<PAGE> 1
2000 ANNUAL REPORT
CENTENNIAL
TAX EXEMPT
TRUST
JUNE 30, 2000
<PAGE> 2
DEAR SHAREHOLDER:
For the one-year period ended June 30, 2000, a hale and hardy economy--and
persistent concern that rapid economic growth might trigger higher
inflation--set the tone in the short-term fixed income markets. The Federal
Reserve attempted to keep the economy from becoming too robust for its own good
by ratcheting up short-term interest rates six times during the year-long
period, but even this was not enough to weaken economic growth or investor
confidence significantly. For the fourth quarter of 1999 and the first quarter
of 2000, the U.S. economy expanded at annualized rates of 7.3% and 5.4%,
respectively.
The fixed income markets responded to all of this with relative calmness, as
many investors factored in most of the interest rate hikes prior to their actual
occurrence. Against this steady advance of interest rates, Centennial Tax Exempt
Trust produced a compounded annual yield of 2.98%. Without compounding, the
annual yield was 2.97%. For investors in the 36% tax bracket, this is equivalent
to a taxable compounded yield of 4.66% and 4.64% without compounding.(1)
As of June 30, 2000, the seven-day annualized yields, with and without
compounding, were 3.76% and 3.70%, respectively.(2)
Like most professional investors, we generally anticipated the interest rate
moves, which led us to shorten the Trust's average maturity until the fourth
quarter. When interest rates rise, fixed income prices generally fall, and the
effect is more pronounced for longer term issues. Because the Trust seeks to
maintain a stable $1.00 share price, we wanted to minimize the devaluing effect
of rising rates. There can be no assurance that the Trust will maintain a stable
share price, but we are always mindful of the need to protect your principal.(3)
We reduced the average maturity of the securities in the portfolio at the
beginning of the fiscal year. Between January and May 2000, we brought it down
even further. The shorter average maturity helped to reduce volatility, or price
instability, for the Trust as interest rates jumped to ever-higher levels.
The Trust invests in high quality, short-term, tax-exempt securities issued by
states, counties and municipalities coast to coast. These generally are either
insured or secured by liquidity arrangements with a bank, and they may pay
either fixed or variable rates of return. It is important to remember that the
Trust itself is neither insured nor guaranteed by the U.S. Government.
1. A portion of the Fund's distributions may be subject to income tax
including state and local taxes. Capital gains distributions are taxable as
capital gains. For an investor subject to alternative minimum taxes, a portion
of the Fund's distributions may increase the investor's tax. Tax rates may be
lower depending on individual circumstances.
2. Compounded yields assume reinvestments of dividends. Past performance is
not indicative of future results.
3. An investment in money market funds is neither insured nor guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although these funds may seek to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in these funds.
<PAGE> 3
We achieved our changes in the portfolio's overall maturity primarily by
shifting our emphasis between the various fixed- and variable-rate investments
available to us. During much of the year, we invested in demand notes backed by
commercial banks.
Adding them to the portfolio therefore helped reduce average maturity of the
Trust's holdings and the duration of the portfolio (typically, the shorter a
portfolio's duration, the better its resistance to the negative impact of rising
interest rates). At the same time, investing in more demand notes helped
increase the Trust's yield. Due to the demand feature, rates paid on demand
notes fluctuate from week to week, and they may at times provide a yield
advantage over comparable-quality fixed-rate instruments.
As the year wound down, we replaced some of our demand notes with fixed-rate
instruments, for two reasons. First, by late April, fixed-rate short-term
securities had become very inexpensive, so we were able to acquire 90 to 180 day
issues at very attractive prices. Second, yields on demand notes fell after
mid-May to levels below those of fixed-rate securities. By switching our focus
to fixed-rate securities, we were able to lock in additional yield, yet the
increase in average maturity played a neutral role.
Going forward, we will continue to be cautious until we see definite signs that
the Federal Reserve has concluded its course of interest rate hikes. As long as
our central bank remains committed to a month-to-month approach and is not
willing to pronounce the economy "slow and steady," we expect to maintain our
wait-and-see investment strategy. Emphasizing securities that generally mature
monthly will allow us to respond quickly if and when the Fed declares that it
has reached its goal. In our view, this may well come about before the end of
the year. June brought the first signs that the Federal Reserve's past efforts
may be achieving the desired moderation of the economy.
However, in keeping with the Trust's objective of safety and liquidity, we
expect to wait for more positive indications of this before making any notable
shift in our strategy.
Sincerely,
/s/ JAMES C. SWAIN
James C. Swain
Chairman
Centennial Tax Exempt Trust
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
President
Centennial Tax Exempt Trust
July 24, 2000
2
<PAGE> 4
STATEMENT OF INVESTMENTS June 30, 2000
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Principal Value
Amount See Note 1
------------- ---------------
<S> <C> <C>
SHORT-TERM TAX-EXEMPT OBLIGATIONS--107.0%
ALASKA--0.2%
AK IDV & Export Authority RRB, Safeway, Inc. Projects, 4.75%, 12/1/00(1)............... $ 3,555,000 $ 3,555,000
---------------
ARIZONA--1.6%
Maricopa Cnty., AZ PC RRB, El Paso Electric Co. Project, Series A, 4.90%(2)............ 4,400,000 4,401,334
Phoenix, AZ IDAU MH RRB, Paradise Lakes Apts. Project, Series 1995, 5%(2).............. 22,500,000 22,500,000
---------------
26,901,334
---------------
CALIFORNIA--8.6%
CA Capital Improvements PFAU RB, Series A35-Reg D, 4.75%(2)............................ 700,000 700,000
CA HFA RB, Series CMC2, AMBAC Insured, 4.55%(2)........................................ 5,000,000 5,000,000
CA RB, Series SG89, MBIA Insured, 4.42%(2)............................................. 7,425,000 7,425,000
CA School Cash Reserve Program Authority Nts., Series A, 5.25%, 7/3/01(1).............. 40,000,000 40,375,600
CA School Cash Reserve Program Authority RB, Series A, 4%, 7/3/00...................... 42,000,000 42,001,910
Huntington Park, CA RA MH RB, Casa Rita Apts., Series A, 4.37%(2)...................... 1,100,000 1,100,000
Irvine Ranch, CA Water District COP, CAP Improvement Project, 3.50%(2)................. 2,000,000 2,000,000
Los Angeles Cnty., CA Pension Obligation RB, Series B, AMBAC Insured, 4.30%(2)......... 1,600,000 1,600,000
Los Angeles Cnty., CA TAN & RAN, Series A, 5%, 6/29/01................................. 8,750,000 8,820,613
Los Angeles, CA Airport RB, Series SG61, 4.47%(2)...................................... 1,055,000 1,055,000
Los Angeles, CA Wastewater System ABN AMRO Munitops Certificates,
Series 1998-25, 4.47%(2)............................................................ 6,000,000 6,000,000
Modesto, CA Irrigation District FAU RB, Series SG66, 4.42%(2).......................... 500,000 500,000
Oceanside, CA MH RRB, Lakeridge Apts. Project, 5.05%(2)................................ 3,000,000 2,999,999
Orange Cnty., CA FAU Teeter Plan RB, Series C, AMBAC Insured, 4.65%(2)................. 10,300,000 10,300,000
Orange Cnty., CA IDAU RB, Control Air Conditioning Project-A, 4.80%(2)................. 3,100,000 3,100,000
Orange Cnty., CA Sanitation District COP, Series C, FGIC Insured, 4%(2)................ 5,800,000 5,800,000
San Bernardino Cnty., CA, MH RB, Somerset Apts., Series A, 4.25%(2).................... 2,495,000 2,495,000
Southern CA PAU RRB, Palo Verde Project, Series B, AMBAC Insured, 4.30%(2)............. 2,400,000 2,400,000
Southern CA Public PAU RRB, Southern Transmission Project,
AMBAC Insured, 4.30%(2)............................................................. 1,000,000 1,000,000
---------------
144,673,122
---------------
COLORADO--0.8%
CO Housing Finance Authority ED RB, Vincent Metal Goods Project, 4.90%(2).............. 5,000,000 5,000,000
Denver City & Cnty., CO Housing RB, KY Circle Village Project, 4.75%(2)................ 4,300,000 4,300,000
Englewood, CO IDV RRB, Safeway, Inc. Projects, 4.75%, 12/1/00(1)....................... 1,515,000 1,515,000
Fraser, CO IDV RRB, Safeway, Inc. Projects, 4.75%, 12/1/00(1).......................... 985,000 985,000
Idaho Springs, CO IDV RRB, Safeway, Inc. Projects, 4.75%, 12/1/00(1)................... 1,645,000 1,645,000
---------------
13,445,000
---------------
</TABLE>
3
<PAGE> 5
STATEMENT OF INVESTMENTS June 30, 2000 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Principal Value
Amount See Note 1
------------- ---------------
<S> <C> <C>
DELAWARE--1.1%
DE EDAU IDV RRB, Delaware Clean Power Project, Series A, 4.95%(2)...................... $ 5,000,000 $ 5,000,000
DE EDAU IDV RRB, Delaware Clean Power Project, Series C, 4.81%(2)...................... 8,000,000 8,000,000
DE EDAU IDV RRB, Star Enterprise Project, Series B, 4.80%(2)........................... 5,000,000 5,000,000
---------------
18,000,000
---------------
FLORIDA--11.2%
Dade Cnty., FL WSS RB, FGIC Insured, 4.40%, 10/3/00(1)................................. 9,900,000 9,900,000
Escambia Cnty., FL HFAU RRB, Florida Convertible Centers Project,
Series A, 4.45%(2).................................................................. 1,150,000 1,150,000
FL BOE Capital Outlay GOUN, Series 286, 4.87%(2)....................................... 2,600,000 2,600,000
FL BOE Capital Outlay Public Education RB, Series A, 4.90%, 8/1/00(1).................. 13,230,000 13,230,000
FL HFA MH RRB, Monterey Lake Project, 4.80%(2)......................................... 17,665,000 17,665,000
FL MPA RB, 4.30%, 10/2/00(1)........................................................... 29,300,000 29,300,000
FL MPA RB, 4.35%, 8/1/00(1)............................................................ 18,055,000 18,055,000
FL TUAU RB, Series A, FGIC Insured, 4.40%, 10/3/00(1).................................. 14,850,000 14,850,000
Hillsboro Cnty., FL IDV PC RB, Tampa Electric Co., MBIA Insured, 4.85%, 8/1/00(1)...... 17,795,000 17,795,000
Hillsboro Cnty., FL IDV PC RB, Tampa Electric Co., MBIA Insured, 4.85%, 8/1/00(1)...... 17,795,000 17,795,000
Lee Cnty., FL Airport & Marina ABN Amro Munitops Certificates,
Series 2000-3, FSA Insured, 4.85%(2)................................................ 4,890,000 4,890,000
Putnam Cnty., FL PC DAU RRB, Seminole Electric Co-op,
Series D, 4.35%, 12/15/00(1)........................................................ 2,000,000 2,000,000
St. Lucie Cnty., FL PC RB, Florida Power & Lite, 4.25%, 7/13/00(1)..................... 22,950,000 22,950,000
St. Lucie Cnty., FL PC RB, Florida Power & Lite, 4.35%, 10/2/00(1)..................... 17,725,000 17,725,000
---------------
189,905,000
---------------
GEORGIA--8.4%
Burke Cnty., GA DAU PC RB, Georgia Power Co. Plant Vogtle Project, 4.55%(2)............ 1,600,000 1,600,000
Burke Cnty., GA DAU PC RB, Oglethorpe Power Corp.,
AMBAC Insured, 4.30%, 8/1/00(1)..................................................... 8,000,000 8,000,000
Burke Cnty., GA DAU PC RB, Oglethorpe Power Corp.,
AMBAC Insured, 4.35%, 10/2/00(1).................................................... 15,000,000 15,000,000
Burke Cnty., GA DAU PC RB, Oglethorpe Power Corp.,
AMBAC Insured, 4.35%, 8/1/00(1)..................................................... 5,000,000 5,000,000
Cobb Cnty., GA HAU MH RRB, Terrell Mill Project, 5%(2)(3).............................. 11,200,000 11,200,000
Fulton Cnty., GA DAU RB, Georgia Tech Athletic Assn., Inc., 4.80%(2)................... 3,000,000 3,000,000
Fulton Cnty., GA DAU RB, Lovett School Project, 4.80%(2)............................... 3,000,000 3,000,000
Fulton Cnty., GA DAU RB, Robert W. Woodruff Arts Project, 4.80%(2)..................... 2,000,000 2,000,000
Fulton Cnty., GA GOUN, 5%, 12/29/00.................................................... 38,800,000 38,940,712
Fulton Cnty., GA HAU MF RRB, Spring Creek Crossing, 4.85%(2)........................... 15,400,000 15,400,000
GA GOB, 4.72%(2)....................................................................... 11,880,000 11,880,000
Monroe Cnty., GA DAU PC RB, Georgia Power Co. Scherer Plant Project,
Series 1, 4.55%(2).................................................................. 1,000,000 1,000,000
Rockdale Cnty., GA WSS Authority, Series B, 4.25%, 7/1/00(1)........................... 2,770,000 2,770,000
Roswell, GA HAU MH RRB, Oxford Project, 4.90%(2)....................................... 23,610,000 23,610,000
---------------
142,400,712
---------------
</TABLE>
4
<PAGE> 6
STATEMENT OF INVESTMENTS June 30, 2000 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Principal Value
Amount See Note 1
------------- ---------------
<S> <C> <C>
ILLINOIS--5.5%
Chicago, IL ABN AMRO Munitops Certificates, Trust 1998-3, 4.82%(2)(3).................. $ 8,735,000 $ 8,735,000
Chicago, IL Lakefront Millennium Parking Facilities RB, 4.65%, 12/15/00(1)............. 22,495,000 22,495,000
Elk Grove Village, IL IDV RB, La Quinta Motor Inns, Inc., 3.95%(2)..................... 1,800,000 1,800,000
IL Education FA RB, 4.25%, 7/19/00(1).................................................. 28,385,000 28,385,000
IL HFAU RB, Lake Forest Hospital Project, 4.75%(2)..................................... 9,755,000 9,755,000
IL HFAU RRB, Advocate Health Care, Series B, 4.90%(2).................................. 20,995,000 20,995,000
IL HFAU RRB, The Carle Foundation, Series B, 4.85%(2).................................. 200,000 200,000
---------------
92,365,000
---------------
INDIANA--5.5%
Dyer, IN HCF RRB, Regency Place, Series A-1, 4.95%(2).................................. 3,170,000 3,170,000
Fort Wayne, IN HCF RRB, Health Quest, Series X-A, 4.95%(2)............................. 2,875,000 2,875,000
IN HFFAU RRB, Ascension Health Credit-B, 5.10%(2)...................................... 52,000,000 52,000,000
IN MPA RB, MBIA Insured, 4.40%, 10/3/00(1)............................................. 13,600,000 13,600,000
Indianapolis, IN HCF RRB, Health Quest, Series A, 4.95%(2)............................. 3,775,000 3,775,000
Indianapolis, IN Local Public Improvement Board Nts., Series D, 5%, 1/8/01............. 5,100,000 5,118,220
Lawerence/Fort Harrison, IN Reuse Authority Tax Increment RB,
Harrison Military Base, 5.81%(2).................................................... 3,345,000 3,345,000
Marion Cnty., IN HA Hospital Facility RB, Indianapolis Osteopathic, 4.85%(2)........... 2,810,000 2,810,000
Merrillville, IN HCF RRB, Southlake, Series A-1, 4.95%(2).............................. 3,755,000 3,755,000
South Bend, IN HCF RRB, Fountainview, Series A-1, 4.95%(2)............................. 3,005,000 3,005,000
---------------
93,453,220
---------------
KANSAS--0.4%
Manhattan, KS Industrial RRB, Parker Hannifin, Inc. Project, 4.80%(2).................. 6,000,000 6,000,000
---------------
KENTUCKY--3.9%
KY Asset/Liability Commission General Fund TAN & RAN,
Series A, 4.35%, 8/2/00(1).......................................................... 15,000,000 15,000,000
KY Asset/Liability Commission General Fund TAN & RAN,
Series A, 5.25%, 6/27/01(1)......................................................... 40,000,000 40,267,200
KY EDFAU RRB, Baptist Convalescent Center, 5.01%(2).................................... 5,000,000 5,000,000
Mayfield, KY Multi-City Lease RB, Kentucky League of Cities Funding Trust, 4.90%(2).... 5,860,000 5,860,000
---------------
66,127,200
---------------
LOUISIANA--2.7%
LA PFFAU RRB, MBIA Insured, 4.85%(2)................................................... 17,600,000 17,600,000
New Orleans, LA IDV Board MH RB, Orleans LLC Project, Series 3700, 4.97%(2)............ 5,000,000 5,000,000
St. James Parish, LA PC RRB, Texaco Project, Series A, 4.25%, 10/17/00(1).............. 22,530,000 22,530,000
---------------
45,130,000
---------------
</TABLE>
5
<PAGE> 7
STATEMENT OF INVESTMENTS June 30, 2000 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Principal Value
Amount See Note 1
------------- ---------------
<S> <C> <C>
MARYLAND--0.5%
Anne Arundel Cnty., MD ED RB, West Capitol, Series A, 4.80%(2)......................... $ 6,000,000 $ 6,000,000
Hyattsville, MD IDV RRB, Safeway, Inc. Projects, 4.75%, 12/1/00(1)..................... 1,800,000 1,800,000
MD Health & HEFAU RB, University of Maryland Pooled Loan Program,
Series B, 4.20%(2).................................................................. 900,000 900,000
---------------
8,700,000
---------------
MASSACHUSETTS--0.9%
MA CMWLTH General Obligation Consolidation Loan, 4.85%, 8/1/00(1)...................... 15,245,000 15,245,000
---------------
MICHIGAN--0.8%
MI Job DAU RB, East Lansing Residence Associates Project, 5%(2)........................ 1,900,000 1,900,000
Rochester, MI Community SDI GOUN, Series 289, 4.87%(2)................................. 3,745,000 3,745,000
St. Clair Cnty., MI ED RRB, Series 282, AMBAC Insured, 4.87%(2)........................ 8,000,000 8,000,000
---------------
13,645,000
---------------
MINNESOTA--2.0%
Minneapolis, MN CD RRB, Minnehaha/Lake Partners Project, 4.85%(2)...................... 2,750,000 2,750,000
MN GOB, 4.65%, 12/15/00(1)............................................................. 16,010,000 16,010,000
New Ulm, MN Hospital Facilities RB, Health Center Systems, 4.60%(2).................... 2,200,000 2,200,000
North Suburban Hospital District, MN RB, Anoka & Ramsey Cntys.
Hospital Health Center, 4.60%(2).................................................... 3,200,000 3,200,000
Rochester, MN HCF RB, Mayo Foundation, 4.40%, 9/6/00(1)................................ 10,000,000 10,000,000
---------------
34,160,000
---------------
MISSOURI--0.1%
MO Education & HFAU RRB, The Washington University, Series C, 4.50%(2)................. 1,800,000 1,800,000
---------------
MONTANA--0.1%
Great Falls, MT IDV RRB, Safeway, Inc. Projects, 4.75%, 12/1/00(1)..................... 1,635,000 1,635,000
---------------
NEVADA--1.2%
NV Municipal Securities Trust Receipts, Series SG 114, 4.85%(2)........................ 20,350,000 20,350,000
---------------
NEW HAMPSHIRE--1.5%
NH Business FAU PC RRB, Series 1990, 4.25%, 9/27/00(1)................................. 25,000,000 25,000,000
---------------
NEW JERSEY--2.9%
NJ TUAU ABN AMRO Munitops Certificates, Series 2000-6,
MBIA Insured, 4.40%, 10/2/00(1)..................................................... 48,420,000 48,420,000
---------------
NEW YORK--4.6%
Hempstead, NY IDA RRB, Trigen-Nassau Energy, 4.70%(2).................................. 1,000,000 1,000,000
NYC HDC MH RB, James Tower Development, Series A, 4.50%(2)............................. 1,100,000 1,100,000
NYC HDC MH RB, Monterey Project, Series A, 4.40%(2).................................... 2,400,000 2,400,000
NYC Health & Hospital Corp. RB, Health Systems, Series E, 4.40%(2)..................... 1,000,000 1,000,000
</TABLE>
6
<PAGE> 8
STATEMENT OF INVESTMENTS June 30, 2000 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Principal Value
Amount See Note 1
------------- ---------------
<S> <C> <C>
NEW YORK (CONTINUED)
NYC IDA Civic Facility RB, Columbia Grammar School Project, 4.65%(2)................... $ 800,000 $ 800,000
NYC Water FAU WSS RB, Series SGB 26, MBIA Insured, 4.84%(2)............................ 3,000,000 3,000,000
NYS DA RB, 4.77%(2).................................................................... 1,700,000 1,700,000
NYS DA RB, Cornell University, Series A, 4.35%(2)...................................... 2,000,000 2,000,000
NYS ERDAUEF RRB, Con Edison Co., Subseries A-3, 4.60%(2)............................... 2,400,000 2,400,000
NYS GOUN, Series A, 4.40%, 2/8/01(1)................................................... 1,700,000 1,700,000
NYS HFA RB, Saxony Housing, Series A, 4.75%(2)......................................... 3,000,000 3,000,000
NYS LGAC RB, Series SG99, MBIA Insured, 4.82%(2)....................................... 27,595,000 27,595,000
NYS LGAC RB, Series SG100, MBIA Insured, 6.875%(2)..................................... 10,420,000 10,420,000
NYS MCFFA RB, Pooled Equipment Loan Program I-A, 4.50%(2).............................. 670,000 670,000
NYS Mtg. Agency RB, Series CMC1, 4.90%(2).............................................. 6,820,000 6,820,000
NYS Urban Empire Development Corp. RB, Series A, 4.84%(2).............................. 9,555,000 9,555,000
TBTAU NY RB, Series T, 7%, 1/1/01(1)................................................... 2,000,000 2,065,922
---------------
77,225,922
---------------
OHIO--3.5%
Gallia Cnty., OH IDV Mtg. RRB, Jackson Pike Assn., 4.75%, 12/15/00(1).................. 3,400,000 3,400,000
Miami Valley, OH Tax-Exempt Mtg. Trust RB, Series 86, 4.88%, 10/15/00(1)............... 2,540,000 2,540,000
OH Adult Corrections Building Authority RB, 4.65%, 12/15/00(1)......................... 7,920,000 7,920,000
OH State University RB, 4.50%, 7/25/00(1).............................................. 31,000,000 31,000,000
Scioto Cnty., OH HCF RB, Hill View Retirement Center, 4.80%, 12/1/00(1)................ 4,275,000 4,275,000
University of Cincinnati, OH COP, Series 232, MBIA Insured, 4.87%(2)................... 10,575,000 10,575,000
---------------
59,710,000
---------------
PENNSYLVANIA--2.5%
Monroe Cnty., PA HA RB, Pocono Medical Center, Series C, 4.85%(2)...................... 2,835,000 2,835,000
PA GOB, 4.87%(2)....................................................................... 20,000,000 20,000,000
PA GOUN, 4.87%(2)...................................................................... 17,800,000 17,800,000
Philadelphia, PA IDAU RB, Fox Chase Cancer Center Project, 4.50%(2).................... 1,100,000 1,100,000
---------------
41,735,000
---------------
SOUTH CAROLINA--2.2%
SC POAU ABN AMRO Munitops Certificates, Trust 1998-7, 4.85%(2)......................... 7,325,000 7,325,000
SC Public Service Authority RB, 4.40%, 10/3/00(1)...................................... 14,850,000 14,850,000
York Cnty., SC PC RRB, Duke Power Co. Project, 4.35%, 8/1/00(1)........................ 2,200,000 2,200,000
York Cnty., SC PC RRB, Duke Power Co. Project, 4.40%, 8/1/00(1)........................ 7,100,000 7,100,000
York Cnty., SC PC RRB, Duke Power Co. Project, 4.75%, 8/1/00(1)........................ 5,450,000 5,450,000
---------------
36,925,000
---------------
SOUTH DAKOTA--1.3%
SD Health & Educational Facilities RB, Sioux Valley Hospital Issue, 4.85%(2)........... 20,800,000 20,800,000
Yankton, SD IDV RB, Kolber-Pioneer, Inc. Project, 4.80%(2)............................. 2,000,000 2,000,000
---------------
22,800,000
---------------
</TABLE>
7
<PAGE> 9
STATEMENT OF INVESTMENTS June 30, 2000 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Principal Value
Amount See Note 1
------------- ---------------
<S> <C> <C>
TENNESSEE--1.2%
TN GOB, 4.20%, 8/22/00(1).............................................................. $ 20,000,000 $ 20,000,000
---------------
TEXAS--22.7%
Austin, TX Travis & Williamson Cntys., Utility System RB, 4.25%, 10/2/00(1)............ 50,000,000 50,000,000
Bexar, TX Municipal Water District RB, 4.40%, 8/1/00(1)................................ 9,000,000 9,000,000
Brownsville, TX Utility System RB, 4.25%, 7/13/00(1)................................... 23,900,000 23,900,000
Brownsville, TX Utility System RB, 4.40%, 7/13/00(1)................................... 2,000,000 2,000,000
De Soto, TX IDAU RRB, National Service Industries, Inc. Project, 4.80%(2).............. 7,150,000 7,150,000
Greater East TX HEAU RRB, Student Loans, Series A, 4.50%, 5/1/01(1).................... 9,000,000 9,000,000
Harris Cnty., TX Criminal Justice Center RB, Series SG96, FGIC Insured, 4.85%(2)....... 7,475,000 7,475,000
Harris Cnty., TX ID Corp. RRB, Shell Oil Co. Project, 4.50%(2)......................... 2,800,000 2,800,000
Harris Cnty., TX Toll Road COP, 4.87%(2)............................................... 9,900,000 9,900,000
Houston, TX GOB, Series A, 4.30%, 8/1/00(1)............................................ 3,000,000 3,000,000
Houston, TX GOB, Series A, 4.30%, 10/2/00(1)........................................... 28,400,000 28,400,000
Houston, TX GOB, Series B, 4.30%, 8/1/00(1)............................................ 39,800,000 39,800,000
Houston, TX GOB, Series C, 4.30%, 10/2/00(1)........................................... 6,000,000 6,000,000
Houston, TX WSS RB, Series SG120, 4.85%(2)............................................. 37,600,000 37,600,000
San Antonio Water RB, 4.87%(2)......................................................... 4,000,000 4,000,000
San Antonio, TX Electric & Gas RRB, Series G-101, 4.85%(2)............................. 20,200,000 20,200,000
San Antonio, TX Electric & Gas RRB, Series SG105, 4.85%(2)............................. 20,000,000 20,000,000
TX TAN & RAN, Series A, 4.50%, 8/31/00................................................. 89,000,000 89,115,569
TX TUAU RB, Dallas Northtollway, Series SG70, 4.70%(2)................................. 15,325,000 15,325,000
---------------
384,665,569
---------------
UTAH--2.8%
Intermountain Power Agency, UT RB, Utah Power Supply, 4.30%, 9/11/00(1)................ 24,600,000 24,600,000
Intermountain Power Agency, UT RB, Utah Power Supply, 4.35%, 9/11/00(1)................ 7,600,000 7,600,000
Salt Lake Cnty., UT TAN & RAN, 5%, 12/29/00............................................ 10,000,000 10,029,969
Tremonton City, UT IDV RRB, Safeway, Inc. Projects, 4.75%, 12/1/00(1).................. 580,000 580,000
Utah Cnty., UT Environmental Improvement RRB, USX Corp.
Project, 4.25%, 10/5/00(1).......................................................... 5,000,000 5,000,000
---------------
47,809,969
---------------
VIRGINIA--2.2%
Peninsula Ports Authority, VA Coal Terminal RRB, Dominion Terminal
Project-A, 4.30%, 7/17/00(1)........................................................ 12,135,000 12,135,000
Stafford, VA IDV RRB, Safeway, Inc. Projects, 4.75%, 12/1/00(1)........................ 1,025,000 1,025,000
Washington D.C. Airport Authority RB, 4.35%, 10/2/00(1)................................ 24,000,000 24,000,000
---------------
37,160,000
---------------
</TABLE>
8
<PAGE> 10
STATEMENT OF INVESTMENTS June 30, 2000 (Continued)
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Principal Value
Amount See Note 1
------------- ---------------
<S> <C> <C>
WASHINGTON--1.0%
Kitsap Cnty., WA SDI No. 401 GOUN, Series 252, MBIA Insured, 4.90%(2).................. $ 3,460,000 $ 3,460,000
WA Refunding GOB, 4.40%(2)............................................................. 13,710,000 13,710,000
---------------
17,170,000
---------------
WEST VIRGINIA--0.4%
WV Road GOB ABN AMRO Munitops Certificates, Series 1999-4, 4.55%(2).................... 6,000,000 6,000,000
---------------
WYOMING--0.2%
Evanston, WY IDV RRB, Safeway, Inc. Projects, 4.75%, 12/1/00(1)........................ 3,700,000 3,700,000
---------------
DISTRICT OF COLUMBIA--0.6%
DC HFA MH RB, Tyler House Trust Certificates Partnership A, 4.95%(2)................... 10,800,000 10,800,000
---------------
OTHER TERRITORIES--1.6%
Greystone Tax Exempt Certificates RB, Trust 1998-1, Sr. Certificate
Beneficial Ownership, 4.93%(2)...................................................... 27,900,000 27,900,000
---------------
U.S. POSSESSIONS--0.3%
PR CMWLTH GOB, 4.42%(2)................................................................ 5,800,000 5,800,000
---------------
Total Investments, at Value............................................................ 107.0% 1,810,312,048
---------------
Liabilities in Excess of Other Assets.................................................. (7.0) (118,762,408)
------------- ---------------
Net Assets............................................................................. 100.0% $ 1,691,549,640
============= ===============
</TABLE>
9
<PAGE> 11
STATEMENT OF INVESTMENTS June 30, 2000 (Continued)
Centennial Tax Exempt Trust
To simplify the listings of securities, abbreviations are used per the table
below:
<TABLE>
<S> <C> <C> <C>
BOE --Board of Education HFFAU --Health Facilities Finance Authority
CAP --Capital Appreciation IDA --Industrial Development Agency
CD --Commercial Development IDAU --Industrial Development Authority
CMWLTH --Commonwealth IDV --Industrial Development
COP --Certificates of Participation LGAC --Local Government Assistance Corp.
DA --Dormitory Authority MCFFA --Medical Care Facilities Finance
DAU --Development Authority Agency
ED --Economic Development MH --Multifamily Housing
EDAU --Economic Development Authority MPA --Municipal Power Agency
EDFAU --Economic Development Finance NYC --New York City
Authority NYS --New York State
ERDAUEF --Energy Research & Development PAU --Power Authority
Authority Electric Facilities PC --Pollution Control
FA --Facilities Authority PFAU --Public Finance Authority
FAU --Finance Authority PFFAU --Public Facilities Finance Authority
GOB --General Obligation Bonds POAU --Port Authority
GOUN --General Obligation Unlimited Nts. RA --Redevelopment Agency
HA --Hospital Authority RAN --Revenue Anticipation Nts.
HAU --Housing Authority RB --Revenue Bonds
HCF --Health Care Facilities RRB --Revenue Refunding Bonds
HDC --Housing Development Corp. SDI --School District
HEAU --Higher Education Authority TAN --Tax Anticipation Nts.
HEFAU --Higher Educational Facilities TBTAU --Triborough Bridge & Tunnel Authority
Authority TUAU --Turnpike Authority
HFA --Housing Finance Agency WSS --Water & Sewer System
HFAU --Health Facilities Authority
</TABLE>
1. Put obligation redeemable at full face value on the date reported.
2. 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,
2000. This instrument may also have a demand feature which allows, on up to 30
days' notice, the recovery of principal at any time, or at specified intervals
not exceeding one year.
3. Represents a securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $19,935,000 or 1.18% of the Trust's net
assets as of June 30, 2000.
See accompanying Notes to Financial Statements.
10
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES June 30, 2000
Centennial Tax Exempt Trust
<TABLE>
<S> <C>
ASSETS
Investments, at value--see accompanying statement ............ $ 1,810,312,048
Cash ......................................................... 9,172,350
Receivables and other assets:
Shares of beneficial interest sold ........................... 38,527,064
Interest ..................................................... 15,890,060
Other ........................................................ 375,223
---------------
Total assets ................................................. 1,874,276,745
---------------
LIABILITIES
Payables and other liabilities:
Investments purchased ........................................ 161,553,479
Shares of beneficial interest redeemed ....................... 17,978,639
Dividends .................................................... 2,577,736
Transfer and shareholder servicing agent fees ................ 265,035
Service plan fees ............................................ 141,869
Trustees' compensation ....................................... 8,967
Other ........................................................ 201,380
---------------
Total liabilities ............................................ 182,727,105
---------------
NET ASSETS ................................................... $ 1,691,549,640
===============
COMPOSITION OF NET ASSETS
Paid-in capital .............................................. $ 1,692,189,822
Accumulated net realized loss on investment transactions ..... (640,182)
---------------
NET ASSETS--applicable to 1,692,205,790 shares of
beneficial interest outstanding ........................... $ 1,691,549,640
===============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 1.00
</TABLE>
See accompanying Notes to Financial Statements.
11
<PAGE> 13
STATEMENT OF OPERATIONS For the Year Ended June 30, 2000
Centennial Tax Exempt Trust
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest ..................................................... $ 63,595,519
------------
EXPENSES
Management fees .............................................. 7,404,944
Service plan fees ............................................ 3,420,376
Transfer and shareholder servicing agent fees ................ 1,075,775
Custodian fees and expenses .................................. 325,816
Trustees' compensation ....................................... 24,814
Other ........................................................ 501,232
------------
Total expenses ............................................... 12,752,957
Less expenses paid indirectly ................................ (156,433)
------------
Net expenses ................................................. 12,596,524
------------
NET INVESTMENT INCOME ........................................ 50,998,995
------------
NET REALIZED LOSS ON INVESTMENTS ............................. (159,972)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......... $ 50,839,023
============
</TABLE>
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
OPERATIONS
Net investment income .......................................................... $ 50,998,995 $ 48,885,541
Net realized gain (loss) ....................................................... (159,972) 102,645
--------------- ---------------
Net increase in net assets resulting from operations ........................... 50,839,023 48,988,186
--------------- ---------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS ................................. (50,998,995) (48,855,541)
--------------- ---------------
BENEFICIAL INTEREST TRANSACTIONS
Net decrease in net assets resulting from beneficial interest
transactions ................................................................ (57,771,643) (79,607,151)
--------------- ---------------
NET ASSETS
Total decrease ................................................................. (57,931,615) (79,504,506)
Beginning of period ............................................................ 1,749,481,255 1,828,985,761
--------------- ---------------
End of period .................................................................. $ 1,691,549,640 $ 1,749,481,255
=============== ===============
</TABLE>
See accompanying Notes to Financial Statements.
12
<PAGE> 14
FINANCIAL HIGHLIGHTS
Centennial Tax Exempt Trust
<TABLE>
<CAPTION>
Year Ended June 30,
---------------------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations--
net investment income and
net realized gain .............................. .03 .03 .03 .03 .03
Dividends and/or distributions to shareholders .... (.03) (.03) (.03) (.03) (.03)
--------- --------- --------- --------- ---------
Net asset value, end of period .................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
TOTAL RETURN(1) ................................... 3.01% 2.61% 3.12% 3.01% 3.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) ........... $ 1,692 $ 1,749 $ 1,829 $ 1,649 $ 1,426
Average net assets (in millions) .................. $ 1,737 $ 1,896 $ 1,832 $ 1,591 $ 1,473
Ratios to average net assets:(2)
Net investment income ............................. 2.94% 2.58% 3.07% 2.95% 3.12%
Expenses .......................................... 0.72% 0.69% 0.69%(3) 0.72%(3) 0.72%(3)
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Total returns reflect
changes in net investment income only. Total returns are not annualized for
periods of less than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
13
<PAGE> 15
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 an open-end management 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.
Securities Valuation. Portfolio securities are valued on the basis of amortized
cost, which approximates market value.
Federal Taxes. The Trust intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required. As of June 30, 2000, the Trust had
available for federal income tax purposes an unused capital loss carryover as
follows:
<TABLE>
<CAPTION>
Expiring
--------
<S> <C>
2006 $ 33,976
2007 432,567
2008 88,401
</TABLE>
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Trust.
Other. Investment transactions are accounted for as of trade date. Realized
gains and losses on investments are determined on an identified cost basis,
which is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
See accompanying Notes to Financial Statements.
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (Continued)
Centennial Tax Exempt Trust
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended June 30, 2000 Year Ended June 30, 1999
--------------------------------- ---------------------------------
Shares Amount Shares Amount
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sold .......................................... 5,849,279,745 $ 5,849,279,745 5,631,707,953 $ 5,631,707,953
Dividends and/or distributions
reinvested .................................... 49,019,366 49,019,366 48,085,400 48,085,400
Redeemed ...................................... (5,956,070,754) (5,956,070,754) (5,759,400,504) (5,759,400,504)
--------------- --------------- --------------- ---------------
Net decrease .................................. (57,771,643) $ (57,771,643) (79,607,151) $ (79,607,151)
=============== =============== =============== ===============
</TABLE>
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust which provides for a fee of 0.50%
of the first $250 million of the Trust's net assets, 0.475% of the next $250
million, 0.45% of the next $250 million, 0.425% of the next $250 million, 0.40%
of the next $250 million, 0.375% of the next $250 million, 0.35% of the next
$500 million and 0.325% of net assets in excess of $2 billion. Furthermore,
under the Trust's Agreement, when the value of the Trust's net assets is less
than $1.5 billion, the annual fee payable to the Manager shall be reduced by
$100,000 based on average net assets computed daily and paid monthly at the
annual rates. However, the annual fee cannot be less than $0. The Trust's
management fee for the year ended June 30, 2000 was an annualized rate of 0.43%,
before any waiver by the Manager if applicable.
Transfer Agent Fees. Shareholder Services, Inc. (SSI) acts as the transfer and
shareholder servicing agent for the Trust and for other registered investment
companies on an "at-cost" basis.
Service Plan Fees. Under an approved service plan, the Trust may expend up to
0.20% of its average annual net assets annually to reimburse the Manager, as
distributor, for costs incurred in connection with the personal service and
maintenance of accounts that hold shares of the Trust, including amounts paid to
brokers, dealers, banks and other financial institutions. During the year ended
June 30, 2000, the Trust paid $12,967 to a broker/dealer affiliated with the
Manager as reimbursement for distribution-related expenses.
15
<PAGE> 17
INDEPENDENT AUDITOR'S REPORT
Centennial Tax Exempt Trust
To the Board of Trustees and Shareholders of Centennial Tax Exempt Trust:
We have audited the accompanying statement of assets and liabilities of
Centennial Tax Exempt Trust, including the statement of investments, as of June
30, 2000, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 2000, 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Centennial Tax Exempt Trust as of June 30, 2000, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
July 24, 2000
16
<PAGE> 18
FEDERAL INCOME TAX INFORMATION
Centennial Tax Exempt Trust
In early 2001 shareholders will receive information regarding all dividends and
distributions paid to them by the Trust during calendar year 2000. Regulations
of the U.S. Treasury Department require the Fund to report this information to
the Internal Revenue Service.
None of the dividends paid by the Trust during the year ended June 30, 2000 are
eligible for the corporate dividend-received deduction. The dividends were
derived from interest on municipal bonds and are not subject to federal income
tax. To the extent a shareholder is subject to any state or local tax laws, some
or all of the dividends received may be taxable.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Trust to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
17
<PAGE> 19
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18
<PAGE> 20
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19
<PAGE> 21
CENTENNIAL TAX EXEMPT TRUST
Officers and Trustees
James C. Swain, Trustee and Chairman of the Board
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
George C. Bowen, Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Michael J. Carbuto, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
Investment Advisor and Distributor
Centennial Asset Management Corporation
Transfer and Shareholder Servicing Agent
Shareholder Services, Inc.
Custodian of Portfolio Securities
Citibank, N.A.
Independent Auditors
Deloitte & Touche LLP
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of Centennial Tax
Exempt Trust. This report must be preceded or accompanied by a
Prospectus of Centennial Tax Exempt Trust. For other material
information concerning the Trust, see the Prospectus.
For shareholder servicing, call:
1.800.525.9310 (in U.S.)
303.671.3200 (outside U.S.)
Or write:
Shareholder Services, Inc.
P.O. Box 5143
Denver, CO 80217-5143
RA0160.001.0600 [PRINTED ON RECYCLED PAPER LOGO]
