Centennial
Tax Exempt Trust
Prospectus dated November 1, 1996
Centennial Tax Exempt 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 brokers or 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 explains concisely what you should know before
investing in the Trust. Please read this Prospectus carefully and keep it for
future reference. You can find more detailed information about the Trust in the
November 1, 1996 Statement of Additional Information. For a free copy, call
Shareholder Services, Inc., the Trust's Transfer Agent, at 1-800-525-9310 or
write to the Transfer Agent at the address on the back cover. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference (which means
that it is legally part of this Prospectus).
Shares of the Trust are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other agency, and
involve investment risks, including the possible loss of the principal amount
invested.
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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.
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Contents
ABOUT THE TRUST
3 Expenses
4 Financial Highlights
5 Performance of the Trust
5 Investment Objective and Policies
11 Investment Restrictions
APPENDIX
A-1 How the Trusts are Managed
A-3 How to Buy Shares
A-5 Purchases Through Automatic Purchase and Redemption
Programs
A-5 Direct Purchases
A-5 Payment by Check
A-5 Payment by Federal Funds Wire
A-6 Guaranteed Payment
A-7 Automatic Investment Plans
A-7 Service Plan
A-8 How to Sell Shares
A-8 Program Participants
A-8 Shares of the Trusts Owned Directly
A-8 Regular Redemption Procedure
A-9 Expedited Redemption Procedure
A-10 Check Writing
A-10 Telephone Redemptions
A-11 Automatic Withdrawal Plans
A-11 Retirement Plans Holding Shares of Government Trust and
Money Market Trust
A-12 General Information on Redemptions
A-13 Exchanges of Shares
A-16 Retirement Plans
A-16 Dividends, Distributions and Taxes
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ABOUT THE 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, 1996.
o Shareholder Transaction Expenses
Maximum Sales Charge on Purchases
(as a percentage of offering price) None
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Sales Charge on Reinvested Dividends None
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Redemption Fees None
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Exchange Fee None
o Annual Trust Operating Expenses
(as a percentage of average net assets)
Management Fees 0.43%
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12b-1 (Service Plan) Fees 0.20%
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Other Expenses 0.09%
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Total Trust Operating Expenses 0.72%
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.
o Example. To try to show the effect of these expenses on an investment
over time, we have created the hypothetical example shown below. Assume that you
make a $1,000 investment in shares of the Trust, and the Trust's annual return
is 5%, and that its operating expenses are the ones shown in the Annual Trust
Operating Expenses chart above. If you were to redeem your shares at the end of
each period shown below, your investment would incur the following expenses by
the end of each period shown.
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1 year 3 years 5 years 10 years
------ ------- ------- --------
$7 $23 $40 $89
This example shows the effect of expenses on an investment, but is not
meant to state or predict actual or expected costs or investment returns of the
Trust, all of which may be more or less than those shown.
Financial Highlights
The table on the following page 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, 1996 is included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
Financial Highlights
Centennial Tax Exempt Trust
Year Ended June 30,
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1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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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
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Income from investment operations - net
investment income and net realized gain .03 .03 .02 .02 .03 .04 .05 .05 .04 .04
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Dividends and distributions to shareholders (.03) (.03) (.02) (.02) (.03) (.04) (.05) (.05) (.04) (.04)
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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
=====================================================================================
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Total Return, at Net Asset Value(1) 3.16% 3.17% 1.90% 2.19% 3.55% 5.09% 5.70% 5.55% 4.35% 3.83%
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Ratios/Supplemental Data:
Net assets, end of period (in millions) $1,426 $1,315 $1,039 $ 981 $ 917 $ 787 $ 575 $ 486 $ 518 $ 459
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Average net assets (in millions) $1,473 $1,127 $1,057 $ 977 $ 900 $ 711 $ 561 $ 504 $ 485 $ 522
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Ratios to average net assets:
Net investment income 3.12% 3.13% 1.87% 2.08% 3.40% 4.84% 5.44% 5.45% 4.30% 3.71%
Expenses 0.72% 0.73% 0.76% 0.76% 0.75% 0.77% 0.79% 0.78% 0.79% 0.78%
<FN>
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.
</FN>
</TABLE>
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Performance of the Trust
Explanation of "Yield." 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 Statement of Additional Information for additional
information about the methods of calculating these yields.
Investment Objective and Policies
Objective. 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 Statement of Additional
Information 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.
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Portfolio Quality/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 Manager, under procedures approved by 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.
Additionally, under Rule 2a-7, the Trust must maintain a dollar-weighted average
portfolio maturity of no more than 90 days, and the remaining 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 Statement of Additional Information 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 Statement
of Additional Information for further details.
Investment Policies and Strategies. The Trust's investment
policies and practices are not "fundamental" policies as defined in
"Investment Restrictions" unless a particular policy is identified
as fundamental. The Trust's investment objective is a fundamental
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policy. The Board may change non-fundamental investment policies without
shareholder approval. In seeking its objective, the Trust may invest in the
types of securities listed below and use the following strategies:
o Municipal Securities. 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 Statement of Additional
Information. The Trust will not invest in foreign securities. The Trust may also
purchase Municipal Securities with demand features that meet the requirements of
Rule 2a-7 (discussed above) 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
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interest from which may be subject to Federal alternative minimum tax (see
"Dividends, Distributions and Taxes" below and "Private Activity Municipal
Securities" in the Statement of Additional Information); 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. 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.
o 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.
o 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
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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.
o 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. However,
the letter of credit or bank guarantee must be rated or meet the other
requirements of Rule 2a-7. See "Floating Rate/Variable Rate Obligations" in the
Statement of Additional Information for more details.
o Puts and Demand Features. The Trust may invest a significant
percentage of its assets in Municipal Securities subject to put or demand
features. Because the Trust invests in securities backed by banks and other
financial institutions, changes in the credit quality of these institutions
could cause losses to the Trust. Therefore, an investment in the Trust may be
riskier than an investment in other types of money market funds. A "put" is the
right to sell a particular security within a specified period of time at a
stated exercise price. The put may be sold, transferred, or assigned only with
the underlying security. A demand feature is a put that may be exercised at
specified intervals not exceeding 397 calendar days and upon no more than thirty
days' notice. Demand features can: (1) shorten the maturity of a variable or
floating rate security, (2) enhance the security's credit quality, and (3)
enhance the ability to sell the security. The aggregate price for a security
subject to a put or demand feature may be higher than the price that would be
paid for the security without the put or demand feature. The effect of the put
or demand feature is to increase the cost of the security
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and reduce its yield.
o 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 120 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 Statement of Additional
Information for more details.
o Municipal Lease Obligations. 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. Payments by the public entity on
the obligation underlying the certificates are derived from available revenue
sources; such revenue may be diverted to the funding of other municipal service
projects. Payments of interest and/or principal with respect to the certificates
are not guaranteed and do not constitute an obligation of the state or any of
its political subdivisions. While some municipal lease securities may be deemed
to be "illiquid" securities (the purchase of which would be limited as described
below in "Illiquid and Restricted Securities"), from time to time the Trust may
invest more than 5% of its net assets in municipal lease obligations that the
Manager has determined to be liquid under guidelines set by the Trust's Board of
Trustees.
o 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
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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 and repurchase agreements
o Repurchase Agreements. The Trust may acquire securities that are
subject to repurchase agreements. The Trust's repurchase agreements must be
fully collateralized under the 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 Statement of Additional Information for further
details.
Investment Restrictions
The Trust has certain investment restrictions which, together with its
investment objective, are fundamental policies, which can be changed 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
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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 Statement of Additional Information 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 "Other Investment Restrictions" in the
Statement of Additional Information.
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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.
How the Trusts are Managed
Organization and History. 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 Statement of Additional Information 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. Each of the Agreements sets forth the fees paid by the Trust to
the Manager and the expenses that the Trust is responsible to pay.
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 classes or series of shares of that Trust, which may have separate
assets and liabilities.)
The Trusts will not normally hold annual meetings of the
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shareholders. The Trusts may hold shareholder meetings from time to time on
important matters and shareholders have the right to call a meeting to remove a
Trustee or take other action described in the Declaration of Trust. Under
certain principles governing business trusts, 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 Statement of Additional Information for details.
The Manager and Its Affiliates. The Manager, a wholly-owned subsidiary of
OppenheimerFunds, Inc. ("OFI"), has operated as an investment advisor since
1978. The Manager and its affiliates currently advise U.S. investment companies
with assets aggregating over $55 billion as of September 30, 1996, and having
more than 3 million shareholder accounts. OFI is wholly owned by Oppenheimer
Acquisition Corp., a holding company owned in part by senior management of OFI
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.
o Fees and Expenses. The management fee is payable monthly to the
Manager under the terms of each Trust's Agreement and is computed on the average
annual 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. 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 next $250 million of net assets; .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. Independently of the Money
Market Trust's Agreement, the Manager has voluntarily agreed to waive a portion
of the management fee other wise payable to it. This voluntary expense
assumption is described in the Statement of Additional Information. 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
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average net assets computed daily and paid monthly at the annual rates, but in
no event shall the annual fee be less than $0. See the Statement of Additional
Information for an explanation of the Manager's reimbursement arrangement for
the Trusts set forth in their Agreements. "Investment Management Services" in
the Statement of Additional Information contains more complete information about
the Agreements, including a discussion of expense arrangements, and a
description of the exculpation provisions and portfolio transactions.
o The Custodian. 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 Statement of Additional
Information 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 "Investment Objective and Policies"
do not apply to banks in which a Trust's cash is kept.
o The Transfer Agent. Shareholder Services, Inc., a subsidiary of OFI,
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 (see "Service Plan"). Direct 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.
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 Statement of Additional
Information 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
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of a Trust's shares. OppenheimerFunds 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 (for direct shareholders)
($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 Statement of Additional Information.
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
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for purchases of the Trust'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.
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 (who is not a program participant, a "direct
shareholder") may directly purchase shares of the Trusts through any broker or
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.
o 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.
o Payment by Federal Funds Wire. Shares of each Trust may
be purchased by direct shareholders by Federal Funds wire. The
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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.
o 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 (which is normally 4:00 P.M., but may be earlier on
some days) with the broker-dealer's guarantee that payment for such shares in
Federal Funds will be received by the
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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 by the required time. 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.
o 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 Sell
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.
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 financial 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
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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
Statement of Additional Information.
How to Sell 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 his or her 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:
o 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., 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
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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.
o 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
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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 Statement of Additional Information for
further details.
o 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 must 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.
o 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
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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 direct 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.
o 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
(which is normally 4:00 P.M. 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 C in the Statement of Additional
Information.
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 address listed on the cover, 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
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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.
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 (including exchanges) 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
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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 direct shareholders 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
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 certain Oppenheimer funds. A list of
the Oppenheimer funds currently available for exchange is included in the
Statement of Additional Information. That list can change from time to time.
(The funds included on the list are collectively referred to as "Eligible
Funds"). There is an initial sales charge on the purchase of Class A shares of
each Eligible Fund except the Money Market Funds (as defined in the Statement of
Additional Information). 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
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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 held by direct shareholders(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 more than one account. 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
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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 a shareholder of
record canceling 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 procedures concerning telephone transactions including confirming
that telephone instructions are genuine by requiring callers to provide tax
identification number(s) and other account data or by using PINS, and by
recording calls and confirming such transactions in writing. If the Transfer
Agent does not use reasonable 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 transaction 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
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delayed by either fund up to seven 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 advisor 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" Municipal
Bonds" in the Statement of Additional Information of that Trust. The Appendix to
the Statement of Additional Information
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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." 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.
All dividends and capital gains distributions for the accounts of
Program participants are automatically reinvested in additional shares of the
Trust selected. 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 Statement of Additional
Information. 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.
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.
Under the terms of a Program, a broker-dealer may pay out the
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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 Statement of Additional
Information 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 Trust shares have been held. Income from securities issued by the
U.S. Government may be exempt from income taxation by various states. The
Government Trust will advise shareholders of the percentage of its income earned
on federal obligations. Rules vary by state regarding the state taxability of
dividends paid by either Trust. You should consult your tax advisor to determine
proper tax treatment of dividends paid by the Trusts.
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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, 1995 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.
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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 Statement of Additional Information of Tax Exempt Trust and should consult
their own tax advisors before purchasing shares. No investigation as to the
users of the facilities financed by such bonds is 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 Sell Shares," above.
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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 Statement of Additional Information, 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 Advisor 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 Centennial
Tax Exempt Trust
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue Prospectus
New York, New York 10043
Dated November 1, 1996
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 1480
Denver, Colorado 80202
<PAGE>
Centennial Tax Exempt Trust
3410 South Galena Street, Denver, Colorado 80231
1-800-525-9310
Statement of Additional Information dated November 1, 1996
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Trust and supplements
information in the Prospectus dated November 1, 1996. It should be read together
with the Prospectus which may be obtained by writing to the Trust's Transfer
Agent, Shareholder Services, Inc. at P.O. Box 5143, Denver, Colorado 80217-5143
or by calling the Transfer Agent at the toll-free number shown above.
Contents Page
Investment Objective and Policies..........................................2
Other Investment Restrictions..............................................8
Appendix
Trustees and Officers................................................A-1
Investment Management Services.......................................A-5
Service Plan.........................................................A-8
Purchase, Redemption and Pricing of Shares...........................A-10
Exchange of Shares ..................................................A-11
Yield Information....................................................A-13
Additional Information...............................................A-14
Independent Auditors' Report.........................................A-16
Financial Statements.................................................A-17
Exhibit A: Description of Securities Ratings.......................A-36
Exhibit B: Industry Classifications................................A-41
Exhibit C: Automatic Withdrawal Plan Provisions....................A-42
Exhibit D: Tax Equivalent Yield Table..............................A-44
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Investment Objective and Policies
Investment Policies and Strategies. 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 this
Statement of Additional Information 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 Bonds. The principal classifications of long-term Municipal Bonds are
"general obligation," "revenue" and "industrial development" bonds.
o 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.
o 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
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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.
o 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:
o 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.
o 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.
o 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.
o 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.
o 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
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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.
Municipal Lease Obligations. From time to time the Trust may invest more than 5%
of its net assets in municipal lease obligations, generally through the
acquisition of certificates of participation, that the Manager has determined to
be liquid under guidelines set by the Board of Directors. Those guidelines
require the Manager to evaluate: (1) the frequency of trades and price
quotations for such securities; (2) the number of dealers or other potential
buyers willing to purchase or sell such securities; (3) the availability of
market-makers; and (4) the nature of the trades for such securities. The Manager
will also evaluate the likelihood of a continuing market for such securities
throughout the time they are held by the Trust and the credit quality of the
instrument. Municipal leases may take the form of a lease or an installment
purchase contract issued by a state or local government authority to obtain
funds to acquire a wide variety of equipment and facilities. Although lease
obligations do not constitute general obligations of the municipality for which
the municipality's taxing power is pledged, a lease obligation is ordinarily
backed by the municipality's covenant to budget for, appropriate and make the
payments due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for such purpose on a yearly basis. 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. Payments by the public entity on the obligation underlying
the certificates are derived from available revenue sources; such revenue may be
diverted to the funding of other municipal service projects. Payments of
interest and/or principal with respect to the certificates are not guaranteed
and do not constitute an obligation of the State of California or any of its
political subdivisions.
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
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assets that may be invested in floating rate and variable rate obligations that
meet the requirements of rule 2a-7. Floating rate or variable rate obligations
which do not provide for recovery of principal and interest within seven days
may be subject to the limitations applicable to illiquid securities described in
"Investment Objective and 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. 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 shall not exceed 120
days from the date the offer is accepted. The purchase price and yield are fixed
at the time the buyer enters into the commitment. During the period between the
time of commitment and settlement, no payment is made by the Trust to the issuer
and no interest accrues to the Trust from this investment. However, the Trust
intends to be as fully invested as possible and will not invest in when-issued
securities if its income or net asset value will be materially adversely
affected. At the time the Trust makes the commitment to purchase a Municipal
Security on a when-issued basis, it will record the transaction on its books and
reflect the value of the security in determining its net asset value. It will
also segregate cash or other liquid high quality Municipal Securities equal in
value to the commitment for the when-issued securities.
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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 advisors 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,
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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. 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. In each of the foregoing instances, Board
action is not required if the Trust disposes of the security within five days of
the Manager learning of the downgrade, in which event the Manager will provide
the Board with subsequent notice of such downgrade. 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
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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.
Other 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 advisor who beneficially
own individually more than 0.5% of the securities of such issuer together own
more than 5% of the securities of such issuer; (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.
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<PAGE>
For purposes of the Trust's policy not to concentrate in securities of
issuers as described in the investment restrictions listed in the Prospectus,
the Trust has adopted the industry classifications set forth in Exhibit B to
this Statement of Additional Information. This is not a fundamental policy.
-9-
<PAGE>
APPENDIX
This Appendix is part of the Statement of Additional Information 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 America Fund, L.P.,
Centennial California Tax Exempt Trust, Centennial New York Tax Exempt Trust,
Daily Cash Accumulation Fund, Inc., Oppenheimer Cash Reserves, Oppenheimer
Champion Income Fund, Oppenheimer Equity Income Fund, Oppenheimer High Yield
Fund, Oppenheimer Integrity Funds, Oppenheimer International Bond Fund,
Oppenheimer Limited-Term Government Fund, Oppenheimer Main Street Funds, Inc.,
Oppenheimer Municipal Fund, Oppenheimer Strategic Income Fund, Oppenheimer
Strategic Income & Growth Fund, Oppenheimer Total Return Fund, Inc.,
Oppenheimer Total Return Fund Inc. Capital Accumulation Plan, Oppenheimer
Variable Account Funds, Panorama Series Fund, Inc. and The New York Tax Exempt
Income Fund, Inc. (all of the foregoing funds along with the Trusts are
collectively referred to as the "Denver Oppenheimer funds") except for Mr.
Fossel and Ms. Macaskill, who are Trustees, Directors or Managing Partners
of all the Denver-based Oppenheimer funds except Oppenheimer Integrity Funds,
Oppenheimer Strategic Income Fund, Oppenheimer Variable Account Funds and
Panorama Series Fund Inc. Mr. Fossel is also not a trustee of Centennial New
York Tax Exempt Trust and he is not a Managing General Partner of Centennial
America Fund, L.P. Ms. Macaskill 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 October 1, 1996, the Trustees and officers of the
Trust in the aggregate owned less than 1% of the outstanding shares of the
Trust.
ROBERT G. AVIS, Trustee*; Age 65
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
advisor and trust company, respectively).
WILLIAM A. BAKER, Trustee; Age 81
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
CHARLES CONRAD, JR., Trustee; Age 66
1501 Quail Street, Newport Beach, California 92660
Chairman and Chief Executive Officer of Universal Space Lines, Inc. (A
space services management company); formerly, Vice President of McDonnell
Douglas Space Systems Co. and associated with National Aeronautics and
Space Administration.
JON S. FOSSEL, Trustee*; Age 54
Box 44 Mead Street, Waccabuc, New York 10597
Member of the Board of Governors of the Investment Company Institute (a
national trade association of investment companies), Chairman of the
Investment Company Institute Education Foundation; Formerly Chairman and a
director of OppenheimerFunds, Inc. ("OFI"), the immediate parent of
Centennial Asset Management Corporation ("Manager"); formerly President and
a director of Oppenheimer Acquisition Corp.("OAC"), OFI's parent holding
company; formerly a director of Shareholder Services, Inc. ("SSI") and
Shareholder Financial Services, Inc.
("SFSI"), transfer agent subsidiaries of OFI.
SAM FREEDMAN, Trustee; Age 56
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly, Chairman and Chief Executive Officer of OppenheimerFunds Services
(a transfer agent); Chairman, Chief Executive Officer and a director of
SSI; Chairman, Chief Executive Officer and director of Shareholder
Financial Services, Inc. ("SFSI"); Vice President and a director of OAC and
a director of OFI.
RAYMOND J. KALINOWSKI, Trustee; Age 67
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc.(a computer products
training company), 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 74
2552 E. Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).
ROBERT M. KIRCHNER, Trustee; Age 75
7500 East Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
BRIDGET A. MACASKILL, President and Trustee*; Age 48
Two World Trade Center, New York, New York 10048-0203
President, Chief Executive Officer and a director of the OFI and
HarbourView Asset Management Corporation ("HarbourView"), a subsidiary of
OFI; Chairman and a director of SSI and SFSI; President and a director of
OAC and Oppenheimer Partnership Holdings Inc., a holding company subsidiary
of OFI; a director of Oppenheimer Real asset Management, Inc. ("Real
Asset"); formerly an Executive Vice President of OFI.
NED M. STEEL, Trustee; Age 81
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting Nurse
Corporation of
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<PAGE>
Colorado; formerly Senior Vice President and a director of the Van Gilder
Insurance Corp. (insurance brokers).
JAMES C. SWAIN, Chairman, Chief Executive Officer and Trustee*; Age 62
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman of OFI; formerly President and a director of the Manager, and
formerly Chairman of the Board of SSI.
MICHAEL A. CARBUTO, Vice President and Portfolio Manager of Tax Exempt Trust;
Age 41
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager and OFI; an officer of other Oppenheimer
funds.
DOROTHY WARMACK, Vice President and Portfolio Manager of Money Market Trust and
Government Trust; Age 60
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager and OFI; an officer of other Oppenheimer
funds.
CAROL E. WOLF, Vice President and Portfolio Manager of Money Market Trust and
Government Trust; Age 44
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager and OFI; an officer of other Oppenheimer
funds.
ARTHUR J. ZIMMER, Vice President and Portfolio Manager of Money Market Trust and
Government Trust; Age 50
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager and OFI; an officer of other Oppenheimer
funds.
ANDREW J. DONOHUE, Vice President and Secretary; Age 46
Two World Trade Center, New York, New York 10048-0203
Executive Vice President and General Counsel of OFI and OppenheimerFunds
Distributor, Inc. ("OFDI"); President and a director of the Manager;
Executive Vice President, General Counsel and a director of HarbourView,
SFSI, SSI and Oppenheimer Partnership Holdings Inc.; President and a
director of Real Asset; General Counsel of OAC; Executive Vice President,
Chief Legal Officer and a director of MultiSource Services, Inc. (A
broker-dealer); an officer of other Oppenheimer funds; formerly Senior Vice
President and Associate General Counsel of OFI 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 advisor); director and an officer of First Investors Family
of Funds and First Investors Life Insurance Company.
GEORGE C. BOWEN, Vice President, Treasurer and Assistant Secretary; Age 60
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of OFI; Vice President and Treasurer of
the OFDI and HarbourView; Senior Vice President, Treasurer Assistant
Secretary and a director of the Manager; Vice President, Treasurer and
Secretary of SSI and SFSI; Treasurer of OAC; Vice
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<PAGE>
President and Treasurer of Real Asset; Chief Executive Officer, Treasurer
and a director of MultiSource Services, Inc.; an officer of other
Oppenheimer funds.
ROBERT J. BISHOP, Assistant Treasurer; Age 37
3410 South Galena Street, Denver, Colorado 80231
Vice President of the OFI/Mutual Fund Accounting; an officer of other
Oppenheimer funds; formerly a Fund Controller for OFI, 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 T. FARRAR, Assistant Treasurer; Age 31
3410 South Galena Street, Denver, Colorado 80231
Vice President of OFI/Mutual Fund Accounting; an officer of other
Oppenheimer funds; formerly a Fund Controller for OFI, 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.
ROBERT G. ZACK, Assistant Secretary; Age 48
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of OFI; Assistant
Secretary of SSI and SFSI; an officer of other Oppenheimer funds.
- ---------------------
* A Trustee who is an "interested person" of the Trusts as defined in the
Investment Company Act.
Remuneration of Trustees. The officers of the Trusts are affiliated with the
Manager. They and the Trustees of the Trusts who are affiliated with the Manager
(Ms. Macaskill and Mr. Swain) receive no salary or fee from the Trusts. The
remaining Trustees of the Trusts (excluding Mr. Freedman, who did not become a
Trustee until June 27, 1996) received the compensation shown below from the
Trusts, during its fiscal year ended June 30, 1996, and from all of the
Denver-based Oppenheimer funds (including the Trust) for which they served as
Trustee, Director or Managing General Partner. Compensation is paid for services
in the positions listed beneath their names:
<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 $2,495 $2,147 $ 941 $53,000
Trustee
William A. Baker $3,449 $2,968 $1,300 $73,255
Audit and Review
Committee Chairman
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<PAGE>
and Trustee
Charles Conrad, Jr. $3,028 $2,605 $1,142 $64,309
Audit and Review
Committee Member
and Trustee
Raymond J. Kalinowski $3,061 2,633 $1,154 $65,000
Risk Management
Oversight Committee
Member and Trustee
C. Howard Kast $3,061 $2,633 $1,154 $65,000
Risk Management
Oversight Committee
Member and Trustee
Robert M. Kirchner $3,215 $2,766 $1,212 $68,292
Audit and Review
Committee Member
and Trustee
Ned M. Steel 2 $,495 $2,147 $ 941 $53,000
<FN>
1 For the 1995 calendar year during which the Denver-based Oppenheimer funds
listed in the first paragraph of this section included Oppenheimer Strategic
Investment Grade Bond Fund and Oppenheimer Strategic Short-Term Income Fund
(which ceased operations following the acquisition of their assets by other
Oppenheimer funds.)
</FN>
</TABLE>
Major Shareholders. As of October 1, 1996, A.G. Edwards & Sons, Inc. ("A.G.
Edwards"), 1 North Jefferson Avenue, St. Louis, MO 63103 was the record owner
of 7,293,504,730.510 shares of Money Market Trust, 1,472,207,497 shares of Tax
Exempt Trust and 978,301,664 shares of Government Trust (approximately 99.85%,
97.81% and 96.82% 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 OFI, which is a wholly-owned subsidiary of
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. The remaining stock of OAC is owned
by (i) certain of OFI's directors and officers, some of whom may serve as
officers of the Trust, and two of whom (Mr. Swain and Ms. Macaskill) serve as
Trustees of the Trust and (ii) Edwards, which owns less than 5% of its equity.
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<PAGE>
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) $9,435,959, $12,657,193 and $21,572,513 paid for the fiscal years
ended June 30, 1994, 1995 and 1996, respectively, of Money Market Trust; (b)
$4,761,673, $5,050,991 and $6,380,737 paid for the fiscal years ended June 30,
1994, 1995 and 1996, respectively, of Tax Exempt Trust; and (c) $3,182,956,
$3,414,212 and $4,468,617 paid for the fiscal years ended June 30, 1994, 1995
and 1996, 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 (if any), 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 Agreements with the Money Market Trust and the Government
Trust, respectively, 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, if any, 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 fiscal year ended June 30, 1994, June
30,1995 and June 30, 1996, the reimbursements by the Manager to Money Market
Trust were $1,201,403, $0 and $0, respectively.
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
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<PAGE>
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 during its respective three most
recent fiscal years. The Agreements permit the Manager to act as investment
advisor 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
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<PAGE>
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 America Fund, L.P., Centennial California Tax
Exempt Trust, Centennial Government Trust, Centennial New York Tax Exempt Trust
and Oppenheimer Cash Reserves. 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.
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<PAGE>
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 a 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. 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 is required to 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, 1996, payments to the
Distributor under its Plan totaled $12,171,435, $2,929,180 and $1,929,551 for
Money Market Trust, Tax Exempt Trust and Government Trust, respectively, of
which $12,170,702, $2,876,667 and $1,868,803 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
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<PAGE>
nomination if the final decision on any such selection or nomination is approved
by a majority of the Independent Trustees.
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 close 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 for the
valuation of the Trust's securities, generally as follows: (i) long-term debt
securities having a remaining maturity in excess of 60 days are valued based on
the mean between the "bid" and "ask" prices determined by a portfolio pricing
service approved by the Trust's Board of Trustees or obtained by the Manager
from two active market makers in the security on the basis of reasonable
inquiry; (ii) debt instruments having a maturity of more than 397 days when
issued, and non-money market type instruments having a maturity of 397 days or
less when issued, which have a remaining maturity of 60 days or less are valued
at the mean between the "bid" and "ask" prices determined by a pricing service
approved by the Trust's Board of Trustees or obtained by the Manager from two
active market makers in the security on the basis of reasonable inquiry; (iii)
money market debt securities that had a maturity of less than 397 days when
issued that have a remaining maturity of 60 days or less are valued at cost,
adjusted for amortization of premiums and accretion of discounts; and (iv)
securities (including restricted securities) not having readily-available market
quotations are valued at fair value determined under the Board's procedures. If
the Manager is unable to locate two market makers willing to give quotes (see
(i) and (ii) above), the security may be priced at the mean between the "bid"
and "ask" prices provided by a single active market maker (which in certain
cases may be the "bid" price if no "ask" price is available).
In the case of Municipal Securities, when last sale information is not
generally available,
A-18
<PAGE>
such pricing procedures may include "matrix" comparisons to the prices for
comparable instruments on the basis of quality, yield, maturity, and other
special factors involved (such as the tax-exempt status of the interest paid by
Municipal Securities). The Manager may use pricing services approved by the
Board of Trustees to price any of the types of securities described above. The
Manager will monitor the accuracy of such pricing services, which may include
comparing prices used for portfolio evaluation to actual sales prices of
selected securities.
In the case of U.S. Government Securities and mortgage-backed
securities, where last sale information is not generally available, such pricing
procedures may include "matrix" comparisons to the prices for comparable
instruments on the basis of quality, yield, maturity and other special factors
involved. The Manager may use pricing services approved by the Board of Trustees
to price U.S. Government Securities for which last sale information is not
generally available. The Manager will monitor the accuracy of such pricing
services, which may include comparing prices used for portfolio evaluation to
actual sales prices of selected securities.
Redemptions. Each Trust's Board of Trustees 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 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 the 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.
Exchange of Shares
Eligible Funds. As stated in the Prospectus, shares of the Trust may, under
certain circumstances, be exchanged by direct shareholders for Class A shares
of the following Oppenheimer funds
A-19
<PAGE>
("Eligible Funds"):
Bond Fund Series-Oppenheimer Bond Fund for Growth
Oppenheimer Asset Allocation Fund
Oppenheimer California Municipal Fund
Oppenheimer Champion Income Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Equity Income Fund
Oppenheimer Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer Municipal Bond Fund
Oppenheimer Municipal Fund
Oppenheimer New York Municipal Fund
Oppenheimer Quest for Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Series Fund, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Target Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Rochester Fund Municipals*
Rochester Portfolio Series - Limited Term New York Municipal Fund*
The New York Tax Exempt Income Fund, Inc.
the following "Money Market Funds":
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
A-20
<PAGE>
Centennial Government Trust Centennial Money Market Trust Centennial New York
Tax Exempt Trust Centennial Tax Exempt Trust Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves Oppenheimer Money Market Fund, Inc.
- ----------------------------------------------------
*Shares of the Trust are not presently exchangeable for shares of these funds.
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, 1996, the "current yield" for each Money Market Trust,
Tax Exempt Trust and Government Trust was 4.74%, 2.89% and 4.58%, respectively.
The seven-day compounded effective yield for that period was 4.85%, 2.93% and
4.69%, 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 D, 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
A-21
<PAGE>
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,
1996 was 4.52%. Its tax-equivalent compounded effective yield for the same
period was 4.58% 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
A-22
<PAGE>
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 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 is 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.
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 General Distributor's Agreement and the
Service 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 OFI, the Manager's
immediate parent, as well as for certain other funds advised by the Manager and
OFI.
A-23
<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,
1996, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended June 30, 1996 and 1995,
and the financial highlights for the period July 1, 1991 to June 30, 1996. 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,
1996 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, 1996, the results of its operations, the changes in its
net assets, and the financial highlights for the respective stated periods, in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
July 22, 1996
A-24
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
-------- ---------
SHORT-TERM TAX-EXEMPT OBLIGATIONS - 100.2%
<S> <C> <C>
ALABAMA - 0.8%
Bessemer, Alabama Industrial Development Revenue Bonds, Big B, Inc. Project,
Series A, 3.40%(1) ................................................................. $ 2,450,000 $ 2,450,000
Huntsville, Alabama Finance Authority Multifamily Housing Revenue Refunding Bonds,
Series B, 3.25%(1) ................................................................. 7,000,000 7,000,000
Winfield City, Alabama Industrial Development Revenue Bonds, Union Underwear Co.,
3.55%(1) ........................................................................... 1,900,000 1,900,000
-----------
11,350,000
-----------
ARIZONA - 4.8%
Arizona Health Facilities Authority Revenue Bonds, Blood Systems, Inc., 3.40%(1) ...... 8,000,000 8,000,000
Maricopa County, Arizona Industrial Development Authority Revenue Bonds, Grand
Canyon University Project, 3.40%(1) ................................................ 5,400,000 5,400,000
Phoenix, Arizona Industrial Development Authority Multifamily Housing Revenue
Refunding Bonds, Lynwood Apts. Project, 3.35%(1) ................................... 4,675,000 4,675,000
Phoenix, Arizona Industrial Development Authority Multifamily Housing Revenue
Refunding Bonds, Paradise Lakes Apts. Project, 1995 Series, 3.55%(1) ............... 22,500,000 22,500,000
Pima County, Arizona Industrial Development Authority Revenue Bonds, Tucson
Electric Power Co., Series A, 3.40%(1) ............................................. 6,000,000 6,000,000
Salt River, Arizona Agriculture Improvement Power Authority Revenue Bonds, 3.60%,
10/1/96(2) ......................................................................... 9,431,000 9,431,000
Salt River, Arizona Agriculture Improvement Power Authority Revenue Bonds, 3.60%,
9/10/96(2) ......................................................................... 11,100,000 11,100,000
Tucson, Arizona Industrial Development Authority Revenue Bonds, Geronimo Building
Renovation Project, 8%, 12/15/96(2) ................................................ 1,085,000 1,085,000
-----------
68,191,000
-----------
ARKANSAS - 0.3%
Harrison, Arkansas Industrial Development Revenue Refunding Bonds, McKesson
Corp. Project, 3.40%(1) ............................................................ 3,940,000 3,940,000
Subiaco, Arkansas Industrial Development Revenue Bonds, Cloves Gear & Products,
Inc., 3.75%(1) ..................................................................... 400,000 400,000
-----------
4,340,000
-----------
CALIFORNIA - 8.9%
Anaheim, California Housing Authority Multifamily Housing Revenue Bonds, Bel Page
Project, Series A, 3.20%(1) ........................................................ 1,000,000 1,000,000
Anaheim, California Housing Authority Multifamily Housing Revenue Refunding
Bonds, Park Vista Apts., Series A, 3.20%(1) ........................................ 2,000,000 2,000,000
California Health Facilities Financing Authority Revenue Bonds, Adventist Health
System, Series B, 3%(1) ............................................................ 1,000,000 1,000,000
California Health Facilities Financing Authority Revenue Bonds, Huntington Memorial
Hospital, 3.15%(1) ................................................................. 1,200,000 1,200,000
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS June 30, 1996(Continued)
Centennial Tax Exempt Trust
Face Value
Amount See Note 1
-------- ---------
<S> <C> <C>
CALIFORNIA (CONTINUED)
California Health Facilities Financing Authority Revenue Bonds, Kaiser Permanente
Medical Center Project, Series B, 3%(1) ............................................ $ 5,000,000 $ 5,000,000
California Health Facilities Financing Authority Revenue Bonds, Pooled Loan Program,
Series B, FGIC Insured, 2.80%(1) ................................................... 500,000 500,000
California Health Facilities Financing Authority Revenue Bonds, Santa Barbara Cottage
Project, Series C, 3%(1) ........................................................... 1,400,000 1,400,000
California Health Facilities Financing Authority Revenue Bonds, Scripps Memorial
Hospital, Series A, MBIA Insured, 3.05%(1) ......................................... 420,000 420,000
California Health Facilities Financing Authority Revenue Refunding Bonds, Memorial
Health Services Project, 3%(1) ..................................................... 3,700,000 3,700,000
California Higher Education Loan Authority Revenue Refunding Bonds, Sr. Lien,
Series A-1, 3.50%(1) ............................................................... 6,500,000 6,500,000
California Higher Education Loan Authority Student Loan Revenue Bonds, Series C,
3.50%(1) ........................................................................... 6,800,000 6,800,000
California Higher Education Loan Authority Student Loan Revenue Refunding Bonds,
Series 1987A, 3.70%, 5/1/97(2) ..................................................... 13,750,000 13,750,000
California Higher Education Loan Authority Student Loan Revenue Refunding Bonds,
Series 1992A-2, 3.70%, 5/1/97(2) ................................................... 14,000,000 14,000,000
California Pollution Control Financing Authority Revenue Bonds, 3.55%, 10/1/96(2) ..... 12,600,000 12,600,401
California Pollution Control Financing Authority Solid Waste Disposal Revenue Bonds,
Western Waste Industries, Series A, 3.10%(1) ....................................... 1,400,000 1,400,000
California State General Obligation Bonds, Series A-3, MBIA Insured, 3.60%(1) ......... 500,000 500,000
California Statewide Communities Development Authority Apt. Development Revenue
Refunding Bonds, Series 1995A, 3.15%(1) ............................................ 1,560,000 1,560,000
California Statewide Communities Development Corp. Industrial Development
Revenue Bonds, Andercraft Project, Series A, 3.25%(1) .............................. 940,000 940,000
Fresno, California Multifamily Housing Revenue Refunding Bonds, Heron Pointe Apts.,
Series A, 3.20%(1) ................................................................. 3,350,000 3,350,000
Kings County, California Housing Authority Multifamily Revenue Refunding Bonds,
Edgewater Isle Apts., Series A, 3.20%(1) ........................................... 3,195,000 3,195,000
Los Angeles County, California Housing Authority Revenue Bonds, Park Sierra Project,
3.15%(1) ........................................................................... 1,500,000 1,500,000
Metropolitan Water District of Southern California Waterworks Revenue Refunding
Bonds, Series A, AMBAC Insured, 2.95%(1) ........................................... 1,000,000 1,000,000
Northern California Power Agency Public Power Revenue Refunding Bonds,
Geothermal Project 3-A, 3.15%(1) ................................................... 2,800,000 2,800,000
Oceanside, California Multifamily Revenue Refunding Bonds, Lakeridge Apts. Project,
3.50%(1) ........................................................................... 5,000,000 5,000,000
Orange County, California Apt. Development Revenue Refunding Bonds, Series A,
3.15%(1) ........................................................................... 13,050,000 13,050,000
Pittsburg, California Mtg. Obligation Gtd. Revenue Bonds, Series A, 3.45%(1) .......... 5,000,000 5,000,000
</TABLE>
4
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996(Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
-------- -----------
CALIFORNIA (CONTINUED)
<S> <C> <C>
Pittsburg, California Multifamily Mtg. Revenue Bonds, Fountain Plaza Project, 3.20%(1) $ 1,500,000 $ 1,500,000
Riverside County, California Housing Authority Multifamily Housing Revenue Bonds,
McKinley Project, 3.35%(1) ........................................................ 2,300,000 2,300,000
Sacramento County, California Multifamily Housing Revenue Refunding Bonds,
Issue A, 3.813%(1) ................................................................ 3,400,000 3,400,000
Sacramento, California Municipal Utility District Tax-Exempt Commercial Paper, 3.50%,
10/1/96(2) ........................................................................ 500,000 500,029
<PAGE>
San Bernardino County, California Housing Authority Multifamily Housing Revenue
Refunding Bonds, Arrowview Park Apts. Project, Series A, 3.25%(1) ................. 670,000 670,000
San Francisco, California City & County Redevelopment Agency Multifamily Revenue
Refunding Bonds, Fillmore Center Housing Project, Series A-1, 3%(1) ............... 500,000 500,000
San Leandro, California Multifamily Mtg. Revenue Bonds, Parkside Commons Project,
Series A, 3.10%(1) ................................................................ 1,000,000 1,000,000
Southern California Public Power Authority Revenue Refunding Bonds, Palo Verde
Project, Series B, AMBAC Insured, 3.10%(1) ........................................ 6,400,000 6,400,000
West Covina, California Redevelopment Agency Certificates of Participation, Barranca
Project, 3%(1) .................................................................... 1,300,000 1,300,000
------------
126,735,430
------------
COLORADO - 2.1%
Arapahoe County, Colorado Multifamily Revenue Refunding Bonds, Hunters Run
Rental Housing, 3.45%(1) .......................................................... 25,600,000 25,600,000
Aurora, Colorado Industrial Development Revenue Refunding Bonds, La Quinta
Motor Inns, Inc., 3.40%(1) ........................................................ 2,800,000 2,800,000
Wheat Ridge, Colorado Industrial Development Revenue Refunding Bonds, La Quinta
Motor Inns, Inc., 3.40%(1) ........................................................ 2,025,000 2,025,000
------------
30,425,000
------------
CONNECTICUT - 0.4%
Manshantucket Pequot, Connecticut Industrial Development Revenue Bonds, 3.40%,
9/5/96(2) ......................................................................... 2,500,000 2,500,000
Mashantucket Pequot, Connecticut Industrial Development Revenue Bonds, 3.40%,
10/24/96(2) ....................................................................... 3,500,000 3,500,000
------------
6,000,000
------------
Delaware - 0.4%
Sussex County, Delaware Economic Development Revenue Bonds, Route 113 LP
Project, 3.55%(1) ................................................................. 6,000,000 6,000,000
------------
Florida - 9.0%
Dade County, Florida Water & Sewer System Revenue Bonds, FGIC Insured, 3.65%(1) ...... 10,000,000 10,000,000
Escambia County, Florida Health Facilities Authority Revenue Refunding Bonds,
Florida Convertible Centers Project, Series A, 3.65%(1) ........................... 1,300,000 1,300,000
</TABLE>
5
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996(Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
-------- ---------
<S> <C> <C>
FLORIDA (CONTINUED)
Florida Housing Finance Agency Revenue Refunding Bonds, Multifamily Housing
Monterey Lake Project, 3.55%(1) ............................................... $ 19,965,000 $ 19,965,000
Florida State Board of Education Capital Outlay Public Education Refunding Bonds,
Series A, 3.50%(1) ............................................................ 13,230,000 13,230,000
Florida State Turnpike Authority Revenue Bonds, Series A, FGIC Insured, 3.60%(1) . 15,000,000 15,000,000
Hillsborough County, Florida Industrial Development Authority Pollution Control
Revenue Bonds, Tampa Electric Co. Project, 3.49%(1) ........................... 17,975,000 17,975,000
Jacksonville, Florida Electric Authority Revenue Bonds, 3.60%, 9/10/96(2) ........ 20,000,000 20,000,000
Orange County, Florida Housing Finance Authority Revenue Bonds, Smokewood/Sun
Project, Series A, 3.35%(1) ................................................... 4,000,000 4,000,000
Orange County, Florida Housing Finance Authority Revenue Refunding Bonds,
Monterey Multifamily Housing Project, Series B, 3.70%(1) ...................... 4,890,000 4,890,000
Orlando, Florida Waste Water Systems Revenue Refunding Bonds, Series A, 3.60%,
9/10/96(2) .................................................................... 5,000,000 5,000,000
Putnam County, Florida Development Authority Pollution Control Revenue Refunding
Bonds, Seminole Electric Co-op, Series D, 3.50%, 12/15/96(2) .................. 16,765,000 16,765,000
------------
128,125,000
------------
GEORGIA - 4.8%
Cobb County, Georgia Housing Authority Multifamily Housing Revenue Refunding
Bonds, Terrell Mill Project, 3.55%(1) ......................................... 9,400,000 9,400,000
Floyd County, Georgia Development Authority Pollution Control Revenue Refunding
Bonds, Inland-Rome, Inc. Project, 3.55%(1) .................................... 4,735,000 4,735,000
Fulton County, Georgia Development Authority Industrial Revenue Refunding Bonds,
Palisades West Ltd. Project, 3.35%(1) ......................................... 2,235,000 2,235,000
Fulton County, Georgia Development Authority Revenue Bonds, Georgia Tech Athletic
Assn., Inc., 3.35%(1) ......................................................... 3,000,000 3,000,000
Fulton County, Georgia Development Authority Revenue Bonds, Robert W. Woodruff
Arts Project, 3.35%(1) ........................................................ 2,000,000 2,000,000
Fulton County, Georgia Residential Care Facilities Revenue Bonds, Canterbury Court
Project, Series A, 3.35%(1) ................................................... 2,160,000 2,160,000
Georgia State General Obligation Bonds, Series 1995B, 3.45%(1) ................... 12,000,000 12,000,000
Newton County, Georgia Industrial Development Authority Revenue Refunding Bonds,
John H. Harland Co. Project, 3.35%(1) ......................................... 1,000,000 1,000,000
Roswell, Georgia Housing Authority Multifamily Revenue Bonds, Post Canyon Project,
3.25%(1) ...................................................................... 3,500,000 3,500,000
Roswell, Georgia Housing Authority Multifamily Revenue Refunding Bonds, Oxford
Project, 3.40%(1) ............................................................. 23,610,000 23,610,000
Smyrna, Georgia Housing Authority Multifamily Revenue Refunding Bonds, Hills of
Post Village Project, 3.25%(1) ................................................ 5,000,000 5,000,000
------------
68,640,000
------------
</TABLE>
6
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996(Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
-------- ---------
<S> <C> <C>
ILLINOIS - 10.7%
Centralia City, Illinois Industrial Development Revenue Bonds, Consolidated Foods
Corp./Hollywood Brands, Inc., 3.40%(1) ............................................. $ 5,500,000 $ 5,500,000
Chicago, Illinois General Obligation Nts., Series B, 3.65%, 10/31/96(2) ............... 25,600,000 25,600,000
Chicago, Illinois O'Hare International Airport Revenue Bonds, American Airlines
Project, Series B, 3.70%(1) ........................................................ 9,000,000 9,000,000
Elk Grove Village, Illinois Industrial Development Revenue Bonds, La Quinta Motor
Inns, Inc., 3.55%(1) ............................................................... 3,400,000 3,400,000
Illinois Development Finance Authority Revenue Bonds, Residential Brookdale
Project, 3.45%(1) .................................................................. 11,000,000 11,000,000
Illinois Educational Facilities Authority Revenue Bonds, National-Louis University,
3.35%(1) ........................................................................... 6,300,000 6,300,000
Illinois Educational Facilities Authority Revenue Bonds, University of Chicago,
Prerefunded, 7.10%, 12/1/96 ........................................................ 1,000,000 1,033,737
Illinois Health Facilities Authority Revenue Bonds, Lake Forest Hospital Project,
4.125%(1) .......................................................................... 13,000,000 13,000,000
Illinois Housing Development Authority Homeowner Mtg. Revenue Bonds, Subseries
C-1, 3.35%, 9/3/96(2) .............................................................. 4,500,000 4,500,000
Lakemoor Village, Illinois Multifamily Housing Mtg. Revenue Bonds, Lakemoor Apts.
Project, 3.90%, 9/1/96(2) .......................................................... 4,780,485 4,780,485
Lakemoor Village, Illinois Multifamily Housing Mtg. Revenue Bonds, Lakemoor Apts.
Project, 4.20%, 9/5/96(2) .......................................................... 15,000,000 15,000,000
Oakbrook Terrace, Illinois Multifamily Housing Mtg. Revenue Bonds, 4.25%, 11/1/96(2) .. 35,000,000 35,000,000
Oakbrook Terrace, Illinois Multifamily Housing Mtg. Revenue Bonds, Renaissance
Project, Series 1985 A, 4.45%, 11/1/96(2) .......................................... 14,000,000 14,000,000
West Chicago, Illinois Industrial Development Revenue Refunding Bonds, Liquid
<PAGE>
Container Project, 3.55%(1) ........................................................ 3,810,000 3,810,000
------------
151,924,222
------------
INDIANA - 2.7%
Crawfordsville, Indiana Economic Development Revenue Refunding Bonds, Pedcor
Investments-Shady Knoll I Apts. Project, 3.50%(1) .................................. 3,450,000 3,450,000
Gary, Indiana Industrial Environmental Improvement Revenue Bonds, U.S. Steel Corp.
Project, 3.70%(1) .................................................................. 1,000,000 1,000,000
Hobart, Indiana Economic Development Revenue Refunding Bonds, MMM Invest, Inc.
Project, 3.40%(1) .................................................................. 2,010,000 2,010,000
Indiana Health Facilities Finance Authority Revenue Bonds, Cardinal Center Project,
3.60%(1) ........................................................................... 1,860,000 1,860,000
Indiana State Development Finance Authority Economic Development Revenue Bonds,
Saroyan Hardwoods, Inc., 3.55%(1) .................................................. 2,150,000 2,150,000
Indianapolis, Indiana Local Public Improvement Bond Bank Nts., Series E,
4.50%, 7/11/96 ..................................................................... 2,725,000 2,725,584
</TABLE>
7
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996(Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
-------- ----------
<S> <C> <C>
INDIANA (CONTINUED)
Marion County, Indiana Hospital Authority Hospital Facility Revenue Bonds,
Indianapolis Osteopathic, 3.60%(1) ................................................ $ 3,715,000 $ 3,715,000
Rockport, Indiana Pollution Control Revenue Refunding Bonds, Indiana & Michigan
Electric Co. Project, Series A, 3.15%(1) .......................................... 13,000,000 13,000,000
St. Joseph County, Indiana Hospital Authority Special Obligation Bonds, Madison
Center, Inc. Project, 3.60%(1) .................................................... 7,020,000 7,020,000
St. Joseph County, Indiana Industrial Educational Facilities Revenue Bonds, Holy Cross
College, 3.60%(1) ................................................................. 1,375,000 1,375,000
-----------
38,305,584
-----------
IOWA - 0.8%
Des Moines, Iowa Commercial Development Revenue Bonds, Series A, 3.45%(1) ............ 6,900,000 6,900,000
Mason City, Iowa Industrial Development Revenue Bonds, SuperValu Stores, Inc.
Project, 3.45%(1) ................................................................. 4,900,000 4,900,000
-----------
11,800,000
-----------
KANSAS - 1.0%
Kansas City, Kansas Private Activity Revenue Refunding Bonds, Inland Container Corp.,
3.55%(1)........................................................................... 5,200,000 5,200,000
Mission, Kansas Multifamily Revenue Bonds, Woodland Village Housing Project,
3.35%(1)........................................................................... 5,900,000 5,900,000
Olathe, Kansas Industrial Revenue Refunding Bonds, William F. Bieber Project, 3.80%(1) 1,800,000 1,800,000
Ottawa, Kansas Industrial Development Revenue Bonds, Laich Industries Project,
3.75%(1)........................................................................... 750,000 750,000
-----------
13,650,000
-----------
KENTUCKY - 0.5%
Jamestown, Kentucky Industrial Building Revenue Bonds, Union Underwear Co.,
3.50%(1) .......................................................................... 1,000,000 1,000,000
Trimble County Kentucky Pollution Control Revenue Bonds, Louisville Gas & Electric
Co. Project, Series A, 3.60%, 10/1/96(2) .......................................... 5,900,000 5,900,000
-----------
6,900,000
-----------
LOUISIANA - 2.3%
East Baton Rouge Parish, Louisiana Industrial Development Board Revenue Refunding
Bonds, La Quinta Motor Inns, Inc., 3.40%(1) ....................................... 2,325,000 2,325,000
Lake Charles, Louisiana Harbor & Terminal District Revenue Bonds, Reynolds Metal
Co. Project, 3.40%(1) ............................................................. 7,000,000 7,000,000
Lake Charles, Louisiana Harbor & Terminal District Revenue Bonds, Reynolds Metal
Co. Project, 3.80%, 12/1/96(2) .................................................... 4,085,000 4,085,804
</TABLE>
8
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996(Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
-------- ----------
<S> <C> <C>
LOUISIANA (CONTINUED)
Louisiana School Health Care Facilities Revenue Bonds, Sisters of Charity, 3.60%,
8/13/96(2) ...................................................................... $ 2,700,000 $ 2,700,000
Plaquemines, Louisiana Port Harbor & Terminal District Facilities Revenue Bonds,
Chevron Pipeline Co., 3.90%, 9/1/96(2) .......................................... 2,500,000 2,500,590
St. Charles Parish, Louisiana Industrial Development Revenue Bonds, 3.40%, 7/1/96(2) 14,000,000 14,000,000
-----------
32,611,394
-----------
MARYLAND - 3.4%
Hartford County, Maryland Revenue Refunding Bonds, 1001 Participation Facility
Project, 3.65%(1) ............................................................... 2,700,000 2,700,000
Maryland State Health & Higher Educational Facilities Authority Revenue Bonds,
Carroll General Pooled Loan Program, Series A, 3.35%(1) ......................... 1,375,000 1,375,000
Maryland State Health & Higher Educational Facilities Authority Revenue Bonds,
University of Maryland Pooled Loan Program, Series B, 3.65%(1) .................. 1,220,000 1,220,000
Montgomery County, Maryland Multifamily Housing Opportunities Commission
Revenue Bonds, Grosvenor House Project, Series A, 3.65%(1) ...................... 19,700,000 19,700,000
Montgomery County, Maryland Multifamily Housing Opportunities Commission
Revenue Bonds, Issue A, 3.50%(1) ................................................ 15,800,000 15,800,000
Worcester County, Maryland Revenue Refunding Bonds, White Marlin Mall Project,
3.55%(1) ........................................................................ 8,050,000 8,050,000
-----------
48,845,000
-----------
MASSACHUSETTS - 1.1%
Massachusetts State Commonwealth General Obligation Bonds, Series C, 3.49%(1) ...... 15,400,000 15,400,000
Massachusetts State Industrial Finance Agency Revenue Bonds, Hazen Paper, 3.55%(1) . 250,000 250,000
North Andover Town, Massachusetts Industrial Revenue Bonds, Atlee-Oak Realty Trust
of Delaware, Inc., 4.21%(1) ..................................................... 350,000 350,000
-----------
16,000,000
-----------
MICHIGAN - 0.9%
Madison Heights, Michigan Economic Development Revenue Bonds, Red Roof Inns
Project, 3.70%(1) ............................................................... 1,000,000 1,000,000
Michigan State Job Development Authority Revenue Bonds, East Lansing Residence
Associates Project, 3.90%(1) .................................................... 1,900,000 1,900,000
Michigan State Underground Storage Tank Financial Assurance Authority Revenue
Refunding Bonds, Series I, 3.45%, 8/15/96(2) .................................... 10,000,000 10,000,000
-----------
12,900,000
-----------
MINNESOTA - 4.7%
Anoka, Minnesota Multifamily Housing Revenue Bonds, Walker Plaza, Series B, 3.45%(1) 1,850,000 1,850,000
Austin, Minnesota Industrial Development Revenue Refunding Bonds, SuperValu
Stores, Inc. Project, 3.45%(1) .................................................. 4,600,000 4,600,000
</TABLE>
9
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996(Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
-------- -----------
<S> <C> <C>
MINNESOTA (CONTINUED)
Blaine, Minnesota Industrial Development Revenue Refunding Bonds, SuperValu
Stores, Inc. Project, 3.45%(1) ................................................... $ 4,700,000 $ 4,700,000
Bloomington, Minnesota Port Authority Tax Revenue Refunding Bonds, Mall of
America Project, Series C, FSA Insured, 3.45%(1) ................................. 8,700,000 8,700,000
Burnsville, Minnesota Commercial Development Revenue Bonds, SuperValu Stores,
Inc. Project, Series 83, 3.85%(1) ................................................ 5,500,000 5,500,000
Dakota County, Minnesota Housing & Redevelopment Multifamily Mtg. Revenue
Bonds, Westwood Ridge Rental Housing Project, Series A, 3.45%(1) ................. 4,200,000 4,200,000
Eden Prairie, Minnesota Commercial Development Revenue Refunding Bonds,
Lakeview Business Center, 3.45%(1) ............................................... 2,595,000 2,595,000
Eden Prairie, Minnesota Industrial Development Revenue Bonds, SuperValu Stores,
Inc. Project, 3.45%(1) ........................................................... 1,000,000 1,000,000
Maplewood, Minnesota Revenue Bonds, 5.115%(1) ....................................... 885,000 885,000
Minneapolis, Minnesota Commercial Development Revenue Refunding Bonds,
Minnehaha/Lake Partners Project, 3.45%(1) ........................................ 2,750,000 2,750,000
Minneapolis, Minnesota Community Development Agency Revenue Refunding Bonds,
Heart Institute Foundation Project, 3.45%(1) ..................................... 3,000,000 3,000,000
Minnesota State Housing Finance Agency Single Family Mtg. Bonds, Series M, 3.50%,
12/12/96(2) ...................................................................... 2,500,000 2,500,000
New Ulm, Minnesota Hospital Facilities Revenue Bonds, Health Center Systems, 3.55%(1) 2,400,000 2,400,000
North Suburban Hospital District, Minnesota Revenue Bonds, Anoka & Ramsey
Counties Hospital Health Center, 3.55%(1) ........................................ 3,300,000 3,300,000
St. Paul, Minnesota Port Authority Parking Revenue Refunding Bonds, City Walking
Ramp Project, 3.45%(1) ........................................................... 2,410,000 2,410,000
St. Paul, Minnesota Port Authority Tax Increment Revenue Bonds, Westgate Office &
Industrial Center Project, 3.45%(1) .............................................. 5,500,000 5,500,000
Stillwater, Minnesota Industrial Development Revenue Refunding Bonds, SuperValu
Stores, Inc. Project, 3.45%(1) ................................................... 5,500,000 5,500,000
University of Minnesota Revenue Bonds, Series G, 3.25%, 8/1/96(2) ................... 2,100,000 2,100,000
Waite Park, Minnesota Housing Revenue Refunding Bonds, Park Meadows Apts
Project, 3.45%(1) ................................................................ 3,270,000 3,270,000
-----------
66,760,000
-----------
MISSOURI - 0.9%
St. Charles County, Missouri Industrial Development Revenue Refunding Bonds,
Remington Apts. Project, 3.70%(1) ................................................ 12,700,000 12,700,000
MONTANA - 0.1%
Great Falls, Montana Industrial Development Revenue Refunding Bonds, SuperValu
Stores, Inc. Project, 3.45%(1) ................................................... 1,000,000 1,000,000
</TABLE>
10
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996(Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
-------- -----------
<S> <C> <C>
NEBRASKA - 0.9%
Nebraska Investment Finance Authority Single Family Mtg. Revenue Refunding Bonds,
Series B, FGIC Insured, 3.35%, 7/15/96(2) ......................................... $ 9,555,000 $ 9,555,000
Norfolk, Nebraska Industrial Development Revenue Refunding Bonds, SuperValu
Stores, Inc. Project, 3.45%(1) .................................................... 2,800,000 2,800,000
-----------
12,355,000
-----------
NEW JERSEY - 0.2%
New Jersey Economic Development Authority Manufacturing Facilities Revenue
Bonds, VPR Commerce Center Project, 3.70%(1) ...................................... 3,350,000 3,350,000
NEW YORK - 1.8%
Babylon, New York General Obligation Bonds, Series B, AMBAC Insured, 3.10%(1) ........ 1,300,000 1,300,000
City of New York Housing Development Corp. Multifamily Mtg. Revenue Bonds,
Columbus Project, Series A, 3.10%(1) .............................................. 1,000,000 1,000,000
City of New York Housing Development Corp. Multifamily Mtg. Revenue Bonds, James
Tower Development, Series A, 3.20%(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, 3.10%(1) ....................... 1,900,000 1,900,000
City of New York Trust Cultural Resources Revenue Refunding Bonds, American
Museum of Natural History, Series B, MBIA Insured, 3.10%(1) ....................... 1,000,000 1,000,000
City of New York Water Finance Authority Revenue Bonds, 3.65%, 8/1/96(2) ............. 1,100,000 1,100,018
Dormitory Authority of the State of New York Revenue Bonds, Memorial Sloan
Kettering Cancer Center Project, Series D, 3.40%, 8/7/96(2) ....................... 495,000 495,000
Franklin County, New York Industrial Development Agency Revenue Refunding Bonds,
McAdam Cheese Co. Project, 3.40%(1) ............................................... 800,000 800,000
New York State Energy Research & Development Authority Electric Facilities Revenue
Bonds, Long Island Lighting Co., Series B, 3.05%(1) ............................... 1,400,000 1,400,000
New York State Energy Research & Development Authority Pollution Control Revenue
Refunding Bonds, Orange/Rockland Utility Project, Series A, AMBAC Insured, 3.10%(1) 2,000,000 2,000,000
New York State Energy Research & Development Authority Pollution Control Revenue
Refunding Bonds, Orange/Rockland Utility Project, Series A, FGIC Insured, 3.10%(1) 3,500,000 3,500,000
New York State Housing Finance Agency Revenue Bonds, Normandie Court I Project,
3.05%(1)........................................................................... 200,000 200,000
New York State Local Government Assistance Corp. Revenue Bonds, Series A, 3.10%(1) ... 1,300,000 1,300,000
New York State Medical Care Facilities Finance Agency Revenue Bonds, Lenox Hill
Hospital Project, Series A, 3.30%(1) .............................................. 4,900,000 4,900,000
New York State Medical Care Facilities Finance Agency Revenue Bonds, Pooled
Equipment Loan Program II-A, 3.20%(1) ............................................. 1,000,000 1,000,000
New York State Power Authority Revenue and General Purpose Bonds, 3.75%, 9/10/96(2) .. 100,000 100,060
</TABLE>
11
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- -----------
<S> <C> <C>
NEW YORK (CONTINUED)
North Hempstead, New York Solid Waste Management Authority Revenue Refunding
Bonds, Series A, 3.05%(1) .......................................................... $ 100,000 $ 100,000
Triborough Bridge & Tunnel Authority of New York Revenue Bonds, FGIC Insured, 3.05%(1) 400,000 400,000
-----------
25,495,078
-----------
NORTH CAROLINA - 0.7%
North Carolina National Bank Pooled Tax-Exempt Trust Certificates of Participation,
Series 1990A, 4.125%(1) ............................................................ 6,530,000 6,530,000
North Carolina National Bank Pooled Tax-Exempt Trust Certificates of Participation,
Series 1990B, 4.125%(1) ............................................................ 4,030,000 4,030,000
-----------
10,560,000
-----------
NORTH DAKOTA - 0.2%
Bismarck, North Dakota Industrial Development Revenue Refunding Bonds, SuperValu
Stores, Inc. Project, 3.85%(1) ..................................................... 800,000 800,000
Bismarck, North Dakota Industrial Development Revenue Refunding Bonds, SuperValu
<PAGE>
Stores, Inc. Project, 3.85%(1) ..................................................... 1,500,000 1,500,000
-----------
2,300,000
-----------
OHIO - 5.1%
Cuyahoga County, Ohio Industrial Development Revenue Bonds, Southwest LP, 4.15%,
12/1/96(2) ......................................................................... 2,045,000 2,045,000
Gallia County, Ohio Industrial Development Mtg. Revenue Refunding Bonds, Jackson
Pike Assn., 3.60%, 12/15/96(2) ..................................................... 4,255,000 4,255,000
Greene County, Ohio Industrial Development Revenue Refunding Bonds, SuperValu
Holdings, Inc. Project, 3.85%(1) ................................................... 1,000,000 1,000,000
Lucas County, Ohio Industrial Development Revenue Refunding Bonds, H.H. Motel, Inc.
Project, 3.40%(1) .................................................................. 3,600,000 3,600,000
Marion County, Ohio Hospital Revenue Bonds, Pooled Lease Program, 3.40%(1) ........... 6,760,000 6,760,000
Marion County, Ohio Hospital Revenue Bonds, Pooled Lease Program, 3.40%(1) ........... 6,810,000 6,810,000
Merchant & Mechanics Tax-Exempt Mtg. Bond Trust Revenue Bonds, 3.20%, 9/1/96(2) ...... 1,000,000 1,000,000
Miami Valley, Ohio Tax-Exempt Mtg. Trust Revenue Bonds, Series 86, 4.88%,
10/15/96(2) ........................................................................ 2,780,000 2,780,000
Ohio State Air Quality Development Authority Pollution Control Revenue Refunding
Bonds, Series B, 3.85%, 7/11/96(2) ................................................. 4,655,000 4,655,000
Ohio State Water Development Authority Pollution Control Facilities Revenue
Refunding Bonds, Duquesne Light Co., Series A, 3.85%, 7/11/96(2) ................... 33,955,000 33,955,000
Scioto County, Ohio Health Care Facilities Revenue Bonds, Hill View Retirement
Center, 3.65%, 12/1/96(2) .......................................................... 2,890,000 2,890,000
Warren County, Ohio Industrial Development Revenue Refunding Bonds, Liquid
Container Project, 3.55%(1) ........................................................ 1,670,000 1,670,000
Whitehall, Ohio Industrial Development Revenue Refunding Bonds, First Mtg
Continental Commercial, 3.40%, 8/1/96(2) ........................................... 1,490,000 1,490,000
-----------
72,910,000
-----------
</TABLE>
12
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- -----------
<S> <C> <C>
OKLAHOMA - 0.8%
Claremore, Oklahoma Industrial & Redevelopment Authority Revenue Refunding
Bonds, Worthington Cylinder Project, 3.40%(1) ................................... $ 2,335,000 $ 2,335,000
Cleveland County, Oklahoma Public Facilities Revenue Bonds, Hunt Development
Project, Series A, 3.60%(1) ..................................................... 1,000,000 1,000,000
Mid-West Tax-Exempt Mtg. Board Trust Revenue Bonds, 3.55%(1) ...................... 915,000 915,000
Tulsa, Oklahoma Industrial Authority Revenue Bonds, 3.60%(1) ...................... 6,500,000 6,500,000
-----------
10,750,000
-----------
OREGON - 0.7%
Hillsboro, Oregon Revenue Bonds, Oregon Graduate Institute, 3.45%(1) .............. 6,700,000 6,700,000
Oregon State Economic & Industrial Development Commission Revenue Bonds,
Eagel-Picher Industries Project, 4.10%(1) ....................................... 3,600,000 3,600,000
-----------
10,300,000
-----------
PENNSYLVANIA - 1.6%
Commonwealth of Pennsylvania Tax-Exempt Mtg. Bond Trust Certificates, Series A,
3.85% , 11/1/96(2) .............................................................. 3,015,000 3,015,000
Delaware County, Pennsylvania Industrial Development Authority Pollution Control
Revenue Refunding Bonds, Philadelphia Electric Project, Series C, FGIC Insured,
3.60%, 8/22/96(2) ............................................................... 14,500,000 14,500,000
Littlestown, Pennsylvania Industrial Development Authority Revenue Refunding Bonds,
Hanover House Industries Project, 3.35%(1) ...................................... 3,000,000 3,000,000
Montgomery County, Pennsylvania Higher Education & Health Authority Hospital
Revenue Bonds, 3.30%(1) ......................................................... 500,000 500,000
Montgomery County, Pennsylvania Industrial Development Authority Revenue Bonds,
Quaker Chemical Corp. Project, 3.80%(1) ......................................... 1,600,000 1,600,000
-----------
22,615,000
-----------
SOUTH CAROLINA - 4.6%
Charleston Center Tax-Exempt Bonds, Grantor Trust No. 2, 3.70%, 11/1/96(2) ........ 4,407,500 4,407,500
Charleston Center Tax-Exempt Bonds, Grantor Trust No. 3, 3.90%, 7/1/96(2) ......... 9,452,500 9,452,500
Charleston Center Tax-Exempt Bonds, Grantor Trust No. 6, 3.50%, 10/1/96(2) ........ 8,075,000 8,075,000
Dorchester County, South Carolina Pollution Control Facilities Revenue Refunding
Bonds, The BOC Group, Inc. Project, 3.40%(1) .................................... 3,500,000 3,500,000
South Carolina Jobs & Economic Development Authority Revenue Bonds, Wellman
Income Project, 3.55%(1) ........................................................ 1,000,000 1,000,000
South Carolina State Public Service Authority Revenue Bonds, 3.40%, 7/26/96(2)..... 24,695,000 24,695,000
South Carolina State Public Service Authority Revenue Bonds, Series 182, MBIA
Insured, 3.44%(1) ............................................................... 15,000,000 15,000,000
-----------
66,130,000
-----------
</TABLE>
13
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- -----------
<S> <C> <C>
SOUTH DAKOTA - 2.4%
Grant County, South Dakota Pollution Control Revenue Refunding Bonds, Otter Tail
Power Co. Project, 3.45%(1) ...................................................... $10,400,000 $10,400,000
South Dakota State Health & Educational Bonds, Sioux Valley Hospital Issue, 3.45%(1) 20,100,000 20,100,000
Watertown, South Dakota Industrial Development Revenue Bonds, SuperValu Stores,
Inc. Project, 3.85%(1) ........................................................... 3,900,000 3,900,000
-----------
34,400,000
-----------
TENNESSEE - 2.0%
Clarksville, Tennessee Public Building Authority Revenue Bonds, Pooled Financing-
Tennessee Municipal Bond Fund, 3.35%(1) .......................................... 11,100,000 11,100,000
Covington, Tennessee Industrial Development Board Revenue Bonds, Charms Co.
Project, 3.45%(1) ................................................................ 4,100,000 4,100,000
Dayton, Tennessee Industrial Development Board Revenue Refunding Bonds, La-Z Boy
Chair Co. Project, 3.40%(1) ...................................................... 4,350,000 4,350,000
Knox County, Tennessee Industrial Development Board Revenue Bonds, Weisgarber
Partners, FGIC Insured, 3.60%(1) ................................................. 3,000,000 3,000,000
Metropolitan Government of Nashville & Davidson County, Tennessee Health &
Educational Facilities Board Revenue Bonds, Vanderbilt University Project,
Series 1985A, 3.50%, 1/15/97(2) .................................................. 1,000,000 1,000,000
Metropolitan Government of Nashville & Davidson County, Tennessee Health &
Educational Facilities Board Revenue Bonds, Vanderbilt University Project,
Series 1985A, 3.50%, 1/15/97(2) .................................................. 700,000 700,000
Metropolitan Government of Nashville & Davidson County, Tennessee Multifamily
Housing Revenue Bonds, Arbor Crest Project, Series B, 3.40%(1) ................... 3,550,000 3,550,000
Rutherford County, Tennessee Industrial Development Board Industrial Building
Revenue Bonds, Derby Industries, Inc. Project, 3.55%(1) .......................... 1,435,000 1,435,000
-----------
29,235,000
-----------
TEXAS - 8.9%
Angelina & Neches River Authority of Texas Pollution Control Revenue Refunding
Bonds, Temple-Inland Forest Project, 3.55%(1) .................................... 7,350,000 7,350,000
Gulf Coast Industrial Development Authority of Texas Marine Terminal Revenue
Bonds, Amoco Oil Co. Project, 3.60%, 12/1/96(2) .................................. 3,000,000 3,000,000
Harris County, Texas Custodial Receipts, Series A, 3.45%(1) ........................ 5,000,000 5,000,000
<PAGE>
Hockley County, Texas Industrial Development Corp. Pollution Control Revenue Bonds,
Amoco Project-Standard Oil Co., 3.30%, 9/1/96(2) ................................. 20,000,000 20,000,000
North Central Texas Health Facility Development Corp. Hospital Revenue Bonds,
Baylor Health Project, Series B, 3.60%, 9/10/96(2) ............................... 50,000,000 50,000,000
Plano, Texas Health Facilities Development Corp. Hospital Revenue Bonds, Children's
Hospital & Presbyterian Health Care Center, 3.60%, 7/30/96(2) .................... 5,000,000 5,000,000
</TABLE>
14
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- ------------
<S> <C> <C>
TEXAS (CONTINUED)
Texas Association of School Boards Certificates of Participation, Series A, 4.75%,
8/30/96 ......................................................................... $31,700,000 $ 31,735,065
Travis County, Texas Housing Finance Corp. Multifamily Housing Revenue Bonds, Bent
Oaks Apts., 3.50%(1) ............................................................ 4,400,000 4,400,000
------------
126,485,065
------------
UTAH - 1.0%
Salt Lake County, Utah Pollution Control Revenue Refunding Bonds, Service Station
Holdings BP Oil Co. Project, 3.60%(1) ........................................... 5,200,000 5,200,000
Utah State Housing Finance Agency Multifamily Housing Revenue Refunding Bonds,
Candlestick Apts. Project, 3.35%(1) ............................................. 6,400,000 6,400,000
Weber County, Utah Industrial Development Revenue Refunding Bonds, Parker
Properties, Inc. Project, 3.40%(1) .............................................. 2,600,000 2,600,000
------------
14,200,000
------------
VERMONT - 0.1%
Vermont Industrial Development Authority Revenue Bonds, Sherburne Corp., 4.21%(1) . 1,885,000 1,885,000
VIRGINIA - 0.4%
Arlington County, Virginia Revenue Bonds, Ballston Public Parking Project, 3.35%(1) 5,900,000 5,900,000
WASHINGTON - 4.9%
Port Longview, Washington Industrial Development Revenue Bonds, Longview Fibre
Co. Project, 3.45%(1) ........................................................... 5,000,000 5,000,000
Redmond, Washington Public Corp. Industrial Revenue Refunding Bonds, Genie
Industries, Lot 1, 3.50%(1) ..................................................... 1,100,000 1,100,000
Redmond, Washington Public Corp. Industrial Revenue Refunding Bonds, Genie
Industries, Lot 2, 3.50%(1) ..................................................... 1,770,000 1,770,000
Seattle, Washington Industrial Development Corp. Revenue Bonds, RICS LP, 3.60%(1) . 5,350,000 5,350,000
Seattle, Washington Municipal Light & Power Revenue Bonds, Prerefunded,
5.875%, 10/1/96 ................................................................. 1,800,000 1,810,061
Washington State General Obligation Bonds, Series 1996-A, 3.40%(1) ................ 41,100,000 41,100,000
Washington State General Obligation Refunding Bonds, Series 1995C, 3.44%(1) ....... 13,850,000 13,850,000
------------
69,980,061
------------
WEST VIRGINIA - 1.8%
Beckley, West Virginia Revenue Anticipation Nts., Series A, 3.40%(1) .............. 1,500,000 1,500,000
Grant County, West Virginia Pollution Control Revenue Bonds, Virginia Electric &
Power Co. Project, Series 1994, 3.60%, 9/9/96(2) ................................ 19,500,000 19,500,000
Harrison County, West Virginia Industrial Development Revenue Refunding Bonds, Fox
Grocery Co. Project, 3.55%(1) ................................................... 4,140,000 4,140,000
------------
25,140,000
------------
</TABLE>
15
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1996 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Face Value
Amount See Note 1
----------- ---------------
<S> <C> <C>
WISCONSIN - 0.7%
Wisconsin Housing & Economic Development Authority Home Ownership Revenue
Refunding Bonds, Series A, 3.30%, 9/1/96(2) .................................. $ 5,490,000 $ 5,490,000
Wisconsin Housing & Economic Development Authority Home Ownership Revenue
Refunding Bonds, Series A, 3.35%, 9/1/96(2) .................................. 4,715,000 4,715,000
---------------
10,205,000
---------------
WYOMING - 0.2%
Uinta County, Wyoming Pollution Control Revenue Bonds, AMOCO Standard Oil Co. of
Indiana Project, 3.98%, 12/1/96(2) ........................................... 3,000,000 3,002,646
---------------
DISTRICT OF COLUMBIA - 0.6%
District of Columbia General Obligation Bonds, Series A-1, 3.80%(1) ............ 3,100,000 3,100,000
District of Columbia General Obligation Bonds, Series A-3, 3.80%(1) ............ 4,800,000 4,800,000
---------------
7,900,000
---------------
Total Investments, at Value .................................................... 100.2% 1,428,300,480
Liabilities in Excess of Other Assets .......................................... (0.2) (2,306,506)
---------- ---------------
Net Assets ..................................................................... 100.0% $ 1,425,993,974
========== ===============
</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, 1996. 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.
2. 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, 1996 Centennial Tax Exempt Trust
<TABLE>
<S> <C>
ASSETS
Investments, at value - see accompanying statement ........... $1,428,300,480
Cash ......................................................... 2,263,510
Receivables:
Interest .................................................... 8,687,982
Shares of beneficial interest sold .......................... 6,954,419
Other ....................................................... 91,152
--------------
Total assets ............................................... 1,446,297,543
--------------
LIABILITIES Payables and other liabilities:
<PAGE>
Shares of beneficial interest redeemed ...................... 18,789,395
Dividends ................................................... 1,141,663
Service plan fees ........................................... 98,402
Transfer and shareholder servicing agent fees ............... 44,709
Other ....................................................... 229,400
--------------
Total liabilities .......................................... 20,303,569
--------------
NET ASSETS ................................................... $1,425,993,974
==============
COMPOSITION OF NET ASSETS
Paid-in capital .............................................. $1,425,759,204
Accumulated net realized gain on investment transactions ..... 234,770
--------------
NET ASSETS - applicable to 1,425,775,172 shares of beneficial
interest outstanding ....................................... $1,425,993,974
==============
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, 1996
Centennial Tax Exempt Trust
<TABLE>
<S> <C>
INVESTMENT INCOME -- Interest ........................ $56,570,903
-----------
EXPENSES
Management fees - Note 3 ............................. 6,380,737
Service plan fees - Note 3 ........................... 2,929,180
Transfer and shareholder servicing agent fees - Note 3 680,208
Registration and filing fees ......................... 197,697
Custodian fees and expenses .......................... 163,122
Shareholder reports .................................. 130,621
Legal and auditing fees .............................. 38,030
Trustees' fees and expenses .......................... 17,899
Insurance expenses ................................... 17,708
Other ................................................ 1,850
-----------
Total expenses ...................................... 10,557,052
-----------
NET INVESTMENT INCOME ................................ 46,013,851
NET REALIZED GAIN ON INVESTMENTS ..................... 244,254
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . $46,258,105
===========
</TABLE>
==============================================================================
STATEMENT OF CHANGES IN NET ASSETS
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Year Ended June 30,
1996 1995
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income ....................................... $ 46,013,851 $ 35,272,785
Net realized gain ........................................... 244,254 69,768
--------------- ---------------
Net increase in net assets resulting from operations ........ 46,258,105 35,342,553
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS ................. (46,061,715) (35,284,282)
BENEFICIAL INTEREST TRANSACTIONS:
Net increase in net assets resulting from beneficial interest
transactions - Note 2 ..................................... 110,876,607 275,476,883
--------------- ---------------
NET ASSETS
Total increase .............................................. 111,072,997 275,535,154
Beginning of period ......................................... 1,314,920,977 1,039,385,823
--------------- ---------------
End of period ............................................... $ 1,425,993,974 $ 1,314,920,977
=============== ===============
</TABLE>
See accompanying Notes to Financial Statements
18
<PAGE>
FINANCIAL HIGHLIGHTS
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
Income from investment operations - net
investment income and net realized gain
on investments........................... .03 .03 .02 .02 .03
Dividends and distributions to
shareholders............................. (.03) (.03) (.02) (.02) (.03)
------ ------ ------ ------ -----
Net asset value, end of period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
====== ====== ====== ====== =====
TOTAL RETURN, AT NET ASSET VALUE(1)........ 3.16% 3.17% 1.90% 2.19% 3.55%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions).... $1,426 $1,315 $1,039 $ 981 $ 917
Average net assets (in millions) $1,473 $1,127 $1,057 $ 977 $ 900
Ratios to average net assets:
Net investment income.................... 3.12% 3.13% 1.87% 2.08% 3.40%
Expenses................................. 0.72% 0.73% 0.76% 0.76% 0.75%
</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.
See accompanying Notes to Financial Statements.
19
<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
<PAGE>
investment company. The Trust's investment objective is to seek 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's investment
advisor is Centennial Asset Management Corporation (the Manager), a subsidiary
of OppenheimerFunds, Inc. (OFI). The following is a summary of significant
accounting policies consistently followed by the Trust.
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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
2. SHARES OF BENEFICIAL INTEREST
The 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 30,1996 Year Ended June 30, 1995
--------------------------------------------------------------------
Shares Amount Shares Amount
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Sold 4,357,729,565 $4,357,729,549 3,745,799,353 $3,745,799,210
Dividends and distributions
reinvested................. 45,904,203 45,904,203 33,490,524 33,490,524
Issued in connection with the
acquisition of Oppenheimer
Tax-Exempt Cash Reserves -
Note 4..................... - - 31,152,605 31,152,738
Redeemed..................... (4,292,757,161) (4,292,757,145) (3,534,964,703) (3,534,965,589)
-------------- -------------- -------------- --------------
Net increase............... 110,876,607 $ 110,876,607 275,477,779 $ 275,476,883
============== ============== ============== ==============
</TABLE>
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Centennial Tax Exempt Trust
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Trust which provides for a fee of 0.50% on the first
$250 million of average annual net assets with a reduction of 0.025% on each
$250 million thereafter to $1.5 billion, 0.35% on the next $500 million of net
assets and 0.325% 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 applicable regulatory limit on Trust
expenses.
Shareholder Services, Inc. (SSI), a subsidiary of OFI, is the transfer and
shareholder servicing agent for the Trust, and for other registered investment
companies. SSI's total costs of providing such services are allocated ratably to
these companies.
Under an approved service plan, the Trust may expend up to 0.20% of its net
assets annually to reimburse 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
30,1996, the Trust paid $11,258 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.
21
<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-5
<PAGE>
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.
A-6
<PAGE>
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
A-7
<PAGE>
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.
A-8
<PAGE>
Exhibit B
INDUSTRY CLASSIFICATIONS
Adult Living Facilities
Education
Electric
Gas
General Obligation
Higher Education
Highways
Hospital
Lease Rental
Manufacturing, Durables
Manufacturing, Non Durables
Marine/Aviation Facilities
Multi Family Housing
Non Profit Organization
Pollution Control
Resource Recovery
Sales Tax
Sewer
Single Family
Housing
Special Assessment
Telephone
Water
A-9
<PAGE>
Exhibit C
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
A-10
<PAGE>
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.
A-11
<PAGE>
Exhibit D
TAX EXEMPT/TAX EQUIVALENT YIELDS
The equivalent yield table below compares tax-free income with taxable income
under Federal income tax rates effective in 1996. 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 $ 40,100 15.0% 1.76% 2.35% 2.94%
$ 40,100 $ 96,900 28.0% 2.08% 2.78% 3.47%
$ 96,900 $147,700 31.0% 2.17% 2.90% 3.62%
$147,700 $263,750 36.0% 2.34% 3.13% 3.91%
$263,750 and above 39.6% 2.48% 3.31% 4.14%
SINGLE RETURN
- -------------
Over Not over
- ---- --------
$ 0 $ 24,000 15.0% 1.76% 2.35% 2.94%
$ 24,000 $ 58,150 28.0% 2.08% 2.78% 3.47%
$ 58,150 $121,300 31.0% 2.17% 2.90% 3.62%
$121,300 $263,750 36.0% 2.34% 3.13% 3.91%
$263,750 and above 39.6% 2.48% 3.31% 4.14%
A-12
<PAGE>
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
- ---- --------
$ 0 $ 40,100 15.0% 3.53% 4.12% 4.71% 5.29%
$ 40,100 $ 96,900 28.0% 4.17% 4.86% 5.56% 6.25%
$ 96,900 $147,700 31.0% 4.35% 5.07% 5.80% 6.52%
$147,700 $263,750 36.0% 4.69% 5.47% 6.25% 7.03%
$263,750 39.6% 4.97% 5.79% 6.62% 7.45%
SINGLE RETURN
- -------------
Over Not over
- ---- --------
$ 0 $ 24,000 15.0% 3.53% 4.12% 4.71% 5.29%
$ 24,000 $ 58,150 28.0% 4.17% 4.86% 5.56% 6.25%
$ 58,150 $121,300 31.0% 4.35% 5.07% 5.80% 6.52%
$121,300 $263,750 36.0% 4.69% 5.47% 6.25% 7.03%
$263,750 39.6% 4.97% 5.79% 6.62% 7.45%
</TABLE>
A-13
<PAGE>
Investment Advisor 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
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 1480
Denver, Colorado 80202
PXO160.001 1196
A-14
