Centennial
Government Trust
3410 South Galena Street, Denver, Colorado 80231
Telephone 1-800-525-9310
Centennial Government Trust (the "Trust") is a no-load "money market"
mutual fund with the investment objective of seeking a high current level
of income consistent with preservation of capital and the maintenance of
liquidity, through investment in a diversified portfolio of short-term
debt instruments issued or guaranteed by the U.S. Government or its
agencies or instrumentalities and maturing in, or having been called for
redemption in, one year or less. See "The Trust and its Investment
Policies."
An investment in the Trust is neither insured nor guaranteed by the
U.S. Government. Shares of the Trust are not deposits or obligations of
any bank, are not guaranteed by any bank, and are not insured by the FDIC
or any other agency.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. See "The Trust and Its Investment Policies."
Shares of the Trust may be purchased directly from dealers having
sales agreements with the Trust's Distributor and also are offered to
participants in Automatic Purchase and Redemption Programs (the
"Programs") established by certain brokerage firms with which the Trust's
Distributor has entered into agreements for that purpose. (See "How to
Buy Shares" in the Appendix.) The information in this Prospectus should
be read together with the information in the Appendix which is part of
this Prospectus. Program participants should also read the description
of the Program provided by their broker.
This Prospectus sets forth concisely information about the Trust that
a prospective investor should know before investing. A Statement of
Additional Information about the Trust (the "Additional Statement"), dated
November 1, 1994, has been filed with the Securities and Exchange
Commission and is available without charge upon written request to
Shareholder Services, Inc. (the "Transfer Agent"), P.O. Box 5143, Denver,
Colorado 80217-5143 or by calling the Transfer Agent at the toll-free
number shown above. The Additional Statement (which is incorporated by
reference in its entirety in this Prospectus) contains more detailed
information about the Trust and its management.
Investors are advised to read and retain this Prospectus for future
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is effective November 1, 1994
<PAGE>
Table of Contents
Page
Trust Expenses
Financial Highlights
Yield Information
The Trust and its Investment Policies
Investment Restrictions
Appendix
Management of the Trusts
How to Buy Shares
Purchases Through Automatic Purchase and
Redemption Programs
Direct Purchases
Guaranteed Payment
Automatic Investment Plans
General
Service Plan
How to Redeem Shares
Program Participants
Shares of the Trusts Owned Directly
Regular Redemption Procedure
Expedited Redemption Procedure
Check Writing
Telephone Redemptions
Retirement Plans Holding Shares of
Government Trust and Money Market Trust
Automatic Withdrawal Plans
General Information on Redemptions
Exchanges of Shares and Retirement Plans
Dividends, Distributions and Taxes
Additional Information
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, 1994.
Shareholder Transaction Expenses
Maximum Sales Charge on Purchases
(as a percentage of offering price) None
Sales Charge on Reinvested Dividends None
Redemption Fees None
Exchange Fee $5.00
Annual Trust Operating Expenses
(as a percentage of average net assets)
Management Fees 0.48%
12b-1 (Service Plan) Fees 0.20%
Other Expenses 0.11%
Total Trust Operating Expenses 0.79%
The purpose of this table is to assist an investor in understanding the
various costs and expenses that an investor in the Trust will bear
directly (shareholder transaction expenses) or indirectly (annual trust
operating expenses). "Other Expenses" includes such expenses as custodial
and transfer agent fees, audit and legal and other business operating
expenses, but excludes extraordinary expenses. For further details, see
the Trust's financial statements included in the Additional Statement.
The following example applies the above-stated expenses to a hypothetical
$1,000 investment in shares of the Trust over the time periods shown
below, assuming a 5% annual rate of return on the investment and also
assuming that the shares were redeemed at the end of each stated period.
The amounts shown below are the cumulative costs of such hypothetical
$1,000 investment for the periods shown.
1 year 3 years 5 years 10 years
$8 $25 $44 $98
This example should not be considered a representation of past or
future expenses or performance. Expenses are subject to change and actual
performance and expenses may be less or greater than those shown above.
<PAGE>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each
period
The information in the table below 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, 1994, is included in the Additional
Statement.
FINANCIAL HIGHLIGHTS
Centennial Government Trust
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
PER SHARE OPERATING
DATA:
Net asset value,
beginning of year.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations -- net
investment income and
net realized gain on
investments.......... .03 .04 .04 .07 .08 .08 .06 .05 .07 .08
Dividends and
distributions to
shareholders......... (.03) (.04) (.04) (.07) (.08) (.08) (.06) (.05) (.07) (.08)
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of
year................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in thousands)....... $ 613,443 $ 637,102 $ 574,717 $ 533,154 $ 219,003 $ 151,898 $ 90,035 $ 67,042 $ 78,550
$ 53,690
Average net assets (in
thousands)........... $ 665,494 $ 633,017 $ 581,563 $ 418,268 $ 200,570 $ 121,909 $ 82,815 $ 74,084 $ 68,515 $
65,241
Number of shares
outstanding at end of
year (in
thousands)........... 613,282 637,018 574,722 533,125 218,986 151,901 90,036 67,042 78,550
53,690
Ratios to average net
assets:
Net investment
income............. 2.79% 2.81% 4.38% 6.44% 7.75% 8.11% 5.94% 5.17% 6.59%
8.53%
Expenses............. .79% .79% .78% .79% .84% .85% .90% .96% .93% .86%
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Yield Information
From time to time the "yield" and "compounded effective yield" of an
investment in the Trust may be advertised. Both yield figures are based
on historical earnings 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.
See "Yield Information" in the Additional Statement for additional
information about the methods of calculating these yields.
The Trust and Its Investment Policies
The Trust is a no-load "money-market" fund. It is an open-end,
diversified management investment company organized as a Massachusetts
business trust on January 18, 1982. The Trust's investment objective is
to seek high current income consistent with the preservation of capital
and the maintenance of liquidity. The value of Trust shares is not
insured or guaranteed by any government agency. However, shares held in
brokerage accounts would be eligible for coverage by the Securities
Investor Protection Corporation for losses arising from the insolvency of
the brokerage firm. The Trust's shares may be purchased at their net
asset value, which will remain fixed at $1.00 per share except under
extraordinary circumstances (see "Determination of Net Asset Value Per
Share" in the Additional Statement for further information). There can
be no assurance, however, that the Trust's net asset value will not vary
or that the Trust will achieve its investment objective. The Trust's
investment policies and practices are not "fundamental" policies (as
defined below) unless a particular policy is identified as fundamental.
The Board may change non-fundamental investment policies without
shareholder approval.
In seeking its objective, the Trust invests principally in
obligations issued or guaranteed by the U.S. Government or its agencies
or instrumentalities and maturing in twelve months or less from the date
of purchase, or in repurchase agreements (described below) under which
such obligations are purchased. The securities in which the Trust may
invest may not yield as high a level of current income as longer-term or
lower-rated securities, which generally have less liquidity and experience
greater price fluctuation.
Securities issued or guaranteed by the U.S. Government include a
variety of U.S. Treasury securities that differ only in their interest
rates, maturities and dates of issuance. Treasury Bills have maturities
of one year or less. Treasury Notes have maturities of from one to ten
years and Treasury Bonds generally have maturities of greater than ten
years at the date of issuance. U.S. Government agencies or
instrumentalities which issue or guarantee securities, also include, but
are not limited to, the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General Services
Administration, Central Bank for Cooperatives, Federal Home Loan Bank,
Federal Home Loan Mortgage Corporation, Federal Intermediate Credit Bank,
Federal Land Bank, Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board, Federal National Mortgage Association
and the Student Loan Marketing Association. The Trust will not invest in
securities issued by the Inter-American Development Bank, the Asian-
American Development Bank and the International Bank for Reconstruction
and Development or in pooled mortgages offered by the Federal Housing
Administration or Veterans Administration.
Obligations of some U.S. Government agencies and instrumentalities
may not be supported by the full faith and credit of the United States.
Some are backed by the right of the issuer to borrow from the U.S.
Treasury; others, such as the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase the agencies'
obligations; while still others, such as the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. In
the case of securities not backed by the full faith and credit of the
United States, the Trust must look principally to the agency issuing or
guaranteeing the obligation for ultimate repayment, and may not be able
to assert a claim against the United States itself in the event the agency
or instrumentality does not meet its commitments.
Certain Debt Obligations
The Trust may invest in variable rate notes, variable rate master
demand notes or in master demand notes (described in "Investment Objective
and Policies" in the Additional Statement) that meet the requirements of
Rule 2a-7 (discussed below). The Trust may also purchase debt obligations
which are Eligible Securities, as defined below, and that either mature
within twelve months from the date of purchase or have been called for
redemption by the issuer, with such redemption to be effective within one
year.
- -Floating Rate/Variable Rate Notes. Some of the notes 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 prime rate of a bank, or the 91-day
U.S. Treasury bill rate. The Trust may purchase these obligations if they
have a remaining maturity of one year or less; if their maturity is
greater than one year, 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 one year and upon not more
than 30 days' notice. Such obligations may be secured by bank letters of
credit or other credit support arrangements. See "Floating Rate/Variable
Rate Obligations" in the Additional Statement for more details.
Ratings of Securities
Under Rule 2a-7 of the Investment Company Act of 1940, as amended
(the "Investment Company Act") the Trust uses the amortized cost method
to value its portfolio securities to determine the Trust's net asset value
per share. Rule 2a-7 places restrictions on a money market fund's
investments. Under the Rule, the Trust may purchase only those securities
that the Trust's Board of Trustees has determined have minimal credit
risks and are "Eligible Securities."
With respect to ratings, 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 Centennial Asset Management
Corporation, the Trust's investment manager (the "Manager"), to be of
comparable quality to investments that are "Eligible Securities" rated
by Rating Organizations. The Rule permits the Trust to purchase "First
Tier Securities," which are Eligible Securities rated in the highest
rating category for short-term debt obligations by at least two Rating
Organizations, or, if only one Rating Organization has rated a particular
security, by that Rating Organization, or comparable unrated securities.
Under the Rule, the Trust may invest only up to 5% of its assets in
"Second Tier Securities," which are Eligible Securities that are not
"First Tier Securities." In addition to the overall 5% limit on Second
Tier Securities, the Trust may not invest more than (i) 5% of its total
assets in the securities of any one issuer (other than the U.S.
Government, its agencies or instrumentalities) or (ii) 1% of its total
assets or $1 million (whichever is greater) in Second Tier Securities of
any one issuer. Additionally, under Rule 2a-7, the Trust must maintain
a dollar-weighted average portfolio maturity of no more than 90 days.
Some of the Trust's existing investment restrictions (which are
fundamental policies that may be changed only by shareholder vote) are
more restrictive than the provisions of Rule 2a-7. The Trust's Board has
adopted procedures under Rule 2a-7 pursuant to which the Board has
delegated to the Manager certain responsibilities, in accordance with that
Rule, of conforming the Trust's investments with the requirements of the
Rule and those procedures.
Exhibit A of the Additional Statement contains additional 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 risk presented by a security and may require
its sale. The rating restrictions described in this Prospectus do not
apply to banks in which the Trust's cash is kept. See "Ratings of
Securities" in "Investment Objective and Policies" in the Additional
Statement for further details.
Repurchase Agreements
The Trust may acquire securities subject to repurchase agreements.
The Trust's repurchase agreements must comply with the collateral
requirements of Rule 2a-7. If the vendor fails to pay the agreed-upon
repurchase price on the delivery date, the Trust's risks may include any
costs of disposing of such collateral, and any loss resulting from any
delay in foreclosing on the collateral. There is no limit on the amount
of the Trust's net assets that may be subject to repurchase agreements
having a maturity of seven days or less. 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) would be invested in repurchase agreements not entitling
the holder to payment of principal within seven days. See "Repurchase
Agreements" in the Additional Statement for further details.
Loans of Portfolio Securities
To attempt to increase its income, the Trust may lend its portfolio
securities to qualified borrowers (other than in repurchase transactions)
if the loan is collateralized in accordance with applicable regulatory
requirements, and if, after any loan, the value of the securities loaned
does not exceed 25% of the value of the Trust's total assets. The Trust
will not enter into any securities lending agreements having a duration
of greater than one year. Any securities received as collateral for a
loan must mature in twelve months or less. The Trust presently does not
intend to engage in securities loan transactions in the coming year. See
"Loans of Portfolio Securities" in the Additional Statement for further
information.
Investment Restrictions
The Trust has certain investment restrictions which, together with
its investment objective, are fundamental policies changeable only by the
vote of a "majority" (as defined in the Investment Company Act) of the
Trust's outstanding voting securities. Under some of those restrictions,
the Trust cannot: (1) invest in any security other than those discussed
under "The Trust and Its Investment Policies," above; (2) enter into
repurchase agreements maturing in more than seven days or purchase
securities which are restricted as to resale or for which market
quotations are not readily available, if any such investment would cause
more than 10% of the Trust's assets to be invested in such securities; (3)
borrow money in excess of 10% of the value of its total assets, and then
only as a temporary measure for extraordinary or emergency purposes;
provided that the Trust will not make any investment at a time during
which such borrowing exceeds 5% of the value of its assets; no assets of
the Trust may be pledged, mortgaged or assigned to secure a debt; (4) make
loans, except through (i) the purchase of debt securities listed under
"The Trust and Its Investment Policies," (ii) the purchase of such debt
securities subject to repurchase agreements, or (iii) loans of securities
as described under "Loans of Portfolio Securities," above; or (5) invest
in any debt instrument having a maturity in excess of one year from the
date of the investment, or, in the case of a debt instrument subject to
a repurchase agreement or called for redemption, having a repurchase or
redemption date more than one year from the date of the investment. The
percentage restrictions above 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 the Additional Statement.
<PAGE>
APPENDIX
This Appendix is part of the Prospectuses of Centennial Money Market Trust
("Money Market Trust"), Centennial Tax Exempt Trust ("Tax Exempt Trust")
and Centennial Government Trust ("Government Trust"), each of which is
referred to in this Appendix individually as a "Trust" and collectively
are referred to as the "Trusts." Unless otherwise indicated, the
information in this Appendix applies to each Trust.
Management of the Trusts
The Board of Trustees of each Trust has overall responsibility for
the management of that Trust under the laws of Massachusetts governing the
responsibilities of trustees of business trusts. "Trustees and Officers"
in the Additional Statement identifies the Trustees and officers and
provides information about them. Subject to the authority of the Board,
the Trusts' investment manager, Centennial Asset Management Corporation
(the "Manager"), supervises the investment operations of each Trust and
the composition of its portfolio and furnishes the Trusts advice and
recommendations with respect to investments, investment policies and the
purchase and sale of securities, pursuant to a management agreement
(collectively, the "Agreements") with each Trust. The management fee is
payable monthly to the Manager under the terms of each Trust's Agreement
and is computed on the aggregate net assets of the respective Trust as of
the close of business each day. The annual rates applicable to Money
Market Trust and Government Trust are as follows: 0.50% of the first $250
million of net assets; 0.475% of the next $250 million of net assets;
0.45% of the next $250 million of net assets; 0.425% of the next $250
million of net assets; and 0.40% of net assets in excess of $1 billion.
See the Additional Statement for an explanation of the Manager's
reimbursement arrangement for the Trusts set forth in their Agreements and
the Manager's voluntary expense assumption for Money Market Trust. The
annual rates applicable to Tax Exempt Trust are as follows: 0.50% of the
first $250 million of net assets; 0.475% of the next $250 million of net
assets; 0.45% of the next $250 million of net assets; 0.425% of the next
$250 million of net assets; 0.40% of the next $250 million of net assets;
0.375% of the next $250 million of net assets; 0.35% of the next $500
million of net assets; and 0.325% of net assets in excess of $2 billion.
Furthermore, under Tax Exempt Trust's Agreement, when the value of Tax
Exempt Trust's net assets is less than $1.5 billion, the annual fee
payable to the Manager shall be reduced by $100,000 based on average net
assets computed daily and paid monthly at the annual rates, but in no
event shall the annual fee be less than $0. "Investment Management
Services" in the Additional Statement contains more information about the
Agreements, including a description of the exculpation provisions, expense
assumption arrangements and portfolio transactions.
The Manager, a wholly-owned subsidiary of Oppenheimer Management
Corporation ("OMC"), has operated as an investment adviser since 1978.
The Manager and its affiliates currently advise U.S. investment companies
with assets aggregating over $28 billion as of June 30, 1994, and having
more than 1.8 million shareholder accounts. OMC is wholly owned by
Oppenheimer Acquisition Corp., a holding company owned in part by senior
management of OMC and the Manager, and ultimately controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company which also advises pension plans and investment companies.
How to Buy Shares
Shares of each Trust may be purchased at their offering price, which
is net asset value per share, without sales charge. The net asset value
will remain fixed at $1.00 per share, except under extraordinary
circumstances (see "Determination of Net Asset Value Per Share" in the
Additional Statement for further details). There can be no guarantee that
any Trust will maintain a stable net asset value of $1.00 per share.
Centennial Asset Management Corporation, which also acts as the
distributor for each Trust (and in that capacity is referred to as the
"Distributor"), may in its sole discretion accept or reject any order for
purchase of a Trust's shares. Oppenheimer Funds Distributor, Inc.
("OFDI"), an affiliate of the Distributor, acts as the sub-distributor for
each Trust (the "Sub-Distributor").
The minimum initial investment is $500 ($2,500 if by Federal Funds
wire), except as otherwise described in this Prospectus. Subsequent
purchases must be in amounts of $25 or more, and may be made through
authorized dealers or brokers or by forwarding payment to the Distributor
at P.O. Box 5143, Denver, Colorado 80217, with the name(s) of all account
owners, the account number and the name of the Trust. The minimum initial
and subsequent purchase requirements are waived on purchases made by
reinvesting dividends from any of the "Eligible Funds" listed in "Exchange
Privilege" below or by reinvesting distributions from unit investment
trusts for which reinvestment arrangements have been made with the
Distributor. Under an Automatic Investment Plan or military allotment
plan, initial and subsequent investments must be at least $25. No share
certificates will be issued unless specifically requested in writing by
an investor or the dealer or broker.
Each Trust intends to be as fully invested as practicable to maximize
its yield. Therefore, dividends will accrue on newly-purchased shares
only after the Distributor accepts the purchase order at its address in
Denver, Colorado, on a day the New York Stock Exchange is open (a "regular
business day"), under one of the methods of purchasing shares described
below. The purchase will be made at the net asset value next determined
after the Distributor accepts the purchase order.
Each Trust's net asset value per share is determined twice each
regular business day, at 12:00 Noon and 4:00 P.M. (all references to times
in this Prospectus are to New York time) by dividing the net assets of the
Trust by the total number of its shares outstanding. Each Trust's Board
of Trustees has established procedures for valuing the Trust's assets,
using the amortized cost method as described in "Determination of Net
Asset Value Per Share" in the Additional Statement.
Purchases Through Automatic Purchase and Redemption Programs
Shares of each Trust are available under Automatic Purchase and
Redemption Programs ("Programs") of broker-dealers that have entered into
agreements with the Distributor for that purpose. Broker-dealers whose
clients participate in such Programs will invest the "free cash balances"
of such client's Program account in shares of the Trust selected as the
primary Trust by the client for the Program account. Such purchases will
be made by the broker-dealer under the procedures described in "Guaranteed
Payment," below. The Program may have minimum investment requirements
established by the broker-dealer. The description of the Program provided
by the broker-dealer should be consulted for details, and all questions
about investing in, exchanging or redeeming shares of a Trust through a
Program should be directed to the broker-dealer.
Direct Purchases
An investor may directly purchase shares of the Trusts through any
dealer which has a sales agreement with the Distributor or the Sub-
Distributor. There are two ways to make a direct initial investment:
either (1) complete a Centennial Funds New Account Application and mail
it with payment to the Distributor at P.O. Box 5143, Denver, Colorado
80217 (if no dealer is named in the Application, the Sub-Distributor will
act as the dealer), or (2) order the shares through your dealer or broker.
Purchases made by Application should have a check enclosed, or payment may
be made by one of the alternative means described below.
-- Payment by check. Orders for shares purchased by check in U.S.
dollars drawn on a U.S. bank will be effected on the regular business day
on which the check (and the purchase application, if the account is new)
is accepted by the Distributor. Dividends will begin to accrue on such
shares the next regular business day after the purchase order is accepted.
For other checks, the shares will not be purchased until the Distributor
is able to convert the purchase payment to Federal Funds, and dividends
will begin to accrue on such shares on the next regular business day.
-- Payment by Federal Funds Wire. Shares of each Trust may be
purchased by direct shareholders by Federal Funds wire. The minimum
investment by wire is $2,500. The investor must first call the
Distributor's Wire Department at 1-800-852-8457 to notify the Distributor
of the transmittal of the wire and to order the shares. The investor's
bank must wire the Federal Funds to Citibank, N.A., ABA No. 0210-0008-9,
for credit to Concentration Account No. 3737-5674 (Centennial Money Market
Trust or Centennial Tax Exempt Trust) or Concentration Account No. 3741-
9796 (Centennial Government Trust), for further credit to the following
account numbers for the respective Trust: (i) Centennial Money Market
Trust Custodian Account No. 099920, (ii) Centennial Government Trust
Custodian Account No. 099975, or (iii) Centennial Tax Exempt Trust
Custodian Account No. 099862.
The wire must state the investor's name. Shares will be purchased
on the regular business day on which, prior to 4:00 P.M., the Federal
Funds are received by Citibank, N.A. (the "Custodian") and the Distributor
has received and accepted the investor's notification of the wire order,
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 4:00 P.M. The investor must
also send the Distributor a completed Application when the purchase order
is placed to establish a new account.
Guaranteed Payment
Broker-dealers with sales agreements with the Distributor (including
broker-dealers who have made special arrangements with the Distributor for
purchases for Program accounts) may place purchase orders with the
Distributor for purchases of a Trust's shares prior to 12:00 Noon on a
regular business day, and the order will be effected at the net asset
value determined at 12:00 Noon that day if the broker-dealer guarantees
that payment for such shares in Federal Funds will be received by the
Trust's Custodian prior to 2:00 P.M. on the same day. Dividends on such
shares will begin to accrue on the purchase date. If an order is received
between 12:00 Noon and 4:00 P.M. on a regular business day with the
broker-dealer's guarantee that payment for such shares in Federal Funds
will be received by the Custodian prior to 4:00 P.M. the next regular
business day, the order will be effected at 4:00 P.M. 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 4:00 P.M. that day and dividends will begin to accrue on
such shares on the purchase date.
Automatic Investment Plans
Direct investors may purchase shares of a Trust automatically.
Automatic Investment Plans may be used to make regular monthly investments
($25 minimum) from the investor's account at a bank or other financial
institution. To establish an Automatic Investment Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Automatic Investment Plan payments are
subject to the redemption restrictions for recent purchases described in
"How to Redeem Shares." The amount of the Automatic Investment Plan
payment may be changed or the automatic investments terminated at any time
by writing to Shareholder Services, Inc. (the "Transfer Agent"). A
reasonable period (approximately 15 days) is required after receipt of
such instructions to implement them. The Trusts reserve the right to
amend, suspend, or discontinue offering Automatic Investment Plans at any
time without prior notice.
General
Dealers and brokers who process orders for a Trust's shares on behalf
of their customers may charge a fee for this service. That fee can be
avoided by purchasing shares directly from a Trust. The sale of shares
will be suspended during any period when the determination of net asset
value is suspended, and may be suspended by the Board of Trustees whenever
the Board judges it in the best interest of a Trust to do so.
Service Plan
Each Trust has adopted a Service Plan (the "Plan") under Rule 12b-1
of the Investment Company Act pursuant to which the Trust will reimburse
the Distributor for all or a portion of its costs incurred in connection
with the personal service and maintenance of accounts that hold Trust
shares. The Distributor will use all the fees received from the Trust to
compensate dealers, brokers, banks, or other institutions ("Recipients")
each quarter for providing personal service and maintenance of accounts
that hold Trust shares. The services to be provided by Recipients under
the Plan include, but shall not be limited to, the following: answering
routine inquiries from the Recipient's customers concerning the Trust,
providing such customers with information on their investment in Trust
shares, assisting in the establishment and maintenance of accounts or sub-
accounts in the Trust, making the Trust's investment plans and dividend
payment options available, and providing such other information and
customer liaison services and the maintenance of accounts as the
Distributor or the Trust may reasonably request. Plan payments by the
Trust to the Distributor will be made quarterly in the amount of the
lesser of: (i) 0.05% (0.20% annually) of the net asset value of the Trust,
computed as of the close of each business day or (ii) the Distributor's
actual distribution expenses for that quarter of the type approved by the
Board. Each Trust may make monthly payments to the Distributor (and the
Distributor to Recipients) in any month where Trust assets held by a
Recipient for itself or on behalf of its customers in that month exceed
$200 million. Any unreimbursed expenses incurred for any quarter by the
Distributor may not be recovered in later periods. The Plan has the
effect of increasing annual expenses of the 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 Trust), make payments to Recipients for distribution,
administrative and accounting services performed by Recipients. For
further details, see "Service Plan" in the Additional Statement.
How to Redeem Shares
Program Participants
A Program participant may redeem shares in the Program by writing
checks as described below, or by contacting the dealer or broker. A
Program participant may also arrange for "Expedited Redemptions," as
described below, only through the dealer or broker.
Shares of the Trusts Owned Directly
Shares of the Trusts owned by a shareholder directly (not through a
Program) (a "direct shareholder"), may be redeemed in the following ways:
-- Regular Redemption Procedure. To redeem some or all shares in an
account (whether or not represented by certificates) under the Trust's
regular redemption procedures, a direct shareholder must send the
following to the transfer agent for the Trust, Shareholder Services, Inc.
(the "Transfer Agent"), P.O. Box 5143, Denver, Colorado 80217 [send
courier or express mail deliveries to 10200 E. Girard Avenue, Building D,
Denver, Colorado 80231]: (1) a written request for redemption signed by
all registered owners exactly as the shares are registered, including
fiduciary titles, if any, and specifying the account number and the dollar
amount or number of shares to be redeemed; (2) a guarantee of the
signatures of all registered owners on the redemption request or on the
endorsement on the share certificate or accompanying stock power, by a
U.S. bank, trust company, credit union or savings association, or a
foreign bank having a U.S. correspondent bank, or by a U.S. registered
dealer and 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, or guardians, 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 redemption or transfer,
shareholders having questions about these requirements should contact the
Transfer Agent in writing or by calling 1-800-525-9310 before submitting
a request. From time to time the Transfer Agent in its discretion may
waive any or certain of the foregoing requirements in particular cases.
Redemption or transfer requests will not be honored until the Transfer
Agent receives all required documents in proper form.
-- Expedited Redemption Procedure. In addition to the regular
redemption procedure set forth above, direct shareholders whose shares are
not represented by certificates may arrange to have redemption proceeds
of $2,500 or more wired in Federal Funds to a designated commercial bank
if the bank is a member of the Federal Reserve wire system. To place a
wire redemption request, call the Transfer Agent at 1-800-852-8457. The
account number of the designated financial institution and the bank ABA
number must be supplied to the Transfer Agent on the Application or dealer
settlement instructions establishing the account or may be added to
existing accounts or changed only by signature-guaranteed instructions to
the Transfer Agent from all shareholders of record. Such redemption
requests may be made by telephone, wire or written instructions to the
Transfer Agent. The wire for the redemption proceeds of shares redeemed
prior to 12:00 noon normally will be transmitted by the Transfer Agent to
the shareholder's designated bank account on the day the shares are
redeemed (or, if that day is not a bank business day, on the next bank
business day). Shares redeemed prior to 12:00 noon do not earn dividends
on the redemption date. The wire for the redemption proceeds of shares
redeemed between 12:00 noon and 4:00 P.M. 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 4:00 P.M. earn dividends on the redemption date. See
"Purchase, Redemption and Pricing of Shares" in the Additional Statement
for further details.
-- Check Writing. Upon request, the Transfer Agent will provide any
direct shareholder of the Trusts or Program participant whose shares are
not represented by certificates with forms of drafts ("checks") payable
through a bank selected by the Trust (the "Bank"). Checks may be made
payable to the order of anyone in any amount not less than $250, and will
be subject to the Bank's rules and regulations governing checks. Program
participants' checks will be payable from the primary account designated
by the Program participant. The Transfer Agent will arrange for checks
written by direct shareholders to be honored by the Bank after obtaining
a specimen signature card from the shareholder(s). Program participants
should arrange for check-writing through their brokers or dealers. If a
check is presented for an amount greater than the account value, it will
not be honored. Shareholders of joint accounts may elect to have checks
honored with a single signature. Checks issued for one Trust account must
not be used if the shareholder's account has been transferred to a new
account or if the account number or registration has changed. Shares
purchased by check or Automatic Investment Plan payments within the
prior 15 days may not be redeemed by Check Writing. A check that would
require redemption of some or all of the shares so purchased is subject
to non-payment. The Bank will present checks to the Trust to redeem
shares to cover the amount of the check. Checks may not be presented for
cash payment at the offices of the Bank or the Trust's Custodian. This
limitation does not affect the use of checks for the payment of bills or
to obtain cash at other banks. The Trust reserves the right to amend,
suspend, or discontinue check writing privileges at any time without prior
notice.
-- Telephone Redemptions. Direct shareholders of the Trusts may
redeem their shares by telephone by calling the Transfer Agent at 1-800-
852-8457. This procedure for telephone redemptions is not available to
Program participants. Proceeds of telephone redemptions will be paid by
check payable to the shareholder(s) of record and sent to the address of
record for the account. Telephone redemptions are not available within
30 days of a change of the address of record. Up to $50,000 may be
redeemed by telephone, once in every 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 15 days) shares
or for shares represented by certificates. Telephone redemption
privileges apply automatically to each shareholder and the dealer
representative of record unless the Transfer Agent receives cancellation
instructions from a shareholder of record. If an account has multiple
owners, the Transfer Agent may rely on the instructions of any one owner.
Retirement Plans Holding Shares of Government Trust and Money Market Trust
Requests for distributions from OppenheimerFunds-sponsored Individual
Retirement Accounts ("IRAs"), 403(b)(7) custodial plans, or pension or
profit-sharing plans of direct shareholders for which the Manager or its
affiliates act as sponsors should be addressed to "Bank of Boston c/o
Shareholder Services, Inc." at the above address, and must: (i) state the
reason for distribution; (ii) state the owner's awareness of tax penalties
if the distribution is premature; and (iii) conform to the requirements
of the plan and the Trust's requirements for regular redemptions discussed
above. Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans may not
directly request redemption of their accounts. The employer or plan
administrator must sign the request. Distributions from such plans are
subject to additional requirements under the Internal Revenue Code and
certain documents (available from the Transfer Agent) must be completed
before the distribution may be made. Distributions from retirement plans
are subject to withholding requirements under the Internal Revenue Code
of 1986, as amended, and IRS Form W-4P (available from the Transfer Agent)
must be submitted to the Transfer Agent with the distribution request, or
the distribution may be delayed. Unless the shareholder has provided the
Transfer Agent with a certified tax identification number, the Internal
Revenue Code requires that tax be withheld from any distribution even if
the shareholder elects not to have tax withheld. The Trustee, the Trusts,
the Manager, the Distributor and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for any
penalties assessed.
Automatic Withdrawal Plans
Direct shareholders of the Trusts can authorize the Transfer Agent
to redeem shares (minimum $50) automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Withdrawal Plan. Shares
will be redeemed as of 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 cease offering such Plan at any time without prior
notice. Required minimum distributions from OppenheimerFunds-sponsored
retirement plans may not be arranged on this basis. For further details,
see the Automatic Withdrawal Plan provisions included as Exhibit B to the
Additional Statement.
General Information on Redemptions
The redemption price will be the net asset value per share of the
Trust next determined after the receipt by the Transfer Agent of a request
in proper form. Under certain unusual circumstances, the Board of
Trustees of Tax Exempt Trust may involuntarily redeem small accounts
(valued at less than $500). Should the Board elect to exercise this
right, it may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in question
(not less than 30 days), or may set requirements for permission to allow
the shareholder to increase the investment so that the shares would not
be involuntarily redeemed. The Board of Trustees of Tax Exempt Trust may
also involuntarily redeem shares in amounts sufficient to reimburse the
Trust or the Distributor for any loss due to cancellation of a share
purchase order. Under the Internal Revenue Code, the Trusts may be
required to impose "backup" withholding of Federal income tax at the rate
of 31% from any taxable dividends and distributions the Trust may make if
the shareholder has not furnished the Trust with a certified taxpayer
identification number or has not complied with provisions of the Internal
Revenue Code relating to reporting dividends.
Payment for redeemed shares is made ordinarily in cash and forwarded
within seven days of the Transfer Agent's receipt of redemption
instructions in proper form, except under unusual circumstances as
determined by the Securities and Exchange Commission. The Transfer Agent
may delay forwarding a redemption check for recently-purchased shares only
until the purchase check has cleared, which may take up to 15 or more days
from the purchase date. Such delay may be avoided if the shareholder
arranges telephone or written assurance satisfactory to the Transfer Agent
from the bank on which the purchase payment was drawn, or by purchasing
shares by Federal Funds wire, as described above. The Trust makes no
charge for redemption. Dealers or brokers may charge a fee for handling
redemption transactions, but such fee can be avoided by requesting the
redemption directly through the Transfer Agent. Under certain
circumstances, the proceeds of redemption of shares of a Trust acquired
by exchange of shares of "Eligible Funds" (described below) purchased
subject to a contingent deferred sales charge ("CDSC") may be subject to
the CDSC (see "Exchange Privilege" below).
Exchanges of Shares and Retirement Plans
Exchange Privilege
Shares of each of the Trusts held under Programs may be exchanged for
shares of Centennial Money Market Trust, Centennial Government Trust,
Centennial Tax Exempt Trust, Centennial California Tax Exempt Trust and
Centennial New York Tax Exempt Trust if available for sale in the
shareholder's state of residence only by instructions of the broker.
Shares of the Trusts may, under certain conditions, be exchanged by direct
shareholders for Class A shares of the following funds, all collectively
referred to as "Eligible Funds": (i) Oppenheimer Target Fund, Oppenheimer
Champion High Yield Fund, Oppenheimer Asset Allocation Fund, Oppenheimer
Discovery Fund, Oppenheimer U.S. Government Trust, Oppenheimer Global
Environment Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer
Global Emerging Growth Fund, Oppenheimer Limited-Term Government Fund,
Oppenheimer Intermediate Tax-Exempt Bond Fund, Oppenheimer Insured Tax-
Exempt Bond Fund, Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer
Time Fund, Oppenheimer Growth Fund, Oppenheimer Equity Income Fund,
Oppenheimer Main Street California Tax-Exempt Fund, Oppenheimer Main
Street Income & Growth Fund, Oppenheimer Gold & Special Minerals Fund,
Oppenheimer Investment Grade Bond Fund, Oppenheimer Value Stock Fund,
Oppenheimer California Tax-Exempt Fund, Oppenheimer Pennsylvania Tax-
Exempt Fund, Oppenheimer Florida Tax-Exempt Fund, Oppenheimer New Jersey
Tax-Exempt Fund, Oppenheimer New York Tax-Exempt Fund, Oppenheimer High
Yield Fund, Oppenheimer Total Return Fund, Inc., Oppenheimer Mortgage
Income Fund, Oppenheimer Tax-Free Bond Fund, Oppenheimer Strategic Income
Fund, Oppenheimer Strategic Income & Growth Fund, Oppenheimer Strategic
Short-Term Income Fund and Oppenheimer Strategic Investment Grade Bond
Fund; and (ii) the following "Money Market Funds": Centennial Money Market
Trust, Centennial Government Trust, Centennial America Fund, L.P.,
Centennial California Tax Exempt Trust, Centennial New York Tax Exempt
Trust and Centennial Tax Exempt Trust (collectively, the "Centennial
Trusts"), Oppenheimer Money Market Fund, Inc., Oppenheimer Cash Reserves
and Daily Cash Accumulation Fund, Inc. There is an initial sales charge
on the purchase of Class A shares of each Eligible Fund except the Money
Market Funds (under certain circumstances described below, redemption
proceeds of Money Market Fund shares may be subject to a CDSC).
Shares of the Trusts and of the other Eligible Funds may be exchanged
at net asset value, if all of the following conditions are met: (1) shares
of the fund selected for exchange are available for sale in the
shareholder's state of residence; (2) the respective prospectuses of the
funds whose shares are to be exchanged and acquired offer the Exchange
Privilege to the investor; (3) newly-purchased shares (by initial or
subsequent investment) are held in an account for at least 7 days prior
to the exchange; and (4) the aggregate net asset value of the shares
surrendered for exchange into a new account is at least equal to the
minimum investment requirements of the fund whose shares are to be
acquired.
In addition to the conditions stated above, shares of Eligible Funds
may be exchanged for shares of any Money Market Fund; shares of any Money
Market Fund (including the Trusts) purchased without a sales charge may
be exchanged for shares of Eligible Funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to purchase
shares of Eligible Funds subject to a CDSC); and shares of a Trust
acquired by reinvestment of dividends and distributions from any Eligible
Fund, except Oppenheimer Cash Reserves, or from any unit investment trust
for which reinvestment arrangements have been made with the Distributor
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 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, and will do so on 60
days' notice if such notice is required by regulations adopted under the
Investment Company Act. The Trusts reserve the right to reject requests
submitted in bulk on behalf of 10 or more accounts. Exchange requests
must be received by the Transfer Agent by 4:00 P.M. on a regular business
day to be effected that day. The number of shares exchanged may be less
than the number requested if the number requested would include shares
subject to a restriction cited above or shares covered by a certificate
that is not tendered with such request. Only the shares available for
exchange without restriction will be exchanged.
-- Telephone Exchanges. Direct shareholders may place a telephone
exchange request by calling the Transfer Agent at 1-800-852-8457.
Telephone exchange calls may be recorded by the Transfer Agent. Telephone
exchanges are subject to the rules described above. By exchanging shares
by telephone, the shareholder is acknowledging receipt of a prospectus of
the fund to which the exchange is made and that for full or partial
exchanges, any special account features such as Automatic Investment
Plans, Automatic Withdrawal Plans and retirement plan contributions will
be switched to the new account unless the Transfer Agent is otherwise
instructed. Telephone exchange privileges automatically apply to each
direct shareholder of record and the dealer representative of record
unless and until the Transfer Agent receives written instructions from the
shareholder(s) of record cancelling such privileges. If an account has
multiple owners, the Transfer Agent may rely on the instructions of any
one owner. The Transfer Agent has adopted reasonable procedures to
confirm that telephone instructions are genuine, by requiring callers to
provide tax identification number(s) and other account data and by
recording calls and confirming such transactions in writing. If the
Transfer Agent does not use such procedures, it may be liable for losses
due to unauthorized transactions, but otherwise will not be liable for
losses or expenses arising out of telephone instructions reasonably
believed to be genuine. The Transfer Agent reserves the right to require
shareholders to confirm, in writing, telephone exchange privileges for an
account. Shares acquired by telephone exchange must be registered exactly
as the account from which the exchange was made. Certificated shares are
not eligible for telephone exchange. If all telephone exchange lines are
busy (which might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request telephone
exchanges and would have to submit written exchange requests.
-- General Information on Exchanges. Shares to be exchanged are
redeemed on the day the Transfer Agent receives an exchange request in
proper form (the "Redemption Date"), as of 4:00 P.M. Normally, shares of
the fund to be acquired are purchased on the Redemption Date, but such
purchases may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer of the
redemption proceeds. The Trust 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. If a sales charge is
assessed on all shares acquired by exchange, there is no service charge.
Otherwise, a $5 service charge will be deducted from the account into
which the exchange is made to defray administrative expenses. Dealers and
brokers who process exchange orders on behalf of their customers may
charge for their services. Those charges may be avoided 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.
Dividends, Distributions and Taxes
This discussion relates solely to Federal tax laws and is not
exhaustive; a qualified tax adviser should be consulted. Dividends and
distributions may be subject to Federal, state and local taxation.
Information about the possible applicability of the Alternative Minimum
Tax to Tax Exempt Trust's dividends and distributions is contained in
"Investment Objective and Policies - Private Activity Municipal
Securities" in the Additional Statement. The Additional Statement
contains 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 in "How
to Buy Shares" above. All dividends and distributions for the accounts
of Program participants are automatically reinvested in additional shares
of the Trust selected. Dividends accumulated since the prior payment will
be reinvested in full and fractional shares of the respective Trust at net
asset value on the third Thursday of each calendar month. If a
shareholder redeems all shares at any time during a month, the redemption
proceeds include all dividends accrued up to the redemption date for
shares redeemed prior to 12:00 noon, and include all dividends accrued
through the redemption date for shares redeemed between 12:00 noon and
4:00 P.M. Such investors may receive cash payments by asking the broker
to redeem shares.
Participants in an A.G. Edwards & Sons, Inc. Cash Convenience Account
Program (other than those whose Account is an Individual Retirement
Account) holding shares of Tax Exempt Trust or Government Trust will
receive account statements five times a year, at the end of March, May,
August, October and December, if the only activity in their account during
that period is the automatic reinvestment of dividends. Dividends and
distributions payable to direct shareholders of the Trusts will also be
automatically reinvested in shares of the respective Trust at net asset
value, on the third Thursday of each calendar month, unless the
shareholder asks the Transfer Agent in writing to pay dividends and
distributions in cash or to reinvest them in another Eligible Fund, as
described in "Dividend Reinvestment in Another Fund" in the Additional
Statement. That notice must be received prior to the record date for a
dividend to be effective as to that dividend. Dividends, distributions
and the proceeds of redemptions of Trust shares represented by checks
returned to the Transfer Agent by the Postal Service as undeliverable will
be reinvested in shares of the respective Trust, as promptly as possible
after the return of such check to the Transfer Agent to enable the
investor to earn a return on otherwise idle funds.
Under the terms of a Program, a broker-dealer may pay out the value
of some or all of a Program participant's Trust shares prior to redemption
of such shares by the Trust. In such cases, the shareholder will be
entitled to dividends on such shares only up to and including the date of
such payment. Dividends on such shares accruing between the date of
payment and the date such shares are redeemed by the Trusts will be paid
to the broker-dealer. It is anticipated that such payments will occur
only to satisfy debit balances arising in a shareholder's account under
a Program.
A Trust's net investment income for dividend purposes consists of all
interest accrued on portfolio assets, less all expenses of the Trust for
such period. Distributions from net realized gains on securities, if any,
will be paid at least once each year, and may be made more frequently in
compliance with the Internal Revenue Code and the Investment Company Act.
Long-term capital gains, if any, will be identified separately when tax
information is distributed. No Trust will make any distributions from net
realized securities gains unless capital loss carry forwards, if any, have
been used or have expired. Receipt of tax-exempt income must be reported
on the taxpayer's Federal income tax return. To effect its policy of
maintaining a net asset value of $1.00 per share, each Trust, under
certain circumstances, may withhold dividends or make distributions from
capital or capital gains. The Additional Statement describes how
dividends and distributions received by direct shareholders of the Trusts
may be reinvested in shares of any Eligible Fund at net asset value.
Tax Status of Money Market Trust's and Government Trust's Dividends and
Distributions
Dividends paid by these Trusts derived from net investment income or
net short-term capital gains are taxable to shareholders as ordinary
income, whether received in cash or reinvested. If either Trust has net
realized long-term capital gains in a fiscal year, it may pay an annual
"long-term capital gains distribution," which will be so identified when
paid and when tax information is distributed. Long-term capital gains are
taxable to shareholders as long-term capital gains, whether received in
cash or reinvested, regardless of how long Fund shares have been held.
Although income from securities issued by the U.S. Government may be
exempt from income taxation by various states, such exemptions may not
apply when the income is received in the form of a dividend from either
of these Trusts. The Government Trust will advise shareholders of the
percentage of its income earned on federal obligations.
Tax Status of Tax Exempt Trust's Dividends and Distributions
This Trust intends to qualify under the Internal Revenue Code during
each fiscal year to pay "exempt-interest dividends" to its shareholders
and did so qualify during its last fiscal year. Exempt-interest dividends
which are derived from net investment income earned by the Trust on
Municipal Securities will be excludable from gross income of shareholders
for Federal income tax purposes. Net investment income includes the
allocation of amounts of income from the Municipal Securities in the
portfolio of the Trust which is excludable from gross income for Federal
individual income tax purposes, less expenses. Expenses are accrued
daily. This allocation will be made by the use of one designated
percentage applied uniformly to all income dividends made during the
calendar year. Such designation will normally be made following the end
of each fiscal year as to income dividends paid in the prior year. The
percentage of income designated as tax-exempt may substantially differ
from the percentage of the Trust's income that was tax-exempt for a given
period. Although from time to time a portion of the exempt-interest
dividends paid by the Trust may be an item of tax preference for
shareholders subject to the alternative minimum tax, all of the dividends
(excluding distributions) paid by the Trust during the calendar year ended
December 31, 1993 were exempt from Federal income taxes. The net amount
of any income on Municipal Securities subject to the alternative minimum
tax will be identified when tax information is distributed by the Trust.
The Trust will report annually to shareholders the percentage of interest
income it received during the preceding year on Municipal Securities.
Receipt of tax-exempt income must be reported on the taxpayer's Federal
income tax return. Shareholders receiving Social Security benefits should
be aware that exempt-interest dividends are a factor in determining
whether such benefits are subject to Federal income tax.
A Trust shareholder treats a dividend as a receipt of ordinary income
(whether paid in cash or reinvested in additional shares) if derived from
net interest income earned by the Trust from one or more of: (i) certain
taxable temporary investments (such as certificates of deposit, commercial
paper, obligations of the U.S. government, its agencies or
instrumentalities, and repurchase agreements), (ii) income from securities
loans, or (iii) an excess of net short-term capital gains over net long-
term capital losses. Additionally, all or a portion of the Trust's
exempt-interest dividends may be a component of the "adjusted current
earnings" preference item under the Federal corporate alternative minimum
tax.
Under the Internal Revenue Code, interest on loans to purchase shares
of the Trust may not be deducted for Federal tax purposes. In addition,
under rules used by the Internal Revenue Service for determining when
borrowed funds are deemed used for the purpose of purchasing or carrying
particular assets, the purchase of shares of the Trust may be considered
to have been made with borrowed funds even though the borrowed funds are
not directly traceable to the purchase of shares. Furthermore, under
Section 147(a) of the Internal Revenue Code, persons who are "substantial
users" (or persons related thereto) of facilities financed by industrial
development bonds or Private Activity Municipal Securities should refer
to "Private Activity Municipal Securities" in the Additional Statement of
Tax Exempt Trust and should consult their own tax advisers before
purchasing shares. No investigation as to the users of the facilities
financed by such bonds has been made by the 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 tax purposes as an
ordinary corporation and receive no tax deduction for payments made to
shareholders. Tax Exempt Trust would then be unable to pay "exempt-
interest dividends" as discussed before. Dividends paid by any Trust will
not be eligible for the dividends-received deduction for corporations.
For information as to "backup" withholding on taxable dividends, see "How
to Redeem Shares," above.
Additional Information
Description of Shares and of the Trusts
Each share of each Trust represents an interest in that Trust equal
to the interest of each other share of the Trust and entitles the holder
to one vote per share (and a fractional vote for a fractional share) on
matters submitted to a shareholder vote. The Trustees may divide or
combine the shares into a greater or lesser number of shares without
thereby changing the proportionate beneficial interest in the Trust.
Shares do not have cumulative voting rights or conversion, preemptive or
subscription rights. Shares of each Trust have equal liquidation rights
as to the assets of that Trust. Each Trust's Board of Trustees is
empowered to issue additional "series" of shares of that Trust, which may
have separate assets and liabilities.
The Trusts do not anticipate holding annual meetings. Under certain
circumstances, shareholders of each Trust have the right to remove a
Trustee. Although the Declaration of Trust of each Trust states that when
issued, shares are fully-paid and nonassessable, shareholders may be held
personally liable as "partners" for the Trust's obligations. However, the
risk of a shareholder incurring any financial loss is limited to the
relatively remote circumstances in which the Trust is unable to meet its
obligations. See "Additional Information" in the Additional Statement for
details.
The Custodian and the Transfer Agent
The Custodian of the assets of the Trusts is Citibank, N.A. The
Manager and its affiliates presently have banking relationships with the
Custodian. See "Additional Information" in the Additional Statement for
further information. Each Trust's cash balances in excess of $100,000
held by the Custodian are not protected by Federal deposit insurance.
Such uninsured balances may at times be substantial. The foregoing rating
restrictions under Rule 2a-7 described under "The Trust and Its Investment
Policies" do not apply to banks in which a Trust's cash is kept.
Shareholder Services, Inc., a subsidiary of OMC, acts as Transfer
Agent and shareholder servicing agent for the Trusts and the other funds
advised by the Manager, on an at-cost basis. The fees to the Transfer
Agent do not include payments for any services of the type paid, or to be
paid, by the Trusts to the Distributor and to Recipients under the Service
Plan. Shareholders should direct any inquiries regarding the Trusts to
the Transfer Agent at the address or toll-free number on the back cover.
Program participants should direct any inquiries regarding the Trust to
their broker.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in
this Prospectus, and if given or made such information and representations
must not be relied upon as having been authorized by the respective Trust,
the Manager, the Distributor or any affiliate thereof. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy
any of the securities offered hereby in any state to any person to whom
it is unlawful to make such offer in such state.
Investment Adviser and Distributor
Centennial Asset Management Corporation
3410 South Galena Street
Denver, Colorado 80231
Transfer Agent and Shareholder Servicing Agent
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217-5143
1-800-525-9310
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson & Adams, P.C.
1600 Broadway - Suite 1850
Denver, Colorado 80202
Centennial Government Trust
Prospectus
Effective November 1, 1994
Centennial Government Trust
Prospectus
Effective November 1, 1994
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
CENTENNIAL GOVERNMENT TRUST
3410 South Galena Street, Denver, Colorado 80231
1-800-525-9310
This Statement of Additional Information (the "Additional Statement")
is not a Prospectus. This Additional Statement should be read together
with the Prospectus dated November 1, 1994 (the "Prospectus") of
Centennial Government Trust (the "Trust"), which may be obtained upon
written request to Shareholder Services, Inc. (the "Transfer Agent"), P.O.
Box 5143, Denver, Colorado 80217 or by calling the Transfer Agent at the
toll-free number shown above.
TABLE OF CONTENTS
Page
Investment Objective and Policies 2
Investment Restrictions 4
Appendix
Trustees and Officers A-1
Investment Management Services A-4
Service Plan A-6
Purchase, Redemption and Pricing of Shares A-8
Yield Information A-10
Additional Information A-11
Exhibit A: Description of Securities Ratings A-13
Exhibit B: Automatic Withdrawal Plan Provisions A-17
Independent Auditors' Report A-18
Financial Statements A-19
This Additional Statement is effective November 1, 1994.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objectives 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 Additional Statement are
defined in the Prospectus.
The Trust will not make investments with the objective of seeking
capital growth. However, the value of the securities held by the Trust may
be affected by changes in general interest rates. Because the current
value of debt securities varies inversely with changes in prevailing
interest rates, if interest rates increase after a security is purchased,
that security would normally decline in value. Conversely, should
interest rates decrease after a security is purchased, its value would
rise. However, those fluctuations in value will not generally result in
realized gains or losses to the Trust since the Trust does not usually
intend to dispose of securities prior to their maturity. A debt security
held to maturity is redeemable by its issuer at full principal value plus
accrued interest. To a limited degree, the Trust may engage in short-term
trading to attempt to take advantage of short-term market variations, or
may dispose of a portfolio security prior to its maturity if, on the basis
of a revised credit evaluation of the issuer or other considerations, the
Trust believes such disposition advisable or needs to generate cash to
satisfy redemptions. In such cases, the Trust may realize a capital gain
or loss.
Repurchase Agreements. In a repurchase transaction, the Trust acquires
a security from, and simultaneously resells it to, an approved vendor (a
U.S. commercial bank or the U.S. branch of a foreign bank having total
domestic assets of at least $1 billion or a broker-dealer with a net
capital of at least $50 million and which has been designated a primary
dealer in government securities). The resale price exceeds the purchase
price by an amount that reflects an agreed-upon interest rate effective
for the period during which the repurchase agreement is in effect. The
majority of these transactions run from day to day, and delivery pursuant
to resale typically will occur within one to five days of the purchase.
Repurchase agreements are considered "loans" under the Investment Company
Act, collateralized by the underlying security. The Trust's repurchase
agreements require that at all times while the repurchase agreement is
in effect, the 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.
Loans of Portfolio Securities. The Trust may lend its portfolio
securities, subject to the restrictions stated in the Prospectus, to
attempt to increase the Trust's income to distribute to shareholders.
Under applicable regulatory requirements (which are subject to change),
the loan collateral must, on each business day, at least equal the value
of the loaned securities and must consist of cash, bank letters of credit
or U.S. Government Securities. To be acceptable as collateral, letters
of credit must obligate a bank to pay amounts demanded by the Trust if the
demand meets the terms of the letter. The Trust receives an amount equal
to the dividends or interest on loaned securities and also receives one
or more of (a) negotiated loan fees, (b) interest on securities used as
collateral, or (c) interest on short-term debt securities purchased with
such loan collateral; either type of interest may be shared with the
borrower. The Trust may also pay reasonable finder's, custodian and
administrative fees and will not lend its portfolio securities to any
officer, trustee, employee or affiliate of the Trust or the Manager. The
terms of the Trust's loans must meet applicable tests under the Internal
Revenue Code and permit the Trust to reacquire loaned securities on five
days' notice or in time to vote on any important matter.
Floating Rate/Variable Rate Obligations. The Trust may invest in
instruments with floating or variable interest rates. The interest rate
on a floating rate obligation is based on a stated prevailing market rate,
such as a bank's prime rate, the 91-day U.S. Treasury Bill rate, the rate
of return on commercial paper or bank certificates of deposit, or some
other standard, and is adjusted automatically each time such market rate
is adjusted. The interest rate on a variable rate obligation is also
based on a stated prevailing market rate but is adjusted automatically at
a specified interval of no more than one year. Generally, the changes in
the interest rate on such securities reduce the fluctuation in their
market value. As interest rates decrease or increase, the potential for
capital appreciation or depreciation is less than that for fixed-rate
obligations of the same maturity. Some variable rate or floating rate
obligations in which the Trust may invest have a demand feature entitling
the holder to demand payment at an amount approximately equal to amortized
cost or the principal amount thereof plus accrued interest at any time,
or at specified intervals not exceeding one year. These notes may or may
not be backed by bank letters of credit.
Variable rate demand notes may include master demand notes, which are
obligations that permit the Trust to invest fluctuating amounts, which may
change daily without penalty, pursuant to direct arrangements between the
Trust, as lender, and the borrower. The Manager, on behalf of the Trust,
will consider on an ongoing basis the creditworthiness of the issuers of
the floating and variable rate obligations in the Trust's portfolio.
Master Demand Notes. A master demand note is a corporate obligation that
permits the investment of fluctuating amounts by the Trust at varying
rates of interest pursuant to direct arrangements between the Trust, as
lender, and the corporate borrower that issues the note. These notes
permit daily changes in the amounts borrowed. The Trust has the right to
increase the amount under the note at any time up to the full amount
provided by the note agreement, or to decrease the amount, and the
borrower may repay up to the full amount of the note at any time without
penalty. Because variable amount master demand notes are direct lending
arrangements between the lender and the borrower, it is not generally
contemplated that such instruments will be traded. There is no secondary
market for these notes, although they are redeemable and thus immediately
repayable by the borrower at face value, plus accrued interest, at any
time. Accordingly, the Trust's right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand. In
evaluating the master demand arrangements, the Manager considers the
earning power, cash flow, and other liquidity ratios of the issuer.
Master demand notes are not typically rated by credit rating agencies.
If they are not rated, the Trust may invest in them only if, at the time
of an investment, they are Eligible Securities. The Manager will
continuously monitor the borrower's financial ability to meet all of its
obligations because the Trust's liquidity might be impaired if the
borrower were unable to pay principal and interest on demand.
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, Centennial Asset Management Corporation (the "Manager") will
promptly reassess whether the security continues to present "minimal
credit risks." If the Manager becomes aware that any Rating Organization
has downgraded its rating of a Second Tier Security or rated an unrated
security below its second highest rating category, the Trust's Board of
Trustees shall promptly reassess whether the security presents minimal
credit risks and whether it is in the best interests of the Trust to
dispose of it; but if the Trust disposes of the security within five days
of the Manager learning of the downgrade, the Manager will provide the
Board with subsequent notice of such downgrade. If a security is in
default, or ceases to be an Eligible Security, or is determined no longer
to present minimal credit risks, the Board must determine whether it would
be in the best interests of the Trust to dispose of the security. The
Rating Organizations currently designated as such by the Securities and
Exchange Commission ("SEC") are Standard & Poor's Corporation, Moody's
Investors Service, Inc., Fitch Investors Services, Inc., Duff and Phelps,
Inc., IBCA Limited and its affiliate, IBCA, Inc., and Thomson Bankwatch,
Inc. A description of the ratings categories of those Rating
Organizations is contained in Exhibit A.
INVESTMENT RESTRICTIONS
The Trust's significant investment restrictions are set forth in the
Prospectus. The following investment restrictions are also fundamental
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 shareholders 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; (3) purchase
securities on margin or make short sales of securities; (4) invest in or
hold securities of any issuer if those officers and Trustees of the Trust
or its adviser who beneficially own individually more than 0.5% of the
securities of such issuer together own more than 5% of the securities of
such issuer; (5) underwrite securities of other companies; or (6) invest
in securities of other investment companies, except as they may be
acquired as part of a merger, consolidation or acquisition of assets.
<PAGE>
APPENDIX
This Appendix is part of the Additional Statement of Centennial Money
Market Trust ("Money Market Trust"), Centennial Tax Exempt Trust ("Tax
Exempt Trust") and Centennial Government Trust ("Government Trust"), each
of which is referred to in this Appendix individually as a "Trust" and
collectively are referred to as the "Trusts." Unless otherwise indicated,
the information in this Appendix applies to each Trust.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trusts and their principal business
affiliations and occupations during the past five years are listed below.
All Trustees are Trustees of each of the Trusts. The Trustees are also
trustees, directors, or managing general partners of Centennial California
Tax Exempt Trust, Centennial New York Tax Exempt Trust, Daily Cash
Accumulation Fund, Inc., Oppenheimer Champion High Yield Fund, Centennial
America Fund, L.P., Oppenheimer Limited-Term Government Fund, Oppenheimer
Tax-Exempt Bond Fund, Oppenheimer Main Street Funds, Inc., Oppenheimer
Cash Reserves, Oppenheimer Equity Income Fund, Oppenheimer High Yield
Fund, Oppenheimer Integrity Funds, Oppenheimer Strategic Funds Trust,
Oppenheimer Strategic Income & Growth Fund, Oppenheimer Strategic Short-
Term Income Fund, Oppenheimer Strategic Investment Grade Bond Fund,
Oppenheimer Total Return Fund, Inc., Oppenheimer Variable Account Funds
and The New York Tax-Exempt Income Fund, Inc. (all of the foregoing funds
are collectively referred to as the "Denver OppenheimerFunds"). Mr. Fossel
is President and Mr. Swain is Chairman of the Denver OppenheimerFunds.
All of the officers except Mr. Carbuto, Ms. Wolf, Mr. Zimmer and Ms.
Warmack hold similar positions with each of the Denver OppenheimerFunds.
As of September 30, 1994, the Trustees and officers of each Trust in the
aggregate owned less than 1% of the outstanding shares of that Trust.
ROBERT G. AVIS, Trustee *
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment
adviser and trust company, respectively).
WILLIAM A. BAKER, Trustee
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
CHARLES CONRAD, JR., Trustee
1447 Vista del Cerro, Las Cruces, New Mexico 88005
Vice President of McDonnell Douglas Space Systems Co.; formerly
associated with National Aeronautics and Space Administration.
JON S. FOSSEL, President and Trustee *
Two World Trade Center, New York, New York 10048-0203
Chairman, Chief Executive Officer and a director of Oppenheimer
Management Corporation ("OMC"), the immediate parent of Centennial
Asset Management Corporation (the "Manager"); President and director
of Oppenheimer Acquisition Corp. ("OAC"), OMC's parent holding
company; President and a director of HarbourView Asset Management
Corporation, a subsidiary of OMC ("HarbourView"); a director of
Shareholder Services, Inc. ("SSI"), the Trust's Transfer Agent, and
Shareholder Financial Services, Inc. ("SFSI"), transfer agent
subsidiaries of OMC; formerly President of OMC.
RAYMOND J. KALINOWSKI, Trustee
44 Portland Drive, St. Louis, Missouri 63131
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
2552 E. Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte Haskins & Sells (an accounting
firm).
ROBERT M. KIRCHNER, Trustee
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
NED M. STEEL, Trustee
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; formerly Senior Vice
President and a director of the Van Gilder Insurance Corp. (insurance
brokers).
JAMES C. SWAIN, Chairman and Trustee *
3410 South Galena Street, Denver, Colorado 80231
President and a Director of the Manager; Vice Chairman of OMC;
formerly Chairman of the Board of SSI.
MICHAEL A. CARBUTO, Vice President and Portfolio Manager of Tax Exempt
Trust
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; an officer of other OppenheimerFunds.
DOROTHY WARMACK, Vice President and Portfolio Manager of Money Market
Trust and Government Trust
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager and OMC; an officer of other
OppenheimerFunds.
CAROL E. WOLF, Vice President and Portfolio Manager of Money Market Trust
and Government Trust
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager and OMC; an officer of other
OppenheimerFunds.
ARTHUR J. ZIMMER, Vice President and Portfolio Manager of Money Market
Trust and Government Trust
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager and OMC; an officer of other
OppenheimerFunds; formerly Vice President of Hanifen Imhoff
Management Company (mutual fund investment advisor).
ANDREW J. DONOHUE, Vice President
Two World Trade Center, New York, New York 10048-0203
Executive Vice President and General Counsel of OMC and Oppenheimer
Funds Distributor, Inc. ("OFDI"); an officer of other
OppenheimerFunds; formerly Senior Vice President and Associate
General Counsel of OMC and OFDI; Partner in Kraft & McManimon (a law
firm); an officer of First Investors Corporation (a broker-dealer)
and First Investors Management Company, Inc. (broker-dealer and
investment adviser); director and an officer of First Investors
Family of Funds and First Investors Life Insurance Company.
GEORGE C. BOWEN, Vice President, Secretary and Treasurer
3410 South Galena Street Denver, Colorado 80231
Senior Vice President, Treasurer, Assistant Secretary and a director
of the Manager; Vice President and Treasurer of OFDI and HarbourView;
Senior Vice President and Treasurer of OMC; Vice President, Treasurer
and Secretary of SSI and SFSI; an officer of other OppenheimerFunds.
ROBERT BISHOP, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of OMC/Mutual Fund Accounting; an officer
of other OppenheimerFunds; formerly a Fund Controller for OMC, prior
to which he was an Accountant for Yale & Seffinger, P.C., an
accounting firm, and previously an Accountant and Commissions
Supervisor for Stuart James Company, Inc., a broker-dealer.
SCOTT FARRAR, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of OMC/Mutual Fund Accounting; an officer
of other OppenheimerFunds; formerly a Fund Controller for OMC, prior
to which he was an International Mutual Fund Supervisor for Brown
Brothers, Harriman Co., a bank, and previously a Senior Fund
Accountant for State Street Bank & Trust Company, before which he was
a sales representative for Central Colorado Planning.
ROBERT G. ZACK, Assistant Secretary
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of OMC; Assistant
Secretary of SSI and SFSI; an officer of other OppenheimerFunds.
[FN]
____________________________
* A Trustee who is an "interested person" of the Trusts as defined in the
Investment Company Act.
Remuneration of Trustees and Officers. The officers of the Trusts
(including Messrs. Swain and Fossel) are affiliated with the Manager and
receive no salary or fee from the Trusts. The Trusts have an Audit and
Review Committee, composed of William A. Baker (Chairman), Charles Conrad,
Jr. and Robert M. Kirchner. This Committee meets regularly to review
audit procedures, financial statements and other financial and operational
matters of the Trusts. During the fiscal year ended June 30, 1994, the
remuneration (including expense reimbursements) paid by the Trusts to the
Trustees as a group for services as trustees and as members of one or more
committees totaled: Money Market Trust: $21,277; Tax Exempt Trust:
$15,726; and Government Trust: $10,387.
Major Shareholders. As of September 30, 1994, A.G. Edwards & Sons, Inc.
("A.G. Edwards"), 1 North Jefferson Avenue, St. Louis, MO 63103 was the
record owner of 2,822,454,504.740 shares of Money Market Trust,
981,569,185.100 shares of Tax Exempt Trust and 633,638,298.290 shares of
Government Trust (approximately 99.6%, 96.1% and 97.8% of outstanding
shares, respectively, of these Trusts). A.G. Edwards has advised the
Trusts that all such shares are held for the benefit of brokerage clients
and that no such client owned beneficially 5% or more of the outstanding
shares of any of the Trusts.
INVESTMENT MANAGEMENT SERVICES
The Manager is wholly-owned by OMC, which is a wholly-owned
subsidiary of OAC, a holding company controlled by Massachusetts Mutual
Life Insurance Company. The remaining stock of OAC is owned by: (i)
certain of OMC's directors and officers, some of whom may serve as
officers of the Trusts, and two of whom (Messrs. James C. Swain and Jon
S. Fossel) serve as a Trustee of the Trusts and (ii) A.G. Edwards, which
owns less than 5% of its equity.
The management fee is payable monthly to the Manager under the terms
of the investment advisory agreements between the Manager and each Trust
(collectively, the "Agreements"), and is computed on the aggregate net
assets of the respective Trust as of the close of business each day. The
management fees paid to the Manager by the Trusts during their last three
fiscal periods were as follows: (a) $3,824,936, $7,254,206 and $9,435,959
paid for the fiscal years ended June 30, 1992, 1993 and 1994,
respectively, of Money Market Trust; (b) $4,164,955, $4,426,198 and
$4,761,673 paid for the fiscal years ended June 30, 1992, 1993 and 1994,
respectively, of Tax Exempt Trust; and (c) $2,804,557, $3,035,760 and
$3,182,956 paid for the fiscal years ended June 30, 1992, 1993 and 1994,
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, custodian and transfer agent expenses,
share issuance costs, certain printing costs (excluding the cost of
printing prospectuses for sales materials) and registration fees, and non-
recurring expenses, including litigation.
Under its Agreement with the Money Market Trust and the Government
Trust, the Manager has agreed to reimburse each Trust to the extent that
the Trust's total expenses (including the management fee but excluding
interest, taxes, brokerage commissions, and extraordinary expenses such
as litigation costs) exceed in any fiscal year the lesser of: (i) 1.5% of
average annual net assets of the Trust up to $30 million plus 1% of the
average annual net assets in excess of $30 million or; (ii) 25% of the
total annual investment income of the Trust.
Independently of the Money Market Trust's Agreement, the Manager has
voluntarily agreed to waive a portion of the management fee otherwise
payable to it by the Money Market Trust to the extent necessary to: (a)
permit the Money Market Trust to have a seven-day yield equal to that of
Daily Cash Accumulation Fund, Inc., and (b) to reduce, on an annual basis,
the management fee paid on the average net assets of the Trust in excess
of $1 billion from 0.40% to: 0.40% of average net assets in excess of $1
billion but less than $1.25 billion; 0.375% of average net assets in
excess of $1.25 billion but less than $1.50 billion; 0.35% of average net
assets in excess of $1.50 billion but less than $2 billion; and 0.325% of
average net assets in excess of $2 billion. This undertaking became
effective as of December 1, 1991, and may be modified or terminated by the
Manager at any time. For the fiscal years ended June 30, 1993 and 1994,
the Manager reimbursed Money Market Trust its expenses in the amounts of
$900,512 and $1,201,403, 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 stringent limits prescribed
by any state in which the Trust's shares are offered for sale. The
payment of the management fee at the end of any month will be reduced so
that at no time will there be any accrued but unpaid liabilities under any
of these expense assumptions. No reimbursement or assumption was
necessary by the Manager to Government Trust or Tax Exempt Trust during
their respective three most recent fiscal years. The Agreements permit
the Manager to act as investment adviser for any other person, firm or
corporation.
The Tax Exempt Trust Agreement provides that the Manager assumes no
responsibility under the Agreement other than that which is imposed by
law, and shall not be responsible for any action of the Board of Trustees
of the Trust in following or declining to follow any advice or
recommendations of the Manager. The Agreement provides that the Manager
shall not be liable for any error of judgment or mistake of law, or for
any loss suffered by the Trust in connection with matters to which the
Agreement relates, except a loss resulting by reason of the Manager's
willful misfeasance, bad faith or gross negligence in the performance of
its duties, or its reckless disregard of its obligations and duties under
the Agreement.
The Agreements of Money Market Trust and Government Trust provide
that the Manager shall not be liable for any loss sustained by reason of
the adoption of an investment policy or the purchase, sale or retention
of any security on its recommendation, whether or not such recommendation
shall have been based upon its own investigation and research or upon
investigation and research made by any other individual, firm or
corporation, if such recommendation shall have been made and such other
individual, firm or corporation shall have been selected with due care and
in good faith, provided that nothing in the Agreements shall be construed
to protect the Manager against any liability to such Trusts or their
shareholders by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under such Agreements.
Portfolio Transactions. Portfolio decisions are based upon the
recommendations and judgment of the Manager subject to the overall
authority of the Board of Trustees. As most purchases made by the Trust
are principal transactions at net prices, the Trust incurs little or no
brokerage costs. 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 may be directed to brokers furnishing execution
and research services. The research services provided by a particular
broker may be useful only to one or more of the advisory accounts of the
Manager and its affiliates, and investment research received for the
commissions of those other accounts may be useful both to the Trust and
one or more of such other accounts. Such research, which may be supplied
by a third party at the instance of a broker, includes information and
analyses on particular companies and industries as well as market or
economic trends and portfolio strategy, receipt of market quotations for
portfolio evaluations, information systems, computer hardware and similar
products and services. If a research service also assists the Manager in
a non-research capacity (such as bookkeeping or other administrative
functions), then only the percentage or component that provides assistance
to the Manager in the investment decision-making process may be paid for
in commission dollars.
The research services provided by brokers broaden the scope and
supplement the research activities of the Manager by making available
additional views for consideration and comparisons, and enabling 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. The Board of Trustees has permitted
the Manager to use concessions on fixed price offerings to obtain
research, in the same manner as is permitted for agency transactions.
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 votie of the Board of Trustees of the Trust,
including a majority of the "Independent Trustees" (those Trustees of the
Trust who are not "interested persons," as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the Plan or in any agreements relating to the Plan) cast in
person at a meeting called for the purpose of voting on the Plan; and (ii)
by the vote of the holders of a "majority" (as defined under the
Investment Company Act) of that Trust's outstanding voting securities.
In approving each Plan, the Board determined that it is likely each Plan
will benefit the shareholders of that Trust.
The Distributor has entered into Supplemental Distribution Assistance
Agreements ("Supplemental Agreements") under the Plan with selected
dealers distributing shares of Centennial Government Trust, Centennial
America Fund, L.P., Oppenheimer Cash Reserves, Centennial New York Tax
Exempt Trust and Centennial California Tax Exempt Trust. Quarterly
payments by the Distributor, which are not a Trust expense, for
distribution-related services will range from 0.10% to 0.30%, annually,
of the average net asset value of shares of these funds owned during the
quarter beneficially or of record by the dealer or its customers.
However, no payment shall be made to any dealer for any quarter during
which the average net asset value of shares of such funds owned during
that quarter by the dealer or its customers is less than $5 million.
Payments made pursuant to Supplemental Agreements are not a fund expense,
but are made by the Distributor out of its own resources or out of the
resources of the Manager which may include profits derived from the
advisory fee it receives from each such fund. No such supplemental
payments will be paid to any dealer which is an "affiliate" (as defined
in the Investment Company Act) of the Distributor.
Each Plan, unless terminated as described below, shall continue in
effect from year to year but only so long as such continuance is
specifically approved at least annually by each Trust's Board of Trustees,
including its Independent Trustees, by a vote cast in person at a meeting
called for that purpose. The Supplemental Agreements are subject to the
same renewal requirement. A Plan and the Supplemental Agreements may be
terminated at any time by the vote of a majority of the Trust's
Independent Trustees or by the vote of the holders of a "majority" (as
defined in the Investment Company Act) of the Trust's outstanding voting
securities. The Supplemental Agreements will automatically terminate in
the event of their "assignment" (as defined in the Investment Company
Act), and each may be terminated by the Distributor: (i) in the event
Government Trust amends its Plan, or (ii) if the net asset value of shares
of the funds covered by the Supplemental Agreements held by the dealer or
its customers is less than $5 million for two or more consecutive
quarters. A dealer may terminate a Supplemental Agreement at any time
upon giving 30 days' notice. Each Plan may not be amended to increase
materially the amount of payments to be made unless such amendment is
approved by the shareholders of that Trust. All material amendments must
be approved by the Independent Trustees.
Under each Plan, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Trust shares held by the
Recipient for itself and its customers did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Trust's Independent Trustees. The Board of Trustees has set the fee at
the maximum rate and set no minimum amount. The Plans permit the
Distributor and the Manager to make additional distribution payments to
Recipients from their own resources (including profits from advisory fees)
at no cost to a Trust. The Distributor and the Manager may, in their sole
discretion, increase or decrease the amount of distribution assistance
payments they make to Recipients from their own assets.
Each Recipient who is to receive distribution payments for any month
or quarter shall certify in writing that the aggregate payments to be
received from the applicable Trust during that month or quarter do not
exceed the Recipient's administrative and sales related costs in rendering
distribution assistance during the month or quarter, and will reimburse
the Trust for any excess.
For each Trust's fiscal year ended June 30, 1994, payments under its
Plan totalled $4,647,715, $2,104,473 and $1,328,950 for Money Market
Trust, Tax Exempt Trust and Government Trust, respectively, all of which
was paid by the Distributor to A.G. Edwards & Sons, Inc. (and, with
respect to Money Market Trust, $8,887 paid to A.G. Edwards Trust) as a
Recipient under the Plans, with the exception of (i) $92, $9,953 and
$22,331 paid by Money Market Trust, Tax Exempt Trust and Government Trust,
respectively, to other Recipients, and (ii) $7,282 paid by Tax Exempt
Trust to an affiliate of the Distributor, as a Recipient. Payments
received by the Distributor under the Plans will not be used to pay any
interest expense, carrying charge, or other financial costs, or allocation
of overhead by the Distributor. Any unreimbursed expenses incurred for
any fiscal quarter by the Distributor may not be recovered under that Plan
in subsequent fiscal quarters.
While the Plan is in effect, the Treasurer of each Trust shall
provide a report to the Board of Trustees in writing at least quarterly
on the amount of all payments made pursuant to the Plan, the identity of
each Recipient that received any such payment, and the purposes for which
the payments were made. The Plan further provides that while it is in
effect, the election and nomination of those Trustees of a Trust who are
not "interested persons" of the Trust is committed to the discretion of
the Independent Trustees. This does not prevent the involvement of others
in such selection and nomination if the final decision on any such
selection or nomination is approved by a majority of the Independent
Trustees.
The Glass-Steagall Act and other applicable laws and regulations,
among other things, generally prohibit Federally-chartered or supervised
banks from engaging in the business of underwriting, selling or
distributing securities as principals. Accordingly, the Distributor may
pay banks only for sales made on an agency basis or for the performance
of administrative and shareholder servicing functions. While the matter
is not free from doubt, the Manager believes that such laws do not
preclude a bank from performing the services required of a Recipient.
However, judicial or administrative decisions or interpretations of such
laws, as well as changes in either Federal or state statutes or
regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent certain banks from continuing
to perform all or a part of these services. If a bank were so prohibited,
shareholders of a Trust who were clients of such bank would be permitted
to remain as shareholders, and if a bank could no longer provide those
service functions, alternate means for continuing the servicing of such
shareholders would be sought. In such event, shareholders serviced by
such bank might no longer be able to avail themselves of any automatic
investment or other services then being provided by such bank. It is not
expected that shareholders would suffer any adverse financial consequences
as a result of any of those occurrences. The Board of Trustees will
consider appropriate modifications to each Trust's operations, including
discontinuance of payments under the Plan to such institutions, in the
event of any future change in such laws or regulations which may adversely
affect the ability of such institutions to provide these services. In
addition, certain banks and financial institutions may be required to
register as dealers under state law.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Determination of Net Asset Value Per Share. The net asset value of each
Trust's shares is determined twice each day as of 12:00 noon and 4:00
P.M., New York time, on each day the New York Stock Exchange (the
"Exchange") is open (a "regular business day"), by dividing that Trust's
net assets (the total value of the Trust's portfolio securities, cash and
other assets less all liabilities) by the total number of shares
outstanding. The Exchange's most recent annual holiday schedule states
that it will close New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The
Exchange may also close on other days. Dealers other than Exchange members
may conduct trading in Municipal Securities on certain days on which the
Exchange is closed (e.g., Good Friday), so that securities of the same
type held by Tax Exempt Trust may be traded, and its net asset value per
share may be affected significantly, on such days when shareholders may
not purchase or redeem shares.
The Trusts will seek to maintain a net asset value of $1.00 per share
for purchases and redemptions. There can be no assurance that each Trust
will do so. Each Trust operates under Rule 2a-7 under which a Trust may
use the amortized cost method of valuing their shares. The amortized cost
method values a security initially at its cost and thereafter assumes a
constant amortization of any premium or accretion of any discount,
regardless of the impact of fluctuating interest rates on the market value
of the security. This method does not take into account unrealized
capital gains or losses.
Each Trust's Board of Trustees has established procedures intended
to stabilize the Trust's net asset value at $1.00 per share. If a Trust's
net asset value per share were to deviate from $1.00 by more than 0.5%,
Rule 2a-7 requires the Board promptly to consider what action, if any,
should be taken. If the Trustees find that the extent of any such
deviation may result in material dilution or other unfair effects on
shareholders, the Board will take whatever steps it considers appropriate
to eliminate or reduce such dilution or unfair effects, including, without
limitation, selling portfolio securities prior to maturity, shortening the
average portfolio maturity, withholding or reducing dividends, reducing
the outstanding number of Trust shares without monetary consideration, or
calculating net asset value per share by using available market
quotations.
As long as the Trusts use Rule 2a-7, each Trust must abide by certain
conditions described in the Prospectus. Some of those conditions which
relate to portfolio management are that each Trust must: (i) maintain a
dollar-weighted average portfolio maturity not in excess of 90 days; (ii)
limit its investments, including repurchase agreements, to those
instruments which are denominated in U.S. dollars and which are rated in
one of the two highest short-term rating categories by at least two
"nationally-recognized statistical rating organizations" ("Rating
Organizations") as defined in Rule 2a-7, or by one Rating Organization if
only one Rating Organization has rated the security; an instrument that
is not rated must be of comparable quality as determined by the Board; and
(iii) not purchase any instruments with a remaining maturity of more than
397 days. Under Rule 2a-7, the maturity of an instrument is generally
considered to be its stated maturity (or in the case of an instrument
called for redemption, the date on which the redemption payment must be
made), with special exceptions for certain variable rate demand and
floating rate instruments. Repurchase agreements and securities loan
agreements are, in general, treated as having a maturity equal to the
period scheduled until repurchase or return, or if subject to demand,
equal to the notice period.
While the amortized cost method provides certainty in valuation,
there may be periods during which the value of an instrument, as
determined by amortized cost, is higher or lower than the price the Trust
would receive if it sold the instrument. During periods of declining
interest rates, the daily yield on shares of the Trust may tend to be
lower (and net investment income and daily dividends higher) than a like
computation made by a fund with identical investments utilizing a method
of valuation based upon market prices or estimates of market prices for
its portfolio. Thus, if the use of amortized cost by the Trusts resulted
in a lower aggregate portfolio value on a particular day, a prospective
investor in one of the Trusts would be able to obtain a somewhat higher
yield than would result from investment in a fund utilizing solely market
values, and existing investors in the Trusts would receive less investment
income than if the Trust were priced at market value. Conversely, during
periods of rising interest rates, the daily yield on Trust shares will
tend to be higher and its aggregate value lower than that of a portfolio
priced at market value. A prospective investor would receive a lower
yield than from an investment in a portfolio priced at market value, while
existing investors in the Trust would receive more investment income than
if the Trust were priced at market value.
Expedited Redemption Procedures. Under the Expedited Redemption Procedure
available to direct shareholders of the Trusts, as discussed in the
Appendix to the Prospectus, the wiring of redemption proceeds may be
delayed if the Trust's Custodian bank is not open for business on a day
that the Trust would normally authorize the wire to be made, which is
usually same day for redemptions prior to 12:00 noon, and the Trust's next
regular business day for redemptions between 12:00 noon and 4:00 P.M. 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 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 in effect at the close of business on the payable date of the
dividend or distribution.
YIELD INFORMATION
Each Trust's current yield is calculated for a seven-day period of
time, in accordance with regulations adopted under the Investment Company
Act. 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, 1994, the "current yield" for Money Market Trust, Tax
Exempt Trust and Government Trust was 3.68%, 2.07% and 3.59%,
respectively. The seven-day compounded effective yield for that period
was 3.75%, 2.09% and 3.65%, respectively.
The yield as calculated above may vary for accounts less than
approximately $100 in value due to the effect of rounding off each daily
dividend to the nearest full cent. Since the calculation of yield under
either procedure described above does not take into consideration any
realized or unrealized gains or losses on each Trust's portfolio
securities which may affect dividends, the return on dividends declared
during a period may not be the same on an annualized basis as the yield
for that period.
Tax Exempt Trust's "tax equivalent yield" adjusts Tax Exempt Trust's
current yield, as calculated above, by a stated Federal tax rate. The tax
equivalent yield is computed by dividing the tax-exempt portion of the
Trust's current yield by one minus a stated income tax rate and adding the
result to the portion (if any) of the Trust's current yield that is not
tax-exempt. The tax equivalent yield may be compounded as described above
to provide a compounded effective tax equivalent yield. The tax
equivalent yield may be used to compare the tax effects of income derived
from the Trust with income from taxable investments at the tax rates
stated. Exhibit C, which is applicable only to Tax Exempt Trust, includes
a tax equivalent yield table, based on various effective tax brackets for
individual taxpayers. Such tax brackets are determined by a taxpayer's
Federal taxable income (the net amount subject to Federal income tax after
deductions and exemptions). The tax equivalent yield table assumes that
the investor is taxed at the highest bracket, regardless of whether a
switch to non-taxable investments would cause a lower bracket to apply and
that state income tax payments are fully deductible for income tax
purposes. For taxpayers with income above certain levels, otherwise
allowable itemized deductions are limited. The Tax Exempt Trust's tax
equivalent yield for the seven-day period ended June 30, 1994 was 3.43%.
Its tax-equivalent compounded effective yield for the same period was
3.46% 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 or upon proper request of the
shareholders. Shareholders have the right, upon the declaration in writing
or vote of two-thirds of the outstanding shares of the Trust, to remove
a Trustee. The Trustees will call a meeting of shareholders to vote on
the removal of a Trustee upon the written request of the shareholders of
10% of its outstanding shares. In addition, if the Trustees receive a
request from at least 10 shareholders (who have been shareholders for at
least six months) holding in the aggregate shares of the Trust valued at
$25,000 or more or holding 1% or more of the Trust's outstanding shares,
whichever is less, that they wish to communicate with other shareholders
to request a meeting to remove a Trustee, the Trustees will then either
make the Trust's shareholder list available to the applicants or mail
their communication to all other shareholders at the applicants' expense,
or the Trustees may take such other action as set forth in Section 16(c)
of the Investment Company Act.
Tax Status of the Trust's Dividends and Distributions. The Federal tax
treatment of the Trust's dividends and distributions to shareholders is
explained in the Prospectus under the caption "Dividends, Distributions
and Taxes." Under the Internal Revenue Code, the Trust must distribute
by December 31 each year 98% of its taxable investment income earned from
January 1 through December 31 of that year and 98% of its capital gains
realized from the prior November 1 through October 31 of that year or
else must pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Trust's distributions will meet those
requirements, the Trust's Board and the Manager might determine in a
particular year that it might be in the best interest of the Trust not to
distribute income or capital gains at the mandated levels and to pay the
excise tax on the undistributed amounts, which would reduce the amount
available for distribution to shareholders.
The Custodian and the Transfer Agent. The Custodian's responsibilities
include safeguarding and controlling the Trusts' portfolio securities and
handling the delivery of portfolio securities to and from the Trusts. The
Manager has represented to the Trusts that its banking relationships with
the Custodian have been and will continue to be unrelated to and
unaffected by the relationships between the Trusts and the Custodian. It
will be the practice of the Trusts to deal with the Custodian in a manner
uninfluenced by any banking relationship the Custodian may have with the
Manager or its affiliates. Shareholder Services, Inc., the Transfer
Agent, is responsible for maintaining each Trust's shareholder registry
and shareholder accounting records, and for shareholder servicing and
administrative functions.
General Distributor's Agreement. Under the General Distributor's
Agreement between each Trust and the Distributor, the Distributor acts as
each Trust's principal underwriter in the continuous public offering of
its shares but is not obligated to sell a specific number of shares.
Expenses normally attributable to sales (other than those paid under the
Distribution Plan), including advertising and the cost of printing and
mailing prospectuses other than those furnished to existing shareholders,
are borne by the Distributor.
Independent Auditors and Financial Statements. The independent auditors
of the Trusts examine the Trusts' financial statements and perform other
related audit services. They also act as auditors for the Manager and for
Oppenheimer Management Corporation, the Manager's immediate parent, as
well as for certain other funds advised by the Manager and Oppenheimer
Management Corporation.
<PAGE>
Exhibit A
DESCRIPTION OF SECURITIES RATINGS
Below is a description of the two highest rating categories for Short Term
Debt and Long Term Debt by the "Nationally-Recognized Statistical Rating
Organizations" which the Manager evaluates in purchasing securities on
behalf of the Trust. The ratings descriptions are based on information
supplied by the ratings organizations to subscribers.
Short Term Debt Ratings.
Moody's Investors Service, Inc. ("Moody's"): The following rating
designations for commercial paper (defined by Moody's as promissory
obligations not having original maturity in excess of nine months), are
judged by Moody's to be investment grade, and indicate the relative
repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally
be evidenced by the following characteristics: (a) leveling market
positions in well-established industries; (b) high rates of return
on funds employed; (c) conservative capitalization structures with
moderate reliance on debt and ample asset protection; (d) broad
margins in earning coverage of fixed financial charges and high
internal cash generation; and (e) well established access to a range
of financial markets and assured sources of alternate liquidity.
Prime-2: Strong capacity for repayment. This will normally be
evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained.
Moody's ratings for state and municipal short-term obligations are
designated "Moody's Investment Grade" ("MIG"). Short-term notes which
have demand features may also be designated as "VMIG". These rating
categories are as follows:
MIG1/VMIG1: Best quality. There is present strong protection by
established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample although
not so large as in the preceding group.
Standard & Poor's Corporation ("S&P"): The following ratings by S&P for
commercial paper (defined by S&P as debt having an original maturity of
no more than 365 days) assess the likelihood of payment:
A-1: Strong capacity for timely payment. Those issues determined
to possess extremely strong safety characteristics are denoted with
a plus sign (+) designation.
A-2: Satisfactory capacity for timely payment. However, the
relative degree of safety is not as high as for issues designated "A-
1".
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have a
demand or double feature as part of their provisions. The first rating
addresses the likelihood of repayment of principal and interest as due,
and the second rating addresses only the demand feature. With short-term
demand debt, S&P's note rating symbols are used with the commercial paper
symbols (for example, "SP-1+/A-1+").
Fitch Investors Service, Inc. ("Fitch"): Fitch assigns the following
short-term ratings to debt obligations that are payable on demand or have
original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and
investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of
assurance for timely payment.
F-1: Very strong credit quality; assurance of timely payment is only
slightly less in degree than issues rated "F-1+".
F-2: Good credit quality; satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for
issues assigned "F-1+" or "F-1" ratings.
Duff & Phelps, Inc. ("Duff & Phelps"): The following ratings are for
commercial paper (defined by Duff & Phelps as obligations with maturities,
when issued, of under one year), asset-backed commercial paper, and
certificates of deposit (the ratings cover all obligations of the
institution with maturities, when issued, of under one year, including
bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors
are excellent and supported by good fundamental protection factors.
Risk factors are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk
factors are very small.
Duff 2: Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is
good. Risk factors are small.
IBCA Limited or its affiliate IBCA Inc. ("IBCA"): Short-term ratings,
including commercial paper (with maturities up to 12 months), are as
follows:
A1: Obligations supported by the highest capacity for timely
repayment.
A1: Obligations supported by a very strong capacity for timely
repayment.
A2: Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic, or financial conditions.
Thomson BankWatch, Inc. ("TBW"): The following short-term ratings apply
to commercial paper, certificates of deposit, unsecured notes, and other
securities having a maturity of one year or less.
TBW-1: The highest category; indicates the degree of safety
regarding timely repayment of principal and interest is very strong.
TBW-2: The second highest rating category; while the degree of
safety regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as for issues
rated "TBW-1".
Long Term Debt Ratings. These ratings are relevant for securities
purchased by the Trust with a remaining maturity of 397 days or less, or
for rating issuers of short-term obligations.
Moody's: Bonds (including municipal bonds) are rated as follows:
Aaa: Judged to be the best quality. They carry the smallest degree
of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong positions of such
issues.
Aa: Judged to be of high quality by all standards. Together with
the "Aaa" group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuations
of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear somewhat
larger than in "Aaa" securities.
Moody's applies numerical modifiers "1", "2" and "3" in its "Aa" rating
classification. The modifier "1" indicates that the security ranks in the
higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in
the lower end of its generic rating category.
Standard & Poor's: Bonds (including municipal bonds) are rated as
follows:
AAA: The highest rating assigned by S&P. Capacity to pay interest
and repay principal is extremely strong.
AA: A strong capacity to pay interest and repay principal and differ
from "AAA" rated issues only in small degree.
Fitch:
AAA: Considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA: Considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated "AAA".
Plus (+) and minus (-) signs are used in the "AA" category to
indicate the relative position of a credit within that category.
Because bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+".
Duff & Phelps:
AAA: The highest credit quality. The risk factors are negligible,
being only slightly more than for risk-free U.S. Treasury debt.
AA: High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic
conditions. Plus (+) and minus (-) signs are used in the "AA"
category to indicate the relative position of a credit within that
category.
IBCA: Long-term obligations (with maturities of more than 12 months) are
rated as follows:
AAA: The lowest expectation of investment risk. Capacity for timely
repayment of principal and interest is substantial such that adverse
changes in business, economic, or financial conditions are unlikely
to increase investment risk significantly.
AA: A very low expectation for investment risk. Capacity for timely
repayment of principal and interest is substantial. Adverse changes
in business, economic, or financial conditions may increase
investment risk albeit not very significantly.
A plus (+) or minus (-) sign may be appended to a long term rating
to denote relative status within a rating category.
TBW: TBW issues the following ratings for companies. These ratings
assess the likelihood of receiving payment of principal and interest on
a timely basis and incorporate TBW's opinion as to the vulnerability of
the company to adverse developments, which may impact the market's
perception of the company, thereby affecting the marketability of its
securities.
A: Possesses an exceptionally strong balance sheet and earnings
record, translating into an excellent reputation and unquestioned
access to its natural money markets. If weakness or vulnerability
exists in any aspect of the company's business, it is entirely
mitigated by the strengths of the organization.
A/B: The company is financially very solid with a favorable track
record and no readily apparent weakness. Its overall risk profile,
while low, is not quite as favorable as for companies in the highest
rating category.
Exhibit B
AUTOMATIC WITHDRAWAL PLAN PROVISIONS
By requesting an Automatic Withdrawal Plan, the shareholder agrees
to the terms and conditions applicable to such plans, as stated below and
elsewhere in the Application for such Plans, and the Prospectus and this
Statement of Additional Information as they may be amended from time to
time by the Trust and/or the Distributor. When adopted, such amendments
will automatically apply to existing Plans.
Trust shares will be redeemed as necessary to meet withdrawal
payments. Shares acquired without a sales charge will be redeemed first
and thereafter shares acquired with reinvested dividends and distributions
followed by shares acquired with a sales charge will be redeemed to the
extent necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made to
shareholders under such plans should not be considered as a yield or
income on investment. Purchases of additional shares concurrently with
withdrawals are undesirable because of sales charges on purchases when
made. Accordingly, a shareholder may not maintain an Automatic Withdrawal
Plan while simultaneously making regular purchases.
1. Shareholder Services, Inc., the Transfer Agent of the Trust,
will administer the Automatic Withdrawal Plan (the "Plan") as agent for
the person (the "Planholder") who executed the Plan authorization and
application submitted to the Transfer Agent.
2. Certificates will not be issued for shares of the Trust
purchased for and held under the Plan, but the Transfer Agent will credit
all such shares to the account of the Planholder on the records of the
Trust. Any share certificates now held by the Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the Plan.
Those shares will be carried on the Planholder's Plan Statement.
3. Distributions of capital gains must be reinvested in shares of
the Trust, which will be done at net asset value without a sales charge.
Dividends may be paid in cash or reinvested.
4. Redemptions of shares in connection with disbursement payments
will be made at the net asset value per share determined on the redemption
date.
5. Checks or ACH payments will be transmitted three business days
prior to the date selected for receipt of the monthly or quarterly payment
(the date of receipt is approximate), according to the choice specified
in writing by the Planholder.
6. The amount and the interval of disbursement payments and the
address to which checks are to be mailed may be changed at any time by the
Planholder on written notification to the Transfer Agent. The Planholder
should allow at least two weeks' time in mailing such notification before
the requested change can be put in effect.
7. The Planholder may, at any time, instruct the Transfer Agent by
written notice (in proper form in accordance with the requirements of the
then-current Prospectus of the Trust) to redeem all, or any part of, the
shares held under the Plan. In such case, the Transfer Agent will redeem
the number of shares requested at the net asset value per share in effect
in accordance with the Trust's usual redemption procedures and will mail
a check for the proceeds of such redemption to the Planholder.
8. The Plan may, at any time, be terminated by the Planholder on
written notice to the Transfer Agent, or by the Transfer Agent upon
receiving directions to that effect from the Trust. The Transfer Agent
will also terminate the Plan upon receipt of evidence satisfactory to it
of the death or legal incapacity of the Planholder. Upon termination of
the Plan by the Transfer Agent or the Trust, shares remaining unredeemed
will be held in an uncertificated account in the name of the Planholder,
and the account will continue as a dividend-reinvestment, uncertificated
account unless and until proper instructions are received from the
Planholder, his executor or guardian, or as otherwise appropriate.
9. For purposes of using shares held under the Plan as collateral,
the Planholder may request issuance of a portion of his shares in
certificated form. Upon written request from the Planholder, the Transfer
Agent will determine the number of shares as to which a certificate may
be issued, so as not to cause the withdrawal checks to stop because of
exhaustion of uncertificated shares needed to continue payments. Should
such uncertificated shares become exhausted, Plan withdrawals will
terminate.
10. The Transfer Agent shall incur no liability to the Planholder
for any action taken or omitted by the Transfer Agent in good faith.
11. In the event that the Transfer Agent shall cease to act as
transfer agent for the Trust, the Planholder will be deemed to have
appointed any successor transfer agent to act as his agent in
administering the Plan.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Centennial Government Trust
The Board of Trustees and Shareholders of Centennial Government Trust:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Centennial Government Trust as of June 30,
1994, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended June 30, 1994 and 1993,
and the financial highlights for the period July 1, 1984 to June 30, 1994. 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 also 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, 1994 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Centennial
Government Trust at June 30, 1994, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods,
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
Denver, Colorado
July 22, 1994
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1994
Centennial Government Trust
<TABLE>
<CAPTION>
Face Market Value
REPURCHASE AGREEMENTS -- 19.4% Amount See Note 1
------------- ------------
<S> <C> <C>
Repurchase agreement with Morgan Guaranty Trust Co., 4.30%, dated 6/30/94, to be repurchased
at $105,212,566 on 7/1/94, collateralized by Federal National Mortgage Assn. Participation
Certificates, 6.50%, 12/1/23-4/1/24, with a value of $39,067,805 and Government National
Mortgage Assn., 6.50%-7%, 9/15/23-6/15/24, with a value of $69,683,743.................... $ 105,200,000 $105,200,000
Repurchase agreement with First Chicago Capital Markets, 4.22%, dated 6/30/94, to be
repurchased at $14,001,641 on 7/1/94, collateralized by U.S. Treasury Notes., 5.125%,
11/30/98, with a value of $14,291,213..................................................... 14,000,000 14,000,000
------------
Total Repurchase Agreements (Cost $119,200,000)............................................. 119,200,000
------------
U.S. GOVERNMENT OBLIGATIONS -- 80.1%
Federal Farm Credit Bank, 4.34%-4.67%, 7/18/94-11/28/94..................................... 38,000,000 37,906,055
Federal Home Loan Bank:
3.44%-4.58%, 7/5/94-11/18/94.............................................................. 72,500,000 71,961,222
3.322%-4.65%, 7/7/94-8/18/94(1)........................................................... 46,000,000 45,974,124
Federal Home Loan Mortgage Corp.:
4.37%, 8/19/94............................................................................ 14,500,000 14,413,753
4.50%, 9/3/94(1).......................................................................... 50,000,000 49,902,089
Federal National Mortgage Assn., 3.60%-4.64%, 7/7/94-11/18/94............................... 107,040,000 106,297,666
Small Business Administration, 4.25%-8.875%, 7/1/94(1)...................................... 75,085,960 79,181,895
Student Loan Marketing Assn.:
4.61%-4.70%, 7/1/94-7/5/94(1)............................................................. 65,500,000 65,411,114
5.48%, 6/30/95............................................................................ 20,000,000 20,003,125
------------
Total U.S. Government Obligations (Cost $491,051,043)....................................... 491,051,043
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments, at Value (Cost $610,251,043)................................................. 99.5% 610,251,043
Other Assets Net of Liabilities................................................................. .5 3,191,459
----- --------------
Net Assets...................................................................................... 100.0% $ 613,442,502
----- --------------
----- --------------
</TABLE>
- ------------
1. Variable rate security. 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, 1994.
See accompanying Notes to Financial Statements.
3
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES June 30, 1994
Centennial Government Trust
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (cost $610,251,043) -- see accompanying statement.................................... $610,251,043
Cash....................................................................................................... 1,047,353
Receivables:
Shares of beneficial interest sold....................................................................... 6,107,522
Interest and principal paydowns.......................................................................... 3,449,444
Other...................................................................................................... 108,468
------------
Total assets.......................................................................................... 620,963,830
------------
LIABILITIES:
Payables and other liabilities:
Shares of beneficial interest redeemed................................................................... 6,502,429
Dividends................................................................................................ 877,960
Service plan fees -- Note 3.............................................................................. 48,537
Other.................................................................................................... 92,402
------------
Total liabilities..................................................................................... 7,521,328
------------
NET ASSETS................................................................................................. $613,442,502
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in capital............................................................................................ $613,281,725
Accumulated net realized gain from investment transactions................................................. 160,777
------------
NET ASSETS -- Applicable to 613,281,725 shares of beneficial interest outstanding.......................... $613,442,502
------------
------------
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE.............................................
$1.00
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended June 30, 1994
Centennial Government Trust
<TABLE>
<S> <C>
INVESTMENT INCOME -- Interest............................................................................... $23,830,047
-----------
EXPENSES:
Management fees -- Note 3................................................................................... 3,182,956
Service plan fees -- Note 3................................................................................. 1,328,950
Transfer and shareholder servicing agent fees -- Note 3..................................................... 417,466
Custodian fees and expenses................................................................................. 82,795
Registration and filing fees................................................................................ 79,295
Shareholder reports......................................................................................... 61,247
Legal and auditing fees..................................................................................... 23,841
Trustees' fees and expenses................................................................................. 10,387
Other....................................................................................................... 69,752
-----------
Total expenses......................................................................................... 5,256,689
-----------
NET INVESTMENT INCOME....................................................................................... 18,573,358
-----------
NET REALIZED GAIN ON INVESTMENTS............................................................................ 166,504
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................................................
$18,739,862
-----------
-----------
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Centennial Government Trust
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------
1994 1993
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................................... $ 18,573,358 $ 17,796,282
Net realized gain on investments........................................................... 166,504 89,483
------------ ------------
Net increase in net assets resulting from operations.................................. 18,739,862 17,885,765
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS................................................ (18,663,114)
(17,796,282)
BENEFICIAL INTEREST TRANSACTIONS:
Net increase (decrease) in net assets resulting from beneficial interest
transactions -- Note 2................................................................... (23,735,954) 62,295,251
------------ ------------
NET ASSETS:
Total increase (decrease).................................................................. (23,659,206) 62,384,734
Beginning of year.......................................................................... 637,101,708 574,716,974
------------ ------------
End of year................................................................................ $613,442,502 $637,101,708
------------ ------------
------------ ------------
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
FINANCIAL HIGHLIGHTS
Centennial Government Trust
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
PER SHARE OPERATING
DATA:
Net asset value,
beginning of year.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations -- net
investment income and
net realized gain on
investments.......... .03 .04 .04 .07 .08 .08 .06 .05 .07 .08
Dividends and
distributions to
shareholders......... (.03) (.04) (.04) (.07) (.08) (.08) (.06) (.05) (.07) (.08)
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of
year................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in thousands)....... $ 613,443 $ 637,102 $ 574,717 $ 533,154 $ 219,003 $ 151,898 $ 90,035 $ 67,042 $ 78,550
$ 53,690
Average net assets (in
thousands)........... $ 665,494 $ 633,017 $ 581,563 $ 418,268 $ 200,570 $ 121,909 $ 82,815 $ 74,084 $ 68,515 $
65,241
Number of shares
outstanding at end of
year (in
thousands)........... 613,282 637,018 574,722 533,125 218,986 151,901 90,036 67,042 78,550
53,690
Ratios to average net
assets:
Net investment
income............. 2.79% 2.81% 4.38% 6.44% 7.75% 8.11% 5.94% 5.17% 6.59%
8.53%
Expenses............. .79% .79% .78% .79% .84% .85% .90% .96% .93% .86%
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Centennial Government Trust
1. SIGNIFICANT ACCOUNTING POLICIES
Centennial Government Trust (the Trust) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Trust's investment advisor is Centennial Asset
Management Corporation (the Manager), a subsidiary of Oppenheimer Management
Corporation (OMC). The following is a summary of significant accounting policies
consistently followed by the Trust.
Investment Valuation -- Portfolio securities are valued on the basis of
amortized cost, which approximates market value.
Repurchase Agreements -- The Trust requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. If the seller of the agreement defaults and the value of
the collateral declines, or if the seller enters an insolvency proceeding,
realization of the value of the collateral by the Trust may be delayed or
limited.
Federal Income 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 tax provision is required.
Distributions to Shareholders -- The Trust intends to declare dividends from net
investment income each day the New York Stock Exchange is open for business and
pay such dividends monthly. To effect its policy of maintaining a net asset
value of $1.00 per share, the Trust may withhold dividends or make distributions
of net realized gains.
Other -- Investment transactions are accounted for on the date the investments
are purchased or sold (trade date). Realized gains and losses on investments are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes.
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------------------------------------------------
1994 1993
-------------------------------- --------------------------------
Shares Amount Shares Amount
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold.............................. 2,133,375,320 $ 2,133,375,320 1,995,315,893 $ 1,995,315,893
Dividends and distributions
reinvested...................... 18,030,062 18,030,062 17,570,813 17,570,813
Redeemed.......................... (2,175,141,336) (2,175,141,336) (1,950,591,455) (1,950,591,455)
-------------- --------------- -------------- ---------------
Net increase (decrease)......... (23,735,954) $ (23,735,954) 62,295,251 $ 62,295,251
-------------- --------------- -------------- ---------------
-------------- --------------- -------------- ---------------
</TABLE>
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
Centennial Government 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 an annual fee of .50% on
the first $250 million of net assets with a reduction of .025% on each $250
million thereafter, to .40% on net assets in excess of $1 billion. The Manager
has agreed to reimburse the Trust if aggregate expenses (with specified
exceptions) exceed the lesser of 1.50% of the first $30 million of average
annual net assets of the Trust, plus 1% of average annual net assets in excess
of $30 million; or 25% of the total annual investment income of the Trust.
Shareholder Services, Inc. (SSI), a subsidiary of OMC, is the transfer and
shareholder servicing agent for the Trust, and for other registered investment
companies. SSI's total costs of providing such services are allocated ratably to
these companies.
Under an approved service plan, the Trust may expend up to .20% of its net
assets annually to reimburse certain securities dealers and other financial
institutions and organizations for costs incurred in distributing Trust shares.
During the year ended June 30, 1994, the Trust paid $22,331 to a broker/dealer
affiliated with the Manager as reimbursement for distribution-related expenses.
Investment Adviser and Distributor
Centennial Asset Management Corporation
3410 South Galena Street
Denver, Colorado 80231
Transfer Agent
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217
1-800-525-9310
Custodian
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson & Adams, P.C.
1600 Broadway - Suite 1850
Denver, Colorado 80202
