<PAGE>
OPPENHEIMER U.S. GOVERNMENT TRUST
Annual Report June 30, 1995
[PHOTO OF MAN]
"We need
monthly
INCOME,
and we
need to feel
COMFORTABLE
about how
our money
is invested."
[OPPENHEIMER FUNDS LOGO]
<PAGE>
YIELD
STANDARDIZED YIELD(3)
For the 30 Days Ended 6/30/95:
Class A
6.17%
Class C
5.59%
This Fund is for people who want monthly INCOME and feel SECURE with a fund
investing primarily in bonds backed by the U.S. government, its agencies and
instrumentalities.
HOW YOUR FUND IS MANAGED
Oppenheimer U.S. Government Trust seeks high current income and safety of
principal by investing primarily in a portfolio of fixed income securities
issued or guaranteed by the U.S. government, its agencies and instrumentalities.
While an investment in the Fund is neither insured nor guaranteed and its shares
fluctuate in value, the fact that most of 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.
In addition, the Fund is also designed to provide higher income than more
conservative fixed income investments.
PERFORMANCE
Total return at net asset value for the 12 months ended 6/30/95 was 11.22% for
Class A shares and 10.31% for Class C shares.(1)
Your Fund's average annual total returns at maximum offering price for Class A
shares for the 1- and 5-year periods ended 6/30/95 and since inception of the
Class on 8/16/85 were 5.94%, 7.27% and 8.00%, respectively. For Class C shares,
average annual total returns for the 1-year period ended 6/30/95 and since
inception of the Class on 12/1/93 were 9.31% and 4.22%, respectively.(2)
OUTLOOK
"Our policy now is to remain defensive, but to carefully watch technical
factors--such as changing relationships between bond yields and maturities--so
we can take advantage of what we believe are the best relative values in the
market."
David Rosenberg, Portfolio Manager
June 30, 1995
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.
1. Based on the change in net asset value per share for the period shown,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
2. Class A returns show results of hypothetical investments on 6/30/94, 6/30/90
and 8/16/85 (inception of class), after deducting the current maximum initial
sales charge of 4.75%. Class C returns show results of hypothetical investments
on 6/30/94 and 12/1/93 (inception of class), with the 1% contingent deferred
sales charge deducted for the 1-year result. 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. An explanation of the different performance calculations is in the
Fund's prospectus.
3. Standardized yield is net investment income calculated on a yield-to-maturity
basis for the 30-day period ended 6/30/95, divided by the maximum offering price
at the end of the period, compounded semiannually and then annualized. Falling
net asset values will tend to artificially raise yields.
2 Oppenheimer U.S. Government Trust
<PAGE>
[PHOTO OF DONALD W. SPIRO]
Donald W. Spiro
President
Oppenheimer
U.S. Government Trust
[PHOTO OF JON S. FOSSEL]
Jon S. Fossel
Chairman and CEO
Oppenheimer
Management
Corporation
DEAR OPPENHEIMERFUNDS SHAREHOLDER,
In contrast to last year, the first half of 1995 has been exceptionally good for
the bond market. Almost all types of bonds have participated in the upswing
and, in many cases, have more than made up for last year's declines in the first
half alone--rewarding investors who were patient through the market's short-term
difficulties. The strength of the current market adds to evidence showing,
once again, that profitable investing calls for a long-term perspective.
The single most important factor behind the bond rally was a change in the
Federal Reserve's monetary policy. Between February 1994 and February 1995, the
Fed raised rates aggressively to preempt possible rising inflation by slowing
the economy to a more moderate growth rate--thus prolonging the current cycle of
economic growth. As evidence began to mount that indicated the economy was
indeed slowing, the Fed stopped raising rates. Indications now are that the
desired slowdown, or "soft landing" you may have read about, has been achieved.
This has allowed rates to decline considerably, which in turn pushed bond prices
up dramatically.
While a near perfect landing is unlikely, our expectation going forward is
that with the current fundamentals in place, we will continue to experience
moderate, sustainable growth with relatively low inflation.
We believe the Fed will not feel pressure to tighten monetary policy in the
near term. Still, until the full extent of the economic slowdown is known, some
questions remain. Signs of economic pickup later this year could motivate the
Fed to raise rates again to combat potential inflation. The more likely
scenario, however, is that the Fed might actually lower rates during the second
half if the economy slows too much.
In light of the uncertainties in the market, your Fund's managers remain
cautious with an eye toward opportunity, so we're positioning investments
somewhat defensively at this time. The bond markets have performed very well
and we don't want to give back the gains the Fund has made. Thus, your Fund's
managers continue to focus on the income potential of bonds, because this area
has contributed most significantly and predictably to performance over time.
Oppenheimer Management's fixed income investment team will continue to
monitor the economy and market conditions going forward to keep ahead of
significant events. We believe a conservative stance and an income orientation
in addition to this year's strong capital appreciation justify a positive
outlook for fixed income investments across the board.
Your portfolio manager discusses the outlook for your Fund on the following
pages. Thank you for your confidence in OppenheimerFunds, and we look forward
to helping you continue to reach your investment goals in the future.
/s/ Donald W. Spiro /s/ Jon S. Fossel
Donald W. Spiro Jon S. Fossel
July 24, 1995
3 Oppenheimer U.S. Government Trust
<PAGE>
Q + A
[PHOTO OF MAN]
[PHOTO OF MAN]
Q What contributed to the Fund's superior PERFORMANCE?
An interview with your Fund's manager.
THE BOND MARKET HAS REBOUNDED STRONGLY IN THE FIRST HALF OF 1995 FOLLOWING A
DIFFICULT PERIOD LAST YEAR. WHAT IMPACT HAS THIS HAD ON YOUR MANAGEMENT OF
U.S. GOVERNMENT TRUST?
Over the period, the Fund met its objectives of providing attractive income with
relatively low risk extremely well. And while we're very happy to report that
the Fund is up 11% for the period, as a defensive investment, it was just as
important to us to continue meeting our goals of providing competitive income
with relatively low price volatility as it was to try to take advantage of the
full extent of the rally.
[PHOTO OF TWO MEN]
LONGER-TERM, THE FUND IS RATED ABOVE MOST OF ITS PEERS. WHAT HAS CONTRIBUTED TO
U.S. GOVERNMENT TRUST'S SUPERIOR PERFORMANCE?
Our government funds are designed to offer good downside protection and
attractive income on the upside. And over the long run, we've been very
successful. During last year's difficult market, for example, we lost only 1%.
Compared to competitive funds, our consistent, conservative approach has placed
us in the top half of government funds measured by Lipper Analytical Services
for the 3-, 5- and 10-year periods ended June 30, 1995.(1)
YOUR AVERAGE DURATION, OR SENSITIVITY TO INTEREST RATE CHANGES, IS RELATIVELY
LOW. WHY?
Shareholders typically invest in government funds like this one because they're
looking for a defensive investment. We feel that we can meet expectations for
income and stability without taking on additional interest rate risk or
stretching for the highest yields. Although investments with high duration
appreciated the most during the bond market's recent rally, they are
(1) Source: Lipper Analytical Services. The Lipper total return average for the
3-, 5- and 10-year periods were for 96, 79 and 23 general U.S. government funds.
The average is shown for comparative purposes only Oppenheimer U.S. Government
Trust is characterized by Lipper as a general U.S. government fund. Lipper
performance does not take sales charges into consideration.
4 Oppenheimer U.S. Government Trust
<PAGE>
FACING PAGE
Top left: David Rosenberg
Portfolio Manager
Top right: Art Steinmetz, Senior
VP Fixed Income Investments
Portfolio Management Team
Bottom left: Len Darling, Executive
VP Director of Fixed Income Invest-
ments, consults with Jon Fossel
THIS PAGE:
Right: David Rosenberg with
Gina Palmeri, Mortgage Analyst
Below: Eva Zeff, Assistant VP
Fixed Income Investments
Portfolio Management Team
A Our CONSISTENT conservative approach.
also more exposed to risk should interest rates reverse.
WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO?
We've added a position in adjustable rate mortgages to the portfolio, believing
that they offer prospects for increasing short-term yields with low risk.
In addition, we're employing a barbell strategy with Treasuries--we're
holding a combination of very short and very long Treasuries to get intermediate
exposure on average, but also to take advantage of the flattening of the yield
curve.
Finally, we've reduced our fixed-rate mortgage-backed securities and, with
a level of uncertainty in interest rates, we feel that prepayment risk in this
market has increased.(1)
[PHOTO OF WOMAN]
WHAT IS YOUR OUTLOOK FOR THE GOVERNMENT BOND MARKET AND HOW WILL YOU POSITION
THE FUND IN LIGHT OF YOUR VIEWS?
We believe the market is currently priced as though the Fed will lower rates in
the near future. We feel that with the rally having come as far as it has, it's
now prudent to be conservative. Any increase in business activity could push
inflation higher, so we don't want to be overextended.
Our policy now is to remain defensive, but to carefully watch technical
factors--such as changing relationships between bond yields and maturities--so
we can take advantage of what we believe are the best relative values in the
market.
[PHOTO OF MAN]
(1) The Fund's portfolio is subject to change.
5 Oppenheimer U.S. Government Trust
<PAGE>
STATEMENT OF INVESTMENTS JUNE 30, 1995
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--108.8%
------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--106.2%
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FHLMC/FNMA/ Federal Home Loan Mortgage Corp.:
SPONSORED--62.0% Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates, 10%, 6/15/20 $ 5,511,000 $ 6,203,456
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates, 14%, 1/1/11 596,715 686,059
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates, 6.65%, 4/15/21 10,750,000 10,544,996
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates, 6.80%, 3/15/16 15,000,000 15,083,400
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates, 8.50%, 10/15/19 2,476,908 2,526,843
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates, 9%, 7/15/21 2,815,075 2,887,676
Gtd. Multiclass Mtg. Participation Certificates, 11.50%, 6/1/20 1,966,543 2,250,463
Gtd. Multiclass Mtg. Participation Certificates, 13%, 8/1/15 3,000,000 3,537,188
Multiclass Gtd. Mtg. Participation Certificates, Series 1455, 7.50%, 12/15/22 5,000,000 5,068,750
-------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.: 7%, 7/15/25(1) 20,000,000 19,681,259
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, 10.50%, 11/25/20 10,000,000 11,497,800
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, 13%, 11/1/12 233,504 266,974
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, 7%, 12/25/21 29,617,000 28,827,704
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, 8%, 12/1/22 3,361,862 3,440,008
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, 8%, 3/25/01 11,567,293 11,602,690
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, 8.75%, 11/25/05 4,000,000 4,280,400
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, 8.75%, 12/25/20 18,500,000 19,648,665
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, 9%, 7/1/21 1,764,448 1,847,950
Gtd. Mtg. Pass-Through Certificates, 12%, 4/1/19 2,000,000 2,305,000
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates, 8%, 7/25/19 18,000,000 18,725,938
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Trust 1992-112, 4%, 12/25/20 3,000,000 2,537,991
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Trust 1993-87, Inverse Floater, 4.933%, 6/25/23 (coupon inversely
indexed to 1-month US LIBOR, multiplied by 1.857)(2) 2,199,998 1,426,905
Interest-Only Stripped Mtg.-Backed Security, Trust 222, 8.19-10.03%, 6/25/23(3) 47,590,613 14,701,038
Interest-Only Stripped Mtg.-Backed Security, Trust 240, 7.84-8.74%, 9/25/23(3) 32,938,214 10,416,711
Principal-Only Stripped Mtg.-Backed Security, Series 1993-253,
Zero Coupon, 10.01% 11/25/23(4) 1,000,028 663,535
------------
200,659,399
</TABLE>
6 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GNMA/GUARANTEED--44.2% Government National Mortgage Assn.:
10%, 6/15/16--8/15/17 $ 2,823,084 $ 3,090,242
10.50%, 11/15/16--5/15/21 11,078,973 12,300,278
11%, 7/20/20 221,995 245,120
6.50%, 8/15/25(1) 63,000,000 63,826,875
7.50%, 3/15/23 41,194,649 41,511,228
8%, 4/15/22--8/15/24 21,381,336 21,933,532
------------
142,907,275
-----------------------------------------------------------------------------------------------------------------------------
PRIVATE--2.6%
-----------------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY--2.6% Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates,
Series 1991-M5, Cl. A, 9%, 3/25/17 5,001,065 5,233,928
---------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates,
Series 1995-C1, Cl. D, 6.90%, 2/25/27 3,600,000 3,328,875
------------
8,562,803
------------
Total Mortgage-Backed Obligations (Cost $345,269,392) 352,129,477
-----------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--16.8%
-----------------------------------------------------------------------------------------------------------------------------
TREASURY--16.8% U.S. Treasury Bonds, 7.625%, 11/15/22 12,000,000 13,402,500
---------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 8.125%, 8/15/19 15,643,000 18,253,426
---------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 8.875%, 8/15/17 3,000,000 3,748,125
---------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 11.625%, 11/15/04 3,500,000 4,813,592
---------------------------------------------------------------------------------------------
U.S. Treasury Nts., 8%, 10/15/96 13,610,000 13,980,014
------------
Total U.S. Government Obligations (Cost $51,984,471) 54,197,657
-----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $397,253,863) 125.6% 406,327,134
-----------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (25.6) (82,701,609)
------------ ------------
NET ASSETS 100.0% $323,625,525
------------ ------------
------------ ------------
<FN>
1. When-issued security to be delivered and settled after June 30, 1995.
2. Represents the current interest rate for a variable rate bond. Variable
rate bonds known as "inverse floaters" pay interest at a rate that varies
inversely with short-term interest rates. As interest rates rise, inverse
floaters produce less current income. Their price may be more volatile than
the price of a comparable fixed-rate security. Inverse floaters amount to
$1,426,905 or 0.4% of the Fund's net assets, at June 30, 1995.
3. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities
typically decline in price as interest rates decline. Most other
fixed-income securities increase in price when interest rates decline. The
principal amount of the underlying pool represents the notional amount on
which current interest is calculated. The price of these securities is
typically more sensitive to changes in prepayment rates than traditional
mortgage-backed securities (for example, GNMA pass-throughs). Interest
rates represent effective yield as of June 30, 1995.
4. 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 interest rates decline and
prepayment rates rise. The price of these securities is typically more
volatile than that of coupon-bearing bonds of the same maturity. Interest
rates represent effective yield as of June 30, 1995.
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer U.S. Government Trust
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS Investments, at value (cost $397,253,863)--see accompanying statement $406,327,134
-----------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 346,867
Interest and principal paydowns 3,403,235
Shares of beneficial interest sold 178,525
-----------------------------------------------------------------------------------------------------------
Other 26,571
------------
Total assets 410,282,332
-----------------------------------------------------------------------------------------------------------------------------
LIABILITIES Bank overdraft 511,740
-----------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased on a when-issued basis 84,306,946
Shares of beneficial interest redeemed 985,255
Dividends 480,932
Distribution and service plan fees--Note 4 192,504
Transfer and shareholder servicing agent fees--Note 4 23,977
Trustees' fees 120,007
Other 35,446
------------
Total liabilities 86,656,807
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS $323,625,525
------------
------------
-----------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $333,516,056
NET ASSETS -----------------------------------------------------------------------------------------------------------
Undistributed net investment income 87,075
-----------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment and written option transactions (19,050,877)
-----------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 9,073,271
------------
Net assets $323,625,525
------------
------------
-----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $312,606,704 and 32,870,814 shares of beneficial interest outstanding) $9.51
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $9.98
-----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $11,018,821 and 1,159,733 shares of beneficial interest outstanding) $9.50
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer U.S. Government Trust
<PAGE>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME Interest $26,384,907
-----------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 4 1,980,189
----------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 737,801
Class C--Note 4 65,084
----------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 347,882
----------------------------------------------------------------------------------------------------
Shareholder reports 144,824
----------------------------------------------------------------------------------------------------
Legal and auditing fees 53,814
----------------------------------------------------------------------------------------------------
Custodian fees and expenses 47,249
----------------------------------------------------------------------------------------------------
Trustees' fees and expenses 40,121
----------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 1,587
Class C 2,309
----------------------------------------------------------------------------------------------------
Other 58,846
-----------
Total expenses 3,479,706
-----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 22,905,201
-----------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain on:
GAIN ON INVESTMENTS Investments 1,903,530
Closing and expiration of option contracts written--Note 5 276,563
-----------
Net realized gain 2,180,093
----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 8,115,444
-----------
Net realized and unrealized gain on investments and options written 10,295,537
-----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $33,200,738
-----------
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer U.S. Government Trust
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
1995 1994
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS Net investment income $ 22,905,201 $ 23,618,222
-----------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and options written 2,180,093 (11,210,170)
-----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 8,115,444 (15,469,786)
------------ ------------
Net increase (decrease) in net assets resulting from operations 33,200,738 (3,061,734)
-----------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income:
TO SHAREHOLDERS Class A ($.676 and $.634 per share, respectively) (22,498,787) (21,966,741)
Class C ($.599 and $.329 per share, respectively) (416,947) (76,280)
-----------------------------------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A ($.012 per share) -- (418,629)
-----------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A ($.034 per share) -- (1,145,537)
-----------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net decrease in net assets resulting from Class A
TRANSACTIONS beneficial interest transactions--Note 2 (7,455,681) (44,398,318)
-----------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class C
beneficial interest transactions--Note 2 6,508,757 4,438,932
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase (decrease) 9,338,080 (66,628,307)
-----------------------------------------------------------------------------------------------
Beginning of period 314,287,445 380,915,752
------------ ------------
End of period (including undistributed net investment
income of $86,547 and $149,269, respectively) $323,625,525 $314,287,445
------------ ------------
------------ ------------
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer U.S. Government Trust
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
1995 1994 1993 1992 1991 1990 1989 1988 1987
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $9.20 $9.95 $9.73 $9.25 $9.24 $9.54 $9.59 $9.77 $10.17
--------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .68 .67 .68 .69 .83 .90 .91 .90 .84
Net realized and unrealized gain (loss)
on investments and options written .31 (.74) .22 .48 .02 (.32) (.05) (.18) (.33)
----- ----- ----- ----- ----- ----- ----- ----- ------
Total income (loss) from investment
operations .99 (.07) .90 1.17 .85 .58 .86 .72 .51
--------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net investment income (.68) (.64) (.68) (.69) (.84) (.88) (.91) (.90) (.85)
Dividends in excess of net
investment income -- (.01) -- -- -- -- -- -- --
Distributions from net realized gain
on investments and options written -- -- -- -- -- -- -- -- (.06)
Tax return of capital distribuiton -- (.03) -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ------
Total dividends and distributions
to shareholders (.68) (.68) (.68) (.69) (.84) (.88) (.91) (.90) (.91)
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.51 $9.20 $9.95 $9.73 $9.25 $9.24 $9.54 $9.59 $9.77
----- ----- ----- ----- ----- ----- ----- ----- ------
----- ----- ----- ----- ----- ----- ----- ----- ------
--------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(3) 11.22% (1.17)% 9.55% 13.05% 9.53% 6.34% 9.51% 7.78% 5.54%
--------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $312,607 $310,027 $380,916 $395,863 $342,220 $264,728 $232,593 $203,857 $216,306
--------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $307,306 $355,698 $401,789 $376,532 $299,144 $253,085 $210,060 $197,834 $207,557
--------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 32,871 33,685 38,279 40,697 36,987 28,650 24,393 21,252 22,146
--------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.32% 6.61% 6.90% 7.23% 8.93% 9.60% 9.65% 9.36% 8.73%
Expenses 1.09% 1.14% 1.17% 1.17% 1.19% 1.16% 1.19% 1.13% .99%
--------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 303.5% 139.5% 96.8% 207.8% 133.9% 125.5% 76.9% 141.3% 263.0%
<FN>
1. For the period from December 1, 1993 (inception of offering) to June 30,
1994.
2. For the period from August 16, 1985 to June 30, 1986.
3. 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. Total returns
are not annualized for periods of less than one full year.
4. Annualized.
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 sales of investment securities (excluding
short-term securities) for the period ended June 30, 1995 were
$1,035,761,462 and $1,044,224,644, respectively.
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
CLASS A CLASS C
-------- -------------------
YEAR ENDED JUNE 30,
1986(2) 1995 1994(1)
----------------------------------------------------- -------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.00 $9.19 $9.83
----------------------------------------------------- ------------------
Income (loss) from investment operations:
Net investment income 94 61 .33
Net realized and unrealized gain (loss)
on investments and options written .38 .30 (.64)
------ ----- -----
Total income (loss) from investment
operations 1.32 .91 (.31)
----------------------------------------------------- ------------------
Dividends and distributions
to shareholders:
Dividends from net investment income (.93) (.60) (.33)
Dividends in excess of net
investment income -- -- --
Distributions from net realized gain
on investments and options written (.22) -- --
Tax return of capital distribuiton -- -- --
------ ----- -----
Total dividends and distributions
to shareholders (1.15) (.60) (.33)
------------------------------------------------------ ------------------
Net asset value, end of period $10.17 $9.50 $9.19
------ ----- -----
------ ----- -----
----------------------------------------------------- ------------------
TOTAL RETURN, AT NET ASSET VALUE(3) 14.95% 10.31% (3.12)%
----------------------------------------------------- ------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $160,389 $11,019 $4,261
---------------------------------------------------- --------------------
Average net assets (in thousands) $98,004 $6,503 $2,173
---------------------------------------------------- --------------------
Number of shares outstanding at
end of period (in thousands) 15,767 1,160 464
---------------------------------------------------- --------------------
Ratios to average net assets:
Net investment income 9.77%(4) 6.44% 5.97%(4)
Expenses .56%(4) 1.89% 1.96%(4)
----------------------------------------------------- --------------------
Portfolio turnover rate(5) 366.9% 303.5% 139.5%
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
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 and/or service
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 the close of the New York Stock Exchange on each
trading day. Listed and unlisted securities for which
such information is regularly reported are valued at
the last sale price of the day or, in the absence of
sales, at values based on the closing bid or asked
price or the last sale price on the prior trading day.
Long-term and short-term ``non-money market'' debt
securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities
which cannot be valued by the approved portfolio
pricing service are valued using dealer-supplied
valuations provided the Manager is satisfied that the
firm rendering the quotes is reliable and that the
quotes reflect current market value, or under
consistently applied procedures established by the
Board of Trustees to determine fair value in good
faith. Short-term "money market type" 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. Options are valued based upon the last sale
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 price 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.
-------------------------------------------------------
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery
and payment for securities that have been purchased by
the Fund on a forward commitment or when-issued basis
can take place a month or more after the transaction
date. During this period, such securities do not earn
interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery.
The Fund maintains, in a segregated account with its
custodian, assets with a market value equal to the
amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis
may increase the volatility of the Fund's net asset
value to the extent the Fund makes such purchases while
remaining substantially fully invested. As of June 30,
1995, the Fund had entered into outstanding when-issued
or forward commitments of $84,306,946.
In connection with its ability to purchase
securities on a when-issued or forward commitment
basis, the Fund may enter into mortgage "dollar-rolls"
in which the Fund sells securities for delivery in the
current month and simultaneously contracts with the
same counterparty to repurchase similar (same type,
coupon and maturity) but not identical securities on a
specified future date. The Fund records each
dollar-roll as a sale and a new purchase transaction.
-------------------------------------------------------
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 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 or excise
tax provision is required. At June 30, 1995, the Fund
had available for federal income tax purposes an unused
capital loss carryover of approximately $19,188,000,
$137,000 of which will expire in 1997, $3,193,000 in
1998, $7,358,000 in 1999, $1,187,000 in 2002 and
$7,313,000 in 2003.
-------------------------------------------------------
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, 1995, the Fund's
projected benefit obligations were reduced by $12,061,
and a payment of $2,026 was made to a retired Trustee,
resulting in an accumulated liability of $107,913 at
June 30, 1995.
12 Oppenheimer U.S. Government Trust
<PAGE>
--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends
POLICIES (CONTINUED) 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.
-----------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net
investment income (loss) and net realized gain (loss)
may differ for financial statement and tax purposes
primarily because of paydown gains and losses. The
character of the distributions made during the year
from net investment income or net realized gains may
differ from their ultimate characterization for
federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that
the income or realized gain (loss) was recorded by
the Fund.
During the year ended June 30, 1995, 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, during the year ended June 30, 1995,
amounts have been reclassified to reflect a decrease
in accumulated net realized loss on investments of
$66,251, a decrease in undistributed net investment
income of $51,661, and a decrease in paid-in capital
of $14,590.
-----------------------------------------------------
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 average life of the respective securities.
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 The Fund has authorized an unlimited number of no par
BENEFICIAL INTEREST value shares of beneficial interest of each class.
Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1995 YEAR ENDED JUNE 30, 1994(1)
-------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 7,076,177 $65,369,039 6,237,904 $ 60,979,282
Dividends reinvested 1,868,269 17,288,287 1,913,674 18,566,281
Redeemed (9,758,134) (90,113,007) (12,746,027) (123,943,881)
---------- ----------- ----------- -------------
Net decrease (813,688) $(7,455,681) (4,594,449) $ (44,398,318)
---------- ----------- ----------- -------------
---------- ----------- ----------- -------------
-----------------------------------------------------------------------------------------------
Class C:
Sold 1,086,358 $10,120,239 531,550 $ 5,070,299
Dividends reinvested 35,316 327,690 5,284 49,363
Redeemed (425,453) (3,939,172) (73,322) (680,730)
---------- ----------- ----------- -------------
Net increase 696,221 $6,508,757 463,512 $ 4,438,932
---------- ----------- ----------- -------------
---------- ----------- ----------- -------------
</TABLE>
1. For the year ended June 30, 1994 for Class A shares
and for the period from December 1, 1993 to June 30,
1994 for Class C shares.
-------------------------------------------------------------------------------
3. UNREALIZED GAINS AND At June 30, 1995, net unrealized appreciation on
LOSSES ON INVESTMENTS investments of $9,073,271 was composed of gross
appreciation of $12,850,496, and gross depreciation of
$3,777,225.
--------------------------------------------------------------------------------
4. MANAGEMENT FEES AND Management fees paid to the Manager were in accordance
OTHER TRANSACTIONS with the investment advisory agreement with the Fund
WITH AFFILIATES which provides for a fee of .65% of the first $200
million of average annual net assets of the Fund, .60%
of the next $100 million, .57% of the next $100
million, .55% of the next $400 million and .50% of net
assets in excess of $800 million. The Manager
voluntarily reduced the management fees to the current
levels. Prior to January 3, 1995, management fees were
as follows: .75% of the first $200 million of average
annual net assets, .70% of the next $200 million, .65%
of the next $400 million and .60% of 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 state
regulatory limit on Fund expenses.
13 Oppenheimer U.S. Government Trust
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
4. MANAGEMENT FEES AND For the year ended June 30, 1995, commissions (sales
OTHER TRANSACTIONS charges paid by investors) on sales of Class A shares
WITH AFFILIATES totaled $582,157, of which $169,246 was retained by
(CONTINUED) Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and
by an affiliated broker/dealer. Sales charges advanced
to broker/dealers by OFDI on sales of the Fund's Class
B shares totaled $76,562, of which $4,633 was paid to
an affiliated broker/dealer. During the period ended
June 30, 1995, OFDI received contingent deferred sales
charges of $9,578 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.
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 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, 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, 1995, OFDI paid $53,292 and $2,782
to an affiliated broker/dealer as reimbursement for
Class A and Class C personal service and maintenance
expenses, respectively, and retained $58,050 as
reimbursement for Class C sales commissions and service
fee advances, as well as financing costs.
--------------------------------------------------------------------------------
5. OPTION ACTIVITY The Fund may buy and sell put and call options, or
write covered put and call options on portfolio
securities in order to produce incremental earnings or
protect against changes in the value of portfolio
securities.
The Fund generally purchases put options or
writes covered call options to hedge against adverse
movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and
becomes obligated to sell or purchase the underlying
security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last
sale price on the principal exchange on which the
option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain
or loss upon the expiration or closing of the option
transaction. When an option is exercised, the proceeds
on sales for a written call option, the purchase cost
for a written put option, or the cost of the security
for a purchased put or call option is adjusted by the
amount of premium received or paid.
The risk in writing a call option is that the
Fund gives up the opportunity for profit if the market
price of the security increases and the option is
exercised. The risk in writing a put option is that the
Fund may incur a loss if the market price of the
security decreases and the option is exercised. The
risk in buying an option is that the Fund pays a
premium whether or not the option is exercised. The
Fund also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary
market does not exist.
Written option activity for the year ended June 30,
1995 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
----------------------------- -----------------------------
NUMBER AMOUNT OF NUMBER AMOUNT OF
OF OPTIONS PREMIUMS OF OPTIONS PREMIUMS
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at June 30, 1994 30,000 $290,625 80,000 $248,438
--------------------------------------------------------------------------------------------------------
Options closed (30,000) (290,625) (80,000) (248,438)
------- -------- ------- --------
Options outstanding at June 30, 1995 -- $ -- -- $ --
------- -------- ------- --------
------- -------- ------- --------
</TABLE>
14 Oppenheimer U.S. Government Trust
<PAGE>
--------------------------------------------------------------------------------
6. ACQUISITION OF On July 27, 1995, the Fund acquired all of the net
OPPENHEIMER assets of Oppenheimer Mortgage Income Fund, pursuant
MORTGAGE to an Agreement and Plan of Reorganization approved by
INCOME FUND the Oppenheimer Mortgage Income Fund shareholders on
July 12, 1995. The Fund issued 8,262,838 and 683,099
shares of beneficial interest for Class A and Class B,
respectively, valued at $77,918,563 and $6,434,794 in
exchange for the net assets, resulting in combined
Class A net assets of $385,440,401 and Class B net
assets of $6,806,465 on July 27, 1995. The exchange
qualifies as a tax-free reorganization for federal
income tax purposes.
--------------------------------------------------------------------------------
7. FUTURES CONTRACTS The Fund may buy and sell interest rate futures
contracts in order to gain exposure to or protect
against changes in interest rates. The Fund may also
buy or write put or call options on these futures
contracts.
The Fund generally sells futures contracts to
hedge against increases in interest rates and the
resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase
futures contracts to gain exposure to changes in
interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the
Fund is required to deposit either cash or securities
in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments
(variation margin) are made or received by the Fund
each day. The variation margin payments are equal to
the daily changes in the contract value and are
recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract is
closed or expires.
Risks of entering into futures contracts (and
related options) include the possibility that there may
be an illiquid market and that a change in the value of
the contract or option may not correlate with changes
in the value of the underlying securities.
15 Oppenheimer U.S. Government Trust
<PAGE>
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, 1995, 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. Our procedures
included confirmation of securities owned as of June
30, 1995, 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, 1995,
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 27, 1995
16 Oppenheimer U.S. Government Trust
<PAGE>
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
--------------------------------------------------------------------------------
In early 1996, shareholders will receive information
regarding all dividends and distributions paid to them
by the Fund during calendar year 1995. 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, 1995 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.
SHAREHOLDER MEETING (UNAUDITED)
--------------------------------------------------------------------------------
On May 25, 1995, a special shareholder meeting was held
at which the twelve Trustees identified below were
elected, the selection of KPMG Peat Marwick LLP as the
independent certified public accountants and auditors
of the Trust for the fiscal year beginning July 1, 1994
was ratified (Proposal No. 1), the proposed changes in
the Fund's investment policies were approved (Proposal
No. 2), the proposed investment advisory agreement was
approved (Proposal No. 3), as described in the Trust's
proxy statement for that meeting. That meeting was
adjourned until May 31, 1995, with respect to a
proposal voted on only by Class C shareholders, at
which time the Fund's amended Class C 12b-1
Distribution and Service Plan was approved by Class C
shareholders (Proposal No. 4), as described in the
Trust's proxy statement for that meeting. The following
is a report of the votes cast:
<TABLE>
<CAPTION>
NOMINEE FOR AGAINST TOTAL
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Leon Levy 16,973,280.862 614,808.471 17,588,089.333
Leo Cherne 16,908,564.560 679,524.773 17,588,089.333
Robert G. Galli 17,010,437.287 577,652.046 17,588,089.333
Benjamin Lipstein 16,957,423.234 630,666.099 17,588,089.333
Elizabeth B. Moynihan 16,978,536.882 609,552.451 17,588,089.333
Kenneth A. Randall 17,003,838.944 584,250.389 17,588,089.333
Edward V. Regan 17,035,109.467 552,979.866 17,588,089.333
Russell S. Reynolds, Jr. 17,021,001.092 567,088.241 17,588,089.333
Sidney M. Robbins 16,939,642.358 648,446.975 17,588,089.333
Donald W. Spiro 16,982,499.151 605,590.182 17,588,089.333
Pauline Trigere 16,918,168.305 669,921.028 17,588,089.333
Clayton K. Yeutter 16,978,956.887 609,132.446 17,588,089.333
</TABLE>
<TABLE>
<CAPTION>
WITHHELD/ BROKER
PROPOSAL FOR AGAINST ABSTAIN NON-VOTES TOTAL
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Proposal No. 1 16,815,630.021 119,338.528 653,120.783 304.776 17,588,089.333
Proposal No. 2 15,376,316.829 1,264,888.201 946,884.302 304.776 17,588,089.333
Proposal No. 3 16,377,849.880 232,204.595 978,034.857 304.776 17,588,089.333
Proposal No. 4 409,139.482 9,643.677 16,334.983 3.399 435,118.142
</TABLE>
17 Oppenheimer U.S. Government Trust
<PAGE>
OPPENHEIMER U.S. GOVERNMENT TRUST
--------------------------------------------------------------------------------
OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees
Leo Cherne, 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 Oppenheimer Shareholder Services
SERVICING AGENT
--------------------------------------------------------------------------------
CUSTODIAN OF Citibank, N.A.
PORTFOLIO SECURITIES
--------------------------------------------------------------------------------
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.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, and are not insured by the FDIC or any other
agency, and involve investment risks, including
possible loss of the principal amount invested.
18 Oppenheimer U.S. Government Trust
<PAGE>
OPPENHEIMERFUNDS FAMILY
--------------------------------------------------------------------------------
OppenheimerFunds offers over 30 funds designed to fit
virtually every investment goal. Whether you're
investing for retirement, your children's education or
tax-free income, we have the funds to help you seek
your objective.
When you invest with OppenheimerFunds, you can
feel comfortable knowing that you are investing with a
respected financial institution with over 30 years of
experience in helping people just like you reach their
financial goals. And you're investing with a leader in
global, growth stock and flexible fixed income
investments--with over 2.6 million shareholder accounts
and more than $35 billion under Oppenheimer's
management and that of our affiliates.
At OppenheimerFunds, we don't charge a fee to
exchange shares of eligible funds of the same class.
And you can exchange shares easily by mail or by
telephone.(1) For more information on
OppenheimerFunds, please contact your financial advisor
or call us at 1-800-525-7048 for a prospectus. You may
also write us at the address shown on the back cover.
As always, please read the prospectus carefully before
you invest.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STOCK FUNDS Discovery Fund Global Fund
Global Emerging Growth Fund(2) Oppenheimer Fund
Target Fund Value Stock Fund
Growth Fund(3) Gold & Special Minerals Fund
---------------------------------------------------------------------------------------------------------------
STOCK & BOND Main Street Income & Growth Fund Equity Income Fund
FUNDS Total Return Fund Asset Allocation Fund
Global Growth & Income Fund
---------------------------------------------------------------------------------------------------------------
BOND FUNDS High Yield Fund Strategic Short-Term Income Fund
Champion High Yield Fund International Bond Fund
Strategic Income & Growth Fund Bond Fund(4)
Strategic Income Fund U.S. Government Trust
Strategic Investment Grade Bond Limited-Term Government Fund
Fund
---------------------------------------------------------------------------------------------------------------
TAX-EXEMPT New York Tax-Exempt Fund(5) New Jersey Tax-Exempt Fund(5)
FUNDS California Tax-Exempt Fund(5) Tax-Free Bond Fund
Pennsylvania Tax-Exempt Fund(5) Insured Tax-Exempt Bond Fund
Florida Tax-Exempt Fund(5) Intermediate Tax-Exempt Bond
Fund
---------------------------------------------------------------------------------------------------------------
MONEY-MARKET Money Market Fund Cash Reserves
FUNDS
<FN>
1. Exchange privileges are subject to change or termination.
2. Formerly Global Bio-Tech Fund.
3. Formerly Special Fund.
4. Formerly Investment Grade Bond Fund.
5. Available only to residents of certain states.
OppenheimerFunds are distributed by Oppenheimer Funds Distributor, Inc.,
Two World Trade Center, New York, NY 10048-0203.
-C- Copyright 1995 Oppenheimer Management Corporation. All rights reserved.
</TABLE>
19 Oppenheimer U.S. Government Trust
<PAGE>
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-8 p.m. ET
Saturday 10 a.m.-2 p.m. ET
1-800-525-7048
TELEPHONE TRANSACTIONS
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-852-8457
PHONELINK
24 hours a day, automated
information and transactions
1-800-533-3310
TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-843-4461
OPPENHEIMERFUNDS
INFORMATION HOTLINE
24 hours a day, timely and insightful
messages on the economy and
issues that affect your investments
1-800-835-3104
"HOW MAY I HELP YOU?"
As an OppenheimerFunds shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your OppenheimerFunds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the OppenheimerFunds' transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
[PHOTO]
Jennifer Leonard, Customer Service Representative
Oppenheimer Shareholder Services
--------------------------------------------------------------------------------
-------------------
[OPPENHEIMER FUNDS LOGO] Bulk Rate
Oppenheimer Funds Distributor, Inc. U.S. Postage
P.O. Box 5270 PAID
Denver, CO 80217-5270 Permit No. 469
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