CENTENNIAL GOVERNMENT TRUST
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Prospectus dated November 1, 2000 Centennial Government Trust is a money
market mutual fund. It seeks a high
level of current income consistent
with preserving capital and
maintaining liquidity. The Trust
invests in short-term, high quality
"money market" investments.
This Prospectus contains important
information about the Trust's
objective, its investment policies,
strategies and risks. It also contains
important information about how to buy
and sell shares of the Trust and other
account features.
As with all mutual funds, the Please read this Prospectus carefully Securities
and Exchange Commission has before you invest and keep it for not approved or
disapproved the Trust's future reference about your account. securities nor has
it determined that this Prospectus is accurate or complete. It is a criminal
offense to represent otherwise.
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CONTENTS
A B O U T T H E T R U S T
The Trust's Investment Objective and Strategies
Main Risks of Investing in the Trust
The Trust's Past Performance
Fees and Expenses of the Trust
About the Trust's Investments
I N V E S T I N G I N T H E T R U S T
This section applies to the prospectuses of Centennial Money
Market Trust, Centennial Tax Exempt Trust and Centennial
Government Trust
How the Trusts are Managed
How to Buy Shares
Automatic Purchase and Redemption Programs
Direct Shareholders
How to Sell Shares
Automatic Purchase and Redemption Programs
Direct Shareholders
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends and Tax Information
Financial Highlights
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A B O U T T H E T R U S T
The Trust's Investment Objective and Strategies
WHAT IS THE TRUST'S INVESTMENT OBJECTIVE? The Trust seeks a high level of
current income that is consistent with the preservation of capital and the
maintenance of liquidity.
WHAT DOES THE TRUST MAINLY INVEST IN? The Trust is a money market fund. It
invests in a variety of high-quality money market instruments to seek income.
The Trust invests principally in short-term, U.S. dollar-denominated debt
instruments issued by the U.S. government, its agencies and instrumentalities.
To be considered "high-quality," generally investments must be rated in one of
the two highest credit-quality categories for short-term securities by
nationally recognized rating services. If unrated, a security must be determined
by the Trust's investment manager to be of comparable quality to rated
securities.
WHO IS THE TRUST DESIGNED FOR? The Trust is designed for investors who are
seeking income at current money market rates while preserving the value of their
investment, because the Trust tries to keep its share price stable at $1.00.
Income on short-term money market instruments tends to be lower than income on
longer term debt securities, so the Trust's yield will likely be lower than the
yield on longer-term fixed income funds. The Trust does not invest for the
purpose of seeking capital appreciation or gains and is not a complete
investment program.
Main Risks of Investing in the Trust
All investments carry risks to some degree. Funds that invest in debt
obligations for income may be subject to credit risks and interest rate risks.
However, the Trust's investments must meet strict standards set by its Board of
Trustees following special rules for money market funds under federal law. Those
standards include requirements for maintaining high credit quality in the
Trust's portfolio, a short average portfolio maturity to reduce the effects of
changes in interest rates on the value of the Trust's securities and
diversifying the Trust's investments among issuers to reduce the effects of a
default by any one issuer on the Trust's overall portfolio and the value of the
Trust's shares.
Even so, there are risks that any of the Trust's holdings could have its
credit rating downgraded, or the issuer could default, or that interest rates
could rise sharply, causing the value of the Trust's investments (and its share
price) to fall. As a result, there is a risk that the Trust's shares could fall
below $1.00 per share. If there is a high redemption demand for the Trust's
shares that was not anticipated, portfolio securities might have to be sold
prior to their maturity at a loss. Also, there is the risk that the value of
your investment could be eroded over time by the effects of inflation, and that
poor security selection could cause the Trust to underperform other funds with
similar objectives.
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An investment in the Trust is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Trust seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Trust.
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The Trust's Past Performance
The bar chart and table below show how the Trust's returns may vary over time,
by showing changes in the Trust's performance from year to year for the last ten
calendar years and average annual total returns for the 1-, 5- and 10- year
periods. Variability of returns is one measure of the risks of investing in a
money market fund. The Trust's past investment performance does not predict how
the Trust will perform in the future.
Annual Total Returns (% as of 12/31 each year)
[See appendix to prospectus for annual total return data for bar chart.]
For the period from 1/1/00 through 9/30/00 the cumulative total return (not
annualized) was 4.17%. During the period shown in the bar chart, the highest
return (not annualized) for a calendar quarter was 1.90% (1st Q '90) and the
lowest return (not annualized) for a calendar quarter was 0.63% (1st Q '93)
Average Annual Total Returns
for the periods ended December 31, 1 Year 5 Years 10 Years
1999
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Centennial Government Trust 4.43% 4.82% 4.74%
(inception 10/5/81)
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The returns measure the performance of a hypothetical account and assume that
all dividends have been reinvested in additional shares. The total returns are
not the Trust's current yield. The Trust's yield more closely reflects the
Trust's current earnings.
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To obtain the Trust's current 7-day yield, please call the Transfer Agent
toll-free at 1.800.525.9310.
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Fees and Expenses of the Trust
The Trust pays a variety of expenses directly for investment management,
administration and other services. Those expenses are subtracted from the
Trust's assets to calculate the Trust's net asset value per share. All
shareholders therefore pay those expenses indirectly. The following tables are
meant to help you understand the fees and expenses you may pay if you buy and
hold shares of the Trust. The numbers below are based upon the Trust's expenses
during its fiscal year ended June 30, 2000.
SHAREHOLDER FEES. The Trust does not charge any initial sales charge to buy
shares or to reinvest dividends. There are no exchange fees or redemption fees
and no contingent deferred sales charges (unless you buy Trust shares by
exchanging Class A shares of other eligible funds that were purchased subject to
a contingent deferred sales charge, as described in "How to Sell Shares").
Annual Trust Operating Expenses (deducted from Trust assets):
(% of average daily net assets)
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Management Fees 0.45%
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Distribution and/or Service (12b-1) Fees 0.20%
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Other Expenses 0.09%
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Total Annual Operating Expenses 0.74%
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"Other expenses" in the table include transfer agent fees, custodial fees, and
accounting and legal expenses the Trust pays.
EXAMPLE. The following example is intended to help you compare the cost of
investing in the Trust with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in shares of the Trust for the time
periods indicated and reinvest your dividends and distributions. The example
also assumes that your investment has a 5% return each year and that the Trust's
operating expenses remain the same. Your actual costs may be higher or lower,
because expenses will vary over time. Based on these assumptions your expenses
would be as follows whether or not you redeem your investment at the end of each
period:
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1 year 3 years 5 years 10 years
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$76 $237 $411 $918
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About the Trust's Investments
THE TRUST'S PRINCIPAL INVESTMENT POLICIES. The Trust invests in short-term money
market securities meeting quality, maturity and diversification standards
established by its Board of Trustees as well as rules that apply to money market
funds under the Investment Company Act. The Statement of Additional Information
contains more detailed information about the Trust's investment policies and
risks.
The Trust's investment manager, Centennial Asset Management
Corporation (referred to in this Prospectus as the Manager) tries to reduce
risks by diversifying investments and by carefully researching investments
before the Trust buys them. The rate of the Trust's income will vary from
day to day, generally reflecting changes in overall short-term interest
rates. There is no assurance that the Trust will achieve its investment
objective.
What Does the Trust Invest In? Money market instruments are high-quality,
short-term debt instruments. They may have fixed, variable or floating
interest rates. All of the Trust's money market investments must meet the
special quality and maturity and requirements set under the Investment
Company Act and the special standards set by the Board described briefly
below. The following is a brief description of the types of money market
instruments the Trust may invest in.
o U.S. Government Securities. The Trust invests mainly in obligations issued or
guaranteed by the U.S. government or any of its agencies or instrumentalities.
Some are direct obligations of the U.S. Treasury, such as Treasury bills, notes
and bonds, and are supported by the full faith and credit of the United States.
Other U.S. government securities, such as pass-through certificates issued by
the Government National Mortgage Association (Ginnie Mae), are also supported by
the full faith and credit of the U.S. government. Some government securities,
agencies or instrumentalities of the U.S. government are supported by the right
of the issuer to borrow from the U.S. Treasury, such as securities of the
Federal National Mortgage Corporation (Fannie Mae). Others may be supported only
by the credit of the instrumentality, such as obligations of the Federal Home
Loan Mortgage Corporation (Freddie Mac).
o Other Money Market Obligations. The Trust may invest in variable rate notes,
variable rate master demand notes or in master demand notes. The Trust o may
also purchase other debt obligations that mature within twelve months from the
date of purchase. It may purchase debt obligations that have been called for
redemption by the issuer if the redemption will occur within one year. The
Trustees have proposed a charge to this policy to increase the length of
permitted maturity to up to the maximum time permitted under Rule 2a-7, which is
currently 397 days. Please refer to "What Standards Apply to the Trust's
Investments?" below for more details.
Additionally, the Trust may buy other money market instruments that
the Manager approves under procedures adopted by the Board of Trustees..
They must be U.S. dollar-denominated short-term investments that the
Manager must determine to have minimal credit risks.
What Standards Apply to the Trust's Investments? Money market instruments
are subject to credit risk, the risk that the issuer might not make timely
payments of interest on the security or repay principal when it is due. The
Trust may buy only those investments that meet standards set by the
Investment Company Act for money market funds and procedures adopted by the
Board. The Trust's Board has adopted evaluation procedures for the Trust's
portfolio and the Manager has the responsibility to implement those
procedures when selecting investments for the Trust.
In general, the Trust buys only high-quality investments that the Manager
believespresent minimal credit risk at the time of purchase. "High-quality"
investments are:
o rated in one of the two highest short-term rating categories of two national
rating organizations, or
o rated by one rating organization in one of its two highest rating categories
(if only one rating organization has rated the investment), or
o unrated investments that the Manager determines are comparable in quality to
the two highest rating categories.
The standards also limit the amount of the Trust's assets that can be
invested in the securities of any one issuer (other than the U.S.
government, its agencies and instrumentalities), to spread the Trust's
investment risks. According to the standards, the Trust can invest without
limit in U.S. government securities because of their limited investment
risks. The Trust's fundamental policy restricting investments in any debt
instrument having a maturity in excess of one year from the date of the
investment is more restrictive than the standards that apply to all. That
restriction could limit the Trust's investments, however, shareholders have
been requested to approve an amendment to this policy whereby no security's
maturity will exceed the maximum time permitted under Rule 2a-7. If the
change is not approved by shareholders, the Manager will supplement this
Prospectus to reflect that the change was not approved. Finally, the Trust
must maintain a dollar-weighted average portfolio maturity of not more than
90 days, to reduce interest rate risks.
Can the Trust's Investment Objective and Policies Change? The Trust's Board
can change non-fundamental policies without shareholder approval, although
significant changes will be described in amendments to this Prospectus.
Fundamental policies cannot be changed without the approval of a majority
of the Trust's outstanding voting shares. The Trust's investment objective
is a fundamental policy. Some investment restrictions that are fundamental
polices are listed in the Statement of Additional Information. An
investment policy is not fundamental unless this Prospectus or the
Statement of Additional Information says that it is. Please see the
Statement of Additional Information for more information on the proposals
to change the fundamental policies that the Board of Trustees has requested
shareholders to approve. If shareholders do not approve the changes, then
this Prospectus and the Statement of Additional Information will be
supplemented to advise you that the amendments were not approved.
OTHER INVESTMENT STRATEGIES. To seek its objective, the Trust can also use
the investment techniques and strategies described below. The Trust might
not always use all of them. These techniques involve risks. The Statement
of Additional Information contains more information about some of these
practices, including limitations on their use that are designed to reduce
some of the risks.
Floating Rate/Variable Rate Notes. The Trust can purchase notes with
floating or variable interest rates. Variable rates are adjustable at
stated periodic intervals. Floating rates are adjusted automatically
according to a specified market rate or benchmark, such as the prime rate
of a bank. If the maturity of a note is greater than one year from the
purchase date (or if the proposed change is approved by shareholders, the
maximum time permitted under Rule 2a-7), it may be purchased only if it has
a demand feature. That feature must permit the Trust to recover the
principal amount of the investment on not more than thirty days' notice at
any time, or at specified times not exceeding one year from purchase (or if
the proposed change is approved by shareholders, the maximum time permitted
under Rule 2a-7).
Repurchase Agreements. The Trust may enter into repurchase agreements. In a
repurchase transaction, the Trust buys a security and simultaneously sells
it to the vendor for delivery at a future date. Repurchase agreements must
be fully collateralized. However, if the vendor fails to pay the resale
price on the delivery date, the Trust may incur costs in disposing of the
collateral and may experience losses if there is any delay in its ability
to do so. The Trust will not enter into repurchase transactions that will
cause more than 10% of the Trust's net assets to be subject to repurchase
agreements having a maturity beyond seven days. There is no limit on the
amount of the Trust's net assets that may be subject to repurchase
agreements maturing in seven days or less.
Illiquid and Restricted Securities. Investments may be illiquid because
they do not have an active trading market, making it difficult to value
them or dispose of them promptly at an acceptable price. A restricted
security is one that has a contractual limit on resale or which cannot be
sold publicly until it is registered under federal securities laws. The
Trust will not invest more than 10% of its net assets in illiquid or
restricted securities. That limit does not apply to certain restricted
securities that are eligible for resale to qualified institutional
purchasers. The Manager monitors holdings of illiquid securities on an
ongoing basis to determine whether to sell any holdings to maintain
adequate liquidity. Difficulty in selling a security may result in a loss
to the Trust or additional costs.
I N V E S T I N G I N T H E T R U S T S
The information below applies to Centennial Money Market Trust, Centennial
Tax Exempt Trust and Centennial Government Trust. Each is referred to as a
"Trust" and they are collectively referred to as the "Trusts". Unless
otherwise indicated, this information applies to each Trust.
How the Trusts are Managed
THE MANAGER. The Manager, Centennial Asset Management Corporation, a
wholly-owned subsidiary of OppenheimerFunds, Inc., is the investment
advisor for the Trusts. The Manager chooses each of the Trust's investments
and handles its day-to-day business. The Manager carries out its duties
subject to the policies established by the Trust's Board of Trustees, under
an investment advisory agreement with each Trust that states the Manager's
responsibilities. The agreement sets the fees the Trust pays to the Manager
and describes the expenses that the Trust is responsible to pay to conduct
its business.
The Manager has been an investment advisor since 1978. The Manager and its
affiliates managed investment companies and other assets of more than $130
billion as of September 30, 2000, and more than 5 million shareholder
accounts. The Manager is located at 6803 South Tucson Way, Englewood,
Colorado 80112.
Portfolio Managers. The portfolio managers of the Trusts are the persons
principally responsible for the day-to-day management of the Trust's
portfolios. The portfolio manager of Centennial Money Market Trust and
Centennial Government Trust is Carol E. Wolf. Ms. Wolf was co-portfolio
manager of the Trusts from June 1990 until April 2000, when she became the
sole portfolio manager. She is a Senior Vice President of OppenheimerFunds,
Inc. and of the Trusts and an officer and portfolio manager of other funds
for which the Manager or an affiliate serves as investment advisor. The
portfolio manager of Centennial Tax Exempt Trust is Michael Carbuto (since
October 1987). Mr. Carbuto is a Vice President of OppenheimerFunds, Inc.
and is an officer and portfolio manager of other funds for which the
Manager serves as investment advisor.
Advisory Fees. Under each investment advisory agreement, a Trust pays the
Manager an advisory fee at an annual rate that declines on additional
assets as the Trust grows. That fee is computed on the average annual net
assets of the respective Trust as of the close of each business day.
o Centennial Money Market Trust. The annual management fee rates are:
0.500% of the first $250 million of the Trust's net assets; 0.475% of the
next $250 million; 0.450% of the next $250 million; 0.425% of the next $250
million; 0.400% of the next $250 million; 0.375% of the next $250 million;
0.350% of the next $500 million; and 0.325% of net assets in excess of $2
billion. In the agreement, the Manager guarantees that the Trust's total
expenses in any fiscal year, exclusive of taxes, interest and brokerage
commissions, and extraordinary expenses such as litigation costs, shall not
exceed the lesser of (1) 1.5% of the average annual net assets of the Trust
up to $30 million and 1% of its average annual net assets in excess of $30
million; or (2) 25% of the total annual investment income of the Trust.
Centennial Money Market Trust's management fee for its fiscal year ended
June 30, 2000 was 0.34% of the Trust's average annual net assets.
o Centennial Government Trust. The annual management fee rates are: 0.500%
of the first $250 million of the Trust's net assets; 0.475% of the next
$250 million; 0.450% of the next $250 million; 0.425% of the next $250
million; 0.400% of the next $250 million; 0.375% of the next $250 million
and 0.350% of net assets in excess of $1.5 billion. The Manager has made
the same guarantee to Centennial Government Trust regarding expenses as
described above for Centennial Money Market Trust. The Trust's management
fee for its fiscal year ended June 30, 2000 was 0.45% of the Trust's
average annual net assets.
o Centennial Tax Exempt Trust. The annual management fee rates applicable
to the Trust are as follows: 0.500% of the first $250 million of the
Trust's net assets; 0.475% of the next $250 million; 0.450% of the next
$250 million; 0.425% of the next $250 million; 0.400% of the next $250
million; 0.375% of the next $250 million; 0.350% of the next $500 million;
and 0.325% of net assets in excess of $2 billion. Under the agreement, when
the value of the Trust's net assets is less than $1.5 billion, the annual
fee payable to the Manager shall be reduced by $100,000 based on average
net assets computed daily and paid monthly at the annual rates. However,
the annual fee cannot be less than $0. The Trust's management fee for its
fiscal year ended June 30, 2000 was 0.43% of the Trust's average annual net
assets.
How to Buy Shares
HOW ARE SHARE PRICES DETERMINED? Shares of each Trust are sold at their
offering price, which is the net asset value per share without any sales
charge. The net asset value per share will normally remain fixed at $1.00
per share. However, there is no guarantee that a Trust will be able to
maintain a stable net asset value of $1.00 per share.
The offering price that applies to a purchase order is based on the next
calculation of the net asset value per share that is made after the
Sub-Distributor (OppenheimerFunds Distributor, Inc.) receives the purchase
order at its offices in Colorado, or after any agent appointed by the
Sub-Distributor receives the order and sends it to the Sub-Distributor as
described below.
How is a Trust's Net Asset Value Determined? The net asset value of shares
of each Trust is determined twice each day, at 12:00 Noon and at 4:00 P.M.,
on each day The New York Stock Exchange is open for trading (referred to in
this Prospectus as a "regular business day"). All references to time in
this Prospectus mean "New York time."
The net asset value per share is determined by dividing the value of a
Trust's net assets by the number of shares that are outstanding. Under a
policy adopted by the Board of Trustees of the Trusts, each Trust uses the
amortized cost method to value its securities to determine net asset value.
The shares of each Trust offered by this Prospectus are considered to be
Class A shares for the purposes of exchanging them or reinvesting
distributions among other eligible funds that offer more than one class of
shares.
IS THERE A MINIMUM INVESTMENT? Minimum initial investments described below
and depend on how you buy and pay for your shares. You can make additional
investments at any time with as little as $25. The minimum investment
requirements do not apply to reinvesting distributions from the Trust or
other eligible funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer Agent) or
reinvesting distributions from unit investment trusts that have made
arrangements with the Distributor.
HOW ARE SHARES PURCHASED? You can buy shares in one of several ways:
Buying Shares Through a Dealer's Automatic Purchase and Redemption Program.
You can buy shares of a Trust through a broker-dealer that has a sales
agreement with the Trust's Distributor or Sub-Distributor that allows
shares to be purchased through the dealer's Automatic Purchase and
Redemption Program. Shares of each Trust are sold mainly to customers of
participating dealers that offer the Trusts' shares under these special
purchase programs. If you participate in an Automatic Purchase and
Redemption Program established by your dealer, your dealer buys shares of
the Trust for your account with the dealer. Program participants should
also read the description of the program provided by their dealer.
BuyingShares Through Your Dealer. If you do not participate in an Automatic
Purchase and Redemption Program, you can buy shares of a Trust through any
broker/dealer that has a sales agreement with the Sub-Distributor. Your
dealer will place your order with the Sub-Distributor on your behalf.
Buying Shares Directly Through the Sub-Distributor. You can also purchase
shares directly through the Sub-Distributor. Shareholders who make
purchases directly and hold shares in their own names are referred to as
"direct shareholders" in this Prospectus.
The Sub-Distributor may appoint servicing agents to accept purchase (and
redemption) orders, including broker/dealers that have established
Automatic Purchase and Redemption Programs. The Sub-Distributor, in its
sole discretion, may reject any purchase order for shares of a Trust.
AUTOMATIC PURCHASE AND REDEMPTION PROGRAM. If you buy shares of a Trust
through your broker/dealer's Automatic Purchase and Redemption Program,
your broker/dealer will buy your shares for your Program Account and will
hold your shares in your broker/dealer's name. These purchases will be made
under the procedures described in "Guaranteed Payment Procedures" below.
Your Automatic Purchase and Redemption Program Account may have minimum
investment requirements established by your broker/dealer. You should
direct all questions about your Automatic Purchase and Redemption Program
to your broker/dealer, because the Trusts' transfer agent does not have
access to information about your account under that Program.
Guaranteed Payment Procedures. Some broker/dealers may have arrangements
with the Sub-Distributor to enable them to place purchase orders for shares
of a Trust and to guarantee that the Trust's custodian bank will receive
Federal Funds to pay for the shares prior to specified times.
Broker/dealers whose clients participate in Automatic Purchase and
Redemption Programs may use these guaranteed payment procedures to pay for
purchases of shares of a Trust.
o If the Distributor receives a purchase order before 12:00 Noon on a
regular business day with the broker/dealer's guarantee that the Trust's
custodian bank will receive payment for those shares in Federal Funds by
2:00 P.M. on that same day, the order will be effected at the net asset
value determined at 12:00 Noon that day. Distributions will begin to accrue
on the shares on that day if the Federal Funds are received by the required
time.
o If the Distributor receives a purchase order after 12:00 Noon on a
regular business day with the broker/dealer's guarantee that the Trust's
custodian bank will receive payment for those shares in Federal Funds by
2:00 P.M. on that same day, the order will be effected at the net asset
value determined at 4:00 P.M. that day. Distributions will begin to accrue
on the shares on that day if the Federal Funds are received by the required
time.
o If the Distributor receives a purchase order between 12:00 Noon and 4:00
P.M. on a regular business day with the broker/dealer's guarantee that the
Trust's custodian bank will receive payment for those shares in Federal
Funds by 4:00 P.M. the next regular business day, the order will be
effected at the net asset value determined at 4:00 P.M. on the day the
order is received and distributions will begin to accrue on the shares
purchased on the next regular business day if the Federal Funds are
received by the required time.
HOW CAN DIRECT SHAREHOLDERS BUY SHARES? Direct shareholders can buy shares
of a Trust by completing a Centennial Funds New Account Application
(enclosed with this Prospectus) and sending it to the Sub-Distributor,
OppenheimerFunds Distributor, Inc., P.O. Box 5143, Denver, Colorado 80217.
Payment must be made by check or by Federal Funds wire as described below.
If you don't list a dealer on the application, OppenheimerFunds
Distributor, Inc., the Sub-Distributor, will act as your agent in buying
the shares. However, we recommend that you discuss your investment with a
financial advisor before you make a purchase to be sure that the Trust is
appropriate for you.
Each Trust intends to be as fully invested as possible to maximize its
yield. Therefore, newly-purchased shares normally will begin to accrue
distributions after the Sub-Distributor or its agent accepts your purchase
order, starting on the business day after the Trust receives Federal Funds
from the purchase payment.
Payment by Check. Direct shareholders may pay for purchases of shares of a
Trust by check. Send your check, payable to "OppenheimerFunds Distributor,
Inc.," along with your Application to the address listed above. For initial
purchases, your check should be payable in U.S. dollars and drawn on a U.S.
bank so that distributions will begin to accrue on the next regular
business day after the Distributor accepts your purchase order. If your
check is not drawn on a U.S. bank and is not payable in U.S. dollars, the
shares will not be purchased until the Distributor is able to convert the
purchase payment to Federal Funds. In that case distributions will begin to
accrue on the purchased shares on the next regular business day after the
purchase is made. The minimum initial investment for direct shareholders by
check is $500.
Payment by Federal Funds Wire. Direct shareholders may pay for purchases of
shares of a Trust by Federal Funds wire. You must also forward your
Application to the Sub-Distributor's address listed above. Before sending a
wire, call the Sub-Distributor's Wire Department at 1.800.525.9310
(toll-free from within the U.S.) or 303.768.3200 (from outside the U.S.) to
notify the Sub-Distributor of the wire, and to receive further
instructions.
Distributions will begin to accrue on the purchased shares on the
purchase date that is a regular business day if the Federal Funds from your
wire and the Application are received by the Sub-Distributor and accepted
by 12:00 Noon. If the Distributor receives the Federal Funds from your wire
and accepts the purchase order between 12:00 Noon and 4:00 P.M. on the
purchase date, distributions will begin to accrue on the shares on the next
regular business day. The minimum investment by Federal Funds Wire is
$2,500.
Buying Shares Through Automatic Investment Plans. Direct shareholders can
purchase shares of a Trust automatically each month by authorizing the
Trust's Transfer Agent to debit your account at a U.S. domestic bank or
other financial institution. Details are in the Automatic Investment Plan
Application and the Statement of Additional Information. The minimum
monthly purchase is $25.
Service (12b-1) Plans. Each Trust has adopted a service plan. It reimburses
the Distributor for a portion of its costs incurred for services provided
to accounts that hold shares of the Trust. Reimbursement is made quarterly
at an annual rate of up to 0.20% of the average annual net assets of the
Trust. The Distributor currently uses all of those fees (together with
significant amounts from the Manager's own resources) to pay dealers,
brokers, banks and other financial institutions quarterly for providing
personal services and maintenance of accounts of their customers that hold
shares of the Trust.
Retirement Plans. Direct shareholders may buy shares of a Trust for a retirement
plan account. If you participate in a plan sponsored by your employer, the
plan trustee or administrator must buy the shares for your plan account. The
Sub-Distributor also offers a number of different retirement plans that
individuals and employers can use:
o Individual Retirement Accounts (IRAs). These include regular IRAs, Roth IRAs,
rollover IRAs and Education IRAs.
o SEP-IRAs. These are Simplified Employee Pensions Plan IRAs for small business
owners or self-employed individuals.
o 403(b)(7) Custodial Plans. These are tax deferred plans for employees of
eligible tax-exempt organizations, such as schools, hospitals and charitable
organizations.
o 401(k) Plans. These are special retirement plans for businesses.
o Pension and Profit-Sharing Plans. These plans are designed for businesses
and self-employed individuals.
Please call the Sub-Distributor for retirement plan documents, which
include applications and important plan information.
How to Sell Shares
You can sell (redeem) some or all of your shares on any regular business
day. Your shares will be sold at the next net asset value calculated after
your order is received in proper form (which means that it must comply with
the procedures described below) and is accepted by the Transfer Agent.
HOW CAN PROGRAM PARTICIPANTS SELL SHARES? If you participate in an
Automatic Purchase and Redemption Program sponsored by your broker/dealer,
you must redeem shares held in your Program Account by contacting your
broker/dealer firm, or you can redeem shares by writing checks as described
below. You should not contact the Trust or its Transfer Agent directly to
redeem shares held in your Program Account. You may also arrange (but only
through your broker/dealer) to have the proceeds of redeemed Trust shares
sent by Federal Funds wire, as described below in "Sending Redemption
Proceeds by Wire."
HOW CAN DIRECT SHAREHOLDERS REDEEM SHARES? Direct shareholders can redeem
their shares by writing a letter to the Transfer Agent, Shareholder
Services, Inc., by using checkwriting privileges, or by telephone. You can
also set up Automatic Withdrawal Plans to redeem shares on a regular basis.
If you have questions about any of these procedures, and especially if you
are redeeming shares in a special situation, such as due to the death of
the owner or from a retirement plan account, please call the Transfer Agent
for assistance first, at 1.800.525.9310.
Certain Requests Require a Signature Guarantee. To protect you
and the Trust from fraud, the following redemption requests for
accounts of direct shareholders must be in writing and must
include a signature guarantee (although there may be other
situations that also require a signature guarantee):
o You wish to redeem $100,000 or more and receive a check
o The redemption check is not payable to all shareholders listed on the account
statement
o The redemption check is not sent to the address of record on your account
statement
o Shares are being transferred to an account with a different owner or name o
Shares are being redeemed by someone (such as an Executor) other than the
owners listed in the account registration.
Where Can Direct Shareholders Have Their Signatures Guaranteed?
The Transfer Agent will accept a guarantee of your signature by a
number of financial institutions, including:
o a U.S. bank, trust company, credit union or savings association,
o a foreign bank that has a U.S. correspondent bank,
o a U.S. registered dealer or broker in securities, municipal securities or
government securities, or
o a U.S. national securities exchange, a registered securities association or a
clearing agency.
If you are signing on behalf of a corporation, partnership or other
business or as a fiduciary, you must also include your title in the
signature.
How Can Direct Shareholders Sell Shares by Mail? Write a letter to the Transfer
Agent that includes:
o Your name
o The Trust's name
o Your account number (from your account statement) o The dollar amount or
number of shares to be redeemed o Any special payment instructions o Any
share certificates for the shares you are selling o The signatures of all
registered owners exactly as listed in the account
statement, and
o Any special documents requested by the Transfer Agent to assure proper
authorization of the person asking to sell the shares (such as Letters
Testamentary of an Executor).
---------------------------------------- ---------------------------------------
Use the following address for Send courier or express mail
---------------------------------------- requests to:
requests by mail: Shareholder Services, Inc.
Shareholder Services, Inc. 10200 E. Girard Avenue, Building D
P.O. Box 5143 Denver, Colorado 80231
Denver, Colorado 80217-5270
--------------------------------------------------------------------------------
How Can Direct Shareholders Sell Shares by Telephone? Direct
shareholders and their dealer representative of record may sell
shares by telephone. To receive the redemption price calculated
on a particular regular business day, the Transfer Agent or its
designated agent must receive the request by 4:00 P.M. on that
day. You may not redeem shares held under a share certificate or
in a retirement account by telephone. To redeem shares through a
service representative, call 1.800.525.9310. The check for
proceeds of telephone redemptions will be payable to the
shareholder(s) of record and will be sent to the address of
record for the account. Up to $100,000 may be redeemed by
telephone in any 7-day period. Telephone redemptions are not
available within 30 days of changing the address on an account.
Retirement Plan Accounts. There are special procedures to sell shares
held in a retirement plan account. Call the Transfer Agent for a
distribution request form. Special income tax withholding requirements
apply to distributions from retirement plans. You must submit a withholding
form with your redemption request to avoid delay in getting your money and
if you do not want tax withheld. If your employer holds your retirement
plan account for you in the name of the plan, you must ask the plan trustee
or administrator to request the sale of the Trust shares in your plan
account.
Sending Redemption Proceeds By Wire. While the Transfer Agent normally
sends direct shareholders their money by check, you can arrange to have the
proceeds of the shares you sell sent by Federal Funds wire to a bank
account you designate. It must be a commercial bank that is a member of the
Federal Reserve wire system. The minimum redemption you can have sent by
wire is $2,500. There is a $10 fee for each wire. To find out how to set up
this feature on an account or to arrange a wire, direct shareholders should
call the Transfer Agent at 1.800.525.9310. If you hold your shares through
your dealer's Automatic Purchase and Redemption Program, you must contact
your dealer to arrange a Federal Funds wire.
Can Direct Shareholders Submit Requests by Fax? Direct shareholders
may send requests for certain types of account transactions to the Transfer
Agent by fax (telecopier). Please call 1.800.525.9310 for information about
which transactions may be handled this way. Transaction requests submitted
by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
HOW DO I WRITE CHECKS AGAINST MY ACCOUNT? Automatic Purchase and
Redemption Program participants may write checks against an
account held under their Program, but must arrange for
checkwriting privileges through their dealers. Direct
shareholders may write checks against their account by requesting
that privilege on the account Application or by contacting the
Transfer Agent for signature cards. They must be signed (with a
signature guarantee) by all owners of the account and returned to
the Transfer Agent so that checks can be sent to you to use.
Shareholders with joint accounts can elect in writing to have
checks paid over the signature of one owner. If checkwriting is
established after November 1, 2000, only one signature is
required for shareholders with joint accounts, unless you elect
otherwise.
o Checks can be written to the order of whomever you wish, but may not be
cashed at the bank the checks are payable through or the Trust's custodian
bank.
o Checkwriting privileges are not available for accounts holding shares that
are subject to a contingent deferred sales charge.
o Checks must be written for at least $250.
o Checks cannot be paid if they are written for more than your account value. o
You may not write a check that would require the redemption of shares that
were purchased by check or Automatic Investment Plan payments within the
prior 10 days.
o Don't use your checks if you changed your account number, until you receive
new checks.
WILL I PAY A SALES CHARGE WHEN I SELL MY SHARES? The Trust does
not charge a fee to redeem shares of a Trust that were bought
directly or by reinvesting distributions from that Trust or
another Centennial Trust or eligible fund. Generally, there is no
fee to redeem shares of a Trust bought by exchange of shares of
another Centennial Trust or eligible fund. However,
o if you acquired shares of a Trust by exchanging Class A shares of another
eligible fund that you bought subject to the Class A contingent deferred sales
charge, and
o those shares are still subject to the Class A contingent deferred sales charge
when you exchange them into the Trust, then
o you will pay the contingent deferred sales charge if you redeem those shares
from the Trust within 18 months of the purchase date of the shares of the
fund you exchanged.
How to Exchange Shares
Shares of a Trust can be exchanged for shares of certain other Centennial Trusts
or other eligible funds, depending on whether you own your shares through your
dealer's Automatic Purchase and Redemption Program or as a direct shareholder.
HOW CAN PROGRAM PARTICIPANTS EXCHANGE SHARES? If you participate in an
Automatic Purchase and Redemption Program sponsored by your broker/dealer,
you may exchange shares held in your Program Account for shares of
Centennial Money Market Trust, Centennial Government Trust, Centennial Tax
Exempt Trust, Centennial California Tax Exempt Trust and Centennial New
York Tax Exempt Trust (referred to in this Prospectus as the "Centennial
Trusts"), if available for sale in your state of residence, by contacting
your broker/dealer and obtaining a Prospectus of the selected Centennial
Trust.
HOW CAN DIRECT SHAREHOLDERS EXCHANGE SHARES? Direct shareholders can exchange
shares of a Trust for Class A shares of certain eligible funds listed in the
Statement of Additional Information. To exchange shares, you must meet several
conditions:
o Shares of the fund selected for exchange must be available for sale in your
state of residence.
o The prospectuses of the Trust and the fund whose shares you want to buy must
offer the exchange privilege.
o You must hold the shares you buy when you establish your account for at least
7 days before you can exchange them. After the account is open 7 days, you
can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund whose shares you
purchase by exchange.
o Before exchanging into a fund, you must obtain and read its prospectus.
Shares of a particular class of an eligible fund may be exchanged only for
shares of the same class in other eligible funds. For example, you can exchange
shares of a Trust only for Class A shares of another fund, and you can exchange
only Class A shares of another eligible fund for shares of a Trust.
You may pay a sales charge when you exchange shares of a Trust.
Because shares of the Trusts are sold without sales charge, in some cases
you may pay a sales charge when you exchange shares of a Trust for shares
of other eligible funds that are sold subject to a sales charge. You will
not pay a sales charge when you exchange shares of a Trust purchased by
reinvesting distributions from that Trust or other eligible funds (except
Oppenheimer Cash Reserves), or when you exchange shares of a Trust
purchased by exchange of shares of an eligible fund on which you paid a
sales charge.
For tax purposes, exchanges of shares involve a sale of the shares of
the fund you own and a purchase of the shares of the other fund, which may
result in a capital gain or loss. Since shares of a Trust normally maintain
a $1.00 net asset value, in most cases you should not realize a capital
gain or loss when you sell or exchange your shares.
Direct shareholders can find a list of eligible funds currently
available for exchanges in the Statement of Additional Information or you
can obtain one by calling a service representative at 1.800.525.9310. The
list of eligible funds can change from time to time.
How Do Direct Shareholders Submit Exchange Requests? Direct shareholders may
request exchanges in writing or by telephone:
o Written Exchange Requests. Complete an Exchange Authorization Form, signed
by all owners of the account. Send it to the Transfer Agent at the address
on the back cover.
o Telephone Exchange Requests. Telephone exchange requests may be made by
calling a service representative at 1.800.525.9310. Telephone exchanges may
be made only between accounts that are registered with the same name(s) and
address. Shares held under certificates may not be exchanged by telephone.
ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies
you should be aware of:
o Shares are normally redeemed from one fund and purchased from the other fund
in the exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that conforms to the policies
described above. Requests for exchanges to any of the Centennial Trusts must
be received by the Transfer Agent by 4:00 P.M. on a regular business day to
be effected that day. The Transfer Agent must receive requests to exchange
shares of a Trust to funds other than the Centennial Trusts on a regular
business day by the close of The New York Stock Exchange that day. The close
is normally 4:00 P.M. but may be earlier on some days.
o Either fund may delay the purchase of shares of the fund you are exchanging
into up to seven days if it determines it would be disadvantaged by a
same-day exchange. For example, the receipt of the multiple exchange requests
from a "market timer" might require a fund to sell securities at a
disadvantageous time and/or price.
o Because excessive trading can hurt fund performance and harm shareholders,
the Trusts reserve the right to refuse any exchange request that may, in the
opinion of the Trusts, be disadvantageous, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
o The Trusts may amend, suspend or terminate the exchange privilege at any
time. The Trusts will provide you notice whenever they are required to do so
by applicable law, but they may impose these changes at any time for
emergency purposes.
o If the Transfer Agent cannot exchange all the shares you request because of a
restriction cited above, only the shares eligible for exchange will be
exchanged.
Shareholder Account Rules and Policies
More information about the Trusts' policies and procedures
for buying, selling and exchanging shares is contained in
the Statement of Additional Information.
The offering of shares of a Trust may be suspended during any period in
which the Trust's determination of net asset value is suspended, and
the offering may be suspended by the Board of Trustees at any time it
believes it is in a Trust's best interest to do so.
Telephone transaction privileges for purchases, redemptions or exchanges
may be modified, suspended or terminated by a Trust at any time. If an
account has more than one owner, a Trust and the Transfer Agent may
rely on the instructions of any one owner. Telephone privileges apply
to each owner of the account and the dealer representative of record
for the account unless the Transfer Agent receives cancellation
instructions from an owner of the account.
The Transfer Agent will record any telephone calls to verify data
concerning transactions. It has adopted other procedures to confirm
that telephone instructions are genuine, by requiring callers to
provide tax identification numbers and other account data and by
confirming such transactions in writing. The Transfer Agent and the
Trusts will not be liable for losses or expenses arising out of
telephone instructions reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer
Agent receives all required documents in proper form. From time to time,
the Transfer Agent in its discretion may waive certain of the requirements
for redemptions stated in this Prospectus.
Payment for redeemed shares ordinarily is made in cash. It is
forwarded by check or by Federal Funds wire (as elected by the
shareholder) within seven days after the Transfer Agent receives
redemption instructions in proper form. However, under unusual
circumstances determined by the Securities and Exchange Commission,
payment may be delayed or suspended. For accounts registered in the
name of a broker/dealer, payment will normally be forwarded within
three business days after redemption.
The Transfer Agent may delay forwarding a check or making a
payment via Federal Funds wire for the redemption of recently
purchased shares, but only until the purchase payment has cleared.
That delay may be as much as 10 days from the date the shares were
purchased. That delay may be avoided if you purchase shares by Federal
Funds wire or certified check, or arrange with your bank to provide
telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
Involuntary redemptions of small accounts may be made by
Centennial Tax Exempt Trust if the account value has fallen below $500
for reasons other than the fact that the market value of shares has
dropped. In some cases involuntary redemptions may be made to repay
the Distributor or Sub-Distributor for losses from the cancellation of
share purchase orders.
"Backup Withholding" of federal income tax may be applied against
taxable dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Trust your correct, certified
Social Security or Employer Identification Number when you sign your
application, or if you under-report your income to the Internal
Revenue Service.
To avoid sending duplicate copies of materials to households, the
Trust will mail only one copy of each prospectus, annual and
semi-annual report to shareholders having the same last name and
address on the Trust's records. The consolidation of these mailings,
called householding, benefits the Trust through reduced mailing
expense.
If you want to receive multiple copies of these materials, you
may call the Transfer Agent at 1.800.525.9310. You may also notify the
Transfer Agent in writing. Individual copies of prospectuses and
reports will be sent to you within 30 days after the Transfer Agent
receives your request to stop householding.
Dividends and Tax Information
DIVIDENDS. Each Trust intends to declare dividends from net
investment income each regular business day and to pay those dividends
to shareholders monthly on a date selected by the Board of Trustees.
To maintain a net asset value of $1.00 per share, a Trust might
withhold dividends or make distributions from capital or capital
gains. Daily dividends will not be declared or paid on newly purchased
shares until Federal Funds are available to a Trust from the purchase
payment for such shares.
CAPITAL GAINS. Each Trust normally holds its securities to
maturity and therefore will not usually pay capital gains. Although
the Trusts do not seek capital gains, a Trust could realize capital
gains on the sale of its portfolio securities. If it does, it may make
distributions out of any net short-term or long-term capital gains in
December of each year. A Trust may make supplemental distributions of
dividends and capital gains following the end of its fiscal year.
What Choices Do I Have for Receiving Distributions? For Automatic
Purchase and Redemption Programs, dividends and distributions are
automatically reinvested in additional shares of the selected Trust.
For direct shareholders, when you open your account, you should
specify on your application how you want to receive your dividends and
distributions. You have four options:
o Reinvest All Distributions in the Trust. You can elect to reinvest some
distributions (dividends, short-term capital gains or long-term capital gains
distributions) in the selected Trust.
o Reinvest Capital Gains Only. You can elect to reinvest some capital gains
distributions (dividends, short-term capital gains or long-term capital gains
distributions) in the selected Trust while receiving dividends by check or
having them sent to your bank account.
o Receive All Distributions in Cash. You can elect to receive a (dividends,
short-term capital gains or long-term capital gains distributions) check for
all distributions or have them sent to your bank.
o Reinvest Your Distributions in Another Account. You can reinvest all
distributions (dividends, short-term capital gains or long-term capital gains
distributions) in the same class of shares of another eligible fund account
you have established.
Under the terms of Automatic Purchase and Redemption Programs,
your broker/dealer can redeem shares to satisfy debit balances arising
in your Program Account. If that occurs, you will be entitled to
dividends on those shares as described in your Program Agreements.
TAXES.
Centennial Money Market Trust and Centennial Government Trust. If your
shares are not held in a tax-deferred retirement account, you should be
aware of the following tax implications of investing in Centennial Money
Market Trust and Centennial Government Trust. Dividends paid from net
investment income and short-term capital gains are taxable as ordinary
income. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. It does not matter how long you have held your
shares. Whether you reinvest your distributions in additional shares or
take them in cash, the tax treatment is the same.
Every year the Trust will send you and the IRS a statement showing the
amount of each taxable distribution you received in the previous year. Any
long-term capital gains distributions will be separately identified in the
tax information the Trust sends you after the end of the calendar year.
Centennial Tax Exempt Trust. Exempt interest dividends paid from net
investment income earned by the Trust on municipal securities will be
excludable from gross income for federal income tax purposes. A portion of
a dividend that is derived from interest paid on certain "private activity
bonds" may be an item of tax preference if you are subject to the
alternative minimum tax. If the Trust earns interest on taxable
investments, any dividends derived from those earnings will be taxable as
ordinary income to shareholders.
Dividends and capital gains distributions may be subject to state
or local taxes. Long-term capital gains are taxable as long-term
capital gains when distributed to shareholders. It does not matter how
long you have held your shares. Dividends paid from short-term capital
gains and non-tax exempt net investment income are taxable as ordinary
income. Whether you reinvest your distributions in additional shares
or take them in cash, the tax treatment is the same. Every year the
Trust will send you and the IRS a statement showing the amount of any
taxable distribution you received in the previous year as well as the
amount of your tax-exempt income.
Remember, There May be Taxes on Transactions. Because each Trust
seeks to maintain a stable $1.00 per share net asset value, it is
unlikely that you will have a capital gain or loss when you sell or
exchange your shares. A capital gain or loss is the difference between
the price you paid for the shares and the price you received when you
sold them. Any capital gain is subject to capital gains tax.
Returns of Capital Can Occur. In certain cases, distributions
made by a Trust may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders.
This information is only a summary of certain federal income tax
information about your investment. You should consult with your tax
adviser about the effect of an investment in a Trust on your
particular tax situation.
<PAGE>
Financial Highlights
The Financial Highlights Tables are presented to help you
understand each Trust's financial performance for the past five fiscal
years. Certain information reflects financial results for a single
Trust share. The total returns in the tables represent the rate that
an investor would have earned (or lost) on an investment in the Trusts
(assuming reinvestment of all dividends and distributions). This
information for the past five fiscal years ended June 30, 2000, has
been audited by Deloitte & Touche LLP, the Trusts' independent
auditors, whose report, along with the Trusts' financial statements,
are included in the Statements of Additional Information, which are
available on request.
<PAGE>
FINANCIAL HIGHLIGHTS
Centennial Government Trust
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period....................... $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations--
net investment income and
net realized gain........................................ .05 .04 .05 .05 .05
Dividends and/or distributions to shareholders............. (.05) (.04) (.05) (.05) (.05)
----- ----- ----- ----- -----
Net asset value, end of period............................. $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
TOTAL RETURN(1)............................................ 5.07% 4.47% 4.93% 4.75% 4.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions).................... $1,192 $1,213 $1,132 $1,027 $ 942
Average net assets (in millions)........................... $1,244 $1,245 $1,117 $1,032 $ 962
Ratios to average net assets:(2)
Net investment income...................................... 4.92% 4.37% 4.82% 4.65% 4.83%
Expenses................................................... 0.74% 0.74% 0.75%(3) 0.76%(3) 0.77%(3)
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Total returns reflect
changes in net investment income only. Total returns are not annualized for
periods less than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses
paid indirectly.
<PAGE>
-30-
INFORMATION AND SERVICES
For More Information on Centennial Money Market Trust:
The following additional information about the Trust is available without charge
upon request:
STATEMENT OF ADDITIONAL INFORMATION This document includes
additional information about the Trust's investment policies,
risks, and operations. It is incorporated by reference into this
Prospectus (which means it is legally part of this Prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS Additional information about the Trust's
investments and performance is available in the Trust's Annual and Semi-Annual
Reports to shareholders. The Annual Report includes a discussion of market
conditions and investment strategies that significantly affected the Trust's
performance during its last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the
Annual and Semi-Annual Reports, and other information about
the Trusts or your account:
--------------------------------------------------------------------------------
By Telephone: Call Shareholder Services, Inc.
toll-free:
1.800.525.9310
-------------------------------------------------------------------------------
By Mail: Write to:
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217
--------------------------------------------------------------------------------
You can also obtain copies of the Statement of Additional
Information and other Trust documents and reports by visiting the
SEC's Public Reference Room in Washington, D.C. (Phone
1.202.942.8090) or the EDGAR database on the SEC's Internet web
site at http://www.sec.gov. Copies may be obtained after payment
of a duplicating fee by electronic request at the SEC's e-mail
address : [email protected] or by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102.
No one has been authorized to provide any information about the Trust or to make
any representations about the Trust other than what is contained in this
Prospectus. This Prospectus is not an offer to sell shares of the Trust, nor a
solicitation of an offer to buy shares of the Trust, to any person in any state
or other jurisdiction where it is unlawful to make such an offer.
The Trust's shares are distributed by:
SEC File No. 811-3391 Centennial Asset Management Corporation
PR0170.001.1100
Printed on recycled paper
<PAGE>
APPENDIX TO THE PROSPECTUS OF
CENTENNIAL GOVERNMENT TRUST
Graphic material included in Prospectus of Centennial Government Trust (the
"Trust") under the heading: "Annual Total Returns (as of 12/31 each year)."
Bar chart will be included in the Prospectus of the Trust depicting the
annual total returns of a hypothetical investment in shares of the Trust for the
full calendar year since the Trust's inception as a money market fund. Set forth
below are the relevant data points that will appear on the bar chart.
--------------------------------------------------------------------
Calendar Year Ended: Annual Total Returns
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/90 7.70%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/91 5.85%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/92 3.46%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/93 2.67%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/94 3.71%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/95 5.26%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/96 4.72%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/97 4.86%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/98 4.84%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/99 4.43%
--------------------------------------------------------------------
<PAGE>
Centennial Government Trust
--------------------------------------------------------------------------------
6803 South Tucson Way, Englewood, Colorado 80112
1.800.525.9310
Statement of Additional Information dated November 1, 2000
This Statement of Additional Information is not a Prospectus. This document
contains additional information about the Trust and supplements information in
the Prospectus dated November 1, 2000. It should be read together with the
Prospectus, which may be obtained by writing to the Trust's Transfer Agent,
Shareholder Services, Inc., at P.O. Box 5143, Denver, Colorado 80217, or by
calling the Transfer Agent at the toll-free number shown above.
Contents
Page
About the Trust
Additional Information about the Trust's Investment Policies and Risks.......2
The Trust's Investment Policies.........................................2
Other Investment Strategies.............................................5
Investment Restrictions.................................................6
How the Trust is Managed.....................................................8
Organization and History................................................8
Trustees and Officers of the Trust......................................9
The Manager............................................................14
Service Plan................................................................16
Performance of the Trust....................................................17
About Your Account
How To Buy Shares...........................................................20
How To Sell Shares..........................................................21
How To Exchange Shares......................................................22
Dividends and Taxes.........................................................24
Additional Information About the Trust......................................25
Financial Information About the Trust
Independent Auditors' Report................................................26
Financial Statements........................................................27
Appendix A: Securities Ratings.............................................A-1
Appendix B: Industry Classifications.......................................B-1
<PAGE>
A B O U T T H E T R U S T
Additional Information About the Trust's Investment Policies and Risks
The investment objective and the principal investment policies of the Trust
are described in the Prospectus. This Statement of Additional Information
contains supplemental information about those policies and the types of
securities that the Trust's investment manager, Centennial Asset Management
Corporation, (referred to as, the "Manager") will select for the Trust.
Additional explanations are also provided about the strategies the Trust
may use to try to achieve its objective.
The Trust's Investment Policies. The composition of the Trust's portfolio
and the techniques and strategies that the Trust's Manager uses in
selecting portfolio securities will vary over time. The Trust is not
required to use all of the investment techniques and strategies described
below at all times in seeking its goal. It may use some of the special
investment techniques and strategies at some times or not at all.
The Trust's objective is to seek a high level of current income consistent
with preservation of capital and the maintenance of liquidity. The Trust will
not make investments with the objective of seeking capital growth. However, the
value of the securities held by the Trust may be affected by changes in general
interest rates. Because the current value of debt securities varies inversely
with changes in prevailing interest rates, if interest rates increase after a
security is purchased, that security would normally decline in value.
Conversely, if interest rates decrease after a security is purchased, its value
would rise. However, those fluctuations in value will not generally result in
realized gains or losses to the Trust since the Trust does not usually intend to
dispose of securities prior to their maturity. A debt security held to maturity
is redeemable by its issuer at full principal value plus accrued interest.
The Trust may sell securities prior to their maturity, to attempt to take
advantage of short-term market variations, or because of a revised credit
evaluation of the issuer or other considerations. The Trust may also do so to
generate cash to satisfy redemptions of Trust shares. In such cases, the Trust
may realize a capital gain or loss on the security.
|X| Ratings of Securities -- Portfolio Quality, Maturity and
Diversification. Under Rule 2a-7 of the Investment Company Act of 1940, the
Trust uses the amortized cost method to value its portfolio securities to
determine the Trust's net asset value per share. Rule 2a-7 places restrictions
on a money market fund's investments. Under that Rule, the Trust may purchase
only those securities that the Manager, under Board-approved procedures, has
determined have minimal credit risks and are "Eligible Securities." The rating
restrictions described in the Prospectus and this Statement of Additional
Information do not apply to banks in which the Trust's cash is kept.
An "Eligible Security" is one that has been rated in one of the two highest
short-term rating categories by any two "nationally-recognized statistical
rating organizations." That term is defined in Rule 2a-7 and they are referred
to as "Rating Organizations" in this Statement of Additional Information. If
only one Rating Organization has rated that security, it must have been rated in
one of the two highest rating categories by that Rating Organization. An unrated
security that is judged by the Manager to be of comparable quality to Eligible
Securities rated by Rating Organizations may also be an "Eligible Security."
Rule 2a-7 permits the Trust to purchase any number of "First Tier
Securities." These are Eligible Securities that have been rated in the highest
rating category for short-term debt obligations by at least two Rating
Organizations. If only one Rating Organization has rated a particular security,
it must have been rated in the highest rating category by that Rating
Organization. Comparable unrated securities may also be First Tier Securities.
Under Rule 2a-7, the Trust may invest only up to 5% of its total assets in
"Second Tier Securities." Those are Eligible Securities that are not "First Tier
Securities." In addition, the Trust may not invest more than: |_| 5% of its
total assets in the securities of any one issuer (other than the U.S.
government, its agencies or instrumentalities) or |_| 1% of its total assets or
$1 million (whichever is greater) in Second Tier Securities of any one issuer.
Under Rule 2a-7, the Trust must maintain a dollar-weighted average
portfolio maturity of not more than 90 days, and the maturity of any single
portfolio investment may not exceed one year from the date of purchase. The
Board of Trustees has recommended that shareholders approve increasing the
maximum permitted maturity to the maximum permitted under Rule 2a-7 (or any
other applicable rule) which is currently 397 days. If that change is not
approved by shareholders, the prospectus and this Statement of Additional
Information will be supplemented to reflect that the change was not approved.
The Board regularly reviews reports from the Manager to show the Manager's
compliance with the Trust's procedures and with the Rule.
If a security's rating is downgraded, the Manager and/or the Board of
Trustees may have to reassess the security's credit risk. If a security has
ceased to be a First Tier Security, the Manager will promptly reassess whether
the security continues to present minimal credit risk. If the Manager becomes
aware that any Rating Organization has downgraded its rating of a Second Tier
Security or rated an unrated security below its second highest rating category,
the Trust's Board of Trustees shall promptly reassess whether the security
presents minimal credit risk and whether it is in the best interests of the
Trust to dispose of it. If the Trust disposes of the security within five days
of the Manager learning of the downgrade, the Manager will provide the Board of
Trustees with subsequent notice of such downgrade. If a security is in default,
or ceases to be an Eligible Security, or is determined no longer to present
minimal credit risks, the Board of Trustees must determine whether it would be
in the best interests of the Trust to dispose of the security.
The Rating Organizations currently designated as nationally-recognized
statistical rating organizations by the Securities and Exchange Commission are
Standard & Poor's Corporation, Moody's Investors Service, Inc., Fitch, Inc. and
Thomson BankWatch, Inc. Appendix A to this Statement of Additional Information
contains descriptions of the rating categories of those Rating Organizations.
Ratings at the time of purchase will determine whether securities may be
acquired under the restrictions described above.
|X| U.S. Government Securities. U.S. government securities are obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities. They include Treasury Bills (which mature within one year of
the date they are issued) and Treasury Notes and Bonds (which are issued with
longer maturities). All Treasury securities are backed by the full faith and
credit of the United States.
U.S. government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage Association, General
Services Administration, Bank for Cooperatives, Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land
Banks, Maritime Administration, the Tennessee Valley Authority and the District
of Columbia Armory Board. The Trust will not invest in securities issued by the
Inter-American Development Bank, the Asian-American Development Bank and the
International Bank for Reconstruction and Development or in pooled mortgages
offered by the Federal Housing Administration or Veterans Administration.
Securities issued or guaranteed by U.S. government agencies and
instrumentalities are not always backed by the full faith and credit of the
United States. Some, such as securities issued by the Federal National Mortgage
Association ("Fannie Mae"), are backed by the right of the agency or
instrumentality to borrow from the Treasury. Others, such as securities issued
by the Federal Home Loan Mortgage Corporation ("Freddie Mac"), are supported
only by the credit of the instrumentality and not by the Treasury. If the
securities are not backed by the full faith and credit of the United States, the
purchaser must look principally to the agency issuing the obligation for
repayment and may not be able to assert a claim against the United States if the
issuing agency or instrumentality does not meet its commitment. The Trust will
invest in U.S. government securities of such agencies and instrumentalities only
when the Manager is satisfied that the credit risk with respect to such
instrumentality is minimal and that the security is an Eligible Security.
|X| Repurchase Agreements. In a repurchase transaction, the Trust acquires
a security from, and simultaneously resells it to, an approved vendor for
delivery on an agreed-upon future date. The resale price exceeds the purchase
price by an amount that reflects an agreed-upon interest rate effective for the
period during which the repurchase agreement is in effect. An "approved vendor"
may be a U.S. commercial bank or the U.S. branch of a foreign bank having total
domestic assets of at least $1 billion, or a broker-dealer with a net capital of
$50 million which has been designated a primary dealer in government securities.
The majority of these transactions run from day to day, and delivery
pursuant to the resale typically will occur within one to five days of the
purchase. The Trust will not enter into a repurchase agreement that will cause
more than 10% of its net assets to be subject to repurchase agreements maturing
in more than seven days.
Repurchase agreements are considered "loans" under the Investment Company
Act, collateralized by the underlying security. The Trust's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the collateral's value must equal or exceed the repurchase price to
fully collateralize the repayment obligation. Additionally, the Manager will
monitor the vendor's creditworthiness to confirm that the vendor is financially
sound and will continuously monitor the collateral's value. However, if the
vendor fails to pay the resale price on the delivery date, the Trust may incur
costs in disposing of the collateral and may experience losses if there is any
delay in its ability to do so.
Other Investment Strategies
o Floating Rate/Variable Rate Obligations. The Trust may invest in
instruments with floating or variable interest rates. The interest rate on a
floating rate obligation is based on a stated prevailing market rate, such as a
bank's prime rate, the 90-day U.S. Treasury Bill rate, the rate of return on
commercial paper or bank certificates of deposit, or some other standard. The
rate on the investment is adjusted automatically each time the market rate is
adjusted. The interest rate on a variable rate obligation is also based on a
stated prevailing market rate but is adjusted automatically at a specified
interval of not less than one year. Some variable rate or floating rate
obligations in which the Trust may invest have a demand feature entitling the
holder to demand payment of an amount approximately equal to the amortized cost
of the instrument or the principal amount of the instrument plus accrued
interest at any time, or at specified intervals not exceeding one year. These
notes may or may not be backed by bank letters of credit.
Variable rate demand notes may include master demand notes, which are
obligations that permit the Trust to invest fluctuating amounts in a note. The
amount may change daily without penalty, pursuant to direct arrangements between
the Trust, as the note purchaser, and the issuer of the note. The interest rates
on these notes fluctuate from time to time. The issuer of this type of
obligation normally has a corresponding right in its discretion, after a given
period, to prepay the outstanding principal amount of the obligation plus
accrued interest. The issuer must give a specified number of days' notice to the
holders of those obligations. Generally, the changes in the interest rate on
those securities reduce the fluctuation in their market value. As interest rates
decrease or increase, the potential for capital appreciation or depreciation is
less than that for fixed-rate obligations having the same maturity.
Because these types of obligations are direct lending arrangements between
the note purchaser and issuer of the note, these instruments generally will not
be traded. Generally, there is no established secondary market for these types
of obligations, although they are redeemable from the issuer at face value.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, the Trust's right to redeem them is dependent
on the ability of the note issuer to pay principal and interest on demand. These
types of obligations usually are not rated by credit rating agencies. The Trust
may invest in obligations that are not rated only if the Manager determines at
the time of investment that they are Eligible Securities. The Manager, on behalf
of the Trust, will monitor the creditworthiness of the issuers of the floating
and variable rate obligations in the Trust's portfolio on an ongoing basis.
There is no limit on the amount of the Trust's assets that may be invested in
floating rate and variable rate obligations that meet the requirements of Rule
2a-7.
o Loans of Portfolio Securities. To attempt to increase its income, the
Trust may lend its portfolio securities to brokers, dealers and other financial
institutions. These loans are limited to not more than 25% of the value of the
Trust's total assets and are subject to other conditions described below. The
Trust will not enter into any securities lending agreements having a maturity of
greater than one year (or if the proposed change is approved by shareholders,
the maximum time permitted under Rule 2a-7). The Trust presently does not intend
that the value of securities loaned will exceed 5% of the value of the Trust's
total assets in the coming year. There are some risks in lending securities. The
Trust could experience a delay in receiving additional collateral to secure a
loan, or a delay in recovering the loaned securities.
The Trust may receive collateral for a loan. Any securities received as
collateral for a loan must mature in twelve months or less. Under current
applicable regulatory requirements (which are subject to change), on each
business day the loan collateral must be at least equal to the market value of
the loaned securities. The collateral must consist of cash, bank letters of
credit, U.S. government securities or other cash equivalents in which the Trust
is permitted to invest. To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by the Trust if the demand meets the
terms of the letter. Such terms and the issuing bank must be satisfactory to the
Trust.
When it lends securities, the Trust receives from the borrower an
amount equal to the interest paid or the dividends declared on the loaned
securities during the term of the loan. It may also receive negotiated loan
fees and the interest on the collateral securities, less any finders',
custodian, administrative or other fees the Trust pays in connection with
the loan. The Trust may share the interest it receives on the collateral
securities with the borrower as long as it realizes at least a minimum
amount of interest required by the lending guidelines established by its
Board of Trustees. The Trust will not lend its portfolio securities to any
officer, Trustee, employee or affiliate of the Trust or its Manager. The
terms of the Trust's loans must meet certain tests under the Internal
Revenue Code and permit the Trust to reacquire loaned securities on five
business days notice or in time to vote on any important matter.
Investment Restrictions
|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Trust has adopted to govern its investments that can be
changed only by the vote of a "majority" of the Trust's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is defined
as the vote of the holders of the lesser of:
|_| 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the outstanding
shares are present or represented by proxy, or |_| more than 50% of the
outstanding shares.
The Trust's investment objective is a fundamental policy. Other
policies described in the Prospectus or this Statement of Additional
Information are "fundamental" only if they are identified as such. The
Trust's Board of Trustees can change non-fundamental policies without
shareholder approval. However, significant changes to investment policies
will be described in supplements or updates to the Prospectus or this
Statement of Additional Information, as appropriate. The Trust's most
significant investment policies are described in the Prospectus.
|X| Does the Trust Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Trust.
|_| The Trust cannot enter into repurchase agreements maturing in more
than seven days or purchase securities which are restricted as to resale or
for which market quotations are not readily available, if any such
investment would cause more than 10% of the Trust's assets to be invested
in such securities;
|_| The Trust cannot borrow money in excess of 10% of the value of its
total assets, and then only as a temporary measure for extraordinary or
emergency purposes; provided that the Trust will not make any investment at
a time during which such borrowing exceeds 5% of the value of its assets;
no assets of the Trust may be pledged, mortgaged or assigned to secure a
debt;
|_| The Trust cannot make loans, except through (i) the purchase of
debt securities listed in the Prospectus under "Investment Objective and
Policies," (ii) the purchase of such debt securities subject to repurchase
agreements, or (iii) loans of securities as described under "Other
Investment Strategies - Loans of Portfolio Securities," in this Statement
of Additional Information;
|_| The Trust cannot invest in commodities or commodity contracts or
invest in interests in oil, gas or other mineral exploration or development
programs;
|_| The Trust cannot invest in real estate;
|_| The Trust cannot purchase securities on margin or make short sales of
securities;
|_| The Trust cannot invest in or hold securities of any issuer if those
officers and Trustees of the Trust or its advisor who beneficially own
individually more than 0.5% of the securities of such issuer together own
more than 5% of the securities of such issuer;
|_| The Trust cannot underwrite securities of other companies; or
|_| The Trust cannot invest in securities of other investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets.
|_| The Trust cannot issue "senior securities," but this does not
prohibit certain investment activities for which assets of the Trust are
designated as segregated, or margin, collateral or escrow arrangements are
established, to cover the related obligations.
The Trust cannot invest 25% or more of its total assets in any one
industry; however, for the purposes of this restriction, municipal
securities and U.S. government obligations are not considered to be part of
any single industry.
The Board of Trustees has recommended shareholders approve changing or
eliminating certain fundamental policies of the Trust. These changes are
expected to be approved by shareholders at a meeting which is scheduled to
be held on or about December 15, 2000 (or any adjournments of that
meeting). If the changes are not approved by shareholders, the Manager will
supplement this Statement of Additional Information to reflect that the
changes were not approved. The changes to the fundamental policies that the
Board of Trustees has recommended that shareholders approve are as follows:
? Eliminating the fundamental investment restriction concerning the
Trust's investment in any security not discussed in its Prospectus or
Statement of Additional Information. Specifically, the Board has
recommended that shareholders approve the elimination of the following
fundamental investment restriction:
--------------------------------------------------------------------------------
Current
--------------------------------------------------------------------------------
The Trust cannot invest in any security other than those discussed in the
Prospectus or Statement of Additional Information under "Investment Objective
and Policies."
--------------------------------------------------------------------------------
Amending the fundamental investment restriction on
investing in debt securities having a maturity greater than
one year. The Trust currently has a fundamental investment
restriction that limits the maturity on debt securities it
can purchase to one year or less. This restriction is more
restrictive than is required under Rule 2a-7. Accordingly,
the Board has recommended that shareholders approve the
following change:
--------------------------------------------------------------------------------
Current
--------------------------------------------------------------------------------
The Trust cannot invest in any debt instrument having a maturity in excess of
one year fron 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.
--------------------------------------------------------------------------------
Proposed
--------------------------------------------------------------------------------
The Trust cannot invest in any debt instrument having a maturity in excess of
the time period provided for in Rule 2a-7 of the Investment Company Act of 1940,
or any other applicable rule, or in the case of debt instrument subject to a
repurchase agreement or called for redemption, unless purchased subject to a
demand feature which may not exceed the time period provided for in Rule 2a-7,
or any other applicable rule.
--------------------------------------------------------------------------------
These proposed changes are described in more detail in the Proxy
Statement which was previously sent to shareholders. If you have any
questions about these changes, please contact the Transfer Agent at
1.800.525.9310.
How the Trust Is Managed
Organization and History. The Trust is an open-end, diversified management
investment company organized as a Massachusetts business trust in 1982, with an
unlimited number of authorized shares of beneficial interest.
The Trust is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees meet periodically throughout the year to oversee the Trust's
activities, review its performance, and review the actions of the Manager.
Although the Trust will not normally hold annual meetings of its
shareholders, it may hold shareholder meetings from time to time on
important matters. Shareholders of the Trust may have the right to call a
meeting to remove a Trustee or to take other action described in the
Declaration of Trust.
|X| Classes of Shares. The Trust has a single class of shares of stock.
While that class has no designation, it is deemed to be the equivalent of
Class A for purposes of the shareholder account policies that apply to
Class A shares of the Oppenheimer funds. Shares of the Trust are freely
transferable. Each share has one vote at shareholder meetings, with
fractional shares voting proportionally on matters submitted to a vote of
shareholders. There are no preemptive or conversion rights and shares
participate equally in the assets of the Trust upon liquidation.
|X| Meetings of Shareholders. As a Massachusetts business trust, the Trust
is not required to hold, and does not plan to hold, regular annual meetings
of shareholders. The Trust will hold meetings when required to do so by the
Investment Company Act or other applicable law. It will also do so when a
shareholder meeting is called by the Trustees or upon proper request of the
shareholders.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of the Trust, to remove a Trustee. The
Trustees will call a meeting of shareholders to vote on the removal of a
Trustee upon the written request of the record holders of 10% of the
outstanding shares of the Trust. If the Trustees receive a request from at
least 10 shareholders stating that they wish to communicate with other
shareholders to request a meeting to remove a Trustee, the Trustees will
then either make the shareholder lists of the Trust available to the
applicants or mail their communication to all other shareholders at the
applicants' expense. The shareholders making the request must have been
shareholders for at least six months and must hold shares of the Trust
valued at $25,000 or more or constituting at least 1% of the outstanding
shares of the Trust, whichever is less. The Trustees may also take other
action as permitted by the Investment Company Act.
|_| Shareholder and Trustee Liability. The Declaration of Trust
contains an express disclaimer of shareholder or Trustee liability for
the Trust's obligations. It also provides for indemnification and
reimbursement of expenses out of the Trust's property for any
shareholder held personally liable for its obligations. The
Declaration of Trust also states that upon request, the Trust shall
assume the defense of any claim made against a shareholder for any act
or obligation of the Trust and shall satisfy any judgment on that
claim. Massachusetts law permits a shareholder of a business trust
(such as the Trust) to be held personally liable as a "partner" under
certain circumstances. However, the risk that a Trust shareholder will
incur financial loss from being held liable as a "partner" of the
Trust is limited to the relatively remote circumstances in which the
Trust would be unable to meet its obligations.
The Trust's contractual arrangements state that any person doing business with
the Trust (and each shareholder of the Trust) agrees under the Declaration
of Trust to look solely to the assets of the Trust for satisfaction of any
claim or demand that may arise out of any dealings with the Trust.
Additionally, the Trustees shall have no personal liability to any such
person, to the extent permitted by law.
Trustees and Officers of the Trust. The Trust's Trustees and officers and
their principal occupations and business affiliations during the past
five years are listed below. Trustees denoted with an asterisk (*)
below are deemed to be "interested persons" of the Trust under the
Investment Company Act. All of the Trustees are also trustees,
directors or managing general partners of the following Denver-based
Oppenheimer funds1:
Oppenheimer Cash Reserves Oppenheimer Senior Floating Rate
Fund
Oppenheimer Champion Income Fund Oppenheimer Strategic Income Fund
Oppenheimer Capital Income Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer High Yield Fund Oppenheimer Variable Account Funds
Oppenheimer International Bond Fund Panorama Series Fund, Inc.
Oppenheimer Integrity Funds Centennial America Fund, L. P.
Oppenheimer Limited-Term Government Centennial California Tax Exempt
Fund Trust
Oppenheimer Main Street Funds, Inc. Centennial Government Trust
Oppenheimer Main Street Opportunity
Fund Centennial Money Market Trust
Oppenheimer Main Street Small Cap
Fund Centennial New York Tax Exempt Trust
Oppenheimer Municipal Fund Centennial Tax Exempt Trust
Oppenheimer Real Asset Fund
Robert G. Avis*, Trustee, Age: 69. One North Jefferson Ave., St. Louis, Missouri
63103 Director and President of A.G. Edwards Capital, Inc. (General Partner
of private equity funds), formerly, until March 2000, Chairman, President
and Chief Executive Officer of A.G. Edwards Capital, Inc.; formerly, until
March 1999, Vice Chairman and Director of A.G. Edwards and Vice Chairman of
A.G. Edwards & Sons, Inc. (its brokerage company subsidiary); until March
1999, Chairman of A.G. Edwards Trust Company and A.G.E. Asset Management
(investment advisor); until March 2000, a Director of A.G. Edwards & Sons
and A.G. Edwards Trust Company.
George C. Bowen, Trustee, Age: 64. 9224 Bauer Court, Lone Tree, Colorado 80124
Formerly (until April 1999) Mr. Bowen held the following positions: Senior
Vice President (since September 1987) and Treasurer (since March 1985) of
OppenheimerFunds, Inc. of which the Manager is a wholly-owned subsidiary;
Vice President (since June 1983) and Treasurer (since March 1985) of
OppenheimerFunds, Distributor, Inc., a subsidiary of OppenheimerFunds, Inc.
and the Trust's Sub-Distributor; Senior Vice President (since February
1992), Treasurer (since July 1991) Assistant Secretary and a director
(since December 1991) of Centennial Asset Management Corp., the Trust's
Manager; Vice President (since October 1989) and Treasurer (since April
1986) of HarbourView Asset Management Corporation, an investment advisor
subsidiary of OppenheimerFunds, Inc.; President, Treasurer and a director
of Centennial Capital Corporation (since June 1989), Vice President and
Treasurer (since August 1978) and Secretary (since April 1981) of
Shareholder Services, Inc., the Trust's Transfer Agent; Vice President,
Treasurer and Secretary of Shareholder Financial Services, Inc. (since
November 1989) ), a transfer agent subsidiary of OppenheimerFunds, Inc;
Assistant Treasurer of Oppenheimer Acquisition Corp., OppenheimerFunds,
Inc.'s parent holding company (since March 1998); Treasurer of Oppenheimer
Partnership Holdings, Inc. (since November 1989), a holding company
subsidiary of OppenheimerFunds, Inc.; Vice President and Treasurer of
Oppenheimer Real Asset Management, Inc. (since July 1996) an investment
advisor subsidiary of OppenheimerFunds, Inc.; Treasurer of OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc (since October
1997), offshore fund management subsidiaries of OppenheimerFunds, Inc.
Jon S. Fossel, Trustee, Age: 58.
P.O. Box 44, Mead Street, Waccabuc, New York 10597
Formerly (until October 1990) Chairman and a director of OppenheimerFunds, Inc.;
President and a director of Oppenheimer Acquisition Corp., Shareholder Services,
Inc. and Shareholder Financial Services, Inc.
Sam Freedman, Trustee, Age: 60. 4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly (until October 1994) Chairman and Chief Executive Officer of
OppenheimerFunds Services, Chairman, Chief Executive Officer and a director
of Shareholder Services, Inc., Chairman, Chief Executive Officer and
director of Shareholder Financial Services, Inc., Vice President and
director of Oppenheimer Acquisition Corp. and a director of
OppenheimerFunds, Inc.
Raymond J. Kalinowski, Trustee, Age: 71. 44 Portland Drive, St. Louis, Missouri
63131 Formerly a director of Wave Technologies International, Inc. (a
computer products training company), self-employed consultant (securities
matters).
C. Howard Kast, Trustee, Age: 78.
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).
Robert M. Kirchner, Trustee, Age: 79.
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Bridget A. Macaskill*, President and Trustee, Age: 52. Two World Trade Center,
New York, New York 10048-0203 Chairman (since August 2000), Chief Executive
Officer (since September 1995) and a director (since December 1994) of
OppenheimerFunds, Inc.; President (since September 1995) and a director
(since October 1990) of Oppenheimer Acquisition Corp.; President, Chief
Executive Officer and a director (since March 2000) of OFI Private
Investments, Inc., an investment advisor subsidiary of OppenheimerFunds,
Inc.; Chairman and a director of Shareholder Services, Inc. (since August
1994) and Shareholder Financial Services, Inc. (since September 1995);
President (since September 1995) and a director (since November 1989) of
Oppenheimer Partnership Holdings, Inc; President and a director (since
October 1997) of OppenheimerFunds International Ltd. and of Oppenheimer
Millennium Funds plc; a director of HarbourView Asset Management
Corporation (since July 1991) and of Oppenheimer Real Asset Management,
Inc. (since July 1996); a director (since April 2000) of OppenheimerFunds
Legacy Program, a charitable trust program established by OppenheimerFunds,
Inc.; a director of Prudential Corporation plc (a U.K. financial service
company); President and a trustee of other Oppenheimer funds; formerly
President of OppenheimerFunds, Inc. (June 1991 - August 2000).
JamesC. Swain*, Chairman, Chief Executive Officer and Trustee, Age: 66. 6803
South Tucson Way, Englewood, Colorado 80112 Vice Chairman (since September
1988) of OppenheimerFunds, Inc.; formerly President and a director of the
Manager and Chairman of the Board of Shareholder Services, Inc.
CarolE. Wolf, Vice President and Portfolio Manager, Age: 48. 6803 South Tucson
Way, Englewood, Colorado 80112 Senior Vice President (since June 2000) of
OppenheimerFunds, Inc.; an officer and portfolio manager of other
Oppenheimer funds; formerly Vice President of the Manager and of
OppenheimerFunds, Inc. (June 1990 - June 2000).
Andrew J. Donohue, Vice-President and Secretary, Age: 50. Two World Trade
Center, New York, New York 10048-0203 Executive Vice President (since
January 1993), General Counsel (since October 1991) and a director (since
September 1995) of OppenheimerFunds, Inc.; Executive Vice President (since
September 1993) and a director (since January 1992) of OppenheimerFunds
Distributor, Inc.; Executive Vice President, General Counsel and a director
(since September 1995) of HarbourView Asset Management Corporation,
Shareholder Services, Inc., Shareholder Financial Services, Inc. and
Oppenheimer Partnership Holdings, Inc., of OFI Private Investments, Inc.
(since March 2000), and of PIMCO Trust Company (since May 2000); President
and a director of the Manager; (since September 1995) and of Oppenheimer
Real Asset Management, Inc. (since July 1996); Vice President and a
director (since September 1997) of OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc; a director (since April 2000) of
OppenheimerFunds Legacy Program; General Counsel (since May 1996) and
Secretary (since April 1997) of Oppenheimer Acquisition Corp.; an officer
of other Oppenheimer funds.
BrianW. Wixted, Treasurer, Age: 41. 6803 South Tucson Way, Englewood, Colorado
80112 Senior Vice President and Treasurer (since March 1999) of
OppenheimerFunds, Inc.; Treasurer (since March 1999) of HarbourView Asset
Management Corporation, Shareholder Services, Inc., Oppenheimer Real Asset
Management Corporation, Shareholder Financial Services, Inc. and
Oppenheimer Partnership Holdings, Inc., of OFI Private Investments, Inc.
(since March 2000) and of OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since May 2000); Treasurer and Chief
Financial Officer (since May 2000) of PIMCO Trust Company; Assistant
Treasurer (since March 1999) of Oppenheimer Acquisition Corp. and of the
Manager; an officer of other Oppenheimer funds; formerly Principal and
Chief Operating Officer, Bankers Trust Company - Mutual Fund Services
Division (March 1995 - March 1999); Vice President and Chief Financial
Officer of CS First Boston Investment Management Corp. (September 1991 -
March 1995).
Robert G. Zack, Assistant Secretary, Age: 52. Two World Trade Center, New York,
New York 10048-0203 Senior Vice President (since May 1985) and Associate
General Counsel (since May 1981) of OppenheimerFunds, Inc.; Assistant
Secretary of Shareholder Services, Inc. (since May 1985), Shareholder
Financial Services, Inc. (since November 1989); OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc (since October
1997); an officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer, Age: 41. Vice President of
OppenheimerFunds, Inc. (since May 1996); an officer of other Oppenheimer
funds; formerly an Assistant Vice President (April 1994 - May 1996) and a
Fund Controller of OppenheimerFunds, Inc.
ScottT. Farrar, Assistant Treasurer, Age: 35. 6803 South Tucson Way, Englewood,
Colorado 80112 Vice President of OppenheimerFunds, Inc. (since May 1996);
Assistant Treasurer of Oppenheimer Millennium Funds plc (since October
1997); an officer of other Oppenheimer funds; formerly an Assistant Vice
President (April 1994 - May 1996) and a Fund Controller of
OppenheimerFunds, Inc.
o Remuneration of Trustees. The officers of the Trust and certain Trustees of
the Trust (Ms. Macaskill and Mr. Swain) who are affiliated with the Manager
receive no salary or fee from the Trust. The remaining Trustees of the
Trust received the compensation shown below. The compensation from the
Trust was paid during its fiscal year ended June 30, 2000. The compensation
from all of the Denver-based Oppenheimer funds includes the Trust and is
compensation received as a trustee, director, managing general partner or
member of a committee of the Board during the calendar year 1999.
<PAGE>
-----------------------------------------------------------------------------
Aggregate Total Compensation
Trustee's Name Compensation from all Denver-Based
and Other Positions from Trust Oppenheimer Funds1
-----------------------------------------------------------------------------
Robert G. Avis $1,969 $67,998
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William A. Baker2 $1,969 $67,998
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George C. Bowen $1,092 $23,879
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Jon S. Fossel $2,025 $66,586
Review Committee Member
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Sam Freedman $2,143 $73,998
Review Committee Member
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Raymond J. Kalinowski $2,090 $73,248
Audit Committee Member
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C. Howard Kast $2,322 $78,873
Audit and Review
Committee Chairman
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Robert M. Kirchner $2,030 $69,248
Audit Committee Member
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Ned M. Steel2 $1,969 $67,998
----------------------------------------------------------------------------- 1.
For the 1999 calendar year. 2. Effective July 1, 2000, Messrs. Baker and
Steel resigned as Trustees of the Trust.
o Deferred Compensation Plan for Trustees. The Trustees have adopted a Deferred
Compensation Plan for disinterested Trustees that enables them to elect to defer
receipt of all or a portion of the annual fees they are entitled to receive from
the Trust. Under the plan, the compensation deferred by a Trustee is
periodically adjusted as though an equivalent amount had been invested in shares
of one or more Oppenheimer funds selected by the Trustee. The amount paid to the
Trustee under this plan will be determined based upon the performance of the
selected funds.
Deferral of fees of the Trustees under this plan will not materially affect the
Trust's assets, liabilities or net income per share. This plan will not obligate
the Trust to retain the services of any Trustee or to pay any particular level
of compensation to any Trustee. Pursuant to an Order issued by the Securities
and Exchange Commission, the Trust may invest in the funds selected by any
Trustee under this plan without shareholder approval for the limited purpose of
determining the value of the Trustees' deferred fee accounts.
|X| Major Shareholders. As of October 10, 2000 the only person who owned of
record or was known by the Trust to own beneficially 5% or more of the Trust's
outstanding retail shares was A.G. Edwards & Sons, Inc., 1 North Jefferson
Avenue, St. Louis, Missouri 63103, which owned 1,242,479,743.210 shares of the
Trust which was 99.4% of the outstanding shares of the Trust on that date, for
accounts of its customers none of whom individually owned more than 5% of the
outstanding shares.
The Manager. The Manager, Centennial Asset Management Corporation, is
wholly-owned by OppenheimerFunds, Inc., which is a wholly-owned subsidiary of
Oppenheimer Acquisition Corp., a holding company controlled by Massachusetts
Mutual Life Insurance Company.
The portfolio managers of the Trust are principally responsible for the
day-to-day management of the Trust's investment portfolio. Other members of the
Manager's fixed-income portfolio department, particularly security analysts,
traders and other portfolio managers, have broad experience with fixed-income
securities. They provide the Trust's portfolio managers with research and
support in managing the Trust's investments.
|X| The Investment Advisory Agreement. The Manager provides investment advisory
and management services to the Trust under an investment advisory agreement
between the Manager and the Trust. The Manager selects securities for the
Trust's portfolio and handles its day-to-day business. The agreement requires
the Manager, at its expense, to provide the Trust with adequate office space,
facilities and equipment. It also requires the Manager to provide and supervise
the activities of all administrative and clerical personnel required to provide
effective administration for the Trust. Those responsibilities include the
compilation and maintenance of records with respect to its operations, the
preparation and filing of specified reports, and composition of proxy materials
and registration statements for continuous public sale of shares of the Trust.
Expenses not expressly assumed by the Manager under the investment advisory
agreement are paid by the Trust. The investment advisory agreement lists
examples of expenses paid by the Trust. The major categories relate to interest,
taxes, fees to unaffiliated Trustees, legal and audit expenses, custodian and
transfer agent expenses, share issuance costs, certain printing and registration
costs and non-recurring expenses, including litigation costs. The management
fees paid by the Trust to the Manager are calculated at the rates described in
the Prospectus.
--------------------------------------------------------------------------------
Fiscal Year Management Fee Paid to Centennial Asset Management Corporation
ending 6/30
--------------------------------------------------------------------------------
1998 $5,092,383
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1999 $5,601,294
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2000 $5,607,527
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Under the investment advisory agreement, the Manager has agreed to reimburse the
Trust to the extent that the Trust's total expenses (including the management
fee but excluding interest, taxes, brokerage commissions, and extraordinary
expenses such as litigation costs) exceed in any fiscal year the lesser of: (i)
1.5% of average annual net assets of the Trust up to $30 million plus 1% of the
average annual net assets in excess of $30 million or; (ii) 25% of the total
annual investment income of the Trust.
The investment advisory agreement provides that the Manager shall not be liable
for any loss sustained by reason of the adoption of an investment policy or the
purchase, sale or retention of any security on its recommendation, whether or
not such recommendation shall have been based upon its own investigation and
research or upon investigation and research made by any other individual, firm
or corporation, if such recommendation shall have been made and such other
individual, firm or corporation shall have been selected with due care and in
good faith, provided that nothing in the agreement shall be construed to protect
the Manager against any liability to the Trust or its shareholders by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and duties
under the agreement.
|X| The Distributor. Under its General Distributor's Agreement with the Trust,
Centennial Asset Management Corporation acts as the Trust's principal
underwriter and Distributor in the continuous public offering of the Trust's
shares. The Distributor is not obligated to sell a specific number of shares.
The Distributor bears the expenses normally attributable to sales, including
advertising and the cost of printing and mailing prospectuses, other than those
furnished to existing shareholders. The Trust's Sub-Distributor is
OppenheimerFunds Distributor, Inc.
Portfolio Transactions. Portfolio decisions are based upon recommendations
and judgment of the Manager subject to the overall authority of the Board
of Trustees. Most purchases made by the Trust are principal transactions at
net prices, so the Trust incurs little or no brokerage costs. The Trust
deals directly with the selling or purchasing principal or market maker
without incurring charges for the services of a broker on its behalf unless
the Manager determines that a better price or execution may be obtained by
using the services of a broker. Purchases of portfolio securities from
underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the bid
and asked prices.
The Trust seeks to obtain prompt execution of orders at the most favorable
net price. If broker/dealers are used for portfolio transactions,
transactions may be directed to broker/dealers for their execution and
research services. The research services provided by a particular broker
may be useful only to one or more of the advisory accounts of the Manager
and its affiliates. Investment research received for the commissions of
those other accounts may be useful both to the Trust and one or more of
such other accounts. Investment research services may be supplied to the
Manager by a third party at the instance of a broker through which trades
are placed. It may include information and analyses on particular companies
and industries as well as market or economic trends and portfolio strategy,
receipt of market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If a research
service also assists the Manager in a non-research capacity (such as
bookkeeping or other administrative functions), then only the percentage or
component that provides assistance to the Manager in the investment
decision-making process may be paid in commission dollars.
The research services provided by brokers broaden the scope and supplement
the research activities of the Manager. That research provides additional
views and comparisons for consideration, and helps the Manager obtain
market information for the valuation of securities held in the Trust's
portfolio or being considered for purchase.
Subject to applicable rules covering the Manager's activities in this area,
sales of shares of the Trust and/or the other investment companies managed
by the Manager or distributed by the Distributor may also be considered as
a factor in the direction of transactions to dealers. That must be done in
conformity with the price, execution and other considerations and practices
discussed above. Those other investment companies may also give similar
consideration relating to the sale of the Trust's shares. No portfolio
transactions will be handled by any securities dealer affiliated with the
Manager.
The Trust may experience high portfolio turnover that may increase the
Trust's transaction costs. However, since brokerage commissions, if any,
are small, high turnover does not have an appreciable adverse effect upon
the income of the Trust.
Service Plan
The Trust has adopted a Service Plan for the shares. The plan has been
approved by a vote of the Board of Trustees, including a majority of
the Independent Trustees2, cast in person at a meeting called for the
purpose of voting on that plan.
Under the plan, the Manager and the Distributor may make payments to
affiliates and, in their sole discretion, from time to time, may use
their own resources (at no direct cost to the Trust) to make payments
to brokers, dealers or other financial institutions for distribution
and administrative services they perform. The Manager may use its
profits from the advisory fee it receives from the Trust. In their
sole discretion, the Distributor and the Manager may increase or
decrease the amount of payments they make from their own resources to
plan recipients.
Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Trust's Board of Trustees and
its Independent Trustees specifically vote annually to approve its
continuance. Approval must be by a vote cast in person at a meeting
called for the purpose of voting on continuing the plan. A plan may be
terminated at any time by the vote of a majority of the Independent
Trustees or by the vote of the holders of a "majority" (as defined in
the Investment Company Act) of the outstanding shares of the Trust.
The Board of Trustees and the Independent Trustees must approve all material
amendments to a plan. An amendment to increase materially the amount of
payments to be made under a plan must be approved by shareholders of the
class affected by the amendment. The approval must be by a "majority" (as
defined in the Investment Company Act) of the shares.
Whilethe plan is in effect, the Treasurer of the Trust shall provide separate
written reports on the plan to the Board of Trustees at least quarterly for
its review. The Reports shall detail the amount of all payments made under
the plan and the purpose for which the payments were made. Those reports
are subject to the review and approval of the Independent Trustees.
The plan states that while it is in effect, the selection and nomination
of those Trustees of the Trust who are not "interested persons" of the
Trust is committed to the discretion of the Independent Trustees. This
does not prevent the involvement of others in the selection and
nomination process as long as the final decision as to selection or
nomination is approved by a majority of the Independent Trustees.
Underthe plan, no payment will be made to any recipient in any quarter in
which the aggregate net asset value of all Trust shares held by the
recipient for itself and its customers does not exceed a minimum
amount, if any, that may be set from time to time by a majority of the
Independent Trustees. The Board of Trustees has set no minimum amount
of assets to qualify for payments under the plan.
|X| Service Plan Fees. Under the service plan, the Distributor
currently uses the fees it receives from the Trust to pay
brokers, dealers and other financial institutions (they are
referred to as "recipients") for personal services and account
maintenance services they provide for their customers who hold
shares. The services include, among others, answering customer
inquiries about the Trust, assisting in establishing and
maintaining accounts in the Trust, making the Trust's investment
plans available and providing other services at the request of
the Trust or the Distributor. The service plan permits
reimbursements to the Distributor at a rate of up to 0.20% of
average annual net assets of the shares. While the plan permits
the Board to authorize payments to the Distributor to reimburse
itself for services under the plan, the Board has not yet done
so. The Distributor makes payments to plan recipients quarterly
at an annual rate not to exceed 0.20% of the average annual net
assets consisting of shares held in the accounts of the
recipients or their customers.
For the fiscal year ended June 30, 2000 payments under the plan totaled
$2,486,115, all of which was paid by the Distributor to recipients. That
included $123,628 paid to an affiliate of the Distributor's parent company.
For the fiscal year ended June 30, 2000, the Manager paid, in the
aggregate, $3,543,425 in fees out of its own resources for distribution
assistance. Any unreimbursed expenses the Distributor incurs with respect
to the shares in any fiscal year cannot be recovered in subsequent years.
The Distributor may not use payments received under the plan to pay any of
its interest expenses, carrying charges, or other financial costs, or
allocation of overhead.
Performance of the Trust
Explanation of Performance Terminology. The Trust uses a variety of terms
to illustrate its performance. These terms include "yield,"
"compounded effective yield" and "average annual total return." An
explanation of how yields and total returns are calculated is set
forth below. The charts below show the Trust's performance as of the
Trust's most recent fiscal year end. You can obtain current
performance information by calling the Trust's Transfer Agent at
1.800.525.9310.
The Trust's illustrations of its performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those
rules describe the types of performance data that may be used and how
it is to be calculated. If the Trust shows total returns in addition
to its yields, the returns must be for the 1-, 5- and 10-year periods
ending as of the most recent calendar quarter prior to the publication
of the advertisement (or its submission for publication).
Use of standardized performance calculations enables an investor to
compare the Trust's performance to the performance of other funds for
the same periods. However, a number of factors should be considered
before using the Trust's performance information as a basis for
comparisons with other investments:
|_| Yields and total returns measure the performance of a hypothetical
account in the Trust over various periods and do not show the
performance of each shareholder's account. Your account's performance
will vary from the model performance data if your dividends are
received in cash, or you buy or sell shares during the period, or you
bought your shares at a different time than the shares used in the
model. |_| An investment in the Trust is not insured by the FDIC or
any other government agency. |_| The Trust's yield is not fixed or
guaranteed and will fluctuate. |_| Yields and total returns for any
given past period represent historical performance information and are
not, and should not be considered, a prediction of future yields or
returns.
|_| Yields. The Trust's current yield is calculated for a seven-day period
of time as follows. First, a base period return is calculated for the
seven-day period by determining the net change in the value of a
hypothetical pre-existing account having one share at the beginning of
the seven-day period. The change includes dividends declared on the
original share and dividends declared on any shares purchased with
dividends on that share, but such dividends are adjusted to exclude
any realized or unrealized capital gains or losses affecting the
dividends declared. Next, the base period return is multiplied by
365/7 to obtain the current yield to the nearest hundredth of one
percent.
The compounded effective yield for a seven-day period is calculated by (1)
adding 1 to the base period return (obtained as described above), (2)
raising the sum to a power equal to 365 divided by 7, and (3) subtracting
1 from the result.
The yield as calculated above may vary for accounts less than
approximately $100 in value due to the effect of rounding off each
daily dividend to the nearest full cent. The calculation of yield
under either procedure described above does not take into
consideration any realized or unrealized gains or losses on the
Trust's portfolio securities which may affect dividends. Therefore,
the return on dividends declared during a period may not be the same
on an annualized basis as the yield for that period.
o Total Return Information. There are different types of "total returns"
to measure the Trust's performance. Total return is the change in
value of a hypothetical investment in the Trust over a given period,
assuming that all dividends and capital gains distributions are
reinvested in additional shares and that the investment is redeemed at
the end of the period. The cumulative total return measures the change
in value over the entire period (for example, ten years). An average
annual total return shows the average rate of return for each year in
a period that would produce the cumulative total return over the
entire period. However, average annual total returns do not show
actual year-by-year performance. The Trust uses standardized
calculations for its total returns as prescribed by the SEC. The
methodology is discussed below.
|_| Average Annual Total Return. The "average annual total return" of each
class is an average annual compounded rate of return for each year in
a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in
the formula below) held for a number of years ("n") to achieve an
Ending Redeemable Value ("ERV" in the formula) of that investment,
according to the following formula:
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|_| Cumulative Total Return. The "cumulative total return" calculation measures
the change in value of a hypothetical investment of $1,000 over an entire
period of years. Its calculation |_| uses some of the same factors as
average annual total return, but it does not average the rate of return on
an annual basis. Cumulative total return is determined as follows:
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Yield Compounded Average Annual Total Returns (at 6/30/00)
(7 days ended Effective Yield
6/30/00) (7 days ended
6/30/00)
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1-Year 5 Years 10 Years
--------------------------------------------------------------------------------
5.90% 6.07% 5.07% 4.83% 4.63%
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|X| Other Performance Comparisons. Yield information may be useful to
investors in reviewing the Trust's performance. The Trust may make
comparisons between its yield and that of other investments, by citing
various indices such as The Bank Rate Monitor National Index (provided
by Bank Rate Monitor(TM)) which measures the average rate paid on bank
money market accounts, NOW accounts and certificates of deposits by
the 100 largest banks and thrifts in the top ten metro areas. When
comparing the Trust's yield with that of other investments, investors
should understand that certain other investment alternatives such as
certificates of deposit, U.S. government securities, money market
instruments or bank accounts may provide fixed yields and may be
insured or guaranteed.
From time to time, the Trust may include in its advertisements and sales
literature performance information about the Trust cited in other
newspapers and periodicals, such as The New York Times, which may include
performance quotations from other sources.
From time to time, the Trust's Manager may publish rankings or ratings of the
Manager (or the Transfer Agent) or the investor services provided by them. Those
ratings or rankings of investor/shareholder services by third parties may
compare the services provided to those of other mutual fund families selected by
the rating or ranking services. They may be based on the opinions of the rating
or ranking service itself, based on its research or judgment, or based on
surveys of investors, brokers, shareholders or others.
A B O U T Y O U R A C C O U N T
How to Buy Shares
Determination of Net Asset Value Per Share. The net asset value per share
of the Trust is determined twice each day that the New York Stock Exchange
("Exchange") is open, at 12:00 Noon and at 4:00 P.M, on each day that the
Exchange is open, by dividing the value of the Trust's net assets by the
total number of shares outstanding. All references to time in this
Statement of Additional Information mean New York time. The Exchange's most
recent annual announcement (which is subject to change) states that it will
close on New Year's Day, Martin Luther King Jr. Day, Washington's Birthday,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. It may also close on other days.
The Trust's Board of Trustees has adopted the amortized cost method to
value the Trust's portfolio securities. Under the amortized cost method, a
security is valued initially at its cost and its valuation assumes a
constant amortization of any premium or accretion of any discount,
regardless of the impact of fluctuating interest rates on the market value
of the security. This method does not take into consideration any
unrealized capital gains or losses on securities. While this method
provides certainty in valuing securities, in certain periods the value of a
security determined by amortized cost may be higher or lower than the price
the Trust would receive if it sold the security.
The Trust's Board of Trustees has established procedures reasonably
designed to stabilize the Trust's net asset value at $1.00 per share. Those
procedures include a review of the valuations of the Trust's portfolio
holdings by the Board of Trustees, at intervals it deems appropriate, to
determine whether the Trust's net asset value calculated by using available
market quotations deviates from $1.00 per share based on amortized cost.
The Board of Trustees will examine the extent of any deviation between the
Trust's net asset value based upon available market quotations and
amortized cost. If the Trust's net asset value were to deviate from $1.00
by more than 0.5%, Rule 2a-7 requires the Board of Trustees to consider
what action, if any, should be taken. If they find that the extent of the
deviation may cause a material dilution or other unfair effects on
shareholders, the Board of Trustees will take whatever steps it considers
appropriate to eliminate or reduce the dilution, including, among others,
withholding or reducing dividends, paying dividends from capital or capital
gains, selling portfolio instruments prior to maturity to realize capital
gains or losses or to shorten the average maturity of the portfolio, or
calculating net asset value per share by using available market quotations.
During periods of declining interest rates, the daily yield on shares of
the Trust may tend to be lower (and net investment income and dividends
higher) than those of a fund holding the identical investments as the Trust
but which used a method of portfolio valuation based on market prices or
estimates of market prices. During periods of rising interest rates, the
daily yield of the Trust would tend to be higher and its aggregate value
lower than that of an identical portfolio using market price valuation.
How to Sell Shares
The information below supplements the terms and conditions for redeeming
shares set forth in the Prospectus.
Checkwriting. When a check is presented to the Bank for clearance, the Bank
will ask the Trust to redeem a sufficient number of full and fractional
shares in the shareholder's account to cover the amount of the check. This
enables the shareholder to continue receiving dividends on those shares
until the check is presented to the Trust. Checks may not be presented for
payment at the offices of the Bank or the Trust's Custodian. This
limitation does not affect the use of checks for the payment of bills or to
obtain cash at other banks. The Trust reserves the right to amend, suspend
or discontinue offering checkwriting privileges at any time without prior
notice.
In choosing to take advantage of the Checkwriting privilege, by signing the
Account Application or by completing a Checkwriting card, each individual who
signs: (1) for individual accounts, represents that they are the registered
owner(s) of the shares of the Trust in that account; (2) for accounts for
corporations, partnerships, trusts and other entities, represents that they are
an officer, general partner, trustee or other fiduciary or agent, as applicable,
duly authorized to act on behalf of the registered owner(s); (3) authorizes the
Trust, its Transfer Agent and any bank through which the Trust's drafts (checks)
are payable to pay all checks drawn on the Trust account of such person(s) and
to redeem a sufficient amount of shares from that account to cover payment of
each check; (4) specifically acknowledges that if they choose to permit checks
to be honored if there is a single signature on checks drawn against joint
accounts, or accounts for corporations, partnerships, trusts or other entities,
the signature of any one signatory on a check will be sufficient to authorize
payment of that check and redemption from the account, even if that account is
registered in the names of more than one person or more than one authorized
signature appears on the Checkwriting card or the Application, as applicable;
(5) understands that the Checkwriting privilege may be terminated or amended at
any time by the Trust and/or the Trust's bank; and (6) acknowledges and agrees
that neither the Trust nor its bank shall incur any liability for that amendment
or termination of checkwriting privileges or for redeeming shares to pay checks
reasonably believed by them to be genuine, or for returning or not paying checks
that have not been accepted for any reason.
Sending Redemption Proceeds by Federal Funds Wire. The Federal Funds wire
of redemptions proceeds may be delayed if the Trust's custodian bank
is not open for business on a day when the Trust would normally
authorize the wire to be made, which is usually the Trust's next
regular business day following the redemption. In those circumstances,
the wire will not be transmitted until the next bank business day on
which the Trust is open for business. No distributions will be paid on
the proceeds of redeemed shares awaiting transfer by Federal Funds
wire
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address
listed in "How To Sell Shares" in the Prospectus or on the back cover of
this Statement of Additional Information. The request must
(1) state the reason for the distribution; (2) state the owner's awareness of
tax penalties if the distribution is premature; and (3) conform to the
requirements of the plan and the Trust's other redemption requirements.
Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Trust held in the name of the plan or its fiduciary may not directly request
redemption of their accounts. The plan administrator or fiduciary must sign the
request.
Distributions from pension and profit sharing plans are subject to special
requirements under the Internal Revenue Code and certain documents (available
from the Transfer Agent) must be completed and submitted to the Transfer Agent
before the distribution may be made. Distributions from retirement plans are
subject to withholding requirements under the Internal Revenue Code, and IRS
Form W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified tax
identification number, the Internal Revenue Code requires that tax be withheld
from any distribution even if the shareholder elects not to have tax withheld.
The Trust, the Manager, the Distributor the Sub-Distributor, and the Transfer
Agent assume no responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for any tax
penalties assessed in connection with a distribution.
How to Exchange Shares
As stated in the Prospectus, direct shareholders can exchange shares of the
Trust for Class A shares of any of the following eligible funds:
<TABLE>
<S> <C>
Oppenheimer Bond Fund Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street California
Oppenheimer California Municipal Fund Municipal Fund
Oppenheimer Main Street Growth & Income
Oppenheimer Capital Appreciation Fund Fund
Oppenheimer Capital Preservation Fund Oppenheimer Main Street Opportunity Fund
Oppenheimer Capital Income Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer Champion Income Fund Oppenheimer MidCap Fund
Oppenheimer Convertible Securities Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Developing Markets Fund Oppenheimer Municipal Bond Fund
Oppenheimer Disciplined Allocation Fund Oppenheimer New York Municipal Fund
Oppenheimer Disciplined Value Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Discovery Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Emerging Technologies Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Enterprise Fund Inc.
Oppenheimer Quest Global Value Fund,
Oppenheimer Europe Fund Inc.
Oppenheimer Florida Municipal Fund Oppenheimer Quest Opportunity Value Fund
Oppenheimer Global Fund Oppenheimer Quest Small Cap Fund Oppenheimer Global
Growth & Income Fund Oppenheimer Quest Value Fund, Inc. Oppenheimer Gold &
Special Minerals Fund Oppenheimer Real Asset Fund Oppenheimer Growth Fund
Oppenheimer Senior Floating Rate Fund Oppenheimer High Yield Fund Oppenheimer
Strategic Income Fund Oppenheimer Insured Municipal Fund Oppenheimer Total
Return Fund, Inc. Oppenheimer Intermediate Municipal Fund Oppenheimer Trinity
Core Fund Oppenheimer International Bond Fund Oppenheimer Trinity Growth Fund
Oppenheimer International Growth Fund Oppenheimer Trinity Value Fund Oppenheimer
International Small Company Fund Oppenheimer U.S. Government Trust Oppenheimer
Large Cap Growth Fund Oppenheimer World Bond Fund
Limited-Term New York Municipal Fund
and the following money market funds: Rochester Fund Municipals
Centennial New York Tax Exempt
Centennial America Fund, L. P. Trust
Centennial California Tax Exempt
Trust Centennial Tax Exempt Trust
Centennial Money Market Trust Oppenheimer Cash Reserves
Oppenheimer Money Market Fund,
Inc.
</TABLE>
Shares of the Trust purchased without a sales charge may be exchanged for
shares of an eligible fund offered with a sales charge upon payment of the
sales charge. Shares of the Trust acquired by reinvestment of dividends or
distributions from the Trust or any of the other eligible funds (other than
Oppenheimer Cash Reserves) or from any unit investment trust for which
reinvestment arrangements have been made with the Distributor may be
exchanged at net asset value for shares of any of the eligible funds.
|_| Limits on Multiple Exchange Orders. The Trust reserves the right to
reject telephone or written exchange requests submitted in bulk by anyone
on behalf of more than one account. The Trust may accept requests for
exchanges of up to 50 accounts per day from representatives of authorized
dealers that qualify for this privilege.
|_| Telephone Exchange Requests. When exchanging shares by telephone, a
direct shareholder must have an existing account in the fund to which the
exchange is to be made. Otherwise, the investor must obtain a prospectus of
that fund before the exchange request may be submitted. If all telephone
lines are busy (which might occur, for example, during periods of
substantial market fluctuations), shareholders might not be able to request
exchanges by telephone and would have to submit written exchange requests.
|_| Processing Exchange Requests. Shares to be exchanged are redeemed on the
regular business day the Transfer Agent receives an exchange request in proper
form (the "Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by either
fund up to five business days if it determines that it would be disadvantaged by
an immediate transfer of the redemption proceeds. The Trust reserves the right,
in its discretion, to refuse any exchange request that may disadvantage it (for
example, if the receipt of multiple exchange requests from a dealer might
require the disposition of portfolio securities at a time or at a price that
might be disadvantageous to the Trust).
In connection with any exchange request, the number of shares exchanged may be
less than the number requested if the exchange or the number requested would
include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered by a share
certificate that is not tendered with the request. In those cases, only the
shares available for exchange without restriction will be exchanged.
The different eligible funds available for exchange have different investment
objectives, policies and risks. A shareholder should assure that the fund
selected is appropriate for his or her investment and should be aware of the tax
consequences of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a purchase of
shares of another. The Trust, the Distributor, the Sub-Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to a
shareholder in connection with an exchange request or any other investment
transaction.
The Trust may amend, suspend or terminate the exchange privilege at any time.
Although, the Trust may impose these changes at any time, it will provide you
with notice of those changes whenever it is required to do so by applicable law.
It may be required to provide 60 days notice prior to materially amending or
terminating the exchange privilege. That 60-day notice is not required in
extraordinary circumstances.
Dividends and Taxes
Tax Status of the Trust's Dividends and Distributions. The federal tax treatment
of the Trust's dividends and capital gains distributions is explained in the
Prospectus under the caption "Distributions and Taxes." Under the Internal
Revenue Code, by December 31 each year, the Trust must distribute 98% of its
taxable investment income earned from January 1 through December 31 of that year
and 98% of its capital gains realized in the period from November 1 of the prior
year through October 31 of the current year. It if does not, the Trust must pay
an excise tax on the amounts not distributed. It is presently anticipated that
the Trust will meet those requirements. However, the Board of Trustees and the
Manager might determine in a particular year that it would be in the best
interest of shareholders for the Trust not to make distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would reduce
the amount of income or capital gains available for distribution to
shareholders. The Trust's dividends will not be eligible for the
dividends-received deduction for corporations.
If the Trust qualifies as a "regulated investment company" under the Internal
Revenue Code, it will not be liable for federal income taxes on amounts paid by
it as distributions. That qualification enables the Trust to "pass through" its
income and realized capital gains to shareholders without having to pay tax on
them. The Trust qualified as a regulated investment company in its last fiscal
year and intends to qualify in future years, but reserves the right not to
qualify. The Internal Revenue Code contains a number of complex tests to
determine whether the Trust qualifies. The Trust might not meet those tests in a
particular year. If it does not qualify, the Trust will be treated for tax
purposes as an ordinary corporation and will receive no tax deduction for
payments of distributions made to shareholders.
Dividends, distributions and the proceeds of the redemption of Trust shares
represented by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be invested in shares of the Trust as promptly as possible
after the return of such checks to the Transfer Agent, in order to enable the
investor to earn a return on otherwise idle funds.
Dividend Reinvestment in Another Trust. Direct shareholders of the Trust may
elect to reinvest all dividends and/or capital gains distributions in Class A
shares of any eligible fund listed above. To elect this option, the shareholder
must notify the Transfer Agent in writing and must have an existing account in
the fund selected for reinvestment. Otherwise, the shareholder first must obtain
a prospectus for that fund and an application from the Distributor to establish
an account. The investment will be made at the close of business on the payable
date of the dividend or distribution.
Additional Information About the Trust
The Distributor. The Trust's shares are sold through dealers, brokers and other
financial institutions that have a sales agreement with the Sub-Distributor. The
Distributor and the Sub-Distributor also distribute shares of the other funds
managed by the Manager or an affiliate.
The Transfer Agent. Shareholder Services, Inc. the Trust's Transfer Agent, is
responsible for maintaining the Trust's shareholder registry and shareholder
accounting records, and for paying dividends and distributions to shareholders
of the Trust. It also handles shareholder servicing and administrative
functions. It is paid on a "at-cost" basis.
The Custodian. Citibank, N.A. is the Custodian of the Trust's assets. The
Custodian's responsibilities include safeguarding and controlling the Trust's
portfolio securities and handling the delivery of such securities to and from
the Trust. It will be the practice of the Trust to deal with the Custodian in a
manner uninfluenced by any banking relationship the Custodian may have with the
Manager and its affiliates. The Trust's cash balances with the Custodian in
excess of $100,000 are not protected by federal deposit insurance. Those
uninsured balances at times may be substantial.
Independent Auditors. Deloitte & Touche LLP are the independent auditors of the
Trust. They audit the Trust's financial statements and perform other related
audit services. They also act as auditors for the Manager and OppenheimerFunds,
Inc. and for certain other funds advised by the Manager and its affiliates.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Centennial Government Trust
To the Board of Trustees and Shareholders of Centennial Government Trust:
We have audited the accompanying statement of assets and liabilities of
Centennial Government Trust, including the statement of investments, as of June
30, 2000, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 2000, by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Centennial Government Trust as of June 30, 2000, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
July 24, 2000
<PAGE>
STATEMENT OF INVESTMENTS June 30, 2000
Centennial Government Trust
<TABLE>
<CAPTION>
Principal Value
Amount See Note 1
----------- ------------
<S> <C> <C>
REPURCHASE AGREEMENTS-- 6.1%
Repurchase agreement with PaineWebber, Inc., 6.60%,
dated 6/30/00, to be repurchased at $72,639,930 on 7/3/00, collateralized by
Federal National Mortgage Assn.,
6.50%--7%, 1/1/27-8/1/29, with a value of $117,209,568........... $72,600,000 $ 72,600,000
------------
U.S. GOVERNMENT AGENCIES--91.2%
Federal Home Loan Bank:
5.39%, 10/6/00.................................................... 29,000,000 28,860,666
6.42%, 7/14/00-8/4/00............................................. 55,000,000 54,816,317
6.46%, 9/13/00.................................................... 30,000,000 29,601,633
6.47%, 9/20/00.................................................... 35,000,000 34,490,488
6.48%, 9/8/00..................................................... 32,500,000 32,096,350
6.49%, 9/22/00.................................................... 35,000,000 34,476,293
Federal Home Loan Mortgage Corp.:
6.40%, 7/11/00.................................................... 10,000,000 9,982,167
6.41%, 7/5/00..................................................... 25,000,000 24,982,194
6.42%, 7/6/00..................................................... 14,560,000 14,547,017
6.43%, 7/25/00-8/17/00............................................ 99,539,000 98,898,183
6.45%, 7/18/00.................................................... 26,207,000 26,127,178
6.46%, 9/7/00..................................................... 35,000,000 34,572,922
6.47%, 9/14/00.................................................... 15,208,000 15,003,009
6.51%, 9/28/00.................................................... 50,000,000 49,195,601
Federal National Mortgage Assn.:
6.40%, 7/6/00-7/21/00............................................. 38,000,000 37,912,889
6.41%, 7/19/00.................................................... 50,750,000 50,587,496
6.45%, 8/2/00..................................................... 25,000,000 24,856,667
6.47%, 9/14/00.................................................... 20,791,000 20,510,755
6.471%, 8/2/00(1)................................................. 20,000,000 19,998,820
6.48%, 8/4/00(1).................................................. 15,000,000 14,998,992
6.48%, 9/21/00.................................................... 52,500,000 51,724,644
6.82%, 7/17/00(1)................................................. 20,000,000 19,999,564
</TABLE>
3
<PAGE>
STATEMENT OF INVESTMENTS June 30, 2000 (Continued)
Centennial Government Trust
<TABLE>
<CAPTION>
Principal Value
Amount See Note 1
------------- --------------
<S> <C> <C>
U.S. GOVERNMENT AGENCIES (CONTINUED)
FNMA Master Credit Facility:
6.14%, 8/1/00.......................................................... $50,000,000 $ 49,735,639
6.60%, 9/6/00.......................................................... 39,500,000 39,014,808
6.63%, 9/1/00.......................................................... 50,000,000 49,429,083
Overseas Private Investment Corp.:
6.32%, 7/20/00(1)(2)................................................... 2,736,156 2,762,402
6.345%, 7/20/00(1)(2).................................................. 3,573,961 3,588,039
Student Loan Marketing Assn.:
6.84%, 9/15/00(1)...................................................... 25,000,000 24,998,477
Student Loan Marketing Assn., guaranteeing commercial paper of
New Hampshire Higher Education Loan Corp., Series 1995A:
6.45%, 7/20/00-7/24/00................................................. 23,825,000 23,736,226
6.48%, 7/11/00......................................................... 25,000,000 24,955,000
Student Loan Marketing Assn., guaranteeing commercial paper of
USA Group Secondary Market Services, Inc., Series A:
6.43%, 7/12/00-7/18/00................................................. 95,598,000 95,340,053
6.45%, 7/13/00......................................................... 45,482,000 45,383,997
--------------
1,087,183,569
--------------
Total Investments, at Value.............................................. 97.3% 1,159,783,569
--------------
Other Assets Net of Liabilities.......................................... 2.7 31,972,158
------------- --------------
Net Assets............................................................... 100.0% $1,191,755,727
============= ==============
</TABLE>
1. Represents the current interest rate for a variable or increasing rate
security.
2. Represents a restricted security which is considered illiquid, by virtue of
the absence of a readily available market or because of legal or contractual
restrictions on resale. Such securities amount to $6,350,441, or 0.53% of the
Trust's net assets. The Trust may not invest more than 10% of its net assets
(determined at the time of purchase) in illiquid securities.
See accompanying Notes to Financial Statements.
4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES June 30, 2000
Centennial Government Trust
<TABLE>
<S> <C>
ASSETS
Investments, at value--see accompanying statement................... $1,159,783,569
Cash................................................................ 534,725
Receivables and other assets:
Shares of beneficial interest sold................................ 39,764,997
Interest.......................................................... 2,639,154
Other............................................................. 115,709
--------------
Total assets................................................... 1,202,838,154
--------------
LIABILITIES Payables and other liabilities:
Shares of beneficial interest redeemed............................ 7,804,066
Dividends......................................................... 2,811,879
Transfer and shareholder servicing agent fees..................... 143,436
Service plan fees................................................. 118,941
Trustees' compensation............................................ 5,213
Other............................................................. 198,892
--------------
Total liabilities.............................................. 11,082,427
--------------
NET ASSETS.......................................................... $1,191,755,727
==============
COMPOSITION OF NET ASSETS
Paid-in capital..................................................... $1,192,303,751
Accumulated net realized loss on investment transactions............ (548,024)
--------------
NET ASSETS--applicable to 1,192,303,751 shares of
beneficial interest outstanding................................... $1,191,755,727
==============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE...... $1.00
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended June 30, 2000
Centennial Government Trust
<TABLE>
<S> <C>
INVESTMENT INCOME--Interest...................................................................... $70,474,618
-----------
EXPENSES
Management fees.................................................................................. 5,607,527
Service plan fees................................................................................ 2,486,115
Transfer and shareholder servicing agent fees.................................................... 833,564
Custodian fees and expenses...................................................................... 32,988
Trustees' compensation........................................................................... 17,609
Other............................................................................................ 277,478
-----------
Total expenses................................................................................. 9,255,281
Less expenses paid indirectly................................................................ (19,331)
-----------
NET EXPENSES..................................................................................... 9,235,950
-----------
NET INVESTMENT INCOME............................................................................ 61,238,668
-----------
NET REALIZED GAIN ON INVESTMENTS................................................................. 13,728
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................. $61,252,396
===========
</TABLE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------
2000 1999
-------------- ---------------
<S> <C> <C>
OPERATIONS
Net investment income................................................. $ 61,238,668 $ 54,416,410
Net realized gain..................................................... 13,728 121,184
-------------- --------------
Net increase in net assets resulting from operations.................. 61,252,396 54,537,594
-------------- --------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS........................ (61,238,668) (54,416,410)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting from beneficial
interest transactions............................................... (21,379,309) 80,656,449
-------------- --------------
NET ASSETS
Total increase (decrease)............................................. (21,365,581) 80,777,633
Beginning of period................................................... 1,213,121,308 1,132,343,675
-------------- --------------
End of period......................................................... $1,191,755,727 $1,213,121,308
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
FINANCIAL HIGHLIGHTS
Centennial Government Trust
<TABLE>
<CAPTION>
Year Ended June 30,
-----------------------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period....................... $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations--
net investment income and
net realized gain........................................ .05 .04 .05 .05 .05
Dividends and/or distributions to shareholders............. (.05) (.04) (.05) (.05) (.05)
----- ----- ----- ----- -----
Net asset value, end of period............................. $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
TOTAL RETURN(1)............................................ 5.07% 4.47% 4.93% 4.75% 4.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions).................... $1,192 $1,213 $1,132 $1,027 $ 942
Average net assets (in millions)........................... $1,244 $1,245 $1,117 $1,032 $ 962
Ratios to average net assets:(2)
Net investment income...................................... 4.92% 4.37% 4.82% 4.65% 4.83%
Expenses................................................... 0.74% 0.74% 0.75%(3) 0.76%(3) 0.77%(3)
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends reinvested in additional
shares on the reinvestment date, and redemption at the net asset value
calculated on the last business day of the fiscal period. Total returns reflect
changes in net investment income only. Total returns are not annualized for
periods less than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio has not been grossed up to reflect the effect of expenses
paid indirectly.
See accompanying Notes to Financial Statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Centennial Government Trust
1. SIGNIFICANT ACCOUNTING POLICIES
Centennial Government Trust (the Trust) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Trust's investment objective is to seek a high level of
current income that is consistent with the preservation of capital and the
maintenance of liquidity. The Trust's investment advisor is Centennial Asset
Management Corporation (the Manager), a subsidiary of OppenheimerFunds, Inc.
(OFI). The following is a summary of significant accounting policies
consistently followed by the Trust.
Securities Valuation. Portfolio securities are valued on the basis of amortized
cost, which approximates market value.
Repurchase Agreements. The Trust requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Trust may be delayed or limited.
Federal Taxes. The Trust intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required. As of June 30, 2000, the Trust had
available for federal income tax purposes an unused capital loss carryover as
follows:
<TABLE>
<CAPTION>
Expiring
--------
<S> <C>
2003 $245,353
2004 278,711
2005 16,379
</TABLE>
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Trust.
Other. Investment transactions are accounted for as of trade date. Realized
gains and losses on investments are determined on an identified cost basis,
which is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Centennial Government Trust
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended June 30, 2000 Year Ended June 30, 1999
---------------------------------- -----------------------------------
Shares Amount Shares Amount
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold.......................... 3,599,296,440 $ 3,599,296,440 3,478,267,909 $ 3,478,267,909
Dividends and/or
distributions reinvested.... 58,889,090 58,889,090 53,427,071 53,427,071
Redeemed...................... (3,679,564,839) (3,679,564,839) (3,451,038,531) (3,451,038,531)
-------------- --------------- -------------- ---------------
Net increase (decrease)....... (21,379,309) $ (21,379,309) 80,656,449 $ 80,656,449
============== =============== ============== ===============
</TABLE>
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Trust which provides for a fee of 0.50%
of the first $250 million of the Trust's net assets, 0.475% of the next $250
million, 0.45% of the next $250 million, 0.425% of the next $250 million, 0.40%
of the next $250 million, 0.375% of the next $250 million and 0.35% of net
assets in excess of $1.5 billion. The Manager has agreed to reimburse the Trust
if aggregate expenses (with specified exceptions) exceed the lesser of 1.50% of
the average annual net assets of the Trust up to $30 million and 1% of its
average annual net assets in excess of $30 million; or 25% of the total annual
investment income of the Trust. The Trust's management fee for the year ended
June 30, 2000 was an annualized rate of 0.45%, before any waiver by the Manager
if applicable.
Transfer Agent Fees. Shareholder Services, Inc. (SSI) acts as the transfer and
shareholder servicing agent for the Trust and for other registered investment
companies on an "at-cost" basis.
Service Plan Fees. Under an approved service plan, the Trust may expend up to
0.20% of its average annual net assets annually to reimburse the Manager, as
distributor, for costs incurred in connection with the personal service and
maintenance of accounts that hold shares of the Trust, including amounts paid to
brokers, dealers, banks and other financial institutions. During the year ended
June 30, 2000, the Trust paid $123,628 to a broker/dealer affiliated with the
Manager as reimbursement for distribution-related expenses.
<PAGE>
Appendix A
RATINGS DEFINITIONS
Below are summaries of the rating definitions used by the nationally-recognized
rating agencies listed below. Those ratings represent the opinion of the agency
as to the credit quality of issues that they rate. The summaries below are based
upon publicly-available information provided by the rating organizations.
Moody's Investors Service, Inc.
--------------------------------------------------------------------------------
Long-Term (Taxable) Bond Ratings
Aaa: Bonds rated "Aaa" are judged to be the best quality. They carry the
smallest degree of investment risk. 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, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated "Aa" are 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 with "Aaa" securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than that of "Aaa"
securities.
A: Bonds rated "A" possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa: Bonds rated "Baa" are considered medium-grade obligations; that is, they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and have speculative
characteristics as well.
Ba: Bonds rated "Ba" are judged to have speculative elements. Their future
cannot be considered well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B: Bonds rated "B" generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa: Bonds rated "Caa" are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca: Bonds rated "Ca" represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C: Bonds rated "C" are the lowest class of rated bonds and can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Con. (...): Bonds for which the security depends on the completion of some act
or the fulfillment of some condition are rated conditionally. These bonds are
secured by (a) earnings of projects under construction, (b) earnings of projects
unseasoned in operating experience, (c) rentals that begin when facilities are
completed, or (d) payments to which some other limiting condition attaches. The
parenthetical rating denotes probable credit stature upon completion of
construction or elimination of the basis of the condition.
Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from "Aa" through "Caa." The modifier "1" indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
"2" indicates a mid-range ranking; and the modifier "3" indicates a ranking in
the lower end of that generic rating category. Advanced refunded issues that are
secured by certain assets are identified with a # symbol.
Short-Term Ratings - Taxable Debt
These ratings apply to the ability of issuers to honor senior debt obligations
having an original maturity not exceeding one year:
Prime-1: Issuer has a superior ability for repayment of senior short-term debt
obligations.
Prime-2: Issuer has a strong ability for repayment of senior short-term debt
obligations. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.
Prime-3: Issuer has an acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market compositions may
be more pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require relatively
high financial leverage. Adequate alternate liquidity is maintained.
Not Prime: Issuer does not fall within any Prime rating category.
Standard & Poor's Rating Services
--------------------------------------------------------------------------------
Long-Term Credit Ratings
AAA: Bonds rated "AAA" have the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA: Bonds rated "AA" differ from the highest rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: Bonds rated "A" are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: Bonds rated "BBB" exhibit adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation.
BB, B, CCC, CC, and C
Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded as having significant
speculative characteristics. "BB" indicates the least degree of speculation, and
"C" the highest. While such obligations will likely have some quality and
protective characteristics, these may be outweighed by large uncertainties or
major exposures to adverse conditions. BB: Bonds rated "BB" are less vulnerable
to nonpayment than other speculative issues. However, these face major ongoing
uncertainties or exposure to adverse business, financial, or economic conditions
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
B: Bonds rated "B" are more vulnerable to nonpayment than obligations rated
"BB", but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
CCC: Bonds rated "CCC" are currently vulnerable to nonpayment, and are dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.
CC: Bonds rated "CC" are currently highly vulnerable to nonpayment.
C: A subordinated debt or preferred stock obligation rated "C" is currently
highly vulnerable to nonpayment. The "C" rating may be used to cover a situation
where a bankruptcy petition has been filed or similar action has been taken, but
payments on this obligation are being continued. A "C" also will be assigned to
a preferred stock issue in arrears on dividends or sinking fund payments, but
that is currently paying.
D: Bonds rated "D" are in default. Payments on the obligation are not being made
on the date due even if the applicable grace period has not expired, unless
Standard and Poor's believes that such payments will be made during such grace
period. The "D" rating will also be used upon the filing of a bankruptcy
petition or the taking of a similar action if payments on an obligation are
jeopardized.
The ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories. The
"r" symbol is attached to the ratings of instruments with significant noncredit
risks.
Short-Term Issue Credit Ratings
A-1: Obligation is rated in the highest category. The obligor's capacity to meet
its financial commitment on the obligation is strong. Within this category, a
plus (+) sign designation indicates the obligor's capacity to meet its financial
obligation is extremely strong.
A-2: Obligation is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligations in higher rating
categories. However, the obligor's capacity to meet its financial commitment on
the obligation is satisfactory.
A-3: Obligation exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation.
B: Obligation is regarded as having significant speculative characteristics. The
obligor currently has the capacity to meet its financial commitment on the
obligation. However, it faces major ongoing uncertainties which could lead to
the obligor's inadequate capacity to meet its financial commitment on the
obligation.
C: Obligation is currently vulnerable to nonpayment and is dependent upon
favorable business, financial, and economic conditions for the obligor to meet
its financial commitment on the obligation.
D: Obligation is in payment default. Payments on the obligation have not been
made on the due date even if the applicable grace period has not expired, unless
Standard and Poor's believes that such payments will be made during such grace
period. The "D" rating will also be used upon the filing of a bankruptcy
petition or the taking of a similar action if payments on an obligation are
jeopardized.
Fitch, Inc.
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International Long-Term Credit Ratings
Investment Grade: AAA: Highest Credit Quality. "AAA" ratings denote the lowest
expectation of credit risk. They are assigned only in the case of exceptionally
strong capacity for timely payment of financial commitments. This capacity is
highly unlikely to be adversely affected by foreseeable events.
AA: Very High Credit Quality. "AA" ratings denote a very low expectation of
credit risk. They indicate a very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.
A: High Credit Quality. "A" ratings denote a low expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.
BBB: Good Credit Quality. "BBB" ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.
Speculative Grade:
BB: Speculative. "BB" ratings indicate that there is a possibility of credit
risk developing, particularly as the result of adverse economic change over
time. However, business or financial alternatives may be available to allow
financial commitments to be met. Securities rated in this category are not
investment grade.
B: Highly Speculative. "B" ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met. However, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.
CCC, CC C: High Default Risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A "CC" rating indicates that default of some
kind appears probable. "C" ratings signal imminent default.
DDD, DD, and D: Default. The ratings of obligations in this category are based
on their prospects for achieving partial or full recovery in a reorganization or
liquidation of the obligor. While expected recovery values are highly
speculative and cannot be estimated with any precision, the following serve as
general guidelines. "DDD" obligations have the highest potential for recovery,
around 90%-100% of outstanding amounts and accrued interest. "DD" indicates
potential recoveries in the range of 50%-90%, and "D" the lowest recovery
potential, i.e., below 50%.
Entities rated in this category have defaulted on some or all of their
obligations. Entities rated "DDD" have the highest prospect for resumption of
performance or continued operation with or without a formal reorganization
process. Entities rated "DD" and "D" are generally undergoing a formal
reorganization or liquidation process; those rated "DD" are likely to satisfy a
higher portion of their outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations. Plus (+) and minus (-) signs may be
appended to a rating symbol to denote relative status within the major rating
categories. Plus and minus signs are not added to the "AAA" category or to
categories below "CCC," nor to short-term ratings other than "F1" (see below).
International Short-Term Credit Ratings
F1: Highest credit quality. Strongest capacity for timely payment of financial
commitments. May have an added "+" to denote any exceptionally strong credit
feature.
F2: Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of higher
ratings.
F3: Fair credit quality. Capacity for timely payment of financial commitments is
adequate. However, near-term adverse changes could result in a reduction to
non-investment grade.
B: Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.
C: High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.
D: Default. Denotes actual or imminent payment default.
<PAGE>
Appendix B
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Industry Classifications
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Aerospace/Defense Food and Drug Retailers
Air Transportation Gas Utilities
Asset-Backed Health Care/Drugs
Auto Parts and Equipment Health Care/Supplies & Services
Automotive Homebuilders/Real Estate
Bank Holding Companies Hotel/Gaming
Banks Industrial Services
Beverages Information Technology
Broadcasting Insurance
Broker-Dealers Leasing & Factoring
Building Materials Leisure
Cable Television Manufacturing
Chemicals Metals/Mining
Commercial Finance Nondurable Household Goods
Communication Equipment Office Equipment
Computer Hardware Oil - Domestic
Computer Software Oil - International
Conglomerates Paper
Consumer Finance Photography
Consumer Services Publishing
Containers Railroads & Truckers
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Wholesalers Specialty Printing
Durable Household Goods Specialty Retailing
Education Steel
Electric Utilities Telecommunications - Long Distance
Electrical Equipment Telephone - Utility
Electronics Textile, Apparel & Home Furnishings
Energy Services Tobacco
Entertainment/Film Trucks and Parts
Environmental Wireless Services
Food
<PAGE>
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Centennial Government Trust
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Investment Advisor and Distributor
Centennial Asset Management Corporation
6803 South Tucson Way
Englewood, Colorado 80112
Sub-Distributor
OppenheimerFunds Distributor, Inc.
P.O. Box 5254
Denver, Colorado 80217
Transfer Agent
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217
1.800.525.9310
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
PX0170.001.1100
