEAF
1-800-843-4461
Service for the hearing impaired.
Monday through Friday from
8:30 a.m. to 8:00 p.m. ET.
OPPENHEIMERFUNDS INFORMATION HOTLINE
1-800-835-3104
Hear timely and insightful
messages on the economy and
issues that affect your finances.
24 hours a day, 7 days a week.
RS220.0294.R
"Just as OppenheimerFunds offers over 30 different funds designed to help meet
virtually every investment need, Oppenheimer Shareholder Services offers a
variety of services to satisfy your individual needs. Whenever you require help,
we're only a toll-free phone call away.
"For personalized assistance and account information, call our
General Information number to speak with our knowledgeable Customer Service
Representatives.
"We also make it easy for you
to redeem shares, exchange shares, or conduct [PICTURE]
AccountLink transactions, simply by calling Barbara Hennigar
our Telephone Transactions number. President
Oppenheimer Shareholder Services
"And for added convenience, OppenheimerFunds PhoneLink, an
automated voice response system, is available 24 hours a day,
7 days a week. PhoneLink gives you access to variety of fund, account, and
market information. You
can even make purchases, exchanges and redemptions using your
[LOGO] touch-tone phone. Of course, PhoneLink will always give you the
option to speak with a Customer Service Representative during regular business
hours.
"When you invest in OppenheimerFunds, you know you'll receive a
high level of customer service. The International Customer Service Association
knows it, too, as it recently awarded Oppenheimer Shareholder Services a 1993
Award of Excellence for consistently demonstrating superior customer service.
"Whatever your needs, we're ready to assist you."
Bulk Rate
U.S. Postage
PAID
[LOGO] Permit No. 469
Denver, CO
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
P.O. Box 5270
Denver, CO 80217-5270
