Registration No. 33-23494
File No. 811-5584
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 14 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
Amendment No. 16 [X]
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CENTENNIAL NEW YORK TAX EXEMPT TRUST
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(Exact Name of Registrant as Specified in Charter)
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6803 South Tucson Way, Englewood, Colorado 80112
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(Address of Principal Executive Offices) (Zip Code)
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1-800-525-9310
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(Registrant's Telephone Number, including Area Code)
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Andrew J. Donohue, Esq.
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OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b) [ ] On _______________
pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1)
[X] On October 28, 1999 pursuant to paragraph (a)(1) [ ] 75 days after filing
pursuant to paragraph (a)(2) [ ] On _______________ pursuant to paragraph (a)(2)
of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Centennial New York Tax Exempt Trust
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Prospectus dated November 1, 1999
Centennial New York Tax Exempt Trust is
a money market mutual fund. It seeks
the maximum current income exempt from
federal, New York State and New York
City income taxes for individual
investors as is consistent with
preservation of capital. The Trust
invests in "money market" securities
meeting specified quality, maturity and
diversification standards. This
Prospectus contains important
information about the Trust's
objective, its investment policies,
As with all mutual funds, the strategies and risks. It also Securities and
Exchange Commission has contains important information about not approved or
disapproved the Trust's how to buy and sell shares of the securities nor has it
determined that Trust and other account features. this Prospectus is accurate or
Please read this Prospectus carefully complete. It is a criminal offense to
before you invest and keep it for represent otherwise. future reference about
your account.
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<PAGE>
2
CONTENTS
A B O U T T H E T R U S T
The Trust's Objective and Investment Strategies
Main Risks of Investing in the Trust
The Trust's Past Performance
Fees and Expenses of the Trust
About the Trust's Investments
How the Trust is Managed
A B O U T Y O U R A C C O U N T
How to Buy Shares
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends and Tax Information
Financial Highlights
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20
A B O U T T H E T R U S T
The Trust's Objective and Investment Strategies
WHAT IS THE TRUST'S INVESTMENT OBJECTIVE? The Trust seeks the maximum current
income exempt from federal, New York State and New York City income taxes for
individual investors as is consistent with the preservation of capital.
WHAT DOES THE TRUST INVEST IN? The Trust is a money market fund. It invests in a
variety of high-quality money market securities to seek income. Money market
securities are short-term debt instruments issued by the U.S. government,
domestic and foreign corporations and financial institutions and other entities.
They include, for example, bank obligations, commercial paper, other corporate
debt obligations and government debt obligations.
WHO IS THE TRUST DESIGNED FOR? The Trust may be appropriate for investors who
want to earn income exempt from federal, New York State and New York City income
taxes at current money market rates while preserving the value of their
investment. The Trust is managed to keep its share price stable at $1.00. The
Trust does not invest for the purpose of seeking capital appreciation or gains.
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 is a money market fund that seeks income by investing in
short-term debt securities that must meet strict standards set by its Board of
Trustees following rules for money market funds under federal law. These 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 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 securities (and its share
price) to fall. 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. As a result, there is a risk that the Trust's shares could
fall below $1.00 per share.
The Trust's investment manager, Centennial Asset Management Corporation,
tries to reduce risks by diversifying investments and by carefully researching
securities before they are purchased. However, an investment in the Trust is not
a complete investment program. 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.
Risks of Non-Diversification -- Investments in New York Municipal Securities.
The Trust is "non-diversified." That means that compared to funds that are
diversified, it can invest a greater portion of its assets in the securities of
one issuer, such as municipal securities issued by the State of New York. Having
a higher percentage of its assets invested in the securities of fewer issuers,
particularly obligations of government issuers of a single state, could result
in greater credit risk exposure to a smaller number of issuers due to economic,
regulatory or political problems in New York. However, the Trust is currently
subject to certain diversification requirements under rules for money market
funds under federal law.
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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 is not necessarily an
indication of 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 1/1/99 through 9/30/99 the cumulative total return was
- --%.
During the period shown in the bar chart, the highest return for a calendar
quarter was __% ( Q ' ) and the lowest return for a calendar quarter was __% ( Q
' ).
5 Years 10 Years
Average Annual Total Returns (or life of (or life of
for the periods ending December 31, 1 Year class, class,
1998 if less) if less)
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Centennial New York Tax Exempt Trust
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The returns in the table 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 management of its assets,
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. Shareholders pay other
expenses directly, such as account transaction charges. The following tables are
provided 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 the fiscal year ended June 30, 1999.
SHAREHOLDER FEES. The Trust does not charge any shareholder fees in
connection with the offer of its shares.
Annual Trust Operating Expenses (deducted from Trust assets):
(% of average daily net assets)
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Management Fees %
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Service (12b-1) Fees %
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Other Expenses %
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Total Annual Operating Expenses %
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"Other expenses" in the table include transfer agent fees, custodial fees, and
accounting and legal expenses the Trust pays.
EXAMPLE. This 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 $10,000 in shares of the Trust for the time periods indicated
and reinvest your dividends and distributions. The example also assumes that
your investment has a 5% return each year and that the Trust's expenses remain
the same. Your actual costs may be higher or lower, because expenses will vary
over time. Based on these assumptions your expenses would be as follows:
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1 year 3 years 5 years 10 years
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$ $ $ $
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About the Trust's Investments
THE TRUST'S PRINCIPAL INVESTMENT POLICIES. In seeking maximum current income
exempt from federal, New York State and New York City income taxes as is
consistent with the preservation of capital, the Trust invests in short-term
money market securities meeting quality, maturity and diversification standards
established for 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.
What Types of Money Market Securities Does the Trust Invest In? The following is
a brief description of the types of money market securities the Trust may
invest in. Money market instruments are high-quality, short-term debt
instruments that may be issued by the U.S. government, domestic and foreign
corporations, banks or other entities. They may have fixed, variable or
floating interest rates. The Trust normally attempts to invest 100% of its
assets and will invest at least 80% of its assets in municipal securities.
The Trust will invest at least 65% of its total assets in obligations of the
State of New York and its political subdivisions, agencies and
instrumentalities or obligations of commonwealths or territories of the
United States, the interest from which is not subject to New York State and
New York City personal income tax in the opinion of bond counsel to the
respective issuer. As a fundamental policy, the Trust will not make any
investment that will reduce the portion of its total assets that are invested
in municipal securities to less than 80%. The balance of the Trust's assets
may be invested in securities, the income from which may be taxable. The
Trust's taxable investments include repurchase agreements, municipal
securities issued to benefit a private user, and certain temporary
investments. These investments are described below under "Other Investment
Strategies" or in the Statement of Additional Information.
o Municipal Securities. The Trust buys municipal bonds and notes,
tax-exempt commercial paper, certificates of participation in municipal
leases and other debt obligations if the interest paid on the security
is not subject to federal individual income tax in the opinion of bond
counsel to the issuer. These are debt obligations issued by or on
behalf of the State of New York, other states and the District of
Columbia, their political subdivisions (such as cities, towns and
counties), or any commonwealth or territory of the United States, or
their agencies, instrumentalities and authorities. All of these types
of debt obligations are referred to as "municipal securities" in this
Prospectus. All municipal securities in which the Trust invests must
have, or, pursuant to regulations adopted by the Securities and
Exchange Commission, be deemed to have, remaining maturities of one
year or less at the date the Trust purchases them. Investments in
unrated municipal securities will not exceed 20% of the Trust's total
assets.
Additionally, the Trust may buy other money market instruments that its
Board of Trustees approves from time to time. They must be U.S.
dollar-denominated short-term investments that the Board must determine to have
minimal credit risks. They also must be of "high quality" as determined by a
national rating organization. The Trust may buy an unrated security that
otherwise meets those qualifications.
What Credit Quality and Maturity Standards Apply to the Trust's Investments? The
Trust may buy only those securities that meet credit quality, maturity and
diversification standards set in the Investment Company Act for money market
funds. For example, the Trust must maintain an average portfolio maturity of
not more than 90 days. Some of the Trust's investment restrictions are more
restrictive than the standards that apply to all money market funds. For
example, as a fundamental policy, the Trust may not invest in any debt
instrument having a maturity in excess of one year from the date of the
investment. The Board of Trustees has adopted procedures to evaluate
securities for the Trust's portfolio under those standards and the Manager
has the responsibility to implement those procedures when selecting
investments for the Trust.
In general, those procedures require that the Trust hold only money market
instruments that are rated in one of the two highest short-term rating
categories of two national rating organizations or unrated securities of
comparable quality. Under the procedures the Trust can invest without limit in
U.S. government securities because of their limited investment risks.
The procedures 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.
Canthe Trust's Investment Objective and Policies Change? The Trust's Trustees
can change non-fundamental policies without shareholder approval, although
significant changes will be described in amendments to this Prospectus.
Fundamental policies are those that 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. An investment policy is not fundamental
unless this Prospectus or the Statement of Additional Information says that a
particular policy is fundamental.
OTHER INVESTMENT STRATEGIES. To seek its objective, the Trust can also use the
investment techniques and strategies described below. The Trust may not always
use all of the techniques and strategies described below. These techniques
involve certain 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. Some of the municipal securities the Trust
may purchase may have variable or floating interest rates. Variable rates are
adjustable at stated periodic intervals of no more than one year. Floating
rates are automatically adjusted according to a specified market rate for
such investments, such as the prime rate of a bank, or the 90 day U.S.
Treasury bill rate. The Trust may purchase these obligations if they have a
remaining maturity of one year or less; if their maturity is greater than one
year, they may be purchased if the Trust is able to recover the principal
amount of the underlying security at specified intervals not exceeding one
year and upon no more than 30 days' notice. Such obligations may be secured
by bank letters of credit or other credit support arrangements which
guarantee payment.
"When-Issued" and "Delayed-Delivery" Transactions. The Trust can purchase
municipal securities on a "when-issued" basis and may purchase or sell such
securities on a "delayed- delivery" basis. These terms refer to securities
that have been created and for which a market exists, but which are not
available for immediate delivery. The Trust does not intend to make such
purchases for speculative purposes. During the period between the purchase
and settlement, no payment is made for the security and no interest accrues
to the buyer from the investment. There is a risk of loss to the Trust if the
value of the security declines prior to the settlement date.
Municipal Lease Obligations. Municipal leases are used by state and local
government authorities to obtain funds to acquire land, equipment or
facilities. The Trust may invest in certificates of participation that
represent a proportionate interest in payments made under municipal lease
obligations. If the government stops making payments or transfers its payment
obligations to a private entity, the obligation could lose value or become
taxable. Some of these obligations might not have an active trading market
and would be subject to the fund's limits on "illiquid" securities described
below. From time to time the Trust may invest more than 5% of its net assets
in municipal lease obligations that the Manager has determined to be liquid
under guidelines set by the Trust's Board of Trustees.
Illiquid and Restricted Securities. Investments may be illiquid because of the
absence of an active trading market, making it difficult to value them or
dispose of them promptly at an acceptable price. Restricted securities may
have a contractual limit on resale or may require registration under federal
securities laws before they can be sold publicly. The Trust will not invest
more than 10% of its net assets in illiquid securities, including repurchase
agreements of more than seven days' duration and other securities that are
not readily marketable. That limit does not apply to certain restricted
securities that are eligible for resale to qualified institutional purchasers
or purchases of commercial paper that may be sold without registration under
the federal securities laws. 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.
Demand Features and Guarantees. The Trust may invest a significant percentage of
its assets in municipal securities that have demand features, guarantees or
similar credit and liquidity enhancements. A demand feature permits the
holder of the security to sell the security within a specified period of time
at a stated price and entitles the holder of the security to receive an
amount equal to the approximate amortized cost of the security plus accrued
interest. A guarantee permits the holder of the security to receive, upon
presentment to the guarantor, the principal amount of the underlying security
plus accrued interest when due or upon default. A guarantee is the
unconditional obligation of an entity other than the issuer of the security.
Demand features and guarantees can effectively: (1) shorten the maturity
of a variable or floating rate security, (2) enhance the security's credit
quality and (3) enhance the ability to sell the security. The aggregate price
for a security subject to a demand feature or a guarantee may be higher than the
price that would otherwise be paid for the security without the guarantee or the
demand feature. When the Trust purchases securities subject to guarantees or
demand features, there is an increase in the cost of the underlying security and
a corresponding reduction in its yield. Because the Trust invests in securities
backed by banks and other financial institutions, changes in the credit quality
of these institutions could cause losses to the Trust. Therefore, an investment
in the Trust may be riskier than an investment in other types of money market
funds.
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 Trusts net assets to be subject to repurchase agreements having a
maturity beyond seven days. Income earned on repurchase transactions is not
tax exempt and accordingly, under normal market conditions, the Trust will
limit its investments in repurchase transactions to 20% of its total assets.
Temporary Investments. The Trust may hold the following types of temporary
investments: (i) obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities; (ii) bankers' acceptances; (iii) taxable
commercial paper rated in the highest category by a Rating Organization; (iv)
short-term taxable debt obligations rated in one of the two highest rating
categories of a Rating Organization; or (v) certificates of deposit of
domestic banks with assets of $1 billion or more, and (vi) repurchase
agreements. To the extent the Trust assumes a temporary defensive position, a
significant portion of the Trust's distributions may be subject to federal,
New York State and local income taxes.
YEAR 2000 RISKS. Because many computer software systems in use today cannot
distinguish the year 2000 from the year 1900, the markets for securities in
which the Trust invests could be detrimentally affected by computer failures
beginning January 1, 2000. Failure of computer systems used for securities
trading could result in settlement and liquidity problems for the Trust and
other investors. That failure could have a negative impact on handling
securities trades, pricing and accounting services. Data processing errors by
government issuers of securities could result in economic uncertainties, and
those issuers might substantial costs in attempting to prevent or fix such
errors, all of which could have a negative effect on the Trust's investments and
returns.
The Manager, the Distributor and the Transfer Agent have been working on
necessary changes to their computer systems to deal with the year 2000 and
expect that their systems will be adapted in time for that event, although there
cannot be assurance of success. Additionally, the services they provide depend
on the interaction of their computer systems with those of brokers, information
services, the Trust's Custodian and other parties. Therefore, any failure of the
computer systems of those parties to deal with the year 2000 might have a
negative effect on the services they provide to the Trust. The extent of that
risk cannot be ascertained at this time.
How the Trust is Managed
THE MANAGER. The investment adviser for of the Trust is Centennial Asset
Management Corporation. The Manager is responsible for selecting the Trust's
investments and handling its day-to-day business. The Manager carries out its
duties with respect to the Trust, subject to the policies established by the
Board of Trustees, under an Investment Advisory Agreement which states the
Manager's responsibilities. The Agreement sets forth the fees paid by the Trust
to the Manager and describes the expenses that the Trust is responsible to pay
to conduct its business.
The Manager, a wholly-owned subsidiary of OppenheimerFunds, Inc., has
operated as an investment advisor since 1978. As of June 30, 1999, the Manager
and its affiliates managed assets of more than $110 billion, including private
accounts and investment companies having more than 5 million shareholder
accounts. The Manager is located at 6803 South Tucson Way, Englewood, CO 80112.
Portfolio Manager. Michael Carbuto is the portfolio manager of the Trust.
He is the person principally responsible for the day-to-day management of
the Trust's portfolio. Mr. Carbuto has had this responsibility 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 adviser.
Advisory Fees. The management fee is payable monthly to the Manager under the
terms of the Trust's Investment Advisory Agreement. That fee is computed on
the average annual net assets of the respective Trust as of the close of each
business day and the following annual rates: 0.500% of the first $250 million
of net assets; 0.475% of the next $250 million of net assets; 0.450% of the
next $250 million of net assets; 0.425% of the next $250 million of net
assets; 0.400% of the of net assets in excess of $1 billion.
For further information about the Investment Advisory Agreement, including
a description of expense assumption arrangements with the Manager, see the
Statement of Additional Information.
A B O U T Y O U R A C C O U N T
How to Buy Shares
AT WHAT PRICE ARE SHARES SOLD? Shares of the 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 the Trust will 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 Distributor
receives the purchase order at its offices in Denver, Colorado, or after any
agent appointed by the Distributor receives the order and sends it to the
Distributor as described below.
HOW MUCH MUST YOU INVEST? You can open an account with a minimum initial
investment described below depending on how you buy and pay for your shares, and
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 Oppenheimer 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? Investors can buy shares in one of several ways:
1. Buying Shares Through a Dealer's Automatic Purchase and Redemption
Program: Investors can buy shares of the Trust through a broker-dealer
that has a sales agreement with that Trust's Distributor or
Sub-Distributor that allows shares to be purchased through the dealer's
Automatic Purchase and Redemption Program. Shares of the 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.
2. Buying Shares Through Your Dealer: Investors who do not participate in
an Automatic Purchase and Redemption Program may buy shares of the
Trust through any broker-dealer that has a sales agreement with the
Distributor or the Sub-Distributor. Your dealer will place your order
with the Distributor on your behalf.
3. Buying Shares Directly Through the Distributor: Investors can also
purchase shares directly through the Trusts' Distributor. Investors who
make purchases directly and hold shares in their own names are referred
to as "Direct Investors" in this Prospectus.
The Distributor may appoint certain servicing agents to accept purchase
(and redemption) orders, including broker-dealers that have established
Automatic Purchase and Redemption Programs. The Distributor, in its sole
discretion, may reject any purchase order for shares of the Trust.
HOW ARE SHARES PURCHASED THROUGH AUTOMATIC PURCHASE AND REDEMPTION PROGRAMS? If
you buy shares through your broker-dealer's Automatic Purchase and Redemption
Program, your broker-dealer will buy your shares of the Trust 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" 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 Distributor to enable them to place purchase orders for shares of the
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 the
Trust.
1. If the Distributor receives a purchase order before 12:00 Noon on a
regular business day with the 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. (All references to time
in this Prospectus mean "New York time.") Distributions will begin to
accrue on the shares on that day if the Federal Funds are received by
the required time.
2. If the Distributor receives a purchase order after 12:00 Noon on a
regular business day with the 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.
3. 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 INVESTORS BUY SHARES THROUGH THE DISTRIBUTOR? Direct Investors
may buy shares of the Trust by completing a Centennial Funds New Account
Application and sending it to Centennial Asset Management Corporation, 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. Direct Investors can also order shares through their dealer
or broker.
The 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 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 Investors may pay for purchases of shares of the Trust
by check. Send your check, payable to "Centennial Asset Management
Corporation," along with your Application and other documents 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
Investors by check is $500.
Payment by Federal Funds Wire. Direct Investors may pay for purchases of Shares
of the Trust by Federal Funds wire. You must also forward your Application
and other documents to the address listed above. Before sending a wire, call
the 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 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 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 Investors can
purchase shares of the 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.
Howis the Trust's Net Asset Value Determined? The net asset value of shares of
the 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 the
Trust's net assets by the number of shares that are outstanding. Under a policy
adopted by the Trust's Board of Trustees, the Trust uses the amortized cost
method to value its securities to determine net asset value.
The shares of the Trust offered by this Prospectus are considered to be
Class A shares for the purposes of exchanging them or reinvesting distributions
among other Oppenheimer funds that offer more than one class of shares.
Service (12b-1) Plan. The 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 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.
How to Sell Shares
Shares can be sold (redeemed) on any regular business day. Orders to sell shares
will receive the next net asset value per share calculated after the order is
received in proper form (which means that it must comply with the procedures
described below) and is accepted by the Trust's 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 INVESTORS REDEEM SHARES? Direct Investors can redeem their shares
by writing a letter to the Transfer Agent, by using the Trust's checkwriting
privilege, 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 Investors and the
Trust from fraud, the following redemption requests for accounts of Direct
Investors 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 $50,000 or more and receive a check o The redemption check is
not payable to all Investors 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
Where Can Direct Investors Have Their Signatures Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, 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 Investors Sell Shares by Mail? Write a "letter of
instructions" 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 the account is
registered, and
o Any special documents requested by the Transfer Agent to assure proper
authorization of the person asking to sell the shares.
- --------------------------------------------------------------------------------
- ---------------------------------------- ---------------------------------------
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
---------------------------------------
HowCan Direct Investors Sell Shares by Telephone? Direct Investors and their
dealer representative of record may also sell shares by telephone. To receive
the redemption price on a regular business day, the Transfer Agent must
receive the request by 4:00 P.M. on that day. You may not redeem shares held
under a share certificate by telephone. To redeem shares through a service
representative, call 1-800-525-9310. Proceeds of telephone redemptions will
be paid by check payable to the shareholder(s) of record and will be sent to
the address of record for the account. Up to $50,000 may be redeemed by
telephone in any 7-day period. The check must be payable to all owners of
record of the shares and must be sent to the address on the account
statement. This service is not available within 30 days of changing the
address on an account.
SENDING REDEMPTION PROCEEDS BY WIRE. While the Trust normally sends Direct
Investors 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 Investors 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.
HOW DO I WRITE CHECKS AGAINST MY ACCOUNT? Program participants may write checks
against the account held under their Program, but must arrange for checkwriting
privileges through their dealers. Direct Investors 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. Investors with joint accounts
can elect in writing to have checks paid over the signature of one owner.
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 Trust to redeem 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 the Trust that were bought directly or by reinvesting
distributions from that Trust or another Centennial Trust or Oppenheimer
fund. Generally, there is no fee to redeem shares of the Trust bought by
exchange of shares of another Centennial Trust or Oppenheimer fund. However,
1. if you acquired shares of the Trust by exchanging Class A shares of
another Oppenheimer fund that you bought subject to the Class A
contingent deferred sales charge, and
2. those shares are still subject to the Class A contingent deferred sales
charge when you exchange them into the Trust, then
3. 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 the Trust can be exchanged for shares of certain other Centennial or
Oppenheimer funds, depending on whether you own your shares through your
dealer's Automatic Purchase and Redemption Program or as a Direct Investor.
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 and Centennial Tax Exempt Trust,
Centennial California Tax Exempt Trust and (referred to in this Prospectus as
the "Centennial Trusts") if available for sale in your state of residence by
contacting your broker or dealer and obtaining a Prospectus of the Centennial
Trusts.
HOW CAN DIRECT INVESTORS EXCHANGE SHARES? Direct Investors can exchange
shares of the Trust for Class A shares of certain Oppenheimer funds. To
exchange shares, you must meet several conditions:
o Shares of the fund selected for exchange must be available for sale in
your place 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 you purchase
by exchange.
o Before exchanging into a fund, you should obtain and read its prospectus.
Shares of a particular class of an Oppenheimer fund may be exchanged only
for shares of the same class in other Oppenheimer funds. For example, you can
exchange shares of the Trust only for Class A shares of another fund, and you
can exchange only Class A shares of another Oppenheimer fund for shares of the
Trust.
You may pay a sales charge when you exchange shares of the Trust. Because
shares of the Trust are sold without sales charge, in some cases you may pay a
sales charge when you exchange shares of the Trust for shares of other
Oppenheimer funds that are sold subject to a sales charge. You will not pay a
sales charge when you exchange shares of the Trust purchased by reinvesting
distributions from the Trust or other Oppenheimer funds (except Oppenheimer Cash
Reserves), or shares of the Trust purchased by exchange of shares 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 the 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 Investors can find a list of Oppenheimer 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 Investors Submit Exchange Requests? Direct shareholders may
request exchanges in writing or by telephone:
o Written Exchange Requests. Submit 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 the 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. Although the Trusts will attempt to provide you notice whenever it
is reasonably able to do so, they may impose these changes at any time.
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 Trust's policies and procedures for buying, selling
and exchanging shares is contained in the Statement of Additional Information.
Theoffering of shares may be suspended during any period in which the
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 the
Trust's best interest to do so.
Telephone Transaction Privileges for purchases, redemptions or exchanges may be
modified, suspended or terminated by the Trust at any time. If an account has
more than one owner, the 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.
TheTransfer Agent will record any telephone calls to verify data concerning
transactions and has adopted other procedures to confirm that telephone
instructions are genuine, by requiring callers to provide tax identification
numbers and other account data or by using PINs, and by confirming such
transactions in writing. The Transfer Agent and the Trust 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.
TheTransfer Agent may delay forwarding a check or making a payment via Federal
Funds wire for 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.
To avoid sending duplicate copies of materials to households, the Trust will
mail only one copy of each annual and semi-annual report to shareholders
having the same last name and address on the Trust's records. However, each
shareholder may call the Transfer Agent at 1-800-525-9310 to ask that copies
of those materials be sent personally to that shareholder.
Dividends and Tax Information
DIVIDENDS. The 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, the 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 the Trust from the
purchase payment for such shares.
CAPITAL GAINS. The Trust normally holds its securities to maturity and therefore
will not usually pay capital gains. Although the Trusts do not seek capital
gains, the 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. The Trust may make
supplemental distributions of dividends and capital gains following the end of
its fiscal year.
If you participate in an Automatic Purchase and Redemption Program sponsored by
your broker-dealer, all dividends will be automatically reinvested in additional
shares of the Trust. Under the terms of the Automatic Purchase and Redemption
Program, your broker-dealer can pay redeem shares to satisfy debit balances
arising in your Program Account. If that occurs, you will be entitled to
dividends on those shares only up to and including the date of such redemption.
TAXES. 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 paid by the Trust from interest it receives from New York
municipal securities will be exempt from New York State and New York City
personal income taxes. Dividends paid from municipal securities of other issuers
normally will be treated as taxable ordinary income subject to New York State
and New York City personal income taxes. Distributions of any net long-term
capital gains distribution will be taxable as ordinary income for New York State
and New York City personal income tax purposes.
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 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 the 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 the 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 tax information
about your investment. You should consult with your tax adviser about the effect
of an investment in the Trust on your particular tax situation.
<PAGE>
Financial Highlights
The Financial Highlights Table is presented to help you understand the Trust's
financial performance for the past 5 fiscal years. Certain information reflects
financial results for a single Trust share. The total returns in the table
represent the rate that an investor would have earned [or lost] on an investment
in the Trust (assuming reinvestment of all dividends and distributions). This
information for the past 5 fiscal years ended June 30, 1999 has been audited by
Deloitte & Touche LLP, the Trust's independent auditors, whose report, along
with the Trust's financial statements, is included in the Statement of
Additional Information, which is available on request.
<PAGE>
54
INFORMATION AND SERVICES
For More Information On Centennial New York Tax Exempt 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 Trust 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
Fund documents and reports by visiting the SEC's Public Reference Room in
Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web site at
http://www.sec.gov. Copies may be obtained upon payment of a duplicating fee by
writing to the SEC's Public Reference Section, Washington, D.C. 20549-6009.
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. 811-5584 Centennial Asset Management
Corporation
PR0780.001.1199
Printed on recycled paper
<PAGE>
APPENDIX TO THE PROSPECTUS OF
CENTENNIAL NEW YORK TAX EXEMPT TRUST
Graphic material included in Prospectus of Centennial New York Tax Exempt
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
- --------------------------------------------------------------------
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12/31/89
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12/31/90
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12/31/91
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12/31/92
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12/31/93
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12/31/94
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12/31/95
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12/31/96
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12/31/97
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12/31/98
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<PAGE>
Centennial New York Tax Exempt Trust
- ------------------------------------------------------------------------------
6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-9310
Statement of Additional Information dated November 1, 1999
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, 1999. 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.....
The Trust's Investment Policies.......................................
Other Investment Strategies...........................................
Investment Restrictions...............................................
How the Trust is Managed...................................................
Organization and History..............................................
Trustees and Officers of the Trust.........................................
The Manager...........................................................
Performance of the Trust...................................................
About Your Account
How To Buy Shares..........................................................
How To Sell Shares.........................................................
Dividends and Taxes........................................................
Additional Information About the Trust.....................................
Financial Information About the Trust
Independent Auditors' Report...............................................
Financial Statements.......................................................
Appendix A: Securities Ratings..........................................A-1
Appendix B: Industry Classifications....................................B-1
Appendix C: Tax Equivalent Yield Tables.................................C-1
Appendix D: Automatic Withdrawal Plan Provision.........................D-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, 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 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.
There are variations in the credit quality of municipal securities, both
within a particular rating classification and between classifications. These
variations depend on numerous factors. The yields of municipal securities depend
on a number of factors, including general conditions in the municipal securities
market, the size of a particular offering, the maturity of the obligation and
rating (if any) of the issue. These factors are discussed in greater detail
below.
|X| Portfolio Turnover. A change in the securities held by the Trust from
buying and selling investments is known as "portfolio turnover." Short-term
trading increases the rate of portfolio turnover and could increase the Trust's
transaction costs. However, the Trust ordinarily incurs little or no brokerage
expense because most of the Trust's portfolio transactions are principal trades
that do not require payment of brokerage commissions.
The Trust ordinarily does not trade securities to achieve capital
gains, because they would not be tax-exempt income. To a limited degree, the
Trust may engage in short-term trading to attempt to take advantage of
short-term market variations. It may also do so to dispose of a portfolio
security prior to its maturity. That might be done if, on the basis of a revised
credit evaluation of the issuer or other considerations, the Manager believes
such disposition is advisable or the Trust needs to generate cash to satisfy
requests to redeem Trust shares. In those cases, the Trust may realize a capital
gain or loss on its investments. The Trust's annual portfolio turnover rate
normally is not expected to exceed ____%.
Municipal Securities. The types of municipal securities in which the Trust may
invest are described in the Prospectus under "About the Trust's Investments."
Municipal securities are generally classified as general obligation bonds,
revenue bonds and notes. A discussion of the general characteristics of these
principal types of municipal securities follows below.
|X| Municipal Bonds. We have classified municipal securities having a
maturity (when the security is issued) of more than one year as "municipal
bonds." The principal classifications of long-term municipal bonds are "general
obligation" and "revenue" (including "industrial development") bonds. They may
have fixed, variable or floating rates of interest, as described below.
Some bonds may be "callable," allowing the issuer to redeem them
before their maturity date. To protect bondholders, callable bonds may be issued
with provisions that prevent them from being called for a period of time.
Typically, that is 5 to 10 years from the issuance date. When interest rates
decline, if the call protection on a bond has expired, it is more likely that
the issuer may call the bond. If that occurs, the Trust might have to reinvest
the proceeds of the called bond in bonds that pay a lower rate of return.
|_| General Obligation Bonds. The basic security behind general
obligation bonds is the issuer's pledge of its full faith and credit and taxing
power, if any, for the repayment of principal and the payment of interest.
Issuers of general obligation bonds include states, counties, cities, towns, and
regional districts. The proceeds of these obligations are used to fund a wide
range of public projects, including construction or improvement of schools,
highways and roads, and water and sewer systems. The rate of taxes that can be
levied for the payment of debt service on these bonds may be limited or
unlimited. Additionally, there may be limits as to the rate or amount of special
assessments that can be levied to meet these obligations.
|_| Revenue Bonds. The principal security for a revenue bond is
generally the net revenues derived from a particular facility, group of
facilities, or, in some cases, the proceeds of a special excise tax or other
specific revenue source. Revenue bonds are issued to finance a wide variety of
capital projects. Examples include electric, gas, water and sewer systems;
highways, bridges, and tunnels; port and airport facilities; colleges and
universities; and hospitals.
Although the principal security for these types of bonds may vary from
bond to bond, many provide additional security in the form of a debt service
reserve fund that may be used to make principal and interest payments on the
issuer's obligations. Housing finance authorities have a wide range of security,
including partially or fully insured mortgages, rent subsidized and/or
collateralized mortgages, and/or the net revenues from housing or other public
projects. Some authorities provide further security in the form of a state's
ability (without obligation) to make up deficiencies in the debt service reserve
fund.
|_| Industrial Development Bonds. Industrial development bonds are
considered municipal bonds if the interest paid is exempt from federal income
tax. They are issued by or on behalf of public authorities to raise money to
finance various privately operated facilities for business and manufacturing,
housing, sports, and pollution control. These bonds may also be used to finance
public facilities such as airports, mass transit systems, ports, and parking.
The payment of the principal and interest on such bonds is dependent solely on
the ability of the facility's user to meet its financial obligations and the
pledge, if any, of real and personal property financed by the bond as security
for those payments.
|_| Private Activity Municipal Securities. The Tax Reform Act of 1986
(the "Tax Reform Act") reorganized, as well as amended, the rules governing tax
exemption for interest on certain types of municipal securities. The Tax Reform
Act generally did not change the tax treatment of bonds issued in order to
finance governmental operations. Thus, interest on general obligation bonds
issued by or on behalf of state or local governments, the proceeds of which are
used to finance the operations of such governments, continues to be tax-exempt.
However, the Tax Reform Act limited the use of tax-exempt bonds for
non-governmental (private) purposes. More stringent restrictions were placed on
the use of proceeds of such bonds. Interest on certain private activity bonds is
taxable under the revised rules. There is an exception for "qualified"
tax-exempt private activity bonds, for example, exempt facility bonds including
certain industrial development bonds, qualified mortgage bonds, qualified
Section 501(c)(3) bonds, and qualified student loan bonds.
In addition, limitations as to the amount of private activity bonds which
each state may issue were revised downward by the Tax Reform Act, which will
reduce the supply of such bonds. The value of the Trust's portfolio could be
affected if there is a reduction in the availability of such bonds.
Interest on certain private activity bonds issued after August 7, 1986,
which continues to be tax-exempt, will be treated as a tax preference item
subject to the alternative minimum tax (discussed below) to which certain
taxpayers are subject. The Trust may hold municipal securities the interest on
which (and thus a proportionate share of the exempt-interest dividends paid by
the Trust) will be subject to the federal alternative minimum tax on individuals
and corporations.
The federal alternative minimum tax is designed to ensure that all persons
who receive income pay some tax, even if their regular tax is zero. This is
accomplished in part by including in taxable income certain tax preference items
that are used to calculate alternative minimum taxable income. The Tax Reform
Act made tax-exempt interest from certain private activity bonds a tax
preference item for purposes of the alternative minimum tax on individuals and
corporations. Any exempt-interest dividend paid by a regulated investment
company will be treated as interest on a specific private activity bond to the
extent of the proportionate relationship the interest the investment company
receives on such bonds bears to all its exempt interest dividends.
In addition, corporate taxpayers subject to the alternative minimum tax
may, under some circumstances, have to include exempt-interest dividends in
calculating their alternative minimum taxable income. That could occur in
situations where the "adjusted current earnings" of the corporation exceeds its
alternative minimum taxable income.
To determine whether a municipal security is treated as a taxable private
activity bond, it is subject to a test for: (a) a trade or business use and
security interest, or (b) a private loan restriction. Under the trade or
business use and security interest test, an obligation is a private activity
bond if: (i) more than 10% of the bond proceeds are used for private business
purposes and (ii) 10% or more of the payment of principal or interest on the
issue is directly or indirectly derived from such private use or is secured by
the privately used property or the payments related to the use of the property.
For certain types of uses, a 5% threshold is substituted for this 10% threshold.
The term "private business use" means any direct or indirect use in a
trade or business carried on by an individual or entity other than a state or
municipal governmental unit. Under the private loan restriction, the amount of
bond proceeds that may be used to make private loans is limited to the lesser of
5% or $5.0 million of the proceeds. Thus, certain issues of municipal securities
could lose their tax-exempt status retroactively if the issuer fails to meet
certain requirements as to the expenditure of the proceeds of that issue or the
use of the bond-financed facility. The Trust makes no independent investigation
of the users of such bonds or their use of proceeds of the bonds. If the Trust
should hold a bond that loses its tax-exempt status retroactively, there might
be an adjustment to the tax-exempt income previously distributed to
shareholders.
Additionally, a private activity bond that would otherwise be a qualified
tax-exempt private activity bond will not, under Internal Revenue Code Section
147(a), be a qualified bond for any period during which it is held by a person
who is a "substantial user" of the facilities or by a "related person" of such a
substantial user. This "substantial user" provision applies primarily to exempt
facility bonds, including industrial development bonds. The Trust may invest in
industrial development bonds and other private activity bonds. Therefore, the
Trust may not be an appropriate investment for entities which are "substantial
users" (or persons related to "substantial users") of such exempt facilities.
Those entities and persons should consult their tax advisers before purchasing
shares of the Trust.
A "substantial user" of such facilities is defined generally as a
"non-exempt person who regularly uses part of a facility" financed from the
proceeds of exempt facility bonds. Generally, an individual will not be a
"related person" under the Internal Revenue Code unless such individual or the
individual's immediate family (spouse, brothers, sisters and immediate
descendants) own directly or indirectly in the aggregate more than 50% in value
of the equity of a corporation or partnership which is a "substantial user" of a
facility financed from the proceeds of exempt facility bonds.
|X| Municipal Notes. Municipal securities having a maturity (when the
security is issued) of less than one year are generally known as municipal
notes. Municipal notes generally are used to provide for short-term working
capital needs. Some of the types of municipal notes the Trust can invest in are
described below.
|_| Tax Anticipation Notes. These are issued to finance working capital
needs of municipalities. Generally, they are issued in anticipation of various
seasonal tax revenue, such as income, sales, use or other business taxes, and
are payable from these specific future taxes.
|_| Revenue Anticipation Notes. These are notes issued in
expectation of receipt of other types of revenue, such as federal revenues
available under federal revenue-sharing programs.
|_| Bond Anticipation Notes. Bond anticipation notes are issued to
provide interim financing until long-term financing can be arranged. The
long-term bonds that are issued typically also provide the money for the
repayment of the notes.
|_| Construction Loan Notes. These are sold to provide project
construction financing until permanent financing can be secured. After
successful completion and acceptance of the project, it may receive permanent
financing through public agencies, such as the Federal Housing Administration.
|X| Tax Exempt Commercial Paper. This type of short-term obligation
(usually having a maturity of 270 days or less) is issued by a municipality
to meet current working capital needs.
|X| Municipal Lease Obligations. The Trust's investments in municipal
lease obligations may be through certificates of participation that are offered
to investors by public entities. Municipal leases may take the form of a lease
or an installment purchase contract issued by a state or local government
authority to obtain funds to acquire a wide variety of equipment and facilities.
Some municipal lease securities may be deemed to be "illiquid" securities.
Their purchase by the Trust would be limited as described below in "Illiquid
Securities." From time to time the Trust may invest more than 5% of its net
assets in municipal lease obligations that the Manager has determined to be
liquid under guidelines set by the Board of Trustees. Those guidelines require
the Manager to evaluate:
|_| the frequency of trades and price quotations for such securities; |_|
the number of dealers or other potential buyers willing to purchase or
sell such securities; |_| the availability of market-makers; and |_| the
nature of the trades for such securities.
Municipal leases have special risk considerations. Although lease
obligations do not constitute general obligations of the municipality for which
the municipality's taxing power is pledged, a lease obligation is ordinarily
backed by the municipality's covenant to budget for, appropriate and make the
payments due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for that purpose on a yearly basis. While the obligation
might be secured by the lease, it might be difficult to dispose of that property
in case of a default.
Projects financed with certificates of participation generally are not
subject to state constitutional debt limitations or other statutory requirements
that may apply to other municipal securities. Payments by the public entity on
the obligation underlying the certificates are derived from available revenue
sources. That revenue might be diverted to the funding of other municipal
service projects. Payments of interest and/or principal with respect to the
certificates are not guaranteed and do not constitute an obligation of a state
or any of its political subdivisions.
In addition to the risk of "non-appropriation," municipal lease securities
do not have as highly liquid a market as conventional municipal bonds. Municipal
leases, like other municipal debt obligations, are subject to the risk of
non-payment of interest or repayment of principal by the issuer. The ability of
issuers of municipal leases to make timely lease payments may be adversely
affected in general economic downturns and as relative governmental cost burdens
are reallocated among federal, state and local governmental units. A default in
payment of income would result in a reduction of income to the Trust. It could
also result in a reduction in the value of the municipal lease and that, as well
as a default in repayment of principal, could result in a decrease in the net
asset value of the Trust. While the Trust holds such securities, the Manager
will also evaluate the likelihood of a continuing market for these securities
and their credit quality.
Ratings of Securities - Portfolio Quality and Diversification. Under Rule 2a-7
of the Investment Company Act, the Trust uses the amortized cost method to value
its portfolio securities to determine the Trust's net asset value per share.
Rule 2a-7 imposes requirements for the maturity, quality and diversification of
the securities which the Trust buys. The Trust may purchase only those
securities that the Manager, under procedures approved by the Board of Trustees,
has determined have minimal credit risk and, as such, are "eligible securities".
|_| Quality. Eligible securities are securities that have received a
rating in one of the two highest short-term rating categories by a rating
organization. Rating organizations are designated by the SEC. Eligible
securities may be "first tier" or "second tier" securities. First tier
securities are those that have received a rating in the highest category for
short term debt obligations by at least two rating organizations. If only one
rating organization has rated the security, it must be rated in the highest
category for that rating organization. U.S. government securities and securities
issued by a registered money market mutual fund are also first tier securities.
The Trust may also buy second tier "conduit securities". These eligible
securities are securities rated by rating organizations but are not first tier
securities. Conduit securities are municipal securities such as industrial
development or revenue bonds issued to finance non-government projects. The
payment of the principal and interest on a conduit security is not the
obligation of the municipal issuer, but is the obligation of another person such
as the user of the facility. The Trust may not invest more than 5% of its total
assets in second tier conduit securities.
The Trust may also buy unrated securities that the Manager determines are
comparable in quality to a first or second tier security by applying certain
criteria established by the board to determine its creditworthiness. These
criteria require a high quality short term or long-term rating (depending on the
security) from a rating organization. Unrated securities the Trust may buy
include asset backed securities and securities subject to "demand features" or
"guarantees".
The Trust may purchase a security subject to a guarantee if the guarantee
is an eligible security or a first tier security. The trust may also purchase a
security subject to a "conditional" demand feature if the demand feature is an
eligible security and the Manager has decided that the conditional demand
feature meets the requirements imposed by Rule 2a-7.
|_| Diversification. With respect to 75% of its total assets, the Trust
cannot invest more than 5% of its total assets in securities issued by one
issuer. It cannot invest more than 5% of its total assets in securities of one
issuer unless the security is a first tier security. The Trust also cannot
invest more than 1% of its total assets or $1.0 million, whichever is greater,
in second tier securities of one issuer. For diversification purposes, the Trust
is considered to have purchased the security underlying a repurchase agreement
if the repurchase agreement is fully collateralized. For a refunded security,
the Trust is considered to have the U.S. government securities underlying the
refunded security. For conduit securities, the Trust considers the issuer to be
the person ultimately responsible for payment of the obligation. If the Trust
buys an asset backed security, the issuer of the security is deemed to be the
"special purpose" entity which issued the security. A special purpose entity is
an entity which is organized solely for the purpose of issuing asset backed
securities. If the asset backed securities issued by the special purpose entity
include the obligations of another person or another special purpose entity and
those obligations amount to 10% or more of the asset backed securities the Trust
buys, that other person or entity is considered to be the issuer of a pro rata
percentage of the asset backed security.
The Trust may buy a security subject to demand feature or guarantee. In
this case, with respect to 75% of its total assets, the Trust may not invest
more than 10% of its total assets in securities issued by or subject to demand
features or guarantees issued by the same issuer. If the demand feature or
guarantee is a second tier security, the Trust may not invest more than 5% of
its total assets in securities subject to demand features or guarantees from the
same issuer. And, the Trust may not invest more than 10% of its total assets in
securities issued by or subject to demand features or guarantees from the same
issuer. However, if the demand feature or guarantee is issued by a person who is
a non-controlled person, the Trust does not have to limit its investments to no
more than 10% of its total assets in securities issued by or subject to demand
features or guarantees from the same issuer.
|_| Maturity. The Trust must maintain a dollar-weighted average portfolio
maturity of not more than 90 days, and the maturity of any single security must
not be in excess of one year from the date of the investment unless that debt
instrument is purchased subject to a demand feature which may not exceed one
year and requires payment on not more than 30 days' notice. This one year limit
is more restrictive than the maturity limitation imposed by Rule 2a-7. The Trust
also may buy adjustable and floating rate securities, enter into repurchase
agreements and lend portfolio securities. Rule 2a-7 defines how the maturities
of these securities is determined. The Trust may buy these securities if their
maturities do not exceed one year from the date of the investment.
|_| Demand Features and Guarantees. Demand features and gurantees and some
of their uses are described in the prospectus. The Trust also uses demand
features and guarantees to satisfy the maturity, quality and diversifications
requirements described above. The Trust considers the person which issues the
demand feature as the person to whom the Trust will look for payment. An
unconditional demand feature is considered a guarantee and the Trust looks to
the person making the guarantee for payment of the obligation of the underlying
security.
When the Trust buys municipal securities, it may obtain a demand feature
standby commitment from the seller to repurchase the securities that entitles
the Trust to achieve same day settlement from the repurchaser and to receive an
exercise price equal to the amortized cost of the underlying security plus
accrued interest, if any, at the time of exercise. Another type of demand
feature purchased in conjunction with a Municipal Security enables the Trust to
sell the underlying security within a specified period of time at a fixed
exercise price. The Trust may pay for demand features either separately in cash
or by paying a higher price for the securities acquired subject to the demand
features. The Trust will enter into these transactions only with banks and
dealers which, in the Manager's opinion, present minimal credit risks. the
Trust's purchases of demand features are subject to the provisions of Rule 2a-7
under the Investment Company Act because the Trust uses the amortized cost
method to value its portfolio securities.
The Trust's ability to exercise a demand feature or standby commitment
will depend on the ability of the bank or dealer to pay for the securities if
the demand feature or standby commitment is exercised. If the bank or dealer
should default on its obligation, the Trust might not be able to recover all or
a portion of any loss sustained from having to sell the security elsewhere.
Demand features and standby commitments are not transferrable by the Trust, and
therefore terminate if the Trust sells the underlying security to a third party.
The Trust intends to enter into these arrangements to facilitate portfolio
liquidity, although such arrangements may enable the Trust to sell a security at
a pre-arranged price which may be higher than the prevailing market price at the
time the demand features or standby commitment is exercised. Any considerations
paid by the Trust for the demand feature (which increases the cost of the
security and reduces the yield otherwise available for the security) will be
reflected on the Trust's books as unrealized depreciation while the demand
feature or standby commitment is held, and a realized gain or loss when demand
feature is exercised or expires.
Other Investment Strategies
Floating Rate/Variable Rate Obligations. Floating rate and variable rate demand
notes are tax-exempt obligations which may have a stated maturity in excess of
one year, but may include features that permit the holder to recover the
principal amount of the underlying security at specified intervals not exceeding
one year on not more than thirty days' notice at any time. The issuer of such
notes normally has a corresponding right, after a given period, to prepay in its
discretion the outstanding principal amount of the note plus accrued interest
upon a specified number of days notice to the holder. The interest rate on a
floating rate demand note is based on a stated prevailing market rate and is
adjusted automatically each time such rate is adjusted. The interest rate on a
variable rate demand note is also based on a stated prevailing market rate but
is adjusted automatically at specified intervals of no more than one year.
Generally, the changes in the interest rate on such securities reduce the
fluctuation in their market value. There is no limit on the amount of the
Trust's assets that may be invested in floating rate and variable rate
obligations that meet the requirements of Rule 2a-7. Floating rate or variable
rate obligations which do not provide for recovery of principal and interest
within seven days may be subject to the limitations applicable to illiquid
securities described in "Investment Objective and Policies - Illiquid and
Restricted Securities" in the Prospectus.
When-Issued and Delayed Delivery Transactions. As stated in the Prospectus, the
Trust may invest in municipal securities on a "when-issued" or "delayed
delivery" basis. Payment for and delivery of the securities shall not exceed 120
days from the date the offer is accepted. The purchase price and yield are fixed
at the time the buyer enters into the commitment. During the period between the
time of commitment and settlement, no payment is made by the Trust to the issuer
and no interest accrues to the Trust from the investment. However, the Trust
intends to be as fully invested as possible and will not invest in when-issued
securities if its income or net asset value will be materially adversely
affected. At the time the Trust makes the commitment to purchase a municipal
security on a when-issued basis, it will record the transaction on its books and
reflect the value of the security in determining its net asset value. It will
also identify on its books liquid assets equal in value to the commitment for
the when-issued securities. While when-issued securities may be sold prior to
settlement date, the Trust intends to acquire the securities upon settlement
unless a prior sale appears desirable for investment reasons. There is a risk
that the yield available in the market when delivery occurs may be higher than
the yield on the security acquired.
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. The Trust presently does not intend to lend its
securities, but if it does, the value of securities loaned is not expected to
exceed 5% of the value of the Trust's total assets. 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 must 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 Directors.
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.
Repurchase Agreements. In a repurchase transaction, the Trust acquires a
security from, and simultaneously resells it to, an approved vendor (a U.S.
commercial bank or the U.S. branch of a foreign bank having total domestic
assets of at least $1 billion or a broker-dealer with a net capital of at least
$50 million and which has been designated a primary dealer in government
securities). The resale price exceeds the purchase price by an amount that
reflects an agreed-upon interest rate effective for the period during which the
repurchase agreement is in effect. The majority of these transactions run from
day to day, and delivery pursuant to the resale typically will occur within one
to five days of the purchase. Repurchase agreements are considered "loans" under
the Investment Company Act of 1940, as amended (the "Investment Company Act")
collateralized by the underlying security. The Trust's repurchase agreements
require that at all times while the repurchase agreement is in effect, the value
of the collateral must equal or exceed the repurchase price to fully
collateralize the repayment obligation. Additionally, the Manager will monitor
the vendor's creditworthiness to confirm that the vendor is financially sound
and will continuously monitor the collateral's value.
Special Investment Considerations - New York Municipal Securities
As explained in the Prospectus, the Trust is highly sensitive to the fiscal
stability of New York State (the "State") and its subdivisions, agencies,
instrumentalities or authorities, including New York City, which issue the
municipal securities in which the Trust concentrates its investments. The
following information on risk factors in concentrating in New York Municipal
Securities is only a summary, based on publicly available official statements
relating to offerings of New York issuers of municipal securities on or prior to
August 3, 1998, with respect to offerings of the State, and August 13, 1998,
with respect to offerings of New York City. No representation is made as to the
accuracy of such information.
During the mid-1970's the State, some of its agencies, instrumentalities
and public benefit corporations (the "Authorities"), and certain of its
municipalities faced serious financial difficulties. To address many of these
financial problems, the State developed various programs, many of which were
successful in ameliorating the financial crisis. Any further financial problems
experienced by these Authorities or municipalities could have a direct adverse
effect on the New York Municipal Securities in which the Trust invests.
New York City. More than any other municipality, the fiscal health of New York
City (the "City") has a significant effect on the fiscal health of the State.
The national economic downturn which began in July 1990 adversely affected the
local economy which had been declining since late 1989. As a result, the City
experienced job losses in 1990 and 1991 and real Gross City Product ("GCP") fell
in those two years. Beginning in 1992, the improvement in the national economy
helped stabilize conditions in the City. Employment losses moderated toward
year-end and real GCP increased, boosted by strong wage gains. After noticeable
improvements in the City's economy during 1994, economic growth slowed in 1995,
and thereafter improved commencing in calendar year 1996, reflecting improved
securities industry earnings and employment in other sectors. Overall, the
City's economic improvement accelerated in 1997 and 1998. The City's current
financial plan assumes, after growth in 1997-1998, that moderate economic growth
will exist through calendar year 2002, with moderating job growth and wage
increases.
For each of the 1981 through 1996 fiscal years, the City had an operating
surplus, before discretionary transfers and achieved balanced operating results
as reported in accordance with applicable generally accepted accounting
principles ("GAAP"), after discretionary transfers. The City has been required
to close substantial gaps between forecast revenues and forecast expenditures in
order to maintain balanced operating results. There can be no assurance that the
City will continue to maintain balanced operating results as required by State
law without tax or other revenue increases or reductions in City services or
entitlement programs, which could adversely affect the City's economic base.
The Mayor is responsible for preparing the City's four-year financial
plan, including the City's current financial plan for the 1999 through 2002
fiscal years (the "1999-2002 Financial Plan", "Financial Plan" or "City Plan").
The City's projections set forth in the City Plan are based on various
assumptions and contingencies which are uncertain and which may not materialize.
Implementation of the Financial Plan is dependent upon the City's ability
to market its securities successfully. The City's financing program for fiscal
years 1999 through 2002 contemplates the issuance of $5.2 billion of general
obligation bonds and $5.4 billion of bonds to be issued by the New York City
Transitional Finance Authority (the "Finance Authority") to finance City capital
projects. The Finance Authority was created to assist the City in financing its
capital program while keeping City indebtedness within the forecast level of the
constitutional restrictions on the amount of debt the City is authorized to
incur. In addition, the City issues revenue and tax anticipation notes to
finance its seasonal working capital requirements. The success of projected
public sales of City bonds and notes, New York City Municipal Water Finance
Authority ("Water Authority") bonds and Finance Authority bonds will be subject
to prevailing market conditions. The City's planned capital and operating
expenditures are dependent upon the sale of its general obligation bonds and
notes, and the Water Authority and Finance Authority bonds. Future developments
concerning the City and public discussion of such developments, as well as
prevailing market conditions, may affect the market for outstanding City general
obligation bonds and notes.
The City Comptroller and other agencies and public officials issue reports
and make public statements which, among other things, state that projected
revenues and expenditures may be different from those forecasted in the City
Plan. It is reasonable to expect that such reports and statements will continue
to be issued and to engender public comment.
|X| 1999-2002 Financial Plan. The most recent quarterly modification to
the City's Financial Plan for the 1998 fiscal year projects a balanced budget in
accordance with GAAP for the 1998 fiscal year. The Financial Plan projects
revenues and expenditures for the 1998 fiscal year balanced in accordance with
GAAP. The Financial plan takes into account, among other things, increased tax
revenue projections; State aid reductions; rent payment collection delays; debt
service expenditure reductions; increased Board of Education spending; and
increased expenditures for drug initiatives. In addition, the Financial Plan
reflects the discretionary transfer in the 1998 fiscal year of debt service due
in the 1999 and 2000 fiscal years, and includes actions to eliminate a
previously projected budget gap for the 1998 fiscal year. The Financial Plan
also sets forth projections for the 1999 though 2001 fiscal years and projects
gaps of $1.9 billion, $2.7 billion and $2.3 billion for the 2000 through 2002
fiscal years, respectively. The Financial Plan also sets forth gap-closing
actions for the 1999 through 2002 fiscal years from additional agency actions
totaling $1.1 billion, $936 million, $910 million and $962 million in fiscal
years 1999 though 2002, respectively, including the approximately $380 million
gap closing program for each of fiscal years 2000 through 2002. This program
assumes for the 2000, 2001 and 2002 fiscal years, respectively, additional
agency programs to reduce expenditures or increase revenues by $894 million,
$1.5 billion and $1.3 billion; savings from privatization initiatives and asset
sales of $300 million, $350 million and $200 million; additional Federal and
State aid of $300 million, $500 million and $425 million; additional entitlement
cost containment initiatives of $300 million, $300 million and $300 million; and
the availability of $100 million, $100 million and $100 million of the General
Reserve.
The Financial Plan assumes (i) approval by the Governor and the State
Legislature of the extension of 14% personal income tax surcharge, which is
scheduled to expire on December 31, 1999, and which is projected to provide
revenue of $172 million, $500 million and $514 million in the 2000, 2001 and
2002 fiscal years, respectively, and the expiration of the 12.5% personal income
tax surcharge on December 31, 1998, the expiration of which is projected to
reduce revenue by $201 million, $546 million, $568 million and $593 million in
the 1999 through 2002 fiscal years, respectively; (ii) collection of the
projected rent payments for the City's airports, totaling $15 million, $365
million, $155 million and $185 million in the 1999 through 2002 fiscal years,
respectively, which may depend on the successful completion of negotiations with
the Port Authority of New York and New Jersey or the enforcement of the City's
rights under the existing leases through pending legal actions, and (iii) State
and Federal approval of the State and Federal gap-closing actions assumed in the
Financial Plan. In addition, the economic and financial condition of the City
may be affected by various financial, social, economic and political factors
which could have a material effect on the City.
On July 23, 1998, the New York State Comptroller issued a report which
noted that a significant cause for concern is the budget gaps in the 1999-2000
and 2000-2001 fiscal years, which the State Comptroller projected at $1.8
billion and $5.5 billion, respectively, after excluding the uncertain receipt by
the State of $250 million of funds from the tobacco settlement assumed for each
of such fiscal years, as well as the unspecified action assumed in the State's
projections. The State Comptroller also stated that if the securities industry
or economy slows, the size of the gaps would increase.
Various actions proposed in the Financial Plan are uncertain. If these
measures cannot be implemented, the City will be required to take other actions
to decrease expenditures or increase revenues to maintain a balanced financial
plan.
The projections for the 1999 through 2002 fiscal years reflect the costs of
the settlements and arbitration awards with the United Federation of Teachers
("UFT"), a coalition of unions headed by District Council 37 of the American
Federation of State, County and Municipal Employees and other bargaining units,
which together represent approximately 97% of the City's workforce, and assume
that the City will reach agreement with its remaining municipal unions under
terms which are generally consistent with such settlements and arbitration
awards. These contracts are approximately five years in length and have a total
cumulative net increase of 13%. Assuming the City reaches similar settlements
with its remaining municipal unions, the cost of all settlements for all
City-funded employees, as reflected in the Financial Plan, would total $459
million and $1.2 billion in the 1998 and 1999 fiscal years, respectively, and
exceed $2 billion in every fiscal year after the 1999 fiscal year.
In the event of a collective bargaining impasse, the terms of wage
settlements could be determined through statutory impasse procedures, which can
impose a binding settlement except in the case of collective bargaining with the
UFT, which may be subject to a non-binding arbitration.
|X| Ratings. Moody's Investors Service, Inc. ("Moody's") has rated the
City's general obligation bonds A3. Standard & Poor's Ratings Group ("Standard &
Poor's) has rated such bonds A-. IBCA Fitch ("Fitch") has rated such bonds A-.
Such ratings reflect only the views of Moody's Standard & Poor's and Fitch from
which an explanation of the significance of such ratings may be obtained. There
is no assurance that such ratings will continue for any given period of time or
that they will not be revised downward or withdrawn entirely. Any such downward
revision or withdrawal could have an adverse effect on the market prices of such
bonds. On July 10, 1995, Standard & Poor's revised its rating of City bonds
downward to BBB+. On July 16, 1998, Standard & Poor's revised its rating of City
bonds upward to A-. Moody's rating of City bonds was revised in February 1998 to
A3 from Baa1. Moody's, Standard & Poor's and Fitch currently rate the City's
outstanding general obligation bonds A3, A- and A-, respectively.
|X| Outstanding Net Indebtedness. As of June 30, 1998, the City and the
Municipal Assistance Corporation for the City of New York had, respectively,
$25.917 billion and $3.108 billion of outstanding net long-term debt.
The City depends on the State for State aid both to enable the City to
balance its budget and to meet its cash requirements. There can be no assurance
that there will not be reductions in State aid to the City from amounts
currently projected; that State budgets in future fiscal years will be adopted
by the April 1 statutory deadline, or interim appropriations enacted; or that
any such reductions or delays will not have adverse effects on the City's cash
flow or expenditures.
|X| Litigation. The City is a defendant in lawsuits pertaining to material
matters, including claims asserted which are incidental to performing routine
governmental and other functions. This litigation includes, but is not limited
to, actions commenced and claims asserted against the City arising out of
alleged torts, alleged breaches of contracts, alleged violations of law and
condemnation proceedings. As of June 30, 1997 and 1996, claims in excess of $530
billion and $380 billion, respectively, were outstanding against the City, for
which the City estimates its potential future liability to be $3.5 billion and
$2.8 billion, respectively.
New York State. The State has historically been one of the wealthiest states in
the nation. For decades, however, the State economy has grown more slowly than
that of the nation as a whole, resulting in the gradual erosion of its relative
economic affluence. The causes of this relative decline are varied and complex,
in many cases involving national and international developments beyond the
State's control.
|X| Recent Developments. The national economy has maintained a robust rate
of growth during the past six quarters, with over 14 million jobs added
nationally since early 1992. The State economy has continued to expand, but
growth remains somewhat slower than in the nation. Although the State has added
approximately 400,000 jobs since late 1992, employment growth in the State has
been hindered during recent years by significant cutbacks in the computer and
instrument manufacturing, utility, defense and banking industries. Government
downsizing has also moderated these job gains.
The forecast of the State's economy shows continued expansion during the
1998 calendar year, with employment growth gradually slowing as the year
progresses. The financial and business service sectors are expected to continue
to do well, while employment in the manufacturing and government sectors will
post only small, if any declines. On an average annual basis, the employment
growth rate in the State is expected to be higher than in 1997 and the
unemployment rate is expected to drop further to 6.1%. Personal income is
expected to record moderate gains in 1998. Wage growth in 1998 is expected to be
slower than in the previous year as the recent robust growth in bonus payments
moderates.
The forecast for continued growth, and any resultant impact on the State
Plan, contains some uncertainties. Stronger-than-expected gains in employment
and wages could lead to surprisingly strong growth in consumer spending.
Investments could also remain robust. Conversely, net exports could plunge even
more sharply than expected, with adverse impacts on the growth of both consumer
spending and investment. The inflation rate may differ significantly from
expectations due to the upward pressure of a tight labor market and the downward
pressure of price reductions emanating from the economic weakness in Asia. In
addition, the State economic forecast could over or underestimate the level of
future bonus payments or inflation growth, resulting in forecasted average wage
growth that could differ significantly from actual growth. Similarly, the State
forecast could fail to correctly account for declines in banking employment and
the direction of employment change that is likely to accompany
telecommunications and energy deregulation.
|X| The 1998-99 Fiscal Year. The State's General Fund (the major operating
Fund of the State) is projected to be balanced on a cash basis for the 1998-99
fiscal year. Total receipts and transfers from other funds are projected to be
$37.8 billion, an increase of over $3 billion from the prior fiscal year. Total
General Fund disbursements and transfers to other funds are projected to be
$36.78 billion, an increase of $2.43 billion from the total in the prior fiscal
year.
The State Plan is based upon forecasts of national and State economic
activity developed through both internal analysis and review of State and
national economic forecasts prepared by commercial forecasting services and
other public and private forecasters. Economic forecasts have frequently failed
to predict accurately the timing and magnitude of changes in the national and
the State economies. Many uncertainties exist in forecasts of both the national
and State economies, including consumer attitudes toward spending, the extent of
corporate and governmental restructuring, federal fiscal and monetary policies,
the level of interest rates, and the condition of the world economy, which could
have an adverse effect on the State. There can be no assurance that the State
economy will not experience results in the current fiscal year that are worse
than predicted, with corresponding material and adverse effects on the State's
projections of receipts and disbursements.
Projections of total State receipts in the State Financial Plan are based
on the State tax structure in effect during the fiscal year and on assumptions
relating to basic economic factors and their historical relationships to State
tax receipts. In preparing projections of State receipts, economic forecasts
relating to personal income, wages, consumption, profits and employment have
been particularly important. The projection of receipts from most tax or revenue
sources is generally made by estimating the change in yield of such tax or
revenue source caused by economic and other factors, rather than by estimating
the total yield of such tax or revenue source from its estimated tax base. The
forecasting methodology, however, ensures that State fiscal year estimates for
taxes that are based on a computation of annual liability, such as the business
and personal income taxes, are consistent with estimates of total liability
under such taxes.
Projections of total State disbursements are based on assumptions relating
to economic and demographic factors, levels of disbursements for various
services provided by local governments (where the cost is partially reimbursed
by the State), and the results of various administrative and statutory
mechanisms in controlling disbursements for State operations. Factors that may
affect the level of disbursements in the fiscal year include uncertainties
relating to the economy of the nation and the State, the policies of the federal
government, and changes in the demand for and use of State services.
Despite recent budgetary surpluses recorded by the State, actions
affecting the level of receipts and disbursements, the relative strength of the
State and regional economy, and actions of the federal government, have helped
to create projected structural budget gaps for the State. These gaps resulted
from a significant disparity between recurring revenues and the costs of
maintaining or increasing the level of support for State programs. To address a
potential imbalance in any given fiscal year, the State would be required to
take actions to increase receipts and/or reduce disbursements as it enacts the
budget for that year, and, under the State Constitution, the Governor is
required to propose a balanced budget each year. There can be no assurance,
however, that the Legislature will enact the Governor's proposals or that the
State's actions will be sufficient to preserve budgetary balance in a given
fiscal year or to align recurring receipts of disbursements in future fiscal
years.
|X| Composition of State's Governmental Funds Group. Substantially all
State non-pension financial operations are accounted for in the State's
governmental funds group. Governmental funds include the General Fund, which
receives all income not required by law to be deposited in another fund; Special
Revenue Funds, which receive the preponderance of moneys received by the State
from the federal government and other income the use of which is legally
restricted to certain purposes; Capital Projects Funds, used to finance the
acquisition and construction of major State capital facilities by the State and
to aid in certain of such projects conducted by local governments or public
authorities; and Debt Service Funds, which are used to account for the payment
of principal of and interest on long-term debt and to meet lease-purchase and
other contractual-obligation commitments.
|X| Local Government Assistance Corporation ("LGAC"). In 1990, as part of
a State fiscal reform program, legislation was enacted creating LGAC, a public
benefit corporation empowered to issue long-term obligations to fund certain
payments to local governments traditionally funded through the State's annual
seasonal borrowing. The legislation authorized LGAC to issue its bonds and notes
in an amount not in excess of $4.7 billion (exclusive of certain refunding
bonds). Over a period of years, the issuance of these long-term obligations,
which are to be amortized over no more than 30 years, was expected to eliminate
the need for continued short-term seasonal borrowing. The legislation also
dedicated revenues equal to one-quarter of the four percent State sales and use
tax to pay debt service on these bonds. The legislation also imposed a cap on
the annual seasonal borrowing of the State at $4.7 billion, less net proceeds of
bonds issued by LGAC and bonds issued to provide for capitalized interest,
except in cases where the Governor and the legislative leaders have certified
the need for additional borrowing and provided a schedule for reducing it to the
cap. If borrowing above the cap is thus permitted in any fiscal year, it is
required by law to be reduced to the cap by the fourth fiscal year after the
limit was first exceeded. This provision capping the seasonal borrowing was
included as a covenant with LGAC's bondholders in the resolution authorizing
such bonds.
As of June 1995, LGAC had issued bonds and notes to provide net proceeds
of $4.7 billion completing the program. The impact of LGAC's borrowing, as well
as other changes in revenue and spending patterns, is that the State has been
able to meet its cash flow needs throughout the fiscal year without relying on
short-term seasonal borrowings.
|X| Authorities. The fiscal stability of the State is related to the
fiscal stability of its public Authorities. Authorities have various
responsibilities, including those which finance, construct and/or operate
revenue-producing public facilities. Authorities are not subject to the
constitutional restrictions on the incurrence of debt which apply to the State
itself and may issue bonds and notes within the amounts and restrictions set
forth in their legislative authorization. As of December 31, 1997, there were 17
Authorities that had outstanding debt of $100 million or more, and the aggregate
outstanding debt, including refunding bonds, of all Authorities was $84 billion,
only a portion of which constitutes State-supported or State related debt.
Authorities are generally supported by revenues generated by the projects
financed or operated, such as tolls charged for use of highways, bridges or
tunnels, charges for public power, electric and gas utility services, rentals
charged for and housing units and charges for occupancy at medical care
facilities. In addition, State legislation authorizes several financing
techniques for Authorities. Also, there are statutory arrangements providing for
State local assistance payments otherwise payable to localities to be made under
certain circumstances to Authorities. Although the State has no obligation to
provide additional assistance to localities whose local assistance payments have
been paid to Authorities under these arrangements, if local assistance payments
are diverted the affected localities could seek additional State assistance.
Some Authorities also receive moneys from State appropriations to pay for the
operating costs of certain of their programs.
|X| Ratings. On January 13, 1992, Standard & Poor's reduced its ratings on
the State's general obligation bonds from A to A- and, in addition, reduced its
ratings on the State's moral obligation, lease purchase, guaranteed and
contractual obligation debt. Standard & Poor's also continued its negative
rating outlook assessment on State general obligation debt. On April 26, 1993,
Standard & Poor's revised the rating outlook assessment to stable. On February
14, 1994, Standard & Poor's raised its outlook to positive and, on October 3,
1995, confirmed its A-rating. On August 28, 1997, Standard & Poor's revised its
ratings on the State's general obligation bonds from A- to A and, in addition
revised its ratings on the State's moral obligation, lease purchase, guaranteed
and contractual obligation debt. On January 6, 1992, Moody's reduced its ratings
on outstanding limited-liability State lease purchase and contractual
obligations from A to Baa1. On October 2, 1995, Moody's reconfirmed its A rating
on the State's general obligation long-term indebtedness. On February 10, 1997,
Moody's confirmed its A2 rating on the State's general obligation long-term
indebtedness. Ratings reflect only the respective views of such organizations,
and an explanation of the significance of such ratings may be obtained from the
rating agency furnishing the same. There is no assurance that a particular
rating will continue for any given period of time or that any such rating will
not be revised downward or withdrawn entirely, if in the judgment of the agency
originally establishing the rating, circumstances so warrant. A downward
revision or withdrawal of such ratings, or either of them, may have an effect on
the market price of the State Municipal Securities in which the Trust invests.
|X| General Obligation Debt. As of March 31, 1998, the State had
approximately $5.03 billion in general obligation bonds, including $294 million
in bond anticipation notes outstanding. Principal and interest due on general
obligation bonds and interest due on bond anticipation notes were $742 million
for the 1998-99 fiscal year and are estimated to be $695 million for the State's
1999-2000 fiscal year.
|X| Litigation. The State is a defendant in numerous legal proceedings
pertaining to matters incidental to the performance of routine governmental
operations. Such litigation includes, but is not limited to, claims asserted
against the State arising from alleged torts, alleged breaches of contracts,
condemnation proceedings and other alleged violations of State and Federal laws.
These proceedings could affect adversely the financial condition of the State in
the 1998-1999 fiscal year or thereafter.
The State believes that the State Plan includes sufficient reserves for
the payment of judgments that may be required during the 1998-99 fiscal year.
There can be no assurance, however, that an adverse decision in any of these
proceedings would not exceed the amount the State Plan reserves for the payment
of judgments and, therefore, could affect the ability of the State to maintain a
balanced 1998-1999 Financial Plan. The General Purpose Financial Statements for
the 1996-1997 fiscal year report estimated probable awarded and anticipated
unfavorable judgements of $364 million, of which $134 million is expected to be
paid during the 1997-1998 fiscal year.
In addition, the State is party to other claims and litigations which its
legal counsel has advised are not probable of adverse court decisions or are not
deemed adverse and material. Although, the amounts of potential losses, if any,
are not presently determinable, it is the State's opinion that its ultimate
liability in these cases is not expected to have a material and adverse effect
on the State's financial position in the 1998-99 fiscal year or thereafter.
|X| Other Localities. Certain localities in addition to the City could
have financial problems leading to requests for additional State assistance
during the State's current fiscal year and thereafter. The potential impact on
the State of such actions by localities is not included in the projections of
the State receipts and disbursements in the State's 1998-99 fiscal year.
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.
n Does the Trust Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Trust:
|_| The Trust cannot make loans, except that the Trust may purchase debt
securities described in "Investment Objective and Policies" and repurchase
agreements, and the Trust may lend its portfolio securities as described in the
Statement of Additional Information;
|_| The Trust cannot borrow money in excess of 10% of the value of its
total assets or make any investment when borrowings exceed 5% of the value of
its total assets; it may borrow only as a temporary measure for extraordinary or
emergency purposes; no assets of the Trust may be pledged, mortgaged or assigned
to secure a debt;
o The Trust cannot invest more than 25% 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 Trust cannot invest in any debt instrument having a maturity in
excess of one year from the date of purchase, unless purchased subject to a
demand feature which may not exceed one year and requires payment on not more
than 30 days' notice;
|_| The Trust cannot enter into a repurchase agreement or purchase a
security subject to a call if the scheduled repurchase or redemption date is
greater than one year;
|_| 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; however, the Trust may
purchase debt securities issued by companies which invest in real estate or
interests therein;
|_| 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 or directors of the Trust or its advisor who beneficially
own individually more than 0.5% of the securities of such issuer together own
more than 5% of the securities of such issuer;
|_| The Trust cannot underwrite securities of other companies except
insofar as the Trust may be deemed an underwriter under the Securities Act of
1933 in connection with the disposition of portfolio securities;
|_| The Trust cannot invest more than 5% of the value of its total assets
in securities of companies that have operated less than three years, including
the operations of predecessors; or
o The Trust cannot purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization.
|_| 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. Examples of those activities include borrowing
money, reverse repurchase agreements, delayed-delivery and when-issued
arrangements for portfolio securities transactions, and contracts to buy or sell
derivatives, hedging instruments, options or futures.
For purposes of the ninth investment restriction listed above and the
investment restrictions in the Prospectus, the identification of the "issuer" of
a municipal security depends on the terms and conditions of the security. When
the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
subdivision and the security is backed only by the assets and revenues of the
subdivision, such subdivision would be deemed to be the sole issuer. Similarly,
in the case of an industrial development bond, if that bond is backed only by
the assets and revenues of the nongovernmental user, then such nongovernmental
user would be deemed to be the sole issuer. However, if in either case the
creating government or some other entity guarantees the security, such guarantee
would be considered a separate security and would be treated as an issue of such
government or other agency.
In applying the restrictions in the Prospectus as to the Trust's
investments, the Manager will consider a nongovernmental user of facilities
financed by industrial development bonds as being in a particular industry,
despite the fact that there is no industry concentration limitation as to
municipal securities the Trust may own. Although this application of the
restriction is not technically a fundamental policy of the Trust, it will not be
changed without shareholder approval. This is not a fundamental policy, and
therefore may be changed without shareholder approval. Should any such change be
made, the Prospectus and/or Statement of Additional Information will be
supplemented to reflect the change.
Unless the Prospectus or this Statement of Additional Information states
that a percentage restriction applies on an ongoing basis, it applies only at
the time the Trust makes an investment. The Trust need not sell securities to
meet the percentage limits if the value of the investment increases in
proportion to the size of the Trust.
For purposes of the Trust's policy not to concentrate its investments in
securities of issuers, the Trust has adopted the industry classifications set
forth in Appendix B to this Statement of Additional Information. This is not a
fundamental policy.
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 ______, 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 series 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. The Declaration of
Trust further state that 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 trustee, directors or Trustees of the following Denver-based
Oppenheimer funds1:
1Ms. Macaskill and Mr. Bowen are not Trustees or Directors of Oppenheimer
Integrity Funds, Oppenheimer Strategic Income Fund, Panorama Series Fund,
Inc. or Oppenheimer Variable Account Funds. Mr. Fossel and Mr. Bowen are not
Trustees of Centennial New York Tax Exempt Trust or Managing General Partners
of Centennial America Fund, L.P.
Oppenheimer Cash Reserves Oppenheimer Strategic Income Fund
Oppenheimer Champion Income Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer Capital Income Fund Oppenheimer Variable Account Funds
Oppenheimer High Yield Fund Panorama Series Fund, Inc.
Oppenheimer International Bond Fund Centennial America Fund, L. P.
Oppenheimer Integrity Funds Centennial California Tax Exempt
Trust
Oppenheimer Limited-Term Government Centennial Government Trust
Fund
Oppenheimer Main Street Funds, Inc. Centennial Money Market Trust
Oppenheimer Main Street Small Cap Centennial New York Tax Exempt Trust
Fund
Oppenheimer Municipal Fund Centennial Tax Exempt Trust
Oppenheimer Real Asset Fund
Robert G. Avis*, Trustee, Age: 68
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment adviser
and trust company, respectively).
William A. Baker, Trustee, Age: 84
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Sam Freedman, Trustee, Age: 59
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly 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: 70
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc. (a computer products
training company), self-employed consultant (securities matters).
C. Howard Kast, Trustee, Age: 77
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).
Robert M. Kirchner, Trustee, Age: 78
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Bridget A. Macaskill*, President and Trustee, Age: 51
Two World Trade Center, New York, New York 10048-0203
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView Asset Management Corporation, an investment adviser
subsidiary of the Manager; Chairman and a director of Shareholder Services, Inc.
(since August 1994) and Shareholder Financial Services, Inc. (since September
1995), transfer agent subsidiaries of the Manager; President (since September
1995) and a director (since October 1990) of Oppenheimer Acquisition Corp., the
Manager's parent holding company; President (since September 1995) and a
director (since November 1989) of Oppenheimer Partnership Holdings, Inc., a
holding company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director (since October
1997) of OppenheimerFunds International Ltd., an offshore fund management
subsidiary of the Manager and of Oppenheimer Millennium Funds plc; President and
a director of other Oppenheimer funds; a director of Prudential Corporation plc
(a U.K. financial service company).
Ned M. Steel, Trustee, Age: 84
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; a director of Visiting Nurse
Corporation of Colorado.
James C. Swain*, Chairman, Chief Executive Officer and Trustee, Age: 65 6803
South Tucson Way, Englewood, Colorado 80112 Vice Chairman of the Manager (since
September 1988); formerly President and a director of Centennial Asset
Management Corporation, an investment adviser subsidiary of the Manager and
Chairman of the Board of Shareholder Services, Inc.
Michael A. Carbuto, Vice President and Portfolio Manager, Age: 44
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager and Centennial Asset Management Corporation
(since May 1988); an officer of other Oppenheimer funds.
Andrew J. Donohue, Vice President and Secretary, Age: 49
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 the Manager; Executive Vice
President and General Counsel (since September 1993) and a director (since
January 1992) of the Distributor; Executive Vice President, General Counsel and
a director of HarbourView Asset Management Corporation, Shareholder Services,
Inc., Shareholder Financial Services, Inc. and (since September 1995)
Oppenheimer Partnership Holdings, Inc.; President and a director of Centennial
Asset Management Corporation (since September 1995); President, General Counsel
and a director of Oppenheimer Real Asset Management, Inc. (since July 1996);
General Counsel (since May 1996) and Secretary (since April 1997) of Oppenheimer
Acquisition Corp.; Vice President and a director of OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc (since October 1997); an
officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer, Age: 40
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund
Controller for the Manager.
Scott T. Farrar, Assistant Treasurer, Age: 34
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller
for the Manager.
Brian W. Wixted, Vice President, Treasurer and Assistant Secretary, Age: 40 6803
South Tucson Way, Englewood, Colorado 80112 Senior Vice President and Treasurer
(since April 1999) of the Manager; Treasurer of HarbourView Asset Management
Corporation, Shareholder Services, Inc., Shareholder Financial Services, Inc.
and Oppenheimer Partnership Holdings, Inc. (since April 1999); Assistant
Treasurer of Oppenheimer Acquisition Corp. (since April 1999); Assistant
Secretary of Centennial Asset Management Corporation (since April 1999);
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); and Vice President and Accounting Manager, Merrill Lynch Asset
Management (November 1987 - September 1991).
Robert G. Zack, Assistant Secretary, Age: 51
Two World Trade Center, New York, New York 10048-0203
Senior Vice President (since May 1985) and Associate General Counsel (since
May 1981) of the Manager, Assistant Secretary of Shareholder Services, Inc.
(since May 1985), and Shareholder Financial Services, Inc. (since November
1989); Assistant Secretary of OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since October 1997); an officer of other
Oppenheimer funds.
O Remuneration of Trustees. The officers of the Trust and certain Trustees of
the Trust (Ms. Macaskill and Messrs. Bowen and 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, 1999. The compensation from all
of the Denver-based Oppenheimer funds includes the Trust and is compensation
received as a Trustee, director, Trustee or member of a committee of the Board
during the calendar year 1998.
<PAGE>
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Aggregate Total Compensation
Trustee's Name Compensation from all Denver-Based
and Other Positions from Trust Oppenheimer Funds1
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Robert G. Avis $ $67,998.00
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William A. Baker $ $69,998.00
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Charles Conrad, Jr. $ $67,998.00
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Jon S. Fossel $ $67,496.04
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Sam Freedman $ $73,998.00
Audit and Review
Committee Member
------------------------------------------------
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Raymond J. Kalinowski $ $73,998.00
Audit and Review
Committee Member
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C. Howard Kast $ $76,998.00
Audit and Review
Committee Chairman
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Robert M. Kirchner $ $67,998.00
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Ned M. Steel $ $67,998.00
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1. For the 1998 calendar year.
[_] 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 __________, 1999 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. ("Edwards"), 1 North Jefferson Avenue, St. Louis, Missouri 63103, which
owned ________shares of the Trust which was ____% of the outstanding shares
of the Trust on that date, for its own account.
The Manager. The Manager 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 Manager and the
Trust have a Code of Ethics. It is designed to detect and prevent improper
personal trading by certain employees, including portfolio managers, that would
compete with or take advantage of the Trust's portfolio transactions. Compliance
with the Code of Ethics is carefully monitored and enforced by the Manager.
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 disinterested 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.
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Fiscal Year Management Fee Paid to Centennial Asset Management Corporation
ending 6/30
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1997
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1998
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1999
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The Manager has temporarily undertaken to assume any expenses of the Trust
in any fiscal year they exceed 0.80% of the Trust's average annual net assets.
The payment of the management fee at the end of any month will be reduced so
that there will not be any accrued but unpaid liability under those expense
limitations. Any assumption of the Trust's expenses under this arrangement
lowers the Trust's overall expense ratio and increases its yield and total
return during the time such expenses are assumed. The Manager reserves the right
to terminate or amend this undertaking at any time. For the fiscal years ended
June 30, 1997, 1998 and 1999 the management fees payable by the Trust to the
Manager would have been $______, $______ and $______, respectively, without the
Manager's voluntary expense assumption. Those amounts do not reflect the effect
of the expense assumptions of $______, $______ and $______respectively, in those
periods by the Manager.
The investment advisory agreement states that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under the investment advisory
agreement, the Manager is not liable for any loss resulting from a good faith
error or omission on its part with respect to any of its duties under the
agreement.
|X| The Distributor. Under its General Distributor's Agreement with the
Trust, Centennial Asset Management Corporation, a subsidiary of the Manager,
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.
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 dealers are used for portfolio transactions, transactions may be
directed to 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's policy of investing in short-term debt securities with
maturity of less than one year results in high portfolio turnover and 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.
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, " "tax-equivalent 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 1-800-525-7948.
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.
The Trust's "tax equivalent yield" adjusts the Trust's current yield, as
calculated above, by a stated federal tax rate. The tax equivalent yield is
computed by dividing the tax-exempt portion of the Trust's current yield by one
minus a stated income tax rate and adding the result to the portion (if any) of
the Trust's current yield that is not tax-exempt. The tax equivalent yield may
be compounded as described above to provide a compounded effective tax
equivalent yield.
The Trust's tax equivalent yield may be used to compare the tax effects of
income derived from the Trust with income from taxable investments at the tax
rates stated. Exhibit D includes a tax equivalent yield table, based on various
effective tax brackets for individual taxpayers. Such tax brackets are
determined by a taxpayer's federal taxable income (the net amount subject to
federal income tax after deductions and exemptions). The tax equivalent yield
table assumes that the investor is taxed at the highest bracket, regardless of
whether a switch to non-taxable investments would cause a lower bracket to apply
and that state income tax payments are fully deductible for income tax purposes.
For taxpayers with income above certain levels, otherwise allowable itemized
deductions are limited. The Trust's tax equivalent yield for the seven-day
period ended June 30, 1999 was ____%. Its tax-equivalent compounded effective
yield for the same period was ____% for an investor in the highest federal tax
bracket.
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 12/31/98)
(7 days ended Effective Yield
12/31/98) (7 days ended
12/31/98)
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1-Year 5 Years 10 Years
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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 MonitorJ) 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 to
shareholders of the Oppenheimer funds, other than performance rankings of the
Oppenheimer funds themselves. Those ratings or rankings of investor/shareholder
services by third parties may compare the services of the Oppenheimer funds 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
|X| The Oppenheimer Funds. The Oppenheimer funds are
those mutual funds for which the OppenheimerFunds Distributor, Inc. acts as
the distributor or the sub-Distributor and include the following:
Oppenheimer Bond Fund Oppenheimer Large Cap Growth Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street California
Oppenheimer Capital Income Fund Municipal Fund
Oppenheimer Main Street Growth & Income
Oppenheimer California Municipal Fund Fund
Oppenheimer Champion Income Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer Convertible Securities Fund Oppenheimer MidCap Fund
Oppenheimer Developing Markets Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Disciplined Allocation Fund Oppenheimer Municipal Bond Fund
Oppenheimer Disciplined Value Fund Oppenheimer New York Municipal Fund
Oppenheimer Discovery Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Enterprise Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Europe Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Florida Municipal Fund Inc.
Oppenheimer Quest Global Value Fund,
Oppenheimer Global Fund Inc.
Oppenheimer Global Growth & Income Fund Oppenheimer Quest Opportunity Value Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Quest Small Cap Value Fund
Oppenheimer Growth Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer High Yield Fund Oppenheimer Real Asset Fund
Oppenheimer Insured Municipal Fund Oppenheimer Strategic Income Fund
Oppenheimer Intermediate Municipal Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer International Bond Fund Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund Oppenheimer World Bond Fund
Oppenheimer International Small Company
Fund Limited-Term New York Municipal Fund
Rochester Fund Municipals
and the following money market funds:
Centennial America Fund, L. P. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust
Centennial Government Trust Oppenheimer Cash Reserves
Centennial Money Market Trust Oppenheimer Money Market Fund, Inc.
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., 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, Presidents' Day, 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 have 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 have established procedures reasonably
designed to stabilize the Trust's net asset value at $1.00 per share. Those
procedures include a review 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 they consider 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.
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
Dividends and Taxes
Tax Status of the Trust's Dividends and Distributions. The Trust intends to
qualify under the Internal Revenue Code during each fiscal year to pay
"exempt-interest dividends" to its shareholders. Exempt-interest dividends that
are derived from net investment income earned by the Trust on municipal
securities will be excludable from gross income of shareholders for federal
income tax purposes.
Net investment income includes the allocation of amounts of income from
the municipal securities in the Trust's portfolio that are free from federal
income taxes. This allocation will be made by the use of one designated
percentage applied uniformly to all income dividends paid during the Trust's tax
year. That designation will normally be made following the end of each fiscal
year as to income dividends paid in the prior year. The percentage of income
designated as tax-exempt may substantially differ from the percentage of the
Trust's income that was tax-exempt for a given period.
A portion of the exempt-interest dividends paid by the Trust may be an
item of tax preference for shareholders subject to the alternative minimum tax.
The amount of any dividends attributable to tax preference items for purposes of
the alternative minimum tax will be identified when tax information is
distributed by the Trust.
A shareholder receiving a dividend from income earned by the Trust from
one or more of the following sources treats the dividend as a receipt of either
ordinary income or long-term capital gain in the computation of gross income,
regardless of whether the dividend is reinvested: (1) certain taxable temporary
investments (such as certificates of deposit,
repurchase agreements, commercial paper and obligations of the U.S.
government, its agencies and instrumentalities);
(2) income from securities loans; (3) income or gains from options or futures;
or
(4) an excess of net short-term capital gain over net long-term capital
loss from the Trust.
The Trust's dividends will not be eligible for the dividends-received
deduction for corporations. Shareholders receiving Social Security benefits
should be aware that exempt-interest dividends are a factor in determining
whether such benefits are subject to federal income tax. Losses realized by
shareholders on the redemption of Trust shares within six months of purchase
(which period may be shortened by regulation) will be disallowed for federal
income tax purposes to the extent of exempt-interest dividends received on such
shares.
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 dividends and 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 dividends and distributions made to shareholders.
In any year in which the Trust qualifies as a regulated investment company
under the Internal Revenue Code, the Trust will also be exempt from New York
corporate income and franchise taxes. It will also be qualified under New York
law to pay exempt interest dividends that will be exempt from New York State and
New York City personal income tax. That exemption applies to the extent that the
Trust's distributions are attributable to interest on New York municipal
securities. Distributions from the Trust attributable to income from sources
other than New York municipal securities and U.S. government obligations will
generally be subject to New York income tax as ordinary income.
Distributions by the Trust from investment income and long- and short-term
capital gains will generally not be excludable from taxable net investment
income in determining New York corporate franchise tax and New York City general
corporation tax for corporate shareholders of the Trust. Additionally, certain
distributions paid to corporate shareholders of the Trust may be includable in
income subject to the New York alternative minimum tax.
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. If it
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
Trust's Board of Trustees and the Manager might determine in a particular year
that it would be in the best interest of shareholders 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.
Additional Information About the Trust
The Distributor. The Trust's retail shares are sold through dealers, brokers and
other financial institutions that have a sales charge agreement with Centennial
Asset Management Corporation, the Trust's Distributor. The Distributor also
distributes shares of the other Oppenheimer funds and is sub-distributor for
funds managed by a subsidiary of the Manager.
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 OFI and for
certain other funds advised by the Manager and its affiliates.
<PAGE>
A-4
Appendix A
Description of Securities Ratings
Below is a description of the two highest rating categories for Short Term Debt
and Long Term Debt by the "Nationally-Recognized Statistical Rating
Organizations" which the Manager evaluates in purchasing securities on behalf of
the Trust. The ratings descriptions are based on information supplied by
the ratings organizations to subscribers.
Short-Term Debt Ratings.
Moody's Investors Service, Inc.
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The following rating designations for commercial paper (defined by Moody's as
promissory obligations not having original maturity in excess of nine months),
are judged by Moody's to be investment grade, and indicate the relative
repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally be evidenced by
the following characteristics: (a) leveling market positions in well-established
industries; (b) high rates of return on funds employed; (c) conservative
capitalization structures with moderate reliance on debt and ample asset
protection; (d) broad margins in earning coverage of fixed financial charges and
high internal cash generation; and (e) well established access to a range of
financial markets and assured sources of alternate liquidity.
Prime-2: Strong capacity for repayment. This will normally be evidenced by many
of the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Moody's ratings for state and municipal short-term obligations are designated
"Moody's Investment Grade" ("MIG"). Short-term notes which have demand features
may also be designated as "VMIG". These rating categories are as follows:
MIG1/VMIG1: Best quality. There is present strong protection by established cash
flows, superior liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample although not so
large as in the preceding group.
<PAGE>
Standard & Poor's Ratings Services
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The following ratings by Standard & Poor's for commercial paper (defined by S&P
as debt having an original maturity of no more than 365 days) assess the
likelihood of payment:
A-1: Strong capacity for timely payment. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
A-2: Satisfactory capacity for timely payment. However, the relative degree of
safety is not as high as for issues designated "A-1".
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have a demand or
double feature as part of their provisions. The first rating addresses the
likelihood of repayment of principal and interest as due, and the second rating
addresses only the demand feature. With short-term demand debt, S&P's note
rating symbols are used with the commercial paper symbols (for example,
"SP-1+/A-1+").
Fitch IBCA, Inc.
- ------------------------------------------------------------------------------
Fitch assigns the following short-term ratings to debt obligations that are
payable on demand or have original maturities of generally up to three years,
including commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of assurance for
timely payment.
F-1: Very strong credit quality; assurance of timely payment is only slightly
less in degree than issues rated "F-1+". F-2: Good credit quality; satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as for issues assigned "F-1+" or "F-1" ratings.
Duff & Phelps, Inc.
- ------------------------------------------------------------------------------
The following ratings are for commercial paper (defined by Duff & Phelps as
obligations with maturities, when issued, of under one year), asset-backed
commercial paper, and certificates of deposit (the ratings cover all obligations
of the institution with maturities, when issued, of under one year, including
bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
Duff 2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
Thomson BankWatch, Inc.
- ------------------------------------------------------------------------------
The following short-term ratings apply to commercial paper, certificates of
deposit, unsecured notes, and other securities having a maturity of one year or
less.
TBW-1: The highest category; indicates the degree of safety regarding timely
repayment of principal and interest is very strong.
TBW-2: The second highest rating category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".
Long Term Debt Ratings
These ratings are relevant for securities purchased by the Trust with a
remaining maturity of 397 days or less, or for rating issuers of short-term
obligations.
Moody's Investors Service, Inc.
- ------------------------------------------------------------------------------
Bonds (including municipal bonds) are rated as follows:
Aaa: Judged to be the best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin, and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
positions of such issues.
Aa: Judged to be of high quality by all standards. Together with the "Aaa" group
they comprise what are generally known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
"Aaa" securities or fluctuations of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risks
appear somewhat larger than in "Aaa" securities.
Moody's applies numerical modifiers "1", "2" and "3" in its "Aa" rating
classification. The modifier "1" indicates that the security ranks in the higher
end of its generic rating category; the modifier "2" indicates a mid-range
ranking; and the modifier "3" indicates that the issue ranks in the lower end of
its generic rating category.
Standard & Poor's Ratings Services
- ------------------------------------------------------------------------------
Bonds (including municipal bonds) are rated as follows:
AAA: The highest rating assigned by S&P. Capacity to pay interest and repay
principal is extremely strong.
AA: A strong capacity to pay interest and repay principal and differ from
"AAA" rated issues only in small degree.
Fitch IBCA, Inc.
- ------------------------------------------------------------------------------
AAA: Considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA". Plus (+) and minus (-) signs are used
in the "AA" category to indicate the relative position of a credit within that
category.
Because bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issuers
is generally rated "F-1+".
Duff & Phelps, Inc.
- ------------------------------------------------------------------------------
AAA: The highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
AA: High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions. Plus (+) and
minus (-) signs are used in the "AA" category to indicate the relative position
of a credit within that category.
Thomson BankWatch, Inc.
- ------------------------------------------------------------------------------
TBW issues the following ratings for companies. These ratings assess the
likelihood of receiving payment of principal and interest on a timely basis and
incorporate TBW's opinion as to the vulnerability of the company to adverse
developments, which may impact the market's perception of the company, thereby
affecting the marketability of its securities.
A: Possesses an exceptionally strong balance sheet and earnings record,
translating into an excellent reputation and unquestioned access to its natural
money markets. If weakness or vulnerability exists in any aspect of the
company's business, it is entirely mitigated by the strengths of the
organization.
A/B: The company is financially very solid with a favorable track record and
no readily apparent weakness. Its overall risk profile, while low, is
not quite as favorable as for companies in the highest rating
<PAGE>
B-1
Appendix B
- ------------------------------------------------------------------------------
Industry Classifications
- ------------------------------------------------------------------------------
Adult Living Facilities Education Electric Gas General Obligation Higher
Education Highways Hospital Lease Rental Manufacturing, Durables Manufacturing,
Non Durables Marine/Aviation Facilities Multi-Family Housing Pollution Control
Resource Recovery Sales Tax Sewer Single Family Housing Special Assessment
Telephone Water
<PAGE>
C-1
Appendix C
- ------------------------------------------------------------------------------
TAX EQUIVALENT YIELD TABLES
- ------------------------------------------------------------------------------
The equivalent yield tables below compare tax-free income with taxable income
under federal, New York State and New York City income tax rates effective
January 1, 1998. Combined taxable income refers to the net amount subject to (i)
Federal and New York State income tax as to the first two tables below and (ii)
Federal, New York State and New York City income tax as to the third and fourth
tables below, in each case after deductions and exemptions. The tables assume
that an investor's highest tax bracket applies to the change in taxable income
resulting from a switch between taxable and non-taxable investments, that the
investor is not subject to the Alternative Minimum Tax and that New York State
and local income tax payments are fully deductible for Federal income tax
purposes. They do not reflect the phaseout of itemized deductions and personal
exemptions at higher income levels, resulting in higher effective tax rates and
tax equivalent yields.
<PAGE>
C-3
New York State Residents
Combined Taxable Income
Centennial New York
Tax-Exempt Trust
Yield
Single Return Joint Return of:
- -----------------------------------
Combined 2.0% 2.5%
3.0%
Effective Is Approximately
Not Not Tax Equivalent to a
Taxable
Over Over Over Over Bracket Yield
of:
$ 22,000 $ 26,000 19.46% 2.48% 3.10%
3.72%
$ 26,000 $ 40,000 20.02% 2.50% 3.13%
3.75%
$ 20,000 $ 25,350 $ 40,000 $ 42,350 20.82% 2.53% 3.16%
3.79%
$ 25,350 $ 61,400 $ 42,350 $102,300 32.93% 2.98% 3.73%
4.47%
$ 61,400 $128,100 $102,300 $155,950 35.73% 3.11% 3.89%
4.67%
$128,100 $278,450 $155,950 $278,450 40.38% 3.35% 4.19%
5.03%
$278,450 $278,450 43.74% 3.55% 4.44%
5.33%
<PAGE>
New York State Residents
Combined Taxable Income
Centennial New York
Tax-Exempt Trust
Yield
Single Return Joint Return
of:
Combined 3.5% 4.0%
4.5%
Effective Is Approximately
Not Not Tax Equivalent to a
Taxable
Over Over Over Over Bracket Yield
of:
$ 22,000 $ 26,000 19.46% 4.35% 4.97%
5.59%
$ 26,000 $ 40,000 20.02% 4.38% 5.00%
5.63%
$ 20,000 $ 25,350 $ 40,000 $ 42,350 20.82% 4.42% 5.05%
5.68%
$ 25,350 $ 61,400 $ 42,350 $102,300 32.93% 5.22% 5.96%
6.71%
$ 61,400 $128,100 $102,300 $155,950 35.73% 5.45% 6.22%
7.00%
$128,100 $278,450 $155,950 $278,450 40.38% 5.87% 6.71%
7.55%
$278,450 $278,450 43.74% 6.22% 7.11%
8.00%
New York City Residents
Combined Taxable Income
Centennial New York
Tax-Exempt Trust
Yield
Single Return Joint Return
of:
Combined 2.0% 2.5%
3.0%
Effective Is Approximately
Not Not Tax Equivalent to a
Taxable
Over Over Over Over Bracket Yield
of:
$ 27,000 $ 40,000 23.75% 2.62% 3.28%
3.93%
$ 20,000 $ 25,000 $ 40,000 $ 42,350 24.55% 2.65% 3.31%
3.98%
$ 25,000 $ 25,350 24.56% 2.65% 3.31%
3.98%
$ 42,350 $ 45,000 36.09% 3.13% 3.91%
4.69%
$ 25,350 $ 50,000 $ 45,000 $ 90,000 36.10% 3.13% 3.91%
4.69%
$ 50,000 $ 61,400 $ 90,000 $102,300 36.14% 3.13% 3.92%
4.70%
$ 61,400 $128,100 $102,300 $108,000 38.80% 3.27% 4.09%
4.90%
$108,000 $155,950 38.80% 3.27% 4.09%
4.90%
$128,100 $278,450 $155,950 $278,450 43.24% 3.52% 4.40%
5.29%
$278,450 $278,450 46.43% 3.73% 4.67%
5.60%
New York City Residents
Combined Taxable Income
Centennial New York
Tax-Exempt Trust
Yield
Single Return Joint Return
of:
Combined 3.5% 4.0%
4.5%
Effective Is Approximately
Not Not Tax Equivalent to a
Taxable
Over Over Over Over Bracket Yield
of:
$ 27,000 $ 40,000 23.75% 4.59% 5.25%
5.90%
$ 20,000 $ 25,000 $ 40,000 $ 42,350 24.55% 4.64% 5.30%
5.96%
$ 25,000 $ 25,350 24.56% 4.64% 5.30%
5.97%
$ 42,350 $ 45,000 36.09% 5.48% 6.26%
7.04%
$ 25,350 $ 50,000 $ 45,000 $ 90,000 36.10% 5.48% 6.26%
7.04%
$ 50,000 $ 61,400 $ 90,000 $102,300 36.14% 5.48% 6.26%
7.05%
$ 61,400 $128,100 $102,300 $108,000 38.80% 5.72% 6.54%
7.35%
$108,000 $155,950 38.80% 5.72% 6.54%
7.35%
$128,100 $278,450 $155,950 $278,450 43.24% 6.17% 7.05%
7.93%
$278,450 $278,450 46.43% 6.53% 7.47%
8.40%
<PAGE>
D-18
Appendix D
- ------------------------------------------------------------------------------
AUTOMATIC WITHDRAWAL PLAN PROVISION
- ------------------------------------------------------------------------------
By requesting an Automatic Withdrawal Plan, the shareholder agrees to the terms
and conditions applicable to such plans, as stated below and elsewhere in the
Application for such Plans, and the Prospectus and this Statement of Additional
Information as they may be amended from time to time by the Trust and/or the
Distributor. When adopted, such amendments will automatically apply to existing
Plans.
Trust shares will be redeemed as necessary to meet withdrawal payments.
Shares acquired without a sales charge will be redeemed first and thereafter
shares acquired with reinvested dividends and distributions followed by shares
acquired with a sales charge will be redeemed to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made to shareholders under such plans should
not be considered as a yield or income on investment. Purchases of additional
shares concurrently with withdrawals are undesirable because of sales charges on
purchases when made. Accordingly, a shareholder may not maintain an Automatic
Withdrawal Plan while simultaneously making regular purchases.
1. Shareholder Services, Inc., the Transfer Agent of the Trust, will
administer the Automatic Withdrawal Plan (the "Plan") as agent for the person
(the "Planholder") who executed the Plan authorization and application submitted
to the Transfer Agent.
2. Certificates will not be issued for shares of the Trust purchased for and
held under the Plan, but the Transfer Agent will credit all such shares to the
account of the Planholder on the records of the Trust. Any share certificates
now held by the Planholder may be surrendered unendorsed to the Transfer Agent
with the Plan application so that the shares represented by the certificate may
be held under the Plan. Those shares will be carried on the Planholder's Plan
Statement.
3. Distributions of capital gains must be reinvested in shares of the Trust,
which will be done at net asset value without a sales charge.
Dividends may be paid in cash or reinvested.
4. Redemptions of shares in connection with disbursement payments will be
made at the net asset value per share determined on the redemption date.
5. Checks or ACH payments will be transmitted three business days prior to
the date selected for receipt of the monthly or quarterly payment (the date of
receipt is approximate), according to the choice specified in writing by the
Planholder.
6. The amount and the interval of disbursement payments and the address to
which checks are to be mailed may be changed at any time by the Planholder on
written notification to the Transfer Agent. The Planholder should allow at least
two weeks' time in mailing such notification before the requested change can be
put in effect.
7. The Planholder may, at any time, instruct the Transfer Agent by written
notice (in proper form in accordance with the requirements of the then current
Prospectus of the Trust) to redeem all, or any part of, the shares held under
the Plan. In such case, the Transfer Agent will redeem the number of shares
requested at the net asset value per share in effect in accordance with the
Trust's usual redemption procedures and will mail a check for the proceeds of
such redemption to the Planholder.
8. The Plan may, at any time, be terminated by the Planholder on written
notice to the Transfer Agent, or by the Transfer Agent upon receiving directions
to that effect from the Trust. The Transfer Agent will also terminate the Plan
upon receipt of evidence satisfactory to it of the death or legal incapacity of
the Planholder. Upon termination of the Plan by the Transfer Agent or the Trust,
shares remaining unredeemed will be held in an uncertificated account in the
name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder, his executor or guardian, or as
otherwise appropriate.
9. For purposes of using shares held under the Plan as collateral, the
Planholder may request issuance of a portion of his shares in certificated form.
Upon written request from the Planholder, the Transfer Agent will determine the
number of shares as to which a certificate may be issued, so as not to cause the
withdrawal checks to stop because of exhaustion of uncertificated shares needed
to continue payments. Should such uncertificated shares become exhausted, Plan
withdrawals will terminate.
10. The Transfer Agent shall incur no liability to the Planholder for any
action taken or omitted by the Transfer Agent in good faith.
11. In the event that the Transfer Agent shall cease to act as transfer agent
for the Trust, the Planholder will be deemed to have appointed any successor
transfer agent to act as his agent in administering the Plan.
<PAGE>
- ------------------------------------------------------------------------------
Centennial New York Tax Exempt Trust
- ------------------------------------------------------------------------------
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
1-800-525-9130
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
PX0780.001.1199
<PAGE>
CENTENNIAL NEW YORK TAX EXEMPT TRUST
FORM N-1A
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) Amended Declaration of Trust dated February 1, 1990: Previously filed with
Post-Effective Amendment No. 3 (1/30/90), and refiled with Registrant's
Post-Effective Amendment No. 9 (11/1/94), pursuant to Item 102 of Regulation
S-T, and incorporated herein by reference.
(b) Amended By-Laws dated June 26, 1990: Previously filed with Registrant's
Post-Effective Amendment No. 6 (10/29/91), and refiled with Registrant's
Post-Effective Amendment No. 9 (11/1/94), pursuant to Item 102 of Regulation
S-T, and incorporated herein by reference.
(c) Specimen Share Certificate: Filed herewith.
(d) Investment Advisory Agreement dated October 22, 1990: Previously filed with
Registrant's Post-Effective Amendment No. 5 (10/29/90), refiled with
Registrant's Post-Effective Amendment No. 9 (11/1/94), pursuant to Item 102 of
Regulation S-T and incorporated herein by reference.
(e) (i) General Distributor's Agreement Centennial Asset
Management Corporation dated October 13, 1992: Previously filed with
Registrant's Post Effective Amendment No. 8 (10/28/93), and incorporated
herein by reference.
(ii) Sub-Distributor's Agreement between Centennial Asset
Management Corporation and OppenheimerFunds Distributor, Inc. dated May 28,
1993: Previously filed with Registrant's Post-Effective Amendment No. 8
(10/28/93), and incorporated herein by reference.
(iii) Form of Dealer Agreement of Centennial Asset
Management Corporation (formerly Centennial Capital Corporation): Previously
filed with Post-Effective Amendment No. 6 of Centennial Government Trust
(Reg. No. 2-75912), (10/26/84), and incorporated herein by reference.
(f) Form of Deferred Compensation Agreement for Disinterested
Trustees/Directors: Filed with Post-Effective Amendment No. 40 to the
Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076),
(10/27/98), and incorporated herein by reference.
(g) Custodian Agreement dated December 22, 1988: Previously filed with
Registrant's Post-Effective Amendment No. 6 (10/21/91), refiled with
Registrant's Post-Effective Amendment No. 9 (11/1/94), pursuant to Item 102 of
Regulation S-T and incorporated herein by reference.
(h) Not applicable.
(i) Opinion and Consent of Counsel dated September 22, 1987: Previously filed
with Registrant's Pre-Effective Amendment No. 1 (11/28/88), refiled with
Registrant's Post-Effective Amendment No. 9 (11/1/94), pursuant to Item 102 of
Regulation S-T and incorporated herein by reference.
(j) Independent Auditors' Consent: To be filed by Post-Effective Amendment.
(k) Not applicable.
(l) Investment letter from Oppenheimer Management Corporation to Registrant
dated December 5, 1988: Previously filed with Registrant's Pre-Effective
Amendment No. 1 (11/28/88), and refiled with Registrant's Post-Effective
Amendment No. 9, (11/1/94) pursuant to Item 102 of Regulation S-T and
incorporated herein by reference.
(m) Service Plan and Agreement between Registrant and Centennial Asset
Management Corporation under Rule 12b-1 dated August 24, 1993: Previously filed
with Registrant's Post-Effective Amendment No. 8, (10/28/93), and incorporated
herein by reference.
(n) Financial Data Schedule: To be filed by Post-Effective Amendment.
- ------------------------------------------------------------------------------
(o) Not applicable.
- ------------------------------------------------------------------------------
- -- Powers of Attorney (including Certified Board resolutions): Previously
filed with Post-Effective Amendment No. 20 to the Registration Statement of
Oppenheimer Total Return Fund, Inc. (Reg. No. 2-11052), (4/30/99), Brian W.
Wixted and incorporated herein by reference. Filed with Registrant's
Post-Effective Amendment No. 13 (10/28/98) George Bowen; Filed with
Registrant's Post Effective Amendment No. 23 (10/8/96) Sam Freedman and
Bridget Macaskill and with Registrant's Post Effective Amendment No. 20
(10/29/93) (all others), and incorporated herein by reference.
Item 24. Persons Controlled by or Under Common Control with the Fund
None.
Item 25. Indemnification
Reference is made to the provisions of Article Seven of Registrant's
Amended and Restated Declaration of Trust filed as Exhibit 23(a) to this
Registration Statement, and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
of expenses incurred or paid by a trustee, officer or controlling person of
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person, Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
Item 26. Business and Other Connections of Investment Adviser
(a) Centennial Asset Management Corporation is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the same capacity
to other registered investment companies as described in Parts A and B hereof
and listed in Item 28(b) below.
(b) There is set forth below information as to any other business, profession,
vocation or employment of a substantial nature in which each officer and
director of Centennial Asset Management Corporation is, or at any time during
the past two fiscal years has been, engaged for his/her own account or in the
capacity of director, officer, employee, partner or trustee.
Name and Current Position
with Centennial Asset Other Business and Connections
Management Corporation During the Past Two Years
Michael Carbuto,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial Asset Management
Corporation.
Andrew J. Donohue,
President and Director Executive Vice President (since September
1993), and a director (since January
1992) of the Distributor; Executive Vice
President, General Counsel and a director
of HarbourView Asset Management
Corporation, Shareholder Services, Inc.,
Shareholder Financial Services, Inc. and
Oppenheimer Partnership Holdings, Inc.
since (September 1995); President and a
director of Centennial Asset Management
Corporation (since September 1995);
President and a director of Oppenheimer
Real Asset Management, Inc.(since July
1996); General Counsel (since May 1996)
and Secretary (since April 1997) of
Oppenheimer Acquisition Corp.; Vice
President and Director of
OppenheimerFunds International, Ltd. and
Oppenheimer Millennium Funds plc (since
October 1997); an officer of other
Oppenheimer funds.
Katherine P. Feld,
Secretary and Director Vice President and Secretary of the
Distributor; Secretary of HarbourView
Asset Management Corporation, and
Centennial Asset Management Corporation;
Secretary, Vice President and Director of
Centennial Capital Corporation; Vice
President and Secretary of Oppenheimer
Real Asset Management, Inc.
Ray Olson, Assistant Vice President of OFI;
Assistant Vice
Treasurer President and Treasurer, OFDI.
Brian W. Wixted Senior Vice President and Treasurer of
OFI; (April
Assistant Treasurer 1999); Vice President and Treasurer of
OFDI; formerly Principal and Chief
Operating Officer, Bankers Trust Company
Mutual Fund Service Division (March 1995
- March 1999); Vice President and Chief
Financial Officer of CS First Boston
Investment Management Corp. (September
1991 - March 1995); and Vice President
and Accounting Manager, Merrill Lynch
Asset Management (November 1987 -
September 1991).
Carol Wolf,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of OFI; Vice President Finance and
Accounting; Point of Contact: Finance
Supporters of Children: Member of the
Oncology Advisory Board of the Children's
Hospital.
Arthur J. Zimmer,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of OFI.
The Oppenheimer funds include the New York-based Oppenheimer funds, the
Denver-based Oppenheimer funds and the Oppenheimer Quest/Rochester funds, as set
forth below:
New York-based Oppenheimer funds
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Europe Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer Large Cap Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Trinity Core Fund
Oppenheimer Trinity Growth Fund
Oppenheimer Trinity Value Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Quest/Rochester funds
Limited Term New York Municipal Fund
Oppenheimer Convertible Securities Fund
Oppenheimer MidCap Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
Denver-based Oppenheimer funds
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Capital Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Main Street Small Cap Fund
Oppenheimer Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The address of OppenheimerFunds, Inc., the New York-based Oppenheimer funds, the
Quest funds, OppenheimerFunds Distributor, Inc., HarbourView Asset Management
Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer Acquisition Corp.
is Two World Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corporation, and
Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood,
Colorado 80112.
The address of the Rochester-based funds is 350 Linden Oaks, Rochester, New York
14625-2807.
Item 27. Principal Underwriter
(a) Centennial Asset Management Corporation is the Distributor of Registrant's
shares. It is also the Distributor of each of the other registered open-end
investment companies for which Centennial Asset Management Corporation is the
investment adviser, as described in Part A and B of this Registration Statement
and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal underwriter are:
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
Michael Carbuto(1) Vice President Vice President of
Centennial
California Tax Exempt
Trust,
Centennial New York Tax
Exempt Trust, and
Centennial
Tax Exempt Trust
Andrew J. Donohue(1) President and Director Vice President and
Secretary
Katherine P. Feld(1) Secretary and Director None
Ray Olson Treasurer None
Brian W. Wixted Assistant Treasurer None
Carol Wolf(2) Vice President Vice President of
Centennial
Government Trust,
Centennial Money Market
Trust and Centennial
America Fund, L.P.
Arthur Zimmer(2) Vice President Vice President of
Centennial
Government Trust,
Centennial Money Market
Trust and Centennial
America Fund, L.P.
- -----------------------
(1) Two World Trade Center, New York, NY 10048-0203
(2) 6803 South Tucson Way, Englewood, CO 80112
(c) Not applicable.
Item 28. Location of Accounts and Records
The accounts, books and other documents required to be maintained by Registrant
pursuant to Section 31(a) of the Investment Company Act of 1940 and rules
promulgated thereunder are in the possession of OppenheimerFunds, Inc. at its
offices at 6803 South Tucson Way, Englewood, Colorado 80112.
Item 29. Management Services
Not applicable
Item 30. Undertakings
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
County of Arapahoe and State of Colorado on the 27th day of August, 1999.
CENTENNIAL NEW YORK TAX EXEMPT TRUST
By: /s/ James C.
Swain *
James C. Swain, Chairman
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the dates indicated:
Signatures Title Date
/s/ James C. Swain* Chairman of the August 27, 1999
- ------------------------------------- Board of
Trustees
James C. Swain Principal Executive
Officer and Trustee
/s/ Bridget A. Macaskill* President and August 27, 1999
- ------------------------------------- Trustee
Bridget A. Macaskill
/s/ Robert G. Avis* Trustee August 27, 1999
- -------------------------------------
Robert G. Avis
/s/ William A. Baker* Trustee August 27, 1999
- -------------------------------------
William A. Baker
/s/ Sam Freedman* Trustee August 27, 1999
- -------------------------------------
Sam Freedman
/s/ Raymond J. Kalinowski* Trustee August 27, 1999
- -------------------------------------
Raymond J. Kalinowski
/s/ C. Howard Kast* Trustee August 27, 1999
- -------------------------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee August 27, 1999
- -------------------------------------
Robert M. Kirchner
/s/ Ned M. Steel* Trustee August 27, 1999
- -------------------------------------
Ned M. Steel
/s/ Brian W. Wixted* Treasurer August 27, 1999
- -------------------------------------
Brian W. Wixted
*By: /s/ Robert G. Zack
- ---------------------------------------------
Robert G. Zack, Attorney-in-Fact
CENTENNIAL NEW YORK TAX EXEMPT TRUST
EXHIBIT INDEX
Exhibit No. Description
23(c) Speciman Share Certificate
<PAGE>
Exhibit 23(c)
CENTENNIAL NEW YORK TAX EXEMPT TRUST
Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within decorative
border)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner, box with heading: SHARES below cert.
no.)
(centered below boxes)
Centennial New York Tax Exempt Trust
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR CERTAIN
DEFINITIONS
(box with number)
CUSIP 151358 108
(at left) is the owner of
(centered)FULLY PAID SHARES OF BENEFICIAL INTEREST OF
CENTENNIAL NEW YORK TAX EXEMPT TRUST
(hereinafter called the "Trust"), transferable only on the books of the
Trust by the holder hereof in person or by duly authorized attorney, upon
surrender of this certificate properly endorsed. This certificate and the
shares represented hereby are issued and shall be held subject to all of
the provisions of the Declaration of Trust of the Trust to all of which
the holder by acceptance hereof assents. This certificate is not valid
until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Trust and the signatures of its duly
authorized officers.
(signature at left of seal) Dated: (signature at
right of seal)
/s/ Brian W. Wixted /s/ Bridget
Macaskill
-------------------------
- -------------------------
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
CENTENNIAL NEW YORK TAX EXEMPT TRUST
SEAL
1988
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed vertically) Countersigned
SHAREHOLDER SERVICES, INC.
Denver (CO) Transfer
Agent
By
- ---------------------------------
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS
NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian
- ---------------
(Cust)
(Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
- -----------------------------------------------------------------------
(Please print or type name and address of assignee)
- -----------------------------------------------------------------------
- -------------------------------------------------------- Shares of beneficial
interest represented by the within Certificate, and do hereby irrevocably
constitute and appoint ___________________ Attorney to transfer the said shares
on the books of the within named Trust with full power of substitution in the
premises.
Dated: ----------------------
Signed: --------------------------------
- ----------------------------------------
(Both must sign if joint owners)
Signature(s) ---------------------------
guaranteed Name of Guarantor
by: ------------------------------------
Signature of Officer/Title
(text printed NOTICE: The signature(s) to this assignment must vertically to
right correspond with the name(s) as written upon the of above paragraph) face
of the certificate in every particular without alteration or enlargement or any
change whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the
signature(s)) current prospectus of the Fund.
PLEASE NOTE: This document contains CENTENNIAL
a watermark when viewed at an angle. ASSET MANAGEMENT CORPORATION
It is invalid without this watermark:
-------------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
