A.G. Edwards
Investments Since 1887
Total Asset
The One Account for Today's Investor
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
1996 Prospectus
Managed and Distributed by
Centennial Asset
Management Corporation
<PAGE>
Total Asset Account
Summary Description
The Total Asset Account Program (TAA) of A.G. Edwards & Sons, Inc.
(AGE) offers integrated financial services by linking together three
components:
(1) the Securities Account, which is a conventional AGE securities
margin account;
(2) the Investment Fund, which consists of your choice of no-load
money market funds (the Funds); and
(3) the VISA Account, which is a VISA check/card account maintained
by Bank One, N.A., Columbus, Ohio (Bank One).
Free cash balances (i.e., any cash that may be withdrawn or
transferred out of the Securities Account without creating an interest
charge or a need for additional margin) held in the Securities Account of
persons establishing a TAA are invested in either Centennial Money Market
Trust, a no-load money market fund (the Money Market Trust), Centennial
Tax Exempt Trust, a no-load, short-term tax-exempt securities fund (the
Tax Exempt Trust), Centennial Government Trust, a no-load, short-term
government securities fund (the Government Trust) or in Centennial America
Fund, L.P., a no-load government securities money market fund for foreign
investors. In addition, residents of California and New York are offered
the option of investing in Centennial California Tax Exempt Trust and
Centennial New York Tax Exempt Trust, respectively (the State Tax Exempt
Funds).
AGE charges a fee for the TAA services to partially defray the costs
of maintaining and servicing the TAA, including Bank One's processing
charges that AGE will pay. AGE will make no commission or other charge
in connection with the purchase or redemption of Fund shares. The Funds
pay investment advisory fees and incur certain administrative and
operational expenses, as do other mutual funds. The client will pay AGE's
normal brokerage fees for securities transactions in the Securities
Account and will pay interest on margin loans made in the Account. In
addition, Bank One may impose certain charges in the VISA Account.
An AGE client may subscribe to the TAA financial service by
depositing a minimum of $10,000 in any combination of cash and/or
securities in the Securities Account. AGE may alter or waive conditions
on which a TAA may be established, either with respect to services
generally or to special groups or limited categories of individuals. AGE
may change the annual service fee at any time on 10 days' notice to
participants. Both AGE and Bank One have the right to reject any
application to open a TAA and to terminate a TAA for any reason. The
following pages describe the principal attributes of each TAA component.
This description of the TAA is a brochure and is not a prospectus,
and must be accompanied by the current prospectus of Centennial Money
Market Trust, Centennial Tax Exempt Trust, Centennial Government Trust,
Centennial America Fund, L.P., or the State Tax Exempt Funds. The
prospectus describes in detail the Fund's objective, investment policies,
risks, fees and other matters of interest. Please read the attached
prospectus carefully before you invest or send money.
Securities Account
The Securities Account, the primary component of the TAA, is a
conventional margin account maintained by AGE, which the client may use
to purchase and sell securities and options on margin or on a fully paid
basis. All dividends and interest accruing and paid on these securities
will be held pending use in accordance with the agreements between AGE and
the client. The interest rates charged for margin loans range from 3/4%
to 2 1/2% above the rate charged by New York City banks to brokers to
finance clients' margin transactions. The maximum loan value of
marginable common stocks is presently 50% of their current value. AGE
will maintain the Securities Account in accordance with and subject to all
then applicable federal and state laws and rules and regulations
promulgated thereunder; the constitution, rules, customs and usages of the
applicable exchange, association, market or clearinghouse; and the customs
and usages of those transacting business on such exchange, market or
clearinghouse. As in the case of a regular margin account, the client
pays AGE's normal brokerage fees for securities transactions in the
Securities Account. Each client will have the same protection with
respect to the Securities Account as any other Securities Account client,
including up to $500,000 from the Securities Investor Protection
Corporation. In addition, each client has an extra $49.5 million worth
of coverage on all securities held by AGE in a TAA, including Fund shares.
The Funds
AGE will automatically invest free cash balances in the Securities
Account in shares of the Money Market Trust, the Tax Exempt Trust, the
Government Trust, Centennial America Fund, L.P., or the appropriate State
Tax Exempt Fund, depending on which Fund the investor selects as the
primary investment. Free cash balances will be invested automatically no
less frequently than weekly in shares of the appropriate Fund at its net
asset value as described below. Dividends will be declared daily on Fund
shares and will be reinvested monthly in additional shares. The investor
may change the primary Fund at any time. The client understands that an
investment in the Fund is not equivalent to a deposit. Although the Fund
strives to maintain a net asset value of $1 per share, the value of a
shareholder's investment may fluctuate as with any investment in
securities. Certificates of the Fund will not be physically issued. For
further information, see "How to Buy Shares" and "Dividends, Distributions
and Tax Information" or "Distributions and Taxes" in the accompanying Fund
prospectus. The Funds' distributor partially reimburses AGE for costs
incurred in distributing Fund shares.
The TAA permits a client to use free cash balances effectively by
having them promptly invested in Fund shares, ensuring full investment of
such funds pending other investments in the Securities Account or payments
of charges incurred in the VISA check/card account. Because AGE may
advance funds on a client's behalf to purchase Fund shares and earn
dividends prior to final collection of checks deposited to the client's
account, it is understood AGE may withhold access to redemption proceeds
of Fund shares purchased with advanced funds until it is satisfied that
all checks deposited to the client's account have been collected. The
Federal Deposit Insurance Corporation, or any other governmental insurance
agency, does not insure the value of Fund shares. However, Fund shares,
like shares of any public issuer held in a brokerage account, are subject
to the Securities Investor Protection Act, which protects brokerage
clients from losses up to $500,000 arising from the insolvency of their
brokerage firm. AGE also provides an additional $49.5 million worth of
account protection through a special policy with a major independent
insurance carrier.
Fund shares will be redeemed automatically as necessary to satisfy
debit balances in the Securities Account or amounts owing in the VISA
check/card account and may also be redeemed at the client's request if not
required to satisfy such debit balances as described below.
AGE will make no commission or other charge with respect to the
purchase or redemption of Fund shares. The Funds have been created as
component parts of the TAA and other investment programs and, in view of
the service fee charged TAA participants, investors who seek solely to
invest cash in a money market fund or a short-term, tax-exempt or a
government securities fund and do not wish to use the automatic investment
and other special features of the TAA, should consider other money market,
tax-exempt or government securities funds offered directly to the public
as a more suitable investment. Centennial Asset Management Corporation,
the distributor of the Funds, may add additional investment funds as
components of the TAA in the future.
The Funds constitute only one component of the TAA. Investors should
read the prospectuses of the Funds in conjunction with the TAA Agreement,
which is available from AGE and must be signed by TAA participants.
Automatic Purchases
Once AGE and Bank One accept a TAA, free cash balances at the end of
each week will be invested automatically on the first business day of the
following week in the primary Fund selected by the investor. Free cash
balances arising from certain transactions will be invested automatically
in Fund shares prior to the previously mentioned automatic investment; the
free cash balances from those transactions are as follows: (a) free cash
balances in any amount of $1 or more arising from the sale of securities
will be invested on the next business day following receipt of the
proceeds; and (b) free cash balances arising from a cash deposit or from
other nondividend or interest entries of $500 or more on any one day will
be invested on the next business day following the deposit or entry unless
the deposit is made after the local AGE branch cashiering deadline.
Dividends and interest totaling $500 or more on any one day will be
invested on the next business day. Shares are credited with the dividend
earned on the date of purchase for shares purchased by noon Eastern time
that day. At any time, the client may withdraw any uninvested free cash
balance from the Securities Account by notifying the investment broker by
letter or telephone. For further information, see "How to Buy Shares" and
"Dividends, Distributions and Tax Information" in the accompanying Fund
prospectus.
Redemption of Shares
Each Fund must redeem for cash all full and fractional shares of the
Fund subject to the conditions described in its prospectus. The
redemption price is the net asset value per share next determined after
receipt by the transfer agent of proper notice of redemption, in
accordance with either the automatic or manual procedures described below.
If the transfer agent receives the notice from AGE before the
determination of net asset value at noon Eastern time on any day that the
New York Stock Exchange and the Fund's custodian bank are open for
business, the redemption will be effective on that day. Payment of the
redemption proceeds will be made after noon Eastern time on the day the
redemption becomes effective. If AGE receives the notice after noon
Eastern time, the redemption in the TAA will be effective on the next
business day and payment will be made on that day. If an investor redeems
all of the Fund shares in the TAA at any time during a month, the Fund
will pay all dividends accrued to the date of redemption together with the
redemption proceeds. Dividends in TAAs are earned through the day prior
to redemption. For further information, see "How to Redeem Shares" in the
accompanying Fund prospectus.
Automatic Redemptions
Whenever a debit balance arises in the Securities Account created by
activity therein or created by VISA card purchases, cash advances, or
checks written against the VISA Account, AGE will automatically effect
redemptions. Daily debit balances will be satisfied first by any free
cash balances and second by the redemption of Fund shares. Margin loans
will be used to satisfy debits remaining in either the Securities Account
or the VISA Account after the use of the free cash balances and the
redemption of all Fund shares, and the investor may not purchase shares
until all debits and margin loans are satisfied. If Fund shares are
redeemed to satisfy these debits, the investor earns dividends up to the
day AGE makes payment for the TAA.
Manual Redemption
Shareholders may redeem Fund shares directly by submitting a written
request for redemption to AGE, which will submit requests to the Funds'
transfer agent. AGE will ordinarily mail cash proceeds from the manual
redemption of Fund shares to the shareholder. Redemption requests should
not be sent to the Funds or their transfer agent. The redemption request
requires the signatures of all persons in whose name the Securities
Account is established, signed exactly as their names appear on their
statements. In certain instances, additional documents, such as, but not
limited to, trust instruments, death certificates, appointments as
executor or administrator, or certificates of corporate authority, may be
required before redemption may be made.
VISA Account
Bank One, with which AGE has entered into an agreement for this
purpose, may issue a VISA card and checks to each person who is a TAA
client other than under certain accounts described below under "Group
Plans and Special Accounts." The TAA client may use the VISA card to
purchase merchandise or services at participating establishments or to
obtain cash advances (which a bank may limit to $5,000 per account per
day) from any participating bank or its branch. Any of 362,000 worldwide
bank branches in the VISA system, as well as all establishments accepting
the VISA card, will honor the VISA card. Presently, more than 10 million
stores, restaurants and service outlets worldwide honor the VISA card.
You may also obtain cash advances using your VISA card and personal
identification number (PIN) from automated teller machines (ATMs)
displaying the VISA or PLUS logos. A $1 charge is assessed for each ATM
transaction or cash advance. The TAA client may draw checks on the VISA
Account for any purpose. Bank One will impose its normal charges for stop
payment orders and checks that are returned because they have exceeded the
authorization limit described below or for special, investigative or
research services. If a client wishes to stop payment on a TAA check,
verbal requests must be confirmed in writing to AGE and the bank within
14 days, and the request will not bind AGE or the bank for a period of
four business days after the initial request. Neither AGE nor the bank
will incur any liability for honoring a check within four business days
of the client request. The client understands a stop payment fee may be
charged for this special request
Neither the VISA card nor the Bank One checks may be used to purchase
securities in the Securities Account or Fund shares. The maximum amount
available (authorization limit) for VISA purchases, cash advances and Bank
One checking for a client's TAA is the total of (a) any uninvested free
cash balances in the Securities Account, (b) the net asset value of the
Fund shares held for the client's TAA, and (c) the available margin loan
value of securities in the Securities Account. Since the authorization
limit depends on the status of cleared checks deposited to the Securities
Account, securities prices, as well as changes in the debit balance in the
Securities Account and the VISA Account, the authorization limit will
fluctuate from day to day. The authorization limit is instantaneously
reduced at the time Bank One is notified of the use of the VISA card, not
at the time the applicable sales draft or cash advance draft is paid.
Fund shares are not redeemed, however, until the item is presented to Bank
One for payment and the request is submitted to AGE for redemption.
Unlike standard credit card procedures under which bills are rendered
monthly and free credit may be extended for a period of up to 25 days
thereafter, Bank One will notify AGE daily of any charges presented
against the VISA Account, whether by use of the VISA card or checks. AGE
will pay Bank One on behalf of its clients from the TAA on the day AGE
receives notice of the debit. AGE will pay for charges in the following
order of priority: first, from free cash balances, if any, held in the
Securities Account pending investment; second, from the proceeds of
redemption of Fund shares; and third (if those sources prove
insufficient), from margin loans made to the client by AGE within the
available margin loan value of the securities in the Securities Account.
AGE will charge interest on any such margin loans. This system provides
for an efficient use of funds since the client will not incur the cost of
a margin loan until all free cash balances and funds invested in Fund
shares are fully used. If charges in an investor's VISA Account are
satisfied by redemption of Fund shares, ownership of the shares will
transfer to AGE as of the date it pays Bank One on behalf of the investor,
and AGE will retain dividends accruing on the shares between the date of
the payment and the date of redemption. Clients have no unsecured
borrowing privileges in the VISA Account. A client participating in the
TAA program must agree not to exceed the authorization limit. Any
overdraft will be immediately payable by the client to Bank One, which
will impose a charge at an annual rate not to exceed 25% for the time the
overdraft is outstanding.
At its sole discretion, AGE may return a check unpaid if there are
insufficient funds in the account to cover payment. The account will be
subject to additional charges for each returned check. The account may
also be subject to any additional fees charged by a processing bank for
excessive deposits.
Clients who subscribe to a TAA will receive a transaction statement
from AGE that will detail all TAA transactions during the preceding month.
The statement will describe securities and options bought and sold in the
Securities Account, whether on margin or on a fully paid basis, any other
type of transaction effected in the Securities Account, margin interest
charges, if any, Fund shares that were purchased or redeemed, and
dividends on Fund shares. The statement will also show purchases of
merchandise or services with the VISA card, checks drawn against the VISA
Account and cash advances. The Fund will not send confirmations for
automatic purchases and redemption of fund shares.
A client may subscribe to the TAA with the minimum amount of $10,000
in any combination of gross market value of securities held at AGE,
marginable or nonmarginable, and/or cash. To subscribe, clients must
execute a TAA Agreement with AGE, which includes a Checking Account/VISA
Account Application. AGE, in its discretion, may waive such conditions
in special instances, certain of which are described below under "Group
Plans and Special Accounts." Both AGE and Bank One may terminate any
client's TAA for any reason at any time. AGE may terminate a client's TAA
if, at the expiration date of the client's VISA card, the Securities
Account does not have a value of at least $5,000, including any Fund
shares. New York Stock Exchange rules require that margin accounts
maintain a minimum of $2,000 of equity. Clients may be prohibited from
maintaining both a TAA and a non-TAA account with AGE.
Clients subscribing to the TAA may be liable for the unauthorized use
of their VISA card, but liability shall not exceed $50 if AGE or Bank One
is notified within 60 days of the transmittal of the periodic statement
reflecting any unauthorized usage. If notification is not made to AGE or
Bank One within 60 days of the statement mailing, the client will not be
reimbursed for any loss incurred after that 60 day period if AGE can prove
that loss could have been prevented, had notification been timely. The
owner of the VISA card will not be liable for any unauthorized use that
occurs after Bank One has been notified verbally or in writing of loss,
theft or possible unauthorized use of the card. If Fund shares are
redeemed due to the unauthorized use of the VISA card, the shares will be
reinstated as if never sold and AGE will indemnify the Fund against any
losses caused. If a VISA card is lost or stolen, the TAA client should
report the loss immediately by calling the TAA Service Center at (800)
677-8380 during normal business hours or by placing a collect call to Bank
One at (614) 248-4242 after business hours.
Group Plans and Special Accounts
AGE may modify the conditions of the TAA for certain group plans and
limited categories of individuals, typically by providing for a cash
securities account instead of a margin account or by providing for limited
use of the VISA Account. In the case of group or special accounts, the
regular minimum may be waived. Such participants may be charged a higher
service fee than that charged to other participants in the program.
General
Investors should be aware that the checking feature of the TAA is
intended to provide clients with easy access to the assets in their
accounts and that the TAA is not a bank account.
From time to time, certain state administrative agencies have raised
questions whether the operation of a TAA-type program constitutes banking
under the laws of their state. In addition, legislation has been proposed
in certain states, which, if enacted, could require a modification of the
TAA in those states. Neither AGE nor any of the Funds is a bank and they
believe that the operation of the TAA does not constitute banking under
the laws of any state. Final adverse rulings in any state that the TAA
constitutes unauthorized banking therein or the adoption of legislation
by any state affecting the TAA could force the Funds to liquidate shares
for residents in such state or to cease offering their shares in such
state as part of the TAA.
Total Asset Account is proprietary to A.G. Edwards & Sons, Inc.
Investors should carefully read the accompanying Fund prospectus.
<PAGE>
Centennial
Money Market Trust
Tax Exempt Trust
Government Trust
Prospectuses
The enclosed prospectuses describe three fully-managed money market
mutual funds (collectively referred to as the "Trusts"). Shares of the
Trusts are offered to participants in Automatic Purchase and Redemption
Programs (the "Programs") established by certain brokerage firms with
which Centennial Asset Management Corporation (the Manager and the
Distributor of the Trusts) has entered into an agreement for this purpose.
Shares of the Trusts may also be purchased directly, through securities
dealers having sales agreements with the Distributor.
Investors should be aware that the Programs are not bank accounts.
Although the Trusts intend to maintain a constant net asset value per
share of $1.00, as with any investment in securities, the value of a
shareholder's investment in the Trusts may fluctuate.
This document consists of the Prospectuses of Centennial Money Market
Trust, Centennial Tax Exempt Trust and Centennial Government Trust, all
dated November 1, 1995, which are component parts of the Programs, and an
Appendix which is a part of each Prospectus. A Table of Contents to the
Prospectuses is on the following page. Each brokerage firm which has
established a Program will furnish separately a summary description of its
Program which must accompany these Prospectuses.
<PAGE>
Table of Contents
Centennial Money Market Trust Page
Trust Expenses
Financial Highlights
Yield Information
The Trust and Its investment Policies
Investment Restrictions
Centennial Tax Exempt Trust
Trust Expenses
Per Share Data and Ratios
Yield Information
The Trust and its Investment Policies
Investment Restrictions
Centennial Government Trust
Trust Expenses
Per Share Data and Ratios
Yield Information
The Trust and its Investment Policies
Investment Restrictions
Appendix to Prospectuses of Centennial Money Market Trust,
Centennial Tax Exempt Trust and Centennial Government Trust
Management of the Trusts
How to Buy Shares
Purchases Through Automatic Purchase and Redemption Programs
Direct Purchases
Guaranteed Payment
Automatic Investment Plans
General
Service Plan
How to Redeem Shares
Program Participants
Shares of the Trusts Owned Directly
Regular Redemption Procedure
Expedited Redemption Procedure
Check Writing
Telephone Redemptions
Retirement Plans Holding Shares of Government Trust and Money Market
Trust
Automatic Withdrawal Plans
General Information on Redemptions
Exchanges of Shares and Retirement Plans
Dividends, Distributions and Taxes
Additional Information
<PAGE>
A.G. Edwards
Investments Since 1887
-----------
Cash
Convenience
Account
-----------
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
1996 Prospectus
Managed and Distributed by
Centennial Asset
Management Corporation
<PAGE>
Cash Convenience Account
The Cash Convenience Account Program (CCA) of A.G. Edwards & Sons,
Inc. (AGE) offers a conventional AGE securities account (the Securities
Account) linked to a no-load money market mutual fund (the Fund), and if
desired, check writing redemption procedures (Check Writing). (A client
must request Check Writing on a separate Check Writing Privilege
Authorization and Specimen Signature Form.)
An AGE client may subscribe to a CCA program by depositing a minimum
of $2,500 of free cash balance (that is, any cash that may be withdrawn
from the Securities Account without resulting in interest charges) in the
Securities Account. This free cash balance must be available with no
unsettled transactions reducing the available cash balance to less than
$2,500 at the time the CCA begins operation. After the client has met this
initial requirement, AGE will automatically invest subsequent free cash
balances of $250 or more resulting from securities sales, additional cash
deposits, and interest or dividends held in the account, or any other free
cash balance that may be withdrawn from the Securities Account without
resulting in a debit balance in Fund shares at their current net asset
value at least once a week (Automatic Purchase Order). AGE will redeem
Fund shares, if available, at net asset value to satisfy debit balances
in the Securities Account (Automatic Redemption Order).
AGE will make no commission or other transaction charge in connection
with the purchase or redemption of Fund shares. The Fund pays investment
advisory fees and incurs certain administrative and operational expenses,
as do other mutual funds. The client will pay AGE's normal brokerage fees
for securities transactions in the Securities Account.
AGE may alter or waive conditions on which a CCA may be established,
either with respect to services generally or to certain individuals or
groups. AGE has the right to reject any request or application to open
a CCA and to terminate a CCA for any reason. The following pages describe
the principal attributes of each CCA component.
This description of the CCA program is a brochure and is not a
prospectus, and must be accompanied by the current prospectus of the
selected Fund. The prospectus describes in detail the Fund's objective,
investment policies, risks, fees and other matters of interest. Please
read the attached prospectus carefully before you invest or send money.
Securities Account
The Securities Account is a conventional account maintained by AGE,
which the client may use to purchase and sell securities. AGE will
maintain the Securities Account pursuant to the rules and regulations of
the Securities and Exchange Commission, the Board of Governors of the
Federal Reserve System, the New York Stock Exchange and the National
Association of Securities Dealers, Inc., as well as the policies of AGE.
The client pays AGE's normal brokerage fees for securities transactions
in the Securities Account. If securities transactions are to occur on
margin, the client must sign an AGE Client's Agreement. Certain
additional account documents may be required to open a Securities Account
depending on the type of entity and/or type of transactions to occur.
Each month in which there is activity in the Securities Account, other
than money market fund dividends, AGE will send a statement detailing
cash, securities and Fund transactions in the Securities Account during
the preceding period. If no activity other than money market fund
dividends occurs, AGE will send a statement at least quarterly. Neither
AGE nor the Fund must send confirmations on each transaction in which Fund
shares are purchased or redeemed for the CCA. The statement will describe
the transactions in the Fund during the preceding period. You should
carefully review the statement and bring any discrepancies immediately to
the attention of AGE.
Each client will have the same protection with respect to the
Securities Account as any other Securities Account client, including up
to $500,000 from the Securities Investor Protection Corporation. In
addition, each client has an extra $49.5 million worth of coverage on all
securities held by AGE in a CCA, including Fund shares.
The Fund
Upon meeting the requirement of $2,500 in free cash balance with no
unsettled transactions in the Securities Account, AGE will automatically
invest the initial free cash balance and subsequent free cash balances of
$250 or more on the first business day of the following week in shares of
Centennial Money Market Trust, Centennial Tax Exempt Trust, Centennial
Government Trust, Centennial America Fund, L.P. or Daily Cash
Accumulation Fund, Inc. depending on which Fund the investor selects as
the primary investment. In addition, residents of California and New York
are offered the option of investing in a state tax-exempt fund for their
particular state. AGE may offer additional funds through CCA in the
future. An investor may change the primary Fund by notifying his or her
AGE investment broker.
Each Fund declares dividends daily, which post monthly to the
Securities Account in the form of additional shares. For further
information, see "How to Buy Shares" and "Dividends, Distributions and Tax
Information" or "Distributions and Taxes" in the accompanying Fund
prospectus.
The Fund's distributor partially reimburses AGE for costs incurred
in distributing Fund shares.
Automatic Purchase Orders
After the initial investment of $2,500 or more, AGE will
automatically invest at least once a week free cash balances of $250 or
more resulting from sales, additional cash deposits and interest or
dividends in the Securities Account in Fund shares designated as the
primary Fund at their current net asset value. The purchase price for
shares will be the net asset value per share determined after the Fund's
receipt of an Automatic Purchase Order. At any time, the client may
withdraw uninvested free cash balances from the Securities Account by
notifying the AGE investment broker. Dividends are earned on the day
following investment through the date of request for redemption.
Manual Purchase Orders
Free cash balances in excess of $10,000 may be invested by manual
purchase order request on the day after funds become available for
withdrawal. Manual purchase orders entered prior to 2 p.m. Central time
(10 a.m. Central time on Friday) will be completed at 3 p.m. Central time
on the day of request, provided the Federal Reserve wire system is in
operation.
New cash deposits in excess of $10,000 may be invested by manual
purchase order two business days after receipt providing the deposit is
received prior to the local AGE branch cashiering deadline. Dividends are
earned on the day following investment through the date of request for
redemption.
Automatic Redemption Orders
Fund shares will be redeemed at net asset value to satisfy debit
balances in the Securities Account. Redemption for payment of a
securities purchase will be effected at net asset value at 3 p.m. Central
time on the day preceding settlement date of the purchase. Redemption for
other activity resulting in a net debit balance in the Securities Account
will be effected at net asset value at 3 p.m. Central time on the day
after the entry is posted to the Securities Account. Dividends are earned
on the day following investment through the date of request for
redemption.
To override an Automatic Redemption Order, a free cash balance
sufficient to cover the amount of the Automatic Redemption Order must be
entered to the Securities Account before the AGE cashiering deadline two
days preceding settlement date of securities purchases, or on the day of
posting other entries generating a debit balance.
AGE reserves the right to redeem all Fund shares if the net asset
value of the shares in a CCA amounts to less than $250.
Manual Redemption
Fund shares can be redeemed at net asset value on the shareholder's
request on any business day. Proceeds from redemption orders entered
before 2 p.m. Central time will be available for withdrawal from the
Securities Account on the next business day on which the Federal Reserve
wire system is in operation.
Check Writing
A client may write checks in amounts of $250 or more if checks are
requested by a signed separate Check Writing Privilege Authorization and
Specimen Signature Form. The amount available for checks will be the
total net asset value of Fund shares in the CCA. AGE will automatically
redeem Fund shares to pay the bank through which checks are paid on behalf
of the account.
Termination
A client may terminate the CCA at any time by notifying AGE in
writing. However, the principals of the account will remain responsible
for any charges to the CCA arising before or after termination. AGE
reserves the right to terminate the CCA at any time with or without
notice.
<PAGE>
Centennial
Money Market Trust
Tax Exempt Trust
Government Trust
Prospectuses
The enclosed prospectuses describe three fully-managed money market
mutual funds (collectively referred to as the "Trusts"). Shares of the
Trusts are offered to participants in Automatic Purchase and Redemption
Programs (the "Programs") established by certain brokerage firms with
which Centennial Asset Management Corporation (the Manager and the
Distributor of the Trusts) has entered into an agreement for this purpose.
Shares of the Trusts may also be purchased directly, through securities
dealers having sales agreements with the Distributor.
Investors should be aware that the Programs are not bank accounts.
Although the Trusts intend to maintain a constant net asset value per
share of $1.00, as with any investment in securities, the value of a
shareholder's investment in the Trusts may fluctuate.
This document consists of the Prospectuses of Centennial Money Market
Trust, Centennial Tax Exempt Trust and Centennial Government Trust, all
dated November 1, 1995, which are component parts of the Programs, and an
Appendix which is a part of each Prospectus. A Table of Contents to the
Prospectuses is on the following page. Each brokerage firm which has
established a Program will furnish separately a summary description of its
Program which must accompany these Prospectuses.
<PAGE>
Table of Contents
Centennial Money Market Trust Page
Trust Expenses
Financial Highlights
Yield Information
The Trust and Its investment Policies
Investment Restrictions
Centennial Tax Exempt Trust
Trust Expenses
Per Share Data and Ratios
Yield Information
The Trust and its Investment Policies
Investment Restrictions
Centennial Government Trust
Trust Expenses
Per Share Data and Ratios
Yield Information
The Trust and its Investment Policies
Investment Restrictions
Appendix to Prospectuses of Centennial Money Market Trust,
Centennial Tax Exempt Trust and Centennial Government Trust
Management of the Trusts
How to Buy Shares
Purchases Through Automatic Purchase and Redemption Programs
Direct Purchases
Guaranteed Payment
Automatic Investment Plans
General
Service Plan
How to Redeem Shares
Program Participants
Shares of the Trusts Owned Directly
Regular Redemption Procedure
Expedited Redemption Procedure
Check Writing
Telephone Redemptions
Retirement Plans Holding Shares of Government Trust and Money Market
Trust
Automatic Withdrawal Plans
General Information on Redemptions
Exchanges of Shares and Retirement Plans
Dividends, Distributions and Taxes
Additional Information
<PAGE>
A.G. Edwards
Investments Since 1887
UltraAsset
The Preferred Account for Select Investors
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
1996 Prospectus
Managed and Distributed by
Centennial Asset
Management Corporation
<PAGE>
UltraAsset Account
Summary Description
The UltraAsset Account Program (UAA) of A.G. Edwards & Sons, Inc.
(AGE) offers integrated financial services by linking together four
components:
(1) the Securities Account, which is a conventional AGE securities
margin account;
(2) the Investment Fund, which consists of your choice of no-load
money market funds (the Funds);
(3) the VISA Gold Account, which is a VISA Gold check/card account
maintained by Bank One, N.A., Columbus, Ohio (Bank One); and
(4) monthly portfolio valuation reports and gain and loss summary
(Effective January 1996,these reports will be consolidated into
the AGE monthly transaction statement).
Free cash balances (i.e., any cash that may be withdrawn or
transferred out of the Securities Account without creating an interest
charge or a need for additional margin) held in the Securities Account of
persons establishing a UAA are invested in either Centennial Money Market
Trust, a no-load money market fund (the Money Market Trust), Centennial
Tax Exempt Trust, a no-load, short-term tax-exempt securities fund (the
Tax Exempt Trust), Centennial Government Trust, a no-load, short-term
government securities fund (the Government Trust) or in Centennial America
Fund, L.P., a no-load government securities money market fund for foreign
investors. In addition, residents of California and New York are offered
the option of investing in Centennial California Tax Exempt Trust and
Centennial New York Tax Exempt Trust, respectively (the State Tax Exempt
Funds).
AGE charges a fee for the UAA services to partially defray the costs
of maintaining and servicing the UAA, including Bank One's processing
charges that AGE will pay. AGE will make no commission or other charge
in connection with the purchase or redemption of Fund shares. The Funds
pay investment advisory fees and incur certain administrative and
operational expenses, as do other mutual funds. The client will pay AGE's
normal brokerage fees for securities transactions in the Securities
Account and will pay interest on margin loans made in the Account. In
addition, Bank One may impose certain charges in the VISA Gold Account.
An AGE client may subscribe to the UAA financial service by
depositing a minimum of $20,000 in any combination of cash and/or
securities in the Securities Account. AGE may alter or waive conditions
on which a UAA may be established, either with respect to services
generally or to special groups or limited categories of individuals. AGE
may change the annual service fee at any time upon 10 days' notice to
participants. Both AGE and Bank One have the right to reject any
application to open a UAA and to terminate a UAA for any reason. The
following pages describe the principal attributes of each UAA component.
This description of the UAA is a brochure and is not a prospectus,
and must be accompanied by the current prospectus of Centennial Money
Market Trust, Centennial Tax Exempt Trust, Centennial Government Trust,
Centennial America Fund, L.P., or the State Tax Exempt Funds. The
prospectus describes in detail the Fund's objective, investment policies,
risks, fees and other matters of interest. Please read the attached
prospectus carefully before you invest or send money.
Securities Account
The Securities Account, the primary component of the UAA, is a
conventional margin account maintained by AGE, which the client may use
to purchase and sell securities and options on margin or on a fully paid
basis. All dividends and interest accruing and paid on these securities
will be held pending use in accordance with the agreements between AGE and
the client. The interest rates charged for margin loans range from to
3/4% to 2 1/2% above the rate charged by New York City banks to brokers
to finance clients' margin transactions. The maximum loan value of
marginable common stocks is presently 50% of their current value. AGE
will maintain the Securities Account in accordance with and subject to all
then applicable federal and state laws and rules and regulations
promulgated thereunder; the constitution, rules, customs and usages of the
applicable exchange, association, market or clearinghouse; and the customs
and usages of those transacting business on such exchange, market or
clearinghouse. As in the case of a regular margin account, the client
pays AGE's normal brokerage fees for securities transactions in the
Securities Account. Each client will have the same protection with
respect to the Securities Account as any other Securities Account client,
including up to $500,000 from the Securities Investor Protection
Corporation. In addition, each client has an extra $49.5 million worth
of coverage on all securities held by AGE in a UAA, including Fund shares.
The Funds
AGE will automatically invest free cash balances in the Securities
Account in shares of the Money Market Trust, the Tax Exempt Trust, the
Government Trust, Centennial America Fund, L.P., or the appropriate
State Tax Exempt Fund, depending on which Fund the investor selects as the
primary investment. Free cash balances will be automatically invested no
less frequently than weekly in shares of the appropriate Fund at their net
asset value as described below. Dividends will be declared daily on Fund
shares and will be reinvested monthly in additional shares. The investor
may change the primary Fund at any time. The client understands that an
investment in the Fund is not equivalent to a deposit. Although the Fund
strives to maintain a net asset value of $1 per share, the value of a
shareholder's investment may fluctuate as with any investment in
securities. Certificates of the Fund will not be physically issued. For
further information, see "How to Buy Shares" and "Dividends, Distributions
and Tax Information" or "Distributions and Taxes" in the accompanying Fund
prospectus. The Funds' distributor partially reimburses AGE for costs
incurred in distributing Fund shares.
The UAA permits a client to use free cash balances effectively by
having them promptly invested in Fund shares, ensuring full investment of
such funds pending other investments in the Securities Account or payments
of charges incurred in the VISA Gold check/card account. Because AGE may
advance funds on a client's behalf to purchase Fund shares and earn
dividends prior to final collection of checks deposited to the client's
account, it is understood AGE may withhold access to redemption proceeds
of Fund shares purchased with advanced funds until it is satisfied that
all checks deposited to the client's account have been collected. The
Federal Deposit Insurance Corporation, or any other governmental insurance
agency, does not insure the value of Fund shares. However, Fund shares,
like shares of any public issuer held in a brokerage account, are subject
to the Securities Investor Protection Act, which protects brokerage
clients from losses up to $500,000 arising from the insolvency of their
brokerage firm. Also AGE provides an additional $49.5 million worth of
account protection through a special policy with a major independent
insurance carrier.
Fund shares will be redeemed automatically as necessary to satisfy
debit balances in the Securities Account or amounts owing in the VISA Gold
check/card account and may also be redeemed at the client's request if not
required to satisfy such debit balances as described below.
AGE will make no commission or other charge with respect to the
purchase or redemption of Fund shares. The Funds have been created as
component parts of the UAA and other investment programs and, in view of
the service fee charged UAA participants, investors who seek solely to
invest cash in a money market fund or a short-term, tax-exempt or a
government securities fund and do not wish to use the automatic investment
and other special features of the UAA, should consider other money market,
tax-exempt or government securities funds offered directly to the public
as a more suitable investment. Centennial Asset Management Corporation,
the distributor of the Funds, may add additional investment funds as
components of the UAA in the future.
The Funds constitute only one component of the UAA. Investors should
read the prospectuses of the Funds in conjunction with the UAA Agreement,
which is available from AGE and must be signed by UAA participants.
Automatic Purchases
Once AGE and Bank One accept a UAA, free cash balances at the end of
each week will be invested automatically on the first business day of the
following week in the primary Fund selected by the investor. Free cash
balances arising from certain transactions will be invested automatically
in Fund shares prior to the previously mentioned automatic investment; the
free cash balances from those transactions are as follows: (a) free cash
balances in any amount of $1 or more arising from the sale of securities
will be invested on the next business day following receipt of the
proceeds; and (b) free cash balances arising from a cash deposit or from
other nondividend or interest entries of $500 or more on any one day will
be invested on the next business day following the deposit or entry unless
the deposit is made after the local AGE branch cashiering deadline.
Dividends and interest totaling $500 or more on any one day will be
invested on the next business day. Shares are credited with the dividend
earned on the date of purchase for shares purchased by noon Eastern time
that day. At any time, the client may withdraw any uninvested free cash
balance from the Securities Account by notifying the investment broker by
letter or telephone. For further information, see "How to Buy Shares" and
"Dividends and Distributions" or "Distributions" in the accompanying Fund
prospectus.
Redemption of Shares
Each Fund must redeem for cash all full and fractional shares of the
Fund subject to the conditions described in its prospectus. The
redemption price is the net asset value per share next determined after
receipt by the transfer agent of proper notice of redemption, in
accordance with either the automatic or manual procedures described below.
If the transfer agent receives the notice from AGE before the
determination of net asset value at noon Eastern time on any day that the
New York Stock Exchange and the Fund's custodian bank are open for
business, the redemption will be effective on such day. Payment of the
redemption proceeds will be made after noon Eastern time on the day the
redemption becomes effective. If AGE receives the notice after noon
Eastern time, the redemption in the UAA will be effective on the next
business day and payment will be made on that day. If an investor redeems
all of the Fund shares in the UAA at any time during a month, the Fund
will pay all dividends accrued to the date of redemption together with the
redemption proceeds. Dividends in UAAs are earned through the day prior
to redemption. For further information, see "How to Redeem Shares" in the
accompanying Fund prospectus.
Automatic Redemptions
Whenever a debit balance arises in the Securities Account created by
activity therein or created by VISA Gold card purchases, cash advances,
or checks written against the VISA Gold Account, AGE will automatically
effect redemptions. Daily debit balances will be satisfied first by any
free cash balances and second by the redemption of Fund shares. Margin
loans will be used to satisfy debits remaining in either the Securities
Account or the VISA Gold Account after the use of the free cash balances
and the redemption of all Fund shares, and the investor may not purchase
shares until all debits and margin loans are satisfied. If Fund shares
are redeemed to satisfy these debits, the investor earns dividends up to
the day AGE makes payment for the UAA.
Manual Redemption
Shareholders may redeem Fund shares directly by submitting a written
request for redemption to AGE, which will submit requests to the Funds'
transfer agent. AGE will ordinarily mail cash proceeds from the manual
redemption of Fund shares to the shareholder. Redemption requests should
not be sent to the Funds or their transfer agent. The redemption request
requires the signatures of all persons in whose name the Securities
Account is established, signed exactly as their names appear on their
statements. In certain instances, additional documents, such as, but not
limited to, trust instruments, death certificates, appointments as
executor or administrator, or certificates of corporate authority, may be
required before redemption may be made.
VISA Gold Account
Bank One, with which AGE has entered into an agreement for this
purpose, may issue a VISA Gold card and checks to each person who is a UAA
client other than under certain accounts described below under "Group
Plans and Special Accounts." The UAA client may use the VISA Gold card
to purchase merchandise or services at participating establishments or to
obtain cash advances (which a bank may limit to $5,000 per account per
day) from any participating bank or its branch. Any of 362,000 worldwide
bank branches in the VISA system, as well as all establishments accepting
the VISA card, will honor the VISA Gold card. Presently, more than 10
million stores, restaurants and service outlets worldwide honor the VISA
card. You may also obtain cash advances using your VISA Gold card and
personal identification number (PIN) from automated teller machines (ATMs)
displaying the VISA or PLUS logos. A $1 charge is assessed for each ATM
transaction or cash advance. The UAA client may draw checks on the VISA
Gold Account for any purpose. Bank One will impose its normal charges for
stop payment orders and checks that are returned because they have
exceeded the authorization limit described below or for special,
investigative or research services. If a client wishes to stop payment
on a UAA check, verbal requests must be confirmed in writing to AGE and
the bank within 14 days, and the request will not bind AGE or the bank for
a period of four business days after the initial request. Neither AGE nor
the bank will incur any liability for honoring a check within four
business days of the client request. The client understands a stop
payment fee may be charged for this special request.
Neither the VISA Gold card nor the Bank One checks may be used to
purchase securities in the Securities Account or Fund shares. The maximum
amount available (authorization limit) for VISA Gold purchases, cash
advances and Bank One checking for a client's UAA is the total of (a) any
uninvested free cash balances in the Securities Account, (b) the net asset
value of the Fund shares held for the client's UAA, and (c) the available
margin loan value of securities in the Securities Account. Since the
authorization limit depends on the status of cleared checks deposited to
the Securities Account, securities prices, as well as changes in the debit
balance in the Securities Account and the VISA Gold Account, the
authorization limit will fluctuate from day to day. The authorization
limit is instantaneously reduced at the time Bank One is notified of the
use of the VISA Gold card, not at the time the applicable sales draft or
cash advance draft is paid. Fund shares are not redeemed, however, until
the item is presented to Bank One for payment and the request is submitted
to AGE for redemption.
Unlike standard credit card procedures under which bills are rendered
monthly and free credit may be extended for a period of up to 25 days
thereafter, Bank One will notify AGE daily of any charges presented
against the VISA Gold Account, whether by use of the VISA Gold card or
checks. AGE will pay Bank One on behalf of its clients from the UAA on
the day AGE receives notice of the debit. AGE will pay for charges in the
following order of priority: first, from free cash balances, if any, held
in the Securities Account pending investment; second, from the proceeds
of redemption of Fund shares; and third (if those sources prove
insufficient), from margin loans made to the client by AGE within the
available margin loan value of the securities in the Securities Account.
AGE will charge interest on any such margin loans. This system provides
for an efficient use of funds since the client will not incur the cost of
a margin loan until all free cash balances and funds invested in Fund
shares are fully used. If charges in an investor's VISA Gold Account are
satisfied by redemption of Fund shares, ownership of the shares will
transfer to AGE as of the date it pays Bank One on behalf of the investor,
and AGE will retain the dividends accruing on the shares between the date
of the payment and the date of redemption. Clients have no unsecured
borrowing privileges in the VISA Gold Account. A client participating in
the UAA program must agree not to exceed the authorization limit. Any
overdraft will be immediately payable by the client to Bank One, which
will impose a charge at an annual rate not to exceed 25% for the time the
overdraft is outstanding.
At its sole discretion, AGE may return a check unpaid if there are
insufficient funds in the account to cover payment. The account will be
subject to additional charges for each returned check. The account may
also be subject to any additional fees charged by a processing bank for
excessive deposits.
Clients who subscribe to a UAA will receive a transaction statement
from AGE that will detail all UAA transactions during the preceding month.
The statement will describe securities and options bought and sold in the
Securities Account, whether on margin or on a fully paid basis, any other
type of transaction effected in the Securities Account, margin interest
charges, if any, Fund shares that were purchased or redeemed, and
dividends on Fund shares. The statement will also show purchases of
merchandise or services with the VISA Gold card, checks drawn against the
VISA Gold Account and cash advances. The Fund will not send confirmations
for automatic purchases and redemption of fund shares.
A client may subscribe to the UAA with the minimum amount of $20,000
in any combination of gross market value of securities held at AGE,
marginable or nonmarginable, and/or cash. To subscribe, clients must
execute a UAA Agreement with AGE, which includes a Checking Account/VISA
Account Application. AGE, in its discretion, may waive such conditions
in special instances, certain of which are described below under "Group
Plans and Special Accounts." Both AGE and Bank One may terminate any
client's UAA for any reason at any time. AGE may terminate a client's UAA
if, at the expiration date of the client's VISA Gold card, the Securities
Account does not have a value of at least $5,000, including any Fund
shares. New York Stock Exchange rules require that margin accounts
maintain a minimum of $2,000 of equity. Clients may be prohibited from
maintaining both a UAA and a non-UAA account with AGE.
Clients subscribing to the UAA may be liable for the unauthorized use
of their VISA Gold card, but liability shall not exceed $50 if AGE or Bank
One is notified within 60 days of the transmittal of the periodic
statement reflecting any unauthorized usage. If notification is not made
to AGE or Bank One within 60 days of the statement mailing, the client
will not be reimbursed for any loss incurred after that 60 day period if
AGE can prove that the loss could have been prevented, had notification
been timely. The owner of the VISA Gold card will not be liable for any
unauthorized use that occurs after Bank One has been notified verbally or
in writing of loss, theft or possible unauthorized use of the card. If
Fund shares are redeemed due to the unauthorized use of the VISA Gold
card, the shares will be reinstated as if never sold and AGE will
indemnify the Fund against any losses caused. If a VISA Gold card is lost
or stolen, the UAA client should report the loss immediately by calling
the UAA Service Center at (800) 825-1822 during normal business hours or
by placing a collect call to Bank One at (614) 248-4242 after business
hours.
Portfolio Management Reports
Clients subscribing to a UAA will receive several portfolio
management reports. These include monthly portfolio valuation reports
that give an overall picture of assets in the UAA, and a monthly gain and
loss summary that reports all securities sold during the year and
indicates whether the client incurred a gain or loss on the transaction.
AGE prepares these reports for the client's convenience and does not
intend for them to replace official documentation, such as trade
confirmations, account statements and Form(s) 1099, which the client
should retain for tax purposes. Clients should consult their tax advisors
for income tax record keeping requirements (Effective January 1996, the
Portfolio Valuation Reports will be consolidated into the AGE monthly
transaction statement.
Group Plans and Special Accounts
AGE may modify the conditions of the UAA for certain group plans and
limited categories of individuals, typically by providing for a cash
securities account instead of a margin account or by providing for limited
use of the VISA Gold Account. In the case of group or special accounts,
the regular minimum may be waived. Such participants may be charged a
higher service fee than that charged to other participants in the program.
General
Investors should be aware that the checking feature of the UAA is
intended to provide clients with easy access to the assets in their
accounts and that the UAA is not a bank account.
From time to time, certain state administrative agencies have raised
questions whether the operation of a UAA-type program constitutes banking
under the laws of their state. In addition, legislation has been proposed
in certain states, which, if enacted, could require a modification of the
UAA in those states. Neither AGE nor any of the Funds is a bank and they
believe that the operation of the UAA does not constitute banking under
the laws of any state. Final adverse rulings in any state that the UAA
constitutes unauthorized banking therein or the adoption of legislation
by any state affecting the UAA could force the Funds to liquidate shares
for residents in such state or to cease offering their shares in such
state as part of the UAA.
UltraAsset Account is proprietary to A.G. Edwards & Sons, Inc.
Investors should carefully read the accompanying Fund prospectus.
<PAGE>
Centennial
Money Market Trust
Tax Exempt Trust
Government Trust
Prospectuses
The enclosed prospectuses describe three fully-managed money market
mutual funds (collectively referred to as the "Trusts"). Shares of the
Trusts are offered to participants in Automatic Purchase and Redemption
Programs (the "Programs") established by certain brokerage firms with
which Centennial Asset Management Corporation (the Manager and the
Distributor of the Trusts) has entered into an agreement for this purpose.
Shares of the Trusts may also be purchased directly, through securities
dealers having sales agreements with the Distributor.
Investors should be aware that the Programs are not bank accounts.
Although the Trusts intend to maintain a constant net asset value per
share of $1.00, as with any investment in securities, the value of a
shareholder's investment in the Trusts may fluctuate.
This document consists of the Prospectuses of Centennial Money Market
Trust, Centennial Tax Exempt Trust and Centennial Government Trust, all
dated November 1, 1995, which are component parts of the Programs, and an
Appendix which is a part of each Prospectus. A Table of Contents to the
Prospectuses is on the following page. Each brokerage firm which has
established a Program will furnish separately a summary description of its
Program which must accompany these Prospectuses.
<PAGE>
Table of Contents
Centennial Money Market Trust Page
Trust Expenses
Financial Highlights
Yield Information
The Trust and Its investment Policies
Investment Restrictions
Centennial Tax Exempt Trust
Trust Expenses
Per Share Data and Ratios
Yield Information
The Trust and its Investment Policies
Investment Restrictions
Centennial Government Trust
Trust Expenses
Per Share Data and Ratios
Yield Information
The Trust and its Investment Policies
Investment Restrictions
Appendix to Prospectuses of Centennial Money Market Trust,
Centennial Tax Exempt Trust and Centennial Government Trust
Management of the Trusts
How to Buy Shares
Purchases Through Automatic Purchase and Redemption Programs
Direct Purchases
Guaranteed Payment
Automatic Investment Plans
General
Service Plan
How to Redeem Shares
Program Participants
Shares of the Trusts Owned Directly
Regular Redemption Procedure
Expedited Redemption Procedure
Check Writing
Telephone Redemptions
Retirement Plans Holding Shares of Government Trust and Money Market
Trust
Automatic Withdrawal Plans
General Information on Redemptions
Exchanges of Shares and Retirement Plans
Dividends, Distributions and Taxes
Additional Information
<PAGE>
Centennial
Tax Exempt Trust
3410 South Galena Street, Denver, Colorado 80231
Telephone 1-800-525-9310
Centennial Tax Exempt Trust (the "Trust") is a no-load "money market"
mutual fund with the investment objective of seeking the maximum short-
term interest income exempt from Federal income taxes that is consistent
with low capital risk and the maintenance of liquidity. The Trust seeks
to achieve this objective by investing in obligations issued by states,
territories and possessions of the United States or by the District of
Columbia, or their political subdivisions, authorities and corporations,
the income from which is exempt from Federal income taxes. Shares of the
Trust are sold at net asset value without a sales charge.
An investment in the Trust is neither insured nor guaranteed by the U.S.
Government. While the Trust seeks to maintain a stable net asset value
of $1.00 per share, there can be no assurance that the Trust will be able
to do so.
Shares of the Trust may be purchased directly from dealers having
sales agreements with the Trust's Distributor and also are offered to
participants in Automatic Purchase and Redemption Programs (the
"Programs") established by certain brokerage firms with which the Trust's
Distributor has entered into agreements for that purpose. (See "How to
Buy Shares" in the Appendix.) The information in this Prospectus should
be read together with the information in the Appendix which is part of
this Prospectus. Program participants should also read the description
of the Program provided by their broker.
This Prospectus sets forth concisely information about the Trust that
a prospective investor should know before investing. A Statement of
Additional Information about the Trust (the "Additional Statement") dated
November 1, 1995, has been filed with the Securities and Exchange
Commission and is available without charge upon written request to
Shareholder Services, Inc. (the "Transfer Agent"), P.O. Box 5143, Denver,
Colorado 80217-5143 or by calling the Transfer Agent at the toll-free
number shown above. The Additional Statement (which is incorporated by
reference in its entirety in this Prospectus) contains more detailed
information about the Trust and its management.
Investors are advised to read and retain this Prospectus for future
reference.
Shares of the Trust are not deposits or obligations of any bank, are
not guaranteed by any bank, and are not insured by the F.D.I.C. or any
other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is effective November 1, 1995.
<PAGE>
Table of Contents
Page
Trust Expenses 3
Financial Highlights 4
Yield Information 5
The Trust and Its Investment Policies 5
Investment Restrictions 8
Appendix
Management of the Trusts A-1
How to Buy Shares A-1
Purchases Through Automatic Purchase and
Redemption Programs A-2
Direct Purchases A-2
Payment by Check
Payment by Federal Funds Wire
Guaranteed Payment A-3
Automatic Investment Plans A-3
General A-4
Service Plan A-4
How to Redeem Shares A-4
Program Participants A-4
Shares of the Trusts Owned Directly A-4
Regular Redemption Procedure A-4
Expedited Redemption Procedure A-5
Check Writing A-5
Telephone Redemptions A-6
Retirement Plans Holding Shares of
Government Trust and Money Market Trust A-6
Automatic Withdrawal Plans A-6
General Information on Redemptions A-6
Exchanges of Shares and Retirement Plans A-7
Dividends, Distributions and Taxes A-9
Additional Information A-12
<PAGE>
Trust Expenses
The following table sets forth the fees that an investor in the Trust
might pay and the expenses paid by the Trust during its fiscal year ended
June 30, 1995.
Shareholder Transaction Expenses
Maximum Sales Charge on Purchases
(as a percentage of offering price) None
Sales Charge on Reinvested Dividends None
Redemption Fees None
Exchange Fee None
Annual Trust Operating Expenses
(as a percentage of average net assets)
Management Fees 0.45%
12b-1 (Service Plan) Fees 0.20%
Other Expenses 0.08%
-----
Total Trust Operating Expenses 0.73%
The purpose of this table is to assist an investor in understanding
the various costs and expenses that an investor in the Trust will bear
directly (shareholder transaction expenses) or indirectly (annual trust
operating expenses). "Other Expenses" includes such expenses as custodial
and transfer agent fees, audit and legal and other business operating
expenses, but excludes extraordinary expenses. For further details, see
the Trust's financial statements included in the Additional Statement.
The following example applies the above-stated expenses to a
hypothetical $1,000 investment in shares of the Trust over the time
periods shown below, assuming a 5% annual rate of return on the investment
and also assuming that the shares are redeemed at the end of each stated
period. The amounts shown below are the cumulative costs of such
hypothetical $1,000 investment for the periods shown.
1 year 3 years 5 years 10 years
------ ------- ------- --------
$7 $23 $41 $91
This example should not be considered a representation of past or
future expenses or performance. Expenses are subject to change and actual
performance and expenses may be less or greater than those illustrated
above.
<PAGE>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
each period
The table on the following pages presents selected information about
the Trust, including per share data and expense ratios and other data
based on the Trust's average net assets. This information has been
audited by Deloitte & Touche LLP, independent auditors, whose report on
the financial statements of the Trust for the fiscal year ended June 30,
1995 is included in the Additional Statement.
<TABLE>
<CAPTION>
Year Ended June 30, SIX MONTHS YEAR ENDED
---------------------------------------------------------------------- ENDED JUNE 30, DECEMBER 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
----- ----- ----- ----- ----- ----- ----- ----- ----- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <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 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations--net investment
income and net realized gain
on investments .03 .02 .02 .03 .04 .05 .05 .04 .04 .02 .05
Dividends and distributions to
shareholders (.03) (.02) (.02) (.03) (.04) (.05) (.05) (.04) (.04) (.02) (.05)
----- ---- - ---- ----- ---- ---- ----- ---- ---- ---- ----
Net asset value, end of period $ 1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ===== ===== ===== ===== =====
===== ===== ===== =====
TOTAL RETURN, AT NET ASSET
VALUE(1) 3.17% 1.90% 2.19% 3.55% 5.09% 5.70% 5.55% 4.35% 3.83% 2.25%
5.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
millions) $1,315 $1,039 $ 981 $ 917 $787 $ 575 $ 486 $ 518 $ 459 $ 469 $ 212
Average net assets (in
millions) $1,127 $1,057 $ 977 $ 900 $711 $ 561 $ 504 $ 485 $ 522 $ 385 $ 154
Number of shares outstanding at
end of period (in millions) 1,315 1,039 981 917 787 575 486 518 459 469 212
Ratios to average net assets:
Net investment income 3.13% 1.87% 2.08% 3.40% 4.84% 5.44% 5.45% 4.30% 3.71% 4.34%(2)
4.59%
Expenses .73% .76% .76% .75% .77% .79% .78% .78% .79% .82%(2) .82%
</TABLE>
1. Assumes a 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 are
not annualized for periods of less than one full year. Total returns reflect
changes in net investment income only.
2. Annualized.
<PAGE>
Yield Information
From time to time, the "yield," "compounded effective yield" and
"tax-equivalent yield" of an investment in the Trust may be advertised.
These yield figures are based on historical earnings per share and are not
intended to indicate future performance. The "yield" of the Trust is the
income generated by an investment in the Trust over a seven-day period,
which is then "annualized." In annualizing, the amount of income
generated by the investment during that seven days is assumed to be
generated each week over a 52-week period, and is shown as a percentage
of the investment. The "compounded effective yield" is calculated
similarly, but the annualized income earned by an investment in the Trust
is assumed to be reinvested. The "compounded effective yield" will
therefore be slightly higher than the yield because of the effect of the
assumed reinvestment. The Trust's "tax-equivalent yield" is calculated
by dividing that portion of the Trust's "yield" (calculated as described
above) which is tax-exempt by one minus a stated income tax rate and
adding the result to the portion (if any) of the Trust's yield that is not
tax-exempt. See "Yield Information" in the Additional Statement for
additional information about the methods of calculating these yields.
The Trust and Its Investment Policies
The Trust is a no-load tax-exempt "money market" fund. It is an
open-end, diversified management investment company organized as a
Massachusetts business trust in 1985. The Trust was initially organized
in 1980 as a Maryland corporation. 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 value of Trust shares is not insured or guaranteed by any
government agency. However, shares held in brokerage accounts would be
eligible for coverage by the Securities Investor Protection Corporation
for losses arising from the insolvency of the brokerage firm. The Trust's
shares may be purchased at their net asset value, which will remain fixed
at $1.00 per share except under extraordinary circumstances (see
"Determination of Net Asset Value Per Share" in the Additional Statement
for further information). There can be no assurance, however, that the
Trust's net asset value will not vary or that the Trust will achieve its
investment objective. In seeking its objective, the Trust may invest in
the securities discussed below. The Trust's investment policies and
practices are not "fundamental" policies (as defined below) unless a
particular policy is identified as fundamental. The Board may change
non-fundamental investment policies without shareholder approval. The
Trust's investment objective is a fundamental policy.
The Trust seeks to achieve its objective by investing in municipal
bonds, municipal notes (including tax anticipation notes, bond
anticipation notes, revenue anticipation notes, construction loan notes
and other short-term loans), tax-exempt commercial paper, certificates of
participation, participation interests and other debt obligations issued
by or on behalf of the states and the District of Columbia, any
commonwealth or territory of the United States, or their respective
political subdivisions, agencies, instrumentalities or authorities, the
interest from which is not subject to Federal individual income tax, in
the opinion of bond counsel to the respective issuer at the time of issue
(collectively, "Municipal Securities"). Such obligations having
maturities of (a) one year or more when issued are referred to as
"Municipal Bonds," and (b) less than one year are referred to as
"Municipal Notes." The Trust may invest in Municipal Bonds and Notes
offered on a "when-issued" basis, as discussed below and in the Additional
Statement. The Trust will not invest in foreign securities. No
independent investigation has been made by Centennial Asset Management
Corporation, the Trust's investment manager (the "Manager") as to the
users of proceeds of such offerings or the application of such proceeds.
The Trust may also purchase Municipal Securities with demand features that
meet the requirements of Rule 2a-7 (discussed below) and are approved
under standards adopted by the Trust's Board of Trustees. All Municipal
Securities in which the Trust invests must have, or, pursuant to
regulations adopted by the Securities and Exchange Commission, be deemed
to have, remaining maturities of 397 days or less at the date the Trust
purchases them. The two principal classifications of Municipal Securities
are "general obligations" (secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest)
and "revenue obligations" (payable only from the revenues derived from a
particular facility or class of facilities, or specific excise tax or
other revenue source).
Under normal market conditions, the Trust attempts to invest 100% of
its assets in Municipal Securities, and the Trust will make no 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,
including: (i) repurchase agreements (explained below); (ii) Municipal
Securities issued to benefit a private user ("Private Activity Municipal
Securities"), the interest from which may be subject to Federal
alternative minimum tax (see "Dividends, Distributions and Taxes" below
and "Private Activity Municipal Securities" in the Additional Statement);
and (iii) certain "Temporary Investments" defined below in "Temporary
Investments." However, in times of unstable economic or market
conditions, when the Manager determines it appropriate to do so, the Trust
may assume a temporary defensive position and invest an unlimited amount
of its assets in Temporary Investments. The Trust may also hold Temporary
Investments pending the investment of proceeds from the sale of Trust
shares or portfolio securities, pending settlement of Municipal Securities
purchases or to meet anticipated redemptions. Normally, the Trust will
not invest more than 20% of its total assets in Private Activity Municipal
Securities and other taxable investments described above. The Trust will
generally use its best efforts to dispose of such securities within sixty
days of acquisition. To the extent the Trust receives income from taxable
investments, it may not achieve its investment objective.
Ratings of Securities
Under Rule 2a-7 of the Investment Company Act of 1940, as amended
(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 the Rule, the Trust may purchase only those securities
that the Trust's Board of Trustees has determined have minimal credit
risks and are "Eligible Securities."
An "Eligible Security" is (a) one that has received a rating in one
of the two highest short-term rating categories by any two "nationally-
recognized statistical rating organizations" (as defined in the Rule)
("Rating Organizations"), or, if only one Rating Organization has rated
that security, by that Rating Organization, or (b) an unrated security
that is judged by the Manager to be of comparable quality to investments
that are "Eligible Securities" rated by Rating Organizations. The Rule
permits the Trust to purchase "First Tier Securities," which are Eligible
Securities rated in the highest rating category for short-term debt
obligations by at least two Rating Organizations, or, if only one Rating
Organization has rated a particular security, by that Rating Organization,
or comparable unrated securities. Under the Rule, the Trust may invest
only up to 5% of its assets in "Second Tier Securities," which are
Eligible Securities that are not "First Tier Securities." The Trust's
Board must approve or ratify the purchase of Eligible Securities that are
unrated or are rated by only one Rating Organization. Additionally, under
Rule 2a-7, the Trust must maintain a dollar-weighted average portfolio
maturity of no more than 90 days, and the maturity of any single portfolio
investment may not exceed 397 days. The Trust's Board has adopted
procedures under Rule 2a-7 pursuant to which the Board has delegated to
the Manager certain responsibilities, in accordance with that Rule, of
conforming the Trust's investments with the requirements of the Rule and
those procedures.
Exhibit A of the Additional Statement contains information on the
rating categories of Rating Organizations. Ratings at the time of
purchase will determine whether securities may be acquired under the above
restrictions. Subsequent downgrades in ratings may require reassessments
of the credit risks presented by a security and may require its sale. See
"Ratings of Securities" in "Investment Objective and Policies" in the
Additional Statement for further details.
- Board Approved Instruments. The Trust may invest in obligations,
other than those discussed above, approved by the Trust's Board of
Trustees and which are in accordance with the Trust's investment
objective, policies and restrictions.
Illiquid and Restricted Securities
The Trust will not purchase or otherwise acquire any security if, as
a result, more than 10% of its net assets (taken at current value) would
be invested in securities that are illiquid by virtue of the absence of
a readily available market, or because of legal or contractual
restrictions on resale ("restricted securities"). This policy does not
limit the acquisition of: (i) restricted securities eligible for resale
to qualified institutional purchasers pursuant to Rule 144A under the
Securities Act of 1933 that are determined to be liquid by the Board of
Trustees or by the Manager under Board-approved guidelines, or (ii)
commercial paper that may be sold without registration under Section
3(a)(3) or Section 4(2) of the Securities Act of 1933. Such guidelines
take into account trading activity for such securities and the
availability of reliable pricing information, among other factors. If
there is a lack of trading interest in particular Rule 144A securities,
the Trust's holdings of those securities may be illiquid. If, due to
changes in relative value, more than 10% of the value of the Trust's net
assets consist of illiquid securities, the Manager would consider
appropriate steps to protect the Trust's maximum flexibility. There may
be undesirable delays in selling illiquid securities at prices
representing their fair value.
Floating Rate/Variable Rate Obligations
Some of the Municipal Securities the Trust may purchase may have
variable or floating interest rates. Variable rates are adjustable at
stated periodic intervals of no more than one year. Floating rates are
automatically adjusted according to a specified market rate for such
investments, such as the PSA Municipal Swap Index or the J.J. Kenney
Index. The Trust may purchase these obligations if they have a remaining
maturity of 397 days or less; if their maturity is greater than 397 days,
they may be purchased if they have a demand feature that permits the Trust
to recover the principal amount of the underlying security at specified
intervals not exceeding 397 days and upon no more than 30 days notice.
The Manager may determine that an unrated floating rate or variable rate
demand obligation meets the Trust's quality standards by reason of being
backed by a letter of credit or guarantee issued by a bank that meets the
Trust's quality standards. See "Floating Rate/Variable Rate Obligations"
in the Additional Statement for more details.
Puts and Standby Commitments
For liquidity purposes, the Trust may purchase Municipal Securities
with puts from banks, brokers, dealers or other institutions. A put gives
the Trust the right to sell the underlying security within a specified
time at a stated price. Under a standby commitment, a dealer agrees to
purchase, at the Trust's option, specified Municipal Securities at a
stated price on same-day settlement. The aggregate price of a security
subject to a put or standby commitment may be higher than the price which
otherwise would be paid for the security without such put or standby
commitment, thereby increasing the cost of such security and reducing its
yield. See "Puts and Standby Commitments" in the Additional Statement for
further details.
When-Issued and Delayed Delivery Securities
The Trust may invest in Municipal Securities on a "when-issued" or
"delayed delivery" basis. In those transactions, the Trust obligates
itself to purchase or sell securities, with delivery and payment to occur
at a later date, to secure what is considered to be an advantageous price
and yield at the time the obligation is entered into. The price, which
is generally expressed in yield terms, is fixed at the time the commitment
to purchase is made, but delivery and payment for when-issued securities
take place at a later date (normally within 30 days of purchase). During
the period between purchase and settlement, no payment is made by the
Trust to the issuer and no interest accrues to the Trust from the
investment. Although the Trust is subject to the risk of adverse market
fluctuation during that period, the Manager does not believe that the
Trust's net asset value or income will be materially adversely affected
by the Trust's purchase of Municipal Securities on a "when-issued" or
"delayed delivery" basis. See "When-Issued and Delayed Delivery
Transactions" in the Additional Statement for more details.
Participation Interests
The Trust may acquire participation interests in senior, fully-
secured floating rate loans that are made primarily to municipal
borrowers. The Trust currently intends to invest no more than 5% of its
net assets during the coming year in participation interests. Such
participation interests, which may take the form of interests in, or
assignments of, the loan, may be acquired from banks or other lenders who
have made loans or are members of a lending syndicate. The Trust's
investments in participation interests are subject to its 10% of net
assets limitation on investments in illiquid securities (see "Investment
Restrictions - "Illiquid and Restricted Securities," above). Further
details are set forth in the Additional Statement under "Municipal Notes -
Participation Interests."
Temporary Investments
The Trust may hold the following "Temporary Investments" that are
Eligible Securities: (i) obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities; (ii) bankers acceptances;
(iii) taxable commercial paper rated in the highest category by a Rating
Organization; (iv) short-term taxable debt obligations rated in one of the
two highest rating categories of a Rating Organization; or (v)
certificates of deposit of domestic banks with assets of $1 billion or
more.
Repurchase Agreements
The Trust may acquire securities that are subject to repurchase
agreements. The Trust's repurchase agreements must comply with the
collateral requirements of Rule 2a-7. If the vendor fails to pay the
agreed-upon resale price on the delivery date, the Trust's risks may
include any costs of disposing of the collateral, and any loss resulting
from any delay in foreclosing on the collateral. The Trust ordinarily
will not purchase or otherwise acquire any security or invest in a
repurchase agreement, if as a result, more than 10% of its net assets
(taken at current value) at the time of purchase would be invested in
repurchase agreements not entitling the holder to payment of principal
within 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 and
accordingly, under normal market conditions, the Trust will limit its
investments in repurchase transactions to 20% of its total assets. See
"Repurchase Agreements" in the Additional Statement for further details.
Investment Restrictions
The Trust has certain investment restrictions which, together with
its investment objective, are fundamental policies, changeable only by the
vote of a "majority" (as defined in the Investment Company Act) of the
Trust's outstanding voting securities. Under some of those restrictions,
the Trust cannot: (1) 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; (2) 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; (3) 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); (4) purchase more than 10% of the outstanding
voting securities of any one issuer or invest in companies for the purpose
of exercising control; or (5) 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 percentage
restrictions above and in the Additional Statement apply only at the time
of investment and require no action by the Trust as a result of
subsequent changes in value of the investments or the size of the Trust.
A supplementary list of investment restrictions is contained in
"Investment Restrictions" in the Additional Statement.
<PAGE>
APPENDIX
This Appendix is part of the Prospectuses of Centennial Money Market Trust
("Money Market Trust"), Centennial Tax Exempt Trust ("Tax Exempt Trust")
and Centennial Government Trust ("Government Trust"), each of which is
referred to in this Appendix individually as a "Trust" and collectively
are referred to as the "Trusts." Unless otherwise indicated, the
information in this Appendix applies to each Trust.
Management of the Trusts
The Board of Trustees of each Trust has overall responsibility for
the management of that Trust under the laws of Massachusetts governing the
responsibilities of trustees of business trusts. "Trustees and Officers"
in the Additional Statement identifies the Trustees and officers and
provides information about them. Subject to the authority of the Board,
the Trusts' investment manager, Centennial Asset Management Corporation
(the "Manager"), is responsible for the day-to-day management of each
Trust's business, supervises the investment operations of each Trust and
the composition of its portfolio and furnishes the Trusts advice and
recommendations with respect to investments, investment policies and the
purchase and sale of securities, pursuant to a management agreement
(collectively, the "Agreements") with each Trust. The management fee is
payable monthly to the Manager under the terms of each Trust's Agreement
and is computed on the aggregate net assets of the respective Trust as of
the close of business each day. The annual rates applicable to Money
Market Trust and Government Trust are as follows: 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% of net assets in excess of $1 billion.
See the Additional Statement for an explanation of the Manager's
reimbursement arrangement for the Trusts set forth in their Agreements and
the Manager's voluntary expense assumption for Money Market Trust. The
annual rates applicable to Tax Exempt Trust are as follows: 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 Tax Exempt Trust's Agreement, when the value of Tax
Exempt 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. "Investment Management
Services" in the Additional Statement contains more complete information
about the Agreements, including a discussion of expense arrangements,
description of the exculpation provisions and portfolio transactions.
The Manager, a wholly-owned subsidiary of Oppenheimer Management
Corporation ("OMC"), has operated as an investment adviser since 1978.
The Manager and its affiliates currently advise U.S. investment companies
with assets aggregating over $38 billion as of September 30, 1995, and
having more than 2.8 million shareholder accounts. OMC is wholly owned
by Oppenheimer Acquisition Corp., a holding company owned in part by
senior management of OMC and the Manager, and ultimately controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company which also advises pension plans and investment companies.
How to Buy Shares
Shares of each Trust may be purchased at their offering price, which
is net asset value per share, without sales charge. The net asset value
will remain fixed at $1.00 per share, except under extraordinary
circumstances (see "Determination of Net Asset Value Per Share" in the
Additional Statement for further details). There can be no guarantee that
any Trust will maintain a stable net asset value of $1.00 per share.
Centennial Asset Management Corporation, which also acts as the
distributor for each Trust (and in that capacity is referred to as the
"Distributor"), may in its sole discretion accept or reject any order for
purchase of a Trust's shares. Oppenheimer Funds Distributor, Inc.
("OFDI"), an affiliate of the Distributor, acts as the sub-distributor for
each Trust (the "Sub-Distributor").
The minimum initial investment is $500 ($2,500 if by Federal Funds
wire), except as otherwise described in this Prospectus. Subsequent
purchases must be in amounts of $25 or more, and may be made through
authorized dealers or brokers or by forwarding payment to the Distributor
at P.O. Box 5143, Denver, Colorado 80217, with the name(s) of all account
owners, the account number and the name of the Trust. The minimum initial
and subsequent purchase requirements are waived on purchases made by
reinvesting dividends from any of the "Eligible Funds" listed in "Exchange
Privilege" below or by reinvesting distributions from unit investment
trusts for which reinvestment arrangements have been made with the
Distributor. Under an Automatic Investment Plan or military allotment
plan, initial and subsequent investments must be at least $25. No share
certificates will be issued unless specifically requested in writing by
an investor or the dealer or broker.
Each Trust intends to be as fully invested as practicable to maximize
its yield. Therefore, dividends will accrue on newly-purchased shares
only after the Distributor accepts the purchase order at its address in
Denver, Colorado, on a day the New York Stock Exchange is open (a "regular
business day"), under one of the methods of purchasing shares described
below. The purchase will be made at the net asset value next determined
after the Distributor accepts the purchase order.
Each Trust's net asset value per share is determined twice each
regular business day, at 12:00 Noon and the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier on some
days (all references to time in this Prospectus mean New York time), by
dividing the net assets of the Trust by the total number of its shares
outstanding. Each Trust's Board of Trustees has established procedures
for valuing the Trust's assets, using the amortized cost method as
described in "Determination of Net Asset Value Per Share" in the
Additional Statement.
Purchases Through Automatic Purchase and Redemption Programs
Shares of each Trust are available under Automatic Purchase and
Redemption Programs ("Programs") of broker-dealers that have entered into
agreements with the Distributor for that purpose. Broker-dealers whose
clients participate in such Programs will invest the "free cash balances"
of such client's Program account in shares of the Trust selected as the
primary Trust by the client for the Program account. Such purchases will
be made by the broker-dealer under the procedures described in "Guaranteed
Payment," below. The Program may have minimum investment requirements
established by the broker-dealer. The description of the Program provided
by the broker-dealer should be consulted for details, and all questions
about investing in, exchanging or redeeming shares of a Trust through a
Program should be directed to the broker-dealer.
Direct Purchases
An investor may directly purchase shares of the Trusts through any
dealer which has a sales agreement with the Distributor or the Sub-
Distributor. There are two ways to make a direct initial investment:
either (1) complete a Centennial Funds New Account Application and mail
it with payment to the Distributor at P.O. Box 5143, Denver, Colorado
80217 (if no dealer is named in the Application, the Sub-Distributor will
act as the dealer), or (2) order the shares through your dealer or broker.
Purchases made by Application should have a check enclosed, or payment may
be made by one of the alternative means described below.
- Payment by Check. Orders for shares purchased by check in U.S.
dollars drawn on a U.S. bank will be effected on the regular business day
on which the check (and the purchase application, if the account is new)
is accepted by the Distributor. Dividends will begin to accrue on such
shares the next regular business day after the purchase order is accepted.
For other checks, the shares will not be purchased until the Distributor
is able to convert the purchase payment to Federal Funds, and dividends
will begin to accrue on such shares on the next regular business day.
- Payment by Federal Funds Wire. Shares of each Trust may be
purchased by direct shareholders by Federal Funds wire. The minimum
investment by wire is $2,500. The investor must first call the
Distributor's Wire Department at 1-800-852-8457 to notify the Distributor
of the transmittal of the wire and to order the shares. The investor's
bank must wire the Federal Funds to Citibank, N.A., ABA No. 0210-0008-9,
for credit to Concentration Account No. 3737-5674 (Centennial Money Market
Trust or Centennial Tax Exempt Trust) or Concentration Account No. 3741-
9796 (Centennial Government Trust), for further credit to the following
account numbers for the respective Trust: (i) Centennial Money Market
Trust Custodian Account No. 099920, (ii) Centennial Government Trust
Custodian Account No. 099975, or (iii) Centennial Tax Exempt Trust
Custodian Account No. 099862.
The wire must state the investor's name. Shares will be purchased
on the regular business day on which the Federal Funds are received by
Citibank, N.A. (the "Custodian") prior to the close of The New York Stock
Exchange (which is normally 4:00 P.M.) but may be earlier on some days and
the Distributor has received and accepted the investor's notification of
the wire order prior to the close of The New York Stock Exchange. Those
shares will be purchased at the net asset value next determined after
receipt of the Federal Funds and the order. Dividends on newly purchased
shares will begin to accrue on the purchase date if the Federal Funds and
order for the purchase are received and accepted by 12:00 Noon. Dividends
will begin to accrue on the next regular business day if the Federal Funds
and purchase order are received and accepted between 12:00 Noon and the
close of The New York Stock Exchange. The investor must also send the
Distributor a completed Application when the purchase order is placed to
establish a new account.
- Guaranteed Payment. Broker-dealers with sales agreements with the
Distributor (including broker-dealers who have made special arrangements
with the Distributor for purchases for Program accounts) may place
purchase orders with the Distributor for purchases of a Trust's shares
prior to 12:00 Noon on a regular business day, and the order will be
effected at the net asset value determined at 12:00 Noon that day if the
broker-dealer guarantees that payment for such shares in Federal Funds
will be received by the Trust's Custodian prior to 2:00 P.M. on the same
day. Dividends on such shares will begin to accrue on the purchase date.
If an order is received between 12:00 Noon and the close of The New York
Stock Exchange on a regular business day with the broker-dealer's
guarantee that payment for such shares in Federal Funds will be received
by the Trust's Custodian by the close of the Exchange on the next regular
business day, the order will be effected at the close of the Exchange on
the day the order is received, and dividends on such shares will begin to
accrue on the next regular business day the Federal Funds are received.
If the broker-dealer guarantees that the Federal Funds payment will be
received by the Trust's Custodian by 2:00 P.M. on a regular business day
on which an order is placed for shares after 12:00 Noon, the order will
be effected at the close of the Exchange that day and dividends will begin
to accrue on such shares on the purchase date.
- Automatic Investment Plans. Direct investors may purchase shares
of a Trust automatically. Automatic Investment Plans may be used to make
regular monthly investments ($25 minimum) from the investor's account at
a bank or other financial institution. To establish an Automatic
Investment Plan from a bank account, a check (minimum $25) for the initial
purchase must accompany the application. Shares purchased by Automatic
Investment Plan payments are subject to the redemption restrictions for
recent purchases described in "How to Redeem Shares." The amount of the
Automatic Investment Plan payment may be changed or the automatic
investments terminated at any time by writing to Shareholder Services,
Inc. (the "Transfer Agent"). A reasonable period (approximately 15 days)
is required after receipt of such instructions to implement them. The
Trusts reserve the right to amend, suspend, or discontinue offering
Automatic Investment Plans at any time without prior notice.
General
Dealers and brokers who process orders for a Trust's shares on behalf
of their customers may charge a fee for this service. That fee can be
avoided by purchasing shares directly from a Trust. The Distributor, in
its sole discretion, may accept or reject any order for purchases of the
Fund's shares. The sale of shares will be suspended during any period
when the determination of net asset value is suspended, and may be
suspended by the Board of Trustees whenever the Board judges it in the
best interest of a Trust to do so.
Service Plan
Each Trust has adopted a Service Plan (the "Plan") under Rule 12b-1
of the Investment Company Act pursuant to which the Trust will reimburse
the Distributor for all or a portion of its costs incurred in connection
with the personal service and maintenance of accounts that hold Trust
shares. The Distributor will use all the fees received from the Trust to
compensate dealers, brokers, banks, or other institutions ("Recipients")
each quarter for providing personal service and maintenance of accounts
that hold Trust shares. The services to be provided by Recipients under
each Plan include, but shall not be limited to, the following: answering
routine inquiries from the Recipient's customers concerning the Trust,
providing such customers with information on their investment in Trust
shares, assisting in the establishment and maintenance of accounts or sub-
accounts in the Trust, making the Trust's investment plans and dividend
payment options available, and providing such other information and
customer liaison services and the maintenance of accounts as the
Distributor or the Trust may reasonably request. Plan payments by the
Trust to the Distributor will be made quarterly in the amount of the
lesser of: (i) 0.05% (0.20% annually) of the net asset value of the Trust,
computed as of the close of each business day or (ii) the Distributor's
actual distribution expenses for that quarter of the type approved by the
Board. Each Trust may make monthly payments to the Distributor (and the
Distributor to Recipients) in any month where Trust assets held by a
Recipient for itself or on behalf of its customers in that month exceed
$200 million. Any unreimbursed expenses incurred for any quarter by the
Distributor may not be recovered in later periods. The Plan has the
effect of increasing annual expenses of each Trust by up to 0.20% of
average annual net assets from what its expenses would otherwise be. In
addition, the Manager may, under the Plan, from time to time from its own
resources (which may include the profits derived from the advisory fee it
receives from the Trusts), make payments to Recipients for distribution,
administrative and accounting services performed by Recipients. For
further details, see "Service Plan" in the Additional Statement.
How to Redeem Shares
Program Participants
A Program participant may redeem shares in the Program by writing
checks as described below, or by contacting the dealer or broker. A
Program participant may also arrange for "Expedited Redemptions," as
described below, only through the dealer or broker.
Shares of the Trusts Owned Directly
Shares of the Trusts owned by a shareholder directly (not through a
Program) (a "direct shareholder"), may be redeemed in the following ways:
- Regular Redemption Procedure. To redeem some or all shares in an
account (whether or not represented by certificates) under the Trust's
regular redemption procedures, a direct shareholder must send the
following to the Transfer Agent for the Trust, Shareholder Services, Inc.
(the "Transfer Agent"), P.O. Box 5143, Denver, Colorado 80217 (send
courier or express mail deliveries to 10200 E. Girard Avenue, Building D,
Denver, Colorado 80231): (1) a written request for redemption signed by
all registered owners exactly as the shares are registered, including
fiduciary titles, if any, and specifying the account number and the dollar
amount or number of shares to be redeemed; (2) a guarantee of the
signatures of all registered owners on the redemption request or on the
endorsement on the share certificate or accompanying stock power, by a
U.S. bank, trust company, credit union or savings association, or a
foreign bank having a U.S. correspondent bank, or by a U.S. registered
dealer or broker in securities, municipal securities or government
securities, or by a U.S. national securities exchange, registered
securities association or clearing agency; (3) any share certificates
issued for any of the shares to be redeemed; and (4) any additional
documents which may be required by the Transfer Agent for redemption by
corporations, partnerships or other organizations, executors,
administrators, trustees, custodians, guardians, or from Individual
Retirement Accounts ("IRAs") or other retirement plans, or if the
redemption is requested by anyone other than the shareholder(s) of record.
A signature guarantee is not required for redemptions of $50,000 or less,
requested by and payable to all shareholders of record, to be sent to the
address of record for that account. Transfers of shares are subject to
similar requirements. To avoid delay in redemptions or transfers,
shareholders having questions about these requirements should contact the
Transfer Agent in writing or by calling 1-800-525-9310 before submitting
a request. From time to time the Transfer Agent in its discretion may
waive any or certain of the foregoing requirements in particular cases.
Redemption or transfer requests will not be honored until the Transfer
Agent receives all required documents in proper form.
- Expedited Redemption Procedure. In addition to the regular
redemption procedure set forth above, direct shareholders whose shares are
not represented by certificates may arrange to have redemption proceeds
of $2,500 or more wired in Federal Funds to a designated commercial bank
if the bank is a member of the Federal Reserve wire system. To place a
wire redemption request, call the Transfer Agent at 1-800-852-8457. The
account number of the designated financial institution and the bank ABA
number must be supplied to the Transfer Agent on the Application or dealer
settlement instructions establishing the account or may be added to
existing accounts or changed only by signature-guaranteed instructions to
the Transfer Agent from all shareholders of record. Such redemption
requests may be made by telephone, wire or written instructions to the
Transfer Agent. The wire for the redemption proceeds of shares redeemed
prior to 12:00 Noon normally will be transmitted by the Transfer Agent to
the shareholder's designated bank account on the day the shares are
redeemed (or, if that day is not a bank business day, on the next bank
business day). Shares redeemed prior to 12:00 Noon do not earn dividends
on the redemption date. The wire for the redemption proceeds of shares
redeemed between 12:00 Noon and the close of The New York Stock Exchange,
which is normally 4:00 P.M., but may be earlier on some days, normally
will be transmitted by the Transfer Agent to the shareholder's designated
bank account on the next bank business day after the redemption. Shares
redeemed between 12:00 Noon and the close of the Exchange earn dividends
on the redemption date. See "Purchase, Redemption and Pricing of Shares"
in the Additional Statement for further details.
- Check Writing. Upon request, the Transfer Agent will provide any
direct shareholder of the Trusts or any Program participant whose shares
are not represented by certificates, with forms of drafts ("checks")
payable through a bank selected by the Trust (the "Bank"). Checks may be
made payable to the order of anyone in any amount not less than $250, and
will be subject to the Bank's rules and regulations governing checks.
Program participants' checks will be payable from the primary account
designated by the Program participant. The Transfer Agent will arrange
for checks written by direct shareholders to be honored by the Bank after
obtaining a specimen signature card from the shareholder(s). Program
participants should arrange for Check Writing through their brokers or
dealers. If a check is presented for an amount greater than the account
value, it will not be honored. Shareholders of joint accounts may elect
to have checks honored with a single signature. Checks issued for one
Trust account must not be used if the shareholder's account has been
transferred to a new account or if the account number or registration has
changed. Shares purchased by check or Automatic Investment Plan payments
within the prior 10 days may not be redeemed by Check Writing. A check
that would require redemption of some or all of the shares so purchased
is subject to non-payment. The Bank will present checks to the Trust to
redeem shares to cover the amount of the check. Checks may not be
presented for cash 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 Check Writing privileges at any
time without prior notice.
- Telephone Redemptions. Direct shareholders of the Trusts may
redeem their shares by telephone by calling the Transfer Agent at 1-800-
852-8457. This procedure for telephone redemptions is not available to
Program participants. Proceeds of telephone redemptions will be paid by
check payable to the shareholder(s) of record and sent to the address of
record for the account. Telephone redemptions are not available within
30 days of a change of the address of record. Up to $50,000 may be
redeemed by telephone, in any seven day period. The Transfer Agent may
record any calls. Telephone redemptions may not be available if all lines
are busy, and shareholders would have to use the Trusts' regular
redemption procedures described above. Telephone redemption privileges
are not available for newly-purchased (within the prior 10 days) shares
or for shares represented by certificates. Telephone redemption
privileges apply automatically to each shareholder and the dealer
representative of record unless the Transfer Agent receives cancellation
instructions from a shareholder of record. If an account has multiple
owners, the Transfer Agent may rely on the instructions of any one owner.
Retirement Plans Holding Shares of Government Trust and Money Market Trust
Requests for distributions from OppenheimerFunds-sponsored Individual
Retirement Accounts ("IRAs"), 403(b)(7) custodial plans, or pension or
profit-sharing plans of direct shareholders for which the Manager or its
affiliates act as sponsors should be addressed to "Bank of Boston c/o
Shareholder Services, Inc." at the above address, and must: (i) state the
reason for distribution; (ii) state the owner's awareness of tax penalties
if the distribution is premature; and (iii) conform to the requirements
of the plan and the Trust's requirements for regular redemptions discussed
above. Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans may not
directly request redemption of their accounts. The employer or plan
administrator must sign the request. Distributions from such plans are
subject to additional requirements under the Internal Revenue Code and
certain documents (available from the Transfer Agent) must be completed
before the distribution may be made. Distributions from retirement plans
are subject to withholding requirements under the Internal Revenue Code
of 1986, as amended, 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 Trustee, the Trusts,
the Manager, the 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
penalties assessed.
- Automatic Withdrawal Plans. Direct shareholders of the Trusts can
authorize the Transfer Agent to redeem shares (minimum $50) automatically
on a monthly, quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed as of the close of The New York
Stock Exchange, three days prior to the date requested by the shareholder
for receipt of the payment. The Trusts cannot guarantee receipt of
payment on the date requested and reserve the right to amend, suspend or
discontinue offering such Plan at any time without prior notice. Required
minimum distributions from OppenheimerFunds-sponsored retirement plans may
not be arranged on this basis. For further details, see the Automatic
Withdrawal Plan provisions included as Exhibit B to the Additional
Statement.
General Information on Redemptions
The redemption price will be the net asset value per share of the
applicable Trust next determined after the receipt by the Transfer Agent
of a request in proper form. Under certain unusual circumstances, the
Board of Trustees of Tax Exempt Trust may involuntarily redeem small
accounts (valued at less than $500). Should the Board elect to exercise
this right, it may also fix, in accordance with the Investment Company
Act, the requirements for any notice to be given to the shareholders in
question (not less than 30 days), or may set requirements for permission
to allow the shareholder to increase the investment so that the shares
would not be involuntarily redeemed. The Board of Trustees of Tax Exempt
Trust may also involuntarily redeem shares in amounts sufficient to
reimburse the Trust or the Distributor for any loss due to cancellation
of a share purchase order. Under the Internal Revenue Code, the Trusts
may be required to impose "backup" withholding of Federal income tax at
the rate of 31% from any taxable dividends and distributions the Trust may
make if the shareholder has not furnished the Trust with a certified
taxpayer identification number or has not complied with provisions of the
Internal Revenue Code relating to reporting dividends.
Payment for redeemed shares is made ordinarily in cash and forwarded
within seven days of the Transfer Agent's receipt of redemption
instructions in proper form, except under unusual circumstances as
determined by the Securities and Exchange Commission. For accounts
registered in the name of a broker-dealer, payment will be forwarded
within three business days. The Transfer Agent may delay forwarding a
redemption check for recently-purchased shares only until the purchase
check has cleared, which may take up to 10 or more days from the purchase
date. Such delay may be avoided if the shareholder arranges telephone or
written assurance satisfactory to the Transfer Agent from the bank on
which the purchase payment was drawn, or by purchasing shares by Federal
Funds wire, as described above. The Trust makes no charge for redemption.
Dealers or brokers may charge a fee for handling redemption transactions,
but such fee can be avoided by requesting the redemption directly through
the Transfer Agent. Under certain circumstances, the proceeds of
redemption of shares of a Trust acquired by exchange of shares of Eligible
Funds that were purchased subject to a contingent deferred sales charge
("CDSC") may be subject to the CDSC (see "Exchange Privilege" below).
Exchanges of Shares and Retirement Plans
Exchange Privilege
Shares of each of the Trusts held under Programs may be exchanged 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 if available for sale in the
shareholder's state of residence only by instructions of the broker.
Shares of the Trusts may, under certain conditions, be exchanged by direct
shareholders for Class A shares of the following funds, all collectively
referred to as "Eligible Funds": (i) Oppenheimer Target Fund, Oppenheimer
Champion Income Fund, Oppenheimer Asset Allocation Fund, Oppenheimer
Discovery Fund, Oppenheimer U.S. Government Trust, Oppenheimer Global
Growth & Income Fund, Oppenheimer Global Emerging Growth Fund, Oppenheimer
Limited-Term Government Fund, Oppenheimer Intermediate Tax-Exempt Fund,
Oppenheimer Insured Tax-Exempt Fund, Oppenheimer International Bond Fund,
Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer Growth Fund,
Oppenheimer Equity Income Fund, Oppenheimer Main Street California Tax-
Exempt Fund, Oppenheimer Main Street Income & Growth Fund, Oppenheimer
Gold & Special Minerals Fund, Oppenheimer Bond Fund, Oppenheimer Value
Stock Fund, Oppenheimer California Tax-Exempt Fund, Oppenheimer
Pennsylvania Tax-Exempt Fund, Oppenheimer Florida Tax-Exempt Fund,
Oppenheimer New Jersey Tax-Exempt Fund, Oppenheimer New York Tax-Exempt
Fund, Oppenheimer High Yield Fund, Oppenheimer Total Return Fund, Inc.,
Oppenheimer Tax-Free Bond Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund, and (ii) the following "Money
Market Funds": Centennial Money Market Trust, Centennial Government Trust,
Centennial America Fund, L.P., Centennial California Tax Exempt Trust,
Centennial New York Tax Exempt Trust and Centennial Tax Exempt Trust
(collectively, the "Centennial Trusts"), Oppenheimer Money Market Fund,
Inc., Oppenheimer Cash Reserves and Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of each
Eligible Fund except the Money Market Funds (under certain circumstances
described below, redemption proceeds of Money Market Fund shares may be
subject to a CDSC).
Shares of the Trusts and of the other Eligible Funds may be exchanged
at net asset value, if all of the following conditions are met: (1) shares
of the fund selected for exchange are available for sale in the
shareholder's state of residence; (2) the respective prospectuses of the
funds whose shares are to be exchanged and acquired offer the Exchange
Privilege to the investor; (3) newly-purchased shares (by initial or
subsequent investment) are held in an account for at least seven days
prior to the exchange; and (4) the aggregate net asset value of the shares
surrendered for exchange into a new account is at least equal to the
minimum investment requirements of the fund whose shares are to be
acquired.
In addition to the conditions stated above, shares of Eligible Funds
may be exchanged for shares of any Money Market Fund; shares of any Money
Market Fund (including the Trusts) purchased without a sales charge may
be exchanged for shares of Eligible Funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to purchase
shares of Eligible Funds subject to a CDSC); and shares of a Trust
acquired by reinvestment of dividends and distributions from any Eligible
Fund, except Oppenheimer Cash Reserves, or from any unit investment trust
for which reinvestment arrangements have been made with the Distributor
or Sub-Distributor may be exchanged at net asset value for shares of any
Eligible Fund. The redemption proceeds of shares of a Trust acquired by
exchange of Class A shares of an Eligible Fund purchased subject to a
CDSC, that are redeemed within 18 months of the end of the calendar month
of the initial purchase of the exchanged shares, will be subject to the
CDSC as described in the prospectus of that other eligible fund; in
determining whether the CDSC is payable, shares of the Trust not subject
to the CDSC are redeemed first, including shares purchased by reinvestment
of dividends and capital gains distributions from any Eligible Fund or
shares of the Trust acquired by exchange of shares of Eligible Funds on
which a front-end sales charge was paid or credited, and then other shares
are redeemed in the order of purchase.
- How to Exchange Shares. An exchange may be made by direct
shareholders by submitting an Exchange Authorization Form to the Transfer
Agent, signed by all registered owners. In addition, direct shareholders
of the Trusts may exchange shares of a Trust for shares of any Eligible
Fund by telephone exchange instructions to the Transfer Agent by a
shareholder or the dealer representative of record for an account. The
Trusts may modify, suspend or discontinue this exchange privilege at any
time. Although the Trust will attempt to provide you notice whenever
reasonably able to do so, it may impose these changes at any time. The
Trusts reserve the right to reject written requests submitted in bulk on
behalf of 10 or more accounts. Exchange requests must be received by the
Transfer Agent by the close of The New York Stock Exchange on a regular
business day to be effected that day. The number of shares exchanged may
be less than the number requested if the number requested would include
shares subject to a restriction cited above or shares covered by a
certificate that is not tendered with such request. Only the shares
available for exchange without restriction will be exchanged.
- Telephone Exchanges. Direct shareholders may place a telephone
exchange request by calling the Transfer Agent at 1-800-852-8457.
Telephone exchange calls may be recorded by the Transfer Agent. Telephone
exchanges are subject to the rules described above. By exchanging shares
by telephone, the shareholder is acknowledging receipt of a prospectus of
the fund to which the exchange is made and that for full or partial
exchanges, any special account features such as Automatic Investment
Plans, Automatic Withdrawal Plans and retirement plan contributions will
be switched to the new account unless the Transfer Agent is otherwise
instructed. Telephone exchange privileges automatically apply to each
direct shareholder of record and the dealer representative of record
unless and until the Transfer Agent receives written instructions from the
shareholder(s) of record cancelling such privileges. If an account has
multiple owners, the Transfer Agent may rely on the instructions of any
one owner. The Transfer Agent has adopted reasonable procedures to
confirm that telephone instructions are genuine, by requiring callers to
provide tax identification number(s) and other account data and by
recording calls and confirming such transactions in writing. If the
Transfer Agent does not use such procedures, it may be liable for losses
due to unauthorized transactions, but otherwise neither it nor any Trust
will be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine. The Transfer Agent
reserves the right to require shareholders to confirm, in writing,
telephone exchange privileges for an account. Shares acquired by
telephone exchange must be registered exactly as the account from which
the exchange was made. Certificated shares are not eligible for telephone
exchange. If all telephone exchange lines are busy (which might occur,
for example, during periods of substantial market fluctuations),
shareholders might not be able to request telephone exchanges and would
have to submit written exchange requests.
- General Information on Exchanges. Shares to be exchanged are
redeemed on the day the Transfer Agent receives an exchange request in
proper form (the "Redemption Date"), as of the close of The New York Stock
Exchange, which is normally 4:00 P.M., but may be earlier some days.
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. Each Trust in its
discretion reserves the right to refuse any exchange request that will
disadvantage it.
The Eligible Funds have different investment objectives and policies.
Each of those funds imposes a sales charge on purchases of Class A shares
except the Money Market Funds. For complete information, including sales
charges and expenses, a prospectus of the fund into which the exchange is
being made should be read prior to an exchange. Dealers and brokers who
process exchange orders on behalf of their customers may charge for their
services. Direct shareholders may avoid those charges by requesting the
Trust directly to exchange shares. For Federal tax purposes, an exchange
is treated as a redemption and purchase of shares.
Retirement Plans
The Distributor has available for direct shareholders who purchase
shares of Government Trust and Money Market Trust: (i) individual
retirement accounts (IRAs), including Simplified Employee Pension Plans
(SEP IRAs); (ii) prototype pension and profit-sharing plans for
corporations and self-employed individuals; and (iii) Section 403(b)(7)
custodial plans for employees of public educational institutions and
organizations of the type described in Section 501(c)(3) of the Internal
Revenue Code. The minimum initial IRA, SEP IRA, pension or profit-sharing
plan investment is normally $250. The minimum initial 403(b)(7) plan
investment is $25. For further details, including the administrative
fees, the appropriate retirement plan should be requested from the
Distributor. Retirement plans are not available to direct shareholders who
purchase shares of Tax Exempt Trust. The Trusts reserve the right to
discontinue offering their shares to such plans at any time without prior
notice.
Dividends, Distributions and Taxes
This discussion relates solely to Federal tax laws and is not
exhaustive; a qualified tax adviser should be consulted. Dividends and
distributions may be subject to Federal, state and local taxation.
Information about the possible applicability of the Alternative Minimum
Tax to Tax Exempt Trust's dividends and distributions is contained in
"Investment Objective and Policies - Private Activity Municipal
Securities" in the Additional Statement. The Additional Statement
contains a further discussion of tax matters affecting the Trusts and
their distributions.
Dividends and Distributions
Each Trust intends to declare all of its net income, as defined
below, as dividends on each regular business day and to pay dividends
monthly. Dividends will be payable to shareholders as described above in
"How To Buy Shares". All dividends and capital gains distributions for
the accounts of Program participants are automatically reinvested in
additional shares of the Trust selected. Dividends accumulated since the
prior payment will be reinvested in full and fractional shares of the
respective Trust at net asset value on the third Thursday of each calendar
month. If a shareholder redeems all shares at any time during a month,
the redemption proceeds include all dividends accrued up to the redemption
date for shares redeemed prior to 12:00 Noon, and include all dividends
accrued through the redemption date for shares redeemed between 12:00 Noon
and the close of The New York Stock Exchange. Program participants may
receive cash payments by asking the broker to redeem shares.
Participants in an A.G. Edwards & Sons, Inc. Cash Convenience Account
Program (other than those whose Account is an Individual Retirement
Account) holding shares of Tax Exempt Trust or Government Trust will
receive account statements five times a year, at the end of March, May,
August, October and December, if the only activity in their account during
that period is the automatic reinvestment of dividends. Dividends and
distributions payable to direct shareholders of the Trusts will also be
automatically reinvested in shares of the respective Trust at net asset
value, on the third Thursday of each calendar month, unless the
shareholder asks the Transfer Agent in writing to pay dividends and
distributions in cash or to reinvest them in another Eligible Fund, as
described in "Dividend Reinvestment in Another Fund" in the Additional
Statement. That notice must be received prior to the record date for a
dividend to be effective as to that dividend. Dividends, distributions
and the proceeds of redemptions of Trust shares represented by checks
returned to the Transfer Agent by the Postal Service as undeliverable will
be reinvested in shares of the respective Trust, as promptly as possible
after the return of such check to the Transfer Agent to enable the
investor to earn a return on otherwise idle funds.
Under the terms of a Program, a broker-dealer may pay out the value
of some or all of a Program participant's Trust shares prior to redemption
of such shares by the Trust. In such cases, the shareholder will be
entitled to dividends on such shares only up to and including the date of
such payment. Dividends on such shares accruing between the date of
payment and the date such shares are redeemed by the Trusts will be paid
to the broker-dealer. Program participants should discuss these
arrangements with their broker-dealer.
A Trust's net investment income for dividend purposes consists of all
interest accrued on portfolio assets, less all expenses of the Trust for
such period. Distributions from net realized gains on securities, if any,
will be paid at least once each year, and may be made more frequently in
compliance with the Internal Revenue Code and the Investment Company Act.
Long-term capital gains, if any, will be identified separately when tax
information is distributed. No Trust will make any distributions from net
realized securities gains unless capital loss carry forwards, if any, have
been used or have expired. Receipt of tax-exempt income must be reported
on the taxpayer's Federal income tax return. To effect its policy of
maintaining a net asset value of $1.00 per share, each Trust, under
certain circumstances, may withhold dividends or make distributions from
capital or capital gains. The Additional Statement describes how
dividends and distributions received by direct shareholders of the Trusts
may be reinvested in shares of any Eligible Fund at net asset value.
Tax Status of Money Market Trust's and Government Trust's Dividends and
Distributions
Dividends paid by these Trusts derived from net investment income or
net short-term capital gains are taxable to shareholders as ordinary
income, whether received in cash or reinvested. If either Trust has net
realized long-term capital gains in a fiscal year, it may pay an annual
"long-term capital gains distribution," which will be so identified when
paid and when tax information is distributed. Long-term capital gains are
taxable to shareholders as long-term capital gains, whether received in
cash or reinvested, regardless of how long Fund shares have been held.
Although income from securities issued by the U.S. Government may be
exempt from income taxation by various states, such exemptions may not
apply when the income is received in the form of a dividend from either
of these Trusts. The Government Trust will advise shareholders of the
percentage of its income earned on federal obligations.
Tax Status of Tax Exempt Trust's Dividends and Distributions
This Trust intends to qualify under the Internal Revenue Code during
each fiscal year to pay "exempt-interest dividends" to its shareholders
and did so qualify during its last fiscal year. Exempt-interest dividends
which are derived from net investment income earned by the Trust on
Municipal Securities will be excludable from gross income of shareholders
for Federal income tax purposes. Net investment income includes the
allocation of amounts of income from the Municipal Securities in the
portfolio of the Trust which is excludable from gross income for Federal
individual income tax purposes, less expenses. Expenses are accrued
daily. This allocation will be made by the use of one designated
percentage applied uniformly to all income dividends made during the
calendar year. Such designation will normally be made following the end
of each fiscal year as to income dividends paid in the prior year. The
percentage of income designated as tax-exempt may substantially differ
from the percentage of the Trust's income that was tax-exempt for a given
period. Although from time to time a portion of the exempt-interest
dividends paid by the Trust may be an item of tax preference for
shareholders subject to the alternative minimum tax, all of the dividends
(excluding distributions) paid by the Trust during the calendar year ended
December 31, 1994 were exempt from Federal income taxes. The net amount
of any income on Municipal Securities subject to the alternative minimum
tax will be identified when tax information is distributed by the Trust.
The Trust will report annually to shareholders the percentage of interest
income it received during the preceding year on Municipal Securities.
Receipt of tax-exempt income must be reported on the taxpayer's Federal
income tax return. Shareholders receiving Social Security benefits should
be aware that exempt-interest dividends are a factor in determining
whether such benefits are subject to Federal income tax.
A Trust shareholder treats a dividend as a receipt of ordinary income
(whether paid in cash or reinvested in additional shares) if derived from
net interest income earned by the Trust from one or more of: (i) certain
taxable temporary investments (such as certificates of deposit, commercial
paper, obligations of the U.S. government, its agencies or
instrumentalities, and repurchase agreements), (ii) income from securities
loans, or (iii) an excess of net short-term capital gains over net long-
term capital losses. Additionally, all or a portion of the Trust's
exempt-interest dividends may be a component of the "adjusted current
earnings" preference item under the Federal corporate alternative minimum
tax.
Under the Internal Revenue Code, interest on loans to purchase shares
of the Trust may not be deducted for Federal tax purposes. In addition,
under rules used by the Internal Revenue Service for determining when
borrowed funds are deemed used for the purpose of purchasing or carrying
particular assets, the purchase of shares of the Trust may be considered
to have been made with borrowed funds even though the borrowed funds are
not directly traceable to the purchase of shares. Furthermore, under
Section 147(a) of the Internal Revenue Code, persons who are "substantial
users" (or persons related thereto) of facilities financed by industrial
development bonds or Private Activity Municipal Securities should refer
to "Private Activity Municipal Securities" in the Additional Statement of
Tax Exempt Trust and should consult their own tax advisers before
purchasing shares. No investigation as to the users of the facilities
financed by such bonds has been made by the Tax Exempt Trust.
Tax Status of the Trusts
If a 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 dividends and distributions. Each Trust qualified
during its last fiscal year and intends to qualify in the current and
future fiscal years, while reserving the right not to qualify. However,
the Internal Revenue Code contains a number of complex tests relating to
such qualification that a Trust might not meet in any particular year.
If a Trust does not qualify, it would be treated for Federal tax purposes
as an ordinary corporation and receive no tax deduction for payments made
to shareholders. Tax Exempt Trust would then be unable to pay "exempt-
interest dividends" as discussed before. Dividends paid by any Trust will
not be eligible for the dividends-received deduction for corporations.
For information as to "backup" withholding on taxable dividends, see "How
to Redeem Shares," above.
Additional Information
Description of Shares and of the Trusts
The Trust's shares are of one class, are transferrable without
restriction and have equal rights and privileges. Each share of each
Trust represents an interest in that Trust equal to the interest of each
other share of the Trust and entitles the holder to one vote per share
(and a fractional vote for a fractional share) on matters submitted to a
shareholder vote. The Trustees may divide or combine the shares into a
greater or lesser number of shares without thereby changing the
proportionate beneficial interest in the Trust. Shares do not have
cumulative voting rights or conversion, preemptive or subscription rights.
Shares of each Trust have equal liquidation rights as to the assets of
that Trust. Each Trust's Board of Trustees is empowered to issue
additional "series" of shares of that Trust, which may have separate
assets and liabilities.
The Trusts do not anticipate holding annual meetings. Under certain
circumstances, shareholders of each Trust have the right to remove a
Trustee. Although the Declaration of Trust of each Trust states that when
issued, shares are fully-paid and nonassessable, shareholders may be held
personally liable as "partners" for the Trust's obligations. However, the
risk of a shareholder incurring any financial loss is limited to the
relatively remote circumstances in which the Trust is unable to meet its
obligations. See "Additional Information" in the Additional Statement for
details.
The Custodian and the Transfer Agent
The Custodian of the assets of the Trusts is Citibank, N.A. The
Manager and its affiliates presently have banking relationships with the
Custodian. See "Additional Information" in the Additional Statement for
further information. Each Trust's cash balances in excess of $100,000
held by the Custodian are not protected by Federal deposit insurance.
Such uninsured balances may at times be substantial. The foregoing rating
restrictions under Rule 2a-7 described under "The Trust and Its Investment
Policies" do not apply to banks in which a Trust's cash is kept.
Shareholder Services, Inc., a subsidiary of Oppenheimer Management
Corporation, acts as Transfer Agent and shareholder servicing agent for
the Trusts and the other mutual funds advised by the Manager, on an at-
cost basis. The fees to the Transfer Agent do not include payments for
any services of the type paid, or to be paid, by the Trusts to the
Distributor and to Recipients under the Service Plan. Shareholders should
direct any inquiries regarding the Trusts to the Transfer Agent at the
address and toll-free phone number on the back cover. Program
participants should direct any inquiries regarding the Trust to their
broker.
<PAGE>
No dealer, broker, salesperson or any other person has been authorized
to give any information or to make any representations other than those
contained in this Prospectus or the Additional Statement, and if given or
made such information and representations must not be relied upon as
having been authorized by the respective Trust, the Manager, the
Distributor or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is
unlawful to make such offer in such state.
Investment Adviser and Distributor
Centennial Asset Management Corporation
3410 South Galena Street
Denver, Colorado 80231
Transfer Agent and Shareholder Servicing Agent
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217-5143
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 Seventeeth Street, Suite 3600
Denver, Colorado 80202-3942
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
The Colorado State Bank Building
1600 Broadway - Suite 1850
Denver, Colorado 80202
<PAGE>
Centennial Tax Exempt Trust
Prospectus
Effective November 1, 1995
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
CENTENNIAL TAX EXEMPT TRUST
3410 South Galena Street, Denver, Colorado 80231
1-800-525-9310
This Statement of Additional Information (the "Additional Statement")
is not a Prospectus. This Additional Statement should be read together
with the Prospectus dated November 1, 1995 (the "Prospectus") of
Centennial Tax Exempt Trust (the "Trust"), which may be obtained by
writing to Shareholder Services, Inc. (the "Transfer Agent"), P.O. Box
5143, Denver, Colorado 80217 or by calling the toll-free number shown
above.
TABLE OF CONTENTS
Page
Investment Objective and Policies 2
Investment Restrictions 8
Appendix
Trustees and Officers A-1
Investment Management Services A-5
Service Plan A-7
Purchase, Redemption and Pricing of Shares A-9
Yield Information A-11
Additional Information A-13
Exhibit A: Description of Securities Ratings A-15
Exhibit B: Automatic Withdrawal Plan Provisions A-20
Exhibit C: Tax Equivalent Yield Table A-22
Independent Auditors' Report A-24
Financial Statements A-25
This Additional Statement is effective November 1, 1995.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Trust are described in
the Prospectus. Set forth below is supplemental information about those
policies. Certain capitalized terms used in the Additional Statement are
defined in the Prospectus.
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, should
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. To a limited degree, the Trust may engage in short-term
trading to attempt to take advantage of short-term market variations, or
may dispose of a portfolio security prior to its maturity if, on the basis
of a revised credit evaluation of the issuer or other considerations, the
Trust believes such disposition advisable or needs to generate cash to
satisfy redemptions. In such cases, the Trust may realize a capital gain
or loss.
There are, or course, variations in Municipal Securities, both within
a particular classification and between classifications, depending on
numerous factors. The yields of Municipal Securities depend on, among
other things, general money market conditions, general conditions of the
Municipal Securities market, the size of a particular offering, the
maturity of the obligation and rating of the issue. The market value of
Municipal Securities will vary as a result of changing evaluations of the
ability of their issuers to meet interest and principal payments, as well
as changes in the interest rates payable on new issues of Municipal
Securities.
Municipal Securities.
Municipal Bonds. The principal classifications of long-term
Municipal Bonds are "general obligation," "revenue" and "industrial
development" bonds.
General Obligation Bonds. 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 basic security behind general
obligation bonds is the issuer's pledge of its full faith and credit and
taxing power for the payment of principal and interest. The taxes that
can be levied for the payment of debt service may be limited or unlimited
as to the rate or amount of special assessments.
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 or other
specific revenue source. Revenue bonds are issued to finance a wide
variety of capital projects including: electric, gas, water and sewer
systems; highways, bridges, and tunnels; port and airport facilities;
colleges and universities; and hospitals. Although the principal
security behind these bonds may vary, many provide additional security in
the form of a debt service reserve fund whose money 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,
which are considered municipal bonds if the interest paid is exempt from
federal income tax, 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
are also 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 so financed as security for such payment.
- Municipal Notes. Municipal Securities having a maturity when
issued of less than one year are generally known as municipal notes.
Municipal notes generally are used to provide for short-term working
capital needs and include:
Tax Anticipation Notes. Tax anticipation notes 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 business taxes, and are payable from these specific future
taxes.
Revenue Anticipation Notes. Revenue anticipation notes are
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. In
most cases, the long-term bonds then provide the money for the repayment
of the notes.
Construction Loan Notes. Construction loan notes are sold to
provide construction financing. After successful completion and
acceptance, many projects receive permanent financing through the Federal
Housing Administration.
Tax-Exempt Commercial Paper. Tax-exempt commercial paper is a
short-term obligation issued by state and local governments or their
agencies to finance seasonal working capital needs or as short-term
financing in anticipation of longer-term financing.
- Participation Interests. The Trust may purchase participation
interests in all or part of loans to municipal borrowers from financial
institutions such as banks, insurance companies and savings and loan
associations. Such institutions frequently provide, or secure from
another financial institution, letters of credit or guarantees to secure
the interests, and give the buyer the right to demand payment of the
principal amount of the participation interests plus accrued interest on
short notice (normally within seven days). In the event of a failure by
the issuer to pay scheduled interest or principal payments on the
underlying municipal security, the Trust could experience a decline in its
net asset value. In the event of a failure by the financial institution
to perform its obligations in connection with the participation interest,
the Trust might incur certain costs and delays in realizing payment or may
suffer a loss of principal and/or interest. The Trust may buy
participation interests in Municipal Securities having maturities of more
than one year if the participation interests include the right to demand
payment from the financial institution (which may charge fees in
connection with their repurchase commitments) consistent with the Trust's
other investment policies and restrictions.
- Certificates of Participation. Subject to the provisions of Rule
2a-7 and the limitation on illiquid securities described in the
Prospectus, the Trust may invest in certificates of participation, which
are tax-exempt obligations that evidence the holder's right to share in
lease, installment loan or other financing payments by a public entity.
Projects financed with certificates of participation generally are not
subject to state constitutional debt limitations or other statutory
requirements that may be applicable to Municipal Securities.
- Floating Rate/Variable Rate Obligations. Floating rate put bonds
and variable rate demand notes are tax-exempt obligations which may have
a stated maturity in excess of one year, but may include features that
permit the holder to recover the principal amount of the underlying
security at specified intervals not exceeding one year on not more than
thirty days' notice at any time. The issuer of such notes normally has
a corresponding right, after a given period, to prepay in its discretion
the outstanding principal amount of the note plus accrued interest upon
a specified number of days notice to the holder. The interest rate on a
floating rate demand note is based on a stated prevailing market rate,
such as the PSA Municipal Swap Index or the J.J. Kenney Index or some
other standard, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable rate demand note is also based
on a stated prevailing market rate but is adjusted automatically at
specified intervals of no more than one year. Generally, the changes in
the interest rate on such securities reduce the fluctuation in their
market value. There is no limit on the amount of the Trust's assets that
may be invested in floating rate and variable rate obligations. Floating
rate or variable rate obligations which do not provide for recovery of
principal and interest within thirty days may be subject to the
limitations applicable to illiquid securities described in "The Trust and
Its Investment Policies "Illiquid and Restricted Securities" in the
Prospectus.
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. That Rule, which
is subject to change, states (among other things) that the Trust may not,
with respect to 75% of the amortized cost of its assets, have invested
more than 5% of the total amortized cost value of its assets in securities
issued by or subject to puts from the same institution. 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.
The Trust's ability to exercise a put or standby commitment will
depend on the ability of the bank or dealer to pay for the securities if
the put or standby commitment is exercised. If the bank or dealer should
default on its obligation, the Trust might not be able to recover all or
a portion of any loss sustained from having to sell the security
elsewhere. Puts and standby commitments are not transferrable by the
Trust, and therefore terminate if the Trust sells the underlying security
to a third party. The Trust intends to enter into these arrangements to
facilitate portfolio liquidity, although such arrangements may enable the
Trust to sell a security at a pre-arranged price which may be higher than
the prevailing market price at the time the put or standby commitment is
exercised. Any consideration paid by the Trust for the put or standby
commitment (which increases the cost of the security and reduces the yield
otherwise available from the security) will be reflected on the Trust's
books as unrealized depreciation while the put or standby commitment is
held, and a realized gain or loss when the put or commitment is exercised
or expires.
- 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 generally settles within 30 days of 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 Municipal 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.
- 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 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 obligations
issued by or on behalf of a state or local government, the proceeds of
which are used to finance the operations of such governments (e.g.,
general obligation bonds) continues to be tax-exempt. However, the Tax
Reform Act further 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 (other than those specified as "qualified" tax-exempt
private activity bonds, e.g., exempt facility bonds including certain
industrial development bonds, qualified mortgage bonds, qualified Section
501(c)(3) bonds, qualified student loan bonds, etc.) is taxable under the
revised rules.
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. Further, a private activity bond which
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 is applicable primarily to exempt facility
bonds, including industrial development bonds. The Trust may not be an
appropriate investment for entities which are "substantial users" (or
persons related thereto) of such exempt facilities, and such persons
should consult their own tax advisers before purchasing shares. 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 investor
or the investor'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. 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. That value may also be affected by a 1988
U.S. Supreme Court decision upholding the constitutionality of the
imposition of a Federal tax on the interest earned on Municipal Securities
issued in bearer form.
A Municipal Security is treated as a taxable private activity bond
under 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 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 governmental unit.) Under the private loan restriction, the
amount of bond proceeds which 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 use of the bond-financed facility. The
Trust makes no independent investigation of the users of such bonds or
their use of proceeds. Should the Trust hold a bond that loses its
tax-exempt status retroactively, there might be an adjustment to the
tax-exempt income previously paid to shareholders.
The Federal alternative minimum tax is designed to ensure that all
taxpayers pay some tax, even if their regular tax is zero. This is
accomplished in part by including in taxable income certain tax preference
items in arriving at 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 its proportionate share of the interest on
such bonds received by the regulated investment company. 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 in situations where the "adjusted
current earnings" of the corporation exceeds its alternative minimum
taxable income. 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 Trust anticipates that under normal
circumstances it will not purchase any such securities in an amount
greater than 20% of its total assets.
Ratings of Securities. The Prospectus describes "Eligible Securities"
in which the Trust may invest and indicates that if a security's rating
is downgraded, the Manager and/or the Board may have to reassess the
security's credit risks. If a security has ceased to be a First Tier
Security, the Manager will promptly reassess whether the security
continues to present "minimal credit risks." 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 risks and whether it is in the best
interests of the Trust to dispose of it; but if the Trust disposes of the
security within five days of the Manager learning of the downgrade, the
Manager will provide the Board 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 must
determine whether it would be in the best interests of the Trust to
dispose of the security. The Rating Organizations currently designated
as such by the Securities and Exchange Commission ("SEC") are Standard &
Poor's Corporation, Moody's Investors Service, Inc., Fitch Investors
Services, Inc., Duff and Phelps, Inc., IBCA Limited and its affiliate,
IBCA, Inc., and Thomson BankWatch, Inc. A description of the ratings
categories of those Rating Organizations is contained in Exhibit A.
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 impose creditworthiness requirements to confirm that the
vendor is financially sound and will continuously monitor the collateral's
value.
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.
INVESTMENT RESTRICTIONS
The Trust's significant investment restrictions are set forth in
the Prospectus. The following investment restrictions are also
fundamental investment policies of the Trust and, together with the
fundamental policies and restrictions described in the Prospectus, cannot
be changed without the vote of a "majority" of the Trust's outstanding
shares. Under the Investment Company Act, such a "majority" vote is
defined as the vote of the holders of the lesser of: (i) 67% or more of
the shares present or represented by proxy at a shareholder's meeting, if
the holders of more than 50% of the outstanding shares are present or
represented by proxy, or (ii) more than 50% of the outstanding shares.
Under these additional restrictions, the Trust cannot: (1) invest in
commodities or commodity contracts or invest in interests in oil, gas or
other mineral exploration or development programs; (2) invest in real
estate; however the Trust may purchase Municipal Bonds or Notes secured
by interests in real estate; (3) 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; (4) invest
in or hold securities of any issuer if those officers and trustees or
directors of the Trust or its adviser 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; (5) 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; or (6) invest in
securities of other investment companies except as they may be acquired
as part of a merger, consolidation or acquisition of assets.
<PAGE>
APPENDIX
This Appendix is part of the Additional Statement of Centennial Money
Market Trust ("Money Market Trust"), Centennial Tax Exempt Trust ("Tax
Exempt Trust") and Centennial Government Trust ("Government Trust"), each
of which is referred to in this Appendix individually as a "Trust" and
collectively are referred to as the "Trusts." Unless otherwise indicated,
the information in this Appendix applies to each Trust.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trusts and their principal
business affiliations and occupations during the past five years are
listed below. All Trustees are Trustees of each of the Trusts. The
Trustees are also trustees, directors, or managing general partners of
Centennial California Tax Exempt Trust, Centennial New York Tax Exempt
Trust, Daily Cash Accumulation Fund, Inc., Oppenheimer Champion Income
Fund, Centennial America Fund, L.P., Oppenheimer Limited-Term Government
Fund, Oppenheimer Tax-Exempt Fund, Oppenheimer Main Street Funds, Inc.,
Oppenheimer Cash Reserves, Oppenheimer Equity Income Fund, Oppenheimer
High Yield Fund, Oppenheimer Integrity Funds, Oppenheimer International
Bond Fund, Oppenheimer Strategic Income Fund, Oppenheimer Strategic Income
& Growth Fund, Oppenheimer Total Return Fund, Inc., Oppenheimer Variable
Account Funds and The New York Tax-Exempt Income Fund, Inc. (all of the
foregoing funds are collectively referred to as the "Denver Oppenheimer
funds") except for Mr. Fossel, who is a Trustee, Director of Managing
Partner of all the Denver-based Oppenheimer funds except Oppenheimer Bond
Fund and Oppenheimer Strategic Income Fund. Mr. Fossel is President and
Mr. Swain is Chairman of the Denver Oppenheimer funds. All of the
officers except Mr. Carbuto, Ms. Wolf, Mr. Zimmer and Ms. Warmack hold
similar positions with each of the Denver Oppenheimer funds. As of
September 30, 1995, the Trustees and officers of each Trust in the
aggregate owned less than 1% of the outstanding shares of that Trust.
ROBERT G. AVIS, Trustee*; Age 64
One North Jefferson Avenue, St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment
adviser and trust company, respectively).
WILLIAM A. BAKER, Trustee; Age 80
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
CHARLES CONRAD, JR., Trustee; Age 65
19411 Merion Circle, Huntington Beach, California 92648
Vice President of McDonnell Douglas Space Systems Co.; formerly associated
with National Aeronautics and Space Administration.
_____________________
* A Trustee who is an "interested person" of the Trusts as defined in the
Investment Company Act.
JON S. FOSSEL, President and Trustee*; Age 53
Two World Trade Center, New York, New York 10048-0203
Chairman and a Director of Oppenheimer Management Corporation ("OMC"), the
immediate parent of Centennial Asset Management Corporation (the
"Manager"); President and director of Oppenheimer Acquisition Corp.
("OAC"), OMC's parent holding company; President and a director of
HarbourView Asset Management Corporation, a subsidiary of OMC
("HarbourView"); a director of Shareholder Services, Inc. ("SSI"), the
Trust's Transfer Agent, and Shareholder Financial Services, Inc. ("SFSI"),
transfer agent subsidiaries of OMC; formerly President of OMC.
RAYMOND J. KALINOWSKI, Trustee; Age 66
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc., formerly Vice Chairman
and a director of A.G. Edwards, Inc., parent holding company of A.G.
Edwards & Sons, Inc. (a broker-dealer), of which he was a Senior Vice
President.
C. HOWARD KAST, Trustee; Age 73
2552 E. Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte Haskins & Sells (an accounting
firm).
ROBERT M. KIRCHNER, Trustee; Age 74
7500 East Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
NED M. STEEL, Trustee; Age 80
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting Nurse
Corporation of Colorado; formerly Senior Vice President and a director of
the Van Gilder Insurance Corp. (insurance brokers).
JAMES C. SWAIN, Chairman and Trustee*; Age 61
3410 South Galena Street, Denver, Colorado 80231
President and a Director of the Manager; Vice Chairman and a Director of
OMC; formerly Chairman of the Board of SSI.
MICHAEL A. CARBUTO, Vice President and Portfolio Manager of Tax Exempt
Trust; Age 40
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; an officer of other Oppenheimer funds.
DOROTHY WARMACK, Vice President and Portfolio Manager of Money Market
Trust and Government Trust; Age 59
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager and OMC; an officer of other Oppenheimer
funds.
_____________________
* A Trustee who is an "interested person" of the Trusts as defined in the
Investment Company Act.
CAROL E. WOLF, Vice President and Portfolio Manager of Money Market Trust
and Government Trust; Age 43
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager and OMC; an officer of other Oppenheimer
funds.
ARTHUR J. ZIMMER, Vice President and Portfolio Manager of Money Market
Trust and Government Trust; Age 49
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager and OMC; an officer of other Oppenheimer
funds; formerly Vice President of Hanifen Imhoff Management Company
(mutual fund investment advisor).
ANDREW J. DONOHUE, Vice President; Age 45
Two World Trade Center, New York, New York 10048-0203
Executive Vice President and General Counsel of OMC and Oppenheimer Funds
Distributor, Inc. ("OFDI"); an officer of other Oppenheimer funds;
formerly Senior Vice President and Associate General Counsel of OMC and
OFDI; Partner in Kraft & McManimon (a law firm); an officer of First
Investors Corporation (a broker-dealer) and First Investors Management
Company, Inc. (broker-dealer and investment adviser); director and an
officer of First Investors Family of Funds and First Investors Life
Insurance Company.
GEORGE C. BOWEN, Vice President, Secretary and Treasurer; Age 59
3410 South Galena Street Denver, Colorado 80231
Senior Vice President, Treasurer, Assistant Secretary and a director of
the Manager; Vice President and Treasurer of OFDI and HarbourView; Senior
Vice President and Treasurer of OMC; Vice President, Treasurer and
Secretary of SSI and SFSI; an officer of other Oppenheimer funds.
ROBERT BISHOP, Assistant Treasurer; Age 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of OMC/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for OMC, prior to
which he was an Accountant for Yale & Seffinger, P.C., an accounting firm,
and previously an Accountant and Commissions Supervisor for Stuart James
Company, Inc., a broker-dealer.
SCOTT FARRAR, Assistant Treasurer; Age 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of OMC/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for OMC, prior to
which he was an International Mutual Fund Supervisor for Brown Brothers,
Harriman Co., a bank, and previously a Senior Fund Accountant for State
Street Bank & Trust Company, before which he was a sales representative
for Central Colorado Planning.
ROBERT G. ZACK, Assistant Secretary; Age 47
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of OMC; Assistant
Secretary of SSI and SFSI; an officer of other Oppenheimer funds.
Remuneration of Trustees and Officers. The officers of the Trusts
(including Messrs. Swain and Fossel) are affiliated with the Manager and
receive no salary or fee from the Trusts. The Trusts have an Audit and
Review Committee, composed of William A. Baker (Chairman), Charles Conrad,
Jr. and Robert M. Kirchner. This Committee meets regularly to review
audit procedures, financial statements and other financial and operational
matters of the Trusts. The Trustees of the Trusts (including Messrs.
Swain and Fossel) received the total amounts shown below (i) from Money
Market Trust, Tax Exempt Trust and Government Trust, respectively, during
the fiscal year ended June 30, 1995, and (ii) from all 21 of the Denver
Oppenheimer funds (including the Trust) listed in the first paragraph of
this section, for services in the positions shown:
<TABLE>
<CAPTION>
Aggregate Aggregate Aggregate Total
Compensation Compensation Compensation Compensation
from the from the from the From All
Money Market Tax Exempt Government Denver-based
Name and Position Trust Trust Trust Oppenheimer funds1
- ----------------- ------------ ------------ ---------- ------------------
<S> <C> <C> <C> <C>
Robert G. Avis $5,012.74 $2,439 $2,595.32 $53,000.00
Trustee
Wiiliam A. Baker $6,928.62 $3,375 $3,587.28 $73,257.01
Audit and Review
Committee Chairman
and Trustee
Charles Conrad, Jr. $6,459.21 $3,145 $3,344.22 $68,293.67
Audit and Review
Committee Member
and Trustee
Raymond J. Kalinowski $5,012.74 $2,439 $2,595.32 $53,000.00
Trustee
C. Howard Kast $5,012.74 $2,439 $2,595.32 $53,000.00
Trustee
Robert M. Kirchner $6,459.21 $3,145 $3,344.22 $68,293.67
Audit and Review
Committee Member
and Trustee
Ned M. Steel $5,012.74 $2,439 $2,595.32 $53,000.00
Trustee
<FN>
________________________
1 For the 1994 calendar year.
</TABLE>
Major Shareholders. As of October 6, 1995, A.G. Edwards & Sons, Inc.
("A.G. Edwards"), 1 North Jefferson Avenue, St. Louis, MO 63103 was the
record owner of 5,476,779,005.180 shares of Money Market Trust,
1,390,087,350.600 shares of Tax Exempt Trust and 901,979,139.200 shares
of Government Trust (approximately 99.56%, 97.40% and 96.99% of
outstanding shares, respectively, of these Trusts). A.G. Edwards has
advised the Trusts that all such shares are held for the benefit of
brokerage clients and that no such client owned beneficially 5% or more
of the outstanding shares of any of the Trusts.
INVESTMENT MANAGEMENT SERVICES
The Manager is wholly-owned by OMC, which is a wholly-owned
subsidiary of OAC, a holding company controlled by Massachusetts Mutual
Life Insurance Company. The remaining stock of OAC is owned by: (i)
certain of OMC's directors and officers, some of whom may serve as
officers of the Trusts, and two of whom (Messrs. James C. Swain and Jon
S. Fossel) serve as a Trustee of the Trusts and (ii) A.G. Edwards, which
owns less than 5% of its equity.
The management fee is payable monthly to the Manager under the terms
of the investment advisory agreements between the Manager and each Trust
(collectively, the "Agreements"), and is computed on the aggregate net
assets of the respective Trust as of the close of business each day. The
management fees paid to the Manager by the Trusts during their last three
fiscal periods were as follows: (a) $7,254,206, $9,435,959 and $12,657,193
paid for the fiscal years ended June 30, 1993, 1994 and 1995,
respectively, of Money Market Trust; (b) $4,426,198, $4,761,673 and
$5,050,991 paid for the fiscal years ended June 30, 1993, 1994 and 1995,
respectively, of Tax Exempt Trust; and (c) $3,035,760, $3,182,956 and
$3,414,212 paid for the fiscal years ended June 30, 1993, 1994 and 1995,
respectively, of Government Trust.
The Agreements require the Manager, at its expense, to provide the
Trusts with adequate office space, facilities and equipment, and to
provide and supervise the activities of all administrative and clerical
personnel required to provide effective administration for the Trusts,
including the compilation and maintenance of records with respect to
operations, the preparation and filing of specified reports, and the
composition of proxy materials and registration statements for continuous
public sale of shares of the Trusts. Expenses not expressly assumed by
the Manager under the Agreements or as Distributor of the shares of the
Trusts, are paid by the Trusts. The Agreements list examples of expenses
paid by the Trusts, the major categories of which relate to interest,
taxes, certain insurance premiums, fees to unaffiliated Trustees, legal,
bookkeeping and audit expenses, brokerage, custodian and transfer agent
expenses, share issuance costs, certain printing costs (excluding the cost
of printing prospectuses for sales materials) and registration fees, and
non-recurring expenses, including litigation.
Under its Agreement with the Money Market Trust and the Government
Trust, the Manager has agreed to reimburse each 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.
Independently of the Money Market Trust's Agreement, the Manager has
voluntarily agreed to waive a portion of the management fee otherwise
payable to it by the Money Market Trust to the extent necessary to: (a)
permit the Money Market Trust to have a seven-day yield at least equal to
that of Daily Cash Accumulation Fund, Inc., and (b) to reduce, on an
annual basis, the management fee paid on the average net assets of the
Trust in excess of $1 billion from 0.40% to: 0.40% of average net assets
in excess of $1 billion but less than $1.25 billion; 0.375% of average net
assets in excess of $1.25 billion but less than $1.50 billion; 0.35% of
average net assets in excess of $1.50 billion but less than $2 billion;
and 0.325% of average net assets in excess of $2 billion. This
undertaking became effective as of December 1, 1991, and may be modified
or terminated by the Manager at any time. For the fiscal years ended June
30, 1994, the Manager reimbursed Money Market Trust for its expenses in
the amount of $1,201,403.
Under its Agreement with Tax Exempt 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. No reimbursement or assumption was
necessary by the Manager to Government Trust or Tax Exempt Trust during
their respective three most recent fiscal years. The Agreements permit
the Manager to act as investment adviser for any other person, firm or
corporation.
The Tax Exempt Trust 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.
The Agreements of Money Market Trust and Government Trust provide
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 Agreements shall be construed
to protect the Manager against any liability to such Trusts or their
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 such Agreements.
Portfolio Transactions. Portfolio decisions are based upon the
recommendations and judgment of the Manager subject to the overall
authority of the Board of Trustees. As most purchases made by the Trust
are principal transactions at net prices, the Trust incurs little or no
brokerage costs. 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's policy of investing in short-term debt securities
with maturities of less than one year results in high portfolio turnover.
However, since brokerage commissions, if any, are small and securities are
usually held to maturity, high turnover does not have an appreciable
adverse effect upon the net asset value or income of the Trust in periods
of stable or declining rates, and may have a positive effect in periods
of rising interest rates.
The Trust seeks to obtain prompt and reliable execution of orders at
the most favorable net price. If brokers are used for portfolio
transactions, transactions are directed to brokers furnishing 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, and 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. Such research, which may be supplied
by a third party at the instance of a broker, includes 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 for
in commission dollars.
The research services provided by brokers broaden the scope and
supplement the research activities of the Manager to make available
additional views for consideration and comparisons, and to enable the
Manager to obtain market information for the valuation of securities held
in the Trust's portfolio or being considered for purchase. In the rare
instances where the Trust pays commissions for research, the Board of
Trustees, including the independent Trustees of the Trust, will review
information furnished by the Manager as to the commissions paid to brokers
furnishing such services in an effort to ascertain that the amount of
such commissions was reasonably related to the value or the benefit of
such services. The Trust does not direct the handling of purchases or
sales of portfolio securities, whether on a principal or agency basis, to
brokers for selling shares of the Trust. No portfolio transactions are
handled by brokers which are affiliated with the Trust or the Manager if
that broker is acting as principal.
SERVICE PLAN
Each Trust has adopted a Service Plan (the "Plan") under Rule 12b-1
of the Investment Company Act, pursuant to which the Trust will reimburse
the Distributor for a portion of its costs incurred in connection with the
services rendered to the Trust, as described in the Prospectus. Each Plan
has been approved: (i) by a vote of the Board of Trustees of the Trust,
including a majority of the "Independent Trustees" (those Trustees of the
Trust who are not "interested persons," as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the Plan or in any agreements relating to the Plan) cast in
person at a meeting called for the purpose of voting on the Plan; and (ii)
by the vote of the holders of a "majority" (as defined under the
Investment Company Act) of that Trust's outstanding voting securities.
In approving each Plan, the Board determined that it is likely each Plan
will benefit the shareholders of that Trust.
The Distributor has entered into Supplemental Distribution Assistance
Agreements ("Supplemental Agreements") under the Plan with selected
dealers distributing shares of Centennial Government Trust, Centennial
America Fund, L.P., Oppenheimer Cash Reserves, Centennial New York Tax
Exempt Trust and Centennial California Tax Exempt Trust. Quarterly
payments by the Distributor, which are not a Trust expense, for
distribution-related services will range from 0.10% to 0.30%, annually,
of the average net asset value of shares of these funds owned during the
quarter beneficially or of record by the dealer or its customers.
However, no payment shall be made to any dealer for any quarter during
which the average net asset value of shares of such funds owned during
that quarter by the dealer or its customers is less than $5 million.
Payments made pursuant to Supplemental Agreements are not a fund expense,
but are made by the Distributor out of its own resources or out of the
resources of the Manager which may include profits derived from the
advisory fee it receives from each such fund. No such supplemental
payments will be paid to any dealer which is an "affiliate" (as defined
in the Investment Company Act) of the Distributor.
Each Plan, unless terminated as described below, shall continue in
effect from year to year but only so long as such continuance is
specifically approved at least annually by each Trust's Board of Trustees,
including its Independent Trustees, by a vote cast in person at a meeting
called for that purpose. The Supplemental Agreements are subject to the
same renewal requirement. A Plan and the Supplemental Agreements may be
terminated at any time by the vote of a majority of the Trust's
Independent Trustees or by the vote of the holders of a "majority" (as
defined in the Investment Company Act) of the Trust's outstanding voting
securities. The Supplemental Agreements will automatically terminate in
the event of their "assignment" (as defined in the Investment Company
Act), and each may be terminated by the Distributor: (i) in the event
Government Trust amends its Plan, or (ii) if the net asset value of shares
of the funds covered by the Supplemental Agreements held by the dealer or
its customers is less than $5 million for two or more consecutive
quarters. A dealer may terminate a Supplemental Agreement at any time
upon giving 30 days' notice. Each Plan may not be amended to increase
materially the amount of payments to be made unless such amendment is
approved by the shareholders of that Trust. All material amendments must
be approved by the Independent Trustees.
Under each Plan, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Trust shares held by the
Recipient for itself and its customers did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Trust's Independent Trustees. Initially, the Board of Trustees has set
the fee at the maximum rate and set no minimum amount. The Plans permit
the Distributor and the Manager to make additional distribution payments
to Recipients from their own resources (including profits from advisory
fees) at no cost to a Trust. The Distributor and the Manager may, in
their sole discretion, increase or decrease the amount of distribution
assistance payments they make to Recipients from their own assets.
Each Recipient who is to receive distribution payments for any month
or quarter shall certify in writing that the aggregate payments to be
received from the applicable Trust during that month or quarter do not
exceed the Recipient's administrative and sales related costs in rendering
distribution assistance during the month or quarter, and will reimburse
the Trust for any excess.
For each Trust's fiscal year ended June 30, 1995, payments to the
Distributor under its Plan totalled $6,674,126, $2,246,219 and $1,426,765
for Money Market Trust, Tax Exempt Trust and Government Trust,
respectively, of which $43, $13,658 and $31,386 was paid by Money Market
Trust, Tax Exempt Trust and Government Trust, respectively, to an
affiliate of the Distributor, as a Recipient. Payments received by the
Distributor under the Plans will not be used to pay any interest expense,
carrying charge, or other financial costs, or allocation of overhead by
the Distributor. Any unreimbursed expenses incurred for any fiscal
quarter by the Distributor may not be recovered under that Plan in
subsequent fiscal quarters.
While the Plan is in effect, the Treasurer of each Trust shall
provide a report to the Board of Trustees in writing at least quarterly
on the amount of all payments made pursuant to the Plan, the identity of
each Recipient that received any such payment, and the purposes for which
the payments were made. The Plan further provides that while it is in
effect, the election and nomination of those Trustees of a 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 such selection and nomination if the final decision on any such
selection or nomination is approved by a majority of the Independent
Trustees.
The Glass-Steagall Act and other applicable laws and regulations,
among other things, generally prohibit Federally-chartered or supervised
banks from engaging in the business of underwriting, selling or
distributing securities as principals. Accordingly, the Distributor may
pay banks only for sales made on an agency basis or for the performance
of administrative and shareholder servicing functions. While the matter
is not free from doubt, the Manager believes that such laws do not
preclude a bank from performing the services required of a Recipient.
However, judicial or administrative decisions or interpretations of such
laws, as well as changes in either Federal or state statutes or
regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent certain banks from continuing
to perform all or a part of these services. If a bank were so prohibited,
shareholders of a Trust who were clients of such bank would be permitted
to remain as shareholders, and if a bank could no longer provide those
service functions, alternate means for continuing the servicing of such
shareholders would be sought. In such event, shareholders serviced by
such bank might no longer be able to avail themselves of any automatic
investment or other services then being provided by such bank. It is not
expected that shareholders would suffer any adverse financial consequences
as a result of any of those occurrences. The Board of Trustees will
consider appropriate modifications to each Trust's operations, including
discontinuance of payments under the Plan to such institutions, in the
event of any future change in such laws or regulations which may adversely
affect the ability of such institutions to provide these services. In
addition, certain banks and financial institutions may be required to
register as dealers under state law.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Determination of Net Asset Value Per Share. The net asset value of each
Trust's shares is determined twice each day as of 12:00 Noon and the
closse of The New York Stock Exchange (the "Exchange") which is normally
4:00 P.M., but may be earlier on some days, each day the Exchange is open
(a "regular business day") (all references to time mean New York time) by
dividing that Trust's net assets (the total value of the Trust's portfolio
securities, cash and other assets less all liabilities) by the total
number of shares outstanding. The Exchange's most recent annual holiday
schedule states that it will close New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The Exchange may also close on other days. Dealers other
than Exchange members may conduct trading in Municipal Securities on
certain days on which the Exchange is closed (e.g., Good Friday), so that
securities of the same type held by Tax Exempt Trust may be traded, and
its net asset value per share may be affected significantly, on such days
when shareholders may not purchase or redeem shares.
The Trusts will seek to maintain a net asset value of $1.00 per share
for purchases and redemptions. There can be no assurance that each Trust
will do so. Each Trust operates under Rule 2a-7 under which a Trust may
use the amortized cost method of valuing their shares. The amortized cost
method values a security initially at its cost and thereafter 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 account unrealized
capital gains or losses.
Each Trust's Board of Trustees has established procedures intended
to stabilize the Trust's net asset value at $1.00 per share. If a Trust's
net asset value per share were to deviate from $1.00 by more than 0.5%,
Rule 2a-7 requires the Board promptly to consider what action, if any,
should be taken. If the Trustees find that the extent of any such
deviation may result in material dilution or other unfair effects on
shareholders, the Board will take whatever steps it considers appropriate
to eliminate or reduce such dilution or unfair effects, including, without
limitation, selling portfolio securities prior to maturity, shortening the
average portfolio maturity, withholding or reducing dividends, reducing
the outstanding number of Trust shares without monetary consideration, or
calculating net asset value per share by using available market
quotations.
As long as the Trusts use Rule 2a-7, each Trust must abide by certain
conditions described in the Prospectus. Some of those conditions which
relate to portfolio management are that each Trust must: (i) maintain a
dollar-weighted average portfolio maturity not in excess of 90 days; (ii)
limit its investments, including repurchase agreements, to those
instruments which are denominated in U.S. dollars and which are rated in
one of the two highest short-term rating categories by at least two
"nationally-recognized statistical rating organizations" ("Rating
Organizations") as defined in Rule 2a-7, or by one Rating Organization if
only one Rating Organization has rated the security; an instrument that
is not rated must be of comparable quality as determined by the Manager
under guidelines approved by the Board; and (iii) not purchase any
instruments with a remaining maturity of more than 397 days. The Trust's
fundamental investment policy that the remaining maturity of an instrument
shall not exceed one year is more restrictive than the provisions of Rule
2a-7. Under Rule 2a-7, the maturity of an instrument is generally
considered to be its stated maturity (or in the case of an instrument
called for redemption, the date on which the redemption payment must be
made), with special exceptions for certain variable rate demand and
floating rate instruments. Repurchase agreements and securities loan
agreements are, in general, treated as having a maturity equal to the
period scheduled until repurchase or return, or if subject to demand,
equal to the notice period.
While the amortized cost method provides certainty in valuation,
there may be periods during which the value of an instrument, as
determined by amortized cost, is higher or lower than the price the Trust
would receive if it sold the instrument. During periods of declining
interest rates, the daily yield on shares of the Trust may tend to be
lower (and net investment income and daily dividends higher) than a like
computation made by a fund with identical investments utilizing a method
of valuation based upon market prices or estimates of market prices for
its portfolio. Thus, if the use of amortized cost by the Trusts resulted
in a lower aggregate portfolio value on a particular day, a prospective
investor in one of the Trusts would be able to obtain a somewhat higher
yield than would result from investment in a fund utilizing solely market
values, and existing investors in the Trusts would receive less investment
income than if the Trust were priced at market value. Conversely, during
periods of rising interest rates, the daily yield on Trust shares will
tend to be higher and its aggregate value lower than that of a portfolio
priced at market value. A prospective investor would receive a lower
yield than from an investment in a portfolio priced at market value, while
existing investors in the Trust would receive more investment income than
if the Trust were priced at market value.
Redemptions. The Fund's Board of Directors has the right, in conformity
with the Trust's Declaration of Trust and applicable law, to cause the
involuntary redemption of the shares held in any account if the aggregate
net asset value of such shares is less than $500 or such lesser amount as
the Board may decide. Should the Board elect to exercise this right, it
will establish the terms of any notice of such redemption required to be
provided to the shareholder under the Investment Company Act, including
any provision the Board may establish to enable the shareholder to
increase the amount of the investment to avoid involuntary redemption.
Expedited Redemption Procedures. Under the Expedited Redemption Procedure
available to direct shareholders of the Trusts, as discussed in the
Appendix to the Prospectus, the wiring of redemption proceeds may be
delayed if the Trust's Custodian bank is not open for business on a day
that the Trust would normally authorize the wire to be made, which is
usually same day for redemptions prior to 12:00 Noon, and the Trust's next
regular business day for redemptions between 12:00 Noon and the close of
The New York Stock Exchange, which is normally 4:00 P.M., but may be
earlier on some days. In those circumstances, the wire will not be
transmitted until the next bank business day on which the Trust is open
for business, and no dividends will be paid on the proceeds of redeemed
shares waiting transfer by wire.
Dividend Reinvestment in Another Fund. Direct shareholders of the Trusts
may elect to reinvest all dividends and/or distributions in Class A shares
of any of the other funds listed in the Prospectus as "Eligible Funds" at
net asset value without sales charge. To elect this option, a shareholder
must notify the Transfer Agent in writing, and either must have an
existing account in the fund selected for reinvestment or must obtain a
prospectus for that fund and an application from the Transfer Agent to
establish an account. The investment will be made at the net asset value
per share next determined on the payable date of the dividend or
distribution.
YIELD INFORMATION
Each Trust's current yield is calculated for a seven-day period of
time, in accordance with regulations adopted under the Investment Company
Act, 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 (a) adding 1 to the base period return
(obtained as described above), (b) raising the sum to a power equal to 365
divided by 7 and (c) subtracting 1 from the result. For the seven day
period ended June 30, 1995, the "current yield" for Money Market Trust,
Tax Exempt Trust and Government Trust was 5.41%, 3.51% and 5.30%,
respectively. The seven-day compounded effective yield for that period
was 5.55%, 3.57% and 5.43%, respectively.
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. Since the calculation of yield under
either procedure described above does not take into consideration any
realized or unrealized gains or losses on each Trust's portfolio
securities which may affect dividends, the return on dividends declared
during a period may not be the same on an annualized basis as the yield
for that period.
Tax Exempt Trust's "tax equivalent yield" adjusts Tax Exempt 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 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 C, which is applicable only to Tax Exempt Trust, 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 Tax Exempt Trust's tax
equivalent yield for the seven-day period ended June 30, 1995 was 5.81%.
Its tax-equivalent compounded effective yield for the same period was
5.91% for an investor in the highest Federal tax bracket.
Yield information may be useful to investors in reviewing each
Trust's performance. A 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 Monitor TM), which measures
the average rate paid on bank money market accounts, NOW accounts and
certificates of deposit by the 100 largest banks and thrift institutions
in the top ten metropolitan areas. However, a number of factors should
be considered before using yield information as a basis for comparison
with other investments. An investment in a Trust is not insured. Its
yield is not guaranteed and normally will fluctuate on a daily basis. The
yield for any given past period is not an indication or representation by
the Trust of future yields or rates of return on its shares. Each Trust's
yield is affected by portfolio quality, portfolio maturity, type of
instruments held and operating expenses. When comparing a 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 or yields that may vary above a stated minimum, and
also that bank accounts may be insured. Certain types of bank accounts
may not pay interest when the balance falls below a specified level and
may limit the number of withdrawals by check per month. In order to
compare the Tax Exempt Trust's dividends to the rate of return on taxable
investments, Federal income taxes on such investments should be
considered.
ADDITIONAL INFORMATION
Description of the Trusts. Each Trust's Declaration of Trust contains an
express disclaimer of shareholder and Trustee liability for the Trust's
obligations, and provides for indemnification and reimbursement of
expenses out of its property for any shareholder held personally liable
for its obligations. Each Declaration of Trust also provides that the
Trust shall, upon request, assume a defense of any claim made against any
shareholder for any act or obligation of the Trust and satisfy any
judgment thereon. Thus, while Massachusetts law permits a shareholder of
a trust (such as the Trust) to be held personally liable as a "partner"
for the Trust's obligations under certain circumstances, the risk of a
Trust shareholder incurring any financial loss on account of shareholder
liability is highly unlikely and is limited to the relatively remote
circumstance in which the Trust would be unable to meet its obligations
described above. Any person doing business with the Trust, and any
shareholder of the Trust, agrees under the Trust's Declaration of Trust
to look solely to the assets of the Trust for satisfaction of any claim
or demand which may arise out of any dealings with the Trust, and the
Trustees shall have no personal liability to any such person, to the
extent permitted by law.
It is not contemplated that regular annual meetings of shareholders
will be held. The Trust will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder
meeting is called by the Trustees. 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 shareholders of 10% of its outstanding shares. In addition, if the
Trustees receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding in the aggregate shares of
the Trust valued at $25,000 or more or holding 1% or more of the Trust's
outstanding shares, whichever is less, that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the Trustees
will then either make the Trust's shareholder list available to the
applicants or mail their communication to all other shareholders at the
applicants' expense, or the Trustees may take such other action as set
forth in Section 16(c) of the Investment Company Act.
Tax Status of the Trust's Dividends and Distributions. The Federal tax
treatment of the Trust's dividends and distributions to shareholders is
explained in the Prospectus under the caption "Dividends, Distributions
and Taxes." Under the Internal Revenue Code, the Trust must distribute
by December 31 each year 98% of its taxable investment income earned from
January 1 through December 31 of that year and 98% of its capital gains
realized from the prior November 1 through October 31 of that year or
else must pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Trust's distributions will meet those
requirements, the Trust's Board and the Manager might determine in a
particular year that it might be in the best interest of the Trust's
shareholders not to distribute income or capital gains at the mandated
levels and to pay the excise tax on the undistributed amounts, which would
reduce the amount available for distribution to shareholders.
The Custodian and the Transfer Agent. The Custodian's responsibilities
include safeguarding and controlling the Trusts' portfolio securities and
handling the delivery of portfolio securities to and from the Trusts. The
Manager has represented to the Trusts that its banking relationships with
the Custodian have been and will continue to be unrelated to and
unaffected by the relationships between the Trusts and the Custodian. It
will be the practice of the Trusts to deal with the Custodian in a manner
uninfluenced by any banking relationship the Custodian may have with the
Manager or its affiliates. Shareholder Services, Inc., the Transfer
Agent, is responsible for maintaining each Trust's shareholder registry
and shareholder accounting records, and for shareholder servicing and
administrative functions.
General Distributor's Agreement. Under the General Distributor's
Agreement between each Trust and the Distributor, the Distributor acts as
each Trust's principal underwriter in the continuous public offering of
its shares but is not obligated to sell a specific number of shares.
Expenses normally attributable to sales (other than those paid under the
Distribution Plan), including advertising and the cost of printing and
mailing prospectuses other than those furnished to existing shareholders,
are borne by the Distributor.
Independent Auditors and Financial Statements. The independent auditors
of the Trusts examine the Trusts' financial statements and perform other
related audit services. They also act as auditors for the Manager and for
Oppenheimer Management Corporation, the Manager's immediate parent, as
well as for certain other funds advised by the Manager and Oppenheimer
Management Corporation.
<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, 1995, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended June 30, 1995 and
1994, and the financial highlights for the period January 1, 1985 to June 30,
1995. 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 at June 30, 1995 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 at June 30, 1995, 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.
DELOITTE & TOUCHE LLP
Denver, Colorado
July 24, 1995
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1995
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS--103.3%
ALABAMA--0.4%
Bessemer, Alabama Industrial Development Revenue Bonds, Big B,
Inc. Project, Series A, 4.25% (1) $ 3,150,000 $ 3,150,000
Winfield City, Alabama Industrial Development Revenue Bonds,
Union Underwear Co., 4.25% (1) 1,900,000 1,900,000
-------------
5,050,000
-------------
ALASKA--0.3%
Alaska Industrial Development Authority Revenue Bonds, Providence Medical
Office Building, 3.65% (1) 3,880,000 3,880,000
-------------
ARIZONA--2.3%
Maricopa County, Arizona Industrial Development Authority Revenue Bonds, Grand
Canyon University Project, 4.20% (1) 5,500,000 5,500,000
Phoenix, Arizona Industrial Development Authority Multifamily Housing Revenue
Refunding Bonds, Paradise Lakes Apts. Project, 1995 Series, 3.40% (2) 18,000,000 18,000,000
Pima County, Arizona Industrial Development Authority Revenue Bonds, Tucson
Electric Power Project, Series 1983-A, 3.95% (1) 6,300,000 6,300,000
-------------
29,800,000
-------------
ARKANSAS--0.4%
Harrison, Arkansas Industrial Development Revenue Refunding Bonds, McKesson
Corp. Project, 4.15% (1) 3,940,000 3,940,000
Jonesboro, Arkansas Industrial Development Revenue Bonds, Farr Co. Project,
4.25% (1) 645,000 645,000
Subiaco, Arkansas Industrial Development Revenue Bonds, Cloves Gear & Products,
Inc., 4.35% (1) 550,000 550,000
-------------
5,135,000
-------------
CALIFORNIA--7.2%
California Health Facilities Financing Authority Revenue Bonds, Adventist
Health System, Series B, 3.80% (1) 1,000,000 1,000,000
California Health Facilities Financing Authority Revenue Bonds, Kaiser
Permanente Medical Center Project, Series B, 3.90% (1) 3,000,000 3,000,000
California Health Facilities Financing Authority Revenue Refunding Bonds,
Memorial Health Services Project, 4% (1) 1,200,000 1,200,000
California Health Facilities Financing Revenue Bonds, Huntington Memorial
Hospital, 3.75% (1) 1,900,000 1,900,000
California Health Facilities Financing Revenue Bonds, Pooled Loan Program,
Series B, FGIC Insured, 4.05% (1) 500,000 500,000
California Health Facilities Financing Revenue Bonds, Santa Barbara Cottage
Project, Series C, 3.80% (1) 6,300,000 6,300,000
</TABLE>
2
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
CALIFORNIA (CONTINUED)
California Health Facilities Financing Revenue Bonds, Scripps Memorial
Hospital, Series A, MBIA Insured, 4.05% (1) $ 500,000 $ 500,000
California Higher Education Loan Authority Student Loan Revenue Refunding
Bonds, Series 1987A, 4.35%, 5/1/96 (3) 13,750,000 13,750,804
California Higher Education Loan Authority Student Loan Revenue Refunding
Bonds, Series 1992A-2, 4.35%, 5/1/96 (3) 14,000,000 14,000,819
California Housing Finance Agency Home Mtg. Revenue Bonds, Series 1995-E, FGIC
Insured, 4.60%, 2/1/96 (3) 4,000,000 4,000,000
California Pollution Control Financing Authority Revenue Bonds, Chevron USA,
Inc. Project, 4.50%, 5/15/96 (3) 1,800,000 1,803,797
California Pollution Control Financing Authority Solid Waste Disposal Revenue
Bonds, Western Waste Industries, Series A, 4.25% (1) 3,000,000 3,000,000
California State General Obligation Bonds, Series A-3, MBIA Insured, 4.35% (1) 500,000 500,000
California State Revenue Anticipation Wts., Series C, FGIC Insured, 5.75%,
4/25/96 400,000 403,869
California Statewide Communities Development Authority Apt. Development Revenue
Refunding Bonds, Series 1995A, 3.75% (1) 1,560,000 1,560,000
Fairfield, California Industrial Development Authority Revenue Bonds, Herman G.
Rowland, 4.182% (1) 950,000 950,000
Huntington Park, California Redevelopment Agency Multifamily Housing Revenue
Bonds, Casa Rita Apts., Series A, 4.30% (1) 1,500,000 1,500,000
Kern County, California Union High School District Certificates of
Participation, Finance Project, 3.85% (1) 1,500,000 1,500,000
Los Angeles County, California Housing Authority Revenue Bonds, Park Sierra
Project, 4.05% (1) 2,000,000 2,000,000
Los Angeles County, California Metropolitan Transportation Authority Revenue
Anticipation Nts., Series 1995A, Swiss Bank Letter of Credit, 5%, 4/25/96 12,000,000 12,072,352
Oceanside, California Multifamily Revenue Bonds, Lakeridge Apts. Project, CCSB
Insured, 4.30% (1) 10,000,000 10,000,000
Ontario, California Multifamily Residential Mtg. Revenue Bonds, Park Centre
Project, Series A, 3.80% (1) 2,300,000 2,300,000
Orange County, California Apt. Development Revenue Refunding Bonds,
Series A, 4.05% (1) 1,000,000 1,000,000
Orange County, California Municipal Water District Refunding Certificates of
Participation, Allen McColloch Project, Series A, 4.45% (1) 1,000,000 1,000,000
Pittsburg, California Mtg. Obligation Gtd. Revenue Bonds, Series A, 4.30% (1) 3,300,000 3,300,000
San Bernardino County, California Housing Authority Multifamily Housing Revenue
Refunding Bonds, Arrowview Park Apts. Project, Series A, Federal Home Loan
Bank Letter of Credit, 4.55% (1) 1,400,000 1,400,000
San Bernardino County, California Multifamily Housing Authority Revenue
Refunding Bonds, Monterey Villas Apts. Project, Series A, 4.25% (1) 600,000 600,000
</TABLE>
3
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
CALIFORNIA (CONTINUED)
San Diego County, California Regional Transportation Commission Second Senior
Sales Tax Revenue Bonds, Series A, FGIC Insured, 4.75%, 4/1/96 $ 800,000 $ 804,407
San Francisco, California City & County Redevelopment Agency Multifamily
Revenue Refunding Bonds, Fillmore Center Housing Project,
Series A-1, 3.90% (1) 500,000 500,000
Southern California Public Power Authority Sub. Revenue Refunding Bonds,
Southern Transmission Project, AMBAC Insured, 3.90% (1) 2,000,000 2,000,000
Visalia, California Certificates of Participation, Visalia Convention Center
Expansion Project, 4.70% (1) 400,000 400,000
-------------
94,746,048
-------------
COLORADO--5.9%
Arapahoe County, Colorado Capital Improvement Trust Fund Highway Revenue Bonds,
E-470 Project, Series E, 4.45%, 8/31/95 (3) 20,000,000 20,001,447
Arapahoe County, Colorado Capital Improvement Trust Fund Highway Revenue Bonds,
E-470 Project, Series G, 4.45%, 8/31/95 (3) 5,015,000 5,015,000
Arapahoe County, Colorado Multifamily Revenue Refunding Bonds, Hunters Run
Rental Housing, 4.30% (1) 25,600,000 25,600,000
Aurora, Colorado Industrial Development Revenue Refunding Bonds, La Quinta
Motor Inns, 4.25% (1) 3,000,000 3,000,000
Colorado Health Facilities Authority Revenue Bonds, Sisters of Charity Project,
Series S, 4.20% (1) 4,400,000 4,400,000
Westminster, Colorado Multifamily Revenue Bonds, Wexford Station Apts., Series
A, CCSB Insured, 4.875%, 12/1/95 (3) 17,095,000 17,095,000
Wheat Ridge, Colorado Industrial Development Revenue Refunding Bonds, La Quinta
Motor Inns, 4.25% (1) 2,275,000 2,275,000
-------------
77,386,447
-------------
CONNECTICUT--0.5%
Connecticut State Special Assessment Unemployment Compensation Advance Funding
Revenue Bonds, Series B, 4.20% (1)(2) 6,100,000 6,100,000
-------------
DELAWARE--0.5%
Sussex County, Delaware Economic Development Revenue Bonds, Route 113 LP
Project, 3.95% (1) 6,000,000 6,000,000
-------------
FLORIDA--7.3%
Dade County, Florida Industrial Development Authority Pollution Control Revenue
Refunding Bonds, Florida Power & Light Co. Project, 4.30% (1) 2,235,000 2,235,000
Dade County, Florida School District General Obligation Bonds, Series A, 4.25%
(1) 2,000,000 2,000,000
Dade County, Florida School District General Obligation Bonds, Series B, 4.25%
(1) 2,000,000 2,000,000
</TABLE>
4
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
FLORIDA (CONTINUED)
Dade County, Florida School District General Obligation School Improvement
Bonds, FGIC Insured, 7%, 8/1/95 $ 2,000,000 $ 2,004,588
Dade County, Florida Water & Sewer System Revenue Bonds, FGIC Insured,
4.20% (1) 14,400,000 14,400,000
Escambia County, Florida Health Facilities Authority Revenue Refunding Bonds,
Florida Convertible Centers Project, Series A, 4.05% (1) 1,400,000 1,400,000
Florida State Board of Education Public Education Capital Outlay Refunding
Bonds, Series A, 4.188% (1) 13,230,000 13,230,000
Hillsborough County, Florida Industrial Development Authority Pollution Control
Revenue Bonds, Tampa Electric Co. Project, 5.40% (1) 17,975,000 17,975,000
Jacksonville, Florida Electric Authority Revenue Refunding Bonds, St. John's
River Power Park System Project, Series 11, 5%, 10/1/95 2,575,000 2,583,137
Jacksonville, Florida Pollution Control Revenue Bonds, Florida Power & Light
Co. Project, 4.05%, 12/4/95 (3) 5,000,000 5,000,000
Jacksonville, Florida Pollution Control Revenue Refunding Bonds, Florida Power
& Light Co. Project, 4.05%, 12/4/95 (3) 10,510,000 10,510,000
Orange County, Florida Housing Finance Authority Revenue Refunding Bonds,
Monterey Multifamily Housing Project, Series B, 4.30% (1) 4,965,000 4,965,000
Putnam County, Florida Development Authority Pollution Control Revenue Bonds,
National Rural Utilities-Seminole Electric Project, Series H-4, 4.30%,
9/15/95 (3) 10,000,000 10,000,000
Putnam County, Florida Development Authority Pollution Control Revenue
Refunding Bonds, Seminole Electric Co-op, Series D, 3.40%, 12/15/95 (3) 8,565,000 8,565,000
-------------
96,867,725
-------------
GEORGIA--3.9%
Burke County, Georgia Development Authority Pollution Control Revenue Bonds,
Oglethorpe Power Corp., Series A, 3.652% (1) 27,940,000 27,940,000
De Kalb County, Georgia Housing Authority Apts. Development Revenue Refunding
Bonds, Winter Peachtree Project, 4.30% (1) 5,000,000 5,000,000
Floyd County, Georgia Development Authority Pollution Control Revenue Refunding
Bonds, Inland-Rome, Inc. Project, 4.35% (1) 4,735,000 4,735,000
Georgia State General Obligation Bonds, Series 1995B, 4.30% (1) 12,000,000 12,000,000
Newton County, Georgia Industrial Development Authority Revenue Refunding
Bonds, John H. Harland Co. Project, 4.20% (1) 1,000,000 1,000,000
-------------
50,675,000
-------------
HAWAII--0.2%
Hawaii State Department of Budget & Finance Special Purpose Mtg. Revenue Bonds,
Kuakini Medical Center Project, FGIC Insured, 4% (1) 2,900,000 2,900,000
-----------
</TABLE>
5
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
ILLINOIS--10.8%
Centralia City, Illinois Industrial Development Revenue Bonds, Consolidated
Foods Corp./Hollywood Brands, Inc., 4.15% (1) $ 5,500,000 $ 5,500,000
Chicago, Illinois General Obligation Tender Nts., Series A, 4.60%, 10/31/95
(3) 15,300,000 15,300,000
Elk Grove Village, Illinois Industrial Development Revenue Bonds, La Quinta
Motor Inns, Inc., 3.95% (1) 3,700,000 3,700,000
Illinois Development Finance Authority Pollution Control Revenue Bonds, Diamond
Star Motors Co. Project, 4.60% (1) 12,700,000 12,700,000
Illinois Development Finance Authority Pollution Control Revenue Bonds,
Illinois Power Co. Project, Series C, 3.90%, 8/3/95 (3) 4,000,000 4,000,000
Illinois Development Finance Authority Revenue Bonds, Latin School of Chicago
Project, 3.60% (1) 9,000,000 9,000,000
Illinois Educational Facilities Authority Revenue Bonds, National-Louis
University, 4.05% (1) 6,500,000 6,500,000
Illinois Health Facilities Authority Revenue Bonds, Lake Forest Hospital
Project, 4.50% (1) 13,000,000 13,000,000
Lakemoor Village, Illinois Multifamily Housing Mtg. Revenue Bonds, Lakemoor
Apts. Project, 5%, 3/1/96 (3) 4,832,000 4,832,000
Lakemoor Village, Illinois Multifamily Housing Mtg. Revenue Bonds, Lakemoor
Apts. Project, 5.25%, 3/1/96 (3) 15,000,000 15,000,000
Oakbrook Terrace, Illinois Multifamily Housing Mtg. Revenue Bonds, 5.25%,
3/1/96 (3) 35,000,000 35,033,652
Oakbrook Terrace, Illinois Multifamily Housing Mtg. Revenue Bonds, Renaissance
Project, Series 1985A, 4.75%, 4/1/96 (3) 14,000,000 14,000,000
West Chicago, Illinois Industrial Development Revenue Refunding Bonds, Liquid
Container Project, 4.25% (1) 3,810,000 3,810,000
-------------
142,375,652
-------------
INDIANA--4.1%
Crawfordsville, Indiana Economic Development Revenue Refunding Bonds, Pedcor
Investments-Shady Knoll I Apts. Project, 4.30% (1) 3,475,000 3,475,000
Gary, Indiana Industrial Environmental Improvement Revenue Bonds, U.S. Steel
Corp. Project, 3.60% (1) 1,000,000 1,000,000
Hobart, Indiana Economic Development Revenue Refunding Bonds, MMM Invest, Inc.
Project, 4.20% (1) 2,220,000 2,220,000
Indiana Bond Bank, Advance Funding Program Nts., Series A-2, 5.75%, 1/10/96 12,530,000 12,577,218
Indiana Health Facilities Finance Authority Revenue Bonds, Cardinal Center
Project, 4.313% (1) 3,000,000 3,000,000
Indiana State Development Finance Authority Economic Development Revenue Bonds,
Saroyan Hardwoods, Inc., 4.35% (1) 2,300,000 2,300,000
</TABLE>
6
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
INDIANA (CONTINUED)
Indianapolis, Indiana Local Public Improvement Bond Bank Nts., Series F, 5.25%,
7/14/95 $18,850,000 $18,852,606
Indianapolis, Indiana Local Public Improvement Bond Bank Nts., Series G, 5.25%,
7/14/95 2,675,000 2,675,370
Marion County, Indiana Hospital Authority Hospital Facility Revenue Bonds,
Indianapolis Osteopathic, 4.313% (1) 4,100,000 4,100,000
St. Joseph County, Indiana Hospital Authority Special Obligation Bonds, Madison
Center, Inc. Project, 4.41% (1) 3,000,000 3,000,000
St. Joseph County, Indiana Industrial Educational Facilities Revenue Bonds,
Holy Cross College, 4.20% (1) 1,000,000 1,000,000
-------------
54,200,194
-------------
IOWA--1.8%
Des Moines, Iowa Commercial Development Revenue Bonds, Series A, 4.10% ((1)) 6,900,000 6,900,000
Iowa School Corp. Warrant Certificates, Series B, CGIC Insured, 5.75%, 2/1/96 15,000,000 15,107,100
Mason City, Iowa Industrial Development Revenue Bonds, SuperValu Stores, Inc.
Project, 4.30% (1) 2,000,000 2,000,000
-------------
24,007,100
-------------
KANSAS--0.6%
Kansas City, Kansas Private Activity Revenue Refunding Bonds, Inland Container
Corp., 4.35% (1) 5,200,000 5,200,000
Olathe, Kansas Industrial Revenue Refunding Bonds, William F. Bieber Project,
5.60% (1) 1,925,000 1,925,000
Ottawa, Kansas Industrial Development Revenue Bonds, Laich Industries Project,
4.35% (1) 800,000 800,000
-------------
7,925,000
-------------
KENTUCKY--0.1%
Jamestown, Kentucky Industrial Building Revenue Bonds, Union Underwear Co.,
4.25% (1) 1,000,000 1,000,000
-------------
LOUISIANA--0.2%
East Baton Rouge Parish, Louisiana Industrial Development Board Revenue
Refunding Bonds, La Quinta Motor Inns, Inc., 4.25% (1) 2,625,000 2,625,000
-------------
MARYLAND--4.1%
Hartford County, Maryland Revenue Refunding Bonds, 1001 Participation Facility
Project, 3.95% (1) 2,850,000 2,850,000
Maryland State Health & Higher Educational Facilities Authority Revenue Bonds,
Carroll General Pooled Loan Program, Series A, 4.20% (1) 1,555,000 1,555,000
</TABLE>
7
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
MARYLAND (CONTINUED)
Maryland State Health & Higher Educational Facilities Authority Revenue Bonds,
University of Maryland Pooled Loan Program, Series B, 3.95% (1) $ 1,285,000 $ 1,285,000
Montgomery County, Maryland Consolidated Public Improvement General Obligation
Bonds, Series A, 5.20%, 10/1/95 5,000,000 5,005,000
Montgomery County, Maryland Multifamily Housing Opportunities Commission
Revenue Bonds, Grosvenor House Project, Series A, 3.95% (1) 19,700,000 19,700,000
Montgomery County, Maryland Multifamily Housing Opportunities Commission
Revenue Bonds, Issue A, 4.15% (1) 15,800,000 15,800,000
Worcester County, Maryland Revenue Refunding Bonds, White Marlin Mall Project,
3.95% (1) 8,250,000 8,250,000
-------------
54,445,000
-------------
MASSACHUSETTS--2.7%
Massachusetts Bay Transportation Authority Tax-Exempt Commercial Paper, 3.50%,
9/8/95 (3) 12,000,000 12,000,000
Massachusetts State Commonwealth General Obligation Bonds, Series C, 4.056% (1) 15,400,000 15,400,000
Massachusetts State Housing Finance Agency Single Family Housing Revenue Bonds,
Series 34, FGIC Insured, 4.15%, 6/1/96 (3) 2,750,000 2,750,000
Massachusetts State Housing Finance Agency Single Family Housing Revenue Bonds,
Series 35, FGIC Insured, 4.10%, 6/1/96 (3) 5,000,000 5,000,000
Massachusetts State Industrial Finance Agency Revenue Bonds, Hazen Paper, 4.48%
(1) 400,000 400,000
North Andover Town, Massachusetts Industrial Revenue Bonds, Atlee-Oak Realty
Trust of Delaware, Inc., 4.48% (1) 450,000 450,000
-------------
36,000,000
-------------
MICHIGAN--4.8%
Madison Heights, Michigan Economic Development Revenue Bonds, Red Roof Inns
Project, 4.15% (1) 1,000,000 1,000,000
Michigan State Full Faith & Credit General Obligation Nts., 5%, 9/29/95 60,000,000 60,130,222
Michigan State Job Development Authority Revenue Bonds, East Lansing Residence
Associates Project, 4% (1) 1,900,000 1,900,000
-------------
63,030,222
-------------
MINNESOTA--4.6%
Anoka, Minnesota Multifamily Housing Revenue Bonds, Walker Plaza, Series B,
4.10% (1) 1,950,000 1,950,000
Austin, Minnesota Industrial Development Revenue Refunding Bonds, SuperValu
Stores, Inc. Project, 4.30% (1) 4,600,000 4,600,000
Bloomington, Minnesota Port Authority Tax Revenue Refunding Bonds, Mall of
America Project, Series C, FSA Insured, 4.15% (1) 8,300,000 8,300,000
</TABLE>
8
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
MINNESOTA (CONTINUED)
Burnsville, Minnesota Commercial Development Revenue Bonds, SuperValu Stores,
Inc. Project, Series 83, 4.30% (1) $5,500,000 $ 5,500,000
Dakota County, Minnesota Housing & Redevelopment Multifamily Mtg. Revenue
Bonds, Westwood Ridge Rental Housing Project, Series A, 4.10% (1) 2,500,000 2,500,000
Eden Prairie, Minnesota Commercial Development Revenue Refunding Bonds,
Lakeview Business Center, 4.10% (1) 1,200,000 1,200,000
Eden Prairie, Minnesota Industrial Development Revenue Bonds, SuperValu Stores,
Inc. Project, 4.30% (1) 1,000,000 1,000,000
Maplewood, Minnesota Revenue Bonds, 5.58% (1) 1,145,000 1,145,000
Minneapolis, Minnesota Commercial Development Revenue Refunding
Bonds, Minnehaha/Lake Partners Project, 4.15% (1) 2,750,000 2,750,000
Minneapolis, Minnesota Housing Development Revenue Refunding Bonds, One Ten
Grant Project, 3.645% (1) 3,000,000 3,000,000
New Ulm, Minnesota Hospital Facilities Revenue Bonds, Health Center Systems,
4.25% (1) 2,500,000 2,500,000
North Suburban Hospital District, Minnesota Revenue Bonds, Anoka & Ramsey
Counties Hospital Health Center, 4.25% (1) 3,400,000 3,400,000
Southern Minnesota Municipal Power Agency Power Supply Systems Revenue Bonds,
Prerefunded, Series A, 9.50%, 1/1/96 (3) 1,700,000 1,775,767
St. Paul, Minnesota Port Authority Parking Revenue Refunding Bonds, City
Walking Ramp Project, 4.10%, (1) 2,410,000 2,410,000
St. Paul, Minnesota Port Authority Tax Increment Revenue Bonds, Westgate Office
& Industrial Center Project, 4.10% (1) 5,500,000 5,500,000
Stillwater, Minnesota Industrial Development Revenue Refunding Bonds, SuperValu
Stores, Inc. Project, 4.30% (1) 5,500,000 5,500,000
Western Minnesota Municipal Power Agency Revenue Refunding Bonds, Prerefunded,
Series 1985A, 9.50%, 1/1/96 (3) 7,000,000 7,310,178
-------------
60,340,945
-------------
MISSOURI--0.5%
St. Charles County, Missouri Industrial Development Revenue Refunding Bonds,
Remington Apts. Project, 4.30% (1) 6,300,000 6,300,000
-------------
MONTANA--0.1%
Great Falls, Montana Industrial Development Revenue Refunding Bonds, SuperValu
Stores, Inc. Project, 4.30% (1) 1,000,000 1,000,000
-------------
NEBRASKA--0.6%
Nebraska Investment Finance Authority Single Family Mtg. Revenue Refunding
Bonds, GNMA Mtg. Series B, FGIC Insured, 4.75%, 7/15/95 (3) 4,765,000 4,765,000
</TABLE>
9
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
NEBRASKA (CONTINUED)
Norfolk, Nebraska Industrial Development Revenue Refunding Bonds, SuperValu
Stores, Inc. Project, 4.30% (1) $ 2,800,000 $ 2,800,000
-------------
7,565,000
-------------
NEVADA--1.9%
Nevada State General Obligation Bonds, Colorado River Commission, 3.85% (1) 25,000,000 25,000,000
-------------
NEW JERSEY--0.7%
New Jersey Economic Development Authority Manufacturing Facilities Revenue
Bonds, VPR Commerce Center Project, 4.20% (1) 3,750,000 3,750,000
New Jersey State General Obligation Revenue Refunding Bonds, 7.90%, 8/1/95 5,000,000 5,013,189
-------------
8,763,189
-------------
NEW MEXICO--0.8%
Albuquerque, New Mexico Airport Revenue Refunding Bonds, Sub. Lien, AMBAC
Insured, 2.55% (1) 11,000,000 11,000,000
-------------
NEW YORK--3.3%
Albany County, New York General Obligation Revenue Refunding Bonds, South Mall
Construction Project, Series A, FGIC Insured, 4.30%, 4/1/96 1,000,000 1,001,490
Babylon, New York General Obligation Bonds, Series B, AMBAC Insured, 3.95% (1) 700,000 700,000
City of New York Development Corp. Mtg. Revenue Bonds, Columbus Multi-
family Project, Series A, 4% (1) 2,700,000 2,700,000
City of New York Housing Development Corp. Mtg. Revenue Bonds, East 96th Street
Project, Series A, 3.75% (1) 400,000 400,000
City of New York Housing Development Corp. Mtg. Revenue Bonds, Multifamily-
James Tower Development, Series A, 3.85% (1) 3,000,000 3,000,000
City of New York Trust Cultural Resources Revenue Refunding Bonds, American
Museum of Natural History, Series A, MBIA Insured, 3.95% (1) 2,400,000 2,400,000
City of New York Trust Cultural Resources Revenue Refunding Bonds, American
Museum of Natural History, Series B, MBIA Insured, 3.95% (1) 900,000 900,000
Erie County, New York General Obligation Revenue Anticipation Nts., 4.75%,
8/15/95 1,800,000 1,799,938
Erie County, New York Water Authority Revenue Bonds, Series A, AMBAC Insured,
4% (1) 1,000,000 1,000,000
New York State Environmental Facilities Corp. Solid Waste Disposal Revenue
Refunding Bonds, General Electric Co. Project, Series A, 3.95%, 9/8/95 (3) 800,000 800,000
New York State Job Development Authority Gtd. Revenue Bonds, 1984 Series E-1 to
E-55, 3.60% (1) 355,000 355,000
</TABLE>
10
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
NEW YORK (CONTINUED)
New York State Job Development Authority Gtd. Revenue Bonds, 1984 Series F-1 to
F-17, 3.60% (1) $ 160,000 $ 160,000
New York State Job Development Authority Gtd. Revenue Bonds, Series C-1 to
C-30, 4.60% (1) 895,000 895,000
New York State Job Development Authority Gtd. Revenue Bonds, Special Purpose,
Series C-1, 3.70% (1) 815,000 815,000
New York State Local Government Assistance Corp. Revenue Bonds, Series A,
3.70% (1) 700,000 700,000
New York State Medical Care Facilities Finance Agency Revenue Bonds, Mt. Sinai
Hospital Project, Prerefunded, Series C, FHA Insured, 8.875%, 1/15/96 (3) 3,000,000 3,131,324
New York State Medical Care Facilities Finance Agency Revenue Bonds, St. Mary's
Hospital-Private Insurance Program, Prerefunded, AMBAC Insured, 8.375%,
11/1/95 (3) 3,300,000 3,401,546
New York State Urban Development Corp. Correctional Facilities Revenue Bonds,
Prerefunded, Series B, 8%, 1/1/96 (3) 8,300,000 8,609,396
New York State Urban Development Corp. Revenue Refunding Bonds, Prerefunded,
8%, 1/1/96 (3) 6,500,000 6,723,139
North Hempstead, New York Solid Waste Management Authority Revenue Refunding
Bonds, Series A, 3.75% (1) 700,000 700,000
Suffolk County, New York Industrial Development Agency Revenue Bonds,
Nissequogue Cogen Partners Project, 4.30% (1) 700,000 700,000
Triborough Bridge & Tunnel Authority of New York Revenue Bonds, FGIC Insured,
3.75% (1) 2,000,000 2,000,000
-------------
42,891,833
-------------
NORTH CAROLINA--0.9%
North Carolina National Bank Pooled Tax-Exempt Trust Certificates of
Participation, Series 1990A, 4.50% (1) 8,080,000 8,080,000
North Carolina National Bank Pooled Tax-Exempt Trust Certificates of
Participation, Series 1990B, 4.50% (1) 4,500,000 4,500,000
-------------
12,580,000
-------------
NORTH DAKOTA--0.2%
Bismarck, North Dakota Industrial Development Revenue Bonds, SuperValu Stores,
Inc. Project, 4.30% (1) 1,500,000 1,500,000
Bismarck, North Dakota Industrial Development Revenue Refunding Bonds,
SuperValu Stores, Inc. Project, 4.30% (1) 800,000 800,000
-------------
2,300,000
-------------
OHIO--5.4%
Cuyahoga County, Ohio Industrial Development Revenue Bonds, Southwest LP,
4.70%, 12/1/95 (3) 500,000 500,000
</TABLE>
11
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
OHIO (CONTINUED)
Gallia County, Ohio Industrial Development Mtg. Revenue Refunding Bonds,
Jackson Pike Assn., 3.85%, 12/15/95 (3) $ 1,750,000 $ 1,750,000
Greene County, Ohio Industrial Development Revenue Refunding Bonds, SuperValu
Holdings, Inc. Project, 4.30% (1) 1,000,000 1,000,000
Licking County, Ohio Industrial Development Revenue Bonds, Power Industries,
Inc. Project, 4.20%, 12/1/95 (3) 315,000 315,000
Lucas County, Ohio Industrial Development Revenue Refunding Bonds, H.H. Motel,
Inc. Project, 4.20% (1) 3,905,000 3,905,000
Marion County, Ohio Hospital Revenue Bonds, Pooled Lease Program, 4.20% (1) 6,960,000 6,960,000
Marion County, Ohio Hospital Revenue Bonds, Pooled Lease Program, 4.25%,
11/1/95 (3) 9,150,000 9,150,000
Miami Valley, Ohio Tax-Exempt Mtg. Trust Revenue Bonds, Series 86, 4.88%,
10/15/95 (3) 2,835,000 2,835,000
Ohio State Air Quality Development Authority Pollution Control Revenue
Refunding Bonds, Series B, 4.95%, 10/4/95 (3) 4,655,000 4,655,000
Ohio State Water Development Authority Pollution Control Facilities Revenue
Refunding Bonds, Duquesne Light Co., Series A, 4.95%, 10/4/95 (3) 33,955,000 33,955,000
Scioto County, Ohio Health Care Facilities Revenue Bonds, Hill View Retirement
Center, 4.20%, 12/1/95 (3) 2,895,000 2,895,000
Warren County, Ohio Industrial Development Revenue Refunding Bonds, Liquid
Container Project, 4.25% (1) 1,670,000 1,670,000
Whitehall, Ohio Industrial Development Revenue Refunding Bonds, First Mtg.
Continental Commercial, 4.70%, 8/1/95 (3) 1,590,000 1,590,000
-------------
71,180,000
-------------
OKLAHOMA--0.9%
Claremore, Oklahoma Industrial & Redevelopment Authority Revenue Refunding
Bonds, Worthington Cylinder Project, 4.25% (1) 2,370,000 2,370,000
Cleveland County, Oklahoma Public Facilities Revenue Bonds, Hunt Development
Project, Series A, 4.55% (1) 1,000,000 1,000,000
Mid-West Tax-Exempt Mtg. Board Trust Revenue Bonds, 3.85% (1) 1,635,000 1,635,000
Tulsa, Oklahoma Industrial Authority Revenue Bonds, 4.15% (1) 6,500,000 6,500,000
-------------
11,505,000
-------------
OREGON--2.2%
Clackamas County, Oregon Hospital Facility Authority Revenue Bonds, Kaiser
Permanente Medical Center Project, 4.20%, 10/1/95 (3) 2,300,000 2,300,000
Hillsboro, Oregon Revenue Bonds, Oregon Graduate Institute, 4.20% (1) 7,000,000 7,000,000
Klamath Falls, Oregon Electric Revenue Bonds, Salt Caves Hydroelectric Project,
Series D, 4.40%, 5/1/96(3) 16,000,000 16,000,000
</TABLE>
12
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
OREGON (CONTINUED)
Oregon State Economic & Industrial Development Commission Revenue Bonds,
Eagel-Picher Industries Project, 4.80% (1) $ 3,600,000 $ 3,600,000
-------------
28,900,000
-------------
PENNSYLVANIA--1.2%
Commonwealth of Pennsylvania Tax-Exempt Mtg. Bond Trust Certificates, Series A,
4.50%, 11/1/95 (3) 3,470,000 3,470,000
Littlestown, Pennsylvania Industrial Development Authority Revenue Refunding
Bonds, Hanover House Industries Project, 4.20% (1) 3,000,000 3,000,000
Montgomery County, Pennsylvania Industrial Development Authority Revenue Bonds,
Quaker Chemical Corp. Project, 3.90% (1) 1,600,000 1,600,000
Philadelphia, Pennsylvania Authority for Industrial Development Revenue Bonds,
Commercial Development, 1100 Walnut St. Assn., 3.90% (1) 7,400,000 7,400,000
-------------
15,470,000
-------------
SOUTH CAROLINA--2.0%
Charleston Center Tax-Exempt Bonds, Grantor Trust No. 2, 4.30%, 11/1/95 (3) 4,407,500 4,407,500
Charleston Center Tax-Exempt Bonds, Grantor Trust No. 3, 4.80%, 7/1/95 (3) 9,452,500 9,452,500
Charleston Center Tax-Exempt Bonds, Grantor Trust No. 6, 4.35%, 10/1/95 (3) 8,075,000 8,075,000
Dorchester County, South Carolina Pollution Control Facilities Revenue
Refunding Bonds, The BOC Group, Inc. Project, 4.15% (1) 3,500,000 3,500,000
South Carolina Jobs & Economic Development Authority Revenue Bonds, Wellman
Income Project, 4.25% (1) 1,000,000 1,000,000
-------------
26,435,000
-------------
SOUTH DAKOTA--2.7%
Grant County, South Dakota Pollution Control Revenue Refunding Bonds, Otter
Tail Power Co. Project, 4.15% (1) 10,400,000 10,400,000
South Dakota State Health & Educational Bonds, Sioux Valley Hospital
Issue, 4.15% (1) 20,600,000 20,600,000
Watertown, South Dakota Industrial Development Revenue Bonds, SuperValu Stores,
Inc. Project, 4.30% (1) 3,900,000 3,900,000
-------------
34,900,000
-------------
TENNESSEE--2.4%
Clarksville, Tennessee Public Building Authority Revenue Bonds, Pooled
Financing-Tennessee Municipal Bond Fund, 4.20% (1) 12,000,000 12,000,000
Covington, Tennessee Industrial Development Board, Charms Co. Project, 4.10%
(1) 4,100,000 4,100,000
Dayton, Tennessee Industrial Development Board Revenue Refunding Bonds,
La-Z Boy Chair Co. Project, 4.15% (1) 4,350,000 4,350,000
</TABLE>
13
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
TENNESSEE (CONTINUED)
Knox County, Tennessee Industrial Development Board Revenue Bonds, Weisgarber
Partners, FGIC Insured, 4.10% (1) $ 3,000,000 $ 3,000,000
Metropolitan Government of Nashville & Davidson County, Tennessee Health &
Educational Facilities Board Revenue Bonds, Vanderbilt University Project,
Series 1985B, 4.35%, 5/1/96 (3) 2,250,000 2,250,000
Metropolitan Government of Nashville & Davidson County, Tennessee Health &
Educational Facilities Board Revenue Bonds, Vanderbilt University Project,
Series 85A, 5.10%, 1/15/96 (3) 1,000,000 1,000,000
Metropolitan Government of Nashville & Davidson County, Tennessee Health &
Educational Facilities Board Revenue Bonds, Vanderbilt University Project,
Series 85A, 5.10%, 1/15/96 (3) 700,000 700,000
Metropolitan Government of Nashville & Davidson County, Tennessee Multifamily
Housing Revenue Bonds, Arbor Crest Project, Series B, 4.20% (1) 3,550,000 3,550,000
Rutherford County, Tennessee Industrial Development Board Industrial Building
Revenue Bonds, Derby Industries, Inc. Project, 4.35% (1) 1,000,000 1,000,000
-------------
31,950,000
-------------
TEXAS--9.0%
Angelina & Neches River Authority Texas Pollution Control Revenue Refunding
Bonds, Temple-Inland Forest Project, 4.35% (1) 7,350,000 7,350,000
Austin, Texas Travis & Williamson Counties Combined Utility Systems Tax-Exempt
Commercial Paper, Swiss Bank Insured, 4.20%, 10/5/95 (3) 8,200,000 8,200,000
Harris County, Texas Custodial Receipts, Series A, 3.65% (1) 5,000,000 5,000,000
Hockley County, Texas Industrial Development Corp. Pollution Control Revenue
Bonds, Amoco Project-Standard Oil Co., 4.75%, 9/1/95 (3) 20,000,000 20,011,993
Lower Neches Valley Authority Texas Revenue Bonds, Chevron USA, Inc. Project,
4.45%, 8/15/95 (3) 9,400,000 9,400,000
Texas State Tax & Revenue Anticipation Nts., 5%, 8/31/95 60,050,000 60,075,386
Texas Water Resource Finance Authority Revenue Bonds, Series 1989, 7%, 8/15/95 4,455,000 4,469,129
Travis County, Texas Housing Finance Corp. Multifamily Housing Revenue Bonds,
Bent Oaks Apts., 4.665% (1) 4,400,000 4,400,000
-------------
118,906,508
-------------
UTAH--1.3%
Intermountain Power Agency of Utah Power Supply Revenue Refunding Bonds,
Series E, 3.85%, 6/17/96 (3) 2,100,000 2,100,000
Intermountain Power Agency of Utah Power Supply Revenue Refunding Bonds,
Series F, 4.15%, 9/15/95 (3) 5,500,000 5,500,000
</TABLE>
14
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
UTAH (CONTINUED)
Utah State Housing Finance Agency Multifamily Housing Revenue Refunding Bonds,
Candlestick Apts. Project, 4.15% (1) $ 6,400,000 $ 6,400,000
Weber County, Utah Industrial Development Revenue Refunding Bonds, Parker
Properties, Inc. Project, 3.90% (1) 2,600,000 2,600,000
-------------
16,600,000
-------------
VERMONT--0.4%
Vermont Educational & Health Buildings Financing Agency Revenue Bonds,
Middlebury College Project, Series 1988A, 4.35%, 5/1/96 (3) 3,500,000 3,500,000
Vermont Industrial Development Authority Revenue Bonds, Sherburne Corp.,
4.48% (1) 1,885,000 1,885,000
-------------
5,385,000
-------------
VIRGINIA--0.8%
Roanoke, Virginia Industrial Development Authority Hospital Revenue Bonds,
Roanoke Memorial Hospital Project, Series A, 4.50% (1) 100,000 100,000
Virginia State Housing Development Authority Commonwealth Mtg. Bonds, Series D,
4.12%, 9/12/95 (3) 4,000,000 4,000,140
Virginia State Housing Development Authority Commonwealth Mtg. Bonds, Series F,
4.12%, 9/12/95 (3) 7,000,000 7,000,244
-------------
11,100,384
-------------
WASHINGTON--1.4%
Port Longview, Washington Industrial Development Revenue Bonds, Longview Fibre
Co. Project, 4.10% (1) 2,500,000 2,500,000
Redmond, Washington Public Corp. Industrial Revenue Refunding Bonds, Genie
Industries, Lot 1, 4.25% (1) 1,100,000 1,100,000
Redmond, Washington Public Corp. Industrial Revenue Refunding Bonds, Genie
Industries, Lot 2, 4.25% (1) 1,770,000 1,770,000
Seattle, Washington Industrial Development Corp. Revenue Bonds, RICS LP,
4.30% (1) 5,700,000 5,700,000
Washington State Housing Finance Commission Non-profit Housing Revenue Bonds,
Horizon House Project, 3.80% (1) 4,505,000 4,505,000
Washington State Housing Finance Commission Single Family Program Bonds, FGIC
Insured, 4.10%, 6/1/96 (3) 2,500,000 2,500,000
-------------
18,075,000
-------------
WEST VIRGINIA--1.9%
Grant County, West Virginia Pollution Control Revenue Bonds, Virginia Electric
& Power Co. Project, Series 1994, 3.80%, 9/13/95 (3) 19,500,000 19,500,000
Harrison County, West Virginia Industrial Development Revenue Refunding Bonds,
Fox Grocery Co. Project, 4.25% (1) 4,140,000 4,140,000
</TABLE>
15
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Amortized Cost
Amount See Note 1
---------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS (CONTINUED)
WEST VIRGINIA (CONTINUED)
West Virginia School Building Authority Capital Improvement Revenue Bonds,
MBIA Insured, 5%, 7/1/95 $1,795,000 $ 1,795,000
-------------
25,435,000
-------------
Total Investments, at Amortized Cost 103.3% 1,357,731,247
Liabilities in Excess of Other Assets (3.3) (42,810,270)
----- -------------
Net Assets 100.0% $1,314,920,977
===== =============
</TABLE>
1. Floating or variable rate obligation maturing 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, 1995. This instrument may also have a demand feature which allows the
recovery of principal at any time, or at specified intervals not exceeding
one year, on up to 30 days' notice. Maturity date shown represents effective
maturity based on variable rate and, if applicable, demand feature.
2. When-issued security to be delivered and settled after June 30, 1995.
3. Put obligation redeemable at full face value on the date reported.
See accompanying Notes to Financial Statements.
16
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES June 30, 1995
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments, at amortized cost--see accompanying statement $1,357,731,247
Cash 2,477,832
Receivables:
Interest 12,804,526
Shares of beneficial interest sold 33,622,017
Other 279,760
-----------
Total assets 1,406,915,382
-----------
LIABILITIES:
Payables and other liabilities:
Investments purchased 71,707,195
Shares of beneficial interest redeemed 18,068,864
Dividends 1,906,239
Service plan fees--Note 3 120,368
Transfer and shareholder servicing agent fees--Note 3 23,467
Trustees' fees 1,113
Other 167,159
-----------
Total liabilities 91,994,405
-----------
NET ASSETS $1,314,920,977
===========
COMPOSITION OF NET ASSETS:
Paid-in capital $1,314,882,597
Accumulated net realized gain from investment transactions 38,380
-----------
NET ASSETS -- applicable to 1,314,898,565 shares of beneficial interest
outstanding $1,314,920,977
===========
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, 1995
Centennial Tax Exempt Trust
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $43,517,674
EXPENSES:
Management fees -- Note 3 5,050,991
Service plan fees -- Note 3 2,246,219
Transfer and shareholder servicing agent
fees -- Note 3 579,024
Registration and filing fees 166,390
Shareholder reports 77,337
Legal and auditing fees 42,350
Trustees' fees and expenses 19,421
Custodian fees and expenses 12,774
Other 50,383
----------
Total expenses 8,244,889
----------
NET INVESTMENT INCOME 35,272,785
NET REALIZED GAIN ON INVESTMENTS 69,768
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $35,342,553
==========
</TABLE>
See accompanying Notes to Financial Statements.
18
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------
1995 1994
--------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 35,272,785 $ 19,775,488
Net realized gain on investments 69,768 2,423
-------------- --------------
Net increase in net assets resulting from operations 35,342,553 19,777,911
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (35,284,282) (19,846,407)
BENEFICIAL INTEREST TRANSACTIONS:
Net increase in net assets resulting from beneficial interest
transactions--Note 2 275,476,883 58,297,214
-------------- --------------
NET ASSETS
Total increase 275,535,154 58,228,718
Beginning of period 1,039,385,823 981,157,105
-------------- --------------
End of period $1,314,920,977 $1,039,385,823
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
19
<PAGE>
FINANCIAL HIGHLIGHTS
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Year Ended June 30, SIX MONTHS YEAR ENDED
---------------------------------------------------------------------- ENDED JUNE 30, DECEMBER 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
----- ----- ----- ----- ----- ----- ----- ----- ----- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <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 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations--net investment
income and net realized gain
on investments .03 .02 .02 .03 .04 .05 .05 .04 .04 .02 .05
Dividends and distributions to
shareholders (.03) (.02) (.02) (.03) (.04) (.05) (.05) (.04) (.04) (.02) (.05)
----- ---- - ---- ----- ---- ---- ----- ---- ---- ---- ----
Net asset value, end of period $ 1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ===== ===== ===== ===== =====
===== ===== ===== =====
TOTAL RETURN, AT NET ASSET
VALUE(1) 3.17% 1.90% 2.19% 3.55% 5.09% 5.70% 5.55% 4.35% 3.83% 2.25%
5.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
millions) $1,315 $1,039 $ 981 $ 917 $787 $ 575 $ 486 $ 518 $ 459 $ 469 $ 212
Average net assets (in
millions) $1,127 $1,057 $ 977 $ 900 $711 $ 561 $ 504 $ 485 $ 522 $ 385 $ 154
Number of shares outstanding at
end of period (in millions) 1,315 1,039 981 917 787 575 486 518 459 469 212
Ratios to average net assets:
Net investment income 3.13% 1.87% 2.08% 3.40% 4.84% 5.44% 5.45% 4.30% 3.71% 4.34%(2)
4.59%
Expenses .73% .76% .76% .75% .77% .79% .78% .78% .79% .82%(2) .82%
</TABLE>
1. Assumes a 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 are
not annualized for periods of less than one full year. Total returns reflect
changes in net investment income only.
2. Annualized.
See accompanying Notes to Financial Statements.
20
<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 advisor is Centennial Asset
Management Corporation (the Manager), a subsidiary of Oppenheimer Management
Corporation (OMC). The following is a summary of significant accounting
policies consistently followed by the Trust.
Investment 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.
Distributions to Shareholders--The Trust intends to declare dividends from
net investment income each day the New York Stock Exchange is open for
business and pay such dividends monthly. To effect its policy of maintaining
a net asset value of $1.00 per share, the Trust may withhold dividends or
make distributions of net realized gains.
Other--Investment transactions are accounted for on the date the investments
are purchased or sold (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.
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, 1995 Year Ended June 30, 1994
---------------------------- ------------------------------
Shares Amount Shares Amount
------------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
Sold 3,745,799,353 $ 3,745,799,210 3,351,917,791 $ 3,351,918,751
Dividends and distributions
reinvested 33,490,524 33,490,524 19,299,307 19,299,307
Issued in connection with
the acquisition of
Oppenheimer Tax-Exempt
Cash Reserves-- Note 4 31,152,605 31,152,738 -- --
Redeemed (3,534,964,703) (3,534,965,589) (3,312,920,844) (3,312,920,844)
-------------- -------------- -------------- ---------------
Net increase 275,477,779 $ 275,476,883 58,296,254 $ 58,297,214
============== ============= ==============
===============
</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 .50% on the
first $250 million of average annual net assets with a reduction of .025% on
each $250 million thereafter to $1.5 billion,
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Centennial Tax Exempt Trust
.35% on the next $500 million of net assets and .325% on net assets in excess
of $2 billion. Until Trust net assets reach $1.5 billion, the annual fee
payable to the Manager will be reduced by $100,000. The Manager has agreed to
assume Trust expenses (with specified exceptions) in excess of the most
stringent state regulatory limit on Trust expenses.
Shareholder Services, Inc. (SSI), a subsidiary of OMC, 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 .20% of its net
assets annually to reimburse Centennial Asset Management Corporation, 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, 1995, the Trust paid $13,658 to a broker/dealer affiliated with the
Manager as reimbursement for distribution-related expenses.
4. ACQUISITION OF OPPENHEIMER TAX-EXEMPT CASH RESERVES
On July 22, 1994, the Trust acquired all of the net assets of Oppenheimer
Tax-Exempt Cash Reserves (OTECR), pursuant to an Agreement and Plan of
Reorganization approved by the OTECR shareholders on July 12, 1994. The Trust
issued 31,152,605 shares of beneficial interest, valued at $31,152,738, in
exchange for the net assets, resulting in combined net assets of
$1,086,765,782 on July 22, 1994. The exchange qualifies as a tax-free
reorganization for federal income tax purposes.
<PAGE>
Exhibit 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. ("Moody's"): 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
broadbased access to the market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample although
not so large as in the preceding group.
Standard & Poor's Corporation ("S&P"): The following ratings by S&P 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 Investors Service, Inc. ("Fitch"): 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. ("Duff & Phelps"): 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.
IBCA Limited or its affiliate IBCA Inc. ("IBCA"): Short-term ratings,
including commercial paper (with maturities up to 12 months), are as
follows:
A1: Obligations supported by the highest capacity for timely
repayment.
A1: Obligations supported by a very strong capacity for timely
repayment.
A2: Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic, or financial conditions.
Thomson BankWatch, Inc. ("TBW"): 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: 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: 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:
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:
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.
IBCA: Long-term obligations (with maturities of more than 12 months) are
rated as follows:
AAA: The lowest expectation of investment risk. Capacity for timely
repayment of principal and interest is substantial such that adverse
changes in business, economic, or financial conditions are unlikely
to increase investment risk significantly.
AA: A very low expectation for investment risk. Capacity for timely
repayment of principal and interest is substantial. Adverse changes
in business, economic, or financial conditions may increase
investment risk albeit not very significantly.
A plus (+) or minus (-) sign may be appended to a long term rating
to denote relative status within a rating category.
TBW: 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 category.
<PAGE>
Exhibit B
AUTOMATIC WITHDRAWAL PLAN PROVISIONS
By requesting an Automatic Withdrawal Plan, the shareholder agrees
to the terms and conditions applicable to such plans, as stated below and
elsewhere in the Application for such Plans, and the Prospectus and this
Statement of Additional Information as they may be amended from time to
time by the Trust and/or the Distributor. When adopted, such amendments
will automatically apply to existing Plans.
Trust shares will be redeemed as necessary to meet withdrawal
payments. Shares acquired without a sales charge will be redeemed first
and thereafter shares acquired with reinvested dividends and distributions
followed by shares acquired with a sales charge will be redeemed to the
extent necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made to
shareholders under such plans should not be considered as a yield or
income on investment. Purchases of additional shares concurrently with
withdrawals are undesirable because of sales charges on purchases when
made. Accordingly, a shareholder may not maintain an Automatic Withdrawal
Plan while simultaneously making regular purchases.
1. Shareholder Services, Inc., the Transfer Agent of the Trust,
will administer the Automatic Withdrawal Plan (the "Plan") as agent for
the person (the "Planholder") who executed the Plan authorization and
application submitted to the Transfer Agent.
2. Certificates will not be issued for shares of the Trust
purchased for and held under the Plan, but the Transfer Agent will credit
all such shares to the account of the Planholder on the records of the
Trust. Any share certificates now held by the Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the Plan.
Those shares will be carried on the Planholder's Plan Statement.
3. Distributions of capital gains must be reinvested in shares of
the Trust, which will be done at net asset value without a sales charge.
Dividends may be paid in cash or reinvested.
4. Redemptions of shares in connection with disbursement payments
will be made at the net asset value per share determined on the redemption
date.
5. Checks or ACH payments will be transmitted three business days
prior to the date selected for receipt of the monthly or quarterly payment
(the date of receipt is approximate), according to the choice specified
in writing by the Planholder.
6. The amount and the interval of disbursement payments and the
address to which checks are to be mailed may be changed at any time by the
Planholder on written notification to the Transfer Agent. The Planholder
should allow at least two weeks' time in mailing such notification before
the requested change can be put in effect.
7. The Planholder may, at any time, instruct the Transfer Agent by
written notice (in proper form in accordance with the requirements of the
then-current Prospectus of the Trust) to redeem all, or any part of, the
shares held under the Plan. In such case, the Transfer Agent will redeem
the number of shares requested at the net asset value per share in effect
in accordance with the Trust's usual redemption procedures and will mail
a check for the proceeds of such redemption to the Planholder.
8. The Plan may, at any time, be terminated by the Planholder on
written notice to the Transfer Agent, or by the Transfer Agent upon
receiving directions to that effect from the Trust. The Transfer Agent
will also terminate the Plan upon receipt of evidence satisfactory to it
of the death or legal incapacity of the Planholder. Upon termination of
the Plan by the Transfer Agent or the Trust, shares remaining unredeemed
will be held in an uncertificated account in the name of the Planholder,
and the account will continue as a dividend-reinvestment, uncertificated
account unless and until proper instructions are received from the
Planholder, his executor or guardian, or as otherwise appropriate.
9. For purposes of using shares held under the Plan as collateral,
the Planholder may request issuance of a portion of his shares in
certificated form. Upon written request from the Planholder, the Transfer
Agent will determine the number of shares as to which a certificate may
be issued, so as not to cause the withdrawal checks to stop because of
exhaustion of uncertificated shares needed to continue payments. Should
such uncertificated shares become exhausted, Plan withdrawals will
terminate.
10. The Transfer Agent shall incur no liability to the Planholder
for any action taken or omitted by the Transfer Agent in good faith.
11. In the event that the Transfer Agent shall cease to act as
transfer agent for the Trust, the Planholder will be deemed to have
appointed any successor transfer agent to act as his agent in
administering the Plan.
<PAGE>
Exhibit C
TAX EXEMPT/TAX EQUIVALENT YIELDS
The equivalent yield table below compares tax-free income with taxable
income under Federal income tax rates effective in 1995. 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 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
- ---- --------
<S> <C> <C> <C> <C> <C>
$ 0 $ 39,000 15.0% 1.76% 2.35% 2.94%
$ 39,000 $ 94,250 28.0% 2.08% 2.78% 3.47%
$ 94,250 $143,600 31.0% 2.17% 2.90% 3.62%
$143,600 $256,500 36.0% 2.34% 3.13% 3.91%
$256,500 and above 39.6% 2.48% 3.31% 4.14%
SINGLE RETURN
- -------------
Over Not over
- ---- --------
<S> <C> <C> <C> <C> <C>
$ 0 $ 23,350 15.0% 1.76% 2.35% 2.94%
$ 23,350 $ 56,550 28.0% 2.08% 2.78% 3.47%
$ 56,550 $117,950 31.0% 2.17% 2.90% 3.62%
$117,950 $256,500 36.0% 2.34% 3.13% 3.91%
$256,500 and above 39.6% 2.48% 3.31% 4.14%
</TABLE>
<TABLE>
<CAPTION>
Centennial Tax Exempt Trust Yield of:
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
- ---- --------
<S> <C> <C> <C> <C> <C> <C>
$ 0 $ 39,000 15.0% 3.53% 4.12% 4.71% 5.29%
$ 39,000 $ 94,250 28.0% 4.17% 4.86% 5.56% 6.25%
$ 94,250 $143,600 31.0% 4.35% 5.07% 5.80% 6.52%
$143,600 $256,500 36.0% 4.69% 5.47% 6.25% 7.03%
$256,500 39.6% 4.97% 5.79% 6.62% 7.45%
SINGLE RETURN
- -------------
Over Not over
- ---- --------
$ 0 $ 23,350 15.0% 3.53% 4.12% 4.71% 5.29%
$ 23,350 $ 56,550 28.0% 4.17% 4.86% 5.56% 6.25%
$ 56,550 $117,950 31.0% 4.35% 5.07% 5.80% 6.52%
$117,950 $256,500 36.0% 4.69% 5.47% 6.25% 7.03%
$256,500 39.6% 4.97% 5.79% 6.62% 7.45%
</TABLE>
<PAGE>
Investment Adviser and Distributor
Centennial Asset Management Corporation
3410 South Galena Street
Denver, Colorado 80231
Transfer Agent
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217
1-800-525-9310
Custodian
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street, Suite 3600
Denver, Colorado 80202-3942
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
The Colorado State Bank Building
1600 Broadway - Suite 1850
Denver, Colorado 80202
