<PAGE> 1
OPPENHEIMER U.S. GOVERNMENT TRUST
ANNUAL REPORT JUNE 30, 1994
(OPPENHEIMERFUNDS(R) LOGO)
[PHOTO #1 -- SEE EDGAR APPENDIX]
"I NEED INVESTMENT INCOME,
BUT NOT A LOT OF RISK.
"MY FINANCIAL ADVISOR RECOMMENDED
THIS FUND BECAUSE IT INVESTS IN
GOVERNMENT SECURITIES. IT'S GIVEN
ME BOTH THE LEVEL OF INCOME
I NEED AND PEACE OF MIND."
<PAGE> 2
FUND FACTS
IN THIS REPORT:
ANSWERS TO TWO TIMELY QUESTIONS YOU SHOULD ASK YOUR FUND'S MANAGERS.
* DID THE FEDERAL RESERVE'S MOVES TO RAISE INTEREST RATES AFFECT THE FUND'S
INVESTMENT STRATEGY OR RETURNS?
* WHERE ARE THE BEST INVESTMENT OPPORTUNITIES LIKELY TO BE FOUND GOING FORWARD?
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 government securities such as GNMAs, Treasury bills,
notes and bonds.
- -------------------------------------------------------------------------------
2 While an investment in the Fund is neither insured nor
guaranteed and shares can fluctuate in value, the fact
that the securities in the Fund's portfolio are
government-backed means investors enjoy superior credit
safety and assurance of timely payment to the Fund of
principal and interest on those securities.
- -------------------------------------------------------------------------------
3 Standardized yield for Class A shares for the 30-days
ended June 30, 1994 was 6.14%. For Class C shares,
standardized yield for the same period was 5.57%.(1)
- -------------------------------------------------------------------------------
4 Total return at net asset value for Class A shares for the
12-month period ended June 30, 1994 was -1.17%. For Class
C shares, total return at net asset value since inception
on December 1, 1993 was -3.12%.(2)
- -------------------------------------------------------------------------------
5 Average annual total returns for Class A shares for the 1-
and 5-year periods ended June 30, 1994 and since inception
on August 16, 1985 were -5.87%, 6.31%, and 7.64%,
respectively. For Class C shares, total return for the
period from inception on December 1, 1993 was -4.09%.(3)
- -------------------------------------------------------------------------------
6 " At today's price levels, there's definitely value to be
found in the government market. Still, there's some
uncertainty in the market, and we're taking a conservative
approach aimed at preserving investors' principal while
providing an attractive yield."
Portfolio Manager David Rosenberg, June 30, 1994
(1) Standardized yield is net investment income calculated on a yield to
maturity basis for the 30-day period ended 6/30/94, divided by the maximum
offering price at the end of the period, compounded semi-annually and then
annualized. Falling net asset values tend to artificially raise yields.
(2) Based on the change in net asset value per share from 6/30/93 and 12/1/93 to
6/30/94, without deducting any sales charges.
(3) Average annual total returns are based on a hypothetical investment in Class
A shares, after deducting the current maximum initial sales charge of 4.75% on
6/30/93, 6/30/89, and 8/16/85, respectively, held until 6/30/94. The Fund's
maximum sales charge rate for Class A shares was higher during a portion of
some of the periods shown, and actual investment results will be different as a
result of the change. The total return for Class C shares was based on a
hypothetical investment held for that period, after deducting the 1% contingent
deferred sales charge.
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment and principal
value on an investment in the Fund will fluctuate 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> 3
REPORT TO SHAREHOLDERS
The year ended June 30, 1994, was a challenging one for the nation's bond
markets, but Oppenheimer U.S. Government Trust once again met its income
objective well.
Many factors supported the Fund's performance during the
year, but two stand out: the Fund's ability to diversify its holdings across
the full range of U.S. government and agency securities and your managers'
conservative approach.
As noted in the Fund's last report, as interest rates
moved toward post-war lows in the fourth quarter of 1993, your managers began
positioning the Fund to preserve principal should rates begin to rise.
In addition to shortening the maturity of the U.S.
Treasury portion of the portfolio, your managers began to reduce the Fund's
mortgage holdings, which are more sensitive than other securities to interest
rate changes. Fund managers used the proceeds to buy bonds that combine
attractive income streams with relative price stability. This strategy helped
the Fund in the first six months of 1994, when the Federal Reserve raised
short-term interest rates four times from February to mid-May as a preemptive
strike against inflation.
In the current economic environment, marked by moderate
growth and continued low inflation, your managers believe that, in the near
term at least, interest rates aren't likely to rise much from their current
levels. Reflecting that outlook, your managers recently began to add higher
yielding bonds to the portfolio, focusing on issues where they could add yield
at attractive prices.
Looking ahead, the outlook for the Fund remains bright.
While uncertainties may be with the market for some time to come, the economy
continues to grow at a steady, sustainable pace with inflation remaining
subdued. As long as that is the case--and there is little on the horizon to
suggest it will change anytime soon--both the government and mortgage markets
should continue to provide attractive investment opportunities.
We appreciate the confidence you have placed in
Oppenheimer U.S. Government Trust, and we look forward to continuing to help
you meet your financial goals in the future.
Donald W. Spiro
President, Oppenheimer U.S. Government Trust
July 22, 1994
3 Oppenheimer U.S. Government Trust
<PAGE> 4
Statement of Investments June 30, 1994
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreements--1.0%
Repurchase agreement with First Chicago Capital Markets, 4.22%, dated 6/30/94,
to be repurchased at $3,300,387 on 7/1/94, collateralized by U.S. Treasury Nts.,
5.125%, 11/30/98, with a value of $3,368,643 (Cost $3,300,000) $3,300,000 $3,300,000
Long-Term U.S. Government Obligations--97.8%
Agency: Full Faith and
Credit--33.2%
Government National Mortgage Assn.:
10.50%, 2/15/13 9,046 9,891
10.50%, 6/15/13 102,908 112,521
10.50%, 7/15/13 80,309 87,811
10.50%, 8/15/13 554,934 606,771
10.50%, 8/15/15 89,296 97,654
10.50%, 9/15/15 92,884 101,580
10.50%, 10/15/15 27,315 29,872
10.50%, 11/15/15 48,711 53,272
10.50%, 12/15/15 35,629 38,965
10.50%, 1/15/16 278,625 304,748
10.50%, 2/15/16 1,693,843 1,852,626
10.50%, 3/15/16 281,765 308,178
10.50%, 4/15/16 44,168 48,309
10.50%, 5/15/16 44,899 49,108
10%, 6/15/16 417,477 449,861
10.50%, 6/15/16 24,636 26,946
10.50%, 8/15/16 81,006 88,601
10.50%, 10/15/16 147,640 161,480
10.50%, 11/15/16 283,844 310,452
10.50%, 6/15/17 194,543 212,819
10.50%, 7/15/17 75,029 82,078
10%, 8/15/17 2,912,386 3,139,378
10.50%, 10/15/17 360,966 394,877
10.50%, 11/15/17 87,691 95,929
10.50%, 12/15/17 2,965,155 3,243,705
10.50%, 1/15/18 200,795 219,711
10.50%, 3/15/18 212,550 232,570
10.50%, 6/15/18 80,783 88,392
10.50%, 8/15/18 14,313 15,661
10.50%, 9/15/18 566,970 620,374
10.50%, 10/15/18 177,428 194,140
10.50%, 12/15/18 45,303 49,571
10.50%, 1/15/19 126,098 138,014
10.50%, 3/15/19 75,645 82,794
10.50%, 4/15/19 1,942 2,126
10.50%, 5/15/19 1,944,123 2,127,827
10.50%, 6/15/19 2,597,478 2,828,723
10.50%, 7/15/19 87,231 95,474
10.50%, 8/15/19 1,025,399 1,122,291
10.50%, 5/15/20 100,206 109,713
11%, 7/20/20 223,450 245,068
10.50%, 10/15/20 24,367 26,679
10.50%, 5/15/21 146,043 159,961
8%, 4/15/22 847,696 836,049
</TABLE>
4 Oppenheimer U.S. Government Trust
<PAGE> 5
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Agency: Full Faith and Credit
(continued)
8%, 9/15/22 $ 3,949,604 $ 3,895,337
6.50%, 9/15/23 248,312 220,931
6.50%, 10/15/23 14,326,733 14,120,040
6.50%, 12/15/23 207,645 184,748
6.50%, 2/15/24 233,980 207,801
8%, 4/15/24 3,360,157 3,311,839
8%, 5/15/24 8,741,098 8,615,401
8%, 6/15/24 5,567,724 5,487,660
7.50%, 7/15/24(3)(5) 49,500,000 47,241,316
------------
104,387,643
Agency: Government
Sponsored--40.3%
Federal Home Loan Mortgage Corp., Collateralized Mortgage Obligations,
Guaranteed Multiclass Mortgage Participation Certificates:
14%, 1/11/11 785,150 892,394
6.80%, 3/15/16 15,000,000 14,981,250
8.50%, 10/15/19 3,100,000 3,191,481
- ------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mortgage Obligations,
Guaranteed Real Estate Mortgage Investment Conduit Pass-Through Certificates:
8.50%, 1/25/00 29,617,000 26,180,536
8%, 3/25/01 11,700,000 11,852,918
13%, 11/1/12 330,156 371,462
8%, 7/25/19 18,000,000 18,286,738
8.75%, 12/25/20 22,500,000 23,284,329
9%, 7/1/21 2,030,600 2,105,002
9%, 7/15/21 4,000,000 4,127,079
8%, 12/1/22 3,602,262 3,562,169
7%, 9/25/23 34,296,980 12,630,934
Principal-Only Stripped Mtg-Backed Security, Trust 253, 0%, 11/25/23(1) 1,000,028 475,639
Interest-Only Stripped Mtg-Backed Security, Trust 257, Class 2, 7%, 2/25/24(2) 12,869,043 4,779,643
------------
126,721,574
Treasury--24.3%
U.S. Treasury Bonds:
12%, 8/15/20 22,500,000 30,839,064
11.625%, 11/15/20 7,850,000 9,967,042
- ------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
9.50%, 11/15/95 5,000,000 5,243,750
8.50%, 5/15/97(4) 28,750,000 30,232,404
------------
76,282,260
Total Long-Term U.S. Government Obligations (Cost $306,338,645) 307,391,477
------------
</TABLE>
5 Oppenheimer U.S. Government Trust
<PAGE> 6
Statement of Investments (Continued)
<TABLE>
<CAPTION>
Shares
Subject Market Value
Date/Price to Call See Note 1
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Call Options Purchased--0.1%
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.25%, 5/15/04 (Cost $292,187) Aug./$ 100.4375 22,000 $ 140,932
- --------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $309,930,832) 98.9% 310,832,409
- --------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.1 3,455,036
------ -------------
Net Assets 100.0 % $ 314,287,445
</TABLE>
1. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as prepayment rates rise.
2. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities are subject
to the risk of accelerated principal paydowns as interest rates decline. The
principal amount represents the notional amount on which current interest is
calculated.
3. When-issued security to be delivered and settled after June 30, 1994.
4. Securities with an aggregate market value of $10,515,619 are held in escrow
to cover initial margin requirements on open interest rate futures sales
contracts, as follows:
<TABLE>
<CAPTION>
Type of Contract Number of Contracts Face Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Nts., 9/94 100 $10,000,000
</TABLE>
The market value of the open contracts was $10,342,188 at June 30, 1994, with
a net unrealized loss of $84,375.
5. Securities with an aggregate market value of $28,631,101 are held in escrow
to cover outstanding call options, as follows:
<TABLE>
<CAPTION>
Shares Subject Expiration Exercise Premium Market Value
to Call Date Price Received See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Government National Mortgage Assn. 30,000 8/94 $99.375 $290,625 $150,000
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer U.S. Government Trust
<PAGE> 7
Statement of Assets and Liabilities June 30, 1994
<TABLE>
<S> <C>
Assets
Investments, at value (cost $309,930,832)--see accompanying statement $310,832,409
- -----------------------------------------------------------------------------------------------------------------------------
Cash 101,565
Receivables:
Investments sold 50,509,259
Shares of beneficial interest sold 4,039,457
Interest and principal paydowns 3,073,764
- -----------------------------------------------------------------------------------------------------------------------------
Other 37,755
------------
Total assets 368,594,209
Liabilities
Options written, at value (premiums received $290,625)--see accompanying statement--Note 5 150,000
Unrealized depreciation on forward contracts 84,375
Payables and other liabilities:
Investment purchased 47,631,172
Shares of beneficial interest redeemed 6,029,922
Distribution and service plan fees--Note 4 196,867
Other 214,428
------------
Total liabilities 54,306,764
Net Assets $314,287,445
============
Composition of
Net Assets
Paid-in capital $334,477,570
- -----------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 149,269
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment transactions and written option transactions (21,297,221)
- -----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments--Note 3 957,827
------------
Net assets $314,287,445
============
Net Asset Value
Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$310,026,529 and 33,684,502 shares of beneficial interest outstanding) $9.20
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $9.66
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $4,260,916 and 463,512 shares of beneficial interest outstanding) $9.19
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer U.S. Government Trust
<PAGE> 8
Statement of Operations For the Year Ended June 30, 1994
<TABLE>
<S> <C>
Investment Income
Interest $27,701,376
Expenses
Management fees--Note 4 2,515,934
- -----------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 863,331
Class C--Note 4 12,509
- -----------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 303,755
- -----------------------------------------------------------------------------------------------------------------------------
Shareholder reports 156,383
- -----------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 61,792
- -----------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 57,770
- -----------------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 32,424
- -----------------------------------------------------------------------------------------------------------------------------
Registration and filing fees--Class C 1,542
- -----------------------------------------------------------------------------------------------------------------------------
Other 77,714
-----------
Total expenses 4,083,154
Net Investment Income 23,618,222
Realized and Unrealized
Loss on Investments
Net realized loss on investments (11,210,170)
- -----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation on investments (15,469,786)
Net realized and unrealized loss on investments (26,679,956)
Net Decrease in Net Assets Resulting From Operations $(3,061,734)
===========
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer U.S. Government Trust
<PAGE> 9
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended June 30,
1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 23,618,222 $ 27,729,894
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and options written (11,210,170) 4,056,978
- ---------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (15,469,786) 5,024,826
------------ -------------
Net increase (decrease) in net assets resulting from operations (3,061,734) 36,811,698
Dividends to
Shareholders
Dividends from net investment income:
Class A ($.634 and .678 per share, respectively) (21,966,741) (27,733,632)
Class C ($.329 per share) (76,280) --
Dividends in excess of net investment income:
Class A ($.012 per share) (418,629) --
Tax return of capital distribution:
Class A ($.034 per share) (1,145,537) --
Beneficial Interest
Transactions
Net decrease in net assets resulting from Class A
beneficial interest transactions--Note 2 (44,398,318) (24,025,195)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class C
beneficial interest transactions--Note 2 4,438,932 --
Net Assets
Total decrease (66,628,307) (14,947,129)
- ---------------------------------------------------------------------------------------------------------------------------
Beginning of year 380,915,752 395,862,881
------------ ------------
End of year (including undistributed net investment
income of $149,269 and $576,358, respectively) $314,287,445 $380,915,752
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer U.S. Government Trust
<PAGE> 10
Financial Highlights
<TABLE>
<CAPTION>
Class A Class C
-----------------------------------------------------------------------------------------------
Year Period
Ended Ended
June 30, June 30,
1994 1993 1992 1991 1990 1989 1988 1987 1986(3) 1985(2) 1994(1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <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 $9.77 $10.17 $ 10.00 $10.00 $9.83
- -----------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .67 .68 .69 .83 .90 .91 .90 .84 .94 .77 .33
Net realized and unrealized
gain (loss) on investments,
options written (.74) .22 .48 .02 (.32) (.05) (.18) (.33) .38 -- (.64)
------- ------- ------- ------ ------ ------- ------- ------- ------- ------ ----
Total income (loss) from
investment operations (.07) .90 1.17 .85 .58 .86 .72 .51 1.32 .77 (.31)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.64) (.68) (.69) (.84) (.88) (.91) (.90) (.85) (.93) (.77) (.33)
Dividends in excess of net
investment income (.01) -- -- -- -- -- -- -- -- -- --
Distributions from net
realized gain on investments
and options written -- -- -- -- -- -- -- (.06) (.22) -- --
Tax return of capital
distribuiton (.03) -- -- -- -- -- -- -- -- -- --
------- ------- ------- ------ ------ ------- ------- ------- ------- ------ ----
Total dividends and
distributions to shareholders (.68) (.68) (.69) (.84) (.88) (.91) (.90) (.91) (1.15) (.77) (.33)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end
of period $9.20 $9.95 $9.73 $9.25 $9.24 $9.54 $9.59 $9.77 $ 10.17 $ 10.00 $9.19
======= ======= ======= ====== ====== ======== ======= ======= ======= ======= =====
Total Return, at Net
Asset Value(4) (1.17)% 9.55% 13.05% 9.53% 6.34% 9.51% 7.78% 5.54% 14.95% -- (3.12)%
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $310,027 $380,916 $395,863 $342,220 $264,728 $232,593 $203,857 $216,306 $160,389 $7,798 $4,261
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $355,698 $401,789 $376,532 $299,144 $253,085 $210,060 $197,834 $207,557 $98,004 $7,724 $2,173
- -----------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period
(in thousands) 33,685 38,279 40,697 36,987 28,650 24,393 21,252 22,146 15,767 780 464
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.61% 6.90% 7.23% 8.93% 9.60% 9.65% 9.36% 8.73% 9.77% 7.77% 5.97%(6)
Expenses 1.14% 1.17% 1.17% 1.19% 1.16% 1.19% 1.13% .99% .56% 1.47% 1.96%(6)
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 139.5% 96.8% 207.8% 133.9% 125.5% 76.9% 141.3% 263.0% 366.9% -- 139.5%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to June 30,
1994.
2. All number of shares and per share data have been restated to reflect a 1
for 10 stock split effective August 16, 1985.
3. For the period from August 16, 1985 to June 30, 1986.
4. 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.
5. 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 sale of investment securities (excluding short-term securities)
for the year ended June 30, 1994 were $495,481,969 and $550,946,645,
respectively.
6. Annualized.
See accompanying Notes to Financial Statements.
10 Oppenheimer U.S. Government Trust
<PAGE> 11
Notes to Financial Statements
1. Significant Accounting Policies
Oppenheimer U.S. Government Trust (the Fund) is 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 June 30, 1994, the Fund had
available for federal income tax purposes an unused capital loss carryover of
approximately $11,875,000, $3,330,000 of which will expire in 1998, $7,358,000
in 1999 and $1,187,000 in 2002.
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 year ended
June 30, 1994, a provision of $22,650 was made for the Fund's projected benefit
obligations, resulting in an accumulated liability of $122,000 at June 30,
1994. 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 day the New York
Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
at least once each year.
Change in Accounting for Distributions to Shareholders. Effective July 1, 1993,
the Fund adopted Statement of Position 93-2: Determination, Disclosure, and
Financial Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies. As a result, the Fund changed the
classification of distributions to shareholders to better disclose the
differences between financial statement amounts and distributions determined in
accordance with income tax regulations. Accordingly, subsequent to June 30,
1993, amounts have been reclassified to reflect a decrease in paid-in capital
of $171,227, a decrease in undistributed net investment income of $391,297, and
an increase in undistributed capital gain on investments of $562,524. During
the year ended June 30, 1994, in accordance with Statement of Position 93-2,
undistributed net investment income has been decreased by $46,827, paid-in
capital has been decreased by $1,145,537 and undistributed capital gain has
been increased by $1,192,364.
11 Oppenheimer U.S. Government Trust
<PAGE> 12
Notes to Financial Statements (Continued)
1. Significant Accounting Policies (continued)
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.
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1994(1) Year Ended June 30, 1993
------------------------------ ----------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 6,237,904 $ 60,979,282 10,114,092 $ 99,121,952
Dividends reinvested 1,913,674 18,566,281 2,059,182 20,214,713
Redeemed (12,746,027) (123,943,881) (14,590,989) (143,361,860)
----------- ------------- ----------- -------------
Net decrease (4,594,449) $ (44,398,318) (2,417,715) $ (24,025,195)
=========== ============= =========== =============
- ----------------------------------------------------------------------------------------------------------
Class C:
Sold 531,550 $ 5,070,299 -- $ --
Dividends reinvested 5,284 49,363 -- --
Redeemed (73,322) (680,730) -- --
----------- ------------- ----------- -------------
Net increase 463,512 $ 4,438,932 -- $ --
=========== ============= =========== =============
</TABLE>
1. For the year ended June 30, 1994 for Class A shares and for the period from
December 1, 1993 (inception of offering) to June 30, 1994 for Class C shares.
3. Unrealized Gains and Losses on Investments and Options Written
At June 30, 1994, net unrealized appreciation on investments and options
written of $957,827 was composed of gross appreciation of $5,714,596, and gross
depreciation of $4,756,769.
4. Management Fees and Other Transactions With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement 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.
Effective January 1, 1994, Oppenheimer Management Corporation (the ``Manager'')
voluntarily reduced the management fees to provide for an annual fee of .70% on
the first $200 million of net assets, .65% on the next $200 million, .60% on
the next $400 million and .55% on net assets in excess of $800 million.
Effective July 1, 1994, Oppenheimer Management Corporation (the ``Manager'')
will voluntarily reduce the management fees to provide for an annual fee of
.65% on the first $200 million of net assets, .60% on the next $200 million,
.55% on the next $400 million and .50% on net assets in excess of $800 million.
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 year ended June 30, 1994, commissions (sales charges paid by
investors) on sales of Class A shares totaled $876,525, of which $282,424 was
retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. During the
year ended June 30, 1994, OFDI received contingent deferred sales charges of
$3,250 upon redemption of Class C shares.
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.
12 Oppenheimer U.S. Government Trust
<PAGE> 13
Notes to Financial Statements (Continued)
4. Management Fees and Other Transactions With Affiliates (continued)
Under separate approved plans, each class may expend up to .25% of its
net assets annually to reimburse OFDI for costs incurred in connection with the
personal service and maintenance of accounts that hold shares of the Fund,
including amounts paid to brokers, dealers, banks and other 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, the Board of Trustees may
allow the Fund to continue payment of the asset-based sales charge to OFDI for
distribution expenses incurred on Class C shares sold prior to termination or
discontinuance of the plan. During the year ended June 30, 1994, OFDI paid
$56,187 to an affiliated broker/dealer as reimbursement for Class A personal
service and maintenance expenses and retained $12,509 as reimbursement for
Class C sales commissions and service fee advances, as well as financing costs.
5. Call Option Activity
Call option activity for the year ended June 30, 1994 was as follows:
<TABLE>
<CAPTION>
Number Amount of
Call Option Activity of Options Premiums
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at June 30, 1993 -- $ --
- ---------------------------------------------------------------------------------------------------------------
Options written 30,000 290,625
- ---------------------------------------------------------------------------------------------------------------
Options expired prior to exercise -- --
- ---------------------------------------------------------------------------------------------------------------
Options exercised -- --
------ ---------
Options outstanding at June 30, 1994 30,000 $ 290,625
====== =========
</TABLE>
Federal Income Tax Information (Unaudited)
In early 1995, shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1994.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
None of the dividends paid by the Fund during the fiscal year ended
June 30, 1994 are eligible for the corporate dividend-received deduction.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax advisor for specific
guidance.
13 Oppenheimer U.S. Government Trust
<PAGE> 14
Independent Auditors' Report
The Board of Trustees and Shareholders of Oppenheimer U.S. Government Trust:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer U.S. Government Trust as of June 30, 1994, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period then ended
and the financial highlights for each of the years in the ten-year period then
ended. These financial statements and financial highlights are the
responsibility of the Fund'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 and financial highlights. Our procedures included confirmation of
securities owned as of June 30, 1994, by correspondence with the custodian and
brokers; and where confirmations were not received from brokers, we performed
other auditing procedures. 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, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Oppenheimer U.S. Government Trust as of June 30, 1994, the results
of its operations for the year then ended, the changes in its net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the ten-year period then ended, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
July 22, 1994
14 Oppenheimer U.S. Government Trust
<PAGE> 15
Oppenheimer U.S. Government Trust
Officers and Trustees
Leon Levy, Chairman of the Board of Trustees
Leo Cherne, 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
David Rosenberg, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
Investment Advisor
Oppenheimer Management Corporation
Distributor
Oppenheimer Funds Distributor, Inc.
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
Custodian of Portfolio Securities
Citibank, N.A.
Independent Auditors
KPMG Peat Marwick LLP
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
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.
15 Oppenheimer U.S. Government Trust
<PAGE> 16
"HOW MAY I HELP YOU?"
[PHOTO #2 -- SEE EDGAR APPENDIX]
"Just as OppenheimerFunds offers over 30 different mutual 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 and get the help you need.
"When you want to make account transactions, it's easy for
you to redeem shares, exchange shares, or conduct AccountLink transactions,
simply by calling our Telephone Transactions number.
"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 a variety of fund, account, and market
information. You can even make purchases, exchanges and redemptions using your
touch-tone phone. Of course, PhoneLink will always give you the option to speak
with a Customer Service Representative during the hours shown to the left.
"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 awarded Oppenheimer Shareholder Services a
1993 Award of Excellence for consistently demonstrating superior customer
service.
"Whatever your needs, we're ready to assist you."
(1993 AWARD OF EXCELLENCE INTERNATIONAL CUSTOMER SERVICE ASSOCIATION LOGO)
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.
RA220.0794.N
(OPPENHEIMERFUNDS(R) LOGO)
Oppenheimer Funds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
- ---------------
Bulk Rate
U.S. Postage
PAID
Permit No. 314
Farmingdale, NY
- ---------------
<PAGE> 17
APPENDIX TO ELECTRONIC FORMAT DOCUMENT
The front cover of the report in the printed version contains a photo
(photo # 1) of a woman and child hugging.
The back cover of the report in the printed version contains a photo
(photo #2) of Barbara Hennigar, Chief Executive Officer, Oppenheimer
Shareholder Services.
