<PAGE>
OPPENHEIMER U.S. GOVERNMENT TRUST
Semiannual Report December 31, 1995
[photo]
"We need monthly INCOME, and we need to feel COMFORTABLE about
how our money is invested."
[logo] OppenheimerFunds-r-
<PAGE>
NEWS
"ROSENBERG HAS SHOWN HIMSELF SKILLED AT MAINTAINING THE FUND'S BALANCE."
- -- Morningstar Mutual Funds
October 13, 1995
STANDARDIZED YIELD (3)
For the 30 Days Ended 12/31/95:
Class A
5.97%
Class B
5.46%
Class C
5.49%
This Fund is for people who want monthly INCOME and want to 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 instrumental-
ities.
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 6 months ended 12/31/95 was 5.22% for
Class A shares and 4.82% for Class C shares. (1)
Your Fund's average annual total returns at maximum offering price for Class A
shares for the 1-, 5- and 10- year periods ended 12/31/95 were 9.48%, 7.16% and
7.64%, respectively. For Class C shares, average annual total returns for the
1-year period ended 12/31/95 and since inception of the Class on 12/1/93 were
13.02% and 5.55%, respectively. (2)
OUTLOOK
"Our outlook is positive. Our strategy is to remain fairly cautious and
conservative, positioning the Fund to provide income, relative stability, and a
good degree of protection on the downside."
David Rosenberg, Portfolio Manager
December 31, 1995
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. Past performance does not guarantee future
results. Investment return and principal value of 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. For more complete information, please review the
prospectus carefully before you invest.
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 12/31/94,
12/31/90 and 12/31/85, after deducting the current maximum initial sales charge
of 4.75%. Class A shares were first publicly offered on 8/16/85. Class C
returns show results of hypothetical investments on 12/31/94 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. Class B cumulative total
return since inception (7/21/95) was 0.63%. 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-matur-
ity basis for the 30-day period ended 12/31/95, 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]
Bridget A. Macaskill
President
Oppenheimer U.S. Government Trust
Dear OppenheimerFunds Shareholder,
The bond market amply rewarded patient investors in 1995.
One year ago, many fixed-income investors had negative returns, as a surging
economy pushed interest rates higher and bond prices lower. But a vigilant
Federal Reserve Board helped slow the economy down by early 1995, lowering the
fear of inflation. And by the summer, after a quarter in which GDP growth was
just 1.3%, the Fed began to lower short-term interest rates.
In the Fall, a balanced federal budget was on the front burner in Washington,
suggesting to foreign investors that the U.S. was finally addressing its rising
debt burden, which helped stabilize the U.S. dollar, making U.S. fixed-income
investments more attractive to international investors.
Throughout 1995, inflation and economic growth came in at less than 3%. As a
result, the yield on the benchmark 30-year U.S. Treasury bond fell to 6% from
nearly 8% the year before. And patient investors saw the value of their higher
paying bonds appreciate substantially. In 1995, while the stock market was up
35%, bonds rose as much as 20%, depending on the type of security.
Overall, the best performing sector of the bond market was the 30-year U.S.
Treasury bond. This is because when interest rates are falling, bonds with the
longest maturities appreciate the most in price. Another excellent performing
sector in 1995 was that of high quality corporate bonds. Although a slowing
economy often raises credit worries about Corporate America, the continuation of
strong corporate profits offset these concerns.
After having such a good year, where does the bond market go from here? Unlike
stocks, which have infinite upside potential, bonds have a constraint. For
bonds to do well, interest rates must remain steady or continue to fall. And
when interest rates are low already, there is only so far they can decline. But
if inflation can be maintained, and if a budget accord is reached, a positive
environment can continue to exist.
We believe that the general long-term trend for the U.S. economy is slow growth
and low inflation. Moving into 1996, we're looking for even slower growth than
we saw in 1995, which should be an excellent environment for bond investors.
Your portfolio manager discusses the outlook for your Fund in light of these
broad issues on the following pages.
Thank you for your confidence in OppenheimerFunds, and we look forward to
helping you reach your investment goals in the future.
/s/ Bridget A. Macaskill
Bridget A. Macaskill
January 22, 1996
3 Oppenheimer U.S. Government Trust
<PAGE>
Q + A
Q How did the Fund perform?
[photo][photo]
An interview with your Fund's managers.
HOW HAS THE FUND PERFORMED OVER THE PAST SIX MONTHS?
Our returns were good for the period and in line with our expectations, though
we didn't experience the dramatic performance that some more aggressive bond
funds did. This Fund was designed to give investors a conservative vehicle for
income with a strong emphasis on protecting principal in down markets. We
believe over the long term this approach will help performance in general and in
relation to our more aggressive competitors.
WHAT FACTORS POSITIVELY INFLUENCED YOUR PERFORMANCE?
Over the period, we were able to achieve our goals of providing income with
relatively low risk, even though this wasn't the best environment for our style
of investing, which places emphasis on mortgage-backed securities as well as
Treasuries. Our holdings in U.S. Treasuries performed well over the period due
to declining interest rates. In addition, we were able to raise our yield
somewhat and to further diversify the portfolio through the addition of
non-agency mortgage-backed securities which are backed by mortgage loans under-
written by banks rather than the government.
WHICH INVESTMENTS DIDN'T PERFORM AS WELL AS EXPECTED?
In general, mortgage-backed securities have suffered in terms of relative price
performance over the period due to investors' concerns about prepayment risk --
a situation that always arises during periods of interest rate declines. During
the past six months, we reduced our holdings in the adjustable rate mortgage
(ARM) market and replaced them with better-performing fixed-rate issues. Long
term, however, we believe the mortgage sector has a lot to offer in terms of
yield and value.
[photo]
4 Oppenheimer U.S. Government Trust
<PAGE>
FACING PAGE
Top left: David Rosenberg, Portfolio Manager
Top right: Donna Compert, Member of Fixed Income Investments Team
Bottom left: Len Darling, Executive VP, Director of Fixed Income
Investments
THIS PAGE
Top: Michael Maciolek, Member of Fixed Income Investments Team
Bottom: David Rosenberg with Leslie Falconio and Gina Palmieri,
Members of Fixed Income Investments Team
[photo]
A Our returns were GOOD and in line with our expectations.
At this time, we continue to add to our mortgage holdings where we see securi-
ties available at reasonable prices.
WHAT AREAS OF THE MARKET ARE YOU CURRENTLY TARGETING?
In Treasuries, we continue to employ a barbell strategy, meaning that we are
investing in both short- and long-term bonds. This strategy is based on our
expectation that long-term interest rates will decline further than short-term
rates, so we want to be exposed to both areas to balance potential changes in
price and income from the securities the Fund owns.
We also plan to continue adding to non-agency mortgages in the coming months,
not only because they offer income and diversification, but also due to the fact
that they're one of the few types of fixed-income securities that can benefit
from increases in inflation. Because non-agency mortgages have an indirect
relationship with the other types of securities in the Fund, this helps us in
our effort to be prepared for any changes in the economy.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Our outlook is positive. We expect the U.S. economy to continue to grow at a
slower pace with inflation continuing to be only modest. As a result, we expect
that rates will remain at or near their current trading range. And although we
believe the fundamentals for bonds going forward are strong, we expect that the
majority of the rally has already become apparent in their current pricing.
That being our position, our strategy is to remain fairly cautious and conserva-
tive, positioning the Fund to provide income, relative stability, and a good
degree of protection on the downside.//
[photo]
5 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS December 31, 1995 (Unaudited)
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<S> <C> <C> <C>
====================================================================================================================================
MORTGAGE-BACKED OBLIGATIONS - 84.9%
- ------------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY - 73.3%
- ------------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 39.8%
----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates:
9.50%, 12/1/02-11/1/03 $ 596,341 $ 624,294
10%, 6/15/20 3,011,000 3,525,670
14%, 1/1/11 578,346 684,433
6.65%, 4/15/21 10,750,000 10,743,227
8.50%, 10/15/19 1,941,813 1,980,029
9%, 7/15/21 2,319,689 2,376,939
Collateralized Mtg. Obligations, Series 1548, Cl. C, 7%,
4/15/21 3,000,000 3,016,860
Gtd. Multiclass Mtg. Participation Certificates:
11.50%, 6/1/20 1,702,671 1,954,348
13%, 8/1/15 2,722,541 3,269,602
Gtd. Multiclass Mtg. Participation Certificates, Series
1455, Cl. J, 7.50%, 12/15/22 5,000,000 5,398,400
----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
11%, 7/1/16 1,926,313 2,185,162
11.50%, 11/1/15 1,487,641 1,694,974
7%, 1/15/26(1) 20,000,000 20,162,400
7%, 8/1/25 28,087,418 28,315,488
7.50%, 8/1/25 4,962,260 5,084,729
Collateralized Mtg. Obligations, Series 1992-103, Cl. JB,
10.50%, 11/25/20 10,000,000 11,909,300
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates:
13%, 11/1/12 227,263 266,252
7%, 12/25/21 29,617,000 30,172,319
8%, 3/25/01-12/1/22 9,516,729 9,654,512
8.75%, 11/25/05-12/25/20 30,000,000 32,405,560
Gtd. Mtg. Pass-Through Certificates, 12%, 4/1/19 1,780,280 2,089,604
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, 8%, 7/25/19 18,000,000 19,125,000
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Trust 1992-112, Cl. ED, 4%, 12/25/20 3,000,000 2,657,790
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Trust 1993-87, Cl. S, Inverse Floater, 5.397%,
6/25/23 (coupon inversely indexed to 1-month US LIBOR,
multiplied by 1.857)(2) 2,199,998 1,691,593
Interest-Only Stripped Mtg.-Backed Security, Trust 222, Cl.
2, 11.552%-14.739%, 6/1/23(3) 86,304,427 23,241,514
Principal-Only Stripped Mtg.-Backed Security, Series 1993-
243, Cl. E, Zero Coupon, 2.99%, 11/25/23(4) 1,016,691 557,274
-------------
224,787,273
- ------------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED - 33.5%
----------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn.:
6%, 1/15/26(1) 28,000,000 28,297,500
7%, 1/15/26(1) 15,000,000 15,178,200
7%, 2/15/22-11/15/23 19,545,559 19,798,648
7.50%, 1/15/26(1) 42,750,000 43,979,062
7.50%, 2/15/22-5/15/24 23,465,238 24,169,066
8%, 4/15/02-5/15/25 34,599,226 36,062,283
8.50%, 6/15/01-8/15/01 156,514 164,364
9.50%, 7/15/18-1/15/20 1,776,513 1,917,396
</TABLE>
6 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED
(CONTINUED)
10%, 6/15/16-5/15/19 $ 3,475,078 $ 3,842,626
10.50%, 1/15/98-5/15/21 11,121,752 12,399,537
11%, 7/20/20 125,888 141,269
----------------------------------------------------------------------------------------------------------------------------
U.S. Department of Veterans Affairs, Interest-Only Gtd.
Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Vendee Mtg. Trust, Series 1995-2B, Cl. 2-IO,
24.40%, 6/1/25(3) 137,802,861 3,638,857
-------------
189,588,808
- ------------------------------------------------------------------------------------------------------------------------------------
PRIVATE - 11.6%
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL - 5.5%
----------------------------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Series 1994-C1, Cl. 2-G,
8.70%, 9/25/25(5) 3,000,000 3,128,437
----------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through
Certificates, Series 1995-C2, Cl. C, 7.70%, 6/15/21(6) 2,981,010 3,075,099
----------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital, 7.95% Collateralized Mtg.
Obligations, Cl. C, 8/15/27(5) 5,014,988 5,366,037
----------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1992-C5, Cl. C, 8.85%, 5/25/22 7,601,257 7,962,317
Series 1992-CHF, Cl. E, 8.25%, 12/25/20 8,381,304 8,224,155
Series 1993-C1, Cl. D, 9.45%, 5/25/24 1,183,001 1,258,048
----------------------------------------------------------------------------------------------------------------------------
SE Commercial Mortgage Pass-Through Certificates,
Series 93-01, Cl. A1, 6.65%, 11/28/13 2,368,624 2,355,301
-------------
31,369,394
- ------------------------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY - 5.4%
----------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Series 1993-12, Cl. B1,
6.625%, 2/25/24 3,000,000 2,827,500
----------------------------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg. Pass-
Through Interest-Only Certificates, Series 94-M1, Cl. A-X,
.52%, 2/15/02(3)(5) 125,768,000 97,045
----------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1991-M5, Cl. A, 9%, 3/25/17 7,599,698 8,046,180
Series 1992-M4, Cl. B, 7.20%, 9/25/21 1,392,952 1,397,306
Series 1994-C1, Cl. C, 8%, 6/25/26 7,075,000 7,563,617
Series 1994-C2, Cl. D, 8%, 4/25/25 2,926,208 2,996,620
Series 1995-C1, Cl. D, 6.90%, 2/25/27 7,677,000 7,331,535
-------------
30,259,803
- ------------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL - 0.7%
----------------------------------------------------------------------------------------------------------------------------
Prudential Home Mortgage Securities Corp., Sub. Fixed
Rate Mtg. Securities, Real Estate Mtg. Investment Conduit
Pass-Through Certificates, Series 1995-A, Cl. B2,
8.684%, 3/28/25(5)(6) 1,492,574 1,534,086
----------------------------------------------------------------------------------------------------------------------------
Residential Funding Corp., Mtg. Pass-Through
Certificates, Series 1993-S10, Cl. A9, 8.50%, 2/25/23 2,555,976 2,639,046
-------------
4,173,132
-------------
Total Mortgage-Backed Obligations (Cost $467,899,148) 480,178,410
</TABLE>
7 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Unaudited)
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<S> <C> <C> <C> <C> <C>
====================================================================================================================================
U.S. GOVERNMENT OBLIGATIONS - 31.4%
- ------------------------------------------------------------------------------------------------------------------------------------
TREASURY - 31.4%
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
8.875%, 8/15/17 $ 2,000,000 $ 2,680,000
STRIPS, Zero Coupon, 6.108%, 11/15/05(7) 15,000,000 8,597,834
STRIPS, Zero Coupon, 6.118%, 2/15/06(7) 20,000,000 11,269,137
----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
7.625%, 5/31/96 4,000,000 4,040,000
7.875%, 11/15/04 61,500,000 71,243,869
8%, 5/15/01(8) 63,500,000 71,120,000
8.75%, 8/15/00 7,300,000 8,296,902
-------------
Total U.S. Government Obligations (Cost $175,090,043) 177,247,742
DATE STRIKE CONTRACTS
====================================================================================================================================
PUT OPTIONS PURCHASED - 0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., 7%, 12/15/22, Put
Opt. (Cost $206,250) Mar. 96 $100.31 30,000 112,500
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $643,195,441) 116.3% 657,538,652
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (16.3) (92,256,631)
----------- -------------
NET ASSETS 100.0% $565,282,021
=========== =============
<FN>
1. When-issued security to be delivered and settled after December 31,
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 $1,691,593 or 0.30% of the Fund's net assets at
December 31, 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 disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future
cash flows.
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 disclosed represent current yields based upon the current
cost basis and estimated timing of future cash flows.
5. Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
has been determined to be liquid under guidelines established by the
Board of Trustees. These securities amount to $10,125,605 or 1.79% of the
Fund's net assets, at December 31, 1995.
6. Represents the current interest rate for a variable rate security.
7. For zero coupon bonds, the interest rate shown is the effective yield
on the date of purchase.
</FN>
</TABLE>
<TABLE>
<CAPTION>
8. A sufficient amount of liquid assets has been designated to cover
outstanding written put options, as follows:
FACE
SUBJECT EXPIRATION EXERCISE PREMIUM MARKET VALUE
TO CALL DATE PRICE RECEIVED SEE NOTE 1
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 5.875%, 11/15/05 1,000,000 3/96 $100.78 $206,025 $125,625
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES December 31, 1995(Unaudited)
<S> <C> <C>
====================================================================================================================================
ASSETS Investments, at value (cost $643,195,441) - see accompanying statement $657,538,652
---------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 13,517,535
Interest and principal paydowns 5,087,748
Shares of beneficial interest sold 1,755,057
---------------------------------------------------------------------------------------------------------
Other 36,711
-------------
Total assets 677,935,703
====================================================================================================================================
LIABILITIES Bank overdraft 250,959
---------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $206,025) -
see accompanying statement - Note 5 125,625
---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased on a when-issued basis 107,315,823
Shares of beneficial interest redeemed 3,722,071
Dividends 709,670
Distribution and service plan fees 293,440
Trustees' fees 156,856
Shareholder reports 31,536
Transfer and shareholder servicing agent fees 11,396
Other 36,306
-------------
Total liabilities 112,653,682
====================================================================================================================================
NET ASSETS $565,282,021
-------------
-------------
====================================================================================================================================
COMPOSITION OF Paid-in capital $565,638,168
NET ASSETS ---------------------------------------------------------------------------------------------------------
Undistributed net investment income 42,547
---------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (14,822,305)
---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 14,423,611
-------------
Net assets $565,282,021
-------------
-------------
====================================================================================================================================
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on
net assets of $523,794,745 and 54,196,215 shares of beneficial interest outstanding) $9.66
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $10.14
---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $23,809,175 and 2,465,857 shares of beneficial interest outstanding) $9.66
---------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $17,678,101 and 1,831,190 shares of beneficial interest outstanding) $9.65
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS For the Six Months Ended December 31, 1995(Unaudited)
<S> <C> <C>
====================================================================================================================================
INVESTMENT INCOME Interest $17,931,579
====================================================================================================================================
EXPENSES Management fees - Note 4 1,336,594
---------------------------------------------------------------------------------------------------------
Distribution and service plan fees - Note 4:
Class A 496,043
Class B 52,410
Class C 66,307
---------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees - Note 4 268,597
---------------------------------------------------------------------------------------------------------
Shareholder reports 119,476
---------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 46,116
---------------------------------------------------------------------------------------------------------
Custodian fees and expenses 38,446
---------------------------------------------------------------------------------------------------------
Legal and auditing fees 30,740
---------------------------------------------------------------------------------------------------------
Insurance expenses 11,998
---------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 35,369
Class B 7,956
Class C 1,970
---------------------------------------------------------------------------------------------------------
Other 33,537
------------
Total expenses 2,545,559
------------
Less assumption of expenses by OppenheimerFunds, Inc. - Note 4 (38,982)
------------
Net expenses 2,506,577
====================================================================================================================================
NET INVESTMENT INCOME 15,425,002
====================================================================================================================================
REALIZED AND Net realized gain (loss) on:
UNREALIZED GAIN Investments 5,271,879
Closing of futures contracts - Note 7 (952,976)
Closing of options written - Note 5 (90,859)
------------
Net realized gain 4,228,044
----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 5,039,536
------------
Net realized and unrealized gain 9,267,580
====================================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $24,692,582
------------
------------
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30,
(UNAUDITED) 1995
<S> <C> <C> <C>
====================================================================================================================================
OPERATIONS Net investment income $15,425,002 $22,905,201
---------------------------------------------------------------------------------------------------------
Net realized gain 4,228,044 2,180,093
---------------------------------
Net change in unrealized appreciation or depreciation 5,039,536 8,115,444
---------------------------------
Net increase in net assets resulting
from operations 24,692,582 33,200,738
====================================================================================================================================
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS Class A (14,721,535) (22,498,787)
TO SHAREHOLDERS Class B (329,380) --
Class C (418,087) (416,947)
====================================================================================================================================
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from
TRANSACTIONS beneficial interest transactions - Note 2:
Class A 202,612,081 (7,455,681)
Class B 23,420,648 --
Class C 6,400,187 6,508,757
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 241,656,496 9,338,080
---------------------------------------------------------------------------------------------------------
Beginning of period 323,625,525 314,287,445
---------------------------------
End of period (including undistributed
net investment income of $42,547 and
$87,075, respectively) $565,282,021 $323,625,525
---------------------------------
---------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer U.S. Government Trust
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------
CLASS A
------------------------------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
1995(UNAUDITED) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
PER SHARE OPERATING DATA:
Net asset value, beginning of period $9.51 $9.20 $9.95 $9.73 $9.25 $9.24
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .34 .68 .67 .68 .69 .83
Net realized and unrealized gain (loss) .15 .31 (.74) .22 .48 .02
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .49 .99 (.07) .90 1.17 .85
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.34) (.68) (.64) (.68) (.69) (.84)
Dividends in excess of net investment
income -- -- (.01) -- -- --
Tax return of capital distribution -- -- (.03) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.34) (.68) (.68) (.68) (.69) (.84)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.66 $9.51 $9.20 $9.95 $9.73 $9.25
=====================================================================================
====================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 5.22% 11.22% (1.17)% 9.55% 13.05% 9.53%
====================================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $523,795 $312,607 $310,027 $380,916 $395,863 $342,220
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $411,013 $307,306 $355,698 $401,789 $376,532 $299,144
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.11%(4) 7.32% 6.61% 6.90% 7.23% 8.93%
Expenses, before voluntary reimbursement
by the Manager 1.12%(4) 1.09% 1.14% 1.17% 1.17% 1.19%
Expenses, net of voluntary reimbursement
by the Manager 1.10%(4) N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 156.8% 303.5% 139.5% 96.8% 207.8% 133.9%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------------
CLASS B CLASS C
-----------------------------------------------------------------------
SIX MONTHS
PERIOD ENDED ENDED
DECEMBER 31, DECEMBER 31, YEAR ENDED JUNE 30,
1995 (UNAUDITED)(2) 1995 (UNAUDITED) 1995 1994(1)
<S> <C> <C> <C> <C>
========================================================================================================================
PER SHARE OPERATING DATA:
Net asset value, beginning of period $9.42 $9.50 $9.19 $9.83
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .26 .30 .61 .33
Net realized and unrealized gain (loss) .24 .15 .30 (.64)
- ------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .50 .45 .91 (.31)
- ------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.26) (.30) (.60) (.33)
Dividends in excess of net investment
income -- -- -- --
Tax return of capital distribution -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.26) (.30) (.60) (.33)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.66 $9.65 $9.50 $9.19
=========================================================================
========================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 5.63% 4.82% 10.31% (3.12)%
========================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $23,809 $17,678 $11,019 $4,261
- ------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $11,783 $13,183 $6,503 $2,173
- ------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 6.18%(4) 6.29%(4) 6.44% 5.97%(4)
Expenses, before voluntary reimbursement
by the Manager 1.99%(4) 1.89%(4) 1.89% 1.96%(4)
Expenses, net of voluntary reimbursement
by the Manager 1.93%(4) 1.88%(4) N/A N/A
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 156.8% 156.8% 303.5% 139.5%
<FN>
1. For the period from December 1, 1993 (inception of offering) to June 30,
1994.
2. For the period from July 21, 1995 (inception of offering) to December 31,
1995.
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 December 31, 1995 were $858,066,577 and $767,726,304, respectively.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
12 Oppenheimer U.S. Government Trust
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
================================================================================
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 objective is to seek high current
income, preservation of capital and maintenance of liquidity primarily through
investments in debt instruments issued or guaranteed by the U.S. Government or
its agencies or instrumentalities. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class
C shares. Class A shares are sold with a front-end sales charge. Class B and C
shares may be subject to a contingent deferred sales charge. All 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 are valued 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 December 31, 1995,
the Fund had entered into outstanding when-issued or forward commitments of
$107,315,823.
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.
- --------------------------------------------------------------------------------
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a nonfunded retirement plan
for the Fund's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the six months
ended December 31, 1995, a provision of $19,575 was made for the Fund's
projected benefit obligations, resulting in an accumulated liability of $127,488
at December 31, 1995.
13 Oppenheimer U.S. Government Trust
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
================================================================================
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately
for Class A, Class B 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.
- --------------------------------------------------------------------------------
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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
================================================================================
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>
SIX MONTHS
ENDED DECEMBER 31, 1995(1) YEAR ENDED JUNE 30, 1995
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
Class A:
Sold 6,444,591 $ 61,459,140 7,076,177 $65,369,039
Dividends reinvested 1,203,565 11,492,217 1,868,269 17,288,287
Issued in connection with the
acquisition of:
Oppenheimer Mortgage
Income Fund - Note 6 8,262,838 77,918,563 -- --
Quest for Value U.S. Government
Income Fund - Note 6 10,598,976 101,114,231 -- --
Redeemed (5,184,569) (49,372,070) (9,758,134) (90,113,007)
----------- ------------- ----------- ------------
Net increase (decrease) 21,325,401 $202,612,081 (813,688) $(7,455,681)
=========== ============= =========== ============
Class B:
Sold 970,590 $ 9,246,092 -- --
Dividends reinvested 21,506 206,034 -- --
Issued in connection with the
acquisition of:
Oppenheimer Mortgage
Income Fund - Note 6 683,099 6,434,794 -- --
Quest for Value U.S. Government
Income Fund - Note 6 967,755 9,222,705 -- --
Redeemed (177,093) (1,688,977) -- --
---------- ------------- ----------- ------------
Net increase 2,465,857 $ 23,420,648 -- --
========== ============= =========== ============
Class C:
Sold 749,763 $ 7,134,565 1,086,358 $10,120,239
Dividends reinvested 35,464 338,242 35,316 327,690
Issued in connection with the
acquisition of Quest for
Value U.S. Government
Income Fund - Note 6 284,411 2,710,439 -- --
Redeemed (398,181) (3,783,059) (425,453) (3,939,172)
---------- ------------- ----------- ------------
Net increase 671,457 $ 6,400,187 696,221 $ 6,508,757
========== ============= =========== ============
</TABLE>
1. For the six months ended December 31, 1995 for
Class A and Class C shares and for the period from
July 21, 1995 (inception of offering) to December 31,
1995 for Class B shares.
14 Oppenheimer U.S. Government Trust
<PAGE>
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At December 31, 1995, net unrealized appreciation on investments of $14,423,611
was composed of gross appreciation of $20,213,082, and gross depreciation of
$5,789,471.
================================================================================
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 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 has agreed to reimburse the
Fund if aggregate expenses (with specified exceptions) exceed the most stringent
state regulatory limit on Fund expenses.
The Manager has agreed to reimburse the Fund for SEC fees incurred in connection
with the acquisition of Quest for Value U.S. Government Income Fund.
For the six months ended December 31, 1995, commissions (sales charges paid by
investors) on sales of Class A shares totaled $384,430, of which $114,369 was
retained by OppenheimerFunds 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 and
Class C shares totaled $239,663 and $49,398, of which $9,192 and $6,498,
respectively, was paid to an affiliated broker/dealer. During the six months
ended December 31, 1995, OFDI received contingent deferred sales charges of
$33,148 and $4,515, respectively, upon redemption of Class B and Class C shares
as reimbursement for sales commissions advanced by OFDI at the time of sale of
such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and
shareholder servicing agent for the Fund, and for other registered investment
companies. OFS'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 compensate 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 B and Class C shares are subject to an asset-based sales charge
of .75% of net assets annually, to compensate 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 B or 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 B or Class C
shares sold prior to termination or discontinuance of the plan. At December 31,
1995, OFDI had incurred unreimbursed expenses of $529,319 for Class B and
$210,967 for Class C. During the six months ended December 31, 1995, OFDI paid
$32,019, $249 and $4,785, respectively, to an affiliated broker/dealer as
compensation for Class A, Class B and Class C personal service and maintenance
expenses, and retained $46,217 and $45,920, respectively, as compensation for
Class B and 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.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a
footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
15 Oppenheimer U.S. Government Trust
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
================================================================================
5. OPTION ACTIVITY (CONTINUED)
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 six months ended December 31, 1995 was as
follows:
<TABLE>
<CAPTION>
PUT OPTIONS
--------------------------
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
<S> <C> <C>
----------------------------------------------------------------
Options outstanding at
June 30, 1995 -- --
Options written 38,080 $279,931
Options closed (22,000) (73,906)
-------- ---------
Options outstanding at
December 31, 1995 16,080 $206,025
======== =========
</TABLE>
================================================================================
6. ACQUISITION OF OPPENHEIMER MORTGAGE INCOME FUND AND QUEST FOR VALUE U.S.
GOVERNMENT INCOME FUND
On July 28, 1995, the Fund acquired all of the net assets of Oppenheimer
Mortgage Income Fund, pursuant to an Agreement and Plan of Reorganization
approved by the Oppenheimer Mortgage Income Fund shareholders on July 12, 1995.
The Fund issued 8,262,838 and 683,099 shares of Class A and Class B beneficial
interest, 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 28, 1995. The net assets acquired included net
unrealized appreciation of $844,310. The exchange qualifies as a tax-free
reorganization for federal income tax purposes.
On November 24, 1995, the Fund acquired all of the net assets of Quest For Value
U.S. Government Income Fund, pursuant to an Agreement and Plan of Reorganization
approved by the Quest For Value U.S. Government Income Fund shareholders on
November 16, 1995. The Fund issued 10,598,976, 967,755, and 284,411 shares of
Class A, Class B, and Class C beneficial interest, respectively, valued at
$101,114,231, $9,222,705 and $2,710,439 in exchange for the net assets,
resulting in combined Class A net assets of $518,859,988, Class B net assets of
$21,270,443, and Class C net assets of $16,422,311 on November 24, 1995. The net
assets acquired included net unrealized depreciation of $533,506. 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.
16 Oppenheimer U.S. Government Trust
<PAGE>
OPPENHEIMER U.S. GOVERNMENT TRUST
================================================================================
OFFICERS AND TRUSTEES
Leon Levy, Chairman of the Board of Trustees
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Bridget A. Macaskill, Trustee and President
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
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
OppenheimerFunds, Inc.
================================================================================
DISTRIBUTOR
OppenheimerFunds Distributors, Inc.
================================================================================
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
================================================================================
CUSTODIAN OF PORTFOLIO SECURITIES
Citibank, N.A.
================================================================================
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
================================================================================
LEGAL COUNSEL
Gordon Altman Butowsky Weitzen Shalov & Wein
The financial statements included herein have been taken from the records of the
Fund without examination by the independent auditors.
This is a copy of a report to shareholders of Oppenheimer U.S. Government Trust.
This report must be preceded or accompanied by a Prospectus of Oppenheimer U.S.
Government Trust. For material information concerning the Fund, see the
Prospectus.
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.
17 Oppenheimer U.S. Government Trust
<PAGE>
- -----------------------
OPPENHEIMERFUNDS FAMILY
- -----------------------
================================================================================
OppenheimerFunds offers over 35 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 comfor-
table knowing that you are investing with a respected financial
institution with over 35 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 2.8 million shareholder accounts and more
than $41 billion under Oppenheimer's management and that of our
affiliates.
At OppenheimerFunds, we don't charge a fee to exchange
shares. And you can exchange shares easily by mail or by tele-
phone.(1) For more information on Oppenheimer funds, please con-
tact 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.
================================================================================
STOCK FUNDS Global Emerging Growth Fund Growth Fund
Enterprise Fund Global Fund
Discovery Fund Quest Global Value Fund
Quest Small Cap Value Fund Oppenheimer Fund
Gold & Special Minerals Fund Value Stock Fund
Target Fund Quest Value Fund
================================================================================
STOCK & BOND Main Street Income & Growth Fund Global Growth & Income Fund
FUNDS Quest Opportunity Value Fund Equity Income Fund
Total Return Fund Asset Allocation Fund
Quest Growth & Income Value Fund Strategic Income & Growth Fund
================================================================================
BOND FUNDS International Bond Fund Bond Fund
High Yield Fund U.S. Government Trust
Strategic Income Fund Limited-Term Government Fund
Champion Income Fund
================================================================================
TAX-EXEMPT California Tax-Exempt Fund(2) Pennsylvania Tax-Exempt Fund(2)
FUNDS Florida Tax-Exempt Fund(2) Tax-Free Bond Fund
New Jersey Tax-Exempt Fund(2) Insured Tax-Exempt Fund
New York Tax-Exempt Fund(2) Intermediate Tax-Exempt Fund
================================================================================
MONEY MARKET Money Market Fund Cash Reserves
FUNDS
1. Exchange privileges are subject to change or termination.
Shares may be exchanged only for shares of the same class of
eligible funds.
2. Available only to investors in certain states.
Oppenheimer funds are distributed by OppenheimerFunds
Distributor, Inc., Two World Trade Center, New York, NY
10048-0203.
-c-Copyright 1996 OppenheimerFunds, Inc. All rights reserved.
18 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
- --------------
RS0220.001.1295 February 28, 1996
- ------------------------------------------------------------------------------
"HOW MAY I HELP YOU?" [PHOTO]
Jennifer Leonard, Customer Service Representative
OppenheimerFunds Services
As an Oppenheimer funds 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 Oppenheimer funds 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 Oppenheimer fund's transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
- ------------------------------------------------------------------------------
[LOGO] OPPENHEIMERFUNDS-R- --------------
OppenheimerFunds Distributor, Inc. Bulk Rate
P.O. Box 5270 U.S. Postage
Denver, CO 80217-5270 PAID
Permit No. 314
Farmingdale, NY
--------------
