Centennial Money Market Trust
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Prospectus dated November 1, 1999
Centennial Money Market Trust is a
money market mutual fund. It seeks the
maximum current income that is
consistent with low capital risk and
maintaining liquidity. The Trust
invests in short-term, high-quality
"money market" instruments.
This Prospectus contains important
information about the Trust's
objective, its investment policies,
As with all mutual funds, the strategies and risks. It also
Securities and Exchange Commission has contains important information about
not approved or disapproved the Trust's how to buy and sell shares of the
securities nor has it determined that Trust and other account features.
this Prospectus is accurate or Please read this Prospectus carefully
complete. It is a criminal offense to before you invest and keep it for
represent otherwise. future reference about your account.
- --------------------------------------------------------------------------------
<PAGE>
A B O U T T H E T R U S T
The Trust's Investment Objective and Strategies
WHAT IS THE TRUST'S INVESTMENT OBJECTIVE? The Trust seeks the maximum current
income that is consistent with low capital risk and the maintenance of
liquidity.
WHAT DOES THE TRUST INVEST IN? The Trust is a money market fund. It invests in a
variety of high-quality money market instruments to seek income. Money market
instruments are short-term, U.S. dollar-denominated debt instruments issued by
the U.S. government, domestic and foreign corporations and financial
institutions and other entities. They include, for example, bank obligations,
repurchase agreements, commercial paper, other corporate debt obligations and
government debt obligations. To be considered "high-quality," generally they
must be rated in one of the two highest credit-quality categories for short-term
securities by nationally recognized rating services. If unrated, a security must
be determined by the Trust's investment manager to be of comparable quality to
rated securities.
WHO IS THE TRUST DESIGNED FOR? The Trust is designed for investors who want to
earn income at current money market rates while preserving the value of their
investment, because the Trust tries to keep its share price stable at $1.00.
Income on short-term money market instruments tends to be lower than income on
longer term debt securities, so the Trust's yield will likely be lower than the
yield on longer-term fixed income funds. The Trust does not invest for the
purpose of seeking capital appreciation or gains and is not a complete
investment program.
Main Risks of Investing in the Trust
All investments carry risks to some degree. Funds that invest in debt
obligations for income may be subject to credit risks and interest rate risks.
However, the Trust's investments must meet strict standards set by its Board of
Trustees following special rules for money market funds under federal law. Those
standards include requirements for maintaining high credit quality in the
Trust's portfolio, a short average portfolio maturity to reduce the effects of
changes in interest rates on the value of the Trust's securities and
diversifying the Trust's investments among issuers to reduce the effects of a
default by any one issuer on the Trust's overall portfolio and the value of the
Trust's shares.
Even so, there are risks that any of the Trust's holdings could have its
credit rating downgraded, or the issuer could default, or that interest rates
could rise sharply, causing the value of the Trust's investments (and its share
price) to fall. As a result, there is a risk that the Trust's shares could fall
below $1.00 per share. If there is a high redemption demand for the Trust's
shares that was not anticipated, portfolio securities might have to be sold
prior to their maturity at a loss. Also, there is the risk that the value of
your investment could be eroded over time by the effects of inflation, and that
poor security selection could cause the Trust to underperform other funds with
similar objectives.
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An investment in the Trust is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Trust seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Trust.
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The Trust's investment manager, Centennial Asset Management Corporation
(referred to in this Prospectus as the Manager) tries to reduce risks by
diversifying investments and by carefully researching investments before the
Trust buys them. The rate of the Trust's income will vary from day to day,
generally reflecting changes in overall short-term interest rates. There is no
assurance that the Trust will achieve its investment objective.
The Trust's Past Performance
The bar chart and table below show how the Trust's returns may vary over time,
by showing changes in the Trust's performance from year to year for the last ten
calendar years and its average annual total returns for the 1-, 5- and 10- year
periods. Variability of returns is one measure of the risks of investing in a
money market fund. The Trust's past investment performance does not predict how
the Trust will perform in the future.
Annual Total Returns (% as of 12/31 each year)
[See appendix to prospectus for annual total return data for bar chart.]
For the period from 1/1/99 through 9/30/99 the cumulative total return (not
annualized) was 3.35%. During the period shown in the bar chart, the highest
return (not annualized) for a calendar quarter was 2.28% (2nd Q '89) and the
lowest return (not annualized) for a calendar quarter was 0.65% (1st Q '93).
Average Annual Total Returns
for the periods ended December 31, 1 Year 5 Years 10 Years
1998
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Centennial Money Market Trust 5.09% 4.87% 5.28%
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The returns measure the performance of a hypothetical account and assume that
all dividends have been reinvested in additional shares.
- --------------------------------------------------------------------------------
The total returns are not the Trust's current yield. The Trust's yield more
closely reflects the Trust's current earnings. To obtain the Trust's
current 7-day yield, please call the Transfer Agent toll-free at
1-800-525-9310.
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Fees and Expenses of the Trust
The Trust pays a variety of expenses directly for investment management,
administration and other services. Those expenses are subtracted from the
Trust's assets to calculate the Trust's net asset value per share. All
shareholders therefore pay those expenses indirectly. The following tables are
meant to help you understand the fees and expenses you may pay if you buy and
hold shares of the Trust. The numbers below are based upon the Trust's expenses
during its fiscal year ended June 30, 1999.
SHAREHOLDER FEES. The Trust does not charge any initial sales charge to buy
shares or to reinvest dividends. There are no exchange fees or redemption fees
and no contingent deferred sales charges (unless you buy Trust shares by
exchanging Class A shares of other eligible funds that were purchased subject to
a contingent deferred sales charge, as described in "How to Sell Shares").
Annual Trust Operating Expenses (deducted from Trust assets):
(% of average daily net assets)
------------------------------------------------------------------------------
Management Fees 0.34%
------------------------------------------------------------------------------
Distribution and/or Service (12b-1) Fees 0.20%
------------------------------------------------------------------------------
Other Expenses 0.12%
------------------------------------------------------------------------------
Total Annual Operating Expenses 0.66%
------------------------------------------------------------------------------
"Other expenses" in the table include transfer agent fees, custodial fees, and
accounting and legal expenses the Trust pays.
EXAMPLE. The following example is intended to help you compare the cost of
investing in the Trust with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in shares of the Trust for the time
periods indicated and reinvest your dividends and distributions. The example
also assumes that your investment has a 5% return each year and that the Trust's
operating expenses remain the same. Your actual costs may be higher or lower,
because expenses will vary over time. Based on these assumptions your expenses
would be as follows, whether or not you redeem your investment at the end of
each period:
-----------------------------------------------------------------------------
1 year 3 years 5 years 10 years
-----------------------------------------------------------------------------
$67 $211 $368 $822
-----------------------------------------------------------------------------
About the Trust's Investments
THE TRUST'S PRINCIPAL INVESTMENT POLICIES. The Trust invests in short-term money
market securities meeting quality, maturity and diversification standards
established by its Board of Trustees as well as rules that apply to money market
funds under the Investment Company Act. The Statement of Additional Information
contains more detailed information about the Trust's investment policies and
risks.
What Does the Trust Invest In? Money market instruments are high-quality,
short-term debt instruments. They may have fixed, variable or floating
interest rates. All of the Trust's money market investments must meet the
special quality and maturity requirements set under the Investment Company
Act and the special standards set by the Board described briefly below. The
following is a brief description of the types of money market instruments
the Trust may invest in.
U.S. Government Securities. The Trust invests mainly in obligations issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities. Some are direct obligations of the U.S. Treasury, such
as Treasury bills, notes and bonds, and are supported by the full faith and
credit of the United States. Other U.S. government securities, such as
pass-through certificates issued by the Government National Mortgage
Association (Ginnie Mae), are also supported by the full faith and credit
of the U.S. government. Some government securities, agencies or
instrumentalities of the U.S. government are supported by the right of the
issuer to borrow from the U.S. Treasury, such as securities of the Federal
National Mortgage Corporation (Fannie Mae). Others may be supported only by
the credit of the instrumentality, such as obligations of the Federal Home
Loan Mortgage Corporation (Freddie Mac).
Bank Obligations. The Trust can buy time deposits, certificates of deposit and
bankers' acceptances. These obligations must be denominated in U.S.
dollars, even if issued by a foreign bank.
Commercial Paper. Commercial paper is a short-term, unsecured promissory note of
a domestic or foreign company or other financial firm. The Trust may buy
commercial paper only if it matures in nine months or less from the date of
purchase.
Corporate Debt Obligations. The Trust can invest in other short-term corporate
debt obligations, besides commercial paper including debt obligations that
either mature within twelve months of the date of purchase or that are
subject to repurchase agreements that call for delivery in twelve months or
less.
OtherMoney Market Obligations. The Trust may invest in money market obligations
other than those listed above if they are subject to repurchase agreements
or guaranteed as to their principal and interest by a corporation whose
commercial paper may be purchased by the Trust or by a domestic bank. The
bank must meet credit criteria set by the Trust's Board of Trustees.
Additionally, the Trust may buy other money market instruments that the
Manager approves under procedures adopted by the Board of Trustees. They must be
U.S. dollar-denominated short-term investments that the Manager must determine
to have minimal credit risks.
Currently, the Board has approved the purchase of dollar-denominated
obligations of foreign banks payable in the U.S. or in London, England, floating
or variable rate demand notes, asset-backed securities, and bank loan
participation agreements. Their purchase may be subject to restrictions adopted
by the Board from time to time.
What Standards Apply to the Trust's Investments? Money market instruments are
subject to credit risk, the risk that the issuer might not make timely
payments of interest on the security or repay principal when it is due.
The Trust may buy only those investments that meet standards set by the
Board of Trustees and in the Investment Company Act for money market
funds. The Trust's Board has adopted evaluation procedures for the Trust's
portfolio, and the Manager has the responsibility to implement those
procedures when selecting investments for the Trust.
In general, the Trust buys only high-quality investments that the Manager
believes present minimal credit risk at the time of purchase. "High-quality"
investments are:
o rated in one of the two highest short-term rating categories of two
national rating organizations, or
o rated by one rating organization in one of its two highest rating
categories (if only one rating organization has rated the investment),
or
o unrated investments that the Manager determines are comparable in quality
to the two highest rating categories.
The procedures also limit the amount of the Trust's assets that can be
invested in the securities of any one issuer (other than the U.S. government,
its agencies and instrumentalities), to spread the Trust's investment risks.
Some of the Trust's investment restrictions are more restrictive than the
standards that apply to all money market funds. For example, as a fundamental
policy, the Trust may not invest in any debt instrument having a maturity in
excess of one year from the date of the investment. Finally, the Trust must
maintain a dollar-weighted average portfolio maturity of not more than 90 days,
to reduce interest rate risks.
Can the Trust's Investment Objective and Policies Change? The Board of
Trustees of the Trust can change non-fundamental policies without
shareholder approval, although significant changes will be described in
amendments to this Prospectus. Fundamental policies cannot be changed
without the approval of a majority of the Trust's outstanding voting
shares. The Trust's investment objective is a fundamental policy. Some
investment restrictions that are fundamental polices are listed in the
Statement of Additional Information. An investment policy is not
fundamental unless this Prospectus or the Statement of Additional
Information says that it is.
OTHER INVESTMENT STRATEGIES. To seek its objective, the Trust can also use the
investment techniques and strategies described below. The Trust might not always
use all of these techniques and strategies. These techniques involve certain
risks. The Statement of Additional Information contains more information about
some of these practices, including limitations on their use that are designed to
reduce some of the risks.
Floating Rate/Variable Rate Notes. The Trust can purchase investments with
floating or variable interest rates. Variable rates are adjustable at
stated periodic intervals. Floating rates are adjusted automatically
according to a specified market rate or benchmark, such as the prime rate
of a bank. If the maturity of an investment is greater than one year, it
may be purchased only if it has a demand feature. That feature must permit
the Trust to recover the principal amount of the investment on not more
than thirty days' notice at any time, or at specified times not exceeding
one year from purchase.
Asset-Backed Securities. The Trust can invest in asset-backed investments. These
are fractional interests in pools of consumer loans and other trade
receivables, which are the obligations of a number of different parties.
The income from the underlying pool is passed through to investors, such
as the Trust.
These investments might be supported by a credit enhancement, such as a
letter of credit, a guarantee or a preference right. However, the credit
enhancement generally applies only to a fraction of the security's value. If the
issuer of the security has no security interest in the related collateral, there
is the risk that the Trust could lose money if the issuer defaults.
Repurchase Agreements. The Trust may enter into repurchase agreements. In a
repurchase transaction, the Trust buys a security and simultaneously sells
it to the vendor for delivery at a future date. Repurchase agreements must
be fully collateralized. However, if the vendor fails to pay the resale
price on the delivery date, the Trust may incur costs in disposing of the
collateral and may experience losses if there is any delay in its ability
to do so. The Trust will not enter into repurchase transactions that will
cause more than 10% of the Trust's net assets to be subject to repurchase
agreements having a maturity beyond seven days. There is no limit on the
amount of the Trust's net assets that may be subject to repurchase
agreements of 7 days or less.
Illiquid and Restricted Securities. Investments may be illiquid because they
have no active trading market, making it difficult to value them or
dispose of them promptly at an acceptable price. A restricted security is
one that has a contractual limit on resale or which cannot be sold
publicly until it is registered under federal securities laws. The Trust
will not invest more than 10% of its net assets in illiquid or restricted
securities. That limit does not apply to certain restricted securities
that are eligible for resale to qualified institutional purchasers. The
Trust may invest up to 25% of its net assets in restricted securities,
subject to the 10% limit on illiquid securities and restricted securities
other than those sold to qualified institutional purchasers. The Manager
monitors holdings of illiquid securities on an ongoing basis to determine
whether to sell any holdings to maintain adequate liquidity. Difficulty in
selling a security may result in a loss to the Trust or additional costs.
<PAGE>
Centennial Tax Exempt Trust
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Prospectus dated November 1, 1999
Centennial Tax Exempt Trust is a
money market mutual fund. It seeks the
maximum short-term interest income is
exempt federal income taxes that is
consistent with low capital risk and
maintaining liquidity. The Trust
invests in short-term, high-quality
"money market" instruments.
This Prospectus contains important
information about the Trust's
objective, its investment policies,
As with all mutual funds, the strategies and risks. It also
Securities and Exchange Commission has contains important information about
not approved or disapproved the Trust's how to buy and sell shares of the
securities nor has it determined that Trust and other account features.
this Prospectus is accurate or Please read this Prospectus carefully
complete. It is a criminal offense to before you invest and keep it for
represent otherwise. future reference about your account.
- --------------------------------------------------------------------------------
<PAGE>
A B O U T T H E T R U S T
The Trust's Investment Objective and Strategies
WHAT IS THE TRUST'S INVESTMENT OBJECTIVE? The Trust seeks the maximum short-term
interest income exempt from federal income taxes that is consistent with low
capital risk and the maintenance of liquidity.
WHAT DOES THE TRUST INVEST IN? The Trust is a money market fund. It invests in a
variety of high-quality money market instruments to seek income. Money market
instruments are short-term, U.S. dollar-denominated debt instruments issued by
the U.S. government, domestic and foreign corporations and financial
institutions and other entities. They include, for example, bank obligations,
repurchase agreements, commercial paper, other corporate debt obligations and
government debt obligations. To be considered "high-quality," generally they
must be rated in one of the two highest credit-quality categories for short-term
securities by nationally recognized rating services. If unrated, a security must
be determined by the Trust's investment manager to be of comparable quality to
rated securities.
The Trust normally invests 100% of its assets in municipal securities. It
will not make any investment that will reduce the portion of its total assets
that are invested in municipal securities to less than 80%. The balance of the
Trust's assets may be invested in investments the income from which may be
taxable. The Trust will not invest more than 20% of its net assets in municipal
securities the income on which may be a tax preference item that would increase
an individual investor's alternative minimum tax.
WHO IS THE TRUST DESIGNED FOR? The Trust is designed for investors who want to
earn income at current money market rates while preserving the value of their
investment, because the Trust tries to keep its share price stable at $1.00.
Income on short-term money market instruments tends to be lower than income on
longer term debt securities, so the Trust's yield will likely be lower than the
yield on longer-term fixed income funds. The Trust does not invest for the
purpose of seeking capital appreciation or gains and is not a complete
investment program.
Main Risks of Investing in the Trust
All investments carry risks to some degree. Funds that invest in debt
obligations for income may be subject to credit risks and interest rate risks.
However, the Trust's investments must meet strict standards set by its Board of
Trustees following rules for money market funds under federal law. Those
standards include requirements for maintaining high credit quality in the
Trust's portfolio, a short average portfolio maturity to reduce the effects of
changes in interest rates on the value of the Trust's securities and
diversifying the Trust's investments among issuers to reduce the effects of a
default by any one issuer on the Trust's overall portfolio and the value of the
Trust's shares.
Even so, there are risks that any of the Trust's holdings could have its
credit rating downgraded, or the issuer could default, or that interest rates
could rise sharply, causing the value of the Trust's investments (and its share
price) to fall. As a result, there is a risk that the Trust's shares could fall
below $1.00 per share. If there is a high redemption demand for the Trust's
shares that was not anticipated, portfolio securities might have to be sold
prior to their maturity at a loss. Also, there is the risk that the value of
your investment could be eroded over time by the effects of inflation, and that
poor security selection could cause the Trust to underperform other funds with
similar objectives.
- --------------------------------------------------------------------------------
An investment in the Trust is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Trust seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Trust.
- --------------------------------------------------------------------------------
The Trust's investment manager, Centennial Asset Management Corporation
(referred to in this Prospectus as the Manager) tries to reduce risks by
diversifying investments and by carefully researching investments before the
Trust buys them. The rate of the Trust's income will vary from day to day,
generally reflecting changes in overall short-term interest rates. There is no
assurance that the Trust will achieve its investment objective.
The Trust's Past Performance
The bar chart and table below show how the Trust's returns may vary over time,
by showing changes in the Trust's performance from year to year for the last ten
calendar years and average annual total returns for the 1-, 5- and 10- year
periods. Variability of returns is one measure of the risks of investing in a
money market fund. The Trust's past investment performance does not predict how
the Trust will perform in the future.
Annual Total Returns (as of 12/31 each year)
[See appendix to prospectus for annual total return data for bar chart.]
For the period from 1/1/99 through 9/30/99 the cumulative total return (not
annualized) was 1.86%. During the period shown in the bar chart, the highest
return (not annualized) for a calendar quarter was 1.55% (2nd Q '89) and the
lowest return (not annualized) for a calendar quarter was 0.44% (1st Q '94).
- --------------------------------------------------------------------------------
Average Annual Total Returns
for the periods ended December 31, 1 Year 5 Years 10 Years
1998
- --------------------------------------------------------------------------------
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Centennial Tax Exempt Trust 2.91% 2.96% 3.50%
- --------------------------------------------------------------------------------
The returns measure the performance of a hypothetical account and assume that
all dividends have been reinvested in additional shares.
- --------------------------------------------------------------------------------
The total returns are not the Trust's current yield. The Trust's yield more
closely reflects the Trust's current earnings. To obtain the Trust's current
7-day yield, please call the Transfer Agent toll-free at 1-800-525-9310.
- --------------------------------------------------------------------------------
Fees and Expenses of the Trust
The Trust pays a variety of expenses directly for investment management,
administration and other services. Those expenses are subtracted from the
Trust's assets to calculate the Trust's net asset value per share. All
shareholders therefore pay those expenses indirectly. The following tables are
meant to help you understand the fees and expenses you may pay if you buy and
hold shares of the Trust. The numbers below are based upon the Trust's expenses
during its fiscal year ended June 30, 1999.
SHAREHOLDER FEES. The Trust does not charge any initial sales charge to buy
shares or to reinvest dividends. There are no exchange fees or redemption fees
and no contingent deferred sales charges (unless you buy Trust shares by
exchanging Class A shares of other eligible funds that were purchased subject to
a contingent deferred sales charge, as described in "How to Sell Shares").
Annual Trust Operating Expenses (deducted from Trust assets):
(% of average daily net assets)
------------------------------------------------------------------------------
Management Fees 0.42%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Distribution and/or Service (12b-1) Fees 0.20%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Other Expenses 0.07%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total Annual Operating Expenses 0.69%
------------------------------------------------------------------------------
"Other expenses" in the table include transfer agent fees, custodial fees, and
accounting and legal expenses the Trust pays.
EXAMPLE. The following example is intended to help you compare the cost of
investing in the Trust with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in shares of the Trust for the time
periods indicated and reinvest your dividends and distributions. The example
also assumes that your investment has a 5% return each year and that the Trust's
operating expenses remain the same. Your actual costs may be higher or lower,
because expenses will vary over time. Based on these assumptions your expenses
would be as follows, whether or not you redeem your investment at the end of
each period:
-----------------------------------------------------------------------------
1 year 3 years 5 years 10 years
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
$70 $221 $384 $859
-----------------------------------------------------------------------------
About the Trust's Investments
THE TRUST'S PRINCIPAL INVESTMENT POLICIES. The Trust invests in short-term money
market securities meeting quality, maturity and diversification standards
established by its Board of Trustees as well as rules that apply to money market
funds under the Investment Company Act. The Statement of Additional Information
contains more detailed information about the Trust's investment policies and
risks.
What Does the Trust Invest In? Money market instruments are high-quality,
short-term debt instruments. They may have fixed, variable or floating
interest rates. All of the Trust's money market investments must meet the
special quality and maturity requirements set under the Investment Company
Act and the special standards set by the Board described briefly below.
The following is a brief description of the types of money market
instruments the Trust may invest in.
o Municipal Securities. The Trust buys municipal bonds and notes,
tax-exempt commercial paper, certificates of participation in municipal
leases and other debt obligations. These are debt obligations issued by the
governments of states, their political subdivisions (such as cities, towns
and counties), or the District of Columbia, or by their agencies,
instrumentalities and authorities, if the interest paid on the security is
not subject to federal individual income tax in the opinion of bond counsel
to the issuer. All of these types of debt obligations are referred to as
"municipal securities" in this Prospectus.
o Other Money Market Obligations. Additionally, the Trust may buy other money
market instruments that the Manager approves under procedures adopted by
the Board of Trustees. They must be U.S. dollar-denominated short-term
investments that the Manager must determine to have minimal credit risks.
What Standards Apply to the Trust's Investments? Money market instruments are
subject to credit risk, the risk that the issuer might not make timely
payments of interest on the security or repay principal when it is due.
The Trust may buy only those investments that meet standards set by the
Board of Trustees and in the Investment Company Act for money market
funds. The Trust's Board has adopted evaluation procedures for the Trust's
portfolio, and the Manager has the responsibility to implement those
procedures when selecting investments for the Trust.
In general, the Trust buys only high-quality investments that the Manager
believes present minimal credit risk at the time of purchase. "High-quality"
investments are:
o rated in one of the two highest short-term rating categories of two national
rating organizations, or
o rated by one rating organization in one of its two highest rating categories
(if only one rating organization has rated the investment), or
o unrated investments that the Manager determines are comparable in quality to
the two highest rating categories.
The procedures also limit the amount of the Trust's assets that can be
invested in the securities of any one issuer (other than the U.S. government,
its agencies and instrumentalities), to spread the Trust's investment risks. The
Trust must also maintain an average portfolio maturity of not more than 90 days,
to reduce interest rate risks. Additionally, the remaining maturity of any
single portfolio investment may not exceed 397 days.
Can the Trust's Investment Objective and Policies Change? The Board of
Trustees of the Trust can change non-fundamental policies without
shareholder approval, although significant changes will be described in
amendments to this Prospectus. Fundamental policies cannot be changed
without the approval of a majority of the Trust's outstanding voting
shares. The Trust's investment objective is a fundamental policy. Some
investment restrictions that are fundamental polices are listed in the
Statement of Additional Information. An investment policy is not
fundamental unless this Prospectus or the Statement of Additional
Information says that it is.
OTHER INVESTMENT STRATEGIES. To seek its objective, the Trust can also use the
investment techniques and strategies described below. The Trust might not always
use all of these techniques and strategies. These techniques involve certain
risks. The Statement of Additional Information contains more information about
some of these practices, including limitations on their use that are designed to
reduce some of the risks.
Floating Rate/Variable Rate Notes. The Trust can purchase investments with
floating or variable interest rates. Variable rates are adjustable at
stated periodic intervals. Floating rates are adjusted automatically
according to a specified market rate or benchmark, such as the prime rate
of a bank. If the maturity of an investment is greater than 397 days, it
may be purchased only if it has a demand feature. That feature must permit
the Trust to recover the principal amount of the investment on not more
than thirty days' notice at any time, or at specified times not exceeding
397 days from purchase.
"When-Issued" and "Delayed-Delivery" Transactions. The Trust can purchase
municipal securities on a "when-issued" basis and may purchase or sell
such securities on a "delayed- delivery" basis. These terms refer to
securities that have been created and for which a market exists, but which
are not available for immediate delivery. The Trust does not intend to
make such purchases for speculative purposes. During the period between
the purchase and settlement, no payment is made for the security and no
interest accrues to the buyer from the investment. There is a risk of loss
to the Trust if the value of the security declines prior to the settlement
date.
Municipal Lease Obligations. Municipal leases are used by state and local
government authorities to obtain funds to acquire land, equipment or
facilities. The Trust may invest in certificates of participation that
represent a proportionate interest in payments made under municipal lease
obligations. If the government stops making payments or transfers its
payment obligations to a private entity, the obligation could lose value
or become taxable. Some of these obligations might not have an active
trading market and would be subject to the Trust's limits on "illiquid"
securities described below. From time to time the Trust may invest more
than 5% of its net assets in municipal lease obligations that the Manager
has determined to be liquid under guidelines set by the Trust's Board of
Trustees.
Repurchase Agreements. The Trust may enter into repurchase agreements. In a
repurchase transaction, the Trust buys a security and simultaneously sells
it to the vendor for delivery at a future date. Repurchase agreements must
be fully collateralized. However, if the vendor fails to pay the resale
price on the delivery date, the Trust may incur costs in disposing of the
collateral and may experience losses if there is any delay in its ability
to do so. The Trust ordinarily will not enter into repurchase transactions
that will cause more than 10% of the Trusts net assets to be subject to
repurchase agreements having a maturity beyond seven days. However, when
the Trust assumes a temporary defensive position, there is no limit on the
amount of the Trust's assets that may be subject to repurchase agreements
having a maturity of seven days or less. Income earned on repurchase
transactions is not tax-exempt. The Trust normally will limit its
investments in repurchase transactions to 20% of its total assets.
Illiquid and Restricted Securities. Investments may be illiquid because they
have no active trading market, making it difficult to value them or
dispose of them promptly at an acceptable price. A restricted security is
one that has a contractual limit on resale or which cannot be sold
publicly until it is registered under federal securities laws. The Trust
will not invest more than 10% of its net assets in illiquid or restricted
securities. That limit does not apply to certain restricted securities
that are eligible for resale to qualified institutional purchasers. The
Manager monitors holdings of illiquid securities on an ongoing basis to
determine whether to sell any holdings to maintain adequate liquidity.
Difficulty in selling a security may result in a loss to the Trust or
additional costs.
DemandFeatures and Guarantees. The Trust may invest a significant percentage of
its assets in municipal securities that have demand features, guarantees
or similar credit and liquidity enhancements. A demand feature permits the
holder of the security to sell the security within a specified period of
time at a stated price and entitles the holder of the security to receive
an amount equal to the approximate amortized cost of the security plus
accrued interest. These securities are described in the Statement of
Additional Information.
Temporary Investments. In times of unstable or adverse market or economic
conditions, the Trust can invest up to 100% of its assets in temporary
defensive investments. These temporary investments can include:
o obligations issued or guaranteed by the U.S. government or its agencies
or instrumentalities,
o bankers' acceptances; taxable commercial paper rated in the highest
category by a Rating Organization,
o short-term taxable debt obligations rated in one of the two highest
rating categories of a Rating Organization.
o certificates of deposit of domestic banks, and
o repurchase agreements.
To the extent the Trust assumes a temporary defensive position, a
significant portion of the Trust's distributions may be taxable.
<PAGE>
Centennial Government Trust
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Prospectus dated November 1, 1999
Centennial Government Trust is a
money market mutual fund. It seeks the
a high level of current income that is
consistent with preserving capital and
maintaining liquidity. The Trust
invests in short-term, high-quality
"money market" instruments.
This Prospectus contains important
information about the Trust's
objective, its investment policies,
As with all mutual funds, the strategies and risks. It also
Securities and Exchange Commission has contains important information about
not approved or disapproved the Trust's how to buy and sell shares of the
securities nor has it determined that Trust and other account features.
this Prospectus is accurate or Please read this Prospectus carefully
complete. It is a criminal offense to before you invest and keep it for
represent otherwise. future reference about your account.
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<PAGE>
A B O U T T H E T R U S T
The Trust's Investment Objective and Strategies
WHAT IS THE TRUST'S INVESTMENT OBJECTIVE? The Trust seeks a high level of
current income that is consistent with the preservation of capital and the
maintenance of liquidity.
WHAT DOES THE TRUST INVEST IN? The Trust is a money market fund. It invests in a
variety of high-quality money market instruments to seek income. The Trust
invests principally in short-term, U.S. dollar-denominated debt instruments
issued by the U.S. government, its agencies and instrumentalities. To be
considered "high-quality," generally investments must be rated in one of the two
highest credit-quality categories for short-term securities by nationally
recognized rating services. If unrated, a security must be determined by the
Trust's investment manager to be of comparable quality to rated securities.
WHO IS THE TRUST DESIGNED FOR? The Trust is designed for investors who want to
earn income at current money market rates while preserving the value of their
investment, because the Trust tries to keep its share price stable at $1.00.
Income on short-term money market instruments tends to be lower than income on
longer term debt securities, so the Trust's yield will likely be lower than the
yield on longer-term fixed income funds. The Trust does not invest for the
purpose of seeking capital appreciation or gains and is not a complete
investment program.
Main Risks of Investing in the Trust
All investments carry risks to some degree. Funds that invest in debt
obligations for income may be subject to credit risks and interest rate risks.
However, the Trust's investments must meet strict standards set by its Board of
Trustees following rules for money market funds under federal law. Those
standards include requirements for maintaining high credit quality in the
Trust's portfolio, a short average portfolio maturity to reduce the effects of
changes in interest rates on the value of the Trust's securities and
diversifying the Trust's investments among issuers to reduce the effects of a
default by any one issuer on the Trust's overall portfolio and the value of the
Trust's shares.
Even so, there are risks that any of the Trust's holdings could have its
credit rating downgraded, or the issuer could default, or that interest rates
could rise sharply, causing the value of the Trust's investments (and its share
price) to fall. As a result, there is a risk that the Trust's shares could fall
below $1.00 per share. If there is a high redemption demand for the Trust's
shares that was not anticipated, portfolio securities might have to be sold
prior to their maturity at a loss. Also, there is the risk that the value of
your investment could be eroded over time by the effects of inflation, and that
poor security selection could cause the Trust to underperform other funds with
similar objectives.
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An investment in the Trust is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Trust seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Trust.
- --------------------------------------------------------------------------------
The Trust's investment manager, Centennial Asset Management Corporation
(referred to in this Prospectus as the Manager) tries to reduce risks by
diversifying investments and by carefully researching investments before the
Trust buys them. The rate of the Trust's income will vary from day to day,
generally reflecting changes in overall short-term interest rates. There is no
assurance that the Trust will achieve its investment objective.
The Trust's Past Performance
The bar chart and table below show how the Trust's returns may vary over time,
by showing changes in the Trust's performance from year to year for the last ten
calendar years and average annual total returns for the 1-, 5- and 10- year
periods. Variability of returns is one measure of the risks of investing in a
money market fund. The Trust's past investment performance does not predict how
the Trust will perform in the future.
Annual Total Returns (as of 12/31 each year)
[See appendix to prospectus for annual total return data for bar chart.]
For the period from 1/1/99 through 9/30/99 the cumulative total return (not
annualized) was 3.17%. During the period shown in the bar chart, the highest
return (not annualized) for a calendar quarter was 2.19%% (2nd Q '89) and the
lowest return (not annualized) for a calendar quarter was 0.63% (1st Q '93).
- --------------------------------------------------------------------------------
Average Annual Total Returns
for the periods ended December 31, 1 Year 5 Years 10 Years
1998
- --------------------------------------------------------------------------------
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Centennial Government Trust 4.84% 4.68% 5.15%
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The returns measure the performance of a hypothetical account and assume that
all dividends have been reinvested in additional shares.
- --------------------------------------------------------------------------------
The total returns are not the Trust's current yield. The Trust's yield more
closely reflects the Trust's current earnings. To obtain the Trust's current
7-day yield, please call the Transfer Agent toll-free at 1-800-525-9310.
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Fees and Expenses of the Trust
The Trust pays a variety of expenses directly for investment management,
administration and other services. Those expenses are subtracted from the
Trust's assets to calculate the Trust's net asset value per share. All
shareholders therefore pay those expenses indirectly. The following tables are
meant to help you understand the fees and expenses you may pay if you buy and
hold shares of the Trust. The numbers below are based upon the Trust's expenses
during its fiscal year ended June 30, 1999.
SHAREHOLDER FEES. The Trust does not charge any initial sales charge to buy
shares or to reinvest dividends. There are no exchange fees or redemption fees
and no contingent deferred sales charges (unless you buy Trust shares by
exchanging Class A shares of other eligible funds that were purchased subject to
a contingent deferred sales charge, as described in "How to Sell Shares").
Annual Trust Operating Expenses (deducted from Trust assets):
(% of average daily net assets)
------------------------------------------------------------------------------
Management Fees 0.45%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Distribution and/or Service (12b-1) Fees 0.20%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Other Expenses 0.09%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total Annual Operating Expenses 0.74%
------------------------------------------------------------------------------
"Other expenses" in the table include transfer agent fees, custodial fees, and
accounting and legal expenses the Trust pays.
EXAMPLE. The following example is intended to help you compare the cost of
investing in the Trust with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in shares of the Trust for the time
periods indicated and reinvest your dividends and distributions. The example
also assumes that your investment has a 5% return each year and that the Trust's
operating expenses remain the same. Your actual costs may be higher or lower,
because expenses will vary over time. Based on these assumptions your expenses
would be as follows, whether or not you redeem your investment at the end of
each period:
-----------------------------------------------------------------------------
1 year 3 years 5 years 10 years
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
$76 $237 $411 $918
-----------------------------------------------------------------------------
About the Trust's Investments
THE TRUST'S PRINCIPAL INVESTMENT POLICIES. The Trust invests in short-term money
market securities meeting quality, maturity and diversification standards
established by its Board of Trustees as well as rules that apply to money market
funds under the Investment Company Act. The Statement of Additional Information
contains more detailed information about the Trust's investment policies and
risks.
What Does the Trust Invest In? Money market instruments are high-quality,
short-term debt instruments. They may have fixed, variable or floating
interest rates. All of the Trust's money market investments must meet the
special quality and maturity requirements set under the Investment Company
Act and the special standards set by the Board described briefly below. The
following is a brief description of the types of money market instruments
the Trust may invest in.
o U.S. Government Securities. The Trust invests mainly in obligations issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities. Some are direct obligations of the U.S. Treasury, such
as Treasury bills, notes and bonds, and are supported by the full faith and
credit of the United States. Other U.S. government securities, such as
pass-through certificates issued by the Government National Mortgage
Association (Ginnie Mae), are also supported by the full faith and credit
of the U.S. government. Some government securities, agencies or
instrumentalities of the U.S. government are supported by the right of the
issuer to borrow from the U.S. Treasury, such as securities of the Federal
National Mortgage Corporation (Fannie Mae). Others may be supported only by
the credit of the instrumentality, such as obligations of the Federal Home
Loan Mortgage Corporation (Freddie Mac).
o Other Money Market Obligations. The Trust may invest in variable rate
notes, variable rate master demand notes or in master demand notes. The
Trust may also purchase other debt obligations that mature within twelve
months from the date of purchase. It may purchase debt obligations that
have been called for redemption by the issuer if the redemption will occur
within one year.
Additionally, the Trust may buy other money market instruments that the
Manager approves under procedures adopted by the Board of Trustees. They must be
U.S. dollar-denominated short-term investments that the Manager must determine
to have minimal credit risks.
What Standards Apply to the Trust's Investments? Money market instruments are
subject to credit risk, the risk that the issuer might not make timely
payments of interest on the security or repay principal when it is due.
The Trust may buy only those investments that meet standards set by the
Board of Trustees and in the Investment Company Act for money market
funds. The Trust's Board has adopted evaluation procedures for the Trust's
portfolio, and the Manager has the responsibility to implement those
procedures when selecting investments for the Trust.
In general, the Trust buys only high-quality investments that the Manager
believes present minimal credit risk at the time of purchase. "High-quality"
investments are:
o rated in one of the two highest short-term rating categories of two national
rating organizations, or
o rated by one rating organization in one of its two highest rating categories
(if only one rating organization has rated the investment), or
o unrated investments that the Manager determines are comparable in quality to
the two highest rating categories.
The procedures also limit the amount of the Trust's assets that can be invested
in the securities of any one issuer (other than the U.S. government, its
agencies and instrumentalities), to spread the Trust's investment risks.
Under the procedures the Trust can invest without limit in U.S. government
securities because of their limited investment risks. Some of the Trust's
investment restrictions are more restrictive than the standards that apply
to all money market funds. For example, as a fundamental policy, the Trust
may not invest in any debt instrument having a maturity in excess of one
year from the date of the investment. Some of the Trust's investment
restrictions are more restrictive than the standards that apply to all
money market funds. For example, as a fundamental policy, the Trust may not
invest in any debt instrument having a maturity in excess of one year from
the date of the investment. Finally, the Trust must maintain a
dollar-weighted average portfolio maturity of not more than 90 days, to
reduce interest rate risks.
Can the Trust's Investment Objective and Policies Change? The Board of
Trustees of the Trust can change non-fundamental policies without
shareholder approval, although significant changes will be described in
amendments to this Prospectus. Fundamental policies cannot be changed
without the approval of a majority of the Trust's outstanding voting
shares. The Trust's investment objective is a fundamental policy. Some
investment restrictions that are fundamental polices are listed in the
Statement of Additional Information. An investment policy is not
fundamental unless this Prospectus or the Statement of Additional
Information says that it is.
OTHER INVESTMENT STRATEGIES. To seek its objective, the Trust can also use the
investment techniques and strategies described below. The Trust might not always
use all of these techniques and strategies. These techniques involve certain
risks. The Statement of Additional Information contains more information about
some of these practices, including limitations on their use that are designed to
reduce some of the risks.
Floating Rate/Variable Rate Notes. The Trust can purchase investments with
floating or variable interest rates. Variable rates are adjustable at
stated periodic intervals. Floating rates are adjusted automatically
according to a specified market rate or benchmark, such as the prime rate
of a bank. If the maturity of an investment is greater than one year, it
may be purchased only if it has a demand feature. That feature must permit
the Trust to recover the principal amount of the investment on not more
than thirty days' notice at any time, or at specified times not exceeding
one year from purchase.
Repurchase Agreements. The Trust may enter into repurchase agreements. In a
repurchase transaction, the Trust buys a security and simultaneously sells
it to the vendor for delivery at a future date. Repurchase agreements must
be fully collateralized. However, if the vendor fails to pay the resale
price on the delivery date, the Trust may incur costs in disposing of the
collateral and may experience losses if there is any delay in its ability
to do so. The Trust will not enter into repurchase transactions that will
cause more than 10% of the Trusts net assets to be subject to repurchase
agreements having a maturity beyond seven days. There is no limit on the
amount of the Trust's net assets that may be subject to repurchase
agreements maturing in seven days or less.
Illiquid and Restricted Securities. Investments may be illiquid because they
have no active trading market, making it difficult to value them or
dispose of them promptly at an acceptable price. A restricted security is
one that has a contractual limit on resale or which cannot be sold
publicly until it is registered under federal securities laws. The Trust
will not invest more than 10% of its net assets in illiquid or restricted
securities. That limit does not apply to certain restricted securities
that are eligible for resale to qualified institutional purchasers. The
Manager monitors holdings of illiquid securities on an ongoing basis to
determine whether to sell any holdings to maintain adequate liquidity.
Difficulty in selling a security may result in a loss to the Trust or
additional costs.
I N V E S T I N G I N T H E T R U S T
The information below applies to Centennial Money Market Trust, Centennial Tax
Exempt Trust and Centennial Government Trust. Each is referred to as a "Trust"
and they are collectively referred to as the "Trusts". Unless otherwise
indicated, this information applies to each Trust.
How the Trusts are Managed
THE MANAGER. The investment adviser for the Trusts is the Manager, Centennial
Asset Management Corporation. The Manager chooses each of the Trust's
investments and handles its day-to-day business. The Manager carries out its
duties subject to the policies established by the Board of Trustees, under an
Investment Advisory Agreement with each Trust that states the Manager's
responsibilities. Each Agreement sets the fees paid by the Trust to the Manager
and describes the expenses that the Trust is responsible to pay to conduct its
business.
The Manager, a wholly-owned subsidiary of OppenheimerFunds, Inc., has
operated as an investment adviser since 1978. The Manager (including affiliates)
currently manages investment companies and other assets of more than $110
billion as of September 30, 1999, and with more than 5 million shareholder
accounts. The Manager is located at 6803 South Tucson Way, Englewood, Colorado
80112.
Portfolio Managers. The portfolio managers of the Trust are the persons
principally responsible for the day-to-day management of the Trust's
portfolio. The portfolio managers of Centennial Money Market Trust and
Centennial Government Trust are Carol E.Wolf (since June 1990) and Arthur
J. Zimmer (since January 1991). Ms. Wolf is a Vice President and Mr. Zimmer
a Senior Vice President of OppenheimerFunds, Inc., and each is a Vice
President of the Manager and an officer and portfolio manager of other
funds for which the Manager or an affiliate serves as investment adviser.
The portfolio manager of Centennial Tax Exempt Trust is Michael Carbuto
(since October 1987). Mr. Carbuto is a Vice President of the Manager and of
OppenheimerFunds, Inc. and is an officer and portfolio manager of other
funds for which the Manager serves as investment adviser.
Advisory Fees. Under each Investment Advisory Agreement, a Trust pays the
Manager an advisory fee at an annual rate that declines on additional
assets as the Trust grows. That fee is computed on the average annual net
assets of the respective Trust as of the close of each business day.
o Centennial Money Market Trust. The annual management fee rates are:
0.500% of the first $250 million of the Trust's net assets; 0.475% of the
next $250 million; 0.450% of the next $250 million; 0.425% of the next $250
million; 0.400% of the next $250 million; 0.375% of the next $250 million;
0.350% of the next $500 million; and 0.325% of net assets in excess of $2
billion. In the Agreement, the Manager guarantees that the Trust's total
expenses in any fiscal year, exclusive of taxes, interest and brokerage
commissions, and extraordinary expenses such as litigation costs, shall not
exceed the lesser of (1) 1.5% of the average annual net assets of the Trust
up to $30 million and 1% of its average annual net assets in excess of $30
million; or (2) 25% of total annual investment income of the Trust.
Centennial Money Market Trust's management fee for its fiscal year ended
June 30, 1999 was 0.34% of the Trust's average annual net assets.
o Centennial Government Trust. The annual management fee are: 0.500% of the
first $250 million of the Trust's net assets; 0.475% of the next $250
million; 0.450% of the next $250 million; 0.425% of the next $250 million;
and 0.400% of the next $250 million; 0.375% of the next $250 million and
0.350% of net assets in excess of $1.5 billion. The Manager has made the
same guarantee to the Trust regarding expenses as described above for
Centennial Money Market Trust. The Trust's management fee for its fiscal
year ended June 30, 1999 was 0.45% of the Trust's average annual net
assets.
o Centennial Tax Exempt Trust. The annual management fee rates applicable
to the Trust are as follows: 0.500% of the first $250 million of the
Trust's net assets; 0.475% of the next $250 million; 0.450% of the next
$250 million; 0.425% of the next $250 million; 0.400% of the next $250
million; 0.375% of the next $250 million; 0.350% of the next $500 million
and 0.325% of net assets in excess of $2 billion. Under the Agreement, when
the value of the Trust's net assets is less than $1.5 billion, the annual
fee payable to the Manager shall be reduced by $100,000 based on average
net assets computed daily and paid monthly at the annual rates. However,
the annual fee cannot be less than $0. The Trust's management fee for its
fiscal year ended June 30, 1999 was 0.42% of the Trust's average annual net
assets.
YEAR 2000 ISSUES. Because many computer software systems in use today cannot
distinguish the year 2000 from the year 1900, the markets for securities in
which the Trust invests could be detrimentally affected by computer failures
beginning January 1, 2000. Failure of computer systems used for securities
trading could result in settlement and liquidity problems for the Trust and
other investors. That failure could have a negative impact on the handling of
securities trades, pricing and accounting services. Data processing errors by
government issuers of securities could result in economic uncertainties. Issuers
might incur substantial costs in attempting to prevent or fix such errors, all
of which could have a negative effect on the Trust's investments and returns.
The Manager, the Distributor and the Transfer Agent have been working on
necessary changes to their computer systems to deal with the year 2000 and
expect that their systems will be adapted in time for that event, although there
cannot be assurance of success. Additionally, the services they provide depend
on the interaction of their computer systems with those of brokers, information
services, the Trust's custodian bank and other parties. Therefore, any failure
of the computer systems of those parties to deal with the year 2000 might also
have a negative effect on the services they provide to the Trust. The extent of
that risk cannot be ascertained at this time.
How to Buy Shares
HOW ARE SHARE PRICES DETERMINED? Shares of each Trust are sold at their offering
price, which is the net asset value per share without any sales charge. The net
asset value per share will normally remain fixed at $1.00 per share. However,
there is no guarantee that a Trust will be able to maintain a stable net asset
value of $1.00 per share.
The offering price that applies to a purchase order is based on the next
calculation of the net asset value per share that is made after the
Sub-Distributor (OppenheimerFunds Distributor, Inc. is the Sub-Distributor for
each Trust) receives the purchase order at its offices in Denver, Colorado, or
after any agent appointed by the Sub-Distributor receives the order and sends it
to the Sub-Distributor as described below.
How is a Trust's Net Asset Value Determined? The net asset value of shares of
each Trust is determined twice each day, at 12:00 Noon and at 4:00 P.M.,
on each day The New York Stock Exchange is open for trading (referred to
in this Prospectus as a "regular business day"). All references to time in
this Prospectus mean "New York time."
The net asset value per share is determined by dividing the value of a
Trust's net assets by the number of shares that are outstanding. Under a policy
adopted by the Board of Trustees of the Trusts, each Trust uses the amortized
cost method to value its securities to determine net asset value.
The shares of each Trust offered by this Prospectus are considered to be
Class A shares for the purposes of exchanging them or reinvesting distributions
among other eligible funds that offer more than one class of shares.
IS THERE A MINIMUM INVESTMENT? There is a minimum initial investment described
below depending on how you buy and pay for your shares. You can make additional
investments at any time with as little as $25. The minimum investment
requirements do not apply to reinvesting distributions from the Trust or other
eligible funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer Agent) or
reinvesting distributions from unit investment trusts that have made
arrangements with the Distributor.
HOW ARE SHARES PURCHASED? You can buy shares in one of several ways:
BuyingShares Through a Dealer's Automatic Purchase and Redemption Program. You
can buy shares of a Trust through a broker-dealer that has a sales
agreement with the Trust's Sub-Distributor that allows shares to be
purchased through the dealer's Automatic Purchase and Redemption Program.
Shares of each Trust are sold mainly to customers of participating dealers
that offer the Trusts' shares under these special purchase programs. If
you participate in an Automatic Purchase and Redemption Program
established by your dealer, your dealer buys shares of the Trust for your
account with the dealer. Program participants should also read the
description of the program provided by their dealer.
Buying Shares Through Your Dealer. If you do not participate in an Automatic
Purchase and Redemption Program, you may buy shares of a Trust through any
broker-dealer that has a sales agreement with the Sub-Distributor. Your
dealer will place your order with the Sub-Distributor on your behalf.
Buying Shares Directly Through the Sub-Distributor. You can also purchase shares
directly through the Sub-Distributor. Shareholders who make purchases
directly and hold shares in their own names are referred to as "direct
shareholders" in this Prospectus.
The Sub-Distributor may appoint servicing agents to accept purchase (and
redemption) orders, including broker-dealers that have established Automatic
Purchase and Redemption Programs. The Sub-Distributor, in its sole discretion,
may reject any purchase order for shares of a Trust.
AUTOMATIC PURCHASE AND REDEMPTION PROGRAMS? If you buy shares of a Trust through
your broker-dealer's Automatic Purchase and Redemption Program, your
broker-dealer will buy your shares for your Program Account and will hold your
shares in your broker-dealer's name. These purchases will be made under the
procedures described in "Guaranteed Payment" below. Your Automatic Purchase and
Redemption Program Account may have minimum investment requirements established
by your broker-dealer. You should direct all questions about your Automatic
Purchase and Redemption Program to your broker-dealer, because the Trusts'
transfer agent does not have access to information about your account under that
Program.
Guaranteed Payment Procedures. Some broker-dealers may have arrangements with
the Sub-Distributor to enable them to place purchase orders for shares of
a Trust and to guarantee that the Trust's custodian bank will receive
Federal Funds to pay for the shares prior to specified times.
Broker-dealers whose clients participate in Automatic Purchase and
Redemption Programs may use these guaranteed payment procedures to pay for
purchases of shares of a Trust.
o If the Distributor receives a purchase order before 12:00 Noon on a
regular business day with the broker-dealer's guarantee that the Trust's
custodian bank will receive payment for those shares in Federal Funds by
2:00 P.M. on that same day, the order will be effected at the net asset
value determined at 12:00 Noon that day. Distributions will begin to
accrue on the shares on that day if the Federal Funds are received by the
required time.
o If the Distributor receives a purchase order after 12:00 Noon on a regular
business day with the broker-dealer's guarantee that the Trust's custodian
bank will receive payment for those shares in Federal Funds by 2:00 P.M.
on that same day, the order will be effected at the net asset value
determined at 4:00 P.M. that day. Distributions will begin to accrue on
the shares on that day if the Federal Funds are received by the required
time.
o If the Distributor receives a purchase order between 12:00 Noon and 4:00
P.M. on a regular business day with the broker-dealer's guarantee that the
Trust's custodian bank will receive payment for those shares in Federal
Funds by 4:00 P.M. the next regular business day, the order will be
effected at the net asset value determined at 4:00 P.M. on the day the
order is received and distributions will begin to accrue on the shares
purchased on the next regular business day if the Federal Funds are
received by the required time.
HOW CAN DIRECT SHAREHOLDERS BUY SHARES? Direct shareholders may buy shares of a
Trust by completing a Centennial Funds New Account Application (enclosed with
this Prospectus) and sending it to the Sub-Distributor, OppenheimerFunds
Distributor, Inc., P.O. Box 5143, Denver, Colorado 80217. Payment must be made
by check or by Federal Funds wire as described below. If you don't list a dealer
on the application, OppenheimerFunds Distributor, Inc., the Sub-Distributor,
will act as your agent in buying the shares. However, we recommend that you
discuss your investment with a financial adviser before you make a purchase to
be sure that the Trust is appropriate for you.
Each Trust intends to be as fully invested as possible to maximize its
yield. Therefore, newly-purchased shares normally will begin to accrue
distributions after the Sub-Distributor or its agent accepts your purchase
order, starting on the business day after the Trust receives Federal Funds from
the purchase payment.
Payment by Check. Direct shareholders may pay for purchases of shares of a Trust
by check. Send your check, payable to "OppenheimerFunds Distributor,
Inc.," along with your Application to the address listed above. For
initial purchases, your check should be payable in U.S. dollars and drawn
on a U.S. bank so that distributions will begin to accrue on the next
regular business day after the Distributor accepts your purchase order. If
your check is not drawn on a U.S. bank and is not payable in U.S. dollars,
the shares will not be purchased until the Distributor is able to convert
the purchase payment to Federal Funds. In that case distributions will
begin to accrue on the purchased shares on the next regular business day
after the purchase is made. The minimum initial investment for direct
shareholders by check is $500.
Payment by Federal Funds Wire. Direct shareholders may pay for purchases of
shares of a Trust by Federal Funds wire. You must also forward your
Application to the Sub-Distributor's address listed above. Before sending
a wire, call the Sub-Distributor's Wire Department at 1-800-525-9310
(toll-free from within the U.S.) or 303-768-3200 (from outside the U.S.)
to notify the Sub-Distributor of the wire, and to receive further
instructions.
Distributions will begin to accrue on the purchased shares on the purchase
date that is a regular business day if the Federal Funds from your wire and the
Application are received by the Sub-Distributor and accepted by 12:00 Noon. If
the Distributor receives the Federal Funds from your wire and accepts the
purchase order between 12:00 Noon and 4:00 P.M on the purchase date,
distributions will begin to accrue on the shares on the next regular business
day. The minimum investment by Federal Funds Wire is $2,500.
Buying Shares Through Automatic Investment Plans. Direct shareholders can
purchase shares of a Trust automatically each month by authorizing the
Trust's Transfer Agent to debit your account at a U.S. domestic bank or
other financial institution. Details are in the Automatic Investment Plan
Application and the Statement of Additional Information. The minimum
monthly purchase is $25.
Service (12b-1) Plans. Each Trust has adopted a service plan. It reimburses the
Distributor for a portion of its costs incurred for services provided to
accounts that hold shares of the Trust. Reimbursement is made quarterly at
an annual rate of up to 0.20% of the average annual net assets of the
Trust. The Distributor currently uses all of those fees to pay dealers,
brokers, banks and other financial institutions quarterly for providing
personal services and maintenance of accounts of their customers that hold
shares of the Trust.
Retirement Plans. Direct shareholders may buy shares of a Trust for a retirement
plan account. If you participate in a plan sponsored by your employer, the
plan trustee or administrator must buy the shares for your plan account.
The Sub-Distributor also offers a number of different retirement plans
that can be used by individuals and employers:
o Individual Retirement Accounts (IRAs), including regular IRAs, Roth IRAs,
rollover IRAs and Education IRAs.
o SEP-IRAs, which are Simplified Employee Pensions Plan IRAs for small
business owners or self-employed individuals.
o 403(b)(7) Custodial Plans, that are tax deferred plans for employees of
eligible tax-exempt organizations, such as schools, hospitals and
charitable organizations.
o 401(k) Plans, which are special retirement plans for businesses.
o Pension and Profit-Sharing Plans, designed for businesses and
self-employed individuals.
Please call the Sub-Distributor for retirement plan documents, which
include applications and important plan information.
How to Sell Shares
You can sell (redeem) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated after your order
is received in proper form (which means that it must comply with the procedures
described below) and is accepted by the Transfer Agent.
HOW CAN PROGRAM PARTICIPANTS SELL SHARES? If you participate in an Automatic
Purchase and Redemption Program sponsored by your broker-dealer, you must redeem
shares held in your Program Account by contacting your broker-dealer firm, or
you can redeem shares by writing checks as described below. You should not
contact the Trust or its Transfer Agent directly to redeem shares held in your
Program Account. You may also arrange (but only through your broker-dealer) to
have the proceeds of redeemed Trust shares sent by Federal Funds wire, as
described below in "Sending Redemption Proceeds by Wire."
HOW CAN DIRECT SHAREHOLDERS REDEEM SHARES? Direct shareholders can redeem their
shares by writing a letter to the Transfer Agent, Shareholder Services, Inc., by
using checkwriting privileges, or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis. If you have questions
about any of these procedures, and especially if you are redeeming shares in a
special situation, such as due to the death of the owner or from a retirement
plan account, please call the Transfer Agent for assistance first, at
1-800-525-9310.
Certain Requests Require a Signature Guarantee. To protect you and the Trust
from fraud, the following redemption requests for accounts of direct
shareholders must be in writing and must include a signature guarantee
(although there may be other situations that also require a signature
guarantee):
o You wish to redeem $100,000 or more and receive a check
o The redemption check is not payable to all shareholders listed on the
account statement
o The redemption check is not sent to the address of record on your account
statement
o Shares are being transferred to an account with a different owner or
name
o Shares are being redeemed by someone (such as an Executor) other than
the owners listed in the account registration
Where Can Direct Shareholders Have Their Signatures Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of financial
institutions, including:
o a U.S. bank, trust company, credit union or savings association,
o a foreign bank that has a U.S. correspondent bank,
o a U.S. registered dealer or broker in securities, municipal securities or
government securities, or
o a U.S. national securities exchange, a registered securities association
or a clearing agency.
If you are signing on behalf of a corporation, partnership or other
business or as a fiduciary, you must also include your title in the signature.
How Can Direct Shareholders Sell Shares by Mail? Write a letter to the Transfer
Agent that includes:
o Your name
o The Trust's name
o Your account number (from your account statement)
o The dollar amount or number of shares to be redeemed
o Any special payment instructions
o Any share certificates for the shares you are selling
o The signatures of all registered owners exactly as listed in the account
statement, and
o Any special documents requested by the Transfer Agent to assure proper
authorization of the person asking to sell the shares (such as Letters
Testamentary of an Executor).
- --------------------------------------------------------------------------------
- ---------------------------------------- ---------------------------------------
Use the following address for Send courier or express mail
requests to: requests by mail:
Shareholder Services, Inc. Shareholder Services, Inc.
P.O. Box 5143 10200 E. Girard Avenue, Building D
Denver, Colorado 80217-5270 Denver, Colorado 80231
- -------------------------------------- --------------------------------------
How Can Direct Shareholders Sell Shares by Telephone? Direct shareholders and
their dealer representative of record may also sell shares by telephone.
To enable you to receive the redemption price on a regular business day,
the Transfer Agent must receive the request by 4:00 P.M. on that day. You
may not redeem shares held under a share certificate or in a retirement
account by telephone. To redeem shares through a service representative,
call 1-800-525-9310. The check for proceeds of telephone redemptions will
be payable to the shareholder(s) of record and will be sent to the address
of record for the account. Up to $100,000 may be redeemed by telephone in
any 7-day period. Telephone redemptions are not available within 30 days
of changing the address on an account.
Retirement Plan Accounts. There are special procedures to sell shares held in a
retirement plan account. Call the Transfer Agent for a distribution
request form. Special income tax withholding requirements apply to
distributions from retirement plans. You must submit a withholding form
with your redemption request to avoid delay in getting your money and if
you do not want tax withheld. If your employer holds your retirement plan
account for you in the name of the plan, you must ask the plan trustee or
administrator to request the sale of the Trust shares in your plan
account.
Sending Redemption Proceeds By Wire. While the Transfer Agent normally sends
direct shareholders their money by check, you can arrange to have the
proceeds of the shares you sell sent by Federal Funds wire to a bank
account you designate. It must be a commercial bank that is a member of
the Federal Reserve wire system. The minimum redemption you can have sent
by wire is $2,500. There is a $10 fee for each wire. To find out how to
set up this feature on an account or to arrange a wire, direct
shareholders should call the Transfer Agent at 1-800-525-9310. If you hold
your shares through your dealer's Automatic Purchase and Redemption
Program, you must contact your dealer to arrange a Federal Funds wire.
Can Direct Shareholders Submit Requests by Fax? Direct shareholders may send
requests for certain types of account transactions to the Transfer Agent
by fax (telecopier). Please call 1-800-525-9310 for information about
which transactions may be handled this way. Transaction requests submitted
by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
HOW DO I WRITE CHECKS AGAINST MY ACCOUNT? Automatic Purchase and Redemption
Program participants may write checks against an account held under their
Program, but must arrange for checkwriting privileges through their dealers.
Direct shareholders may write checks against their account by requesting that
privilege on the account Application or by contacting the Transfer Agent for
signature cards. They must be signed (with a signature guarantee) by all owners
of the account and returned to the Transfer Agent so that checks can be sent to
you to use. Shareholders with joint accounts can elect in writing to have checks
paid over the signature of one owner.
o Checks can be written to the order of whomever you wish, but may not be
cashed at the bank the checks are payable through or the Trust's custodian
bank
o Checkwriting privileges are not available for accounts holding shares that
are subject to a contingent deferred sales charge.
o Checks must be written for at least $250.
o Checks cannot be paid if they are written for more than your account value.
o You may not write a check that would require the redemption of shares that
were purchased by check or Automatic Investment Plan payments within the
prior 10 days.
o Don't use your checks if you changed your account number, until you
receive new checks.
WILL I PAY A SALES CHARGE WHEN I SELL MY SHARES? The Trust does not charge a fee
to redeem shares of a Trust that were bought directly or by reinvesting
distributions from that Trust or another Centennial Trust or eligible fund.
Generally, there is no fee to redeem shares of a Trust bought by exchange of
shares of another Centennial Trust or eligible fund. However,
o if you acquired shares of a Trust by exchanging Class A shares of another
eligible fund that you bought subject to the Class A contingent deferred
sales charge, and
o those shares are still subject to the Class A contingent deferred sales
charge when you exchange them into the Trust, then
o you will pay the contingent deferred sales charge if you redeem those
shares from the Trust within 18 months of the purchase date of the shares
of the fund you exchanged.
How to Exchange Shares
Shares of a Trust can be exchanged for shares of certain other Centennial Trusts
or other eligible funds, depending on whether you own your shares through your
dealer's Automatic Purchase and Redemption Program or as a direct shareholder.
HOW CAN PROGRAM PARTICIPANTS EXCHANGE SHARES? If you participate in an Automatic
Purchase and Redemption Program sponsored by your broker-dealer, you may
exchange shares held in your Program Account for shares of Centennial Money
Market Trust, Centennial Government Trust, Centennial Tax Exempt Trust,
Centennial California Tax Exempt Trust and Centennial New York Tax Exempt Trust
(referred to in this Prospectus as the "Centennial Trusts"), if available for
sale in your state of residence, by contacting your broker- dealer and obtaining
a Prospectus of the selected Centennial Trust.
HOW CAN DIRECT SHAREHOLDERS EXCHANGE SHARES? Direct shareholders can exchange
shares of a Trust for Class A shares of certain eligible funds listed in the
Statement of Additional Information. To exchange shares, you must meet several
conditions:
o Shares of the fund selected for exchange must be available for sale in
your state of residence.
o The prospectuses of the Trust and the fund whose shares you want to buy
must offer the exchange privilege.
o You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them. After the account is open 7
days, you can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund you purchase
by exchange.
o Before exchanging into a fund, you must obtain and read its prospectus.
Shares of a particular class of an eligible fund may be exchanged only for
shares of the same class in other eligible funds. For example, you can exchange
shares of a Trust only for Class A shares of another fund, and you can exchange
only Class A shares of another eligible fund for shares of a Trust.
You may pay a sales charge when you exchange shares of a Trust. Because
shares of the Trusts are sold without sales charge, in some cases you may pay a
sales charge when you exchange shares of a Trust for shares of other eligible
funds that are sold subject to a sales charge. You will not pay a sales charge
when you exchange shares of a Trust purchased by reinvesting distributions from
that Trust or other eligible funds (except Oppenheimer Cash Reserves), or when
you exchange shares of a Trust purchased by exchange of shares of an eligible
fund on which you paid a sales charge.
For tax purposes, exchanges of shares involve a sale of the shares of the
fund you own and a purchase of the shares of the other fund, which may result in
a capital gain or loss. Since shares of a Trust normally maintain a $1.00 net
asset value, in most cases you should not realize a capital gain or loss when
you sell or exchange your shares.
Direct shareholders can find a list of eligible funds currently available
for exchanges in the Statement of Additional Information or you can obtain one
by calling a service representative at 1-800-525-9310. The list of eligible
funds can change from time to time.
How Do Direct Shareholders Submit Exchange Requests? Direct shareholders may
request exchanges in writing or by telephone:
o Written Exchange Requests. Complete an Exchange Authorization Form, signed
by all owners of the account. Send it to the Transfer Agent at the address
on the back cover.
o Telephone Exchange Requests. Telephone exchange requests may be made by
calling a service representative at 1-800-525-9310. Telephone exchanges
may be made only between accounts that are registered with the same
name(s) and address. Shares held under certificates may not be exchanged
by telephone.
ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies you
should be aware of:
o Shares are normally redeemed from one fund and purchased from the other
fund in the exchange transaction on the same regular business day on which
the Transfer Agent receives an exchange request that conforms to the
policies described above. Requests for exchanges to any of the Centennial
Trusts must be received by the Transfer Agent by 4:00 P.M. on a regular
business day to be effected that day. The Transfer Agent must receive
requests to exchange shares of a Trust to funds other than the Centennial
Trusts on a regular business day by the close of The New York Stock
Exchange that day. The close is normally 4:00 P.M. but may be earlier on
some days.
o Either fund may delay the purchase of shares of the fund you are
exchanging into up to seven days if it determines it would be
disadvantaged by a same-day exchange. For example, the receipt of the
multiple exchange requests from a "market timer" might require a fund to
sell securities at a disadvantageous time and/or price.
o Because excessive trading can hurt fund performance and harm shareholders,
the Trusts reserve the right to refuse any exchange request that may, in
the opinion of the Trusts, be disadvantageous, or to refuse multiple
exchange requests submitted by a shareholder or dealer.
o The Trusts may amend, suspend or terminate the exchange privilege at any
time. The Trusts will provide you notice whenever they are required to do
so by applicable law, but they may impose these changes at any time for
emergency purposes.
o If the Transfer Agent cannot exchange all the shares you request because
of a restriction cited above, only the shares eligible for exchange will
be exchanged.
Shareholder Account Rules and Policies
More information about the Trusts' policies and procedures for buying, selling
and exchanging shares is contained in the Statement of Additional Information.
The offering of shares of a Trust may be suspended during any period in which
the Trust's determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time it believes
it is in a Trust's best interest to do so.
Telephone Transaction Privileges for purchases, redemptions or exchanges may be
modified, suspended or terminated by a Trust at any time. If an account
has more than one owner, a Trust and the Transfer Agent may rely on the
instructions of any one owner. Telephone privileges apply to each owner of
the account and the dealer representative of record for the account unless
the Transfer Agent receives cancellation instructions from an owner of the
account.
The Transfer Agent will record any telephone calls to verify data concerning
transactions. It has adopted other procedures to confirm that telephone
instructions are genuine, by requiring callers to provide tax
identification numbers and other account data and by confirming such
transactions in writing. The Transfer Agent and the Trusts will not be
liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements for
redemptions stated in this Prospectus.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by check
or by Federal Funds wire (as elected by the shareholder) within seven days
after the Transfer Agent receives redemption instructions in proper form.
However, under unusual circumstances determined by the Securities and
Exchange Commission, payment may be delayed or suspended. For accounts
registered in the name of a broker-dealer, payment will normally be
forwarded within three business days after redemption.
The Transfer Agent may delay forwarding a check or making a payment via
Federal Funds wire for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days from
the date the shares were purchased. That delay may be avoided if you
purchase shares by Federal Funds wire or certified check, or arrange with
your bank to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by Centennial Tax Exempt
Trust if the account value has fallen below $500 for reasons other than
the fact that the market value of shares has dropped. In some cases
involuntary redemptions may be made to repay the Distributor for losses
from the cancellation of share purchase orders.
"Backup Withholding" of federal income tax may be applied against taxable
dividends, distributions and redemption proceeds (including exchanges) if
you fail to furnish the Trust your correct, certified Social Security or
Employer Identification Number when you sign your application, or if you
under-report your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, a Trust will
mail only one copy of each annual and semi-annual report to shareholders
having the same last name and address on a Trust's records. However, each
shareholder may call the Transfer Agent at 1-800-525-9310 to ask that
copies of those materials be sent personally to that shareholder.
Dividends and Tax Information
DIVIDENDS. Each Trust intends to declare dividends from net investment income
each regular business day and to pay those dividends to shareholders monthly on
a date selected by the Board of Trustees. To maintain a net asset value of $1.00
per share, a Trust might withhold dividends or make distributions from capital
or capital gains. Daily dividends will not be declared or paid on newly
purchased shares until Federal Funds are available to a Trust from the purchase
payment for such shares.
CAPITAL GAINS. Each Trust normally holds its securities to maturity and
therefore will not usually pay capital gains. Although the Trusts do not seek
capital gains, a Trust could realize capital gains on the sale of its portfolio
securities. If it does, it may make distributions out of any net short-term or
long-term capital gains in December of each year. A Trust may make supplemental
distributions of dividends and capital gains following the end of its fiscal
year.
What Choices Do I Have for Receiving Distributions? For Automatic Purchase and
Redemption Programs, dividends and distributions are automatically
reinvested in additional shares of the selected Trust. For direct
shareholders, when you open your account, you should specify on your
application how you want to receive your dividends and distributions. You
have four options:
o Reinvest All Distributions in the Trust. You can elect to reinvest all
dividends and capital gains distributions in additional shares of the
selected Trust.
o Reinvest Capital Gains Only. You can elect to reinvest capital gains
distributions in the selected Trust while receiving dividends by check or
having them sent to your bank account.
o Receive All Distributions in Cash. You can elect to receive a check for
all dividends and capital gains distributions or have them sent to your
bank.
o Reinvest Your Distributions in Another Account. You can reinvest all
distributions in the same class of shares of another eligible fund account
you have established.
Under the terms of Automatic Purchase and Redemption Programs, your
broker-dealer can redeem shares to satisfy debit balances arising in your
Program Account. If that occurs, you will be entitled to dividends on those
shares as described in your Program Agreements.
TAXES.
Centennial Money Market Trust and Centennial Government Trust. If your shares
are not held in a tax-deferred retirement account, you should be aware of
the following tax implications of investing in Centennial Money Market
Trust and Centennial Government Trust. Dividends paid from net investment
income and short-term capital gains are taxable as ordinary income.
Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. It does not matter how long you have held
your shares. Whether you reinvest your distributions in additional shares
or take them in cash, the tax treatment is the same.
Every year the Trust will send you and the IRS a statement showing the
amount of each taxable distribution you received in the previous year. Any
long-term capital gains distributions will be separately identified in the tax
information the Trust sends you after the end of the calendar year.
Centennial Tax Exempt Trust. Exempt interest dividends paid from net investment
income earned by the Trust on municipal securities will be excludable from
gross income for federal income tax purposes. A portion of a dividend that
is derived from interest paid on certain "private activity bonds" may be
an item of tax preference if you are subject to the alternative minimum
tax. If the Trust earns interest on taxable investments, any dividends
derived from those earnings will be taxable as ordinary income to
shareholders.
Dividends and capital gains distributions may be subject to state or local
taxes. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. It does not matter how long you have held your
shares. Dividends paid from short-term capital gains and non-tax exempt net
investment income are taxable as ordinary income. Whether you reinvest your
distributions in additional shares or take them in cash, the tax treatment is
the same. Every year the Trust will send you and the IRS a statement showing the
amount of any taxable distribution you received in the previous year as well as
the amount of your tax-exempt income.
Remember, There May be Taxes on Transactions. Because each Trust seeks to
maintain a stable $1.00 per share net asset value, it is unlikely that you
will have a capital gain or loss when you sell or exchange your shares. A
capital gain or loss is the difference between the price you paid for the
shares and the price you received when you sold them. Any capital gain is
subject to capital gains tax.
Returns of Capital Can Occur. In certain cases, distributions made by a Trust
may be considered a non-taxable return of capital to shareholders. If that
occurs, it will be identified in notices to shareholders.
This information is only a summary of certain federal income tax
information about your investment. You should consult with your tax adviser
about the effect of an investment in a Trust on your particular tax situation.
<PAGE>
Financial Highlights
The Financial Highlights Tables are presented to help you understand each
Trust's financial performance for the past five fiscal years. Certain
information reflects financial results for a single Trust share. The total
returns in the tables represent the rate that an investor would have earned (or
lost) on an investment in the Trusts (assuming reinvestment of all dividends and
distributions). This information for the past five fiscal years ended June 30,
1999, has been audited by Deloitte & Touche LLP, the Trusts' independent
auditors, whose report, along with the Trusts' financial statements, is included
in the Statement of Additional Information, which is available on request.
Centennial Money Market Trust
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period................. $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations--
net investment income and net realized gain ...... .05 .05 .05 .05 .05
Dividends and distributions to shareholders.......... (.05) (.05) (.05) (.05) (.05)
---- ---- ---- ---- ----
Net asset value, end of period....................... $1.00 $1.00 $1.00 $1.00 $1.00
==== ==== ==== ==== ====
TOTAL RETURN(1)...................................... 4.75 % 5.16 % 4.97 % 5.11 % 5.07 %
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions).............. $17,821 $15,114 $9,063 $6,753 $4,812
Average net assets (in millions)..................... $17,128 $12,617 $8,033 $6,077 $3,342
Ratios to average net assets:(2)
Net investment income ............................... 4.63 % 5.04 % 4.86 % 4.99 % 5.01 %
Expenses, before voluntary assumption
by the Manager(3)................................. 0.66 % 0.68 % 0.73 % 0.74 % 0.77 %
Expenses, net of voluntary assumption
by the Manager.................................... N/A 0.66 % 0.67 % 0.69 % 0.73 %
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends reinvested in
additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total
returns reflect changes in net investment income only. Total returns are
not annualized for periods of less than one year.
2. Annualized for periods less than one full year.
3. The expense ratio reflects the effect of expenses paid indirectly by the
Trust.
<PAGE>
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Year Ended June 30,
---------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period ........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations--
net investment income and net
realized gain ................................................ .03 .03 .03 .03 .03
Dividends and distributions to shareholders ..................... (.03) (.03) (.03) (.03) (.03)
------ ------ ------ ------ ------
Net asset value, end of period ................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
TOTAL RETURN(1) ................................................ 2.61% 3.12% 3.01% 3.16% 3.17%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) ........................ $1,749 $1,829 $1,649 $1,426 $1,315
Average net assets (in millions)................................. $1,896 $1,832 $1,591 $1,473 $1,217
Ratios to average net assets:(2)
Net investment income .......................................... 2.58% 3.07% 2.95% 3.12% 3.13%
Expenses(3)...................................................... 0.69% 0.69% 0.72% 0.72% 0.73%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Total returns reflect
changes in net investment income only. Total returns are not annualized for
periods of less than one full year.
2. Annualized for periods less than one full year.
3. The expense ratio reflects the effect of expenses paid indirectly by the
Trust.
<PAGE>
Centennial Government Trust
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period ............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations--
net investment income and
net realized gain ............................................ .04 .05 .05 .05 .05
Dividends and distributions to shareholders ..................... (.04) (.05) (.05) (.05) (.05)
------ ------ ------ ------ ------
Net asset value, end of period .................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
TOTAL RETURN(1) ................................................. 4.47% 4.93% 4.75% 4.91% 4.93%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) ......................... $1,213 $1,132 $1,027 $ 942 $ 893
Average net assets (in millions) ................................ $1,245 $1,117 $1,032 $ 962 $ 719
Ratios to average net assets:(2)
Net investment income ........................................... 4.37% 4.82% 4.65% 4.83% 4.81%
Expenses(3) ..................................................... 0.74% 0.75% 0.76% 0.77% 0.80%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Total returns reflect
changes in net investment income only. Total returns are not annualized for
periods less than one full year.
2. Annualized for periods less than one full year.
3. The expense ratio reflects the effect of expenses paid indirectly by the
Trust.
<PAGE>
INFORMATION AND SERVICES
For More Information On Centennial Money Market Trust,
Centennial Tax Exempt Trust and Centennial Government Trust:
The following additional information about the Trusts is available without
charge upon request:
STATEMENT OF ADDITIONAL INFORMATION This document includes additional
information about the Trusts' investment policies, risks, and operations. It is
incorporated by reference into this Prospectus (which means it is legally part
of this Prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS Additional information about the Trusts'
investments and performance is available in the Trust's Annual and Semi-Annual
Reports to shareholders. The Annual Report includes a discussion of market
conditions and investment strategies that significantly affected the Trusts'
performance during its last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, and other information about the Trusts or your account:
- --------------------------------------------------------------------------------
By Telephone: Call Shareholder Services, Inc.
toll-free:
1-800-525-9310
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
By Mail: Write to:
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217
- -------------------------------------------------------------------------------
You can also obtain copies of the Statement of Additional Information and other
Fund documents and reports by visiting the SEC's Public Reference Room in
Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at
http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by
writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009.
No one has been authorized to provide any information about the Trusts or to
make any representations about the Trusts other than what is contained in this
Prospectus. This Prospectus is not an offer to sell shares of any Trust, nor a
solicitation of an offer to buy shares of any Trust, to any person in any state
or other jurisdiction where it is unlawful to make such an offer.
The Trust's shares are distributed by:
SEC File No. 811-2945, 3104, 3391 Centennial Asset Management Corporation
PR0151.001.1199
Printed on recycled paper
<PAGE>
APPENDIX TO THE PROSPECTUS OF
CENTENNIAL MONEY MARKET TRUST
Graphic material included in Prospectus of Centennial Money Market Trust
(the "Trust") under the heading: "Annual Total Returns (as of 12/31 each year)."
Bar chart will be included in the Prospectus of the Trust depicting the
annual total returns of a hypothetical investment in shares of the Trust for the
past 10 full calendar years. Set forth below are the relevant data points that
will appear on the bar chart.
- --------------------------------------------------------------------
Calendar Year Ended: Annual Total Returns
- --------------------------------------------------------------------
- --------------------------------------------------------------------
12/31/89 8.79%
- --------------------------------------------------------------------
- --------------------------------------------------------------------
12/31/90 7.76%
- --------------------------------------------------------------------
- --------------------------------------------------------------------
12/31/91 5.81%
- --------------------------------------------------------------------
- --------------------------------------------------------------------
12/31/92 3.53%
- --------------------------------------------------------------------
- --------------------------------------------------------------------
12/31/93 2.69%
- --------------------------------------------------------------------
- --------------------------------------------------------------------
12/31/94 3.77%
- --------------------------------------------------------------------
- --------------------------------------------------------------------
12/31/95 5.46%
- --------------------------------------------------------------------
- --------------------------------------------------------------------
12/31/96 4.94%
- --------------------------------------------------------------------
- --------------------------------------------------------------------
12/31/97 5.10%
- --------------------------------------------------------------------
- --------------------------------------------------------------------
12/31/98 5.09%
- --------------------------------------------------------------------
<PAGE>
APPENDIX TO THE PROSPECTUS OF
CENTENNIAL TAX EXEMPT TRUST
Graphic material included in the Prospectus of Centennial Tax Exempt Trust
(the "Trust") under the heading: "Annual Total Returns (as of 12/31 each year)."
A bar chart will be included in the Prospectus of the Trust depicting the
annual total returns of a hypothetical investment in shares of the Trust for
each of the ten most recent calendar years. Set forth below are the relevant
data points that will appear on the bar chart.
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Calendar Year Ended: Annual Total Returns
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12/31/89 5.87%
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12/31/90 5.56%
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12/31/91 4.32%
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12/31/92 2.64%
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12/31/93 1.91%
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12/31/94 2.30%
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12/31/95 3.47%
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12/31/96 3.00%
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12/31/97 3.11%
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12/31/98 2.91%
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<PAGE>
APPENDIX TO THE PROSPECTUS OF
CENTENNIAL GOVERNMENT TRUST
Graphic material included in the Prospectus of Centennial Government Trust
(the "Trust") under the heading: "Annual Total Returns (as of 12/31 each year)."
A bar chart will be included in the Prospectus of the Trust depicting the
annual total returns of a hypothetical investment in shares of the Trust for
each of the ten most recent calendar years. Set forth below are the relevant
data points that will appear in the bar chart.
- --------------------------------------------------------------------
Calendar Year Ended: Annual Total Returns
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12/31/89 8.60%
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12/31/90 7.70%
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12/31/91 5.85%
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12/31/92 3.46%
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12/31/93 2.67%
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12/31/94 3.71%
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12/31/95 5.26%
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12/31/96 4.72%
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12/31/97 4.86%
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12/31/98 4.84%
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<PAGE>
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Centennial Money Market Trust
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6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-9310
Statement of Additional Information dated November 1, 1999
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Trust and supplements
information in the Prospectus dated November 1, 1999. It should be read together
with the Prospectus, which may be obtained by writing to the Trust's Transfer
Agent, Shareholder Services, Inc., at P.O. Box 5143, Denver, Colorado 80217, or
by calling the Transfer Agent at the toll-free number shown above.
Contents
Page
About the Trust
Additional Information about the Trust's Investment Policies and Risks........
The Trust's Investment Policies..........................................
Other Investment Strategies..............................................
Investment Restrictions..................................................
How the Trust is Managed......................................................
Organization and History.................................................
Trustees and Officers of the Trust.......................................
The Manager..............................................................
Performance of the Trust......................................................
About Your Account
How To Buy Shares.............................................................
How To Sell Shares............................................................
How To Exchange Shares........................................................
Dividends and Taxes...........................................................
Additional Information About the Trust........................................
Financial Information About the Trust
Independent Auditors' Report..................................................
Financial Statements..........................................................
Appendix A: Securities Ratings.............................................A-1
Appendix B: Industry Classifications.......................................B-1
<PAGE>
A B O U T T H E T R U S T
Additional Information About the Trust's Investment Policies and Risks
The investment objective and the principal investment policies of the Trust are
described in the Prospectus. This Statement of Additional Information contains
supplemental information about those policies and the types of securities that
the Trust's investment manager, Centennial Asset Management Corporation, will
select for the Trust. Additional explanations are also provided about the
strategies the Trust may use to try to achieve its objective.
The Trust's Investment Policies. The composition of the Trust's portfolio and
the techniques and strategies that the Trust's Manager uses in selecting
portfolio securities will vary over time. The Trust is not required to use all
of the investment techniques and strategies described below at all times in
seeking its goal. It may use some of the special investment techniques and
strategies at some times or not at all.
The Trust's objective is to seek the maximum current income that is
consistent with low capital risk and the maintenance of liquidity. The Trust
will not make investments with the objective of seeking capital growth. However,
the value of the securities held by the Trust may be affected by changes in
general interest rates. Because the current value of debt securities varies
inversely with changes in prevailing interest rates, if interest rates increase
after a security is purchased, that security would normally decline in value.
Conversely, if interest rates decrease after a security is purchased, its value
would rise. However, those fluctuations in value will not generally result in
realized gains or losses to the Trust since the Trust does not usually intend to
dispose of securities prior to their maturity. A debt security held to maturity
is redeemable by its issuer at full principal value plus accrued interest.
The Trust may sell securities prior to their maturity, to attempt to take
advantage of short-term market variations, or because of a revised credit
evaluation of the issuer or other considerations. The Trust may also do so to
generate cash to satisfy redemptions of Trust shares. In such cases, the Trust
may realize a capital gain or loss on the security.
|X| Ratings of Securities -- Portfolio Quality, Maturity and
Diversification. Under Rule 2a-7 of the Investment Company Act, the Trust uses
the amortized cost method to value its portfolio securities to determine the
Trust's net asset value per share. Rule 2a-7 places restrictions on a money
market fund's investments. Under that Rule, the Trust may purchase only those
securities that the Manager, under Board-approved procedures, has determined
have minimal credit risks and are "Eligible Securities." The rating restrictions
described in the Prospectus and this Statement of Additional Information do not
apply to banks in which the Trust's cash is kept.
An "Eligible Security" is one that has been rated in one of the two
highest short-term rating categories by any two "nationally-recognized
statistical rating organizations." That term is defined in Rule 2a-7 and they
are referred to as "Rating Organizations" in this Statement of Additional
Information. If only one Rating Organization has rated that security, it must
have been rated in one of the two highest rating categories by that Rating
Organization. An unrated security that is judged by the Manager to be of
comparable quality to Eligible Securities rated by Rating Organizations may also
be an "Eligible Security."
Rule 2a-7 permits the Trust to purchase any number of "First Tier
Securities." These are Eligible Securities that have been rated in the highest
rating category for short-term debt obligations by at least two Rating
Organizations. If only one Rating Organization has rated a particular security,
it must have been rated in the highest rating category by that Rating
Organization. Comparable unrated securities may also be First Tier Securities.
Under Rule 2a-7, the Trust may invest only up to 5% of its total assets in
"Second Tier Securities." Those are Eligible Securities that are not "First Tier
Securities." In addition, the Trust may not invest more than:
|_| 5% of its total assets in the securities of any one issuer (other than
the U.S. government, its agencies or instrumentalities) or
|_| 1% of its total assets or $1 million (whichever is greater) in Second
Tier Securities of any one issuer.
Under Rule 2a-7, the Trust must maintain a dollar-weighted average
portfolio maturity of not more than 90 days, and the maturity of any single
portfolio investment may not exceed 397 days. Some of the Trust's existing
investment restrictions are more restrictive than the provisions of Rule 2a-7.
For example, as a matter of fundamental policy, the Trust may not invest in any
debt instrument having a maturity in excess of one year from the date of the
investment. The Board regularly reviews reports from the Manager to show the
Manager's compliance with the Trust's procedures and with the Rule.
If a security's rating is downgraded, the Manager and/or the Board of
Trustees may have to reassess the security's credit risk. If a security has
ceased to be a First Tier Security, the Manager will promptly reassess whether
the security continues to present minimal credit risk. If the Manager becomes
aware that any Rating Organization has downgraded its rating of a Second Tier
Security or rated an unrated security below its second highest rating category,
the Trust's Board of Trustees shall promptly reassess whether the security
presents minimal credit risk and whether it is in the best interests of the
Trust to dispose of it. If the Trust disposes of the security within five days
of the Manager learning of the downgrade, the Manager will provide the Board of
Trustees with subsequent notice of such downgrade. If a security is in default,
or ceases to be an Eligible Security, or is determined no longer to present
minimal credit risks, the Board of Trustees must determine whether it would be
in the best interests of the Trust to dispose of the security.
The Rating Organizations currently designated as nationally-recognized
statistical rating organizations by the Securities and Exchange Commission are
Standard & Poor's Corporation, Moody's Investors Service, Inc., Fitch IBCA,
Inc., Duff and Phelps, Inc., and Thomson BankWatch, Inc. Appendix A to this
Statement of Additional Information contains descriptions of the rating
categories of those Rating Organizations. Ratings at the time of purchase will
determine whether securities may be acquired under the restrictions described
above.
|X| Bank Obligations. The Trust can invest in the bank obligations
described in the Prospectus. The Trust will buy bank obligations only from a
domestic bank with total assets of at least $2.0 billion from a foreign bank
with total assets of at least $30.0 billion. These asset requirements apply only
at the time the obligations are acquired. In addition, the Trust may invest in
certificates of deposit of $100,000 or less of a domestic bank, regardless of
asset size, if such certificate of deposit is fully insured as to principal by
the Federal Deposit Insurance Corporation. At no time will the Trust hold more
than one certificate of deposit from any such bank
Investments in securities issued by foreign banks or foreign branches of
U.S. banks subject the Trust to certain additional investment risks, including
future political and economic developments of the country in which the branch is
located, possible imposition of withholding taxes on income payable on the
securities, possible seizure of foreign deposits, establishment of exchange
control restrictions, or other government regulation. While domestic banks are
subject to federal and/or state laws and regulations which, among other things,
require specific levels of reserves to be maintained, not all of those laws
apply to foreign branches of domestic banks or domestic branches or subsidiaries
of foreign banks. For purposes of this section, the term "bank" includes
commercial banks, savings banks and savings and loan associations.
|X| U.S. Government Securities. U.S. government securities are
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities. They include Treasury Bills (which mature within one year
of the date they are issued) and Treasury Notes and Bonds (which are issued
with longer maturities). All Treasury securities are backed by the full
faith and credit of the United States.
U.S. government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage Association, General
Services Administration, Bank for Cooperatives, Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land
Banks, Maritime Administration, the Tennessee Valley Authority and the District
of Columbia Armory Board.
Securities issued or guaranteed by U.S. government agencies and
instrumentalities are not always backed by the full faith and credit of the
United States. Some, such as securities issued by the Federal National Mortgage
Association ("Fannie Mae"), are backed by the right of the agency or
instrumentality to borrow from the Treasury. Others, such as securities issued
by the Federal Home Loan Mortgage Corporation ("Freddie Mac"), are supported
only by the credit of the instrumentality and not by the Treasury. If the
securities are not backed by the full faith and credit of the United States, the
purchaser must look principally to the agency issuing the obligation for
repayment and may not be able to assert a claim against the United States if the
issuing agency or instrumentality does not meet its commitment. The Trust will
invest in U.S. government securities of such agencies and instrumentalities only
when the Manager is satisfied that the credit risk with respect to such
instrumentality is minimal and that the security is an Eligible Security.
Other Investment Strategies
O Floating Rate/Variable Rate Obligations. The Trust may invest in
instruments with floating or variable interest rates. The interest rate on a
floating rate obligation is based on a stated prevailing market rate, such as a
bank's prime rate, the 90-day U.S. Treasury Bill rate, the rate of return on
commercial paper or bank certificates of deposit, or some other standard. The
rate on the investment is adjusted automatically each time the market rate is
adjusted. The interest rate on a variable rate obligation is also based on a
stated prevailing market rate but is adjusted automatically at a specified
interval of not less than one year. Some variable rate or floating rate
obligations in which the Trust may invest have a demand feature entitling the
holder to demand payment of an amount approximately equal to the amortized cost
of the instrument or the principal amount of the instrument plus accrued
interest at any time, or at specified intervals not exceeding one year. These
notes may or may not be backed by bank letters of credit.
Variable rate demand notes may include master demand notes, which are
obligations that permit the Trust to invest fluctuating amounts in a note. The
amount may change daily without penalty, pursuant to direct arrangements between
the Trust, as the note purchaser, and the issuer of the note. The interest rates
on these notes fluctuate from time to time. The issuer of this type of
obligation normally has a corresponding right in its discretion, after a given
period, to prepay the outstanding principal amount of the obligation plus
accrued interest. The issuer must give a specified number of days' notice to the
holders of those obligations. Generally, the changes in the interest rate on
those securities reduce the fluctuation in their market value. As interest rates
decrease or increase, the potential for capital appreciation or depreciation is
less than that for fixed-rate obligations having the same maturity.
Because these types of obligations are direct lending arrangements between
the note purchaser and issuer of the note, these instruments generally will not
be traded. Generally, there is no established secondary market for these types
of obligations, although they are redeemable from the issuer at face value.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, the Trust's right to redeem them is dependent
on the ability of the note issuer to pay principal and interest on demand. These
types of obligations usually are not rated by credit rating agencies. The Trust
may invest in obligations that are not rated only if the Manager determines at
the time of investment that they are Eligible Securities. The Manager, on behalf
of the Trust, will monitor the creditworthiness of the issuers of the floating
and variable rate obligations in the Trust's portfolio on an ongoing basis.
There is no limit on the amount of the Trust's assets that may be invested in
floating rate and variable rate obligations that meet the requirements of Rule
2a-7.
|X| Asset-Backed Securities. These securities, issued by trusts and
special purpose corporations, are backed by pools of assets. They pass through
the payments on the underlying obligations to the security holders (less
servicing fees paid to the originator or fees for any credit enhancement). The
value of an asset-backed security is affected by changes in the market's
perception of the asset backing the security, the creditworthiness of the
servicing agent for the loan pool, the originator of the loans, or the financial
institution providing any credit enhancement.
Payments of principal and interest passed through to holders of
asset-backed securities are typically supported by some form of credit
enhancement, such as a letter of credit, surety bond, limited guarantee by
another entity or having a priority to certain of the borrower's other
securities. The degree of credit enhancement varies, and generally applies to
only a fraction of the asset-backed security's par value until exhausted. If the
credit enhancement of an asset-backed security held by the Trust has been
exhausted, and if any required payments of principal and interest are not made
with respect to the underlying loans, the Trust may experience losses or delays
in receiving payment.
The risks of investing in asset-backed securities are ultimately dependent
upon payment of underlying assets. As a purchaser of an asset-backed security,
the Trust would generally have no recourse to the entity that originated the
loans in the event of default by a borrower. The underlying loans are subject to
prepayments, which shorten the weighted average life of asset-backed securities
and may lower their return, in the same manner as for prepayments of a pool of
mortgage loans underlying mortgage-backed securities. However, asset-backed
securities do not have the benefit of the same security interest in the
underlying collateral as do mortgage-backed securities.
|X| Repurchase Agreements. In a repurchase transaction, the Trust acquires
a security from, and simultaneously resells it to, an approved vendor for
delivery on an agreed-upon future date. The resale price exceeds the purchase
price by an amount that reflects an agreed-upon interest rate effective for the
period during which the repurchase agreement is in effect. An "approved vendor"
may be a U.S. commercial bank or the U.S. branch of a foreign bank having total
domestic assets of at least $1 billion, or a broker-dealer with a net capital of
$50 million which has been designated a primary dealer in government securities.
The majority of these transactions run from day to day, and delivery
pursuant to the resale typically will occur within one to five days of the
purchase. The Trust will not enter into a repurchase agreement that will cause
more than 10% of its net assets to be subject to repurchase agreements maturing
in more than seven days.
Repurchase agreements are considered "loans" under the Investment Company
Act, collateralized by the underlying security. The Trust's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the collateral's value must equal or exceed the repurchase price to
fully collateralize the repayment obligation. Additionally, the Manager will
monitor the vendor's creditworthiness to confirm that the vendor is financially
sound and will continuously monitor the collateral's value. However, if the
vendor fails to pay the resale price on the delivery date, the Trust may incur
costs in disposing of the collateral and may experience losses if there is any
delay in its ability to do so.
|X| Illiquid and Restricted Securities. Under the policies and procedures
established by the Trust's Board of Trustees, the Manager determines the
liquidity of certain of the Trust's investments. Investments may be illiquid
because of the absence of an active trading market, making it difficult to value
them or dispose of them promptly at an acceptable price. A restricted security
is one that has a contractual restriction on its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933.
Illiquid securities the Trust can buy include issues that may be redeemed
only by the issuer upon more than seven days notice or at maturity, repurchase
agreements maturing in more than seven days, fixed time deposits subject to
withdrawal penalties which mature in more than seven days, and other securities
that cannot be sold freely due to legal or contractual restrictions on resale.
Contractual restrictions on the resale of illiquid securities might prevent or
delay their sale by the Trust at a time when such sale would be desirable.
There are restricted securities that are not illiquid that the Trust can
buy. They include certain master demand notes redeemable on demand, and
short-term corporate debt instruments that are related to current transactions
of the issuer and therefore are exempt from registration as commercial paper.
Illiquid securities include repurchase agreements maturing in more than 7 days,
or certain participation interests other than those with puts exercisable within
7 days.
O Loans of Portfolio Securities. To attempt to increase its income, the Trust
may lend its portfolio securities to brokers, dealers and other financial
institutions. These loans are limited to not more than 10% of the value of the
Trust's total assets and are subject to other conditions described below. The
Trust will not enter into any securities lending agreements having a maturity of
greater than one year. The Trust presently does not intend to lend its
securities, but if it does, the value of securities loaned is not expected to
exceed 5% of the value of the Trust's total assets. There are some risks in
lending securities. The Trust could experience a delay in receiving additional
collateral to secure a loan, or a delay in recovering the loaned securities.
The Trust may receive collateral for a loan. Any securities received as
collateral for a loan must mature in twelve months or less. Under current
applicable regulatory requirements (which are subject to change), on each
business day the loan collateral must be at least equal to the market value of
the loaned securities. The collateral must consist of cash, bank letters of
credit, U.S. government securities or other cash equivalents in which the Trust
is permitted to invest. To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by the Trust if the demand meets the
terms of the letter. Such terms and the issuing bank must be satisfactory to the
Trust.
When it lends securities, the Trust receives from the borrower an amount
equal to the interest paid or the dividends declared on the loaned securities
during the term of the loan. It may also receive negotiated loan fees and the
interest on the collateral securities, less any finders', custodian,
administrative or other fees the Trust pays in connection with the loan. The
Trust may share the interest it receives on the collateral securities with the
borrower as long as it realizes at least a minimum amount of interest required
by the lending guidelines established by its Board of Trustees.
The Trust will not lend its portfolio securities to any officer, Trustee,
employee or affiliate of the Trust or its Manager. The terms of the Trust's
loans must meet certain tests under the Internal Revenue Code and permit the
Trust to reacquire loaned securities on five business days notice or in time to
vote on any important matter.
Investment Restrictions
|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Trust has adopted to govern its investments that can be
changed only by the vote of a "majority" of the Trust's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is defined as
the vote of the holders of the lesser of:
|_| 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the outstanding
shares are present or represented by proxy, or
|_| more than 50% of the outstanding shares.
The Trust's investment objective is a fundamental policy. Other policies
described in the Prospectus or this Statement of Additional Information are
"fundamental" only if they are identified as such. The Trust's Board of Trustees
can change non-fundamental policies without shareholder approval. However,
significant changes to investment policies will be described in supplements or
updates to the Prospectus or this Statement of Additional Information, as
appropriate. The Trust's most significant investment policies are described in
the Prospectus.
n Does the Trust Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Trust:
|_| The Trust cannot invest more than 5% of the value of its total
assets in the securities of any one issuer (other than the U.S. government or
its agencies or instrumentalities).
|_| The Trust cannot purchase more than 10% of the outstanding non-voting
securities or more than 10% of the total debt securities of any one issuer.
|_| The Trust cannot concentrate investments to the extent of 25% of its
assets in any industry; however, there is no limitation as to investment in
obligations issued by banks, savings and loan associations or the U.S.
government and its agencies or instrumentalities.
|_| The Trust cannot invest in any debt instrument having a maturity in
excess of one year from the date of the investment or, in the case of a debt
instrument subject to a repurchase agreement or called for redemption, having a
repurchase or redemption date more than one year from the date of the
investment.
|_| The Trust cannot borrow money except as a temporary measure for
extraordinary or emergency purposes, and then only up to 10% of the market value
of the Trust's assets; the Trust will not make any investment when such
borrowing exceeds 5% of the value of its assets; no assets of the Trust may be
pledged, mortgaged or assigned to secure a debt.
|_| The Trust cannot invest more than 5% of the value of its total assets
in securities of companies that have operated less than three years, including
the operations of predecessors.
|_| The Trust cannot make loans, except the Trust may: (i) purchase debt
securities, (ii) purchase debt securities subject to repurchase agreements, or
(iii) lend its securities as described in this Statement of Additional
Information.
|_| The Trust cannot invest in commodities or commodity contracts or
invest in interests in oil, gas or other mineral exploration or mineral
development programs.
|_| The Trust cannot invest in real estate; however the Trust may purchase
debt securities issued by companies which invest in real estate or interests
therein.
|_| The Trust cannot purchase securities on margin or make short sales of
securities.
|_| The Trust cannot invest in or hold securities of any issuer if those
officers and Trustees of the Trust or the Manager who beneficially own
individually more than 0.5% of the securities of such issuer together own more
than 5% of the securities of such issuer.
o The Trust cannot underwrite securities of other companies.
|_| The Trust cannot invest in securities of other investment companies,
except in connection with a consolidation or merger.
|_| The Trust cannot issue "senior securities," but this does not prohibit
certain investment activities for which assets of the Trust are designated as
segregated, or margin, collateral or escrow arrangements are established, to
cover the related obligations.
Unless the Prospectus or this Statement of Additional Information states
that a percentage restriction applies on an ongoing basis, it applies only at
the time the Trust makes an investment. The Trust need not sell securities to
meet the percentage limits if the value of the investment increases in
proportion to the size of the Trust.
For purposes of the Trust's policy not to concentrate its investments in
securities of issuers, the Trust has adopted the industry classifications set
forth in Appendix B to this Statement of Additional Information. This is not a
fundamental policy.
How the Trust Is Managed
Organization and History. The Trust is an open-end, diversified management
investment company organized as a Massachusetts business trust in 1979, with an
unlimited number of authorized shares of beneficial interest.
The Trust is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The Trustees
meet periodically throughout the year to oversee the Trust's activities, review
its performance, and review the actions of the Manager. Although the Trust will
not normally hold annual meetings of its shareholders, it may hold shareholder
meetings from time to time on important matters. Shareholders of the Trust may
have the right to call a meeting to remove a Trustee or to take other action
described in the Declaration of Trust.
|X| Classes of Shares. The Board of Trustees has the power, without
shareholder approval, to divide unissued shares of the Trust into two or more
classes. The Board has done so, and the Trust currently has authorized the
issuance of two classes of shares. The class of shares currently offered by the
Prospectus and this Statement of Additional information has no special name
designation. The Trust's other class of shares, designated as "Class Y" shares,
is not currently available. At such time as Class Y shares are available, both
classes of shares will invest in the same investment portfolio. Shares are
freely transferable. Each share has one vote at shareholder meetings, with
fractional shares voting proportionally on matters submitted to the vote of
shareholders. Each class of shares:
|_| has its own dividends and distributions,
|_| pays certain expenses which may be different for
the different classes,
|_| may have a different net asset value,
o may have separate voting rights on matters in which the interests of
one class are different from the interests of another class, and
|_| votes as a class on matters that affect that class
alone.
|X| Meetings of Shareholders. As a Massachusetts business trust, the Trust
is not required to hold, and does not plan to hold, regular annual meetings of
shareholders. The Trust will hold meetings when required to do so by the
Investment Company Act or other applicable law. It will also do so when a
shareholder meeting is called by the Trustees or upon proper request of the
shareholders.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of the Trust, to remove a Trustee. The
Trustees will call a meeting of shareholders to vote on the removal of a Trustee
upon the written request of the record holders of 10% of the outstanding shares
of the Trust. If the Trustees receive a request from at least 10 shareholders
stating that they wish to communicate with other shareholders to request a
meeting to remove a Trustee, the Trustees will then either make the shareholder
lists of the Trust available to the applicants or mail their communication to
all other shareholders at the applicants' expense. The shareholders making the
request must have been shareholders for at least six months and must hold shares
of the Trust valued at $25,000 or more or constituting at least 1% of the
outstanding shares of the Trust, whichever is less. The Trustees may also take
other action as permitted by the Investment Company Act.
|_| Shareholder and Trustee Liability. The Declaration of Trust
contains an express disclaimer of shareholder or Trustee liability for the
Trust's obligations. It also provides for indemnification and reimbursement of
expenses out of the Trust's property for any shareholder held personally liable
for its obligations. The Declaration of Trust also states that upon request, the
Trust shall assume the defense of any claim made against a shareholder for any
act or obligation of the Trust and shall satisfy any judgment on that claim.
Massachusetts law permits a shareholder of a business trust (such as the Trust)
to be held personally liable as a "partner" under certain circumstances.
However, the risk that a Trust shareholder will incur financial loss from being
held liable as a "partner" of the Trust is limited to the relatively remote
circumstances in which the Trust would be unable to meet its obligations.
The Trust's contractual arrangements state that any person doing business
with the Trust (and each shareholder of the Trust) agrees under the Declaration
of Trust to look solely to the assets of the Trust for satisfaction of any claim
or demand that may arise out of any dealings with the Trust. Additionally, the
Trustees shall have no personal liability to any such person, to the extent
permitted by law.
Trustees and Officers of the Trust. The Trust's Trustees and officers and their
principal occupations and business affiliations during the past five years are
listed below. Trustees denoted with an asterisk (*) below are deemed to be
"interested persons" of the Trust under the Investment Company Act. All of the
Trustees are also trustees, directors or managing general partners of the
following Denver-based Oppenheimer funds1:
1Ms. Macaskill and Mr. Bowen are not Trustees or Directors of Oppenheimer
Integrity Funds, Oppenheimer Strategic Income Fund, Panorama Series Fund, Inc.
or Oppenheimer Variable Account Funds. Mr. Fossel and Mr. Bowen are not Trustees
of Centennial New York Tax Exempt Trust or Managing General Partners of
Centennial America Fund, L.P.
Oppenheimer Capital Income Fund Oppenheimer Senior Floating Rate
Fund
Oppenheimer Cash Reserves Oppenheimer Strategic Income Fund
Oppenheimer Champion Income Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer High Yield Fund Oppenheimer Variable Account Funds
Oppenheimer International Bond Fund Panorama Series Fund, Inc.
Oppenheimer Integrity Funds Centennial America Fund, L. P.
Oppenheimer Limited-Term Government Centennial California Tax Exempt
Fund Trust
Oppenheimer Main Street Funds, Inc. Centennial Government Trust
Oppenheimer Main Street Small Cap Centennial Money Market Trust
Fund
Oppenheimer Municipal Fund Centennial New York Tax Exempt Trust
Oppenheimer Real Asset Fund Centennial Tax Exempt Trust
Robert G. Avis*, Trustee, Age: 68
One North Jefferson Ave., St. Louis, Missouri 63103
Chairman, President and Chief Executive Officer of A.G. Edwards Capital, Inc.
(general partnership of private equity funds), Director of A.G. Edwards & Sons,
Inc. (a broker-dealer) and Director of A.G. Edwards Trust Companies (trust
companies), formerly, Vice Chairman of A.G. Edwards & Sons, Inc. and A.G.
Edwards, Inc. (its parent holding company) and Chairman of A.G.E. Asset
Management (an investment advisor).
William A. Baker, Trustee, Age: 84
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
George C. Bowen, Trustee, Age: 63
9224 Bauer Court, Lone Tree, Colorado 80124
Formerly (until April 1999) Mr. Bowen held the following positions: Senior Vice
President (since September 1987) and Treasurer (since March 1985) of the
Manager; Vice President (since June 1983) and Treasurer (since March 1985) of
the Distributor; Vice President (since October 1989) and Treasurer (since April
1986) of HarbourView Asset Management Corporation; Senior Vice President (since
February 1992), Treasurer (since July 1991) Assistant Secretary and a director
(since December 1991) of Centennial Asset Management Corporation; President,
Treasurer and a director of Centennial Capital Corporation (since June 1989);
Vice President and Treasurer (since August 1978) and Secretary (since April
1981) of Shareholder Services, Inc.; Vice President, Treasurer and Secretary of
Shareholder Financial Services, Inc. (since November 1989); Assistant Treasurer
of Oppenheimer Acquisition Corp. (since March 1998); Treasurer of Oppenheimer
Partnership Holdings, Inc. (since November 1989); Vice President and Treasurer
of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief Executive
Officer, Treasurer; Treasurer of OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since October 1997).
Jon S. Fossel, Trustee, Age: 57
P.O. Box 44, Mead Street, Waccabuc, New York 10597
Formerly Chairman and a director of the Manager, President and a director of
Oppenheimer Acquisition Corp., the Manager's parent holding company, and
Shareholder Services, Inc. and Shareholder Financial Services, Inc., transfer
agent subsidiaries of the Manager.
Sam Freedman, Trustee, Age: 59
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly Chairman and Chief Executive Officer of OppenheimerFunds Services,
Chairman, Chief Executive Officer and a director of Shareholder Services, Inc.,
Chairman, Chief Executive Officer and director of Shareholder Financial
Services, Inc., Vice President and director of Oppenheimer Acquisition Corp. and
a director of OppenheimerFunds, Inc.
Raymond J. Kalinowski, Trustee, Age: 70
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc. (a computer products training
company), self-employed consultant (securities matters).
C. Howard Kast, Trustee, Age: 77
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).
Robert M. Kirchner, Trustee, Age: 78
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Bridget A. Macaskill*, President and Trustee, Age: 51
Two World Trade Center, New York, New York 10048-0203
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView Asset Management Corporation, an investment adviser
subsidiary of the Manager; Chairman and a director of Shareholder Services, Inc.
(since August 1994) and Shareholder Financial Services, Inc. (since September
1995), transfer agent subsidiaries of the Manager; President (since September
1995) and a director (since October 1990) of Oppenheimer Acquisition Corp., the
Manager's parent holding company; President (since September 1995) and a
director (since November 1989) of Oppenheimer Partnership Holdings, Inc., a
holding company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director (since October
1997) of OppenheimerFunds International Ltd., an offshore fund management
subsidiary of the Manager and of Oppenheimer Millennium Funds plc; President and
a director of other Oppenheimer funds; a director of Prudential Corporation plc
(a U.K. financial service company).
Ned M. Steel, Trustee, Age: 84
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; a director of Visiting Nurse
Corporation of Colorado.
James C. Swain*, Chairman, Chief Executive Officer and Trustee, Age: 65
6803 South Tucson Way, Englewood, Colorado 80112
Vice Chairman of the Manager (since September 1988); formerly President and a
director of Centennial Asset Management Corporation, an investment adviser
subsidiary of the Manager and Chairman of the Board of Shareholder Services,
Inc.
Carol E. Wolf, Vice President and Portfolio Manager, Age: 47
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager and Centennial Asset Management Corporation (since
June 1990); an officer of other Oppenheimer funds.
Arthur J. Zimmer, Vice President and Portfolio Manager, Age: 53
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager (since June 1997); Vice President of
Centennial Asset Management Corporation (since June 1997); an officer of other
Oppenheimer funds; formerly Vice President of the Manager (October 1990 - June
1997).
Andrew J. Donohue, Vice President and Secretary, Age: 49
Two World Trade Center, New York, New York 10048-0203
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President and General Counsel (since September 1993) and a director (since
January 1992) of the Distributor; Executive Vice President, General Counsel and
a director of HarbourView Asset Management Corporation, Shareholder Services,
Inc., Shareholder Financial Services, Inc. and (since September 1995)
Oppenheimer Partnership Holdings, Inc.; President and a director of Centennial
Asset Management Corporation (since September 1995); President, General Counsel
and a director of Oppenheimer Real Asset Management, Inc. (since July 1996);
General Counsel (since May 1996) and Secretary (since April 1997) of Oppenheimer
Acquisition Corp.; Vice President and a director of OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc (since October 1997); an
officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer, Age: 40
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller
for the Manager.
Scott T. Farrar, Assistant Treasurer, Age: 34
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller
for the Manager.
Brian W. Wixted, Treasurer, Age: 40
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (since April 1999) of the Manager; Treasurer
of HarbourView Asset Management Corporation, Shareholder Services, Inc.,
Shareholder Financial Services, Inc. and Oppenheimer Partnership Holdings, Inc.
(since April 1999); Assistant Treasurer of Oppenheimer Acquisition Corp. (since
April 1999); Assistant Secretary of Centennial Asset Management Corporation
(since April 1999); formerly Principal and Chief Operating Officer, Bankers
Trust Company - Mutual Fund Services Division (March 1995 - March 1999); Vice
President and Chief Financial Officer of CS First Boston Investment Management
Corp. (September 1991 - March 1995); and Vice President and Accounting Manager,
Merrill Lynch Asset Management (November 1987 - September 1991).
Robert G. Zack, Assistant Secretary, Age: 51
Two World Trade Center, New York, New York 10048-0203
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of Shareholder Services, Inc. (since
May 1985), and Shareholder Financial Services, Inc. (since November 1989);
Assistant Secretary of OppenheimerFunds International Ltd. and Oppenheimer
Millennium Funds plc (since October 1997); an officer of other Oppenheimer
funds.
O Remuneration of Trustees. The officers of the Trust and certain Trustees of
the Trust (Ms. Macaskill and Mr. Swain) who are affiliated with the Manager
receive no salary or fee from the Trust. The remaining Trustees of the Trust
received the compensation shown below. The compensation from the Trust was paid
during its fiscal year ended June 30, 1999. The compensation from all of the
Denver-based Oppenheimer funds includes the Trust and is compensation received
as a trustee, director, managing general partner or member of a committee of the
Board during the calendar year 1998.
<PAGE>
-----------------------------------------------------------------------------
Aggregate Total Compensation
Trustee's Name Compensation from all Denver-Based
and Other Positions from Trust Oppenheimer Funds1
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Robert G. Avis $5,734 $67,998
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
William A. Baker $5,818 $69,998
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Jon S. Fossel $5,691 $67,496
Review Committee Member
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Sam Freedman $6,239 $73,998
Review Committee Member
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Raymond J. Kalinowski $6,239 $73,998
Audit Committee Member
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
C. Howard Kast $6,493 $76,998
Audit and Review
Committee Chairman
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Robert M. Kirchner $5,734 $67,998
Audit Committee Member
------------------------------------------------------------------------------
-----------------------------------------------------------------------------
Ned M. Steel $5,734 $67,998
-----------------------------------------------------------------------------
1. For the 1998 calendar year.
o Deferred Compensation Plan for Trustees. The Trustees have adopted
a Deferred Compensation Plan for disinterested Trustees that enables them to
elect to defer receipt of all or a portion of the annual fees they are entitled
to receive from the Trust. Under the plan, the compensation deferred by a
Trustee is periodically adjusted as though an equivalent amount had been
invested in shares of one or more Oppenheimer funds selected by the Trustee. The
amount paid to the Trustee under this plan will be determined based upon the
performance of the selected funds.
Deferral of fees of the Trustees under this plan will not materially
affect the Trust's assets, liabilities or net income per share. This plan will
not obligate the Trust to retain the services of any Trustee or to pay any
particular level of compensation to any Trustee. Pursuant to an Order issued by
the Securities and Exchange Commission, the Trust may invest in the funds
selected by any Trustee under this plan without shareholder approval for the
limited purpose of determining the value of the Trustees' deferred fee accounts.
|X| Major Shareholders. As of October 21, 1999 the only person who owned
of record or was known by the Trust to own beneficially 5% or more of the
Trust's outstanding retail shares was A.G. Edwards & Sons, Inc. ("Edwards"), 1
North Jefferson Avenue, St. Louis, Missouri 63103, which owned
17,691,672,576.430 shares of the Trust which was 98.8% of the outstanding shares
of the Trust on that date, for accounts of its customers none of whom
individually owned more than 5% of the outstanding shares..
The Manager. The Manager is wholly-owned by OppenheimerFunds, Inc., which is a
wholly-owned subsidiary of Oppenheimer Acquisition Corp., a holding company
controlled by Massachusetts Mutual Life Insurance Company.
The portfolio managers of the Trust are principally responsible for the
day-to-day management of the Trust's investment portfolio. Other members of the
Manager's fixed-income portfolio department, particularly security analysts,
traders and other portfolio managers, have broad experience with fixed-income
securities. They provide the Trust's portfolio managers with research and
support in managing the Trust's investments.
|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Trust under an investment advisory
agreement between the Manager and the Trust. The Manager selects securities for
the Trust's portfolio and handles its day-to-day business. The agreement
requires the Manager, at its expense, to provide the Trust with adequate office
space, facilities and equipment. It also requires the Manager to provide and
supervise the activities of all administrative and clerical personnel required
to provide effective administration for the Trust. Those responsibilities
include the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and composition of
proxy materials and registration statements for continuous public sale of shares
of the Trust.
Expenses not expressly assumed by the Manager under the investment
advisory agreement are paid by the Trust. The investment advisory agreement
lists examples of expenses paid by the Trust. The major categories relate to
interest, taxes, fees to unaffiliated Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain printing
and registration costs and non-recurring expenses, including litigation costs.
The management fees paid by the Trust to the Manager are calculated at the rates
described in the Prospectus.
- --------------------------------------------------------------------------------
Fiscal Year Management Fee Paid to Centennial Asset Management Corporation
ending 6/30
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1997 $32,755,568
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1998 $45,145,160
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1999 $57,461,310
- --------------------------------------------------------------------------------
Under the investment advisory agreement, the Manager has agreed to
reimburse the Trust to the extent that the Trust's total expenses (including the
management fee but excluding interest, taxes, brokerage commissions, and
extraordinary expenses such as litigation costs) exceed in any fiscal year the
lesser of: (i) 1.5% of average annual net assets of the Trust up to $30 million
plus 1% of the average annual net assets in excess of $30 million or; (ii) 25%
of the total annual investment income of the Trust. For fiscal year ended June
30, 1997 and June 30, 1998 June 30, 1999, the reimbursements by the Manager to
the Trust were $4,890,123, $2,382,437 and $0, respectively.
Independently of the investment advisory agreement, the Manager had
voluntarily agreed to waive a portion of the management fee otherwise payable to
it by the Trust during the period from December 1, 1991 through November 21,
1997. Contemporaneously with the amendment of the Trust's investment advisory
agreement with the Manager, the Manager withdrew its voluntary waiver on
November 21, 1997.
The investment advisory agreement provides that the Manager shall not be
liable for any loss sustained by reason of the adoption of an investment policy
or the purchase, sale or retention of any security on its recommendation,
whether or not such recommendation shall have been based upon its own
investigation and research or upon investigation and research made by any other
individual, firm or corporation, if such recommendation shall have been made and
such other individual, firm or corporation shall have been selected with due
care and in good faith, provided that nothing in the agreement shall be
construed to protect the Manager against any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of its reckless disregard of its
obligations and duties under the agreement.
|X| The Distributor. Under its General Distributor's Agreement with the
Trust, Centennial Asset Management Corporation acts as the Trust's principal
underwriter and Distributor in the continuous public offering of the Trust's
shares. The Distributor is not obligated to sell a specific number of shares.
The Distributor bears the expenses normally attributable to sales, including
advertising and the cost of printing and mailing prospectuses, other than those
furnished to existing shareholders.
Portfolio Transactions. Portfolio decisions are based upon recommendations and
judgment of the Manager subject to the overall authority of the Board of
Trustees. Most purchases made by the Trust are principal transactions at net
prices, so the Trust incurs little or no brokerage costs. The Trust deals
directly with the selling or purchasing principal or market maker without
incurring charges for the services of a broker on its behalf unless the Manager
determines that a better price or execution may be obtained by using the
services of a broker. Purchases of portfolio securities from underwriters
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers include a spread between the bid and asked prices.
The Trust seeks to obtain prompt execution of orders at the most favorable
net price. If broker/dealers are used for portfolio transactions, transactions
may be directed to broker/dealers for their execution and research services. The
research services provided by a particular broker may be useful only to one or
more of the advisory accounts of the Manager and its affiliates. Investment
research received for the commissions of those other accounts may be useful both
to the Trust and one or more of such other accounts. Investment research
services may be supplied to the Manager by a third party at the instance of a
broker through which trades are placed. It may include information and analyses
on particular companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio evaluations,
information systems, computer hardware and similar products and services. If a
research service also assists the Manager in a non-research capacity (such as
bookkeeping or other administrative functions), then only the percentage or
component that provides assistance to the Manager in the investment
decision-making process may be paid in commission dollars.
The research services provided by brokers broaden the scope and supplement
the research activities of the Manager. That research provides additional views
and comparisons for consideration, and helps the Manager obtain market
information for the valuation of securities held in the Trust's portfolio or
being considered for purchase.
Subject to applicable rules covering the Manager's activities in this
area, sales of shares of the Trust and/or the other investment companies managed
by the Manager or distributed by the Distributor may also be considered as a
factor in the direction of transactions to dealers. That must be done in
conformity with the price, execution and other considerations and practices
discussed above. Those other investment companies may also give similar
consideration relating to the sale of the Trust's shares. No portfolio
transactions will be handled by any securities dealer affiliated with the
Manager.
The Trust's policy of investing in short-term debt securities with
maturities of less than one year results in high portfolio turnover and may
increase the Trust's transaction costs. However, since brokerage commissions, if
any, are small, high turnover does not have an appreciable adverse effect upon
the income of the Trust.
Service Plan
The Trust has adopted a Service Plan for the shares. The plan has been approved
by a vote of the Board of Trustees, including a majority of the Independent
Trustees2, cast in person at a meeting called for the purpose of voting on that
plan.
2. In accordance with Rule 12b-1 of the Investment
Company Act, the term "Independent Trustees" in this Statement of Additional
Information refers to those Trustees who are not "interested persons" of the
Fund (or its parent corporation) and who do not have any direct or indirect
financial interest in the operation of any agreement under the plan.
Under the plan, the Manager and the Distributor may make payments to
affiliates and, in their sole discretion, from time to time, may use their own
resources (at no direct cost to the Trust) to make payments to brokers, dealers
or other financial institutions for distribution and administrative services
they perform. The Manager may use its profits from the advisory fee it receives
from the Trust. In their sole discretion, the Distributor and the Manager may
increase or decrease the amount of payments they make from their own resources
to plan recipients.
Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Trust's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose of
voting on continuing the plan. A plan may be terminated at any time by the vote
of a majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the outstanding shares
of the Trust.
The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the amount of
payments to be made under a plan must be approved by shareholders of the class
affected by the amendment. The approval must be by a "majority" (as defined in
the Investment Company Act) of the shares.
While the plan is in effect, the Treasurer of the Trust shall provide
separate written reports on the plan to the Board of Trustees at least quarterly
for its review. The Reports shall detail the amount of all payments made under
the plan and the purpose for which the payments were made. Those reports are
subject to the review and approval of the Independent Trustees.
The plan states that while it is in effect, the selection and nomination
of those Trustees of the Trust who are not "interested persons" of the Trust is
committed to the discretion of the Independent Trustees. This does not prevent
the involvement of others in the selection and nomination process as long as the
final decision as to selection or nomination is approved by a majority of the
Independent Trustees.
Under the plan, no payment will be made to any recipient in any quarter in
which the aggregate net asset value of all Trust shares held by the recipient
for itself and its customers does not exceed a minimum amount, if any, that may
be set from time to time by a majority of the Independent Trustees. The Board of
Trustees has set no minimum amount of assets to qualify for payments under the
plan.
|X| Service Plan Fees. Under the service plan, the Distributor currently
uses the fees it receives from the Trust to pay brokers, dealers and other
financial institutions (they are referred to as "recipients") for personal
services and account maintenance services they provide for their customers who
hold shares. The services include, among others, answering customer inquiries
about the Trust, assisting in establishing and maintaining accounts in the
Trust, making the Trust's investment plans available and providing other
services at the request of the Trust or the Distributor. The service plan
permits reimbursements to the Distributor at a rate of up to 0.20% of average
annual net assets of the shares. While the plan permits the Board to authorize
payments to the Distributor to reimburse itself for services under the plan, the
Board has not yet done so. The Distributor makes payments to plan recipients
quarterly at an annual rate not to exceed 0.20% of the average annual net assets
consisting of shares held in the accounts of the recipients or their customers.
For the fiscal year ended June 30, 1999 payments under the plan totaled
$34,170,025, all of which was paid by the Distributor to recipients. That
included $546 paid to an affiliate of the Distributor's parent company. Any
unreimbursed expenses the Distributor incurs with respect to the shares in any
fiscal year cannot be recovered in subsequent years. The Distributor may not use
payments received under the plan to pay any of its interest expenses, carrying
charges, or other financial costs, or allocation of overhead.
Performance of the Trust
Explanation of Performance Terminology. The Trust uses a variety of terms to
illustrate its performance. These terms include "yield," "compounded effective
yield" and "average annual total return." An explanation of how yields and total
returns are calculated is set forth below. The charts below show the Trust's
performance as of the Trust's most recent fiscal year end. You can obtain
current performance information by calling the Trust's Transfer Agent at
1-800-525-9310.
The Trust's illustrations of its performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those rules
describe the types of performance data that may be used and how it is to be
calculated. If the Trust shows total returns in addition to its yields, the
returns must be for the 1-, 5- and 10-year periods ending as of the most recent
calendar quarter prior to the publication of the advertisement (or its
submission for publication).
Use of standardized performance calculations enables an investor to
compare the Trust's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using the
Trust's performance information as a basis for comparisons with other
investments:
|_| Yields and total returns measure the performance of a hypothetical
account in the Trust over various periods and do not show the performance
of each shareholder's account. Your account's performance will vary from
the model performance data if your dividends are received in cash, or you
buy or sell shares during the period, or you bought your shares at a
different time than the shares used in the model.
|_| An investment in the Trust is not insured by the FDIC or any other
government agency.
|_| The Trust's yield is not fixed or guaranteed and will fluctuate.
|_| Yields and total returns for any given past period represent historical
performance information and are not, and should not be considered, a
prediction of future yields or returns.
|_| Yields. The Trust's current yield is calculated for a seven-day
period of time as follows. First, a base period return is calculated for the
seven-day period by determining the net change in the value of a hypothetical
pre-existing account having one share at the beginning of the seven-day period.
The change includes dividends declared on the original share and dividends
declared on any shares purchased with dividends on that share, but such
dividends are adjusted to exclude any realized or unrealized capital gains or
losses affecting the dividends declared. Next, the base period return is
multiplied by 365/7 to obtain the current yield to the nearest hundredth of one
percent.
The compounded effective yield for a seven-day period is calculated by (1)
adding 1 to the base period return (obtained as described above), (2) raising
the sum to a power equal to 365 divided by 7, and (3) subtracting 1 from the
result.
The yield as calculated above may vary for accounts less than
approximately $100 in value due to the effect of rounding off each daily
dividend to the nearest full cent. The calculation of yield under either
procedure described above does not take into consideration any realized or
unrealized gains or losses on the Trust's portfolio securities which may affect
dividends. Therefore, the return on dividends declared during a period may not
be the same on an annualized basis as the yield for that period.
o Total Return Information. There are different types of "total
returns" to measure the Trust's performance. Total return is the change in value
of a hypothetical investment in the Trust over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares
and that the investment is redeemed at the end of the period. The cumulative
total return measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate of return for
each year in a period that would produce the cumulative total return over the
entire period. However, average annual total returns do not show actual
year-by-year performance. The Trust uses standardized calculations for its total
returns as prescribed by the SEC. The methodology is discussed below.
|_| Average Annual Total Return. The "average annual total return" of
each class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below) held
for a number of years ("n") to achieve an Ending Redeemable Value ("ERV" in the
formula) of that investment, according to the following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
|_| Cumulative Total Return. The "cumulative total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as average
annual total return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
- --------------------------------------------------------------------------------
Yield Compounded Average Annual Total Returns (at 6/30/99)
(7 days ended Effective Yield
6/30/99) (7 days ended
6/30/99)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1-Year 5 Years 10 Years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4.37% 4.46% 4.75% 5.01% 5.04%
- --------------------------------------------------------------------------------
|X| Other Performance Comparisons. Yield information may be useful to
investors in reviewing the Trust's performance. The Trust may make comparisons
between its yield and that of other investments, by citing various indices such
as The Bank Rate Monitor National Index (provided by Bank Rate MonitorJ) which
measures the average rate paid on bank money market accounts, NOW accounts and
certificates of deposits by the 100 largest banks and thrifts in the top ten
metro areas. When comparing the Trust's yield with that of other investments,
investors should understand that certain other investment alternatives such as
certificates of deposit, U.S. government securities, money market instruments or
bank accounts may provide fixed yields and may be insured or guaranteed.
From time to time, the Trust may include in its advertisements and sales
literature performance information about the Trust cited in other newspapers and
periodicals, such as The New York Times, which may include performance
quotations from other sources.
From time to time, the Trust's Manager may publish rankings or ratings of
the Manager (or the Transfer Agent) or the investor services provided by them.
Those ratings or rankings of investor/shareholder services by third parties may
compare the services provided to those of other mutual fund families selected by
the rating or ranking services. They may be based on the opinions of the rating
or ranking service itself, based on its research or judgment, or based on
surveys of investors, brokers, shareholders or others.
A B O U T Y O U R A C C O U N T
How to Buy Shares
Determination of Net Asset Value Per Share. The net asset value per share of the
Trust is determined twice each day that the New York Stock Exchange ("Exchange")
is open, at 12:00 Noon and at 4:00 P.M, on each day that the Exchange is open,
by dividing the value of the Trust's net assets by the total number of shares
outstanding. All references to time in this Statement of Additional Information
mean New York time. The Exchange's most recent annual announcement (which is
subject to change) states that it will close on New Year's Day, Martin Luther
King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. It may also close on other days.
The Trust's Board of Trustees has adopted the amortized cost method to
value the Trust's portfolio securities. Under the amortized cost method, a
security is valued initially at its cost and its valuation assumes a constant
amortization of any premium or accretion of any discount, regardless of the
impact of fluctuating interest rates on the market value of the security. This
method does not take into consideration any unrealized capital gains or losses
on securities. While this method provides certainty in valuing securities, in
certain periods the value of a security determined by amortized cost may be
higher or lower than the price the Trust would receive if it sold the security.
The Trust's Board of Trustees has established procedures reasonably
designed to stabilize the Trust's net asset value at $1.00 per share. Those
procedures include a review of the valuations of the Trust's portfolio holdings
by the Board of Trustees, at intervals it deems appropriate, to determine
whether the Trust's net asset value calculated by using available market
quotations deviates from $1.00 per share based on amortized cost.
The Board of Trustees will examine the extent of any deviation between the
Trust's net asset value based upon available market quotations and amortized
cost. If the Trust's net asset value were to deviate from $1.00 by more than
0.5%, Rule 2a-7 requires the Board of Trustees to consider what action, if any,
should be taken. If they find that the extent of the deviation may cause a
material dilution or other unfair effects on shareholders, the Board of Trustees
will take whatever steps it considers appropriate to eliminate or reduce the
dilution, including, among others, withholding or reducing dividends, paying
dividends from capital or capital gains, selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten the average maturity
of the portfolio, or calculating net asset value per share by using available
market quotations.
During periods of declining interest rates, the daily yield on shares of
the Trust may tend to be lower (and net investment income and dividends higher)
than those of a fund holding the identical investments as the Trust but which
used a method of portfolio valuation based on market prices or estimates of
market prices. During periods of rising interest rates, the daily yield of the
Trust would tend to be higher and its aggregate value lower than that of an
identical portfolio using market price valuation.
How to Sell Shares
The information below supplements the terms and conditions for redeeming shares
set forth in the Prospectus.
Checkwriting. When a check is presented to the Bank for clearance, the Bank will
ask the Trust to redeem a sufficient number of full and fractional shares in the
shareholder's account to cover the amount of the check. This enables the
shareholder to continue receiving dividends on those shares until the check is
presented to the Trust. Checks may not be presented for payment at the offices
of the Bank or the Trust's Custodian. This limitation does not affect the use of
checks for the payment of bills or to obtain cash at other banks. The Trust
reserves the right to amend, suspend or discontinue offering checkwriting
privileges at any time without prior notice.
In choosing to take advantage of the Checkwriting privilege, by signing the
Account Application or by completing a Checkwriting card, each individual who
signs:
(1) for individual accounts, represents that they are the registered owner(s)
of the shares of the Trust in that account;
(2) for accounts for corporations, partnerships, trusts and other entities,
represents that they are an officer, general partner, trustee or other
fiduciary or agent, as applicable, duly authorized to act on behalf of the
registered owner(s);
(3) authorizes the Trust, its Transfer Agent and any bank through which the
Trust's drafts (checks) are payable to pay all checks drawn on the Trust
account of such person(s) and to redeem a sufficient amount of shares from
that account to cover payment of each check;
(4) specifically acknowledges that if they choose to permit checks to be
honored if there is a single signature on checks drawn against joint
accounts, or accounts for corporations, partnerships, trusts or other
entities, the signature of any one signatory on a check will be sufficient
to authorize payment of that check and redemption from the account, even if
that account is registered in the names of more than one person or more
than one authorized signature appears on the Checkwriting card or the
Application, as applicable;
(5) understands that the Checkwriting privilege may be terminated or amended at
any time by the Trust and/or the Trust's bank; and
(6) acknowledges and agrees that neither the Trust nor its bank shall incur any
liability for that amendment or termination of checkwriting privileges or
for redeeming shares to pay checks reasonably believed by them to be
genuine, or for returning or not paying checks that have not been accepted
for any reason.
Sending Redemption Proceeds by Federal Funds Wire. The Federal Funds wire of
redemptions proceeds may be delayed if the Trust's custodian bank is not open
for business on a day when the Trust would normally authorize the wire to be
made, which is usually the Trust's next regular business day following the
redemption. In those circumstances, the wire will not be transmitted until the
next bank business day on which the Trust is open for business. No distributions
will be paid on the proceeds of redeemed shares awaiting transfer by Federal
Funds wire
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address listed
in "How To Sell Shares" in the Prospectus or on the back cover of this Statement
of Additional Information. The request must
(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is
premature; and
(3) conform to the requirements of the plan and the Trust's other redemption
requirements.
Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Trust held in the name of the plan or its fiduciary may not directly request
redemption of their accounts. The plan administrator or fiduciary must sign the
request.
Distributions from pension and profit sharing plans are subject to special
requirements under the Internal Revenue Code and certain documents (available
from the Transfer Agent) must be completed and submitted to the Transfer Agent
before the distribution may be made. Distributions from retirement plans are
subject to withholding requirements under the Internal Revenue Code, and IRS
Form W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified tax
identification number, the Internal Revenue Code requires that tax be withheld
from any distribution even if the shareholder elects not to have tax withheld.
The Trust, the Manager, the Distributor the Sub-Distributor, and the Transfer
Agent assume no responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for any tax
penalties assessed in connection with a distribution.
How to Exchange Shares
As stated in the Prospectus, direct shareholders can exchange shares of the
Trust for Class A shares of any of the following eligible funds:
Oppenheimer Main Street California
Oppenheimer Bond Fund Municipal Fund
Oppenheimer Main Street Growth &
Oppenheimer Capital Appreciation Fund Income Fund
Oppenheimer Capital Preservation Oppenheimer Main Street Small Cap Fund
Oppenheimer California Municipal Fund Oppenheimer MidCap Fund
Oppenheimer Champion Income Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Convertible Securities Fund Oppenheimer Municipal Bond Fund
Oppenheimer Developing Markets Fund Oppenheimer New York Municipal Fund
Oppenheimer Disciplined Allocation Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Disciplined Value Fund Oppenheimer Pennsylvania Municipal
Fund
Oppenheimer Discovery Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Enterprise Fund Inc.
Oppenheimer Quest Global Value Fund,
Oppenheimer Capital Income Fund Inc.
Oppenheimer Europe Fund Oppenheimer Quest Opportunity Value
Fund
Oppenheimer Florida Municipal Fund Oppenheimer Quest Small Cap Value Fund
Oppenheimer GlobalFund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Global Growth & Income Fund Oppenheimer Real Asset Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Strategic Income Fund
Oppenheimer Growth Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer High Yield Fund Oppenheimer Trinity Core Fund
Oppenheimer Insured Municipal Fund Oppenheimer Trinity Growth Fund
Oppenheimer Intermediate Municipal Fund Oppenheimer Trinity Value Fund
Oppenheimer International Bond Fund Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund Oppenheimer World Bond Fund
Oppenheimer International Small
Company Fund Limited-Term New York Municipal Fund
Oppenheimer Large Cap Growth Fund Rochester Fund Municipals
Oppenheimer Limited-Term Government Fund
and the following money
market funds:
Centennial New York Tax Exempt Trust
Centennial America Fund, L. P. Centennial Tax Exempt Trust
Centennial California Tax Exempt Trust Oppenheimer Cash Reserves
Centennial Government Trust Oppenheimer Money Market Fund, Inc.
Centennial Money Market Trust
Shares of the Trust purchased without a sales charge may be exchanged for
shares of an eligible fund offered with a sales charge upon payment of the sales
charge. Shares of the Trust acquired by reinvestment of dividends or
distributions from the Trust or any of the other eligible funds (other than
Oppenheimer Cash Reserves) or from any unit investment trust for which
reinvestment arrangements have been made with the Distributor may be exchanged
at net asset value for shares of any of the eligible funds.
|_| Limits on Multiple Exchange Orders. The Trust reserves the right to
reject telephone or written exchange requests submitted in bulk by anyone on
behalf of more than one account. The Trust may accept requests for exchanges of
up to 50 accounts per day from representatives of authorized dealers that
qualify for this privilege.
|_| Telephone Exchange Requests. When exchanging shares by telephone, a
direct shareholder must have an existing account in the fund to which the
exchange is to be made. Otherwise, the investor must obtain a prospectus of that
fund before the exchange request may be submitted. If all telephone lines are
busy (which might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
|_| Processing Exchange Requests. Shares to be exchanged are redeemed on
the regular business day the Transfer Agent receives an exchange request in
proper form (the "Redemption Date"). Normally, shares of the fund to be acquired
are purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The Trust
reserves the right, in its discretion, to refuse any exchange request that may
disadvantage it (for example, if the receipt of multiple exchange requests from
a dealer might require the disposition of portfolio securities at a time or at a
price that might be disadvantageous to the Trust).
In connection with any exchange request, the number of shares exchanged
may be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered by a share
certificate that is not tendered with the request. In those cases, only the
shares available for exchange without restriction will be exchanged.
The different eligible funds available for exchange have different
investment objectives, policies and risks. A shareholder should assure that the
fund selected is appropriate for his or her investment and should be aware of
the tax consequences of an exchange. For Federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. The Trust, the Distributor, the Sub-Distributor,
and the Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other investment
transaction.
The Trust may amend, suspend or terminate the exchange privilege at any
time. Although, the Trust may impose these changes at any time, it will provide
you with notice of those changes whenever it is required to do so by applicable
law. It may be required to provide 60 days notice prior to materially amending
or terminating the exchange privilege. That 60-day notice is not required in
extraordinary circumstances.
Dividends and Taxes
Tax Status of the Trust's Dividends and Distributions. The federal tax treatment
of the Trust's dividends and capital gains distributions is explained in the
Prospectus under the caption "Distributions and Taxes." Under the Internal
Revenue Code, by December 31 each year, the Trust must distribute 98% of its
taxable investment income earned from January 1 through December 31 of that year
and 98% of its capital gains realized in the period from November 1 of the prior
year through October 31 of the current year. It if does not, the Trust must pay
an excise tax on the amounts not distributed. It is presently anticipated that
the Trust will meet those requirements. However, the Board of Trustees and the
Manager might determine in a particular year that it would be in the best
interest of shareholders for the Trust not to make distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would reduce
the amount of income or capital gains available for distribution to
shareholders. The Trust's dividends will not be eligible for the
dividends-received deduction for corporations.
If the Trust qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for federal income taxes on amounts
paid by it as distributions. That qualification enables the Trust to "pass
through" its income and realized capital gains to shareholders without having to
pay tax on them. The Trust qualified as a regulated investment company in its
last fiscal year and intends to qualify in future years, but reserves the right
not to qualify. The Internal Revenue Code contains a number of complex tests to
determine whether the Trust qualifies. The Trust might not meet those tests in a
particular year. If it does not qualify, the Trust will be treated for tax
purposes as an ordinary corporation and will receive no tax deduction for
payments of distributions made to shareholders.
Dividends, distributions and the proceeds of the redemption of Trust
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of the Trust as promptly as
possible after the return of such checks to the Transfer Agent, in order to
enable the investor to earn a return on otherwise idle funds.
Dividend Reinvestment in Another Trust. Direct shareholders of the Trust may
elect to reinvest all dividends and/or capital gains distributions in Class A
shares of any eligible fund listed above. To elect this option, the shareholder
must notify the Transfer Agent in writing and must have an existing account in
the fund selected for reinvestment. Otherwise, the shareholder first must obtain
a prospectus for that fund and an application from the Distributor to establish
an account. The investment will be made at the close of business on the payable
date of the dividend or distribution.
Additional Information About the Trust
The Distributor. The Trust's shares are sold through dealers, brokers and other
financial institutions that have a sales agreement with the Sub-Distributor. The
Distributor and the Sub-Distributor also distribute shares of the other funds
managed by the Manager or an affiliate.
The Transfer Agent. Shareholder Services, Inc. the Trust's Transfer Agent,
is responsible for maintaining the Trust's shareholder registry and
shareholder accounting records, and for paying dividends and distributions to
shareholders of the Trust. It also handles shareholder servicing and
administrative functions. It is paid on a "at-cost" basis.
The Custodian. Citibank, N.A. is the Custodian of the Trust's assets. The
Custodian's responsibilities include safeguarding and controlling the Trust's
portfolio securities and handling the delivery of such securities to and from
the Trust. It will be the practice of the Trust to deal with the Custodian in a
manner uninfluenced by any banking relationship the Custodian may have with the
Manager and its affiliates. The Trust's cash balances with the Custodian in
excess of $100,000 are not protected by federal deposit insurance. Those
uninsured balances at times may be substantial.
Independent Auditors. Deloitte & Touche LLP are the independent auditors of the
Trust. They audit the Trust's financial statements and perform other related
audit services. They also act as auditors for the Manager and OFI and for
certain other funds advised by the Manager and its affiliates.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Centennial Money Market Trust
The Board of Trustees and Shareholders of Centennial Money Market Trust:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Centennial Money Market Trust as of June 30,
1999, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended June 30, 1999 and 1998,
and the financial highlights for the period July 1, 1994 to June 30, 1999. These
financial statements and financial highlights are the responsibility of the
Trust'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, 1999, by correspondence with the custodian and brokers; where replies 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Centennial Money
Market Trust as of June 30, 1999, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods,
in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
July 22, 1999
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ --------------
DIRECT BANK OBLIGATIONS--4.9%
<S> <C> <C>
Abbey National Treasury Services:
4.85%, 8/23/99....................................................................... $ 50,000,000 $ 49,642,986
4.85%, 8/25/99....................................................................... 50,000,000 49,629,514
Bank of Scotland:
4.88%, 8/25/99....................................................................... 50,000,000 49,627,222
4.88%, 8/26/99....................................................................... 45,000,000 44,658,400
Credit Suisse First Boston:
4.83%, 8/23/99(1).................................................................... 15,000,000 14,893,337
4.83%, 9/2/99(1)..................................................................... 35,000,000 34,704,163
4.83%, 9/8/99(1)..................................................................... 42,500,000 42,106,556
4.83%, 10/12/99(1)................................................................... 30,000,000 29,585,425
4.844%, 11/4/99(1)................................................................... 25,000,000 24,576,150
4.90%, 9/9/99(1)..................................................................... 50,000,000 49,523,611
5.02%, 7/8/99(1)..................................................................... 25,000,000 24,975,597
5.10%, 7/29/99(2)(3)................................................................. 50,000,000 49,995,852
FCC National Bank:
4.89%, 9/3/99........................................................................ 50,000,000 50,000,000
4.925%, 11/1/99...................................................................... 50,000,000 50,000,000
4.93%, 8/27/99....................................................................... 50,000,000 50,000,000
4.93%, 10/20/99...................................................................... 50,000,000 50,000,000
4.93%, 10/21/99...................................................................... 50,000,000 50,000,000
4.94%, 11/1/99....................................................................... 65,000,000 65,000,000
4.94%, 11/3/99....................................................................... 50,000,000 50,000,000
4.94%, 11/4/99....................................................................... 50,000,000 50,000,000
--------------
Total Direct Bank Obligations 878,918,813
--------------
LETTERS OF CREDIT--6.8%
Abbey National plc, guaranteeing commercial paper of Abbey National
North America Corp.:
4.80%, 7/7/99........................................................................ 100,000,000 99,919,833
4.80%, 7/8/99........................................................................ 50,000,000 49,953,333
4.81%, 7/21/99....................................................................... 50,000,000 49,866,389
4.81%, 7/22/99....................................................................... 50,000,000 49,859,708
4.84%, 11/12/99...................................................................... 50,000,000 49,099,222
4.89%, 8/31/99....................................................................... 50,000,000 49,585,708
5.05%, 12/6/99....................................................................... 50,000,000 48,891,806
ABN Amro Bank N.V., guaranteeing commercial paper of
Formosa Plastics Corp., USA, Series A, 4.89%, 8/12/99................................ 20,000,000 19,885,900
ABN Amro Bank N.V., guaranteeing commercial paper of
Lasalle National Bank:
4.93%, 10/21/99...................................................................... 50,000,000 50,000,000
4.93%, 10/28/99...................................................................... 50,000,000 50,000,000
</TABLE>
3
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ --------------
LETTERS OF CREDIT (CONTINUED)
<S> <C> <C>
Bank of America NT & SA, guaranteeing commercial paper of
Formosa Plastics Corp., USA, Series B, 4.88%, 8/12/99................................ $ 33,000,000 $ 32,812,120
Bank One, Cleveland, N.A., guaranteeing commercial paper of
Capital One Funding Corp.:
Series 1995F, 5.18%, 7/2/99(2)(4).................................................... 5,602,000 5,602,000
Series 1995F, 5.18%, 7/5/99(2)(4).................................................... 19,400,000 19,400,000
Series 1996C, 5.18%, 7/2/99(2)(4).................................................... 12,205,000 12,205,000
Series 1997E, 5.18%, 7/2/99(2)(4).................................................... 12,584,000 12,584,000
Bank One, Indiana, N.A., guaranteeing commercial paper of
Primex Funding Corp., 5.18%, 7/1/99(2)(4)............................................ 4,250,000 4,250,000
Barclays Bank plc, guaranteeing commercial paper of Banca Serfin SA,
Institucion de Banca Multiple, Grupo Financiero Serfin, Nassau Branch,
4.82%, 8/26/99....................................................................... 10,000,000 9,925,022
Barclays Bank plc, guaranteeing commercial paper of Banca Nacional
de Comercio Exterior SNC, Series A, 4.83%, 8/4/99.................................... 50,000,000 49,771,917
Barclays Bank plc, guaranteeing commercial paper of Banco Nacional
de Mexico SA, Series A, 4.92%, 9/9/99................................................ 30,000,000 29,713,000
Barclays Bank plc, guaranteeing commercial paper of Nacional Financiera SNC:
4.84%, 8/16/99....................................................................... 13,500,000 13,416,510
4.97%, 11/18/99...................................................................... 7,000,000 6,864,706
Barclays Bank plc, guaranteeing commercial paper of Petro Brasiliero
SA, Petrobras, Series C, 4.90%, 9/8/99............................................... 20,000,000 19,812,167
Barclays Bank plc, guaranteeing commercial paper of Unibanco-Uniao
de Bancos Brasilierios SA, Series D, 4.81%, 10/21/99................................. 25,000,000 24,625,889
Barclays Bank plc, guaranteeing commercial paper of United Mexican States:
4.83%, 11/3/99....................................................................... 50,000,000 49,159,722
4.97%, 11/17/99...................................................................... 80,000,000 78,464,822
Credit Suisse First Boston, guaranteeing commercial paper of Credit Suisse
First Boston International Ltd.:
4.81%, 8/20/99....................................................................... 50,000,000 49,665,972
4.82%, 8/12/99....................................................................... 27,000,000 26,848,170
4.83%, 8/19/99....................................................................... 25,000,000 24,835,646
4.87%, 9/16/99....................................................................... 15,000,000 14,843,754
4.99%, 9/22/99(3).................................................................... 50,000,000 50,000,000
First Chicago NBD Corp., guaranteeing commercial paper of First Chicago Financial:
4.85%, 9/16/99....................................................................... 50,000,000 49,481,320
4.85%, 10/14/99...................................................................... 37,000,000 36,476,604
4.90%, 7/28/99....................................................................... 26,000,000 25,904,450
Morgan Guaranty Trust Co., guaranteeing commercial paper of
Morgan Guaranty Trust Co. of New York, 5.09%, 7/27/99(2)............................. 45,000,000 44,994,735
--------------
Total Letters of Credit 1,208,719,425
--------------
</TABLE>
4
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ --------------
SHORT-TERM NOTES--88.3%
<S> <C> <C>
ASSET-BACKED--18.7%
Asset Backed Capital Finance, Inc.:
4.82%, 10/8/99(1).................................................................... $ 26,467,000 $ 26,116,180
4.90%, 7/6/99(2)(4).................................................................. 19,000,000 19,000,000
4.98%, 7/19/99(2)(4)................................................................. 45,000,000 45,000,000
Asset Securitization Cooperative:
5.25%, 8/25/99(1).................................................................... 70,000,000 69,438,542
5.25%, 8/27/99(1).................................................................... 93,000,000 92,226,937
5.10%, 9/2/99(1)..................................................................... 50,000,000 49,553,750
Atlantis One Funding Corp.:
4.82%, 9/23/99(1).................................................................... 50,000,000 49,437,667
4.84%, 8/18/99(1).................................................................... 97,718,000 97,087,393
4.89%, 8/17/99(1).................................................................... 50,000,000 49,680,792
4.90%, 8/19/99(1).................................................................... 100,000,000 99,333,056
Beta Finance, Inc.:
4.81%, 10/29/99(1)................................................................... 50,000,000 49,198,333
4.83%, 10/8/99(1).................................................................... 44,000,000 43,415,570
4.84%, 8/17/99(1).................................................................... 115,000,000 114,271,761
4.86%, 9/13/99(1).................................................................... 20,000,000 19,800,200
4.86%, 9/24/99(1).................................................................... 25,000,000 24,713,125
4.87%, 8/24/99(1).................................................................... 13,000,000 12,905,035
4.88%, 9/9/99(1)..................................................................... 18,500,000 18,324,456
4.94%, 7/26/99(1).................................................................... 36,000,000 35,876,500
Corporate Asset Funding Co., Inc.:
4.81%, 8/11/99(1).................................................................... 50,000,000 49,726,097
4.82%, 11/8/99(1).................................................................... 50,000,000 49,129,722
4.82%, 11/10/99(1)................................................................... 50,000,000 49,116,333
4.86%, 7/21/99(1).................................................................... 50,000,000 49,865,000
4.93%, 7/13/99(1).................................................................... 50,000,000 49,917,833
4.95%, 9/8/99(1)..................................................................... 25,000,000 24,762,813
5.04%, 7/28/99(1).................................................................... 50,000,000 49,811,000
5.08%, 9/24/99(1).................................................................... 50,000,000 49,399,097
5.11%, 9/20/99(1).................................................................... 31,000,000 30,643,578
Eureka Securitization, Inc.:
4.86%, 7/1/99(1)..................................................................... 50,000,000 50,000,000
4.94%, 8/11/99(1).................................................................... 40,000,000 39,774,956
4.94%, 8/12/99(1).................................................................... 50,000,000 49,711,833
5%, 7/14/99(1)....................................................................... 50,000,000 49,909,722
</TABLE>
5
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ --------------
ASSET-BACKED(CONTINUED)
<S> <C> <C>
Eureka Securitization, Inc.: (continued)
5.09%, 9/14/99(1).................................................................... $ 50,000,000 $ 49,469,792
5.11%, 9/10/99(1).................................................................... 23,000,000 22,768,205
5.15%, 9/20/99(1).................................................................... 30,000,000 29,652,375
5.25%, 8/25/99(1).................................................................... 50,000,000 49,598,958
5.35%, 7/20/99(1).................................................................... 30,000,000 29,915,292
5.37%, 7/9/99(1)..................................................................... 10,100,000 10,087,947
Falcon Asset Securitization Corp.:
4.85%, 7/7/99(1)..................................................................... 70,000,000 69,942,750
4.93%, 7/12/99(1).................................................................... 50,000,000 49,924,681
4.93%, 7/26/99(1).................................................................... 50,000,000 49,828,819
Moat Funding LLC:
4.96%, 7/8/99(1)..................................................................... 35,177,000 35,143,074
4.98%, 7/20/99(1).................................................................... 50,000,000 49,868,583
5%, 8/30/99(1)....................................................................... 105,000,000 104,125,000
Park Avenue Receivables Corp.:
4.82%, 10/15/99(1)................................................................... 41,784,000 41,190,992
4.83%, 8/4/99(1)..................................................................... 76,522,000 76,171,170
4.94%, 7/21/99(1).................................................................... 29,580,000 29,498,819
5.05%, 7/20/99(1).................................................................... 50,000,000 49,866,736
5.15%, 8/23/99(1).................................................................... 36,244,000 35,969,200
5.33%, 9/9/99(1)..................................................................... 100,000,000 98,963,611
Preferred Receivables Funding Corp.:
4.82%, 10/20/99(1)................................................................... 11,350,000 11,181,320
4.85%, 9/23/99(1).................................................................... 22,620,000 22,363,802
4.86%, 7/22/99(1).................................................................... 6,000,000 5,982,990
4.93%, 7/27/99(1).................................................................... 49,755,000 49,577,845
5.15%, 9/24/99(1).................................................................... 56,375,000 55,689,496
Sigma Finance, Inc.:
4.77%, 8/2/99(1)..................................................................... 50,000,000 49,788,000
4.78%, 7/30/99(1).................................................................... 32,500,000 32,374,917
4.82%, 8/19/99(1).................................................................... 20,000,000 19,868,789
4.82%, 10/29/99(1)................................................................... 25,000,000 24,598,333
4.825%, 8/11/99(1)................................................................... 38,030,000 37,821,020
4.85%, 10/8/99(1).................................................................... 36,000,000 35,519,850
4.86%, 9/21/99(1).................................................................... 50,000,000 49,446,500
4.86%, 11/12/99(1)................................................................... 20,000,000 19,638,200
4.87%, 8/18/99(1).................................................................... 50,000,000 49,675,333
4.90%, 9/10/99(1).................................................................... 100,000,000 99,025,722
4.94%, 7/8/99(1)..................................................................... 23,000,000 22,977,907
5.08%, 7/7/99(1)..................................................................... 15,000,000 15,000,000
</TABLE>
6
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ --------------
ASSET-BACKED (CONTINUED)
<S> <C> <C>
Variable Funding Capital Corp.:
4.81%, 7/19/99(1).................................................................... $ 50,000,000 $ 49,879,750
4.81%, 7/20/99(1).................................................................... 18,750,000 18,702,401
4.86%, 7/13/99(1).................................................................... 50,000,000 49,919,000
4.93%, 7/8/99(1)..................................................................... 50,000,000 49,952,069
4.94%, 7/14/99(1).................................................................... 45,500,000 45,418,833
4.94%, 7/15/99(1).................................................................... 75,000,000 74,855,236
5.05%, 7/9/99(1)..................................................................... 50,000,000 49,943,889
--------------
3,328,334,487
BANK HOLDING COMPANIES--12.0% --------------
Bank One Corp.:
4.82%, 7/29/99....................................................................... 50,000,000 49,812,556
4.83%, 9/29/99....................................................................... 50,000,000 49,396,250
4.84%, 8/18/99....................................................................... 50,000,000 49,677,333
4.88%, 8/5/99........................................................................ 50,000,000 49,762,778
BankAmerica Corp.:
4.80%, 10/18/99...................................................................... 100,000,000 98,546,667
4.83%, 10/6/99....................................................................... 50,000,000 49,349,292
4.83%, 10/7/99....................................................................... 50,000,000 49,342,583
4.84%, 11/17/99...................................................................... 50,000,000 49,065,611
4.84%, 11/18/99...................................................................... 50,000,000 49,058,889
4.89%, 9/20/99....................................................................... 50,000,000 49,447,204
Bankers Trust Co., New York:
4.90%, 8/5/99........................................................................ 50,000,000 49,761,806
4.94%, 10/15/99...................................................................... 50,000,000 49,272,722
4.97%, 11/10/99...................................................................... 46,300,000 45,456,260
5%, 7/1/99........................................................................... 50,000,000 50,000,000
5%, 7/19/99.......................................................................... 30,000,000 29,925,000
5.01%, 7/15/99....................................................................... 44,500,000 44,413,299
5.02%, 7/29/99....................................................................... 100,000,000 99,607,222
5.04%, 12/15/99...................................................................... 70,000,000 68,363,400
5.05%, 8/30/99....................................................................... 50,000,000 49,579,167
Chase Manhattan Corp.:
4.80%, 10/20/99...................................................................... 50,000,000 49,260,000
4.80%, 10/21/99...................................................................... 50,000,000 49,253,333
J.P. Morgan & Co., Inc.:
4.75%, 7/26/99....................................................................... 90,000,000 89,703,125
4.79%, 7/19/99....................................................................... 50,000,000 49,880,250
4.79%, 7/21/99....................................................................... 95,613,000 95,359,577
4.80%, 10/18/99...................................................................... 100,000,000 98,546,667
</TABLE>
7
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ --------------
BANK HOLDING COMPANIES (CONTINUED)
J.P. Morgan & Co., Inc.: (continued)
<S> <C> <C>
4.82%, 7/7/99........................................................................ $ 50,000,000 $ 49,959,833
4.83%, 7/12/99....................................................................... 50,000,000 49,926,208
4.83%, 10/4/99....................................................................... 50,000,000 49,362,708
4.84%, 9/27/99....................................................................... 154,385,000 152,559,783
4.85%, 7/14/99....................................................................... 50,000,000 49,912,431
4.85%, 7/15/99....................................................................... 40,000,000 39,924,556
Keycorp:
4.95%, 8/11/99....................................................................... 25,000,000 24,859,063
4.95%, 8/13/99....................................................................... 25,000,000 24,852,188
Wells Fargo & Co.:
4.81%, 8/23/99....................................................................... 90,000,000 89,358,553
4.84%, 7/21/99....................................................................... 50,000,000 49,865,556
4.88%, 7/30/99....................................................................... 50,000,000 49,803,444
4.90%, 7/22/99....................................................................... 50,000,000 49,857,083
--------------
2,142,082,397
BEVERAGES--2.1% --------------
Coca-Cola Enterprises, Inc.:
4.81%, 9/21/99(1).................................................................... 15,000,000 14,835,658
4.81%, 9/27/99(1).................................................................... 40,000,000 39,529,689
4.82%, 9/16/99(1).................................................................... 50,000,000 49,479,181
4.83%, 8/11/99(1).................................................................... 35,000,000 34,807,471
4.84%, 11/4/99(1).................................................................... 25,000,000 24,576,500
4.85%, 7/22/99(1).................................................................... 25,000,000 24,929,271
4.87%, 8/26/99(1).................................................................... 50,000,000 49,621,222
4.88%, 8/4/99(1)..................................................................... 35,000,000 34,838,689
4.90%, 9/9/99(1)..................................................................... 50,000,000 49,523,611
5.04%, 7/15/99(1).................................................................... 50,000,000 49,902,000
--------------
372,043,292
BROKER/DEALERS--16.3% --------------
Bear Stearns Cos., Inc.:
4.75%, 7/28/99....................................................................... 50,000,000 49,821,875
4.76%, 10/13/99...................................................................... 50,000,000 49,312,444
4.82%, 8/12/99....................................................................... 50,000,000 49,718,833
4.83%, 8/26/99....................................................................... 50,000,000 49,624,333
4.85%, 11/22/99...................................................................... 10,000,000 9,806,000
4.87%, 8/30/99....................................................................... 50,000,000 49,594,167
4.88%, 7/8/99........................................................................ 25,000,000 24,976,278
4.912%, 7/5/99(2).................................................................... 12,500,000 12,500,000
4.964%, 7/12/99(2)................................................................... 35,000,000 35,000,000
</TABLE>
8
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------- --------------
BROKER/DEALERS (CONTINUED)
Bear Stearns Cos., Inc.: (continued)
<S> <C> <C>
4.983%, 7/12/99(2)...................................................................$ 100,000,000 $ 100,000,000
4.994%, 7/20/99(2)................................................................... 10,000,000 9,992,589
5.02%, 7/19/99(2).................................................................... 50,000,000 50,000,000
5.03%, 8/18/99(2).................................................................... 50,000,000 50,000,000
5.078%, 7/6/99(2).................................................................... 25,000,000 25,012,484
5.11%, 7/27/99(2).................................................................... 30,000,000 30,000,000
5.14%, 7/26/99(2).................................................................... 50,000,000 50,000,000
5.15%, 7/7/99(2)..................................................................... 30,000,000 30,000,000
5.16%, 9/16/99(2).................................................................... 50,000,000 50,000,000
5.18%, 9/8/99(2)..................................................................... 30,000,000 30,000,000
5.349%, 9/9/99(2).................................................................... 35,000,000 35,000,000
5.378%, 8/18/99(2)................................................................... 45,000,000 45,000,000
Goldman Sachs Group, LP Promissory Nt.:
4.892%, 10/27/99..................................................................... 50,000,000 50,000,000
5.07%, 9/9/99........................................................................ 50,000,000 50,000,000
Goldman Sachs Group, LP:
4.80%, 10/28/99...................................................................... 150,000,000 147,613,389
4.82%, 10/25/99...................................................................... 50,000,000 49,223,444
4.82%, 10/27/99...................................................................... 45,000,000 44,289,050
4.83%, 10/6/99....................................................................... 50,000,000 49,349,292
4.83%, 10/13/99...................................................................... 50,000,000 49,302,333
4.87%, 9/2/99........................................................................ 50,000,000 49,573,875
4.94%, 11/18/99...................................................................... 40,000,000 39,231,556
5.11%, 7/12/99(2)(4)................................................................. 25,000,000 25,010,594
5.12%, 7/13/99(2)(4)................................................................. 40,000,000 40,022,629
5.12%, 9/21/99....................................................................... 50,000,000 49,416,889
5.20%, 7/7/99(2)(4).................................................................. 50,000,000 50,047,010
Lehman Brothers Holdings:
4.93%, 7/8/99........................................................................ 96,000,000 95,907,973
4.94%, 7/6/99........................................................................ 70,000,000 69,951,972
4.95%, 7/14/99....................................................................... 100,000,000 99,821,250
Merrill Lynch & Co., Inc.:
5.06%, 9/23/99(2).................................................................... 35,000,000 35,000,000
5.11%, 7/8/99(2)..................................................................... 50,000,000 50,000,000
5.14%, 7/28/99(2).................................................................... 50,000,000 50,000,000
5.35%, 7/1/99........................................................................ 191,400,000 191,400,000
Morgan Stanley Dean Witter & Co.:
4.81%, 8/26/99....................................................................... 50,000,000 49,625,889
4.82%, 8/25/99....................................................................... 50,000,000 49,631,806
5.057%, 7/16/99(2)................................................................... 50,000,000 49,983,984
5.16%, 9/14/99(2).................................................................... 50,000,000 50,000,000
6%, 9/13/99(2)....................................................................... 21,730,000 21,730,000
</TABLE>
9
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ -------------
<S> <C> <C>
BROKER/DEALERS (CONTINUED)
NationsBanc Montgomery Securities LLC, 6.20%, 9/1/99(2) $ 20,000,000 $ 20,000,000
Salomon Smith Barney Holdings, Inc.:
4.79%, 11/10/99...................................................................... 100,000,000 98,238,167
4.80%, 10/12/99...................................................................... 50,000,000 49,313,333
4.80%, 10/13/99 ..................................................................... 50,000,000 49,306,667
4.80%, 10/18/99...................................................................... 50,000,000 49,273,333
4.80%, 10/25/99...................................................................... 50,000,000 49,226,667
4.80%, 11/15/99...................................................................... 50,000,000 49,086,667
4.83%, 10/5/99....................................................................... 50,000,000 49,356,000
5.02%, 7/29/99....................................................................... 50,000,000 49,804,778
5.03%, 7/26/99....................................................................... 50,000,000 49,825,347
5.08%, 9/13/99....................................................................... 50,000,000 49,477,889
--------------
2,904,400,786
--------------
CHEMICALS--1.2%
Henkel Corp.:
4.80%, 7/16/99(1).................................................................... 15,000,000 14,970,000
4.80%, 10/25/99(1)................................................................... 13,000,000 12,798,933
4.88%, 9/3/99(1)..................................................................... 12,000,000 11,895,893
Monsanto Co.:
4.75%, 8/3/99(1)..................................................................... 23,000,000 22,899,854
4.83%, 9/29/99(1).................................................................... 19,236,000 19,003,725
4.835%, 10/8/99(1)................................................................... 25,000,000 24,667,594
4.835%, 10/13/99..................................................................... 25,000,000 24,650,806
4.84%, 8/19/99(1).................................................................... 16,550,000 16,440,972
4.85%, 9/2/99........................................................................ 20,000,000 19,830,250
4.85%, 9/15/99....................................................................... 23,500,000 23,259,386
4.85%, 9/20/99....................................................................... 28,591,000 28,279,001
--------------
218,696,414
--------------
COMMERCIAL FINANCE--11.0%
Caterpillar Financial Services Corp.:
4.88%, 8/25/99....................................................................... 38,500,000 38,212,961
5.06%, 8/16/99(2).................................................................... 15,000,000 15,001,755
CIT Group Holdings, Inc.:
4.75%, 7/28/99....................................................................... 22,000,000 21,921,625
4.75%, 7/29/99....................................................................... 50,000,000 49,815,278
Countrywide Home Loans:
4.93%, 7/7/99........................................................................ 73,102,000 73,041,135
4.93%, 7/13/99....................................................................... 25,661,000 25,617,804
4.93%, 7/15/99....................................................................... 23,460,000 23,415,022
4.94%, 7/26/99(2).................................................................... 35,000,000 35,000,000
5%, 7/6/99(2)........................................................................ 25,000,000 24,996,678
5%, 7/26/99(2)....................................................................... 50,000,000 49,999,541
</TABLE>
10
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ --------------
COMMERCIAL FINANCE (CONTINUED)
Countrywide Home Loans: (continued)
<S> <C> <C>
5%, 7/29/99(2)....................................................................... $ 50,000,000 $ 49,999,134
5.042%, 8/30/99(2)................................................................... 25,000,000 25,000,000
5.05%, 7/12/99....................................................................... 30,589,000 30,541,799
5.05%, 7/29/99....................................................................... 50,000,000 49,803,222
5.125%, 7/12/99(2)................................................................... 25,000,000 25,000,000
5.246%, 7/29/99(2)................................................................... 23,000,000 22,998,488
5.25%, 10/14/99(2)................................................................... 40,000,000 40,000,000
FINOVA Capital Corp.:
4.85%, 8/24/99....................................................................... 35,000,000 34,745,375
4.87%, 11/9/99....................................................................... 50,000,000 49,113,931
4.89%, 7/15/99....................................................................... 65,000,000 64,875,458
4.89%, 7/16/99....................................................................... 34,000,000 33,930,725
4.91%, 9/21/99....................................................................... 48,750,000 48,204,785
4.91%, 9/22/99....................................................................... 46,000,000 45,479,267
4.93%, 7/13/99 ...................................................................... 25,000,000 24,958,917
4.98%, 9/9/99........................................................................ 28,000,000 27,728,867
5%, 9/15/99.......................................................................... 39,500,000 39,083,056
5%, 9/16/99.......................................................................... 20,000,000 19,786,111
5.05%, 8/16/99(2).................................................................... 25,000,000 25,000,000
5.05%, 8/16/99(2).................................................................... 25,000,000 25,000,000
5.097%, 8/24/99(2)................................................................... 25,000,000 25,000,000
5.255%, 9/16/99(2)................................................................... 25,000,000 25,000,000
5.50%, 3/10/00....................................................................... 20,000,000 19,226,944
Heller Financial, Inc.:
4.83%, 7/21/99....................................................................... 50,000,000 49,865,833
4.90%, 8/12/99....................................................................... 60,000,000 59,655,425
4.90%, 8/13/99....................................................................... 50,000,000 49,707,361
4.93%, 8/11/99....................................................................... 25,000,000 24,859,632
4.95%, 7/22/99....................................................................... 40,000,000 39,884,500
5.05%, 7/6/99(2) .................................................................... 13,000,000 12,999,725
5.075%, 7/19/99(2)................................................................... 50,000,000 50,004,291
5.149%, 9/9/99(2).................................................................... 50,000,000 50,000,000
5.25%, 7/13/99(2).................................................................... 50,000,000 50,000,000
5.35%, 7/8/99........................................................................ 20,000,000 19,979,194
Homeside Lending, Inc.:
4.84%, 7/12/99....................................................................... 25,000,000 24,963,028
4.85%, 7/9/99........................................................................ 40,980,000 40,934,285
5%, 7/15/99.......................................................................... 75,000,000 74,855,431
5.02%, 7/13/99....................................................................... 20,000,000 19,966,533
5.03%, 7/14/99....................................................................... 50,000,000 49,909,181
5.04%, 7/29/99....................................................................... 50,000,000 49,804,000
</TABLE>
11
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ --------------
COMMERCIAL FINANCE (CONTINUED)
Safeco Credit Co.:
<S> <C> <C>
4.85%, 7/9/99........................................................................ $ 27,000,000 $ 26,971,122
4.92%, 9/9/99........................................................................ 25,000,000 24,760,833
5.06%, 7/19/99....................................................................... 21,100,000 21,046,617
5.125%, 7/26/99...................................................................... 28,000,000 27,900,347
5.16%, 9/17/99....................................................................... 36,000,000 35,596,220
5.27%, 9/3/99........................................................................ 25,000,000 24,765,778
TransAmerica Finance Corp., 5.25%, 7/22/99(2)........................................... 35,000,000 35,000,000
--------------
1,970,927,214
--------------
CONSUMER FINANCE--1.4%
American Express Credit Corp.:
4.79%, 9/15/99....................................................................... 50,000,000 49,494,389
4.79%, 9/16/99....................................................................... 50,000,000 49,487,736
Sears Roebuck Acceptance Corp.:
4.90%, 9/3/99........................................................................ 50,000,000 49,564,444
4.97%, 7/26/99....................................................................... 50,000,000 49,827,431
5.14%, 8/26/99....................................................................... 50,000,000 49,600,222
--------------
247,974,222
--------------
DIVERSIFIED FINANCIAL--6.2%
Ford Motor Credit Co.:
4.93%, 7/22/99....................................................................... 100,000,000 99,712,417
6.375%, 9/15/99...................................................................... 10,000,000 10,031,171
General Electric Capital Corp.:
4.80%, 7/29/99....................................................................... 50,000,000 49,813,333
4.81%, 9/9/99........................................................................ 30,000,000 29,719,417
4.82%, 7/21/99....................................................................... 50,000,000 49,866,111
4.83%, 10/22/99...................................................................... 40,000,000 39,393,567
4.83%, 10/28/99...................................................................... 50,000,000 49,201,708
General Electric Capital Services:
4.74%, 8/5/99........................................................................ 50,000,000 49,769,583
4.80%, 10/21/99...................................................................... 50,000,000 49,253,333
4.82%, 9/2/99........................................................................ 50,000,000 49,578,250
4.83%, 10/13/99...................................................................... 50,000,000 49,302,333
4.90%, 7/23/99....................................................................... 100,000,000 99,700,556
General Motors Acceptance Corp.:
4.80%, 7/6/99........................................................................ 50,000,000 49,966,667
4.80%, 7/7/99........................................................................ 50,000,000 49,960,000
4.81%, 8/12/99....................................................................... 50,000,000 49,719,417
4.91%, 7/19/99....................................................................... 50,000,000 49,877,250
5.06%, 9/23/99....................................................................... 50,000,000 49,409,667
</TABLE>
12
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ --------------
DIVERSIFIED FINANCIAL (CONTINUED)
Household International, Inc.:
<S> <C> <C>
4.83%, 8/5/99(1)..................................................................... $ 25,000,000 $ 24,882,604
4.90%, 8/23/99(1).................................................................... 25,000,000 24,819,653
Prudential Funding Corp.:
4.82%, 7/14/99....................................................................... 50,000,000 49,912,972
4.83%, 7/15/99....................................................................... 50,000,000 49,906,083
4.83%, 7/16/99....................................................................... 50,000,000 49,899,375
4.83%, 9/29/99....................................................................... 26,000,000 25,686,050
-------------
1,099,381,517
DIVERSIFIED MEDIA--0.2%
Omnicom Finance, Inc.:
5.10%, 8/27/99(1).................................................................... 20,000,000 19,838,500
5.16%, 9/24/99(1).................................................................... 10,000,000 9,878,167
-------------
29,716,667
-------------
INDUSTRIAL SERVICES--0.1%
Atlas Copco AB, 4.875%, 7/23/99(1) 15,000,000 14,955,313
-------------
INSURANCE--9.1%
AIG Life Insurance Co., 4.93%, 7/1/99(2)(4)............................................. 20,000,000 20,000,000
Allstate Life Insurance Co., 4.94%, 7/1/99(2)........................................... 50,000,000 50,000,000
American General Corp., 4.81%, 8/2/99................................................... 50,000,000 49,786,222
Combined Insurance Co. of America, 4.995%, 7/5/99(2)(4)................................. 50,000,000 50,000,000
First Allmerica Financial Life Insurance Co., 4.94%, 7/1/99(2).......................... 30,000,000 30,000,000
GE Financial Assurance Holdings, Inc., 4.75%, 7/26/99................................... 50,000,000 49,835,069
General American Life Insurance Co., 5.12%, 7/1/99(2)................................... 235,000,000 235,000,000
Jackson National Life Insurance Co.:
4.94%, 7/1/99(2)..................................................................... 70,000,000 70,000,000
4.94%, 7/1/99(2)..................................................................... 45,000,000 45,000,000
John Hancock Mutual Life Insurance Co., 4.95%, 7/1/99(2)................................ 100,000,000 100,000,000
Pacific Mutual Life Insurance Co., 4.941%, 7/1/99(2)(4) ................................ 90,000,000 90,000,000
Principal Mutual Life Insurance Co., 4.96%, 7/1/99(2)(4)................................ 95,000,000 95,000,000
Protective Life Insurance Co.:
4.96%, 7/1/99(2)..................................................................... 20,000,000 20,000,000
5.07%, 7/1/99(2)..................................................................... 70,000,000 70,000,000
5.08%, 7/1/99(2)..................................................................... 30,000,000 30,000,000
Prudential Life Insurance Co., 5%, 7/1/99(2)............................................ 200,000,000 200,000,000
Safeco Corp., 4.88%, 7/12/99............................................................ 30,000,000 29,955,267
Security Benefit Life Insurance Co., 4.96%, 7/1/99(2)................................... 100,000,000 100,000,000
</TABLE>
13
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ --------------
INSURANCE (CONTINUED)
Travelers Insurance Co.:
<S> <C> <C>
4.917%, 7/1/99(2)(4)................................................................. $ 23,000,000 $ 23,000,000
4.938%, 7/1/99(2)(4)................................................................. 25,000,000 25,000,000
4.938%, 7/1/99(2)(4)................................................................. 40,000,000 40,000,000
4.967%, 7/1/99(2)(4)................................................................. 50,000,000 50,000,000
Western & Southern Life Insurance Co., 4.93%, 7/1/99(2)................................ 100,000,000 100,000,000
Western National Life Insurance Co., 4.93%, 7/1/99(2).................................. 50,000,000 50,000,000
-------------
1,622,576,558
-------------
LEASING & FACTORING--3.6%
American Honda Finance Corp.:
4.975%, 7/27/99(2)................................................................... 25,000,000 25,000,000
4.98%, 7/8/99(2)..................................................................... 30,000,000 30,000,000
5%, 7/26/99(2)....................................................................... 43,000,000 42,987,993
5.135%, 9/22/99(2)................................................................... 35,000,000 34,990,015
5.144%, 9/20/99(2)................................................................... 65,000,000 64,985,943
Hertz Corp.:
4.82%, 7/15/99....................................................................... 50,000,000 49,906,278
4.82%, 7/22/99....................................................................... 50,000,000 49,859,417
4.85%, 7/8/99........................................................................ 100,000,000 99,905,694
4.91%, 7/23/99....................................................................... 50,000,000 49,849,972
4.96%, 7/9/99........................................................................ 150,000,000 149,837,222
International Lease Finance Corp., 4.80%, 7/6/99........................................ 50,000,000 49,966,667
-------------
647,289,201
-------------
MANUFACTURING--1.4%
Eaton Corp.:
4.83%, 8/23/99....................................................................... 50,000,000 49,644,458
4.83%, 8/30/99....................................................................... 34,000,000 33,726,300
4.83%, 9/3/99........................................................................ 35,000,000 34,698,756
4.83%, 9/16/99....................................................................... 50,000,000 49,483,458
4.83%, 11/4/99....................................................................... 50,000,000 49,154,750
4.84%, 11/5/99....................................................................... 20,500,000 20,149,974
5.12%, 9/24/99....................................................................... 20,000,000 19,758,222
-------------
256,615,918
-------------
OIL: DOMESTIC--0.2%
Equilon Enterprises LLC, 4.88%, 8/12/99 35,000,000 34,800,733
-------------
</TABLE>
14
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ --------------
OIL: INTERNATIONAL--0.7%
Fina Oil & Chemical Co.:
<S> <C> <C>
4.80%, 8/2/99(1)..................................................................... $ 30,000,000 $ 29,872,000
4.84%, 8/4/99(1)..................................................................... 20,000,000 19,908,578
4.84%, 9/24/99(1).................................................................... 20,000,000 19,771,444
4.85%, 9/16/99(1).................................................................... 20,000,000 19,792,528
4.92%, 7/23/99(1).................................................................... 20,000,000 19,939,867
5.12%, 9/22/99....................................................................... 10,000,000 9,881,956
Statoil, 5.70%, 7/1/99(1)............................................................... 11,508,000 11,508,000
---------------
130,674,373
---------------
SPECIAL PURPOSE FINANCIAL--3.5%
Forrestal Funding Master Trust, Series 1999, 4.96%, 7/21/99(3).......................... 44,000,000 43,878,756
Intrepid Funding Corp., Master Trust, Series 1998A:
4.85%, 8/5/99(3)..................................................................... 35,000,000 34,834,965
4.87%, 10/14/99(3)................................................................... 83,773,000 82,583,074
Intrepid Funding Corp., Series 1999A:
4.83%, 10/5/99(3).................................................................... 45,000,000 44,420,400
4.84%, 8/19/99(3).................................................................... 48,169,000 47,851,673
4.85%, 9/27/99(3).................................................................... 50,000,000 49,407,222
4.85%, 11/12/99(3)................................................................... 42,000,000 41,241,783
4.86%, 11/18/99(3)................................................................... 50,000,000 49,055,000
4.91%, 8/31/99(3).................................................................... 30,000,000 29,750,408
4.93%, 9/9/99(3)..................................................................... 100,000,000 99,036,528
RACERS, Series 1998-MM-8-5, 4.934%, 7/2/99(2)(4)........................................ 95,000,000 95,000,000
---------------
617,059,809
---------------
TELECOMMUNICATIONS: TECHNOLOGY--0.6%
GTE Corp., 5.135%, 9/13/99(2)........................................................... 100,000,000 99,938,968
---------------
Total Short-Term Notes 15,737,467,869
---------------
FOREIGN GOVERNMENT OBLIGATIONS--0.3%
Swedish Export Credit Corp. (Kingdom of Sweden), 4.80%, 10/26/99........................ 50,000,000 49,220,000
---------------
Total Investments, at Value............................................................. 100.3% 17,874,326,107
Liabilities in Excess of Other Assets................................................... (0.3) (53,684,644)
---------- ---------------
Net Assets.............................................................................. 100.0% $17,820,641,463
========== ===============
</TABLE>
15
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Money Market Trust
Short-term notes, direct bank obligations and letters of credit are generally
traded on a discount basis; the interest rate is the discount rate received by
the Fund at the time of purchase. Other securities normally bear interest at the
rates shown.
1. Security issued in an exempt transaction without registration under the
Securities Act of 1933. Such securities amount to $4,194,586,244, or 23.54%
of the Trust's net assets, and have been determined to be liquid pursuant
to guidelines adopted by the Board of Trustees.
2. Floating or variable rate obligation. The interest rate, which is based on
specific, or an index of, market interest rates, is subject to change
periodically and is the effective rate on June 30, 1999. This instrument
may also have a demand feature which allows, on up to 30 days' notice, the
recovery of principal at any time, or at specified intervals not exceeding
one year. Maturity date shown represents effective maturity based on
variable rate and, if applicable, demand feature.
3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board
of Trustees. These securities amount to $622,055,661 or 3.49% of the
Trust's net assets as of June 30, 1999.
4. Represents a restricted security which is considered illiquid, by virtue of
the absence of a readily available market or because of legal or
contractual restrictions on resale. Such securities amount to $721,121,233,
or 4.05% of the Trust's net assets. The Trust may not invest more than 10%
of its net assets (determined at the time of purchase) in illiquid
securities.
See accompanying Notes to Financial Statements.
16
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES June 30, 1999
Centennial Money Market Trust
<TABLE>
<CAPTION>
<S> <C>
Assets
Investments, at value--see accompanying statement ................................................... $17,874,326,107
Cash ................................................................................................ 15,509,363
Receivables and other assets:
Shares of beneficial interest sold ............................................................... 107,797,278
Interest ......................................................................................... 29,577,328
Other ............................................................................................ 761,042
---------------
Total assets .................................................................................... 18,027,971,118
---------------
LIABILITIES
Payables and other liabilities:
Shares of beneficial interest redeemed ........................................................... 174,120,672
Dividends ........................................................................................ 27,758,713
Transfer and shareholder servicing agent fees .................................................... 1,763,740
Service plan fees ................................................................................ 1,392,396
Shareholder reports .............................................................................. 1,183,653
Custodian fees ................................................................................... 65,744
Other ............................................................................................ 1,044,737
---------------
Total liabilities .............................................................................. 207,329,655
---------------
NET ASSETS .......................................................................................... $17,820,641,463
===============
COMPOSITION OF NET ASSETS
Paid-in capital ..................................................................................... $17,820,562,989
Accumulated net realized gain on investment transactions ............................................ 78,474
---------------
NET ASSETS--applicable to 17,821,095,704 shares of beneficial
interest outstanding ............................................................................. $17,820,641,463
===============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE ...................................... $1.00
</TABLE>
See accompanying Notes to Financial Statements.
17
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended June 30, 1999
Centennial Money Market Trust
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest ............................................................................................ $906,322,780
------------
EXPENSES
Management fees--Note 3 ............................................................................. 57,461,310
Service plan fees--Note 3 ........................................................................... 34,170,025
Transfer and shareholder servicing agent fees--Note 3 ............................................... 17,191,545
Shareholder reports ................................................................................. 2,054,892
Registration and filing fees ........................................................................ 1,728,853
Custodian fees and expenses ......................................................................... 943,731
Legal, auditing and other professional fees ......................................................... 113,814
Trustees' compensation .............................................................................. 53,416
Insurance expenses .................................................................................. 27,440
Other ............................................................................................... 126,358
------------
Total expenses .................................................................................... 113,871,384
Less expenses paid indirectly--Note 1 ........................................................... (47,837)
------------
Net expenses ...................................................................................... 113,823,547
------------
NET INVESTMENT INCOME ............................................................................... 792,499,233
------------
NET REALIZED GAIN ON INVESTMENTS .................................................................... 14,857
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................................ $792,514,090
============
</TABLE>
See accompanying Notes to Financial Statements.
18
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Centennial Money Market Trust
<TABLE>
<CAPTION>
Year Ended June 30,
1999 1998
--------------- ---------------
OPERATIONS
<S> <C> <C>
Net investment income ....................................................... $ 792,499,233 $ 635,961,061
Net realized gain ........................................................... 14,857 42,303
--------------- ---------------
Net increase in net assets resulting from operations ........................ 792,514,090 636,003,364
--------------- ---------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS ................................. (792,539,959) (635,961,061)
--------------- ---------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions--Note 2 ................................. 2,706,509,046 6,051,149,102
--------------- ---------------
NET ASSETS
Total increase .............................................................. 2,706,483,177 6,051,191,405
Beginning of period ......................................................... 15,114,158,286 9,062,966,881
--------------- ---------------
End of period ............................................................... $17,820,641,463 $15,114,158,286
=============== ===============
</TABLE>
See accompanying Notes to Financial Statements.
19
<PAGE>
FINANCIAL HIGHLIGHTS
Centennial Money Market Trust
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period................. $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations--
net investment income and net realized gain ...... .05 .05 .05 .05 .05
Dividends and distributions to shareholders.......... (.05) (.05) (.05) (.05) (.05)
---- ---- ---- ---- ----
Net asset value, end of period....................... $1.00 $1.00 $1.00 $1.00 $1.00
==== ==== ==== ==== ====
TOTAL RETURN(1)...................................... 4.75 % 5.16 % 4.97 % 5.11 % 5.07 %
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions).............. $17,821 $15,114 $9,063 $6,753 $4,812
Average net assets (in millions)..................... $17,128 $12,617 $8,033 $6,077 $3,342
Ratios to average net assets:(2)
Net investment income ............................... 4.63 % 5.04 % 4.86 % 4.99 % 5.01 %
Expenses, before voluntary assumption
by the Manager(3)................................. 0.66 % 0.68 % 0.73 % 0.74 % 0.77 %
Expenses, net of voluntary assumption
by the Manager.................................... N/A 0.66 % 0.67 % 0.69 % 0.73 %
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends reinvested in
additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total
returns reflect changes in net investment income only. Total returns are
not annualized for periods of less than one year.
2. Annualized for periods less than one full year.
3. The expense ratio reflects the effect of expenses paid indirectly by the
Trust.
See accompanying Notes to Financial Statements.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Centennial Money Market Trust
1. SIGNIFICANT ACCOUNTING POLICIES
Centennial Money Market Trust (the Trust) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Trust's investment objective is to seek the maximum
current income that is consistent with low capital risk and the maintenance of
liquidity. The Trust seeks to achieve this objective by investing in "money
market" securities meeting specified quality, maturity and diversification
standards. The Trust's investment advisor is Centennial Asset Management
Corporation (the Manager), a subsidiary of OppenheimerFunds, Inc. (OFI). The
following is a summary of significant accounting policies consistently followed
by the Trust.
Securities Valuation. Portfolio securities are valued on the basis of amortized
cost, which approximates market value.
Repurchase Agreements. The Trust requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Trust may be delayed or limited.
Federal Taxes. The Trust intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required.
Distributions to Shareholders. Distributions to shareholders, which are
determined in accordance with income tax regulations, are recorded on the
ex-dividend date.
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Trust.
Other. Investment transactions are accounted for as of trade date. Realized
gains and losses on investments are determined on an identified cost basis,
which is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Centennial Money Market Trust
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1999 Year Ended June 30, 1998
--------------------------------- ---------------------------------
Shares Amount Shares Amount
-------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold .......................... 50,615,000,093 $ 50,615,000,093 40,408,988,871 $ 40,408,988,871
Dividends and distributions
reinvested .................. 776,439,225 776,439,225 613,194,479 613,194,479
Issued in connection with
the acquisition of
Daily Cash Accumulation
Fund, Inc.--Note 4 ............ -- -- 3,461,468,087 3,460,935,372
Redeemed ...................... (48,684,930,272) (48,684,930,272) (38,431,969,620) (38,431,969,620)
-------------- ----------------- -------------- ----------------
Net increase .................. 2,706,509,046 $ 2,706,509,046 6,051,681,817 $ 6,051,149,102
============== ================= ============== ================
</TABLE>
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Centennial Money Market Trust
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Trust which provides for a fee of 0.50% of the first
$250 million of net assets, 0.475% of the next $250 million of net assets, 0.45%
of the next $250 million of net assets, 0.425% of the next $250 million of net
assets, 0.40% of the next $250 million of net assets, 0.375% of the next $250
million of net assets, 0.35% of the next $500 million of net assets and 0.325%
of net assets in excess of $2 billion. The Manager has agreed to reimburse the
Trust if aggregate expenses (with specified exceptions) exceed the lesser of
1.5% of the first $30 million of average annual net assets of the Trust, plus 1%
of average annual net assets in excess of $30 million; or 25% of the total
annual investment income of the Trust. The Trust's management fee for the year
ended June 30, 1999 was 0.34% of average annual net assets.
Shareholder Services, Inc. (SSI), a subsidiary of the OFI, is the transfer and
shareholder servicing agent for the Trust and for other registered investment
companies. SSI's total costs of providing such services are allocated ratably to
these companies.
Under an approved service plan, the Trust may expend up to 0.20% of its net
assets annually to reimburse certain securities dealers and other financial
institutions and organizations for costs incurred in distributing Trust shares.
4. ACQUISITION OF DAILY CASH ACCUMULATION FUND, INC.
On November 21, 1997, the Trust acquired the net assets of Daily Cash
Accumulation Fund, Inc. The Trust issued 3,461,468,087 shares of beneficial
interest, valued at $3,460,935,372, in exchange for the net assets, resulting in
combined net assets of $13,332,466,315 on November 21, 1997. The exchange
qualified as a tax-free reorganization for federal income tax purposes.
<PAGE>
Appendix A
- ------------------------------------------------------------------------------
Description of Securities Ratings
- ------------------------------------------------------------------------------
Below is a description of the two highest rating categories for Short Term Debt
and Long Term Debt by the "Nationally-Recognized Statistical Rating
Organizations" which the Manager evaluates in purchasing securities on behalf of
the Trust. The ratings descriptions are based on information supplied by the
ratings organizations to subscribers.
Short-Term Debt Ratings.
Moody's Investors Service, Inc.
- ------------------------------------------------------------------------------
The following rating designations for commercial paper (defined by Moody's as
promissory obligations not having original maturity in excess of nine months),
are judged by Moody's to be investment grade, and indicate the relative
repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally be evidenced by
the following characteristics: (a) leveling market positions in well-established
industries; (b) high rates of return on funds employed; (c) conservative
capitalization structures with moderate reliance on debt and ample asset
protection; (d) broad margins in earning coverage of fixed financial charges and
high internal cash generation; and (e) well established access to a range of
financial markets and assured sources of alternate liquidity.
Prime-2: Strong capacity for repayment. This will normally be evidenced by many
of the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Moody's ratings for state and municipal short-term obligations are designated
"Moody's Investment Grade" ("MIG"). Short-term notes which have demand features
may also be designated as "VMIG". These rating categories are as follows:
MIG1/VMIG1: Best quality. There is present strong protection by established cash
flows, superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample although not so
large as in the preceding group.
<PAGE>
Standard & Poor's Ratings Services
- ------------------------------------------------------------------------------
The following ratings by Standard & Poor's for commercial paper (defined by S&P
as debt having an original maturity of no more than 365 days) assess the
likelihood of payment:
A-1: Strong capacity for timely payment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
A-2: Satisfactory capacity for timely payment. However, the relative degree of
safety is not as high as for issues designated "A-1".
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have a demand or
double feature as part of their provisions. The first rating addresses the
likelihood of repayment of principal and interest as due, and the second rating
addresses only the demand feature. With short-term demand debt, S&P's note
rating symbols are used with the commercial paper symbols (for example,
"SP-1+/A-1+").
Fitch IBCA, Inc.
- ------------------------------------------------------------------------------
Fitch assigns the following short-term ratings to debt obligations that are
payable on demand or have original maturities of generally up to three years,
including commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of assurance for
timely payment.
F-1: Very strong credit quality; assurance of timely payment is only slightly
less in degree than issues rated "F-1+". F-2: Good credit quality; satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as for issues assigned "F-1+" or "F-1" ratings.
Duff & Phelps, Inc.
- ------------------------------------------------------------------------------
The following ratings are for commercial paper (defined by Duff & Phelps as
obligations with maturities, when issued, of under one year), asset-backed
commercial paper, and certificates of deposit (the ratings cover all obligations
of the institution with maturities, when issued, of under one year, including
bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
Duff 2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
Thomson BankWatch, Inc.
- ------------------------------------------------------------------------------
The following short-term ratings apply to commercial paper, certificates of
deposit, unsecured notes, and other securities having a maturity of one year or
less.
TBW-1: The highest category; indicates the degree of safety regarding timely
repayment of principal and interest is very strong.
TBW-2: The second highest rating category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".
Long Term Debt Ratings
These ratings are relevant for securities purchased by the Trust with a
remaining maturity of 397 days or less, or for rating issuers of short-term
obligations.
Moody's Investors Service, Inc.
- ------------------------------------------------------------------------------
Bonds (including municipal bonds) are rated as follows:
Aaa: Judged to be the best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin, and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
positions of such issues.
Aa: Judged to be of high quality by all standards. Together with the "Aaa" group
they comprise what are generally known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
"Aaa" securities or fluctuations of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risks
appear somewhat larger than in "Aaa" securities.
Moody's applies numerical modifiers "1", "2" and "3" in its "Aa" rating
classification. The modifier "1" indicates that the security ranks in the higher
end of its generic rating category; the modifier "2" indicates a mid-range
ranking; and the modifier "3" indicates that the issue ranks in the lower end of
its generic rating category.
- ------------------------------------------------------------------------------
Standard & Poor's Ratings Services
- ------------------------------------------------------------------------------
Bonds (including municipal bonds) are rated as follows:
AAA: The highest rating assigned by S&P. Capacity to pay interest and repay
principal is extremely strong.
AA: A strong capacity to pay interest and repay principal and differ from
"AAA" rated issues only in small degree.
Fitch IBCA, Inc.
- ------------------------------------------------------------------------------
AAA: Considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA". Plus (+) and minus (-) signs are used
in the "AA" category to indicate the relative position of a credit within that
category.
Because bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issuers
is generally rated "F-1+".
- ------------------------------------------------------------------------------
Duff & Phelps, Inc.
- ------------------------------------------------------------------------------
AAA: The highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
AA: High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions. Plus (+) and
minus (-) signs are used in the "AA" category to indicate the relative position
of a credit within that category.
Thomson BankWatch, Inc.
- ------------------------------------------------------------------------------
TBW issues the following ratings for companies. These ratings assess the
likelihood of receiving payment of principal and interest on a timely basis and
incorporate TBW's opinion as to the vulnerability of the company to adverse
developments, which may impact the market's perception of the company, thereby
affecting the marketability of its securities.
A: Possesses an exceptionally strong balance sheet and earnings record,
translating into an excellent reputation and unquestioned access to its natural
money markets. If weakness or vulnerability exists in any aspect of the
company's business, it is entirely mitigated by the strengths of the
organization.
A/B: The company is financially very solid with a favorable track
record and no readily apparent weakness. Its overall risk
profile, while low, is not quite as favorable as for
companies in the highest rating
<PAGE>
Appendix B
- ------------------------------------------------------------------------------
Industry Classifications
- ------------------------------------------------------------------------------
Aerospace/Defense Food and Drug Retailers
Air Transportation Gas Utilities
Asset-Backed Health Care/Drugs
Auto Parts and Equipment Health Care/Supplies & Services
Automotive Homebuilders/Real Estate
Bank Holding Companies Hotel/Gaming
Banks Industrial Services
Beverages Information Technology
Broadcasting Insurance
Broker-Dealers Leasing & Factoring
Building Materials Leisure
Cable Television Manufacturing
Chemicals Metals/Mining
Commercial Finance Nondurable Household Goods
Communication Equipment Office Equipment
Computer Hardware Oil - Domestic
Computer Software Oil - International
Conglomerates Paper
Consumer Finance Photography
Consumer Services Publishing
Containers Railroads & Truckers
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Wholesalers Specialty Printing
Durable Household Goods Specialty Retailing
Education Steel
Electric Utilities Telecommunications - Long Distance
Electrical Equipment Telephone - Utility
Electronics Textile, Apparel & Home Furnishings
Energy Services Tobacco
Entertainment/Film Trucks and Parts
Environmental Wireless Services
Food
<PAGE>
- ------------------------------------------------------------------------------
Centennial Money Market Trust
- ------------------------------------------------------------------------------
Investment Advisor and Distributor
Centennial Asset Management Corporation
6803 South Tucson Way
Englewood, Colorado 80112
Sub-Distributor
OppenheimerFunds Distributor, Inc.
P.O. Box 5254
Denver, Colorado 80217
Transfer Agent
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217
1-800-525-9130
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
PX0150.001.1199
<PAGE>
Centennial Tax Exempt Trust
- --------------------------------------------------------------------------------
6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-9310
Statement of Additional Information dated November 1, 1999
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Trust and supplements
information in the Prospectus dated November 1, 1999. It should be read together
with the Prospectus, which may be obtained by writing to the Trust's Transfer
Agent, Shareholder Services, Inc., at P.O. Box 5143, Denver, Colorado 80217, or
by calling the Transfer Agent at the toll-free number shown above.
Contents
Page
About the Trust
Additional Information about the Trust's Investment Policies and Risks.......2
The Trust's Investment Policies.........................................2
Other Investment Strategies.............................................9
Investment Restrictions................................................10
How the Trust is Managed....................................................12
Organization and History...............................................12
Trustees and Officers of the Trust.....................................13
The Manager............................................................19
Performance of the Trust....................................................22
About Your Account
How To Buy Shares...........................................................25
How To Sell Shares..........................................................26
How To Exchange Shares......................................................29
Dividends and Taxes.........................................................30
Additional Information About the Trust......................................31
Financial Information About the Trust
Independent Auditors' Report................................................32
Financial Statements........................................................33
Appendix A: Securities Ratings.............................................A-1
Appendix B: Industry Classifications.......................................B-1
Appendix C: Tax Equivalent Yield Tables....................................C-1
<PAGE>
A B O U T T H E T R U S T
Additional Information About the Trust's Investment Policies and Risks
The investment objective and the principal investment policies of the Trust are
described in the Prospectus. This Statement of Additional Information contains
supplemental information about those policies and the types of securities that
the Trust's investment manager, Centennial Asset Management Corporation, will
select for the Trust. Additional explanations are also provided about the
strategies the Trust may use to try to achieve its objective.
The Trust's Investment Policies. The composition of the Trust's portfolio and
the techniques and strategies that the Trust's Manager uses in selecting
portfolio securities will vary over time. The Trust is not required to use all
of the investment techniques and strategies described below at all times in
seeking its goal. It may use some of the special investment techniques and
strategies at some times or not at all.
The Trust does not make investments with the objective of seeking capital
growth. However, the values of the securities held by the Trust may be affected
by changes in general interest rates and other factors, prior to their maturity.
Because the current values of debt securities vary inversely with changes in
prevailing interest rates, if interest rates increase after a security is
purchased, that security will normally fall in value. Conversely, should
interest rates decrease after a security is purchased, normally its value will
rise.
However, those fluctuations in value will not generally result in realized
gains or losses to the Trust unless the Trust sells the security prior to the
security's maturity. A debt security held to maturity is redeemable by its
issuer at full principal value plus accrued interest. The Trust does not usually
intend to dispose of securities prior to their maturity, but may do so for
liquidity purposes, or because of other factors affecting the issuer that cause
the Manager to sell the particular security. In that case, the Trust could
realize a capital gain or loss on the sale.
There are variations in the credit quality of municipal securities, both
within a particular rating classification and between classifications. These
variations depend on numerous factors. The yields of municipal securities depend
on a number of factors, including general conditions in the municipal securities
market, the size of a particular offering, the maturity of the obligation and
rating (if any) of the issue. These factors are discussed in greater detail
below.
Municipal Securities. The types of municipal securities in which the Trust may
invest are described in the Prospectus under "About the Trust's Investments."
Municipal securities are generally classified as general obligation bonds,
revenue bonds and notes. A discussion of the general characteristics of these
principal types of municipal securities follows below.
|X| Municipal Bonds. We have classified municipal securities having a
maturity (when the security is issued) of more than one year as "municipal
bonds." The principal classifications of long-term municipal bonds are "general
obligation" and "revenue" (including "industrial development") bonds. They may
have fixed, variable or floating rates of interest, as described below.
Some bonds may be "callable," allowing the issuer to redeem them
before their maturity date. To protect bondholders, callable bonds may be issued
with provisions that prevent them from being called for a period of time.
Typically, that is 5 to 10 years from the issuance date. When interest rates
decline, if the call protection on a bond has expired, it is more likely that
the issuer may call the bond. If that occurs, the Trust might have to reinvest
the proceeds of the called bond in bonds that pay a lower rate of return.
|_| General Obligation Bonds. The basic security behind general
obligation bonds is the issuer's pledge of its full faith and credit and taxing
power, if any, for the repayment of principal and the payment of interest.
Issuers of general obligation bonds include states, counties, cities, towns, and
regional districts. The proceeds of these obligations are used to fund a wide
range of public projects, including construction or improvement of schools,
highways and roads, and water and sewer systems. The rate of taxes that can be
levied for the payment of debt service on these bonds may be limited or
unlimited. Additionally, there may be limits as to the rate or amount of special
assessments that can be levied to meet these obligations.
|_| Revenue Bonds. The principal security for a revenue bond is
generally the net revenues derived from a particular facility, group of
facilities, or, in some cases, the proceeds of a special excise tax or other
specific revenue source. Revenue bonds are issued to finance a wide variety of
capital projects. Examples include electric, gas, water and sewer systems;
highways, bridges, and tunnels; port and airport facilities; colleges and
universities; and hospitals.
Although the principal security for these types of bonds may vary from
bond to bond, many provide additional security in the form of a debt service
reserve fund that may be used to make principal and interest payments on the
issuer's obligations. Housing finance authorities have a wide range of security,
including partially or fully insured mortgages, rent subsidized and/or
collateralized mortgages, and/or the net revenues from housing or other public
projects. Some authorities provide further security in the form of a state's
ability (without obligation) to make up deficiencies in the debt service reserve
fund.
|_| Industrial Development Bonds. Industrial development bonds are
considered municipal bonds if the interest paid is exempt from federal income
tax. They are issued by or on behalf of public authorities to raise money to
finance various privately operated facilities for business and manufacturing,
housing, sports, and pollution control. These bonds may also be used to finance
public facilities such as airports, mass transit systems, ports, and parking.
The payment of the principal and interest on such bonds is dependent solely on
the ability of the facility's user to meet its financial obligations and the
pledge, if any, of real and personal property financed by the bond as security
for those payments.
|_| Private Activity Municipal Securities. The Tax Reform Act of 1986
(the "Tax Reform Act") reorganized, as well as amended, the rules governing tax
exemption for interest on certain types of municipal securities. The Tax Reform
Act generally did not change the tax treatment of bonds issued in order to
finance governmental operations. Thus, interest on general obligation bonds
issued by or on behalf of state or local governments, the proceeds of which are
used to finance the operations of such governments, continues to be tax-exempt.
However, the Tax Reform Act limited the use of tax-exempt bonds for
non-governmental (private) purposes. More stringent restrictions were placed on
the use of proceeds of such bonds. Interest on certain private activity bonds is
taxable under the revised rules. There is an exception for "qualified"
tax-exempt private activity bonds, for example, exempt facility bonds including
certain industrial development bonds, qualified mortgage bonds, qualified
Section 501(c)(3) bonds, and qualified student loan bonds. Normally, the Trust
will not invest more than 20% of its total assets in private activity municipal
securities or other taxable investments.
In addition, limitations as to the amount of private activity bonds which
each state may issue were revised downward by the Tax Reform Act, which will
reduce the supply of such bonds. The value of the Trust's portfolio could be
affected if there is a reduction in the availability of such bonds.
Interest on certain private activity bonds issued after August 7, 1986,
which continues to be tax-exempt, will be treated as a tax preference item
subject to the alternative minimum tax (discussed below) to which certain
taxpayers are subject. The Trust may hold municipal securities the interest on
which (and thus a proportionate share of the exempt-interest dividends paid by
the Trust) will be subject to the federal alternative minimum tax on individuals
and corporations.
The federal alternative minimum tax is designed to ensure that all persons
who receive income pay some tax, even if their regular tax is zero. This is
accomplished in part by including in taxable income certain tax preference items
that are used to calculate alternative minimum taxable income. The Tax Reform
Act made tax-exempt interest from certain private activity bonds a tax
preference item for purposes of the alternative minimum tax on individuals and
corporations. Any exempt-interest dividend paid by a regulated investment
company will be treated as interest on a specific private activity bond to the
extent of the proportionate relationship the interest the investment company
receives on such bonds bears to all its exempt interest dividends.
In addition, corporate taxpayers subject to the alternative minimum tax
may, under some circumstances, have to include exempt-interest dividends in
calculating their alternative minimum taxable income. That could occur in
situations where the "adjusted current earnings" of the corporation exceeds its
alternative minimum taxable income.
To determine whether a municipal security is treated as a taxable private
activity bond, it is subject to a test for: (a) a trade or business use and
security interest, or (b) a private loan restriction. Under the trade or
business use and security interest test, an obligation is a private activity
bond if: (i) more than 10% of the bond proceeds are used for private business
purposes and (ii) 10% or more of the payment of principal or interest on the
issue is directly or indirectly derived from such private use or is secured by
the privately used property or the payments related to the use of the property.
For certain types of uses, a 5% threshold is substituted for this 10% threshold.
The term "private business use" means any direct or indirect use in a
trade or business carried on by an individual or entity other than a state or
municipal governmental unit. Under the private loan restriction, the amount of
bond proceeds that may be used to make private loans is limited to the lesser of
5% or $5.0 million of the proceeds. Thus, certain issues of municipal securities
could lose their tax-exempt status retroactively if the issuer fails to meet
certain requirements as to the expenditure of the proceeds of that issue or the
use of the bond-financed facility. The Trust makes no independent investigation
of the users of such bonds or their use of proceeds of the bonds. If the Trust
should hold a bond that loses its tax-exempt status retroactively, there might
be an adjustment to the tax-exempt income previously distributed to
shareholders.
Additionally, a private activity bond that would otherwise be a qualified
tax-exempt private activity bond will not, under Internal Revenue Code Section
147(a), be a qualified bond for any period during which it is held by a person
who is a "substantial user" of the facilities or by a "related person" of such a
substantial user. This "substantial user" provision applies primarily to exempt
facility bonds, including industrial development bonds. The Trust may invest in
industrial development bonds and other private activity bonds. Therefore, the
Trust may not be an appropriate investment for entities which are "substantial
users" (or persons related to "substantial users") of such exempt facilities.
Those entities and persons should consult their tax advisers before purchasing
shares of the Trust.
A "substantial user" of such facilities is defined generally as a
"non-exempt person who regularly uses part of a facility" financed from the
proceeds of exempt facility bonds. Generally, an individual will not be a
"related person" under the Internal Revenue Code unless such individual or the
individual's immediate family (spouse, brothers, sisters and immediate
descendants) own directly or indirectly in the aggregate more than 50% in value
of the equity of a corporation or partnership which is a "substantial user" of a
facility financed from the proceeds of exempt facility bonds.
|X| Municipal Notes. Municipal securities having a maturity (when the
security is issued) of one year or less are generally known as municipal notes.
Municipal notes generally are used to provide for short-term working capital
needs. Some of the types of municipal notes the Trust can invest in are
described below.
|_| Tax Anticipation Notes. These are issued to finance working capital
needs of municipalities. Generally, they are issued in anticipation of various
seasonal tax revenue, such as income, sales, use or other business taxes, and
are payable from these specific future taxes.
|_| Revenue Anticipation Notes. These are notes issued in expectation of
receipt of other types of revenue, such as federal revenues available under
federal revenue-sharing programs.
|_| Bond Anticipation Notes. Bond anticipation notes are issued to
provide interim financing until long-term financing can be arranged. The
long-term bonds that are issued typically also provide the money for the
repayment of the notes.
|_| Construction Loan Notes. These are sold to provide project
construction financing until permanent financing can be secured. After
successful completion and acceptance of the project, it may receive permanent
financing through public agencies, such as the Federal Housing Administration.
|X| Tax Exempt Commercial Paper. This type of short-term obligation
(usually having a maturity of 270 days or less) is issued by a municipality to
meet current working capital needs.
|X| Municipal Lease Obligations. The Trust's investments in municipal
lease obligations may be through certificates of participation that are offered
to investors by public entities. Municipal leases may take the form of a lease
or an installment purchase contract issued by a state or local government
authority to obtain funds to acquire a wide variety of equipment and facilities.
Some municipal lease securities may be deemed to be "illiquid" securities.
Their purchase by the Trust would be limited as described below in "Illiquid
Securities." From time to time the Trust may invest more than 5% of its net
assets in municipal lease obligations that the Manager has determined to be
liquid under guidelines set by the Board of Trustees. Those guidelines require
the Manager to evaluate:
|_| the frequency of trades and price quotations for such securities;
|_| the number of dealers or other potential buyers willing to purchase or
sell such securities;
|_| the availability of market-makers; and
|_| the nature of the trades for such securities.
Municipal leases have special risk considerations. Although lease
obligations do not constitute general obligations of the municipality for which
the municipality's taxing power is pledged, a lease obligation is ordinarily
backed by the municipality's covenant to budget for, appropriate and make the
payments due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for that purpose on a yearly basis. While the obligation
might be secured by the lease, it might be difficult to dispose of that property
in case of a default.
Projects financed with certificates of participation generally are not
subject to state constitutional debt limitations or other statutory requirements
that may apply to other municipal securities. Payments by the public entity on
the obligation underlying the certificates are derived from available revenue
sources. That revenue might be diverted to the funding of other municipal
service projects. Payments of interest and/or principal with respect to the
certificates are not guaranteed and do not constitute an obligation of a state
or any of its political subdivisions.
In addition to the risk of "non-appropriation," municipal lease securities
do not have as highly liquid a market as conventional municipal bonds. Municipal
leases, like other municipal debt obligations, are subject to the risk of
non-payment of interest or repayment of principal by the issuer. The ability of
issuers of municipal leases to make timely lease payments may be adversely
affected in general economic downturns and as relative governmental cost burdens
are reallocated among federal, state and local governmental units. A default in
payment of income would result in a reduction of income to the Trust. It could
also result in a reduction in the value of the municipal lease and that, as well
as a default in repayment of principal, could result in a decrease in the net
asset value of the Trust. While the Trust holds such securities, the Manager
will also evaluate the likelihood of a continuing market for these securities
and their credit quality.
Floating Rate/Variable Rate Obligations. The Trust may invest in instruments
with floating or variable interest rates. The interest rate on a floating rate
obligation is based on a stated prevailing market rate, such as a bank's prime
rate, the 90-day U.S. Treasury Bill rate, the rate of return on commercial paper
or bank certificates of deposit, or some other standard. The rate on the
investment is adjusted automatically each time the market rate is adjusted. The
interest rate on a variable rate obligation is also based on a stated prevailing
market rate but is adjusted automatically at a specified interval of not less
than one year. Some variable rate or floating rate obligations in which the
Trust may invest have a demand feature entitling the holder to demand payment of
an amount approximately equal to the amortized cost of the instrument or the
principal amount of the instrument plus accrued interest at any time, or at
specified intervals not exceeding one year. These notes may or may not be backed
by bank letters of credit.
Variable rate demand notes may include master demand notes, which are
obligations that permit the Trust to invest fluctuating amounts in a note. The
amount may change daily without penalty, pursuant to direct arrangements between
the Trust, as the note purchaser, and the issuer of the note. The interest rates
on these notes fluctuate from time to time. The issuer of this type of
obligation normally has a corresponding right in its discretion, after a given
period, to prepay the outstanding principal amount of the obligation plus
accrued interest. The issuer must give a specified number of days' notice to the
holders of those obligations. Generally, the changes in the interest rate on
those securities reduce the fluctuation in their market value. As interest rates
decrease or increase, the potential for capital appreciation or depreciation is
less than that for fixed-rate obligations having the same maturity.
Because these types of obligations are direct lending arrangements between
the note purchaser and issuer of the note, these instruments generally will not
be traded. Generally, there is no established secondary market for these types
of obligations, although they are redeemable from the issuer at face value.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, the Trust's right to redeem them is dependent
on the ability of the note issuer to pay principal and interest on demand. These
types of obligations usually are not rated by credit rating agencies. The Trust
may invest in obligations that are not rated only if the Manager determines at
the time of investment that they are Eligible Securities. The Manager, on behalf
of the Trust, will monitor the creditworthiness of the issuers of the floating
and variable rate obligations in the Trust's portfolio on an ongoing basis.
There is no limit on the amount of the Trust's assets that may be invested in
floating rate and variable rate obligations that meet the requirements of Rule
2a-7.
When-Issued and Delayed Delivery Transactions. As stated in the Prospectus, the
Trust may invest in municipal securities on a "when-issued" or "delayed
delivery" basis. Payment for and delivery of the securities shall not exceed 120
days from the date the offer is accepted. The purchase price and yield are fixed
at the time the buyer enters into the commitment. During the period between the
time of commitment and settlement, no payment is made by the Trust to the issuer
and no interest accrues to the Trust from this investment. However, the Trust
intends to be as fully invested as possible and will not invest in when-issued
securities if its income or net asset value will be materially adversely
affected. At the time the Trust makes the commitment to purchase a municipal
security on a when-issued basis, it will record the transaction on its books and
reflect the value of the security in determining its net asset value. It will
also segregate cash or other liquid high quality Securities equal in value to
the commitment for the when-issued securities. While when-issued securities may
be sold prior to settlement date, the Trust intends to acquire the securities
upon settlement unless a prior sale appears desirable for investment reasons.
There is a risk that the yield available in the market when delivery occurs may
be higher than the yield on the security acquired.
|X| Ratings of Securities -- Portfolio Quality, Maturity and
Diversification. Under Rule 2a-7 of the Investment Company Act, the Trust uses
the amortized cost method to value its portfolio securities to determine the
Trust's net asset value per share. Rule 2a-7 places restrictions on a money
market fund's investments. Under that Rule, the Trust may purchase only those
securities that the Manager, under Board-approved procedures, has determined
have minimal credit risks and are "Eligible Securities." The rating restrictions
described in the Prospectus and this Statement of Additional Information do not
apply to banks in which the Trust's cash is kept.
An "Eligible Security" is one that has been rated in one of the two
highest short-term rating categories by any two "nationally-recognized
statistical rating organizations." That term is defined in Rule 2a-7 and they
are referred to as "Rating Organizations" in this Statement of Additional
Information. If only one Rating Organization has rated that security, it must
have been rated in one of the two highest rating categories by that Rating
Organization. An unrated security that is judged by the Manager to be of
comparable quality to Eligible Securities rated by Rating Organizations may also
be an "Eligible Security."
Rule 2a-7 permits the Trust to purchase any number of "First Tier
Securities." These are Eligible Securities that have been rated in the highest
rating category for short-term debt obligations by at least two Rating
Organizations. If only one Rating Organization has rated a particular security,
it must have been rated in the highest rating category by that Rating
Organization. Comparable unrated securities may also be First Tier Securities.
Under Rule 2a-7, the Trust may invest only up to 5% of its total assets in
"Second Tier Securities." Those are Eligible Securities that are not "First Tier
Securities." In addition, the Trust may not invest more than:
|_| 5% of its total assets in the securities of any one issuer (other than
the U.S. government, its agencies or instrumentalities) or
|_| 1% of its total assets or $1 million (whichever is greater) in Second
Tier Conduit Securities of any one issuer.
The Trust may buy second tier "conduit securities". These eligible
securities are securities rated by rating organizations but are not first tier
securities. Conduit securities are municipal securities such as industrial
development or revenue bonds issued to finance non-government projects. The
payment of the principal and interest on a conduit security is not the
obligation of the municipal issuer, but is the obligation of another person who
is ultimately responsible for the payment of principal and interest, such as the
user of the facility.
Under Rule 2a-7, the Trust must maintain a dollar-weighted average
portfolio maturity of not more than 90 days, and the maturity of any single
portfolio investment may not exceed 397 days. The Board regularly reviews
reports from the Manager to show the Manager's compliance with the Trust's
procedures and with the Rule.
If a security's rating is downgraded, the Manager and/or the Board of
Trustees may have to reassess the security's credit risk. If a security has
ceased to be a First Tier Security, the Manager will promptly reassess whether
the security continues to present minimal credit risk. If the Manager becomes
aware that any Rating Organization has downgraded its rating of a Second Tier
Security or rated an unrated security below its second highest rating category,
the Trust's Board of Trustees shall promptly reassess whether the security
presents minimal credit risk and whether it is in the best interests of the
Trust to dispose of it. If the Trust disposes of the security within five days
of the Manager learning of the downgrade, the Manager will provide the Board of
Trustees with subsequent notice of such downgrade. If a security is in default,
or ceases to be an Eligible Security, or is determined no longer to present
minimal credit risks, the Board of Trustees must determine whether it would be
in the best interests of the Trust to dispose of the security.
The Rating Organizations currently designated as nationally-recognized
statistical rating organizations by the Securities and Exchange Commission are
Standard & Poor's Corporation, Moody's Investors Service, Inc., Fitch IBCA,
Inc., Duff and Phelps, Inc., and Thomson BankWatch, Inc. Appendix A to this
Statement of Additional Information contains descriptions of the rating
categories of those Rating Organizations. Ratings at the time of purchase will
determine whether securities may be acquired under the restrictions described
above.
Other Investment Strategies
Repurchase Agreements. In a repurchase transaction, the Trust acquires a
security from, and simultaneously resells it to, an approved vendor (a U.S.
commercial bank or the U.S. branch of a foreign bank having total domestic
assets of at least $1 billion or a broker-dealer with a net capital of at least
$50 million and which has been designated a primary dealer in government
securities). The resale price exceeds the purchase price by an amount that
reflects an agreed-upon interest rate effective for the period during which the
repurchase agreement is in effect. The majority of these transactions run from
day to day, and delivery pursuant to the resale typically will occur within one
to five days of the purchase. Repurchase agreements are considered "loans" under
the Investment Company Act of 1940, as amended (the "Investment Company Act")
collateralized by the underlying security. The Trust's repurchase agreements
require that at all times while the repurchase agreement is in effect, the value
of the collateral must equal or exceed the repurchase price to fully
collateralize the repayment obligation. Additionally, the Manager will monitor
the vendor's creditworthiness to confirm that the vendor is financially sound
and will continuously monitor the collateral's value.
Puts and Standby Commitments. When the Trust buys municipal securities, it may
obtain a standby commitment from the seller to repurchase the securities that
entitles the Trust to achieve same day settlement from the repurchaser and to
receive an exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. A put purchased in
conjunction with a municipal security enables the Trust to sell the underlying
security within a specified period of time at a fixed exercise price. The Trust
may pay for a standby commitment or put either separately in cash or by paying a
higher price for the securities acquired subject to the standby commitment or
put. The Trust will enter into these transactions only with banks and dealers
which, in the Manager's opinion, present minimal credit risks. The Trust's
purchases of puts are subject to the provisions of Rule 2a-7 under the
Investment Company Act because the Trust uses the amortized cost method to value
its portfolio securities. An unconditional put or guarantee with respect to a
security will not be deemed to be issued by the institution providing the
guarantee or put, provided that the value of all securities held by the Trust
and issued or guaranteed by the issuer providing the guarantee or put shall not
exceed 10% of the Trust's total assets.
Diversification. For purposes of diversification under the Investment Company
Act, and the Trust's investment restrictions, the identification of the issuer
of a Municipal Bond or Note depends on the terms and conditions of the security.
When the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
subdivision and the security is backed only by the assets and revenues of the
subdivision, such subdivision would be deemed to be the sole issuer. Similarly,
in the case of an industrial development bond, if that bond is backed only by
the assets and revenues of the nongovernmental user, then such nongovernmental
user would be deemed to be the sole issuer. If, however, in either case, the
creating government or some other entity guarantees a security, such a guarantee
would be considered a separate security and is to be treated as an issue of such
government or other entity. Conduit securities are deemed to be issued by the
person ultimately responsible for payments of interest and principal on the
security.
Investment Restrictions
|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Trust has adopted to govern its investments that can be
changed only by the vote of a "majority" of the Trust's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is defined as
the vote of the holders of the lesser of:
|_| 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the outstanding
shares are present or represented by proxy, or
|_| more than 50% of the outstanding shares.
The Trust's investment objective is a fundamental policy. Other policies
described in the Prospectus or this Statement of Additional Information are
"fundamental" only if they are identified as such. The Trust's Board of Trustees
can change non-fundamental policies without shareholder approval. However,
significant changes to investment policies will be described in supplements or
updates to the Prospectus or this Statement of Additional Information, as
appropriate. The Trust's most significant investment policies are described in
the Prospectus.
Does the Trust Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Trust:
|_| The Trust cannot make loans, except by purchasing debt obligations
in accordance with its investment policies as approved by the Board, or by
entering into repurchase agreements, or by lending portfolio securities in
accordance with applicable regulations;
|_| The Trust cannot borrow money except as a temporary measure for
extraordinary or emergency purposes, and then only up to 10% of the value of its
assets; no more than 10% of the Trust's net assets may be pledged, mortgaged or
assigned to secure a debt; no investments may be made while outstanding
borrowings, other than by means of reverse repurchase agreements (which are not
considered borrowings under this restriction), exceed 5% of its assets;
|_| The Trust cannot invest more than 5% of the value of its total
assets taken at market value in the securities of any one issuer (not including
the U.S. government or its agencies or instrumentalities, whose securities may
be purchased without limitation for defensive purposes);
|_| The Trust cannot purchase more than 10% of the outstanding voting
securities of any one issuer or invest in companies for the purpose of
exercising control;
|_| The Trust cannot concentrate investments to the extent of 25% of its
assets in any industry; however, there is no limitation as to investment, for
liquidity purposes, in obligations issued by banks or savings and loan
associations or in obligations issued by the U.S. government or its agencies or
instrumentalities;
|_| The Trust cannot invest in commodities or commodity contracts or
invest in interests in oil, gas or other mineral exploration or development
programs;
|_| The Trust cannot invest in real estate; however the Trust may
purchase municipal bonds or notes secured by interests in real estate;
|_| The Trust cannot make short sales of securities or purchase
securities on margin, except for short-term credits necessary for the clearance
of purchases and sales of portfolio securities;
|_| The Trust cannot invest in or hold securities of any issuer if those
officers and trustees or directors of the Trust or its advisor who beneficially
own individually more than 0.5% of the securities of such issuer together own
more than 5% of the securities of such issuer;
|_| The Trust cannot underwrite securities issued by other persons
except to the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter for purposes of the
Securities Act of 1933;
|_| The Trust cannot invest in securities of other investment companies
except as they may be acquired as part of a merger, consolidation or acquisition
of assets; or
|_| The Trust cannot issue "senior securities," but this does not
prohibit certain investment activities for which assets of the Trust are
designated as segregated, or margin, collateral or escrow arrangements are
established, to cover the related obligations.
Unless the Prospectus or this Statement of Additional Information states
that a percentage restriction applies on an ongoing basis, it applies only at
the time the Trust makes an investment. The Trust need not sell securities to
meet the percentage limits if the value of the investment increases in
proportion to the size of the Trust.
For purposes of the Trust's policy not to concentrate its investments in
securities of issuers, the Trust has adopted the industry classifications set
forth in Appendix B to this Statement of Additional Information. This is not a
fundamental policy.
How the Trust Is Managed
Organization and History. The Trust is an open-end, diversified management
investment company organized as a Massachusetts business trust in 1985, with an
unlimited number of authorized shares of beneficial interest.
The Trust is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The Trustees
meet periodically throughout the year to oversee the Trust's activities, review
its performance, and review the actions of the Manager. Although the Trust will
not normally hold annual meetings of its shareholders, it may hold shareholder
meetings from time to time on important matters. Shareholders of the Trust may
have the right to call a meeting to remove a Trustee or to take other action
described in the Declaration of Trust.
|X| Classes of Shares. The Trust has a single class of shares of stock.
While that class has no designation, it is deemed to be the equivalent of Class
A for purposes of the shareholder account policies that apply to Class A shares
of the Oppenheimer funds. Shares of the Trust are freely transferable. Each
share has one vote at shareholder meetings, with fractional shares voting
proportionally on matters submitted to a vote of shareholders. There are no
preemptive or conversion rights and shares participate equally in the assets of
the Trust upon liquidation.
|X| Meetings of Shareholders. As a Massachusetts business trust, the Trust
is not required to hold, and does not plan to hold, regular annual meetings of
shareholders. The Trust will hold meetings when required to do so by the
Investment Company Act or other applicable law. It will also do so when a
shareholder meeting is called by the Trustees or upon proper request of the
shareholders.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of the Trust, to remove a Trustee. The
Trustees will call a meeting of shareholders to vote on the removal of a Trustee
upon the written request of the record holders of 10% of the outstanding shares
of the Trust. If the Trustees receive a request from at least 10 shareholders
stating that they wish to communicate with other shareholders to request a
meeting to remove a Trustee, the Trustees will then either make the shareholder
lists of the Trust available to the applicants or mail their communication to
all other shareholders at the applicants' expense. The shareholders making the
request must have been shareholders for at least six months and must hold shares
of the Trust valued at $25,000 or more or constituting at least 1% of the
outstanding shares of the Trust, whichever is less. The Trustees may also take
other action as permitted by the Investment Company Act.
|_| Shareholder and Trustee Liability. The Declaration of Trust contains
an express disclaimer of shareholder or Trustee liability for the Trust's
obligations. It also provides for indemnification and reimbursement of expenses
out of the Trust's property for any shareholder held personally liable for its
obligations. The Declaration of Trust also states that upon request, the Trust
shall assume the defense of any claim made against a shareholder for any act or
obligation of the Trust and shall satisfy any judgment on that claim.
Massachusetts law permits a shareholder of a business trust (such as the Trust)
to be held personally liable as a "partner" under certain circumstances.
However, the risk that a Trust shareholder will incur financial loss from being
held liable as a "partner" of the Trust is limited to the relatively remote
circumstances in which the Trust would be unable to meet its obligations.
The Trust's contractual arrangements state that any person doing business
with the Trust (and each shareholder of the Trust) agrees under the Declaration
of Trust to look solely to the assets of the Trust for satisfaction of any claim
or demand that may arise out of any dealings with the Trust. Additionally, the
Trustees shall have no personal liability to any such person, to the extent
permitted by law.
Trustees and Officers of the Trust. The Trust's Trustees and officers and their
principal occupations and business affiliations during the past five years are
listed below. Trustees denoted with an asterisk (*) below are deemed to be
"interested persons" of the Trust under the Investment Company Act. All of the
Trustees are also trustees, directors or managing general partners of the
following Denver-based Oppenheimer funds1:
1. Ms. Macaskill and Mr. Bowen are not Trustees or Directors of Oppenheimer
Integrity Funds, Oppenheimer Strategic Income Fund, Panorama Series Fund, Inc.
or Oppenheimer Variable Account Funds. Mr. Fossel and Mr. Bowen are not Trustees
of Centennial New York Tax Exempt Trust or Managing General Partners of
Centennial America Fund, L.P.
Oppenheimer Capital Income Fund Oppenheimer Senior Floating Rate
Fund
Oppenheimer Cash Reserves Oppenheimer Strategic Income Fund
Oppenheimer Champion Income Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer High Yield Fund Oppenheimer Variable Account Funds
Oppenheimer International Bond Fund Panorama Series Fund, Inc.
Oppenheimer Integrity Funds Centennial America Fund, L. P.
Oppenheimer Limited-Term Government Centennial California Tax Exempt
Fund Trust
Oppenheimer Main Street Funds, Inc. Centennial Government Trust
Oppenheimer Main Street Small Cap Centennial Money Market Trust
Fund
Oppenheimer Municipal Fund Centennial New York Tax Exempt Trust
Oppenheimer Real Asset Fund Centennial Tax Exempt Trust
Robert G. Avis*, Trustee, Age: 68
One North Jefferson Ave., St. Louis, Missouri 63103
Chairman, President and Chief Executive Officer of A.G. Edwards Capital, Inc.
(general partnership of private equity funds), Director of A.G. Edwards & Sons,
Inc. (a broker-dealer) and Director of A.G. Edwards Trust Companies (trust
companies), formerly, Vice Chairman of A.G. Edwards & Sons, Inc. and A.G.
Edwards, Inc. (its parent holding company) and Chairman of A.G.E. Asset
Management (an investment advisor).
William A. Baker, Trustee, Age: 84
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
George C. Bowen, Trustee, Age: 63
9224 Bauer Court, Lone Tree, Colorado 80124
Formerly (until April 1999) Mr. Bowen held the following positions: Senior Vice
President (since September 1987) and Treasurer (since March 1985) of the
Manager; Vice President (since June 1983) and Treasurer (since March 1985) of
the Distributor; Vice President (since October 1989) and Treasurer (since April
1986) of HarbourView Asset Management Corporation; Senior Vice President (since
February 1992), Treasurer (since July 1991) Assistant Secretary and a director
(since December 1991) of Centennial Asset Management Corporation; President,
Treasurer and a director of Centennial Capital Corporation (since June 1989);
Vice President and Treasurer (since August 1978) and Secretary (since April
1981) of Shareholder Services, Inc.; Vice President, Treasurer and Secretary of
Shareholder Financial Services, Inc. (since November 1989); Assistant Treasurer
of Oppenheimer Acquisition Corp. (since March 1998); Treasurer of Oppenheimer
Partnership Holdings, Inc. (since November 1989); Vice President and Treasurer
of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief Executive
Officer, Treasurer; Treasurer of OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since October 1997).
Jon S. Fossel, Trustee, Age: 57
P.O. Box 44, Mead Street, Waccabuc, New York 10597
Formerly Chairman and a director of the Manager, President and a director of
Oppenheimer Acquisition Corp., the Manager's parent holding company, and
Shareholder Services, Inc. and Shareholder Financial Services, Inc., transfer
agent subsidiaries of the Manager.
Sam Freedman, Trustee, Age: 59
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly Chairman and Chief Executive Officer of OppenheimerFunds Services,
Chairman, Chief Executive Officer and a director of Shareholder Services, Inc.,
Chairman, Chief Executive Officer and director of Shareholder Financial
Services, Inc., Vice President and director of Oppenheimer Acquisition Corp. and
a director of OppenheimerFunds, Inc.
Raymond J. Kalinowski, Trustee, Age: 70
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc. (a computer products training
company), self-employed consultant (securities matters).
C. Howard Kast, Trustee, Age: 77
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).
Robert M. Kirchner, Trustee, Age: 78
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Bridget A. Macaskill*, President and Trustee, Age: 51
Two World Trade Center, New York, New York 10048-0203
President (since June 1991), Chief Executive Officer (since
September 1995) and a Director (since December 1994) of the Manager; President
and director (since June 1991) of HarbourView Asset Management Corporation, an
investment adviser subsidiary of the Manager; Chairman and a director of
Shareholder Services, Inc. (since August 1994) and Shareholder Financial
Services, Inc. (since September 1995), transfer agent subsidiaries of the
Manager; President (since September 1995) and a director (since October 1990) of
Oppenheimer Acquisition Corp., the Manager's parent holding company; President
(since September 1995) and a director (since November 1989) of Oppenheimer
Partnership Holdings, Inc., a holding company subsidiary of the Manager; a
director of Oppenheimer Real Asset Management, Inc. (since July 1996); President
and a director (since October 1997) of OppenheimerFunds International Ltd., an
offshore fund management subsidiary of the Manager and of Oppenheimer Millennium
Funds plc; President and a director of other Oppenheimer funds; a director of
Prudential Corporation plc (a U.K. financial service company).
Ned M. Steel, Trustee, Age: 84
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; a director of Visiting Nurse
Corporation of Colorado.
James C. Swain*, Chairman, Chief Executive Officer and Trustee, Age: 65
6803 South Tucson Way, Englewood, Colorado 80112
Vice Chairman of the Manager (since September 1988); formerly President and a
director of Centennial Asset Management Corporation, an investment adviser
subsidiary of the Manager and Chairman of the Board of Shareholder Services,
Inc.
Michael A. Carbuto, Vice President and Portfolio Manager, Age: 44
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager and Centennial Asset Management Corporation (since
May 1988); an officer of other Oppenheimer funds.
Andrew J. Donohue, Vice President and Secretary, Age: 49
Two World Trade Center, New York, New York 10048-0203
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President and General Counsel (since September 1993) and a director (since
January 1992) of the Distributor; Executive Vice President, General Counsel and
a director of HarbourView Asset Management Corporation, Shareholder Services,
Inc., Shareholder Financial Services, Inc. and (since September 1995)
Oppenheimer Partnership Holdings, Inc.; President and a director of Centennial
Asset Management Corporation (since September 1995); President, General Counsel
and a director of Oppenheimer Real Asset Management, Inc. (since July 1996);
General Counsel (since May 1996) and Secretary (since April 1997) of Oppenheimer
Acquisition Corp.; Vice President and a director of OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc (since October 1997); an
officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer, Age: 40
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller
for the Manager.
Scott T. Farrar, Assistant Treasurer, Age: 34
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller
for the Manager.
Brian W. Wixted, Treasurer, Age: 40
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (since April 1999) of the Manager; Treasurer
of HarbourView Asset Management Corporation, Shareholder Services, Inc.,
Shareholder Financial Services, Inc. and Oppenheimer Partnership Holdings, Inc.
(since April 1999); Assistant Treasurer of Oppenheimer Acquisition Corp. (since
April 1999); Assistant Secretary of Centennial Asset Management Corporation
(since April 1999); formerly Principal and Chief Operating Officer, Bankers
Trust Company - Mutual Fund Services Division (March 1995 - March 1999); Vice
President and Chief Financial Officer of CS First Boston Investment Management
Corp. (September 1991 - March 1995); and Vice President and Accounting Manager,
Merrill Lynch Asset Management (November 1987 - September 1991).
Robert G. Zack, Assistant Secretary, Age: 51
Two World Trade Center, New York, New York 10048-0203
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of Shareholder Services, Inc. (since
May 1985), and Shareholder Financial Services, Inc. (since November 1989);
Assistant Secretary of OppenheimerFunds International Ltd. and Oppenheimer
Millennium Funds plc (since October 1997); an officer of other Oppenheimer
funds.
O Remuneration of Trustees. The officers of the Trust and certain Trustees of
the Trust (Ms. Macaskill and Mr. Swain) who are affiliated with the Manager
receive no salary or fee from the Trust. The remaining Trustees of the Trust
received the compensation shown below. The compensation from the Trust was paid
during its fiscal year ended June 30, 1999. The compensation from all of the
Denver-based Oppenheimer funds includes the Trust and is compensation received
as a trustee, director, managing general partner or member of a committee of the
Board during the calendar year 1998.
<PAGE>
-----------------------------------------------------------------------------
Aggregate Total Compensation
Trustee's Name Compensation from all Denver-Based
and Other Positions from Trust Oppenheimer Funds1
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Robert G. Avis $2,324 $67,998
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
William A. Baker $2,359 $69,998
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Jon S. Fossel $2,307 $67,496
Review Committee Member
------------------------------------------------
-----------------------------------------------------------------------------
Sam Freedman $2,530 $73,998
Review Committee Member
------------------------------------------------
-----------------------------------------------------------------------------
Raymond J. Kalinowski $2,530 $73,998
Audit Committee Member
------------------------------------------------
-----------------------------------------------------------------------------
C. Howard Kast $2,633 $76,998
Audit and Review
Committee Chairman
-----------------------------------------------------------------------------
------------------------------------------------
Robert M. Kirchner $2,324 $67,998
Audit Committee Member
------------------------------------------------
-----------------------------------------------------------------------------
Ned M. Steel $2,324 $67,998
-----------------------------------------------------------------------------
1. For the 1998 calendar year.
[_] Deferred Compensation Plan for Trustees. The Trustees have adopted
a Deferred Compensation Plan for disinterested Trustees that enables them to
elect to defer receipt of all or a portion of the annual fees they are entitled
to receive from the Trust. Under the plan, the compensation deferred by a
Trustee is periodically adjusted as though an equivalent amount had been
invested in shares of one or more Oppenheimer funds selected by the Trustee. The
amount paid to the Trustee under this plan will be determined based upon the
performance of the selected funds.
Deferral of fees of the Trustees under this plan will not materially
affect the Trust's assets, liabilities or net income per share. This plan will
not obligate the Trust to retain the services of any Trustee or to pay any
particular level of compensation to any Trustee. Pursuant to an Order issued by
the Securities and Exchange Commission, the Trust may invest in the funds
selected by any Trustee under this plan without shareholder approval for the
limited purpose of determining the value of the Trustees' deferred fee accounts.
|X| Major Shareholders. As of October 21, 1999 the only person who owned
of record or was known by the Trust to own beneficially 5% or more of the
Trust's outstanding retail shares was A.G. Edwards & Sons, Inc. ("Edwards"), 1
North Jefferson Avenue, St. Louis, Missouri 63103, which owned 1,685,042,691.570
shares of the Trust which was 98.5% of the outstanding shares of the Trust on
that date, for accounts of its customers none of whom individually owned more
than 5% of the outstanding shares..
The Manager. The Manager is wholly-owned by OppenheimerFunds, Inc., which is a
wholly-owned subsidiary of Oppenheimer Acquisition Corp., a holding company
controlled by Massachusetts Mutual Life Insurance Company.
The portfolio managers of the Trust are principally responsible for the
day-to-day management of the Trust's investment portfolio. Other members of the
Manager's fixed-income portfolio department, particularly security analysts,
traders and other portfolio managers, have broad experience with fixed-income
securities. They provide the Trust's portfolio managers with research and
support in managing the Trust's investments.
|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Trust under an investment advisory
agreement between the Manager and the Trust. The Manager selects securities for
the Trust's portfolio and handles its day-to-day business. The agreement
requires the Manager, at its expense, to provide the Trust with adequate office
space, facilities and equipment. It also requires the Manager to provide and
supervise the activities of all administrative and clerical personnel required
to provide effective administration for the Trust. Those responsibilities
include the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and composition of
proxy materials and registration statements for continuous public sale of shares
of the Trust.
Expenses not expressly assumed by the Manager under the investment
advisory agreement are paid by the Trust. The investment advisory agreement
lists examples of expenses paid by the Trust. The major categories relate to
interest, taxes, fees to unaffiliated Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain printing
and registration costs and non-recurring expenses, including litigation costs.
The management fees paid by the Trust to the Manager are calculated at the rates
described in the Prospectus.
- -------------------------------------------------------------------------------
Fiscal Year Management Fee Paid to Centennial Asset Management Corporation
ending 6/30
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1997 $4,743,430
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1998 $5,092,383
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1999 $7,950,188
- --------------------------------------------------------------------------------
Under its Agreement with The Trust, when the value of the Trust's net
assets is less than $1.5 billion, the annual fee payable to the Manager is
reduced by $100,000 based on the average net assets computed daily and paid
monthly at the annual rates, but in no event shall the annual fee be less than
$0. This contractual provision resulted in a reduction of the fee which would
otherwise have been payable to the Manager during the fiscal years ended June
30, 1997, 1998, and 1999, respectively, in the following amounts: $19,945, $0
and $0.
In addition, under its Agreement with The Trust, the Manager has agreed to
assume that Trust's expenses to the extent that the total expenses (as described
above) of the Trust exceed the most stringent limits prescribed by any state in
which the Trust's shares are offered for sale. The payment of the management fee
at the end of any month will be reduced so that at no time will there be any
accrued but unpaid liabilities under any of these expense assumptions. As a
result of changes in federal securities laws which have effectively pre-empted
state expense limitations, the contractual commitment relating to such
reimbursements is no longer relevant.
The Agreement provides that the Manager assumes no responsibility under the
Agreement other than that which is imposed by law, and shall not be responsible
for any action of the Board of Trustees of the Trust in following or declining
to follow any advice or recommendations of the Manager. The Agreement provides
that the Manager shall not be liable for any error of judgment or mistake of
law, or for any loss suffered by the Trust in connection with matters to which
the Agreement relates, except a loss resulting by reason of the Manager's
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or its reckless disregard of its obligations and duties under the
Agreement.
|X| The Distributor. Under its General Distributor's Agreement with the
Trust, Centennial Asset Management Corporation acts as the Trust's principal
underwriter and Distributor in the continuous public offering of the Trust's
shares. The Distributor is not obligated to sell a specific number of shares.
The Distributor bears the expenses normally attributable to sales, including
advertising and the cost of printing and mailing prospectuses, other than those
furnished to existing shareholders.
Portfolio Transactions. Portfolio decisions are based upon recommendations and
judgment of the Manager subject to the overall authority of the Board of
Trustees. Most purchases made by the Trust are principal transactions at net
prices, so the Trust incurs little or no brokerage costs. The Trust deals
directly with the selling or purchasing principal or market maker without
incurring charges for the services of a broker on its behalf unless the Manager
determines that a better price or execution may be obtained by using the
services of a broker. Purchases of portfolio securities from underwriters
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers include a spread between the bid and asked prices.
The Trust seeks to obtain prompt execution of orders at the most favorable
net price. If broker/dealers are used for portfolio transactions, transactions
may be directed to broker/dealers for their execution and research services. The
research services provided by a particular broker may be useful only to one or
more of the advisory accounts of the Manager and its affiliates. Investment
research received for the commissions of those other accounts may be useful both
to the Trust and one or more of such other accounts. Investment research
services may be supplied to the Manager by a third party at the instance of a
broker through which trades are placed. It may include information and analyses
on particular companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio evaluations,
information systems, computer hardware and similar products and services. If a
research service also assists the Manager in a non-research capacity (such as
bookkeeping or other administrative functions), then only the percentage or
component that provides assistance to the Manager in the investment
decision-making process may be paid in commission dollars.
The research services provided by brokers broaden the scope and supplement
the research activities of the Manager. That research provides additional views
and comparisons for consideration, and helps the Manager obtain market
information for the valuation of securities held in the Trust's portfolio or
being considered for purchase.
Subject to applicable rules covering the Manager's activities in this
area, sales of shares of the Trust and/or the other investment companies managed
by the Manager or distributed by the Distributor may also be considered as a
factor in the direction of transactions to dealers. That must be done in
conformity with the price, execution and other considerations and practices
discussed above. Those other investment companies may also give similar
consideration relating to the sale of the Trust's shares. No portfolio
transactions will be handled by any securities dealer affiliated with the
Manager.
The Trust's policy of investing in short-term debt securities with
maturities of less than one year results in high portfolio turnover and may
increase the Trust's transaction costs. However, since brokerage commissions, if
any, are small, high turnover does not have an appreciable adverse effect upon
the income of the Trust.
Service Plan
The Trust has adopted a Service Plan for the shares. The plan has been approved
by a vote of the Board of Trustees, including a majority of the Independent
Trustees2, cast in person at a meeting called for the purpose of voting on that
plan.
Under the plan, the Manager and the Distributor may make payments to
affiliates and, in their sole discretion, from time to time, may use their own
resources (at no direct cost to the Trust) to make payments to brokers, dealers
or other financial institutions for distribution and administrative services
they perform. The Manager may use its profits from the advisory fee it receives
from the Trust. In their sole discretion, the Distributor and the Manager may
increase or decrease the amount of payments they make from their own resources
to plan recipients.
Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Trust's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose of
voting on continuing the plan. A plan may be terminated at any time by the vote
of a majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the outstanding shares
of the Trust.
The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the amount of
payments to be made under a plan must be approved by shareholders of the class
affected by the amendment. The approval must be by a "majority" (as defined in
the Investment Company Act) of the shares.
2. In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Trustees" in this Statement of Additional Information refers to
those Trustees who are not "interested persons" of the Fund (or its parent
corporation) and who do not have any direct or indirect financial interest in
the operation of any agreement under the plan.
While the plan is in effect, the Treasurer of the Trust shall provide
separate written reports on the plan to the Board of Trustees at least quarterly
for its review. The Reports shall detail the amount of all payments made under
the plan and the purpose for which the payments were made. Those reports are
subject to the review and approval of the Independent Trustees.
The plan states that while it is in effect, the selection and nomination
of those Trustees of the Trust who are not "interested persons" of the Trust is
committed to the discretion of the Independent Trustees. This does not prevent
the involvement of others in the selection and nomination process as long as the
final decision as to selection or nomination is approved by a majority of the
Independent Trustees.
Under the plan, no payment will be made to any recipient in any quarter in
which the aggregate net asset value of all Trust shares held by the recipient
for itself and its customers does not exceed a minimum amount, if any, that may
be set from time to time by a majority of the Independent Trustees. The Board of
Trustees has set no minimum amount of assets to qualify for payments under the
plan.
|X| Service Plan Fees. Under the service plan, the Distributor currently
uses the fees it receives from the Trust to pay brokers, dealers and other
financial institutions (they are referred to as "recipients") for personal
services and account maintenance services they provide for their customers who
hold shares. The services include, among others, answering customer inquiries
about the Trust, assisting in establishing and maintaining accounts in the
Trust, making the Trust's investment plans available and providing other
services at the request of the Trust or the Distributor. The service plan
permits reimbursements to the Distributor at a rate of up to 0.20% of average
annual net assets of the shares. While the plan permits the Board to authorize
payments to the Distributor to reimburse itself for services under the plan, the
Board has not yet done so. The Distributor makes payments to plan recipients
quarterly at an annual rate not to exceed 0.20% of the average annual net assets
consisting of shares held in the accounts of the recipients or their customers.
For the fiscal year ended June 30, 1999 payments under the plan totaled
$3,773,272, all of which was paid by the Distributor to recipients. That
included $16,878 paid to an affiliate of the Distributor's parent company. Any
unreimbursed expenses the Distributor incurs with respect to the shares in any
fiscal year cannot be recovered in subsequent years. The Distributor may not use
payments received under the plan to pay any of its interest expenses, carrying
charges, or other financial costs, or allocation of overhead.
Performance of the Trust
Explanation of Performance Terminology. The Trust uses a variety of terms to
illustrate its performance. These terms include "yield," "compounded effective
yield, " "tax-equivalent yield" and "average annual total return." An
explanation of how yields and total returns are calculated is set forth below.
The charts below show the Trust's performance as of the Trust's most recent
fiscal year end. You can obtain current performance information by calling the
Trust's Transfer Agent at 1-800-525-9310.
The Trust's illustrations of its performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those rules
describe the types of performance data that may be used and how it is to be
calculated. If the Trust shows total returns in addition to its yields, the
returns must be for the 1-, 5- and 10-year periods ending as of the most recent
calendar quarter prior to the publication of the advertisement (or its
submission for publication).
Use of standardized performance calculations enables an investor to
compare the Trust's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using the
Trust's performance information as a basis for comparisons with other
investments:
|_| Yields and total returns measure the performance of a hypothetical
account in the Trust over various periods and do not show the performance of
each shareholder's account. Your account's performance will vary from the model
performance data if your dividends are received in cash, or you buy or sell
shares during the period, or you bought your shares at a different time than the
shares used in the model.
|_| An investment in the Trust is not insured by the FDIC or any other
government agency.
|_| The Trust's yield is not fixed or guaranteed and will fluctuate.
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
|_| Yields and total returns for any given past period represent historical
performance information and are not, and should not be considered, a prediction
of future yields or returns.
|_| Yields. The Trust's current yield is calculated for a seven-day
period of time as follows. First, a base period return is calculated for the
seven-day period by determining the net change in the value of a hypothetical
pre-existing account having one share at the beginning of the seven-day period.
The change includes dividends declared on the original share and dividends
declared on any shares purchased with dividends on that share, but such
dividends are adjusted to exclude any realized or unrealized capital gains or
losses affecting the dividends declared. Next, the base period return is
multiplied by 365/7 to obtain the current yield to the nearest hundredth of one
percent.
The compounded effective yield for a seven-day period is calculated by (1)
adding 1 to the base period return (obtained as described above), (2)
raising the sum to a power equal to 365 divided by 7, and (3) subtracting
1 from the result.
The yield as calculated above may vary for accounts less than
approximately $100 in value due to the effect of rounding off each daily
dividend to the nearest full cent. The calculation of yield under either
procedure described above does not take into consideration any realized or
unrealized gains or losses on the Trust's portfolio securities which may affect
dividends. Therefore, the return on dividends declared during a period may not
be the same on an annualized basis as the yield for that period.
The Trust's "tax equivalent yield" adjusts the Trust's current yield, as
calculated above, by a stated federal tax rate. The tax equivalent yield is
computed by dividing the tax-exempt portion of the Trust's current yield by one
minus a stated income tax rate and adding the result to the portion (if any) of
the Trust's current yield that is not tax-exempt. The tax equivalent yield may
be compounded as described above to provide a compounded effective tax
equivalent yield.
The Trust's tax equivalent yield may be used to compare the tax effects of
income derived from the Trust with income from taxable investments at the tax
rates stated. Exhibit D includes a tax equivalent yield table, based on various
effective tax brackets for individual taxpayers. Such tax brackets are
determined by a taxpayer's federal taxable income (the net amount subject to
federal income tax after deductions and exemptions). The tax equivalent yield
table assumes that the investor is taxed at the highest bracket, regardless of
whether a switch to non-taxable investments would cause a lower bracket to apply
and that state income tax payments are fully deductible for income tax purposes.
For taxpayers with income above certain levels, otherwise allowable itemized
deductions are limited. The Trust's tax equivalent yield for the seven-day
period ended June 30, 1999 was 4.40%. Its tax-equivalent compounded effective
yield for the same period was 4.45% for an investor in the highest federal tax
bracket.
[_] Total Return Information. There are different types of "total
returns" to measure the Trust's performance. Total return is the change in value
of a hypothetical investment in the Trust over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares
and that the investment is redeemed at the end of the period. The cumulative
total return measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate of return for
each year in a period that would produce the cumulative total return over the
entire period. However, average annual total returns do not show actual
year-by-year performance. The Trust uses standardized calculations for its total
returns as prescribed by the SEC. The methodology is discussed below.
|_| Average Annual Total Return. The "average annual total return" of
each class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below) held
for a number of years ("n") to achieve an Ending Redeemable Value ("ERV" in the
formula) of that investment, according to the following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
|_| Cumulative Total Return. The "cumulative total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as average
annual total return, but it does not average the rate of return on an annual
basis.
Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
- --------------------------------------------------------------------------------
Yield Compounded Average Annual Total Returns (at 6/30/99)
(7 days ended Effective Yield
6/30/99) (7 days ended
6/30/99)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1-Year 5 Years 10 Years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2.66% 2.69% 2.61% 3.02% 3.32%
- --------------------------------------------------------------------------------
|X| Other Performance Comparisons. Yield information may be useful to
investors in reviewing the Trust's performance. The Trust may make comparisons
between its yield and that of other investments, by citing various indices such
as The Bank Rate Monitor National Index (provided by Bank Rate MonitorJ) which
measures the average rate paid on bank money market accounts, NOW accounts and
certificates of deposits by the 100 largest banks and thrifts in the top ten
metro areas. When comparing the Trust's yield with that of other investments,
investors should understand that certain other investment alternatives such as
certificates of deposit, U.S. government securities, money market instruments or
bank accounts may provide fixed yields and may be insured or guaranteed.
From time to time, the Trust may include in its advertisements and sales
literature performance information about the Trust cited in other newspapers and
periodicals, such as The New York Times, which may include performance
quotations from other sources.
From time to time, the Trust's Manager may publish rankings or ratings of
the Manager (or the Transfer Agent) or the investor services provided by them.
Those ratings or rankings of investor/shareholder services by third parties may
compare the services provided to those of other mutual fund families selected by
the rating or ranking services. They may be based on the opinions of the rating
or ranking service itself, based on its research or judgment, or based on
surveys of investors, brokers, shareholders or others.
A B O U T Y O U R A C C O U N T
How to Buy Shares
Determination of Net Asset Value Per Share. The net asset value per share of the
Trust is determined twice each day that the New York Stock Exchange ("Exchange")
is open, at 12:00 Noon and at 4:00 P.M, on each day that the Exchange is open,
by dividing the value of the Trust's net assets by the total number of shares
outstanding. All references to time in this Statement of Additional Information
mean New York time. The Exchange's most recent annual announcement (which is
subject to change) states that it will close on New Year's Day, Martin Luther
King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. It may also close on other days.
The Trust's Board of Trustees has adopted the amortized cost method to
value the Trust's portfolio securities. Under the amortized cost method, a
security is valued initially at its cost and its valuation assumes a constant
amortization of any premium or accretion of any discount, regardless of the
impact of fluctuating interest rates on the market value of the security. This
method does not take into consideration any unrealized capital gains or losses
on securities. While this method provides certainty in valuing securities, in
certain periods the value of a security determined by amortized cost may be
higher or lower than the price the Trust would receive if it sold the security.
The Trust's Board of Trustees has established procedures reasonably
designed to stabilize the Trust's net asset value at $1.00 per share. Those
procedures include a review of the valuations of the Trust's portfolio holdings
by the Board of Trustees, at intervals it deems appropriate, to determine
whether the Trust's net asset value calculated by using available market
quotations deviates from $1.00 per share based on amortized cost.
The Board of Trustees will examine the extent of any deviation between the
Trust's net asset value based upon available market quotations and amortized
cost. If the Trust's net asset value were to deviate from $1.00 by more than
0.5%, Rule 2a-7 requires the Board of Trustees to consider what action, if any,
should be taken. If they find that the extent of the deviation may cause a
material dilution or other unfair effects on shareholders, the Board of Trustees
will take whatever steps it considers appropriate to eliminate or reduce the
dilution, including, among others, withholding or reducing dividends, paying
dividends from capital or capital gains, selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten the average maturity
of the portfolio, or calculating net asset value per share by using available
market quotations.
During periods of declining interest rates, the daily yield on shares of
the Trust may tend to be lower (and net investment income and dividends higher)
than those of a fund holding the identical investments as the Trust but which
used a method of portfolio valuation based on market prices or estimates of
market prices. During periods of rising interest rates, the daily yield of the
Trust would tend to be higher and its aggregate value lower than that of an
identical portfolio using market price valuation.
How to Sell Shares
The information below supplements the terms and conditions for redeeming shares
set forth in the Prospectus.
Checkwriting. When a check is presented to the Bank for clearance, the Bank will
ask the Trust to redeem a sufficient number of full and fractional shares in the
shareholder's account to cover the amount of the check. This enables the
shareholder to continue receiving dividends on those shares until the check is
presented to the Trust. Checks may not be presented for payment at the offices
of the Bank or the Trust's Custodian. This limitation does not affect the use of
checks for the payment of bills or to obtain cash at other banks. The Trust
reserves the right to amend, suspend or discontinue offering checkwriting
privileges at any time without prior notice.
In choosing to take advantage of the Checkwriting privilege, by signing the
Account Application or by completing a Checkwriting card, each individual who
signs:
(1) for individual accounts, represents that they are the registered owner(s) of
the shares of the Trust in that account;
(2) for accounts for corporations, partnerships, trusts and other entities,
represents that they are an officer, general partner, trustee or other fiduciary
or agent, as applicable, duly authorized to act on behalf of the registered
owner(s);
(3) authorizes the Trust, its Transfer Agent and any bank through which the
Trust's drafts (checks) are payable to pay all checks drawn on the Trust account
of such person(s) and to redeem a sufficient amount of shares from that account
to cover payment of each check;
(4) specifically acknowledges that if they choose to permit checks to be honored
if there is a single signature on checks drawn against joint accounts, or
accounts for corporations, partnerships, trusts or other entities, the signature
of any one signatory on a check will be sufficient to authorize payment of that
check and redemption from the account, even if that account is registered in the
names of more than one person or more than one authorized signature appears on
the Checkwriting card or the Application, as applicable;
(5) understands that the Checkwriting privilege may be terminated or amended at
any time by the Trust and/or the Trust's bank; and
(6) acknowledges and agrees that neither the Trust nor its bank shall incur any
liability for that amendment or termination of checkwriting privileges or for
redeeming shares to pay checks reasonably believed by them to be genuine, or for
returning or not paying checks that have not been accepted for any reason.
Sending Redemption Proceeds by Federal Funds Wire. The Federal Funds wire of
redemptions proceeds may be delayed if the Trust's custodian bank is not open
for business on a day when the Trust would normally authorize the wire to be
made, which is usually the Trust's next regular business day following the
redemption. In those circumstances, the wire will not be transmitted until the
next bank business day on which the Trust is open for business. No distributions
will be paid on the proceeds of redeemed shares awaiting transfer by Federal
Funds wire
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address listed
in "How To Sell Shares" in the Prospectus or on the back cover of this Statement
of Additional Information. The request must
(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is
premature; and
(3) conform to the requirements of the plan and the Trust's other redemption
requirements.
Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Trust held in the name of the plan or its fiduciary may not directly request
redemption of their accounts. The plan administrator or fiduciary must sign the
request.
Distributions from pension and profit sharing plans are subject to special
requirements under the Internal Revenue Code and certain documents (available
from the Transfer Agent) must be completed and submitted to the Transfer Agent
before the distribution may be made. Distributions from retirement plans are
subject to withholding requirements under the Internal Revenue Code, and IRS
Form W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified tax
identification number, the Internal Revenue Code requires that tax be withheld
from any distribution even if the shareholder elects not to have tax withheld.
The Trust, the Manager, the Distributor the Sub-Distributor, and the Transfer
Agent assume no responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for any tax
penalties assessed in connection with a distribution.
How to Exchange Shares
As stated in the Prospectus, direct shareholders can exchange shares of the
Trust for Class A shares of any of the following eligible funds:
Oppenheimer Main Street California
Oppenheimer Bond Fund Municipal Fund
Oppenheimer Main Street Growth &
Oppenheimer Capital Appreciation Fund Income Fund
Oppenheimer Capital Preservation Oppenheimer Main Street Small Cap Fund
Oppenheimer California Municipal Fund Oppenheimer MidCap Fund
Oppenheimer Champion Income Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Convertible Securities Fund Oppenheimer Municipal Bond Fund
Oppenheimer Developing Markets Fund Oppenheimer New York Municipal Fund
Oppenheimer Disciplined Allocation Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Disciplined Value Fund Oppenheimer Pennsylvania Municipal
Fund
Oppenheimer Discovery Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Enterprise Fund Inc.
Oppenheimer Quest Global Value Fund,
Oppenheimer Capital Income Fund Inc.
Oppenheimer Europe Fund Oppenheimer Quest Opportunity Value
Fund
Oppenheimer Florida Municipal Fund Oppenheimer Quest Small Cap Value Fund
Oppenheimer GlobalFund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Global Growth & Income Fund Oppenheimer Real Asset Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Strategic Income Fund
Oppenheimer Growth Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer High Yield Fund Oppenheimer Trinity Core Fund
Oppenheimer Insured Municipal Fund Oppenheimer Trinity Growth Fund
Oppenheimer Intermediate Municipal Fund Oppenheimer Trinity Value Fund
Oppenheimer International Bond Fund Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund Oppenheimer World Bond Fund
Oppenheimer International Small
Company Fund Limited-Term New York Municipal Fund
Oppenheimer Large Cap Growth Fund Rochester Fund Municipals
Oppenheimer Limited-Term Government Fund
and the following money
market funds:
Centennial New York Tax Exempt Trust
Centennial America Fund, L. P. Centennial Tax Exempt Trust
Centennial California Tax Exempt Trust Oppenheimer Cash Reserves
Centennial Government Trust Oppenheimer Money Market Fund, Inc.
Centennial Money Market Trust
Shares of the Trust purchased without a sales charge may be exchanged for
shares of an eligible fund offered with a sales charge upon payment of the sales
charge. Shares of the Trust acquired by reinvestment of dividends or
distributions from the Trust or any of the other eligible funds (other than
Oppenheimer Cash Reserves) or from any unit investment trust for which
reinvestment arrangements have been made with the Distributor may be exchanged
at net asset value for shares of any of the eligible funds.
|_| Limits on Multiple Exchange Orders. The Trust reserves the right to
reject telephone or written exchange requests submitted in bulk by anyone on
behalf of more than one account. The Trust may accept requests for exchanges of
up to 50 accounts per day from representatives of authorized dealers that
qualify for this privilege.
|_| Telephone Exchange Requests. When exchanging shares by telephone, a
direct shareholder must have an existing account in the fund to which the
exchange is to be made. Otherwise, the investor must obtain a prospectus of that
fund before the exchange request may be submitted. If all telephone lines are
busy (which might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
|_| Processing Exchange Requests. Shares to be exchanged are redeemed on
the regular business day the Transfer Agent receives an exchange request in
proper form (the "Redemption Date"). Normally, shares of the fund to be acquired
are purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The Trust
reserves the right, in its discretion, to refuse any exchange request that may
disadvantage it (for example, if the receipt of multiple exchange requests from
a dealer might require the disposition of portfolio securities at a time or at a
price that might be disadvantageous to the Trust).
In connection with any exchange request, the number of shares exchanged
may be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered by a share
certificate that is not tendered with the request. In those cases, only the
shares available for exchange without restriction will be exchanged.
The different eligible funds available for exchange have different
investment objectives, policies and risks. A shareholder should assure that the
fund selected is appropriate for his or her investment and should be aware of
the tax consequences of an exchange. For Federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. The Trust, the Distributor, the Sub-Distributor,
and the Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other investment
transaction.
The Trust may amend, suspend or terminate the exchange privilege at any
time. Although, the Trust may impose these changes at any time, it will provide
you with notice of those changes whenever it is required to do so by applicable
law. It may be required to provide 60 days notice prior to materially amending
or terminating the exchange privilege. That 60-day notice is not required in
extraordinary circumstances.
Dividends and Taxes
Tax Status of the Trust's Dividends and Distributions. The federal tax treatment
of the Trust's dividends and capital gains distributions is explained in the
Prospectus under the caption "Distributions and Taxes." Under the Internal
Revenue Code, by December 31 each year, the Trust must distribute 98% of its
taxable investment income earned from January 1 through December 31 of that year
and 98% of its capital gains realized in the period from November 1 of the prior
year through October 31 of the current year. It if does not, the Trust must pay
an excise tax on the amounts not distributed. It is presently anticipated that
the Trust will meet those requirements. However, the Board of Trustees and the
Manager might determine in a particular year that it would be in the best
interest of shareholders for the Trust not to make distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would reduce
the amount of income or capital gains available for distribution to
shareholders. The Trust's dividends will not be eligible for the
dividends-received deduction for corporations.
If the Trust qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for federal income taxes on amounts
paid by it as distributions. That qualification enables the Trust to "pass
through" its income and realized capital gains to shareholders without having to
pay tax on them. The Trust qualified as a regulated investment company in its
last fiscal year and intends to qualify in future years, but reserves the right
not to qualify. The Internal Revenue Code contains a number of complex tests to
determine whether the Trust qualifies. The Trust might not meet those tests in a
particular year. If it does not qualify, the Trust will be treated for tax
purposes as an ordinary corporation and will receive no tax deduction for
payments of distributions made to shareholders.
Dividends, distributions and the proceeds of the redemption of Trust
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of the Trust as promptly as
possible after the return of such checks to the Transfer Agent, in order to
enable the investor to earn a return on otherwise idle funds.
Dividend Reinvestment in Another Trust. Direct shareholders of the Trust may
elect to reinvest all dividends and/or capital gains distributions in Class A
shares of any eligible fund listed above. To elect this option, the shareholder
must notify the Transfer Agent in writing and must have an existing account in
the fund selected for reinvestment. Otherwise, the shareholder first must obtain
a prospectus for that fund and an application from the Distributor to establish
an account. The investment will be made at the close of business on the payable
date of the dividend or distribution.
Additional Information About the Trust
The Distributor. The Trust's shares are sold through dealers, brokers and other
financial institutions that have a sales agreement with the Sub-Distributor. The
Distributor and the Sub-Distributor also distribute shares of the other funds
managed by the Manager or an affiliate.
The Transfer Agent. Shareholder Services, Inc. the Trust's Transfer Agent, is
responsible for maintaining the Trust's shareholder registry and shareholder
accounting records, and for paying dividends and distributions to shareholders
of the Trust. It also handles shareholder servicing and administrative
functions. It is paid on a "at-cost" basis.
The Custodian. Citibank, N.A. is the Custodian of the Trust's assets. The
Custodian's responsibilities include safeguarding and controlling the Trust's
portfolio securities and handling the delivery of such securities to and from
the Trust. It will be the practice of the Trust to deal with the Custodian in a
manner uninfluenced by any banking relationship the Custodian may have with the
Manager and its affiliates. The Trust's cash balances with the Custodian in
excess of $100,000 are not protected by federal deposit insurance. Those
uninsured balances at times may be substantial.
Independent Auditors. Deloitte & Touche LLP are the independent auditors of the
Trust. They audit the Trust's financial statements and perform other related
audit services. They also act as auditors for the Manager and OFI and for
certain other funds advised by the Manager and its affiliates.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Centennial Tax Exempt Trust
The Board of Trustees and Shareholders of Centennial Tax Exempt Trust:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Centennial Tax Exempt Trust as of June 30,
1999, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended June 30, 1999 and 1998,
and the financial highlights for the period July 1, 1994 to June 30, 1999. These
financial statements and financial highlights are the responsibility of the
Trust'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, 1999, by correspondence with the custodian and brokers; where replies 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Centennial Tax
Exempt Trust as of June 30, 1999, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods,
in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
July 22, 1999
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS--108.1%
ARIZONA--2.1%
AZ HFAU RB, Blood Systems, Inc., 3.62%(1).............................................. $ 8,795,000 $ 8,795,000
Maricopa Cnty., AZ GORB, FGIC Insured, 6.25%, 7/1/99................................... 2,000,000 2,000,000
Phoenix, AZ Airport RRB, Series A, MBIA Insured, 5.40%, 7/1/99......................... 2,000,000 2,000,000
Phoenix, AZ IDAU MH RRB, Paradise Lakes Apts. Project, 1995 Series, 3.65%(1)........... 22,500,000 22,500,000
Tucson, AZ IDAU RB, Geronimo Building Renovation Project, 4%, 12/15/99(2).............. 965,000 965,000
----------------
36,260,000
----------------
CALIFORNIA--9.3%
Anaheim, CA HAU MH RRB, Park Vista Apts., Series A, 3.75%(1)........................... 1,000,000 1,000,000
CA CDAU Apartment Development RRB, Whispering Winds Apts., Series D, 3.15%(1).......... 1,000,000 1,000,000
CA GOB, Tendered Option Certificates, Series 1998A, MBIA Insured, 3.65%(1)(3).......... 3,027,000 3,027,000
CA HEAU Student Loan RB, Series C, 3.40%(1)............................................ 4,000,000 4,000,000
CA HFFAU RRB, Catholic West Project, Series C, MBIA Insured, 3.30%(1).................. 2,000,000 1,999,979
CA Municipal RB, Series SG89, MBIA Insured, 3.62%(1)................................... 7,425,000 7,425,000
CA School Cash Reserve Program Authority RB, Series A, 4%, 7/3/00...................... 70,000,000 70,612,500
CA Statewide CDC RB, Fibrebond, Inc., 3.30%(1)......................................... 1,310,000 1,309,988
Covina City, CA RA MH RRB, Shadowhills Apts., Inc., Series A, 3.55%(1)................. 2,700,000 2,700,020
Huntington Park, CA RA MH RB, Casa Rita Apts., Series A, 3.52%(1)...................... 1,100,000 1,100,000
Los Angeles Cnty., CA Pension Obligation RB, Series B, AMBAC Insured, 3.25%(1)......... 1,000,000 1,000,000
Los Angeles Cnty., CA Pension Obligation RRB, Series A, 3.25%(1)....................... 2,000,000 2,000,000
Los Angeles, CA Airport RB, Series SG61, 3.64%(1)...................................... 1,055,000 1,055,000
Los Angeles, CA TAN & RAN, 4%, 6/30/00................................................. 40,000,000 40,262,400
Modesto, CA Irrigation District FAU RB, Series SG66, 3.57%(1).......................... 500,000 500,000
Oceanside, CA MH RRB, Lakeridge Apts. Project, 3.75%(1)................................ 3,000,000 2,999,999
Pittsburg, CA Mortgage Obligation RRB, Series A, 3.55%(1).............................. 4,470,000 4,470,000
Sacramento Cnty., CA RB, Trust REG D, Series A28, 3.30%(1)............................. 11,300,000 11,300,000
San Bernardino Cnty., CA TAN & RAN, 4.50%, 9/30/99..................................... 500,000 501,912
San Diego, CA ABN AMRO Munitops Certificates, Series 1998-10, 3.60%(1)(3).............. 1,000,000 1,000,000
San Francisco, CA City & Cnty. Redevelopment FAU RRB, Yerba Buena Garden, 3.25%(1)..... 315,000 315,000
Southern CA PAU RRB, Palo Verde Project, Series B, AMBAC Insured, 3.25%(1)............. 2,400,000 2,400,000
Southern CA Public PAU RRB, Southern Transmission Project, AMBAC Insured, 3.25%(1)..... 1,000,000 1,000,000
----------------
162,978,798
----------------
</TABLE>
3
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- --------------
<S> <C> <C>
COLORADO--1.7%
Arapahoe Cnty., CO MH RRB, Hunters Run Rental Housing, 3.85%(1)........................ $25,600,000 $ 25,600,000
Superior Metropolitan District No. 3, CO GOB, 3.62%(1)................................. 5,000,000 5,000,000
--------------
30,600,000
--------------
DELAWARE--1.1%
DE EDAU IDV RRB, Delaware CleanPower Project, Series A, 3.55%(1)....................... 5,000,000 5,000,000
DE EDAU IDV RRB, Delaware CleanPower Project, Series C, 3.61%(1)....................... 8,000,000 8,000,000
DE EDAU RB, Hospital Billing Project, Series A, BIG Insured, 3.55%(1).................. 5,200,000 5,200,000
DE Transportation Authority System RRB, Sr. Lien, AMBAC Insured, 5.25%, 7/1/99......... 900,000 900,000
--------------
19,100,000
--------------
FLORIDA--7.2%
Dade Cnty., FL WSS RB, FGIC Insured, 3.40%, 4/1/00(2).................................. 9,900,000 9,900,000
Escambia Cnty., FL HFAU RRB, Florida Convertible Centers Project, Series A, 3.50%(1)... 1,150,000 1,150,000
FL BOE Capital Outlay Public Education Refunding Bonds, Series A, 3.75%(1)............. 13,230,000 13,230,000
FL HFA MH RRB, Monterey Lake Project, 3.40%(1)......................................... 19,965,000 19,965,000
FL TUAU RB, Prerefunded, 7.75%, 7/1/99(2).............................................. 1,250,000 1,275,000
FL TUAU RB, Series A, FGIC Insured, 3.10%, 7/1/99(2)................................... 14,850,000 14,850,000
Hillsboro Cnty., FL IDV PC RB, Tampa Electric Co., MBIA Insured, 3.25%, 1/15/00(2)..... 17,795,000 17,795,000
Hillsboro Cnty., FL IDV PC RB, Tampa Electric Co., MBIA Insured, 3.25%, 1/15/00(2)..... 17,795,000 17,795,000
Jacksonville, FL IDV RRB, Airport Hotel Project, 3.50%(1).............................. 3,000,000 3,000,000
Orange Cnty., FL Housing FAU MH RRB, Monterey Project, Series B, 3.75%(1).............. 4,665,000 4,665,000
Putnam Cnty., FL PC DAU RRB, Seminole Electric Co-op, Series D, 3.125%, 12/15/99(2).... 23,000,000 23,000,000
--------------
126,625,000
--------------
GEORGIA--11.6%
Atlanta, GA Urban Residential FAU MH RB, New Community East Lake Project, 3.90%(1)..... 2,000,000 2,000,000
Cobb Cnty., GA HAU MH RRB, Terrell Mill Project, 3.65%(1)(3)........................... 9,400,000 9,400,000
Cobb Cnty., GA SDI RB, 3.50%, 12/31/99................................................. 14,650,000 14,673,119
Cobb Cnty., GA TAN, 3.25%, 12/31/99.................................................... 20,900,000 20,922,465
Fulton Cnty., GA DAU RB, Georgia Tech Athletic Assn., Inc., 3.75%(1)................... 3,000,000 3,000,000
Fulton Cnty., GA DAU RB, Lovett School Project, 3.75%(1)............................... 3,000,000 3,000,000
Fulton Cnty., GA DAU RB, Robert W. Woodruff Arts Project, 3.75%(1)..................... 2,000,000 2,000,000
Fulton Cnty., GA General Fund TAN, 3.25%, 12/31/99..................................... 77,000,000 77,065,198
GA GOB, Series 1995B, 3.69%(1)......................................................... 11,880,000 11,880,000
</TABLE>
4
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- --------------
<S> <C> <C>
GEORGIA (CONTINUED)
Gainesville, GA RA RB, Riverside Military Academy, 3.65%(1)............................ $10,000,000 $ 10,000,000
Gwinnett Cnty., GA SDI Construction Sales Tax Nts., 3.50%, 12/31/99.................... 25,000,000 25,073,281
Roswell, GA HAU MH RRB, Oxford Project, 3.60%(1)....................................... 23,610,000 23,610,000
--------------
202,624,063
--------------
IDAHO--0.1%
Custer Cnty., ID IDV SWD RB, Hecla Mining Co. Project, 3.95%(1)........................ 1,000,000 1,000,000
--------------
ILLINOIS--4.7%
Chicago, IL ABN AMRO Munitops Certificates, Trust 1998-3, 3.75%(1)(3).................. 8,735,000 8,735,000
Chicago, IL Lakefront Millennium Parking Facilities RB, 3.15%, 10/1/99(2).............. 22,495,000 22,495,000
Chicago, IL Metropolitan Reclamation Water District GOB, Greater
Chicago Capital Improvements, 6.80%, 1/1/00(2)...................................... 5,200,000 5,398,999
Elk Grove Village, IL IDV RB, La Quinta Motor Inns, Inc., 3.10%(1)..................... 2,300,000 2,300,000
IL Development FAU RB, Metropolitan Family Services, 3.415%(1)......................... 8,700,000 8,700,000
IL HFAU RB, Lake Forest Hospital Project, 3.875%(1).................................... 10,565,000 10,565,000
IL HFAU RRB, The Carle Foundation, Series B, 3.20%(1).................................. 5,100,000 5,100,000
IL IDAU RRB, SuperValu Stores, Inc. Project, 3.55%(1).................................. 5,000,000 5,000,000
IL Student Assistance Commission Student Loan RB, Series A, 3.60%(1)................... 10,000,000 10,000,000
West Chicago, IL IDV RRB, Liquid Container Project, 3.65%(1)........................... 3,810,000 3,810,000
--------------
82,103,999
--------------
INDIANA--7.1%
Dyer, IN HCF RRB, Regency Place, Series A-1, 3.77%(1).................................. 3,270,000 3,270,000
Fort Wayne, IN HCF RRB, Health Quest, Series X-A, 3.77%(1)............................. 3,110,000 3,110,000
IN Bank Bonds, Advance Funding Program, Series A-2, 3.50%, 1/19/00..................... 45,000,000 45,128,451
IN MPA RB, Power Supply System, MBIA Insured, 3.69%(1)................................. 13,600,000 13,600,000
Indianapolis, IN HCF RRB, Health Quest, Series A, 3.77%(1)............................. 3,915,000 3,915,000
Indianapolis, IN Local Public Improvement Bank Bonds, Series A, 4%, 1/10/00............ 11,250,000 11,293,740
Indianapolis, IN Local Public Improvement Revenue Nts., Series F, 3.50%, 7/12/99....... 14,025,000 14,027,281
Indianapolis, IN MH RB, Camby Housing Partners Project, 3.75%(1)....................... 5,400,000 5,400,000
Marion Cnty., IN HA Hospital Facility RB, Indianapolis Osteopathic, 3.60%(1)........... 2,810,000 2,810,000
Merrillville, IN HCF RRB, Southlake, Series A-1, 3.77%(1).............................. 3,995,000 3,995,000
Rockport, IN PC RRB, Indiana & Michigan Electric Co. Project, Series A, 3.55%(1)....... 13,000,000 13,000,000
South Bend, IN HCF RRB, Fountainview, Series A-1, 3.77%(1)............................. 3,095,000 3,095,000
St. Joseph Cnty., IN Industrial Educational Facilities RB, Holy Cross College, 3.60%(1) 1,130,000 1,130,000
--------------
123,774,472
--------------
</TABLE>
5
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- ----------------
<S> <C> <C>
IOWA--1.0%
IA School Cash Anticipation Program Warrant Certificates, Series B,
FSA Insured, 3.50%, 1/28/00......................................................... $16,740,000 $ 16,789,802
----------------
KANSAS--1.5%
Burlington, KS Environmental Improvement RRB, K C Power & Light
Co. Project, Series B, 3.60%(1)..................................................... 19,800,000 19,800,000
Manhattan, KS Industrial RRB, Parker Hannifin, Inc. Project, 3.65%(1).................. 6,000,000 6,000,000
Ottawa, KS IDV RB, Laich Industries Project, 3.75%(1).................................. 525,000 525,000
----------------
26,325,000
----------------
KENTUCKY--2.7%
Jamestown, KY Industrial Building RB, Union Underwear Co., 3.75%(1).................... 1,000,000 1,000,000
KY Asset/Liability Commission General Fund TAN & RAN, Series A, 4.25%, 6/28/00......... 30,000,000 30,255,000
Mayfield, KY Multi-City Lease RB, Kentucky League of Cities Funding Trust, 3.60%(1).... 15,200,000 15,200,000
----------------
46,455,000
----------------
MARYLAND--1.0%
Anne Arundel Cnty., MD ED RB, West Capitol, Series A, 3.65%(1)......................... 6,000,000 6,000,000
MD Department of Transportation RB, Prerefunded, Second Issue, 6.80%, 11/1/99(2)....... 3,155,000 3,256,962
MD Health & HEFAU RB, Mercy Medical Center, Prerefunded, 8%, 7/1/99(2)................. 6,500,000 6,630,000
MD Health & HEFAU RB, University of Maryland Pooled Loan
Program, Series B, 3.20%(1)......................................................... 985,000 985,000
----------------
16,871,962
----------------
MASSACHUSETTS--3.3%
MA CMWLTH General Obligation Consolidation Loan, 3.25%, 1/15/00(2)..................... 15,245,000 15,245,000
MA GOB, 3.15%, 10/1/99(2).............................................................. 20,800,000 20,800,000
MA Health & Education FA RRB, Boston University, Series H, 3%, 8/25/99(2).............. 22,500,000 22,500,000
----------------
58,545,000
----------------
MICHIGAN--0.7%
Madison Heights, MI ED RB, Red Roof Inns Project, 3.40%(1)............................. 1,000,000 1,000,000
MI Hospital FAU RRB, Mount Clemens General Hospital, 3.40%(1).......................... 9,220,000 9,220,000
MI Job DAU RB, East Lansing Residence Associates Project, 3.50%(1)..................... 1,900,000 1,900,000
----------------
12,120,000
----------------
</TABLE>
6
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ -----------------
<S> <C> <C>
MINNESOTA--1.9%
Blaine, MN IDV RRB, SuperValu Stores, Inc. Project, 3.70%(1)........................... $ 5,500,000 $ 5,500,000
Burnsville, MN CD RB, SuperValu Stores, Inc. Project, Series 83, 3.70%(1).............. 5,500,000 5,500,000
Maplewood, MN CD RRB, 5.27%(1)......................................................... 105,000 105,000
Minneapolis, MN CD RRB, Minnehaha/Lake Partners Project, 3.45%(1)...................... 2,750,000 2,750,000
New Ulm, MN Hospital Facilities RB, Health Center Systems, 3.75%(1).................... 2,200,000 2,200,000
North Suburban Hospital District, MN RB, Anoka & Ramsey Cntys.
Hospital Health Center, 3.75%(1).................................................... 3,300,000 3,300,000
St. Paul, MN Housing & Redevelopment Authority RB, Science
Museum of Minnesota, Series B, 3.75%(1)............................................. 3,200,000 3,200,000
St. Paul, MN POAU Tax Increment RB, Westgate Office & Industrial
Center Project, 3.60%(1)............................................................ 10,300,000 10,300,000
-----------------
32,855,000
-----------------
NEVADA--1.2%
NV Municipal Securities Trust Receipts, Series SG 114, 3.77%(1)........................ 20,350,000 20,350,000
-----------------
NEW HAMPSHIRE--1.4%
NH Business FAU PC RRB, Series 1990-A, 3.25%, 8/2/99(2)................................ 25,000,000 25,000,000
-----------------
NEW JERSEY--0.1%
Passaic Valley, NJ Water Commission RB, Sub-System, Series A, 4%, 11/16/99............. 2,000,000 2,006,403
-----------------
NEW MEXICO--1.5%
Albuquerque, NM Gross Receipts Tax RRB, MBIA Insured, 5%, 7/1/99....................... 2,445,000 2,445,000
Farmington, NM PC RB, 3.25%, 4/6/00(2)................................................. 24,000,000 24,000,000
-----------------
26,445,000
-----------------
NEW YORK--12.8%
Buffalo, NY RAN, Series A, 3.75%, 7/27/99.............................................. 500,000 500,263
Erie Cnty., NY RAN, 4%, 10/13/99....................................................... 7,800,000 7,821,573
Franklin Cnty., NY IDA RAN, McAdam Cheese Co. Project, 3.65%(1)........................ 600,000 600,000
L.I., NY PAU RB, 3.15%, 7/22/99(2)..................................................... 34,000,000 34,000,000
L.I., NY PAU RB, 3.15%, 8/23/99(2)..................................................... 10,000,000 10,000,000
NYC Health & Hospital Corp. RB, Series D, 3.30%(1)..................................... 1,500,000 1,500,000
NYC MTAU Dedicated Tax Fund RB, FGIC Insured, 4%, 4/1/00............................... 3,640,000 3,662,909
NYC Municipal Assistance Corp. RRB, Series G, 4.10%, 7/1/99............................ 10,000,000 10,000,000
NYC Trust Cultural Resource RRB, American Museum of Natural
History, Series A, MBIA Insured, 3.10%(1)........................................... 1,000,000 1,000,000
</TABLE>
7
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
---------- -------------
<S> <C> <C>
NEW YORK (CONTINUED)
NYS DA COP, Rockefeller University, 3.65%(1)........................................... $ 500,000 $ 500,012
NYS ERDAUPC RB, NYS Electric & Gas Corp., Series B, 3.20%, 10/15/99(2)................. 700,000 700,000
NYS ERDAUPC RB, NYS Electric & Gas Corp., Series D, 3%, 12/1/99(2)..................... 2,500,000 2,500,000
NYS HFA RB, Normandie Court I Project, 3.20%(1)........................................ 1,010,000 1,010,000
NYS HFA RB, Saxony Housing, Series A, 3.30%(1)......................................... 1,500,000 1,500,000
NYS LGAC RB, Series SG100, MBIA Insured, 3.77%, 10/1/99(2)............................. 10,420,000 10,420,000
NYS LGAC RB, Series SG99, MBIA Insured, 3.77%, 10/1/99(2).............................. 29,195,000 29,195,000
NYS MAG RB, Series PT217, 3.30%, 10/1/99(2)............................................ 3,200,000 3,200,000
NYS MCFFA RB, St. Luke's Hospital Center Mortgage., Prerefunded,
Series B, 7.45%, 2/15/00............................................................ 1,000,000 1,048,427
NYS PAU RB, Series SG4, 3.77%(1)....................................................... 3,195,000 3,195,001
NYS TBTAU Beneficial Interest COP, MBIA Insured, 3.35%, 7/15/99(2)..................... 3,300,000 3,300,000
NYS TBTAU RB, Series SG-41, 2.95%, 11/10/99(2)......................................... 5,000,000 5,000,000
NYS UDC RB, Correctional Capital Facilities, Prerefunded, Series 1,
FSA Insured, 7.50%, 1/1/00(2)....................................................... 1,000,000 1,041,454
NYS Urban Empire Development Corp. RB, Series A, 3.65%(1).............................. 10,255,000 10,255,000
PAUNYNJ SPO Bonds, Series SG94, 3.82%(1)............................................... 600,000 600,006
Suffolk Cnty., NY TAN, Series II, 3.50%, 8/12/99....................................... 48,000,000 48,027,102
Suffolk Cnty., NY TAN, Series II, 4%, 9/9/99........................................... 33,000,000 33,039,765
-------------
223,616,512
-------------
OHIO--0.9%
Gallia Cnty., OH IDV Mtg. RRB, Jackson Pike Assn., 3.20%, 12/15/99(2).................. 3,625,000 3,625,000
Marion Cnty., OH Hospital RB, Pooled Lease Program, 3.62%(1)........................... 5,985,000 5,985,000
Miami Valley, OH Tax-Exempt Mtg. Trust RB, Series 86, 4.88%, 10/15/99(2)............... 2,620,000 2,620,000
Scioto Cnty., OH HCF RB, Hill View Retirement Center, 3.25%, 12/1/99(2)................ 2,675,000 2,675,000
Warren Cnty., OH IDV RRB, Liquid Container Project, 3.65%(1)........................... 1,670,000 1,670,000
-------------
16,575,000
-------------
OKLAHOMA--0.7%
Cleveland Cnty., OK Public Facilities RB, Hunt Development Project,
Series A, 3.40%(1).................................................................. 1,000,000 1,000,000
Creek Cnty., OK IDV RRB, Indiana Glass, 3.25%, 12/1/99(2).............................. 1,795,000 1,795,000
OK Industrial Authority RB, Casady School Project, 3.62%(1)............................ 6,405,000 6,405,000
Tulsa, OK IDAU RB, Indian Health Care Project, 3.62%(1)................................ 3,100,000 3,100,000
-------------
12,300,000
-------------
</TABLE>
8
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- ----------------
<S> <C> <C>
OREGON--0.8%
Hillsboro, OR RB, Oregon Graduate Institute, 3.65%(1).................................. $ 6,100,000 $ 6,100,000
OR Economic & IDV Commission RB, Eagle-Picher Industries Project, 3.75%(1)............. 3,600,000 3,600,000
OR Housing & Community Services Department Mtg. RB, SFM
Program, Series C, 3.15%, 4/13/00(2)................................................ 4,615,000 4,615,000
----------------
14,315,000
----------------
PENNSYLVANIA--1.7%
Butler Cnty., PA IDAU RRB, Lutheran Welfare, Series A, 2.95%, 11/1/99(2)............... 6,185,000 6,185,000
Monroe Cnty., PA HA RB, Pocono Medical Center, Series C, 3.65%(1)...................... 2,920,000 2,920,000
Montgomery Cnty., PA IDAU RB, Quaker Chemical Corp. Project, 3.35%(1).................. 1,600,000 1,600,000
PA HEFAU RB, Assn. Independent Colleges & Universities, Series C1, 4%, 11/1/99(2)...... 1,700,000 1,705,588
PA HEFAU RB, Assn. Independent Colleges & Universities, Series C2, 4%, 11/1/99(2)...... 4,500,000 4,514,792
PA HEFAU RB, Assn. Independent Colleges & Universities, Series C6, 4%, 11/1/99(2)...... 3,000,000 3,009,862
PA HEFAU RB, CICU Financing Program, Series B1, 2.95%, 11/1/99(2)...................... 2,900,000 2,900,000
PA HEFAU RB, CICU Financing Program, Series B4, 2.95%, 11/1/99(2)...................... 2,500,000 2,500,000
PA HEFAU RB, CICU Financing Program, Series B6, 2.95%, 11/1/99(2)...................... 2,000,000 2,000,000
PA HEFAU RB, CICU Financing Program, Series B8, 2.95%, 11/1/99(2)...................... 2,950,000 2,950,000
----------------
30,285,242
----------------
SOUTH CAROLINA--0.8%
SC Public Service Authority RB, Series 182, MBIA Insured, 3.69%(1)..................... 14,850,000 14,850,000
----------------
SOUTH DAKOTA--1.9%
Grant Cnty., SD PC RRB, Otter Tail Power Co. Project, 3.70%(1)......................... 10,400,000 10,400,000
SD Health & Educational Facilities RB, Sioux Valley Hospital Issue, 3.70%(1)........... 21,400,000 21,400,000
Yankton, SD IDV RB, Kolber-Pioneer, Inc. Project, 3.75%(1)............................. 2,000,000 2,000,000
----------------
33,800,000
----------------
TENNESSEE--4.4%
Clarksville, TN Public Building Authority RB, Pooled Financing-
Tennessee Municipal Bond Fund, 3.80%(1)............................................. 9,500,000 9,500,000
Clarksville, TN Public Building Authority RB, Tennessee Municipal
Bond Fund, 3.25%(1)................................................................. 41,000,000 41,000,000
Fayetteville & Lincoln, TN IDV Board RB, V.A.W. of America, 3.95%(1)................... 2,000,000 2,000,000
Knox Cnty., TN IDV Board RB, Weisgarber Partners, FGIC Insured, 3.40%(1)............... 3,000,000 3,000,000
</TABLE>
9
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- ----------------
<S> <C> <C>
TENNESSEE (CONTINUED)
Montgomery Cnty., TN Public Building Authority RB, Tennessee
County Loan, 3.80%(1)............................................................... $17,000,000 $ 17,000,000
Sevier Cnty., TN Public Building Authority RB, Local Government
Public Improvements-III-D-6, AMBAC Insured, 3.65%(1)................................ 5,000,000 5,000,000
----------------
77,500,000
----------------
TEXAS--13.2%
Austin, TX RRB, Prerefunded, Series B, 7%, 9/1/99(2)................................... 1,000,000 1,006,039
Dallas, TX Waterworks & Sewer ABN AMRO Munitops Certificates,
Series 1998-19, 3.20%(1)............................................................ 8,000,000 8,000,000
De Soto, TX IDAU RRB, National Service Industries, Inc. Project, 3.65%(1).............. 7,150,000 7,150,000
Greater East TX HEAU RRB, Student Loans, Series A, 3.15%, 5/1/00(2).................... 9,000,000 9,000,000
Harris Cnty., TX Criminal Justice Center RB, Series SG96, FGIC Insured, 3.77%(1)....... 7,475,000 7,475,000
Harris Cnty., TX Toll Road COP, 3.40%(1)............................................... 9,900,000 9,900,000
Hockley Cnty., TX IDV Corp. PC RB, Amoco/Standard Oil Co. Project,
2.90%, 9/1/99(2).................................................................... 28,750,000 28,750,000
Houston, TX WSS RB, Series SG120, 3.77%(1)............................................. 37,600,000 37,600,000
San Antonio, TX Electric & Gas RRB, Series G-101, 3.77%(1)............................. 20,000,000 20,000,000
San Antonio, TX Electric & Gas RRB, Series SG105, 3.47%(1)............................. 20,000,000 20,000,000
TX Gulf Coast Waste Disposal Authority Environmental Improvement
RB, Amoco Oil Co. Project, 2.90%, 9/1/99(2)......................................... 7,000,000 7,000,000
TX Gulf Coast Waste Disposal Authority RRB, Armco, Inc. Project, 3.65%(1).............. 6,000,000 6,000,000
TX TAN & RAN, 4.50%, 8/31/99........................................................... 48,000,000 48,115,357
TX TUAU RB, Dallas Northtollway, Series SG70, 3.77%(1)................................. 15,325,000 15,325,000
Yoakum Cnty., TX IDV PC RB, Amoco Project, 3.15%, 11/1/99(2)........................... 5,265,000 5,265,000
----------------
230,586,396
----------------
UTAH--3.9%
UT HFA MH RRB, Candlestick Apts. Project, 3.60%(1)..................................... 6,400,000 6,400,000
UT Intermountain Power Agency RRB, Series E, AMBAC Insured, 3.125%, 9/15/99(2)......... 24,000,000 24,000,000
UT Intermountain Power Agency RRB, Series F, AMBAC Insured, 3.10%, 9/15/99(2).......... 37,700,000 37,700,000
----------------
68,100,000
----------------
VIRGINIA--0.2%
Henry Cnty., VA IDAU RB, Amfibe, Inc. Project, 3.90%(1)................................ 2,900,000 2,900,000
----------------
</TABLE>
10
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- --------------
<S> <C> <C>
WASHINGTON--2.4%
Port Longview, WA IDV RB, Longview Fibre Co. Project, 3.75%(1)......................... $ 5,000,000 $ 5,000,000
Redmond, WA Public Corp. Industrial RRB, Genie Industries, Lot 1, 3.80%(1)............. 910,000 910,000
Redmond, WA Public Corp. Industrial RRB, Genie Industries, Lot 2, 3.80%(1)............. 1,620,000 1,620,000
Seattle, WA IDV Corp. RB, 3.70%(1)..................................................... 4,050,000 4,050,000
WA GORB, Series 1995C, 3.69%(1)........................................................ 13,710,000 13,710,000
WA GORB, Series 1995C, AT-8 & R-95B, 5.50%, 7/1/99..................................... 2,000,000 2,000,000
WA GORB, Series R-94A, 4.40%, 8/1/99................................................... 10,000,000 10,007,838
WA PP Supply System RRB, Nuclear Project No. 1, Prerefunded,
Series A, 7.50%, 7/1/99(2).......................................................... 4,650,000 4,743,000
--------------
42,040,838
--------------
WISCONSIN--0.3%
WI Transportation RB, Prerefunded, Series A, 6.25%, 7/1/99(2).......................... 5,000,000 5,100,000
---------------
DISTRICT OF COLUMBIA--0.6%
DC HFA MH RB, Tyler House Trust Certificates Partnership A, 3.717%(1).................. 10,800,000 10,800,000
--------------
U.S. POSSESSIONS--2.3%
Greystone Tax Exempt Certificates RB, Trust 1998-1, Sr. Certificate
Beneficial Ownership, 3.78%(1)...................................................... 30,800,000 30,800,000
PR CMWLTH TAN & RAN, 3.50%, 7/30/99.................................................... 9,500,000 9,504,841
--------------
40,304,841
--------------
Total Investments, at Value............................................................ 108.1% 1,891,903,328
--------------
Liabilities in Excess of Other Assets.................................................. (8.1) (142,422,073)
------------ --------------
Net Assets............................................................................. 100.0% $1,749,481,255
=========== ==============
</TABLE>
11
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999 (Continued)
Centennial Tax Exempt Trust
To simplify the listings of securities, abbreviations are used per the table
below:
<TABLE>
<S> <C>
BOE--Board of Education IDV--Industrial Development
CD--Commercial Development LGAC--Local Government Assistance Corp.
CDAU--Communities Development Authority MAG--Mtg. Agency
CDC--Community Development Corp. MCFFA--Medical Care Facilities Finance Agency
CMWLTH--Commonwealth MH--Multifamily Housing
COP--Certificates of Participation MPA--Municipal Power Agency
DA--Dormitory Authority MTAU--Metropolitan Transportation Authority
DAU--Development Authority NYC--New York City
ED--Economic Development NYS--New York State
EDAU--Economic Development Authority PAU--Power Authority
ERDAUPC--Energy Research & Development Authority PAUNYNJ--Port Authority of New York & New Jersey
Pollution Control PC--Pollution Control
FA--Facilities Authority POAU--Port Authority
FAU--Finance Authority PP--Public Power
GOB--General Obligation Bonds RA--Redevelopment Agency
GORB--General Obligation Refunding Bonds RAN--Revenue Anticipation Nts.
HA--Hospital Authority RB--Revenue Bonds
HAU--Housing Authority RRB--Revenue Refunding Bonds
HCF--Health Care Facilities SDI--School District
HEAU--Higher Education Authority SFM--Single Family Mtg.
HEFAU--Higher Educational Facilities Authority SPO--Special Obligations
HFA--Housing Finance Agency SWD--Solid Waste Disposal
HFAU--Health Facilities Authority TAN--Tax Anticipation Nts.
HFFAU--Health Facilities Finance Authority TBTAU--Triborough Bridge & Tunnel Authority
IDA--Industrial Development Agency TUAU--Turnpike Authority
IDAU--Industrial Development Authority WSS--Water Sewer System
</TABLE>
1. Floating or variable rate obligation maturity in more than one year. The
interest rate, which is based on specific, or an index of, market interest
rates, is subject to change periodically and is the effective rate on June 30,
1999. This instrument may also have a demand feature which allows, on up to 30
days' notice, the recovery of principal at any time, or at specified intervals
not exceeding one year.
2. Put obligation redeemable at full face value on the date reported.
3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $22,162,000 or 1.27% of the Trust's net
assets as of June 30, 1999.
See accompanying Notes to Financial Statements.
12
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES June 30, 1999
Centennial Tax Exempt Trust
<TABLE>
<S> <C>
ASSETS
Investments, at value--see accompanying statement .................................................... $1,891,903,328
Receivables and other assets:
Shares of beneficial interest sold.................................................................. 17,240,098
Interest ........................................................................................... 17,122,132
Investments sold ................................................................................... 7,143,021
Other .............................................................................................. 116,445
--------------
Total assets...................................................................................... 1,933,525,024
--------------
LIABILITIES
Bank overdraft ....................................................................................... 5,010,342
Payables and other liabilities:
Investments purchased............................................................................... 141,147,608
Shares of beneficial interest redeemed ............................................................. 35,849,075
Dividends........................................................................................... 1,651,504
Service plan fees .................................................................................. 178,779
Transfer and shareholder servicing agent fees....................................................... 89,937
Shareholder reports ................................................................................ 78,444
Other .............................................................................................. 38,080
--------------
Total liabilities................................................................................. 184,043,769
--------------
NET ASSETS .......................................................................................... $1,749,481,255
==============
COMPOSITION OF NET ASSETS
Paid-in capital....................................................................................... $1,749,961,465
Accumulated net realized loss on investment transactions ............................................. (480,210)
--------------
NET ASSETS--applicable to 1,749,977,433 shares of
beneficial interest outstanding .................................................................. $1,749,481,255
==============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE ....................................... $1.00
</TABLE>
See accompanying Notes to Financial Statements.
13
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended June 30, 1999
Centennial Tax Exempt Trust
<TABLE>
<S> <C>
INVESTMENT INCOME--Interest ............................................................................ $61,856,853
-----------
EXPENSES
Management fees--Note 3 ................................................................................ 7,950,188
Service plan fees--Note 3 .............................................................................. 3,773,272
Transfer and shareholder servicing agent fees--Note 3 .................................................. 817,705
Custodian fees and expenses ............................................................................ 237,108
Shareholder reports .................................................................................... 131,295
Registration and filing fees ........................................................................... 112,318
Legal, auditing and other professional fees ............................................................ 41,810
Trustees' compensation ................................................................................. 21,655
Other .................................................................................................. 22,770
-----------
Total expenses ....................................................................................... 13,108,121
Less expenses paid indirectly--Note 1............................................................... (136,809)
-----------
Net expenses ......................................................................................... 12,971,312
-----------
NET INVESTMENT INCOME .................................................................................. 48,885,541
-----------
NET REALIZED GAIN ON INVESTMENTS ....................................................................... 102,645
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................................... $48,988,186
===========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------------
1999 1998
------------------ ----------------
<S> <C> <C>
OPERATIONS
Net investment income ................................................... $ 48,885,541 $ 56,209,459
Net realized gain (loss) ................................................ 102,645 (569,188)
-------------- --------------
Net increase in net assets resulting from operations ..................... 48,988,186 55,640,271
-------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS .............................. (48,885,541) (56,328,253)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting from
beneficial interest transactions--Note 2 .............................. (79,607,151) 180,927,614
-------------- --------------
NET ASSETS
Total increase (decrease) ................................................ (79,504,506) 180,239,632
Beginning of period ...................................................... 1,828,985,761 1,648,746,129
-------------- --------------
End of period ............................................................ $1,749,481,255 $1,828,985,761
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
14
<PAGE>
FINANCIAL HIGHLIGHTS
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Year Ended June 30,
---------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period ........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations--
net investment income and net
realized gain ................................................ .03 .03 .03 .03 .03
Dividends and distributions to shareholders ..................... (.03) (.03) (.03) (.03) (.03)
------ ------ ------ ------ ------
Net asset value, end of period ................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
TOTAL RETURN(1) ................................................ 2.61% 3.12% 3.01% 3.16% 3.17%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) ........................ $1,749 $1,829 $1,649 $1,426 $1,315
Average net assets (in millions)................................. $1,896 $1,832 $1,591 $1,473 $1,217
Ratios to average net assets:(2)
Net investment income .......................................... 2.58% 3.07% 2.95% 3.12% 3.13%
Expenses(3)...................................................... 0.69% 0.69% 0.72% 0.72% 0.73%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Total returns reflect
changes in net investment income only. Total returns are not annualized for
periods of less than one full year.
2. Annualized for periods less than one full year.
3. The expense ratio reflects the effect of expenses paid indirectly by the
Trust.
See accompanying Notes to Financial Statements.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Centennial Tax Exempt Trust
1. SIGNIFICANT ACCOUNTING POLICIES
Centennial Tax Exempt Trust (the Trust) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Trust's investment objective is to seek maximum
short-term interest income exempt from federal income taxes that is consistent
with low capital risk and the maintenance of liquidity. The Trust's investment
advisor is Centennial Asset Management Corporation (the Manager), a subsidiary
of OppenheimerFunds, Inc. (OFI). The following is a summary of significant
accounting policies consistently followed by the Trust.
Securities Valuation. Portfolio securities are valued on the basis of amortized
cost, which approximates market value.
Federal Taxes. The Trust intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required. As of June 30, 1999, the Trust had
available for federal income tax purposes an unused capital loss carryover of
approximately $467,000, which expires between 2006 and 2007.
Distributions to Shareholders. Distributions to shareholders, which are
determined in accordance with income tax regulations, are recorded on the
ex-dividend date.
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Trust.
Other. Investment transactions are accounted for as of trade date. Realized
gains and losses on investments are determined on an identified cost basis,
which is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Centennial Tax Exempt Trust
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1999 Year Ended June 30, 1998
--------------------------------- --------------------------------
Shares Amount Shares Amount
-------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C>
Sold ........................ 5,631,707,953 $ 5,631,707,953 5,609,068,596 $ 5,609,068,596
Dividends and distributions
reinvested ................ 48,085,400 48,085,400 55,170,917 55,170,917
Redeemed..................... (5,759,400,504) (5,759,400,504) (5,483,311,899) (5,483,311,899)
-------------- --------------- -------------- ---------------
Net increase (decrease).... (79,607,151) $ (79,607,151) 180,927,614 $ 180,927,614
============== =============== ============== ===============
</TABLE>
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Trust which provides for a fee of 0.50% of the first
$250 million of net assets; 0.475% of the next $250 million of net assets; 0.45%
of the next $250 million of net assets; 0.425% of the next $250 million of net
assets; 0.40% of the next $250 million of net assets; 0.375% of the next $250
million of net assets; 0.35% of the next $500 million of net assets and 0.325%
of net assets in excess of $2 billion. Furthermore, under the Trust's Agreement,
when the value of the Trust's net assets is less than $1.5 billion, the annual
fee payable to the Manager shall be reduced by $100,000 based on average net
assets computed daily and paid monthly at the annual rates, but in no event
shall the annual fee be less than $0. The Trust's management fee for the year
ended June 30, 1999 was 0.42% of average annual net assets.
Shareholder Services, Inc. (SSI), a subsidiary of OFI, is the transfer and
shareholder servicing agent for the Trust and for other registered investment
companies. SSI's total costs of providing such services are allocated ratably to
these companies.
Under an approved service plan, the Trust may expend up to 0.20% of its net
assets annually to reimburse the Manager, as distributor, for costs incurred in
connection with the personal service and maintenance of accounts that hold
shares of the Trust, including amounts paid to brokers, dealers, banks and other
institutions. During the year ended June 30, 1999, the Trust paid $16,878 to a
broker/dealer affiliated with the Manager as reimbursement for
distribution-related expenses.
<PAGE>
Appendix A
Description of Securities Ratings
Below is a description of the two highest rating categories for Short Term Debt
and Long Term Debt by the "Nationally-Recognized Statistical Rating
Organizations" which the Manager evaluates in purchasing securities on behalf of
the Trust. The ratings descriptions are based on information supplied by the
ratings organizations to subscribers.
Short-Term Debt Ratings.
Moody's Investors Service, Inc.
- --------------------------------------------------------------------------------
The following rating designations for commercial paper (defined by Moody's as
promissory obligations not having original maturity in excess of nine months),
are judged by Moody's to be investment grade, and indicate the relative
repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally be evidenced by
the following characteristics: (a) leveling market positions in well-established
industries; (b) high rates of return on funds employed; (c) conservative
capitalization structures with moderate reliance on debt and ample asset
protection; (d) broad margins in earning coverage of fixed financial charges and
high internal cash generation; and (e) well established access to a range of
financial markets and assured sources of alternate liquidity.
Prime-2: Strong capacity for repayment. This will normally be evidenced by many
of the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Moody's ratings for state and municipal short-term obligations are designated
"Moody's Investment Grade" ("MIG"). Short-term notes which have demand features
may also be designated as "VMIG". These rating categories are as follows:
MIG1/VMIG1: Best quality. There is present strong protection by established cash
flows, superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample although not so large
as in the preceding group.
<PAGE>
Standard & Poor's Ratings Services
- --------------------------------------------------------------------------------
The following ratings by Standard & Poor's for commercial paper (defined by S&P
as debt having an original maturity of no more than 365 days) assess the
likelihood of payment:
A-1: Strong capacity for timely payment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
A-2: Satisfactory capacity for timely payment. However, the relative degree of
safety is not as high as for issues designated "A-1".
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have a demand or
double feature as part of their provisions. The first rating addresses the
likelihood of repayment of principal and interest as due, and the second rating
addresses only the demand feature. With short-term demand debt, S&P's note
rating symbols are used with the commercial paper symbols (for example,
"SP-1+/A-1+").
Fitch IBCA, Inc.
- --------------------------------------------------------------------------------
Fitch assigns the following short-term ratings to debt obligations that are
payable on demand or have original maturities of generally up to three years,
including commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of assurance for
timely payment.
F-1: Very strong credit quality; assurance of timely payment is only slightly
less in degree than issues rated "F-1+". F-2: Good credit quality; satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as for issues assigned "F-1+" or "F-1" ratings.
Duff & Phelps, Inc.
- --------------------------------------------------------------------------------
The following ratings are for commercial paper (defined by Duff & Phelps as
obligations with maturities, when issued, of under one year), asset-backed
commercial paper, and certificates of deposit (the ratings cover all obligations
of the institution with maturities, when issued, of under one year, including
bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
Duff 2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
Thomson BankWatch, Inc.
- --------------------------------------------------------------------------------
The following short-term ratings apply to commercial paper, certificates of
deposit, unsecured notes, and other securities having a maturity of one year or
less.
TBW-1: The highest category; indicates the degree of safety regarding timely
repayment of principal and interest is very strong.
TBW-2: The second highest rating category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".
Long Term Debt Ratings
These ratings are relevant for securities purchased by the Trust with a
remaining maturity of 397 days or less, or for rating issuers of short-term
obligations.
Moody's Investors Service, Inc.
- --------------------------------------------------------------------------------
Bonds (including municipal bonds) are rated as follows:
Aaa: Judged to be the best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin, and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
positions of such issues.
Aa: Judged to be of high quality by all standards. Together with the "Aaa" group
they comprise what are generally known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
"Aaa" securities or fluctuations of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risks
appear somewhat larger than in "Aaa" securities.
Moody's applies numerical modifiers "1", "2" and "3" in its "Aa" rating
classification. The modifier "1" indicates that the security ranks in the higher
end of its generic rating category; the modifier "2" indicates a mid-range
ranking; and the modifier "3" indicates that the issue ranks in the lower end of
its generic rating category.
Standard & Poor's Ratings Services
- --------------------------------------------------------------------------------
Bonds (including municipal bonds) are rated as follows:
AAA: The highest rating assigned by S&P. Capacity to pay interest and repay
principal is extremely strong.
AA: A strong capacity to pay interest and repay principal and differ from "AAA"
rated issues only in small degree.
Fitch IBCA, Inc.
- --------------------------------------------------------------------------------
AAA: Considered to be investment grade and of the highest credit quality. The
obligor has an exceptionally strong ability to pay interest and repay principal,
which is unlikely to be affected by reasonably foreseeable events.
AA: Considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA". Plus (+) and minus (-) signs are used
in the "AA" category to indicate the relative position of a credit within that
category.
Because bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issuers
is generally rated "F-1+".
Duff & Phelps, Inc.
- --------------------------------------------------------------------------------
AAA: The highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA: High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions. Plus (+) and
minus (-) signs are used in the "AA" category to indicate the relative position
of a credit within that category.
Thomson BankWatch, Inc.
- --------------------------------------------------------------------------------
TBW issues the following ratings for companies. These ratings assess the
likelihood of receiving payment of principal and interest on a timely basis and
incorporate TBW's opinion as to the vulnerability of the company to adverse
developments, which may impact the market's perception of the company, thereby
affecting the marketability of its securities.
A: Possesses an exceptionally strong balance sheet and earnings record,
translating into an excellent reputation and unquestioned access to its natural
money markets. If weakness or vulnerability exists in any aspect of the
company's business, it is entirely mitigated by the strengths of the
organization.
A/B: The company is financially very solid with a favorable track record and no
readily apparent weakness. Its overall risk profile, while low, is not quite as
favorable as for companies in the highest rating
<PAGE>
Appendix B
- --------------------------------------------------------------------------------
Industry Classifications
- --------------------------------------------------------------------------------
Adult Living Facilities
Education
Electric
Gas
General Obligation
Higher Education
Highways
Hospital
Lease
Rental
Manufacturing,
Durables Manufacturing,
Non Durables
Marine/Aviation Facilities
Multi-Family Housing
Pollution Control
Resource Recovery
Sales Tax
Sewer
Single Family Housing
Special Assessment
Telephone
Water
<PAGE>
Appendix C
- --------------------------------------------------------------------------------
TAX EQUIVALENT YEILD TABLE
- --------------------------------------------------------------------------------
The equivalent yield table below compares tax-free income with taxable income
under federal income tax rates effective in 1999. The tables assume that an
investor's highest tax bracket applies to the change in taxable income resulting
from a switch between taxable and non-taxable investments, that the investor is
not subject to the Alternative Minimum Tax, and that state income tax payments
are fully deductible for federal income tax purposes. The income tax brackets
are subject to indexing in future years to reflect changes in the Consumer Price
Index.
Example: Assuming a 4.0% tax-free yield, the equivalent taxable yield would be
6.25% for a person in the 36% tax bracket.
<TABLE>
<CAPTION>
Centennial Tax Exempt Trust
<S> <C> <C> <C> <C>
Yield of:
Federal Effective 1.5% 2.0% 2.5%
Taxable Tax Is Approximately Equivalent
To a
Income Bracket Taxable Yield of:
JOINT RETURN
- ---------------------
Over Not over
- -------- -----------
$ 0 $ 43,050 15.00% 1.76% 2.35% 2.94%
$ 43,050 $104,050 28.00% 2.08% 2.78% 3.47%
$104,050 $158,550 31.00% 2.17% 2.90% 3.62%
$158,550 $283,150 36.00% 2.34% 3.13% 3.91%
39.60% 2.48% 3.31% 4.14%
SINGLE RETURN
- ------------------------
Over Not over
- ------- -----------
$ 0 $ 25,750 15.00% 1.76% 2.35% 2.94%
$ 25,750 $ 62,450 28.00% 2.08% 2.78% 3.47%
$ 62,450 $130,250 31.00% 2.17% 2.90% 3.62%
$130,250 $283,150 36.00% 2.34% 3.13% 3.91%
$283,150 39.60% 2.48% 3.31% 4.14%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Centennial Tax Exempt Trust Yield of:
<S> <C> <C> <C> <C> <C>
Federal Effective 3.0% 3.5% 4.0% 4.5%
Taxable Tax Is Approximately Equivalent To a
Income Bracket Taxable Yield of:
JOINT RETURN
- ---------------------
Over Not over
- -------- -----------
$ 0 $ 43,050 15.00% 3.53% 4.12% 4.71% 5.29%
$ 43,050 $104,050 28.00% 4.17% 4.86% 5.56% 6.25%
$104,050 $158,550 31.00% 4.35% 5.07% 5.80% 6.52%
$158,550 $283,150 36.00% 4.69% 5.47% 6.35% 7.03%
39.60% 4.97% 5.79% 6.62% 7.45%
SINGLE RETURN
- ------------------------
Over Not over
- ------- -----------
$ 0 $ 25,750 15.00% 3.53% 4.12% 4.71% 5.29%
$ 25,750 $ 62,450 28.00% 4.17% 4.86% 5.56% 6.25%
$ 62,450 $130,250 31.00% 4.35% 5.07% 5.80% 6.52%
$130,250 $283,150 36.00% 4.69% 5.47% 6.25% 7.03%
$283,150 39.60% 4.97% 5.79% 6.62% 7.45%
</TABLE>
- --------------------------------------------------------------------------------
Centennial Tax Exempt Trust
- --------------------------------------------------------------------------------
Investment Advisor and Distributor
Centennial Asset Management Corporation
6803 South Tucson Way
Englewood, Colorado 80112
Sub-Distributor
OppenheimerFunds Distributor, Inc.
P.O. Box 5254
Denver, Colorado 80217
Transfer Agent
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217
1-800-525-9310
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
PX0160.001.1199
<PAGE>
Centennial Government Trust
- --------------------------------------------------------------------------------
6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-9310
Statement of Additional Information dated November 1, 1999
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Trust and supplements
information in the Prospectus dated November 1, 1999. It should be read together
with the Prospectus, which may be obtained by writing to the Trust's Transfer
Agent, Shareholder Services, Inc., at P.O. Box 5143, Denver, Colorado 80217, or
by calling the Transfer Agent at the toll-free number shown above.
Contents
Page
About the Trust
Additional Information about the Trust's Investment Policies and Risks........
The Trust's Investment Policies..........................................
Other Investment Strategies..............................................
Investment Restrictions..................................................
How the Trust is Managed......................................................
Organization and History.................................................
Trustees and Officers of the Trust.......................................
The Manager..............................................................
Performance of the Trust......................................................
About Your Account
How To Buy Shares.............................................................
How To Sell Shares............................................................
How To Exchange Shares........................................................
Dividends and Taxes...........................................................
Additional Information About the Trust........................................
Financial Information About the Trust
Independent Auditors' Report..................................................
Financial Statements..........................................................
Appendix A: Securities Ratings.............................................A-1
Appendix B: Industry Classifications.......................................B-1
<PAGE>
A B O U T T H E T R U S T
Additional Information About the Trust's Investment Policies and Risks
The investment objective and the principal investment policies of the Trust are
described in the Prospectus. This Statement of Additional Information contains
supplemental information about those policies and the types of securities that
the Trust's investment manager, Centennial Asset Management Corporation, will
select for the Trust. Additional explanations are also provided about the
strategies the Trust may use to try to achieve its objective.
The Trust's Investment Policies. The composition of the Trust's portfolio and
the techniques and strategies that the Trust's Manager uses in selecting
portfolio securities will vary over time. The Trust is not required to use all
of the investment techniques and strategies described below at all times in
seeking its goal. It may use some of the special investment techniques and
strategies at some times or not at all.
The Trust's objective is to seek a high level of current income consistent
with preservation of capital and the maintenance of liquidity. The Trust will
not make investments with the objective of seeking capital growth. However, the
value of the securities held by the Trust may be affected by changes in general
interest rates. Because the current value of debt securities varies inversely
with changes in prevailing interest rates, if interest rates increase after a
security is purchased, that security would normally decline in value.
Conversely, if interest rates decrease after a security is purchased, its value
would rise. However, those fluctuations in value will not generally result in
realized gains or losses to the Trust since the Trust does not usually intend to
dispose of securities prior to their maturity. A debt security held to maturity
is redeemable by its issuer at full principal value plus accrued interest.
The Trust may sell securities prior to their maturity, to attempt to take
advantage of short-term market variations, or because of a revised credit
evaluation of the issuer or other considerations. The Trust may also do so to
generate cash to satisfy redemptions of Trust shares. In such cases, the Trust
may realize a capital gain or loss on the security.
|X| Ratings of Securities -- Portfolio Quality, Maturity and
Diversification. Under Rule 2a-7 of the Investment Company Act, the Trust uses
the amortized cost method to value its portfolio securities to determine the
Trust's net asset value per share. Rule 2a-7 places restrictions on a money
market fund's investments. Under that Rule, the Trust may purchase only those
securities that the Manager, under Board-approved procedures, has determined
have minimal credit risks and are "Eligible Securities." The rating restrictions
described in the Prospectus and this Statement of Additional Information do not
apply to banks in which the Trust's cash is kept.
An "Eligible Security" is one that has been rated in one of the two
highest short-term rating categories by any two "nationally-recognized
statistical rating organizations." That term is defined in Rule 2a-7 and they
are referred to as "Rating Organizations" in this Statement of Additional
Information. If only one Rating Organization has rated that security, it must
have been rated in one of the two highest rating categories by that Rating
Organization. An unrated security that is judged by the Manager to be of
comparable quality to Eligible Securities rated by Rating Organizations may also
be an "Eligible Security."
Rule 2a-7 permits the Trust to purchase any number of "First Tier
Securities." These are Eligible Securities that have been rated in the highest
rating category for short-term debt obligations by at least two Rating
Organizations. If only one Rating Organization has rated a particular security,
it must have been rated in the highest rating category by that Rating
Organization. Comparable unrated securities may also be First Tier Securities.
Under Rule 2a-7, the Trust may invest only up to 5% of its total assets in
"Second Tier Securities." Those are Eligible Securities that are not "First Tier
Securities." In addition, the Trust may not invest more than:
|_| 5% of its total assets in the securities of any one issuer (other than
the U.S. government, its agencies or instrumentalities) or
|_| 1% of its total assets or $1 million (whichever is greater) in Second
Tier Securities of any one issuer.
Under Rule 2a-7, the Trust must maintain a dollar-weighted average
portfolio maturity of not more than 90 days, and the maturity of any single
portfolio investment may not exceed 397 days. Some of the Trust's existing
investment restrictions are more restrictive than the provisions of Rule 2a-7.
For example, as a matter of fundamental policy, the Trust may not invest in any
debt instrument having a maturity in excess of one year from the date of the
investment. The Board regularly reviews reports from the Manager to show the
Manager's compliance with the Trust's procedures and with the Rule.
If a security's rating is downgraded, the Manager and/or the Board of
Trustees may have to reassess the security's credit risk. If a security has
ceased to be a First Tier Security, the Manager will promptly reassess whether
the security continues to present minimal credit risk. If the Manager becomes
aware that any Rating Organization has downgraded its rating of a Second Tier
Security or rated an unrated security below its second highest rating category,
the Trust's Board of Trustees shall promptly reassess whether the security
presents minimal credit risk and whether it is in the best interests of the
Trust to dispose of it. If the Trust disposes of the security within five days
of the Manager learning of the downgrade, the Manager will provide the Board of
Trustees with subsequent notice of such downgrade. If a security is in default,
or ceases to be an Eligible Security, or is determined no longer to present
minimal credit risks, the Board of Trustees must determine whether it would be
in the best interests of the Trust to dispose of the security.
The Rating Organizations currently designated as nationally-recognized
statistical rating organizations by the Securities and Exchange Commission are
Standard & Poor's Corporation, Moody's Investors Service, Inc., Fitch IBCA,
Inc., Duff and Phelps, Inc., and Thomson BankWatch, Inc. Appendix A to this
Statement of Additional Information contains descriptions of the rating
categories of those Rating Organizations. Ratings at the time of purchase will
determine whether securities may be acquired under the restrictions described
above.
|X| U.S. Government Securities. U.S. government securities are obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities. They include Treasury Bills (which mature within one year of
the date they are issued) and Treasury Notes and Bonds (which are issued with
longer maturities). All Treasury securities are backed by the full faith and
credit of the United States.
U.S. government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage Association, General
Services Administration, Bank for Cooperatives, Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land
Banks, Maritime Administration, the Tennessee Valley Authority and the District
of Columbia Armory Board. The Trust will not invest in securities issued by the
Inter-American Development Bank, the Asian-American Development Bank and the
International Bank for Reconstruction and Development or in pooled mortgages
offered by the Federal Housing Administration or Veterans Administration.
Securities issued or guaranteed by U.S. government agencies and
instrumentalities are not always backed by the full faith and credit of the
United States. Some, such as securities issued by the Federal National Mortgage
Association ("Fannie Mae"), are backed by the right of the agency or
instrumentality to borrow from the Treasury. Others, such as securities issued
by the Federal Home Loan Mortgage Corporation ("Freddie Mac"), are supported
only by the credit of the instrumentality and not by the Treasury. If the
securities are not backed by the full faith and credit of the United States, the
purchaser must look principally to the agency issuing the obligation for
repayment and may not be able to assert a claim against the United States if the
issuing agency or instrumentality does not meet its commitment. The Trust will
invest in U.S. government securities of such agencies and instrumentalities only
when the Manager is satisfied that the credit risk with respect to such
instrumentality is minimal and that the security is an Eligible Security.
|X| Repurchase Agreements. In a repurchase transaction, the Trust acquires
a security from, and simultaneously resells it to, an approved vendor for
delivery on an agreed-upon future date. The resale price exceeds the purchase
price by an amount that reflects an agreed-upon interest rate effective for the
period during which the repurchase agreement is in effect. An "approved vendor"
may be a U.S. commercial bank or the U.S. branch of a foreign bank having total
domestic assets of at least $1 billion, or a broker-dealer with a net capital of
$50 million which has been designated a primary dealer in government securities.
The majority of these transactions run from day to day, and delivery
pursuant to the resale typically will occur within one to five days of the
purchase. The Trust will not enter into a repurchase agreement that will cause
more than 10% of its net assets to be subject to repurchase agreements maturing
in more than seven days.
Repurchase agreements are considered "loans" under the Investment Company
Act, collateralized by the underlying security. The Trust's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the collateral's value must equal or exceed the repurchase price to
fully collateralize the repayment obligation. Additionally, the Manager will
monitor the vendor's creditworthiness to confirm that the vendor is financially
sound and will continuously monitor the collateral's value. However, if the
vendor fails to pay the resale price on the delivery date, the Trust may incur
costs in disposing of the collateral and may experience losses if there is any
delay in its ability to do so.
Other Investment Strategies
O Floating Rate/Variable Rate Obligations. The Trust may invest in
instruments with floating or variable interest rates. The interest rate on a
floating rate obligation is based on a stated prevailing market rate, such as a
bank's prime rate, the 90-day U.S. Treasury Bill rate, the rate of return on
commercial paper or bank certificates of deposit, or some other standard. The
rate on the investment is adjusted automatically each time the market rate is
adjusted. The interest rate on a variable rate obligation is also based on a
stated prevailing market rate but is adjusted automatically at a specified
interval of not less than one year. Some variable rate or floating rate
obligations in which the Trust may invest have a demand feature entitling the
holder to demand payment of an amount approximately equal to the amortized cost
of the instrument or the principal amount of the instrument plus accrued
interest at any time, or at specified intervals not exceeding one year. These
notes may or may not be backed by bank letters of credit.
Variable rate demand notes may include master demand notes, which are
obligations that permit the Trust to invest fluctuating amounts in a note. The
amount may change daily without penalty, pursuant to direct arrangements between
the Trust, as the note purchaser, and the issuer of the note. The interest rates
on these notes fluctuate from time to time. The issuer of this type of
obligation normally has a corresponding right in its discretion, after a given
period, to prepay the outstanding principal amount of the obligation plus
accrued interest. The issuer must give a specified number of days' notice to the
holders of those obligations. Generally, the changes in the interest rate on
those securities reduce the fluctuation in their market value. As interest rates
decrease or increase, the potential for capital appreciation or depreciation is
less than that for fixed-rate obligations having the same maturity.
Because these types of obligations are direct lending arrangements between
the note purchaser and issuer of the note, these instruments generally will not
be traded. Generally, there is no established secondary market for these types
of obligations, although they are redeemable from the issuer at face value.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, the Trust's right to redeem them is dependent
on the ability of the note issuer to pay principal and interest on demand. These
types of obligations usually are not rated by credit rating agencies. The Trust
may invest in obligations that are not rated only if the Manager determines at
the time of investment that they are Eligible Securities. The Manager, on behalf
of the Trust, will monitor the creditworthiness of the issuers of the floating
and variable rate obligations in the Trust's portfolio on an ongoing basis.
There is no limit on the amount of the Trust's assets that may be invested in
floating rate and variable rate obligations that meet the requirements of Rule
2a-7.
O Loans of Portfolio Securities. To attempt to increase its income, the Trust
may lend its portfolio securities to brokers, dealers and other financial
institutions. These loans are limited to not more than 25% of the value of the
Trust's total assets and are subject to other conditions described below. The
Trust will not enter into any securities lending agreements having a maturity of
greater than one year. The Trust presently does not intend that the value of
securities loaned will exceed 5% of the value of the Trust's total assets in the
coming year. There are some risks in lending securities. The Trust could
experience a delay in receiving additional collateral to secure a loan, or a
delay in recovering the loaned securities.
The Trust may receive collateral for a loan. Any securities received as
collateral for a loan must mature in twelve months or less. Under current
applicable regulatory requirements (which are subject to change), on each
business day the loan collateral must be at least equal to the market value of
the loaned securities. The collateral must consist of cash, bank letters of
credit, U.S. government securities or other cash equivalents in which the Trust
is permitted to invest. To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by the Trust if the demand meets the
terms of the letter. Such terms and the issuing bank must be satisfactory to the
Trust.
When it lends securities, the Trust receives from the borrower an amount
equal to the interest paid or the dividends declared on the loaned securities
during the term of the loan. It may also receive negotiated loan fees and the
interest on the collateral securities, less any finders', custodian,
administrative or other fees the Trust pays in connection with the loan. The
Trust may share the interest it receives on the collateral securities with the
borrower as long as it realizes at least a minimum amount of interest required
by the lending guidelines established by its Board of Trustees.
The Trust will not lend its portfolio securities to any officer, Trustee,
employee or affiliate of the Trust or its Manager. The terms of the Trust's
loans must meet certain tests under the Internal Revenue Code and permit the
Trust to reacquire loaned securities on five business days notice or in time to
vote on any important matter.
Investment Restrictions
|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Trust has adopted to govern its investments that can be
changed only by the vote of a "majority" of the Trust's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is defined as
the vote of the holders of the lesser of:
|_| 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the outstanding
shares are present or represented by proxy, or
|_| more than 50% of the outstanding shares.
The Trust's investment objective is a fundamental policy. Other policies
described in the Prospectus or this Statement of Additional Information are
"fundamental" only if they are identified as such. The Trust's Board of Trustees
can change non-fundamental policies without shareholder approval. However,
significant changes to investment policies will be described in supplements or
updates to the Prospectus or this Statement of Additional Information, as
appropriate. The Trust's most significant investment policies are described in
the Prospectus.
Does the Trust Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Trust:
|_| The Trust cannot invest in any security other than those discussed in
the Prospectus or Statement of Additional Information under "Investment
Objective and Policies";
|_| The Trust cannot enter into repurchase agreements maturing in more
than seven days or purchase securities which are restricted as to resale or for
which market quotations are not readily available, if any such investment would
cause more than 10% of the Trust's assets to be invested in such securities;
|_| The Trust cannot borrow money in excess of 10% of the value of its
total assets, and then only as a temporary measure for extraordinary or
emergency purposes; provided that the Trust will not make any investment at a
time during which such borrowing exceeds 5% of the value of its assets; no
assets of the Trust may be pledged, mortgaged or assigned to secure a debt;
|_| The Trust cannot make loans, except through (i) the purchase of debt
securities listed in the Prospectus under "Investment Objective and Policies,"
(ii) the purchase of such debt securities subject to repurchase agreements, or
(iii) loans of securities as described under "Other Investment Strategies -
Loans of Portfolio Securities," in this Statement of Additional Information;
|_| The Trust cannot invest in any debt instrument having a maturity in
excess of one year from the date of the investment, or, in the case of a debt
instrument subject to a repurchase agreement or called for redemption, having a
repurchase or redemption date more than one year from the date of the
investment.
|_| The Trust cannot invest in commodities or commodity contracts or
invest in interests in oil, gas or other mineral exploration or development
programs;
|_| The Trust cannot invest in real estate;
|_| The Trust cannot purchase securities on margin or make short sales of
securities;
|_| The Trust cannot invest in or hold securities of any issuer if those
officers and Trustees of the Trust or its advisor who beneficially own
individually more than 0.5% of the securities of such issuer together own more
than 5% of the securities of such issuer;
|_| The Trust cannot underwrite securities of other companies; or
|_| The Trust cannot invest in securities of other investment
companies, except as they may be acquired as part of a merger, consolidation or
acquisition of assets.
|_| The Trust cannot issue "senior securities," but this does not prohibit
certain investment activities for which assets of the Trust are designated as
segregated, or margin, collateral or escrow arrangements are established, to
cover the related obligations.
Unless the Prospectus or this Statement of Additional Information states
that a percentage restriction applies on an ongoing basis, it applies only at
the time the Trust makes an investment. The Trust need not sell securities to
meet the percentage limits if the value of the investment increases in
proportion to the size of the Trust.
For purposes of the Trust's policy not to concentrate its investments in
securities of issuers, the Trust has adopted the industry classifications set
forth in Appendix B to this Statement of Additional Information. This is not a
fundamental policy.
How the Trust Is Managed
Organization and History. The Trust is an open-end, diversified management
investment company organized as a Massachusetts business trust in 1982, with an
unlimited number of authorized shares of beneficial interest.
The Trust is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The Trustees
meet periodically throughout the year to oversee the Trust's activities, review
its performance, and review the actions of the Manager. Although the Trust will
not normally hold annual meetings of its shareholders, it may hold shareholder
meetings from time to time on important matters. Shareholders of the Trust may
have the right to call a meeting to remove a Trustee or to take other action
described in the Declaration of Trust.
|X| Classes of Shares. The Trust has a single class of shares of stock.
While that class has no designation, it is deemed to be the equivalent of Class
A for purposes of the shareholder account policies that apply to Class A shares
of the Oppenheimer funds. Shares of the Trust are freely transferable. Each
share has one vote at shareholder meetings, with fractional shares voting
proportionally on matters submitted to a vote of shareholders. There are no
preemptive or conversion rights and shares participate equally in the assets of
the Trust upon liquidation.
|X| Meetings of Shareholders. As a Massachusetts business trust, the Trust
is not required to hold, and does not plan to hold, regular annual meetings of
shareholders. The Trust will hold meetings when required to do so by the
Investment Company Act or other applicable law. It will also do so when a
shareholder meeting is called by the Trustees or upon proper request of the
shareholders.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of the Trust, to remove a Trustee. The
Trustees will call a meeting of shareholders to vote on the removal of a Trustee
upon the written request of the record holders of 10% of the outstanding shares
of the Trust. If the Trustees receive a request from at least 10 shareholders
stating that they wish to communicate with other shareholders to request a
meeting to remove a Trustee, the Trustees will then either make the shareholder
lists of the Trust available to the applicants or mail their communication to
all other shareholders at the applicants' expense. The shareholders making the
request must have been shareholders for at least six months and must hold shares
of the Trust valued at $25,000 or more or constituting at least 1% of the
outstanding shares of the Trust, whichever is less. The Trustees may also take
other action as permitted by the Investment Company Act.
|_| Shareholder and Trustee Liability. The Declaration of Trust
contains an express disclaimer of shareholder or Trustee liability for the
Trust's obligations. It also provides for indemnification and reimbursement of
expenses out of the Trust's property for any shareholder held personally liable
for its obligations. The Declaration of Trust also states that upon request, the
Trust shall assume the defense of any claim made against a shareholder for any
act or obligation of the Trust and shall satisfy any judgment on that claim.
Massachusetts law permits a shareholder of a business trust (such as the Trust)
to be held personally liable as a "partner" under certain circumstances.
However, the risk that a Trust shareholder will incur financial loss from being
held liable as a "partner" of the Trust is limited to the relatively remote
circumstances in which the Trust would be unable to meet its obligations.
The Trust's contractual arrangements state that any person doing business
with the Trust (and each shareholder of the Trust) agrees under the Declaration
of Trust to look solely to the assets of the Trust for satisfaction of any claim
or demand that may arise out of any dealings with the Trust. Additionally, the
Trustees shall have no personal liability to any such person, to the extent
permitted by law.
Trustees and Officers of the Trust. The Trust's Trustees and officers and their
principal occupations and business affiliations during the past five years are
listed below. Trustees denoted with an asterisk (*) below are deemed to be
"interested persons" of the Trust under the Investment Company Act. All of the
Trustees are also trustees, directors or managing general partners of the
following Denver-based Oppenheimer funds1:
1Ms. Macaskill and Mr. Bowen are not Trustees or Directors of Oppenheimer
Integrity Funds, Oppenheimer Strategic Income Fund, Panorama Series Fund, Inc.
or Oppenheimer Variable Account Funds. Mr. Fossel and Mr. Bowen are not Trustees
of Centennial New York Tax Exempt Trust or Managing General Partners of
Centennial America Fund, L.P.
Oppenheimer Capital Income Fund Oppenheimer Senior Floating Rate
Fund
Oppenheimer Cash Reserves Oppenheimer Strategic Income Fund
Oppenheimer Champion Income Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer High Yield Fund Oppenheimer Variable Account Funds
Oppenheimer International Bond Fund Panorama Series Fund, Inc.
Oppenheimer Integrity Funds Centennial America Fund, L. P.
Oppenheimer Limited-Term Government Centennial California Tax Exempt
Fund Trust
Oppenheimer Main Street Funds, Inc. Centennial Government Trust
Oppenheimer Main Street Small Cap Centennial Money Market Trust
Fund
Oppenheimer Municipal Fund Centennial New York Tax Exempt Trust
Oppenheimer Real Asset Fund Centennial Tax Exempt Trust
Robert G. Avis*, Trustee, Age: 68
One North Jefferson Ave., St. Louis, Missouri 63103
Chairman, President and Chief Executive Officer of A.G. Edwards Capital, Inc.
(general partnership of private equity funds), Director of A.G. Edwards & Sons,
Inc. (a broker-dealer) and Director of A.G. Edwards Trust Companies (trust
companies), formerly, Vice Chairman of A.G. Edwards & Sons, Inc. and A.G.
Edwards, Inc. (its parent holding company) and Chairman of A.G.E. Asset
Management (an investment advisor).
William A. Baker, Trustee, Age: 84
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
George C. Bowen, Trustee, Age: 63
9224 Bauer Court, Lone Tree, Colorado 80124
Formerly (until April 1999) Mr. Bowen held the following positions: Senior Vice
President (since September 1987) and Treasurer (since March 1985) of the
Manager; Vice President (since June 1983) and Treasurer (since March 1985) of
the Distributor; Vice President (since October 1989) and Treasurer (since April
1986) of HarbourView Asset Management Corporation; Senior Vice President (since
February 1992), Treasurer (since July 1991) Assistant Secretary and a director
(since December 1991) of Centennial Asset Management Corporation; President,
Treasurer and a director of Centennial Capital Corporation (since June 1989);
Vice President and Treasurer (since August 1978) and Secretary (since April
1981) of Shareholder Services, Inc.; Vice President, Treasurer and Secretary of
Shareholder Financial Services, Inc. (since November 1989); Assistant Treasurer
of Oppenheimer Acquisition Corp. (since March 1998); Treasurer of Oppenheimer
Partnership Holdings, Inc. (since November 1989); Vice President and Treasurer
of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief Executive
Officer, Treasurer; Treasurer of OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since October 1997).
Jon S. Fossel, Trustee, Age: 57
P.O. Box 44, Mead Street, Waccabuc, New York 10597
Formerly Chairman and a director of the Manager, President and a director of
Oppenheimer Acquisition Corp., the Manager's parent holding company, and
Shareholder Services, Inc. and Shareholder Financial Services, Inc., transfer
agent subsidiaries of the Manager.
Sam Freedman, Trustee, Age: 59
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly Chairman and Chief Executive Officer of OppenheimerFunds Services,
Chairman, Chief Executive Officer and a director of Shareholder Services, Inc.,
Chairman, Chief Executive Officer and director of Shareholder Financial
Services, Inc., Vice President and director of Oppenheimer Acquisition Corp. and
a director of OppenheimerFunds, Inc.
Raymond J. Kalinowski, Trustee, Age: 70
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc. (a computer products training
company), self-employed consultant (securities matters).
C. Howard Kast, Trustee, Age: 77
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).
Robert M. Kirchner, Trustee, Age: 78
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Bridget A. Macaskill*, President and Trustee, Age: 51
Two World Trade Center, New York, New York 10048-0203
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView Asset Management Corporation, an investment adviser
subsidiary of the Manager; Chairman and a director of Shareholder Services, Inc.
(since August 1994) and Shareholder Financial Services, Inc. (since September
1995), transfer agent subsidiaries of the Manager; President (since September
1995) and a director (since October 1990) of Oppenheimer Acquisition Corp., the
Manager's parent holding company; President (since September 1995) and a
director (since November 1989) of Oppenheimer Partnership Holdings, Inc., a
holding company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director (since October
1997) of OppenheimerFunds International Ltd., an offshore fund management
subsidiary of the Manager and of Oppenheimer Millennium Funds plc; President and
a director of other Oppenheimer funds; a director of Prudential Corporation plc
(a U.K. financial service company).
Ned M. Steel, Trustee, Age: 84
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; a director of Visiting Nurse
Corporation of Colorado.
James C. Swain*, Chairman, Chief Executive Officer and Trustee, Age: 65
6803 South Tucson Way, Englewood, Colorado 80112
Vice Chairman of the Manager (since September 1988); formerly President and a
director of Centennial Asset Management Corporation, an investment adviser
subsidiary of the Manager and Chairman of the Board of Shareholder Services,
Inc.
Carol E. Wolf, Vice President and Portfolio Manager, Age: 47
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager and Centennial Asset Management Corporation (since
June 1990); an officer of other Oppenheimer funds.
Arthur J. Zimmer, Vice President and Portfolio Manager, Age: 53
Two World Trade Center, New York, New York 10048-0203
Senior Vice President of the Manager (since June 1997); Vice President of
Centennial Asset Management Corporation (since June 1997); an officer of other
Oppenheimer funds; formerly Vice President of the Manager (October 1990 - June
1997).
Andrew J. Donohue, Vice President and Secretary, Age: 49
Two World Trade Center, New York, New York 10048-0203
Executive Vice President (since January 1993), General
Counsel (since October 1991) and a Director (since September 1995) of the
Manager; Executive Vice President and General Counsel (since September 1993) and
a director (since January 1992) of the Distributor; Executive Vice President,
General Counsel and a director of HarbourView Asset Management Corporation,
Shareholder Services, Inc., Shareholder Financial Services, Inc. and (since
September 1995) Oppenheimer Partnership Holdings, Inc.; President and a director
of Centennial Asset Management Corporation (since September 1995); President,
General Counsel and a director of Oppenheimer Real Asset Management, Inc. (since
July 1996); General Counsel (since May 1996) and Secretary (since April 1997) of
Oppenheimer Acquisition Corp.; Vice President and a director of OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc (since October 1997); an
officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer, Age: 40
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller
for the Manager.
Scott T. Farrar, Assistant Treasurer, Age: 34
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller
for the Manager.
Brian W. Wixted, Treasurer, Age: 40
6803 South Tucson Way, Englewood Colorado 80112
Senior Vice President and Treasurer (since April 1999) of the Manager; Treasurer
of HarbourView Asset Management Corporation, Shareholder Services, Inc.,
Shareholder Financial Services, Inc. and Oppenheimer Partnership Holdings, Inc.
(since April 1999); Assistant Treasurer of Oppenheimer Acquisition Corp. (since
April 1999); Assistant Secretary of Centennial Asset Management Corporation
(since April 1999); formerly Principal and Chief Operating Officer, Bankers
Trust Company - Mutual Fund Services Division (March 1995 - March 1999); Vice
President and Chief Financial Officer of CS First Boston Investment Management
Corp. (September 1991 - March 1995); and Vice President and Accounting Manager,
Merrill Lynch Asset Management (November 1987 - September 1991).
Robert G. Zack, Assistant Secretary, Age: 51
Two World Trade Center, New York, New York 10048-0203
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of Shareholder Services, Inc. (since
May 1985), and Shareholder Financial Services, Inc. (since November 1989);
Assistant Secretary of OppenheimerFunds International Ltd. and Oppenheimer
Millennium Funds plc (since October 1997); an officer of other Oppenheimer
funds.
O Remuneration of Trustees. The officers of the Trust and certain Trustees of
the Trust (Ms. Macaskill and Mr. Swain) who are affiliated with the Manager
receive no salary or fee from the Trust. The remaining Trustees of the Trust
received the compensation shown below. The compensation from the Trust was paid
during its fiscal year ended June 30, 1999. The compensation from all of the
Denver-based Oppenheimer funds includes the Trust and is compensation received
as a trustee, director, managing general partner or member of a committee of the
Board during the calendar year 1998.
<PAGE>
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Aggregate Total Compensation
Trustee's Name Compensation from all Denver-Based
and Other Positions from Trust Oppenheimer Funds1
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Robert G. Avis $1,925 $67,998
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William A. Baker $1,953 $69,998
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Jon S. Fossel $1,911 $67,496
Review Committee Member
------------------------------------------------
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Sam Freedman $2,094 $73,998
Review Committee Member
------------------------------------------------
-----------------------------------------------------------------------------
Raymond J. Kalinowski $2,094 $73,998
Audit Committee Member
------------------------------------------------
-----------------------------------------------------------------------------
C. Howard Kast $2,180 $76,998
Audit and Review
Committee Chairman
-----------------------------------------------------------------------------
------------------------------------------------
Robert M. Kirchner $1,925 $67,998
Audit Committee Member
------------------------------------------------
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Ned M. Steel $1,925 $67,998
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1. For the 1998 calendar year.
[_] Deferred Compensation Plan for Trustees. The Trustees have adopted
a Deferred Compensation Plan for disinterested Trustees that enables them to
elect to defer receipt of all or a portion of the annual fees they are entitled
to receive from the Trust. Under the plan, the compensation deferred by a
Trustee is periodically adjusted as though an equivalent amount had been
invested in shares of one or more Oppenheimer funds selected by the Trustee. The
amount paid to the Trustee under this plan will be determined based upon the
performance of the selected funds.
Deferral of fees of the Trustees under this plan will not materially
affect the Trust's assets, liabilities or net income per share. This plan will
not obligate the Trust to retain the services of any Trustee or to pay any
particular level of compensation to any Trustee. Pursuant to an Order issued by
the Securities and Exchange Commission, the Trust may invest in the funds
selected by any Trustee under this plan without shareholder approval for the
limited purpose of determining the value of the Trustees' deferred fee accounts.
|X| Major Shareholders. As of October 21, 1999 the only person who owned
of record or was known by the Trust to own beneficially 5% or more of the
Trust's outstanding retail shares was A.G. Edwards & Sons, Inc. ("Edwards"), 1
North Jefferson Avenue, St. Louis, Missouri 63103, which owned 1,239,936,715.400
shares of the Trust which was 95.0% of the outstanding shares of the Trust on
that date, for accounts of its customers none of whom individually owned more
than 5% of the outstanding shares.
The Manager. The Manager is wholly-owned by OppenheimerFunds, Inc., which is a
wholly-owned subsidiary of Oppenheimer Acquisition Corp., a holding company
controlled by Massachusetts Mutual Life Insurance Company.
The portfolio managers of the Trust are principally responsible for the
day-to-day management of the Trust's investment portfolio. Other members of the
Manager's fixed-income portfolio department, particularly security analysts,
traders and other portfolio managers, have broad experience with fixed-income
securities. They provide the Trust's portfolio managers with research and
support in managing the Trust's investments.
|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Trust under an investment advisory
agreement between the Manager and the Trust. The Manager selects securities for
the Trust's portfolio and handles its day-to-day business. The agreement
requires the Manager, at its expense, to provide the Trust with adequate office
space, facilities and equipment. It also requires the Manager to provide and
supervise the activities of all administrative and clerical personnel required
to provide effective administration for the Trust. Those responsibilities
include the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and composition of
proxy materials and registration statements for continuous public sale of shares
of the Trust.
Expenses not expressly assumed by the Manager under the investment
advisory agreement are paid by the Trust. The investment advisory agreement
lists examples of expenses paid by the Trust. The major categories relate to
interest, taxes, fees to unaffiliated Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain printing
and registration costs and non-recurring expenses, including litigation costs.
The management fees paid by the Trust to the Manager are calculated at the rates
described in the Prospectus.
- --------------------------------------------------------------------------------
Fiscal Year Management Fee Paid to Centennial Asset Management Corporation
ending 6/30
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1997 $4,743,430
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1998 $5,092,383
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1999 $5,601,294
- --------------------------------------------------------------------------------
Under the investment advisory agreement, the Manager has agreed to
reimburse the Trust to the extent that the Trust's total expenses (including the
management fee but excluding interest, taxes, brokerage commissions, and
extraordinary expenses such as litigation costs) exceed in any fiscal year the
lesser of: (i) 1.5% of average annual net assets of the Trust up to $30 million
plus 1% of the average annual net assets in excess of $30 million or; (ii) 25%
of the total annual investment income of the Trust.
The investment advisory agreement provides that the Manager shall not be
liable for any loss sustained by reason of the adoption of an investment policy
or the purchase, sale or retention of any security on its recommendation,
whether or not such recommendation shall have been based upon its own
investigation and research or upon investigation and research made by any other
individual, firm or corporation, if such recommendation shall have been made and
such other individual, firm or corporation shall have been selected with due
care and in good faith, provided that nothing in the agreement shall be
construed to protect the Manager against any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of its reckless disregard of its
obligations and duties under the agreement.
|X| The Distributor. Under its General Distributor's Agreement with the
Trust, Centennial Asset Management Corporation acts as the Trust's principal
underwriter and Distributor in the continuous public offering of the Trust's
shares. The Distributor is not obligated to sell a specific number of shares.
The Distributor bears the expenses normally attributable to sales, including
advertising and the cost of printing and mailing prospectuses, other than those
furnished to existing shareholders.
Portfolio Transactions. Portfolio decisions are based upon recommendations and
judgment of the Manager subject to the overall authority of the Board of
Trustees. Most purchases made by the Trust are principal transactions at net
prices, so the Trust incurs little or no brokerage costs. The Trust deals
directly with the selling or purchasing principal or market maker without
incurring charges for the services of a broker on its behalf unless the Manager
determines that a better price or execution may be obtained by using the
services of a broker. Purchases of portfolio securities from underwriters
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers include a spread between the bid and asked prices.
The Trust seeks to obtain prompt execution of orders at the most favorable
net price. If broker/dealers are used for portfolio transactions, transactions
may be directed to broker/dealers for their execution and research services. The
research services provided by a particular broker may be useful only to one or
more of the advisory accounts of the Manager and its affiliates. Investment
research received for the commissions of those other accounts may be useful both
to the Trust and one or more of such other accounts. Investment research
services may be supplied to the Manager by a third party at the instance of a
broker through which trades are placed. It may include information and analyses
on particular companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio evaluations,
information systems, computer hardware and similar products and services. If a
research service also assists the Manager in a non-research capacity (such as
bookkeeping or other administrative functions), then only the percentage or
component that provides assistance to the Manager in the investment
decision-making process may be paid in commission dollars.
The research services provided by brokers broaden the scope and supplement
the research activities of the Manager. That research provides additional views
and comparisons for consideration, and helps the Manager obtain market
information for the valuation of securities held in the Trust's portfolio or
being considered for purchase.
Subject to applicable rules covering the Manager's activities in this
area, sales of shares of the Trust and/or the other investment companies managed
by the Manager or distributed by the Distributor may also be considered as a
factor in the direction of transactions to dealers. That must be done in
conformity with the price, execution and other considerations and practices
discussed above. Those other investment companies may also give similar
consideration relating to the sale of the Trust's shares. No portfolio
transactions will be handled by any securities dealer affiliated with the
Manager.
The Trust's policy of investing in short-term debt securities with
maturities of less than one year results in high portfolio turnover and may
increase the Trust's transaction costs. However, since brokerage commissions, if
any, are small, high turnover does not have an appreciable adverse effect upon
the income of the Trust.
Service Plan
The Trust has adopted a Service Plan for the shares. The plan has been approved
by a vote of the Board of Trustees, including a majority of the Independent
Trustees2, cast in person at a meeting called for the purpose of voting on that
plan.
Under the plan, the Manager and the Distributor may make payments to
affiliates and, in their sole discretion, from time to time, may use their own
resources (at no direct cost to the Trust) to make payments to brokers, dealers
or other financial institutions for distribution and administrative services
they perform. The Manager may use its profits from the advisory fee it receives
from the Trust. In their sole discretion, the Distributor and the Manager may
increase or decrease the amount of payments they make from their own resources
to plan recipients.
Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Trust's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose of
voting on continuing the plan. A plan may be terminated at any time by the vote
of a majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the outstanding shares
of the Trust.
The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the amount of
payments to be made under a plan must be approved by shareholders of the class
affected by the amendment. The approval must be by a "majority" (as defined in
the Investment Company Act) of the shares.
2. In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Trustees" in this Statement of Additional Information refers to
those Trustees who are not "interested persons" of the Trust (or its parent
corporation) and who do not have any direct or indirect financial interest in
the operation of any agreement under the plan.
While the plan is in effect, the Treasurer of the Trust shall provide
separate written reports on the plan to the Board of Trustees at least quarterly
for its review. The Reports shall detail the amount of all payments made under
the plan and the purpose for which the payments were made. Those reports are
subject to the review and approval of the Independent Trustees.
The plan states that while it is in effect, the selection and nomination
of those Trustees of the Trust who are not "interested persons" of the Trust is
committed to the discretion of the Independent Trustees. This does not prevent
the involvement of others in the selection and nomination process as long as the
final decision as to selection or nomination is approved by a majority of the
Independent Trustees.
Under the plan, no payment will be made to any recipient in any quarter in
which the aggregate net asset value of all Trust shares held by the recipient
for itself and its customers does not exceed a minimum amount, if any, that may
be set from time to time by a majority of the Independent Trustees. The Board of
Trustees has set no minimum amount of assets to qualify for payments under the
plan.
|X| Service Plan Fees. Under the service plan, the Distributor currently
uses the fees it receives from the Trust to pay brokers, dealers and other
financial institutions (they are referred to as "recipients") for personal
services and account maintenance services they provide for their customers who
hold shares. The services include, among others, answering customer inquiries
about the Trust, assisting in establishing and maintaining accounts in the
Trust, making the Trust's investment plans available and providing other
services at the request of the Trust or the Distributor. The service plan
permits reimbursements to the Distributor at a rate of up to 0.20% of average
annual net assets of the shares. While the plan permits the Board to authorize
payments to the Distributor to reimburse itself for services under the plan, the
Board has not yet done so. The Distributor makes payments to plan recipients
quarterly at an annual rate not to exceed 0.20% of the average annual net assets
consisting of shares held in the accounts of the recipients or their customers.
For the fiscal year ended June 30, 1999 payments under the plan totaled
$2,485,301, all of which was paid by the Distributor to recipients. That
included $84,980 paid to an affiliate of the Distributor's parent company. Any
unreimbursed expenses the Distributor incurs with respect to the shares in any
fiscal year cannot be recovered in subsequent years. The Distributor may not use
payments received under the plan to pay any of its interest expenses, carrying
charges, or other financial costs, or allocation of overhead.
Performance of the Trust
Explanation of Performance Terminology. The Trust uses a variety of terms to
illustrate its performance. These terms include "yield," "compounded effective
yield" and "average annual total return." An explanation of how yields and total
returns are calculated is set forth below. The charts below show the Trust's
performance as of the Trust's most recent fiscal year end. You can obtain
current performance information by calling the Trust's Transfer Agent at
1-800-525-9310.
The Trust's illustrations of its performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those rules
describe the types of performance data that may be used and how it is to be
calculated. If the Trust shows total returns in addition to its yields, the
returns must be for the 1-, 5- and 10-year periods ending as of the most recent
calendar quarter prior to the publication of the advertisement (or its
submission for publication).
Use of standardized performance calculations enables an investor to
compare the Trust's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using the
Trust's performance information as a basis for comparisons with other
investments:
|_| Yields and total returns measure the performance of a hypothetical
account in the Trust over various periods and do not show the performance
of each shareholder's account. Your account's performance will vary from
the model performance data if your dividends are received in cash, or you
buy or sell shares during the period, or you bought your shares at a
different time than the shares used in the model.
|_| An investment in the Trust is not insured by the FDIC or any other
government agency.
|_| The Trust's yield is not fixed or guaranteed and will fluctuate.
|_| Yields and total returns for any given past period represent historical
performance information and are not, and should not be considered, a
prediction of future yields or returns.
|_| Yields. The Trust's current yield is calculated for a seven-day
period of time as follows. First, a base period return is calculated for the
seven-day period by determining the net change in the value of a hypothetical
pre-existing account having one share at the beginning of the seven-day period.
The change includes dividends declared on the original share and dividends
declared on any shares purchased with dividends on that share, but such
dividends are adjusted to exclude any realized or unrealized capital gains or
losses affecting the dividends declared. Next, the base period return is
multiplied by 365/7 to obtain the current yield to the nearest hundredth of one
percent.
The compounded effective yield for a seven-day period is calculated by (1)
adding 1 to the base period return (obtained as described above), (2)
raising the sum to a power equal to 365 divided by 7, and (3) subtracting
1 from the result.
The yield as calculated above may vary for accounts less than
approximately $100 in value due to the effect of rounding off each daily
dividend to the nearest full cent. The calculation of yield under either
procedure described above does not take into consideration any realized or
unrealized gains or losses on the Trust's portfolio securities which may affect
dividends. Therefore, the return on dividends declared during a period may not
be the same on an annualized basis as the yield for that period.
[_] Total Return Information. There are different types of "total
returns" to measure the Trust's performance. Total return is the change in value
of a hypothetical investment in the Trust over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares
and that the investment is redeemed at the end of the period. The cumulative
total return measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate of return for
each year in a period that would produce the cumulative total return over the
entire period. However, average annual total returns do not show actual
year-by-year performance. The Trust uses standardized calculations for its total
returns as prescribed by the SEC. The methodology is discussed below.
|_| Average Annual Total Return. The "average annual total return" of
each class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below) held
for a number of years ("n") to achieve an Ending Redeemable Value ("ERV" in the
formula) of that investment, according to the following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
- --------------------------------------------------------------------------------
|_| Cumulative Total Return. The "cumulative total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as average
annual total return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Yield Compounded Average Annual Total Returns (at 6/30/99)
(7 days ended Effective Yield
6/30/99) (7 days ended
6/30/99)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1-Year 5 Years 10 Years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4.17% 4.26% 4.47% 4.80% 4.92%
- --------------------------------------------------------------------------------
|X| Other Performance Comparisons. Yield information may be useful to
investors in reviewing the Trust's performance. The Trust may make comparisons
between its yield and that of other investments, by citing various indices such
as The Bank Rate Monitor National Index (provided by Bank Rate MonitorJ) which
measures the average rate paid on bank money market accounts, NOW accounts and
certificates of deposits by the 100 largest banks and thrifts in the top ten
metro areas. When comparing the Trust's yield with that of other investments,
investors should understand that certain other investment alternatives such as
certificates of deposit, U.S. government securities, money market instruments or
bank accounts may provide fixed yields and may be insured or guaranteed.
From time to time, the Trust may include in its advertisements and sales
literature performance information about the Trust cited in other newspapers and
periodicals, such as The New York Times, which may include performance
quotations from other sources.
From time to time, the Trust's Manager may publish rankings or ratings of
the Manager (or the Transfer Agent) or the investor services provided by them.
Those ratings or rankings of investor/shareholder services by third parties may
compare the services provided to those of other mutual fund families selected by
the rating or ranking services. They may be based on the opinions of the rating
or ranking service itself, based on its research or judgment, or based on
surveys of investors, brokers, shareholders or others.
A B O U T Y O U R A C C O U N T
How to Buy Shares
Determination of Net Asset Value Per Share. The net asset value per share of the
Trust is determined twice each day that the New York Stock Exchange ("Exchange")
is open, at 12:00 Noon and at 4:00 P.M, on each day that the Exchange is open,
by dividing the value of the Trust's net assets by the total number of shares
outstanding. All references to time in this Statement of Additional Information
mean New York time. The Exchange's most recent annual announcement (which is
subject to change) states that it will close on New Year's Day, Martin Luther
King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. It may also close on other days.
The Trust's Board of Trustees has adopted the amortized cost method to
value the Trust's portfolio securities. Under the amortized cost method, a
security is valued initially at its cost and its valuation assumes a constant
amortization of any premium or accretion of any discount, regardless of the
impact of fluctuating interest rates on the market value of the security. This
method does not take into consideration any unrealized capital gains or losses
on securities. While this method provides certainty in valuing securities, in
certain periods the value of a security determined by amortized cost may be
higher or lower than the price the Trust would receive if it sold the security.
The Trust's Board of Trustees has established procedures reasonably
designed to stabilize the Trust's net asset value at $1.00 per share. Those
procedures include a review of the valuations of the Trust's portfolio holdings
by the Board of Trustees, at intervals it deems appropriate, to determine
whether the Trust's net asset value calculated by using available market
quotations deviates from $1.00 per share based on amortized cost.
The Board of Trustees will examine the extent of any deviation between the
Trust's net asset value based upon available market quotations and amortized
cost. If the Trust's net asset value were to deviate from $1.00 by more than
0.5%, Rule 2a-7 requires the Board of Trustees to consider what action, if any,
should be taken. If they find that the extent of the deviation may cause a
material dilution or other unfair effects on shareholders, the Board of Trustees
will take whatever steps it considers appropriate to eliminate or reduce the
dilution, including, among others, withholding or reducing dividends, paying
dividends from capital or capital gains, selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten the average maturity
of the portfolio, or calculating net asset value per share by using available
market quotations.
During periods of declining interest rates, the daily yield on shares of
the Trust may tend to be lower (and net investment income and dividends higher)
than those of a fund holding the identical investments as the Trust but which
used a method of portfolio valuation based on market prices or estimates of
market prices. During periods of rising interest rates, the daily yield of the
Trust would tend to be higher and its aggregate value lower than that of an
identical portfolio using market price valuation.
How to Sell Shares
The information below supplements the terms and conditions for redeeming shares
set forth in the Prospectus.
Checkwriting. When a check is presented to the Bank for clearance, the Bank will
ask the Trust to redeem a sufficient number of full and fractional shares in the
shareholder's account to cover the amount of the check. This enables the
shareholder to continue receiving dividends on those shares until the check is
presented to the Trust. Checks may not be presented for payment at the offices
of the Bank or the Trust's Custodian. This limitation does not affect the use of
checks for the payment of bills or to obtain cash at other banks. The Trust
reserves the right to amend, suspend or discontinue offering checkwriting
privileges at any time without prior notice.
In choosing to take advantage of the Checkwriting privilege, by signing the
Account Application or by completing a Checkwriting card, each individual who
signs:
(1) for individual accounts, represents that they are the registered owner(s) of
the shares of the Trust in that account;
(2) for accounts for corporations, partnerships, trusts and other entities,
represents that they are an officer, general partner, trustee or other fiduciary
or agent, as applicable, duly authorized to act on behalf of the registered
owner(s);
(3) authorizes the Trust, its Transfer Agent and any bank through which the
Trust's drafts (checks) are payable to pay all checks drawn on the Trust account
of such person(s) and to redeem a sufficient amount of shares from that account
to cover payment of each check;
(4) specifically acknowledges that if they choose to permit checks to be honored
if there is a single signature on checks drawn against joint accounts, or
accounts for corporations, partnerships, trusts or other entities, the signature
of any one signatory on a check will be sufficient to authorize payment of that
check and redemption from the account, even if that account is registered in the
names of more than one person or more than one authorized signature appears on
the Checkwriting card or the Application, as applicable;
(5) understands that the Checkwriting privilege may be terminated or amended at
any time by the Trust and/or the Trust's bank; and
(6) acknowledges and agrees that neither the Trust nor its bank shall incur any
liability for that amendment or termination of checkwriting privileges or for
redeeming shares to pay checks reasonably believed by them to be genuine, or for
returning or not paying checks that have not been accepted for any reason.
Sending Redemption Proceeds by Federal Funds Wire. The Federal Funds wire of
redemptions proceeds may be delayed if the Trust's custodian bank is not open
for business on a day when the Trust would normally authorize the wire to be
made, which is usually the Trust's next regular business day following the
redemption. In those circumstances, the wire will not be transmitted until the
next bank business day on which the Trust is open for business. No distributions
will be paid on the proceeds of redeemed shares awaiting transfer by Federal
Funds wire
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address listed
in "How To Sell Shares" in the Prospectus or on the back cover of this Statement
of Additional Information. The request must
(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is
premature; and
(3) conform to the requirements of the plan and the Trust's other
redemption requirements.
Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Trust held in the name of the plan or its fiduciary may not directly request
redemption of their accounts. The plan administrator or fiduciary must sign the
request.
Distributions from pension and profit sharing plans are subject to special
requirements under the Internal Revenue Code and certain documents (available
from the Transfer Agent) must be completed and submitted to the Transfer Agent
before the distribution may be made. Distributions from retirement plans are
subject to withholding requirements under the Internal Revenue Code, and IRS
Form W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified tax
identification number, the Internal Revenue Code requires that tax be withheld
from any distribution even if the shareholder elects not to have tax withheld.
The Trust, the Manager, the Distributor the Sub-Distributor, and the Transfer
Agent assume no responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for any tax
penalties assessed in connection with a distribution.
How to Exchange Shares
As stated in the Prospectus, direct shareholders can exchange shares of the
Trust for Class A shares of any of the following eligible funds:
Oppenheimer Main Street California
Oppenheimer Bond Fund Municipal Fund
Oppenheimer Main Street Growth &
Oppenheimer Capital Appreciation Fund Income Fund
Oppenheimer Capital Preservation Oppenheimer Main Street Small Cap Fund
Oppenheimer California Municipal Fund Oppenheimer MidCap Fund
Oppenheimer Champion Income Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Convertible Securities Fund Oppenheimer Municipal Bond Fund
Oppenheimer Developing Markets Fund Oppenheimer New York Municipal Fund
Oppenheimer Disciplined Allocation Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Disciplined Value Fund Oppenheimer Pennsylvania Municipal
Fund
Oppenheimer Discovery Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Enterprise Fund Inc.
Oppenheimer Quest Global Value Fund,
Oppenheimer Capital Income Fund Inc.
Oppenheimer Europe Fund Oppenheimer Quest Opportunity Value
Fund
Oppenheimer Florida Municipal Fund Oppenheimer Quest Small Cap Value Fund
Oppenheimer GlobalFund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Global Growth & Income Fund Oppenheimer Real Asset Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Strategic Income Fund
Oppenheimer Growth Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer High Yield Fund Oppenheimer Trinity Core Fund
Oppenheimer Insured Municipal Fund Oppenheimer Trinity Growth Fund
Oppenheimer Intermediate Municipal Fund Oppenheimer Trinity Value Fund
Oppenheimer International Bond Fund Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund Oppenheimer World Bond Fund
Oppenheimer International Small
Company Fund Limited-Term New York Municipal Fund
Oppenheimer Large Cap Growth Fund Rochester Fund Municipals
Oppenheimer Limited-Term Government Fund
and the following money
market funds:
Centennial New York Tax Exempt Trust
Centennial America Fund, L. P. Centennial Tax Exempt Trust
Centennial California Tax Exempt Trust Oppenheimer Cash Reserves
Centennial Government Trust Oppenheimer Money Market Fund, Inc.
Centennial Money Market Trust
Shares of the Trust purchased without a sales charge may be exchanged for
shares of an eligible fund offered with a sales charge upon payment of the sales
charge. Shares of the Trust acquired by reinvestment of dividends or
distributions from the Trust or any of the other eligible funds (other than
Oppenheimer Cash Reserves) or from any unit investment trust for which
reinvestment arrangements have been made with the Distributor may be exchanged
at net asset value for shares of any of the eligible funds.
|_| Limits on Multiple Exchange Orders. The Trust reserves the right to
reject telephone or written exchange requests submitted in bulk by anyone on
behalf of more than one account. The Trust may accept requests for exchanges of
up to 50 accounts per day from representatives of authorized dealers that
qualify for this privilege.
|_| Telephone Exchange Requests. When exchanging shares by telephone, a
direct shareholder must have an existing account in the fund to which the
exchange is to be made. Otherwise, the investor must obtain a prospectus of that
fund before the exchange request may be submitted. If all telephone lines are
busy (which might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
|_| Processing Exchange Requests. Shares to be exchanged are redeemed on
the regular business day the Transfer Agent receives an exchange request in
proper form (the "Redemption Date"). Normally, shares of the fund to be acquired
are purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The Trust
reserves the right, in its discretion, to refuse any exchange request that may
disadvantage it (for example, if the receipt of multiple exchange requests from
a dealer might require the disposition of portfolio securities at a time or at a
price that might be disadvantageous to the Trust).
In connection with any exchange request, the number of shares exchanged
may be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered by a share
certificate that is not tendered with the request. In those cases, only the
shares available for exchange without restriction will be exchanged.
The different eligible funds available for exchange have different
investment objectives, policies and risks. A shareholder should assure that the
fund selected is appropriate for his or her investment and should be aware of
the tax consequences of an exchange. For Federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. The Trust, the Distributor, the Sub-Distributor,
and the Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other investment
transaction.
The Trust may amend, suspend or terminate the exchange privilege at any
time. Although, the Trust may impose these changes at any time, it will provide
you with notice of those changes whenever it is required to do so by applicable
law. It may be required to provide 60 days notice prior to materially amending
or terminating the exchange privilege. That 60-day notice is not required in
extraordinary circumstances.
Dividends and Taxes
Tax Status of the Trust's Dividends and Distributions. The federal tax treatment
of the Trust's dividends and capital gains distributions is explained in the
Prospectus under the caption "Distributions and Taxes." Under the Internal
Revenue Code, by December 31 each year, the Trust must distribute 98% of its
taxable investment income earned from January 1 through December 31 of that year
and 98% of its capital gains realized in the period from November 1 of the prior
year through October 31 of the current year. It if does not, the Trust must pay
an excise tax on the amounts not distributed. It is presently anticipated that
the Trust will meet those requirements. However, the Board of Trustees and the
Manager might determine in a particular year that it would be in the best
interest of shareholders for the Trust not to make distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would reduce
the amount of income or capital gains available for distribution to
shareholders. The Trust's dividends will not be eligible for the
dividends-received deduction for corporations.
If the Trust qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for federal income taxes on amounts
paid by it as distributions. That qualification enables the Trust to "pass
through" its income and realized capital gains to shareholders without having to
pay tax on them. The Trust qualified as a regulated investment company in its
last fiscal year and intends to qualify in future years, but reserves the right
not to qualify. The Internal Revenue Code contains a number of complex tests to
determine whether the Trust qualifies. The Trust might not meet those tests in a
particular year. If it does not qualify, the Trust will be treated for tax
purposes as an ordinary corporation and will receive no tax deduction for
payments of distributions made to shareholders.
Dividends, distributions and the proceeds of the redemption of Trust
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of the Trust as promptly as
possible after the return of such checks to the Transfer Agent, in order to
enable the investor to earn a return on otherwise idle funds.
Dividend Reinvestment in Another Trust. Direct shareholders of the Trust may
elect to reinvest all dividends and/or capital gains distributions in Class A
shares of any eligible fund listed above. To elect this option, the shareholder
must notify the Transfer Agent in writing and must have an existing account in
the fund selected for reinvestment. Otherwise, the shareholder first must obtain
a prospectus for that fund and an application from the Distributor to establish
an account. The investment will be made at the close of business on the payable
date of the dividend or distribution.
Additional Information About the Trust
The Distributor. The Trust's shares are sold through dealers, brokers and other
financial institutions that have a sales agreement with the Sub-Distributor. The
Distributor and the Sub-Distributor also distribute shares of the other funds
managed by the Manager or an affiliate.
The Transfer Agent. Shareholder Services, Inc. the Trust's Transfer Agent, is
responsible for maintaining the Trust's shareholder registry and shareholder
accounting records, and for paying dividends and distributions to shareholders
of the Trust. It also handles shareholder servicing and administrative
functions. It is paid on a "at-cost" basis.
The Custodian. Citibank, N.A. is the Custodian of the Trust's assets. The
Custodian's responsibilities include safeguarding and controlling the Trust's
portfolio securities and handling the delivery of such securities to and from
the Trust. It will be the practice of the Trust to deal with the Custodian in a
manner uninfluenced by any banking relationship the Custodian may have with the
Manager and its affiliates. The Trust's cash balances with the Custodian in
excess of $100,000 are not protected by federal deposit insurance. Those
uninsured balances at times may be substantial.
Independent Auditors. Deloitte & Touche LLP are the independent auditors of the
Trust. They audit the Trust's financial statements and perform other related
audit services. They also act as auditors for the Manager and OFI and for
certain other funds advised by the Manager and its affiliates.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Centennial Government Trust
The Board of Trustees and Shareholders of Centennial Government Trust:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Centennial Government Trust as of June 30,
1999, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended June 30, 1999 and 1998,
and the financial highlights for the period July 1, 1994 to June 30, 1999. These
financial statements and financial highlights are the responsibility of the
Trust'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, 1999, by correspondence with the custodian and brokers; where replies 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Centennial
Government Trust as of June 30, 1999, the results of its operations, the changes
in its net assets, and the financial highlights for the respective stated
periods, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
July 22, 1999
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999
Centennial Government Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
------------ ------------
<S> <C> <C>
REPURCHASE AGREEMENTS--8.6%
Repurchase agreement with PaineWebber, Inc., 4.80%, dated 6/30/99, to be
repurchased at $104,014,098 on 7/1/99, collateralized by Federal National
Mortgage Assn., 6%-6.50%, 7/1/06-5/1/29, with a value of $79,757,574 and
Federal Home Loan Mortgage Corp., 7%, 6/1/29, with a value of $27,060,081........... $104,000,000 $104,000,000
------------
U.S. GOVERNMENT AGENCIES--92.1%
Federal Farm Credit Bank:
4.861%, 9/1/99(1) .................................................................. 10,000,000 9,999,501
5.55%, 7/1/99 ...................................................................... 4,000,000 4,000,000
Federal Home Loan Bank:
4.83%, 7/1/99 ...................................................................... 10,600,000 10,600,000
4.85%, 7/14/99 ..................................................................... 10,000,000 9,982,486
4.86%, 1/14/00 ..................................................................... 19,875,000 19,864,042
4.87%, 7/23/99 ..................................................................... 10,000,000 9,970,239
4.90%, 1/14/00 ..................................................................... 16,480,000 16,477,882
4.91%, 7/13/99(1) .................................................................. 25,000,000 25,000,691
4.935%, 1/19/00 .................................................................... 5,875,000 5,875,080
4.94%, 10/26/99 .................................................................... 25,000,000 25,000,000
5%, 7/23/99-1/11/00 ................................................................ 60,780,000 60,720,823
5.03%, 10/29/99 .................................................................... 9,000,000 9,000,000
5.327%, 8/12/99(1) ................................................................. 15,000,000 14,998,962
5.349%, 7/7/99(1) .................................................................. 15,000,000 14,995,486
5.379%, 7/14/99(1) ................................................................. 25,000,000 24,996,066
5.545%, 8/18/99 .................................................................... 10,000,000 10,007,783
Federal Home Loan Mortgage Corp.:
4.69%, 7/19/99-8/31/99 ............................................................. 41,391,000 41,209,309
4.70%, 8/6/99-9/8/99 ............................................................... 66,670,000 66,246,109
4.713%, 7/13/99 .................................................................... 30,500,000 30,451,273
4.72%, 7/15/99 ..................................................................... 10,000,000 9,981,644
4.73%, 8/5/99-10/8/99 .............................................................. 63,954,000 63,628,206
4.74%, 8/27/99 ..................................................................... 15,000,000 14,887,425
4.75%, 7/2/99-9/24/99 .............................................................. 149,304,000 149,053,381
4.78%, 8/17/99(1) .................................................................. 10,000,000 9,999,114
4.80%, 8/18/99-8/19/99 ............................................................. 25,000,000 24,838,667
4.825%, 7/19/99(1) ................................................................. 10,000,000 9,992,962
4.87%, 7/29/99 ..................................................................... 20,000,000 19,924,244
4.88%, 9/2/99 ...................................................................... 15,000,000 14,871,900
4.90%, 9/10/99 ..................................................................... 15,000,000 14,855,042
6.13%, 8/19/99 ..................................................................... 4,025,000 4,030,870
</TABLE>
3
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1999
Centennial Government Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- --------------
<S> <C> <C>
U.S. GOVERNMENT AGENCIES (Continued)
Federal National Mortgage Assn.:
4.70%, 7/22/99-7/26/99 ............................................................. $45,000,000 $ 44,868,617
4.73%, 7/16/99-9/17/99 ............................................................. 25,372,000 25,236,142
4.758%, 7/7/99 ..................................................................... 10,000,000 9,992,070
4.766%, 7/30/99(1) ................................................................. 15,000,000 14,999,064
4.774%, 8/5/99(1) .................................................................. 20,000,000 19,989,502
4.80%, 8/19/99-8/24/99 ............................................................. 45,000,000 44,685,334
4.81%, 8/30/99 ..................................................................... 15,000,000 14,879,750
4.82%, 7/21/99 ..................................................................... 10,000,000 9,973,222
4.87%, 7/19/99 ..................................................................... 15,000,000 14,963,475
4.90%, 9/1/99 ...................................................................... 17,496,000 17,348,353
5.52%, 8/9/99 ...................................................................... 17,000,000 17,010,056
Overseas Private Investment Corp.:
5.096%, 7/20/99(1)(2) .............................................................. 4,000,000 4,018,165
5.121%, 7/20/99(1)(2) .............................................................. 3,088,693 3,120,115
Student Loan Marketing Assn.:
4.91%, 7/20/99(1) .................................................................. 15,000,000 15,000,000
4.93%, 2/8/00 ...................................................................... 15,000,000 14,999,416
4.93%, 8/5/99(1) ................................................................... 15,000,000 14,998,894
4.94%, 7/17/99(1) .................................................................. 30,000,000 29,992,983
5.109%, 8/2/99(1) .................................................................. 10,000,000 9,997,247
Student Loan Marketing Assn., guaranteeing commercial paper of
Nebraska Higher Education Loan Program, 4.84%, 7/12/99(3)........................... 46,600,000 46,531,084
--------------
Total U.S. Government Agencies......................................................... 1,118,062,676
--------------
Total Investments, at Value............................................................ 100.7% 1,222,062,676
--------------
Liabilities in Excess of Other Assets.................................................. (0.7) (8,941,368)
----------- --------------
Net Assets............................................................................. 100.0% $1,213,121,308
=========== ==============
</TABLE>
1. Floating or variable rate obligation. The interest rate, which is based on
specific, or an index of, market interest rates, is subject to change
periodically and is the effective rate on June 30, 1999. This instrument may
also have a demand feature which allows, on up to 30 days' notice, the recovery
of principal at any time, or at specified intervals not exceeding one year.
Maturity date shown represents effective maturity based on variable rate and, if
applicable, demand feature.
2. Represents a restricted security which is considered illiquid, by virtue of
the absence of a readily available market or because of legal or contractual
restrictions on resale. Such securities amount to $7,138,280, or 0.59% of the
Trust's net assets. The Trust may not invest more than 10% of its net assets
(determined at the time of purchase) in illiquid securities.
3. Security issued in an exempt transaction without registration
under the Securities Act of 1933. Such securities amount to $46,531,084, or
3.84% of the Trust's net assets, and have been determined to be liquid pursuant
to guidelines adopted by the Board of Trustees.
4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES June 30, 1999
Centennial Government Trust
<TABLE>
<S> <C>
ASSETS
Investments, at value--see accompanying statement ................................................ $1,222,062,676
Cash ............................................................................................. 1,121,707
Receivables and other assets:
Interest ....................................................................................... 6,299,173
Shares of beneficial interest sold.............................................................. 6,118,343
Other .......................................................................................... 43,922
--------------
Total assets.................................................................................. 1,235,645,821
--------------
LIABILITIES
Payables and other liabilities:
Shares of beneficial interest redeemed ......................................................... 20,354,863
Dividends ...................................................................................... 1,818,848
Service plan fees .............................................................................. 105,572
Transfer and shareholder servicing agent fees................................................... 89,336
Shareholder reports ............................................................................ 87,617
Custodian fees ................................................................................. 6,011
Trustees' compensation ......................................................................... 1,081
Other .......................................................................................... 61,185
--------------
Total liabilities............................................................................. 22,524,513
--------------
NET ASSETS ....................................................................................... $1,213,121,308
==============
COMPOSITION OF NET ASSETS
Paid-in capital .................................................................................. $1,213,683,060
Accumulated net realized loss on investment transactions ......................................... (561,752)
--------------
NET ASSETS--applicable to 1,213,683,060 shares of
beneficial interest outstanding ................................................................ $1,213,121,308
==============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE ................................... $1.00
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended June 30, 1999
Centennial Government Trust
<TABLE>
<S> <C>
INVESTMENT INCOME--Interest ...................................................................... $63,612,544
-----------
EXPENSES
Management fees--Note 3 .......................................................................... 5,601,294
Service plan fees--Note 3 ........................................................................ 2,485,301
Transfer and shareholder servicing agent fees--Note 3 ............................................ 732,187
Registration and filing fees ..................................................................... 132,831
Shareholder reports .............................................................................. 99,326
Custodian fees and expenses ...................................................................... 86,675
Legal, auditing and other professional fees ...................................................... 35,110
Trustees' compensation ........................................................................... 17,932
Insurance expenses ............................................................................... 10,185
Other ............................................................................................ 9,591
-----------
Total expenses ................................................................................. 9,210,432
Less expenses paid indirectly--Note 1 ............................................................ (14,298)
-----------
Net expenses ..................................................................................... 9,196,134
-----------
NET INVESTMENT INCOME ............................................................................ 54,416,410
-----------
NET REALIZED GAIN ON INVESTMENTS ................................................................. 121,184
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................................. $54,537,594
===========
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------
1999 1998
---------------- --------------
<S> <C> <C>
OPERATIONS
Net investment income .................................................... $ 54,416,410 $ 53,897,930
Net realized gain ........................................................ 121,184 59,323
---------------- --------------
Net increase in net assets resulting from operations ..................... 54,537,594 53,957,253
---------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS .............................. (54,416,410) (53,897,930)
---------------- --------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from beneficial interest
transactions--Note 2 .................................................. 80,656,449 104,848,437
---------------- --------------
NET ASSETS
Total increase ........................................................... 80,777,633 104,907,760
Beginning of period ...................................................... 1,132,343,675 1,027,435,915
---------------- --------------
End of period ............................................................ $1,213,121,308 $1,132,343,675
================ ==============
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
FINANCIAL HIGHLIGHTS
Centennial Government Trust
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period ............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations--
net investment income and
net realized gain ............................................ .04 .05 .05 .05 .05
Dividends and distributions to shareholders ..................... (.04) (.05) (.05) (.05) (.05)
------ ------ ------ ------ ------
Net asset value, end of period .................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
TOTAL RETURN(1) ................................................. 4.47% 4.93% 4.75% 4.91% 4.93%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) ......................... $1,213 $1,132 $1,027 $ 942 $ 893
Average net assets (in millions) ................................ $1,245 $1,117 $1,032 $ 962 $ 719
Ratios to average net assets:(2)
Net investment income ........................................... 4.37% 4.82% 4.65% 4.83% 4.81%
Expenses(3) ..................................................... 0.74% 0.75% 0.76% 0.77% 0.80%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Total returns reflect
changes in net investment income only. Total returns are not annualized for
periods less than one full year.
2. Annualized for periods less than one full year.
3. The expense ratio reflects the effect of expenses paid indirectly by the
Trust.
See accompanying Notes to Financial Statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Centennial Government Trust
1. SIGNIFICANT ACCOUNTING POLICIES
Centennial Government Trust (the Trust) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Trust's investment objective is to seek a high level of
current income consistent with the preservation of capital and the maintenance
of liquidity. The Trust's investment advisor is Centennial Asset Management
Corporation (the Manager), a subsidiary of OppenheimerFunds, Inc. (OFI). The
following is a summary of significant accounting policies consistently followed
by the Trust.
Securities Valuation. Portfolio securities are valued on the basis of
amortized cost, which approximates market value.
Repurchase Agreements. The Trust requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is
required to be at least 102% of the resale price at the time of purchase. If
the seller of the agreement defaults and the value of the collateral declines,
or if the seller enters an insolvency proceeding, realization of the value of
the collateral by the Trust may be delayed or limited.
Federal Taxes. The Trust intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, to shareholders. Therefore, no federal
income or excise tax provision is required. As of June 30, 1999, the Trust had
available for federal income tax purposes an unused capital loss carryover of
approximately $550,000, which expires between 2003 and 2005.
Distributions to Shareholders. Distributions to shareholders, which are
determined in accordance with income tax regulations, are recorded on the
ex-dividend date.
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Trust.
Other. Investment transactions are accounted for as of trade date. Realized
gains and losses on investments are determined on an identified cost basis,
which is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Centennial Government Trust
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1999 Year Ended June 30, 1998
-------------------------------- ----------------------------------
Shares Amount Shares Amount
------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
Sold ........................... 3,478,267,909 $ 3,478,267,909 3,253,572,215 $ 3,253,572,215
Dividends and distributions
reinvested ..................... 53,427,071 53,427,071 52,695,140 52,695,140
Redeemed ....................... (3,451,038,531) (3,451,038,531) (3,201,418,918) (3,201,418,918)
-------------- --------------- -------------- ---------------
Net increase ................... 80,656,449 $ 80,656,449 104,848,437 $ 104,848,437
============== =============== ============== ===============
</TABLE>
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Trust which provides for a fee of 0.50% of the first
$250 million of net assets, 0.475% of the next $250 million of net assets, 0.45%
of the next $250 million of net assets, 0.425% of the next $250 million of net
assets, and 0.40% on net assets in excess of $1 billion.
The Manager has agreed to reimburse the Trust if aggregate expenses (with
specified exceptions) exceed the lesser of 1.50% of the first $30 million of
average annual net assets of the Trust, plus 1% of average annual net assets in
excess of $30 million; or 25% of the total annual investment income of the
Trust. Effective January 1, 1999, the following breakpoints were added: 0.375%
on average net assets over $1.25 billion to $1.5 billion and 0.35% on average
net assets over $1.5 billion. The Trust's management fee for the year ended June
30, 1999 was 0.45% of average annual net assets.
Shareholder Services, Inc. (SSI), a subsidiary of OFI, is the transfer and
shareholder servicing agent for the Trust and for other registered investment
companies. SSI's total costs of providing such services are allocated ratably to
these companies.
Under an approved plan of distribution, the Trust may expend up to 0.20% of its
net assets annually to reimburse certain securities dealers and other financial
institutions and organizations for costs incurred in distributing Trust shares.
During the year ended June 30, 1999, the Trust paid $84,980 to a broker/dealer
affiliated with the Manager as reimbursement for distribution-related expenses.
9
<PAGE>
Appendix A
Description of Securities Ratings
Below is a description of the two highest rating categories for Short Term Debt
and Long Term Debt by the "Nationally-Recognized Statistical Rating
Organizations" which the Manager evaluates in purchasing securities on behalf of
the Trust. The ratings descriptions are based on information supplied by the
ratings organizations to subscribers.
Short-Term Debt Ratings.
Moody's Investors Service, Inc.
- --------------------------------------------------------------------------------
The following rating designations for commercial paper (defined by Moody's as
promissory obligations not having original maturity in excess of nine months),
are judged by Moody's to be investment grade, and indicate the relative
repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally be evidenced by
the following characteristics: (a) leveling market positions in well-established
industries; (b) high rates of return on funds employed; (c) conservative
capitalization structures with moderate reliance on debt and ample asset
protection; (d) broad margins in earning coverage of fixed financial charges and
high internal cash generation; and (e) well established access to a range of
financial markets and assured sources of alternate liquidity.
Prime-2: Strong capacity for repayment. This will normally be evidenced by many
of the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Moody's ratings for state and municipal short-term obligations are designated
"Moody's Investment Grade" ("MIG"). Short-term notes which have demand features
may also be designated as "VMIG". These rating categories are as follows:
MIG1/VMIG1: Best quality. There is present strong protection by established cash
flows, superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample although not so large
as in the preceding group.
<PAGE>
Standard & Poor's Ratings Services
- --------------------------------------------------------------------------------
The following ratings by Standard & Poor's for commercial paper (defined by S&P
as debt having an original maturity of no more than 365 days) assess the
likelihood of payment:
A-1: Strong capacity for timely payment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
A-2: Satisfactory capacity for timely payment. However, the relative degree of
safety is not as high as for issues designated "A-1".
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have a demand or
double feature as part of their provisions. The first rating addresses the
likelihood of repayment of principal and interest as due, and the second rating
addresses only the demand feature. With short-term demand debt, S&P's note
rating symbols are used with the commercial paper symbols (for example,
"SP-1+/A-1+").
Fitch IBCA, Inc.
- --------------------------------------------------------------------------------
Fitch assigns the following short-term ratings to debt obligations that are
payable on demand or have original maturities of generally up to three years,
including commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of assurance for
timely payment.
F-1: Very strong credit quality; assurance of timely payment is only slightly
less in degree than issues rated "F-1+". F-2: Good credit quality; satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as for issues assigned "F-1+" or "F-1" ratings.
Duff & Phelps, Inc.
- --------------------------------------------------------------------------------
The following ratings are for commercial paper (defined by Duff & Phelps as
obligations with maturities, when issued, of under one year), asset-backed
commercial paper, and certificates of deposit (the ratings cover all obligations
of the institution with maturities, when issued, of under one year, including
bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
Duff 2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
Thomson BankWatch, Inc.
- --------------------------------------------------------------------------------
The following short-term ratings apply to commercial paper, certificates of
deposit, unsecured notes, and other securities having a maturity of one year or
less.
TBW-1: The highest category; indicates the degree of safety regarding timely
repayment of principal and interest is very strong.
TBW-2: The second highest rating category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".
Long Term Debt Ratings
These ratings are relevant for securities purchased by the Trust with a
remaining maturity of 397 days or less, or for rating issuers of short-term
obligations.
Moody's Investors Service, Inc.
- --------------------------------------------------------------------------------
Bonds (including municipal bonds) are rated as follows:
Aaa: Judged to be the best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin, and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
positions of such issues.
Aa: Judged to be of high quality by all standards. Together with the "Aaa" group
they comprise what are generally known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
"Aaa" securities or fluctuations of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risks
appear somewhat larger than in "Aaa" securities.
Moody's applies numerical modifiers "1", "2" and "3" in its "Aa" rating
classification. The modifier "1" indicates that the security ranks in the higher
end of its generic rating category; the modifier "2" indicates a mid-range
ranking; and the modifier "3" indicates that the issue ranks in the lower end of
its generic rating category.
Standard & Poor's Ratings Services
- --------------------------------------------------------------------------------
Bonds (including municipal bonds) are rated as follows:
AAA: The highest rating assigned by S&P. Capacity to pay interest and repay
principal is extremely strong.
AA: A strong capacity to pay interest and repay principal and differ from "AAA"
rated issues only in small degree.
Fitch IBCA, Inc.
- --------------------------------------------------------------------------------
AAA: Considered to be investment grade and of the highest credit quality. The
obligor has an exceptionally strong ability to pay interest and repay principal,
which is unlikely to be affected by reasonably foreseeable events.
AA: Considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA". Plus (+) and minus (-) signs are used
in the "AA" category to indicate the relative position of a credit within that
category.
Because bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issuers
is generally rated "F-1+".
Duff & Phelps, Inc.
- -------------------------------------------------------------------------------
AAA: The highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA: High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions. Plus (+) and
minus (-) signs are used in the "AA" category to indicate the relative position
of a credit within that category.
Thomson BankWatch, Inc.
- --------------------------------------------------------------------------------
TBW issues the following ratings for companies. These ratings assess the
likelihood of receiving payment of principal and interest on a timely basis and
incorporate TBW's opinion as to the vulnerability of the company to adverse
developments, which may impact the market's perception of the company, thereby
affecting the marketability of its securities.
A: Possesses an exceptionally strong balance sheet and earnings record,
translating into an excellent reputation and unquestioned access to its natural
money markets. If weakness or vulnerability exists in any aspect of the
company's business, it is entirely mitigated by the strengths of the
organization.
A/B: The company is financially very solid with a favorable track record and no
readily apparent weakness. Its overall risk profile, while low, is not quite as
favorable as for companies in the highest rating
<PAGE>
Appendix B
- --------------------------------------------------------------------------------
Industry Classifications
- --------------------------------------------------------------------------------
Aerospace/Defense Food and Drug Retailers
Air Transportation Gas Utilities
Asset-Backed Health Care/Drugs
Auto Parts and Equipment Health Care/Supplies & Services
Automotive Homebuilders/Real Estate
Bank Holding Companies Hotel/Gaming
Banks Industrial Services
Beverages Information Technology
Broadcasting Insurance
Broker-Dealers Leasing & Factoring
Building Materials Leisure
Cable Television Manufacturing
Chemicals Metals/Mining
Commercial Finance Nondurable Household Goods
Communication Equipment Office Equipment
Computer Hardware Oil - Domestic
Computer Software Oil - International
Conglomerates Paper
Consumer Finance Photography
Consumer Services Publishing
Containers Railroads & Truckers
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Wholesalers Specialty Printing
Durable Household Goods Specialty Retailing
Education Steel
Electric Utilities Telecommunications - Long Distance
Electrical Equipment Telephone - Utility
Electronics Textile, Apparel & Home Furnishings
Energy Services Tobacco
Entertainment/Film Trucks and Parts
Environmental Wireless Services
Food
<PAGE>
- --------------------------------------------------------------------------------
Centennial Government Trust
- --------------------------------------------------------------------------------
Investment Advisor and Distributor
Centennial Asset Management Corporation
6803 South Tucson Way
Englewood, Colorado 80112
Sub-Distributor
OppenheimerFunds Distributor, Inc.
P.O. Box 5254
Denver, Colorado 80217
Transfer Agent
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217
1-800-525-9310
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
PX0170.001.1199