Registration No. 33-30471
File No. 811-5871
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. 13 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ X ]
Amendment No. 16 [ X ]
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CENTENNIAL CALIFORNIA 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 27, 2000 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 California Tax Exempt Trust
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Prospectus dated November 1, 2000
Centennial California Tax Exempt Trust is a
money market mutual fund. It seeks the
maximum current income exempt from federal,
and California personal income taxes for
individual investors as is consistent with
preservation of capital. The Trust invests
in short-term, high quality "money market"
securities.
This Prospectus contains
important information about the
Trust's objective, its
As with all mutual funds, the investment policies, strategies
Securities and Exchange Commission and risks. It also contains
has not approved or disapproved important information about how
the Trust's securities nor has it to buy and sell shares of the
determined that this Prospectus is Trust and other account
accurate or complete. It is a features. Please read this
criminal offense to represent Prospectus carefully before you
otherwise. invest and keep it for future
reference about your account.
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(logo) OppenheimerFunds
The Right Way to Invest
<PAGE>
CONTENTS
A B O U T T H E T R U S T
The Trust's Investment Objective and Strategies
Main Risks of Investing in the Trust
The Trust's Past Performance
Fees and Expenses of the Trust
About the Trust's Investments
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
By Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends and Tax Information
Financial Highlights
A B O U T T H E T R U S T
The Trust's Investment Objective and Strategies
WHAT IS THE TRUST'S INVESTMENT OBJECTIVE? The Trust seeks the maximum current
interest income exempt from federal and California personal income taxes for
individual investors as is consistent with the preservation of capital.
WHAT DOES THE TRUST MAINLY 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 with maturities
not in excess of 397 days from the date of purchase (if approved by
shareholders, as described below).
WHO IS THE TRUST DESIGNED FOR? The Trust may be appropriate for investors who
want to earn income exempt from federal and California 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. Income on short-term securities
tends to be lower than income on longer term debt securities, so the Trust's
yield will likely be lower than the yield on longer-term fixed income funds. The
Trust also offers easy access to your money through checkwriting and wire
redemption privileges. The Trust does not invest for the purpose of seeking
capital appreciation or gains and is not a complete investment program.
Main Risks of Investing in the Trust
All investments carry risks to some degree. Funds that invest in debt
obligations for income may be subject to credit risks and interest rate risks.
However, the Trust 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.
Risks of Non-Diversification -- Investments in California 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 bonds issued by the State of California.
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 California. However, the Trust is
currently subject to certain diversification requirements under rules for money
market funds under federal law. 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.
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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 1/1/00 through 9/30/00 the cumulative total return was
--%.
During the period shown in the bar chart, the highest return for a calendar
quarter was 0.____% (__nd Q '___) and the lowest return for a calendar quarter
was .____% (__nd Q '___).
10 Years
Average Annual Total Returns (or life of
for the periods ended December 31, 1 Year 5 Years class if
1999 less)
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Centennial California Tax Exempt _______% _____% _____%
Trust (inception 6/12/90)
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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, 2000.
SHAREHOLDER FEES. The Trust does not charge any initial sales charge to buy
shares or to reinvest dividends. There are no exchange fees or redemption fees
and no contingent deferred sales charges (unless you buy Trust shares by
exchanging Class A shares of other Oppenheimer funds that were purchased subject
to a contingent deferred sales charge, as described in "How to Sell Shares").
Annual Trust Operating Expenses (deducted from Trust assets):
(% of average daily net assets)
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Management Fees _____%
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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. The following example is intended to help you compare the cost of
investing in the Trust with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in shares of the Trust for the time
periods indicated and reinvest your dividends and distributions. The example
also assumes that your investment has a 5% return each year and that the Trust's
expenses remain the same. Your actual costs may be higher or lower, because
expenses will vary over time. Based on these assumptions your expenses would be
as follows:
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1 year 3 years 5 years 10 years
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$---- $----- $----- $-----
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About the Trust's Investments
THE TRUST'S PRINCIPAL INVESTMENT POLICIES. In seeking maximum current interest
income exempt from Federal and California personal income taxes for individual
investors 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 in municipal securities and at least 65% of its assets
in obligations of the State of California 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 California 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 investments, 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.
Normally, the Trust will not invest more than 20% of its total assets in
taxable investments.
o Municipal Securities. The Trust buys municipal bonds and notes,
tax-exempt commercial paper, certificates of participation in municipal
leases and other debt obligations. These are debt obligations issued by
or on behalf of the State of California, other states and the District
of Columbia, their political subdivisions (such as cities, towns and
counties), or by their agencies, instrumentalities and authorities, if
the interest paid on the security is not subject to federal individual
income tax in the opinion of bond counsel to the issuer. 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 not in
excess of 397 days from the date the Trust purchases them (if approved
by shareholders).
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?
Debt instruments, including money market instruments, are subject to
credit risk, the risk that the issuer might not make timely payments of
interest on the security or repay principal when it is due. The Trust may
buy only those securities that meet standards set in the Investment
Company Act for money market funds. The Trust's Board has adopted
procedures to evaluate securities for the Trust's portfolio and the
Manager has the responsibility to implement those procedures when
selecting investments for the Trust.
In general, those procedures require that securities be rated in one of
the two highest short-term rating categories of two national rating
organizations. At least 95% of the Trust's assets must be invested in securities
of issuers with the highest credit rating. No more than 5% of the Trust's assets
can be invested in securities with the second highest credit rating. In some
cases, the Trust can buy securities rated by one rating organization or unrated
securities that the Manager judges to be comparable in quality to the two
highest rating categories.
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.
Currently, 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. However, shareholders have been requested to approve an amendment to
this policy whereby no security's maturity will exceed 397 days from the date of
the investment. If the change is not approved by shareholders, the Manager will
supplement this Prospectus to reflect that the changes were not approved.
Finally, the Trust must maintain a dollar-weighted average portfolio maturity of
not more than 90 days, to reduce interest rate risks.
Can the Trust's Investment Objective and Policies Change? The Trust's Trustees
can change non-fundamental policies without shareholder approval, although
significant changes will be described in amendments to this Prospectus.
Fundamental policies cannot be changed without the approval of a majority
of the Trust's outstanding voting shares. The Trust's investment objective
is a fundamental policy. 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 them. These techniques have risks. The Statement of Additional
Information contains more information about some of these practices, including
limitations on their use that are designed to reduce some of the risks.
Floating Rate/Variable Rate Notes. The Trust can purchase notes with floating or
variable interest rates. Variable rates are adjustable at stated periodic
intervals. Floating rates are adjusted automatically according to a
specified market index for such investments, such as the prime rate of a
bank. If the maturity of a note is greater than 397 days (if approved by
shareholders), it may be purchased if it has a demand feature. That
feature must permit the Trust to recover the principal amount of the note
on not more than thirty days' notice at any time, or at specified times
not exceeding 397 days from purchase.
"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
governments to obtain funds to acquire land, equipment or facilities. The
Trust can invest in certificates of participation that represent a
proportionate interest in payments made under municipal lease obligations.
Most municipal leases, while secured by the leased property, are not
general obligations of the issuing municipality. They often contain
"non-appropriation" clauses under which the municipal government has no
obligation to make lease or installment payments in future years unless
money is appropriated on a yearly basis. If the government stops making
payments or transfers its payment obligations to a private entity, the
obligation could lose value or become taxable.
Illiquid and Restricted Securities. Investments may be illiquid because they do
not have an active trading market, making it difficult to value them or
dispose of them promptly at an acceptable price. 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. 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:
o shorten the maturity of a variable or floating rate security,
o enhance the security's credit quality and
o 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.
How the Trust is Managed
THE MANAGER. The Manager, Centennial Asset Management Corporation, a
wholly-owned subsidiary of OppenheimerFunds, Inc., chooses the Trust's
investments and handles its day-to-day business. The Manager carries out its
duties, subject to the policies established by the Trust's Board of Trustees,
under an investment advisory agreement that states the Manager's
responsibilities. The agreement sets the fees the Trust pays to the Manager and
describes the expenses that the Trust is responsible to pay to conduct its
business.
The Manager has been an investment advisor since 1978. The Manager and its
affiliates managed more than $____ billion in assets as of ______, including
private accounts and investment companies having more than 5 million shareholder
accounts. The Manager is located at 6803 South Tucson Way, Englewood, Colorado
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 advisor.
Advisory Fees. Under the investment advisory agreement, the Trust pays the
Manager an advisory fee at an annual rate that declines on additional
assets as the Trust grows: 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. Centennial California
Tax Exempt Trust's management fee for the fiscal year ended June 30, 2000
was _____% of the Trust's average annual net assets.
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 Colorado, or after any agent
appointed by the Distributor receives the order and sends it to the Distributor
as described below.
How is 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.
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.
You can make additional purchases 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 can buy shares 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 shareholders" 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 SHAREHOLDERS BUY SHARES THROUGH THE DISTRIBUTOR? Direct
shareholders can 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 shareholders 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 shareholders 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 on the back cover. For initial purchases, your check should be
payable in U.S. dollars and drawn on a U.S. bank so that distributions
will begin to accrue on the next regular business day after the
Distributor accepts your purchase order. If your check is not drawn on a
U.S. bank and is not payable in U.S. dollars, the shares will not be
purchased until the Distributor is able to convert the purchase payment to
Federal Funds. In that case distributions will begin to accrue on the
purchased shares on the next regular business day after the purchase is
made. The minimum initial investment for direct shareholders by check is
$500.
Payment by Federal Funds Wire. Direct shareholders may pay for purchases of
shares of the Trust by Federal Funds wire. You must also forward your
Application and other documents to the address on the back cover. 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 shareholders 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.
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 SHAREHOLDERS REDEEM SHARES? Direct shareholders 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
shareholders must be in writing and must include a signature guarantee
(there may also be other situations that require a signature guarantee):
o You wish to redeem $100,000 or more and receive a check
o The redemption check is not payable to all 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 Shareholders Have Their Signatures Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of financial
institutions, including:
o a U.S. bank, trust company, credit union or savings association,
o a foreign bank that has a U.S. correspondent bank,
o a U.S. registered dealer or broker in securities, municipal securities
or government securities, or
o a U.S. national securities exchange, a registered securities association
or a clearing agency.
If you are signing on behalf of a corporation, partnership or other
business or as a fiduciary, you must also include your title in the signature.
How Can Direct Shareholders Sell Shares by Mail? Write a "letter 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
P.O. Box 5143 D
Denver, Colorado 80217-5270 Denver, Colorado 80231
----------------------------------
How Can Direct Shareholders Sell Shares by Telephone? Direct shareholders and
their dealer representative of record may both sell shares by telephone.
To receive the redemption price calculated on a particular 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 $100,000 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.
Automatic Withdrawal and Exchange Plans. The Trust has several plans that enable
direct shareholders to sell shares automatically or exchange them to
another eligible fund account on a regular basis. Please call the Transfer
Agent or consult the Statement of Additional Information for details.
Can I Submit Transaction Requests by Fax? Direct shareholders may send
requests for certain types of account transactions to the Transfer Agent
by fax (telecopier). Please call 1.800.525.9310 for information about
which transactions may be handled this way. Transaction requests submitted
by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
SENDING REDEMPTION PROCEEDS BY WIRE. While the Trust normally sends direct
shareholders their money by check, you can arrange to have the proceeds of the
shares you sell sent by Federal Funds wire to a bank account you designate. It
must be a commercial bank that is a member of the Federal Reserve wire system.
The minimum redemption you can have sent by wire is $2,500. There is a $10 fee
for each wire. To find out how to set up this feature on an account or to
arrange a wire, direct shareholders should call the Transfer Agent at
1.800.525.9310. If you hold your shares through your dealer's Automatic Purchase
and Redemption Program, you must contact your dealer to arrange a Federal Funds
wire.
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 shareholders may write checks against
their account by requesting that privilege on the account Application or by
contacting the Transfer Agent for signature cards. They must be signed (with a
signature guarantee) by all owners of the account and returned to the Transfer
Agent so that checks can be sent to you to use. Investors with joint accounts
can elect in writing to have checks paid over the signature of one owner. If
checkwriting is established after November 1, 2000, only one signature is
required for shareholders with joint accounts, unless you elect otherwise.
o Checks can be written to the order of whomever you wish, but may not be
cashed at the bank the checks are payable through or the Trust's custodian
bank.
o Checkwriting privileges are not available for accounts holding shares that
are subject to a contingent deferred sales charge.
o Checks must be written for at least $250.
o Checks cannot be paid if they are written for more than your account value.
o You may not write a check that would require the 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
(except Oppenheimer Cash Reserves). 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 shareholder.
HOW CAN PROGRAM PARTICIPANTS EXCHANGE SHARES? If you participate in an Automatic
Purchase and Redemption Program sponsored by your broker-dealer, you may
exchange shares held in your Program Account for shares of Centennial Money
Market Trust, Centennial Government Trust, Centennial Tax Exempt Trust,
Centennial California Tax Exempt Trust and Centennial New York Tax Exempt Trust
(referred to in this Prospectus as the "Centennial Trusts") if available for
sale in your state of residence by contacting your broker or dealer and
obtaining a Prospectus of the Centennial Trust.
HOW CAN DIRECT SHAREHOLDERS EXCHANGE SHARES? Direct shareholders 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 state of residence.
o The prospectuses of the Trust and the fund whose shares you want to buy
must offer the exchange privilege.
o You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them. After the account is open 7
days, you can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund whose shares
you purchase by exchange.
o Before exchanging into a fund, you must obtain and read its prospectus.
Shares of a particular class of an eligible fund may be exchanged only for
shares of the same class in other eligible funds. For example, you can exchange
shares of the Trust only for Class A shares of another fund, and you can
exchange only Class A shares of another eligible 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 shareholders 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 Shareholders 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 Trust may amend, suspend or terminate the exchange privilege at any
time. The Trust will provide you notice whenever it is required to do so
by applicable law, but it may impose these changes at any time for
emergency purposes.
o If the Transfer Agent cannot exchange all the shares you request because
of a restriction cited above, only the shares eligible for exchange will
be exchanged.
Shareholder Account Rules and Policies
More information about the Trust's policies and procedures for buying, selling
and exchanging shares is contained in the Statement of Additional Information.
The offering 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.
The Transfer 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 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.
The Transfer 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.
Involuntary redemptions of small accounts may be made by the Trust if the
account value has fallen below $500 for reasons other than the fact that
the market value of shares has dropped. In some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
"Backup Withholding" of federal income tax may be applied against taxable
dividends, distributions and redemption proceeds (including exchanges) if
you fail to furnish the Trust your correct, certified Social Security or
Employer Identification Number when you sign your application, or if you
under-report your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, the Trust will
mail only one copy of each prospectus and 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. 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.
What Choices Do I Have for Receiving Distributions? When you open your account,
direct shareholders should specify on your application how you want to
receive your dividends and distributions. You have four options:
o Reinvest All Distributions in the Trust. You can elect to reinvest all
dividends and capital gains distributions in additional shares of the
Trust.
o Reinvest Capital Gains Only. You can elect to reinvest some distributions
(short-term capital gains or long-term capital gains) in the Trust while
receiving dividends by check or having them sent to your bank account.
o Receive All Distributions in Cash. You can elect to receive a check for
all dividends and capital gains distributions or have them sent to your
bank.
o Reinvest Your Distributions in Another Account. You can reinvest all
distributions in the same class of shares of another Oppenheimer fund
account you have established.
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 on California municipal
securities will be exempt from California individual income taxes, if at the
close of each quarter at least 50% of the value of the Trust's assets are
invested in debt obligations that pay interest exempt from California individual
income taxes. Dividends paid from income from municipal securities of issuers
outside California will normally be subject to California individual income
taxes.
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, and may be taxable at different rates depending on
how long the Trust holds the asset. 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 income 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, 2000 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>
INFORMATION AND SERVICES
For More Information On Centennial California 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
Trust documents and reports by visiting the SEC's Public Reference Room in
Washington, D.C. (Phone 1.202.942.8090) or the EDGAR database on the SEC's
Internet web site at http://www.sec.gov. Copies may be obtained after payment of
a duplicating fee by electronic request at the SEC's e-mail address:
[email protected] or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
No one has been authorized to provide any information about the Trust or to make
any representations about the Trust other than what is contained in this
Prospectus. This Prospectus is not an offer to sell shares of the Trust, nor a
solicitation of an offer to buy shares of the Trust, to any person in any state
or other jurisdiction where it is unlawful to make such an offer.
The Trust's shares are distributed by:
SEC File No. 811-5871 Centennial Asset Management
Corporation
PR0180.001.1100
Printed on recycled paper
<PAGE>
APPENDIX TO THE PROSPECTUS OF
CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
Graphic material included in Prospectus of Centennial California 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
----------------------------------------------------------
----------------------------------------------------------
12/31/90 N/A
----------------------------------------------------------
----------------------------------------------------------
12/31/91 3.91%
----------------------------------------------------------
----------------------------------------------------------
12/31/92 2.37%
----------------------------------------------------------
----------------------------------------------------------
12/31/93 1.81%
----------------------------------------------------------
----------------------------------------------------------
12/31/94 2.16%
----------------------------------------------------------
----------------------------------------------------------
12/31/95 3.31%
----------------------------------------------------------
----------------------------------------------------------
12/31/96 2.79%
----------------------------------------------------------
----------------------------------------------------------
12/31/97 2.91%
----------------------------------------------------------
----------------------------------------------------------
12/31/98 2.57%
----------------------------------------------------------
----------------------------------------------------------
12/31/99
----------------------------------------------------------
<PAGE>
-----------------------------------------------------------------------------
Centennial California Tax Exempt Trust
-------------------------------------------------------------------------------
6803 South Tucson Way, Englewood, Colorado 80112
1.800.525.9310
Statement of Additional Information dated November 1, 2000
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Trust and supplements
information in the Prospectus dated November 1, 2000. It should be read together
with the Prospectus, which may be obtained by writing to the Trust's Transfer
Agent, Shareholder Services, Inc., at P.O. Box 5143, Denver, Colorado 80217, or
by calling the Transfer Agent at the toll-free number shown above.
Contents
Page
About the Trust
Additional Information about the Trust's Investment Policies and Risks
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...................................................
Service Plan.......................................................
Performance of the Trust...........................................
About Your Account
How To Buy Shares..................................................
How To Sell Shares.................................................
How To Exchange 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
<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 composition of the Trust's portfolio and
the techniques and strategies that the Trust's Manager uses in selecting
portfolio securities will vary over time. The Trust is not required to use all
of the investment techniques and strategies described below at all times in
seeking its goal. It may use some of the special investment techniques and
strategies at some times or not at all.
The Trust 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.
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. Normally, the Trust
will not invest more than 20% of its total assets in private activity municipal
securities or other taxable investments.
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 who
is ultimately responsible for the payment of principal and interest, 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.
If a security's rating is downgraded, the Manager and/or the Board of
Trustees may have to reassess the security's credit risk. If a security has
ceased to be a First Tier Security, the Manager will promptly reassess whether
the security continues to present minimal credit risk. If the Manager becomes
aware that any Rating Organization has downgraded its rating of a Second Tier
Security or rated an unrated security below its second highest rating category,
the Trust's Board of Trustees shall promptly reassess whether the security
presents minimal credit risk and whether it is in the best interests of the
Trust to dispose of it. If the Trust disposes of the security within five days
of the Manager learning of the downgrade, the Manager will provide the Board of
Trustees with subsequent notice of such downgrade. If a security is in default,
or ceases to be an Eligible Security, or is determined no longer to present
minimal credit risks, the Board of Trustees must determine whether it would be
in the best interests of the Trust to dispose of the security.
|_| 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 a 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 397 days from the date of purchase. 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 are determined. The Trust may buy these securities if their
maturities do not exceed the time period provided for in Rule 2a-7, or any other
applicable rule.
|_| Demand Features and Guarantees. Demand features and guarantees 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
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 guarantee will depend
on the ability of the bank or dealer to pay for the securities if the demand
feature or guarantee 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
guarantees are not transferable 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
feature or guarantee 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 guarantee 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
397 days from the purchase date, 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 this investment. However, the Trust
intends to be as fully invested as possible and will not invest in when-issued
securities if its income or net asset value will be materially adversely
affected. At the time the Trust makes the commitment to purchase a municipal
security on a when-issued basis, it will record the transaction on its books and
reflect the value of the security in determining its net asset value. It will
also segregate cash or other liquid high quality municipal securities equal in
value to the commitment for the when-issued securities. 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.
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.
Loans of Portfolio Securities. To attempt to increase its income, the Trust may
lend its portfolio securities to qualified borrowers (other than in repurchase
transactions). There are risks in connection with securities lending. The Trust
might experience a delay in receiving additional collateral to secure a loan, or
a delay in recovery of the loaned securities. The Trust presently does not
intend to lend securities; but if it does, these loans cannot exceed 25% of the
value of the Trust's total assets. Income from securities loans does not
constitute exempt-interest income for the purpose of paying tax-exempt
dividends.
The Trust must receive collateral for a loan. Under current applicable
regulatory requirements (which are subject to change), on each business day the
loan collateral must be at least equal to the value of the loaned securities. It
must consist of cash, bank letters of credit, securities of the U.S. government
or its agencies or instrumentalities, 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. The terms of the letter of credit and the issuing bank
both must be satisfactory to the Trust.
When it lends securities, the Trust receives amounts equal to the
dividends or interest on the loaned securities. It also receives one or more of
(a) negotiated loan fees, (b) interest on securities used as collateral, and (c)
interest on short-term debt securities purchased with the loan collateral.
Either type of interest may be shared with the borrower. The Trust may pay
reasonable finder's, administrative or other fees in connection with these
loans. The terms of the Trust's loans must meet applicable tests under the
Internal Revenue Code and must permit the Trust to reacquire loaned securities
on five days' notice or in time to vote on any important matter.
Special Risks of Investing Primarily in California Municipal Securities. Because
the Trust focuses its investments primarily on California municipal securities,
the value of its portfolio investments will be highly sensitive to events
affecting the fiscal stability of the State of California and its
municipalities, authorities and other instrumentalities that issue securities.
There have been a number of political developments, voter initiatives, state
constitutional amendments and legislation in California in recent years that may
affect the ability of the State government and municipal governments to pay
interest and repay principal on the securities they have issued. In addition, in
recent years, the State of California has derived a significant portion of its
revenues from personal income and sales taxes. Because the amount collected from
these taxes is particularly sensitive to economic conditions, the State's
revenues have been volatile.
It is not possible to predict the future impact of the legislation and
economic considerations described below on the long-term ability of the State of
California or California municipal issuers to pay interest or repay principal on
their obligations. In part that is because of possible inconsistencies in the
terms of the various laws and Propositions and the applicability of other
statutes to these issues. The budgets of California counties and local
governments may be significantly affected by state budget decisions beyond their
control. The information below about these conditions is only a brief summary,
based upon information the Trust has drawn from sources that it believes are
reliable.
Changes to the State Constitution. Changes to the state constitution in
recent years have raised general concerns about the ability of the State and
municipal governments in California to obtain sufficient revenues to pay their
bond obligations. In 1978, California voters approved Proposition 13, an
amendment to the state constitution. The Proposition added a new section to the
constitution that limits ad valorem taxes on real property and restricts the
ability of local taxing entities to increase real property taxes. However,
legislation enacted after Proposition 13 provided help to California municipal
issuers to raise revenue to pay their bond obligations. During the severe
recession California experienced from 1991 to 1993, the State legislature
eliminated significant components of its aid to local governments. The State has
since increased aid to local governments and reduced certain mandates for local
services. Whether legislation will be enacted in the future to either increase
or reduce the redistribution of State revenues to local governments, or to make
them less dependent on State budget decisions, cannot be predicted. Even if
legislation increasing such redistribution is passed, it cannot be predicted
whether in every instance it will provide sufficient revenue for local municipal
issuers to pay their bond obligations.
Another amendment to the state constitution may also have an adverse
impact on state and municipal bond obligations. That amendment restricts the
state government from spending amounts in excess of appropriation limits imposed
on each state and local government entity. If revenues exceed the appropriation
limit, those revenues must be returned, in the form of a revision in the tax
rates or fee schedules.
Voter Initiatives. California voters have approved a number of initiatives
that affect the ability of the state and municipalities to finance their bond
obligations. In 1988, California voters approved Proposition 98, which requires
a minimum level of funding for public schools and community colleges. In 1986,
voters approved Proposition 62, which had a number of effects. One requires that
any special tax imposed by a local government must be approved by a two-thirds
vote of the electorate. In 1995, the California Supreme Court upheld the
constitutionality of that Proposition. That created uncertainty as to the
legality of certain local taxes enacted by non-charter cities without voter
approval. It is not possible to predict the eventual impact of that decision.
In 1996, California voters approved Proposition 218. That initiative
applied the provisions of Proposition 62 to all government entities, including
cities having charters. It requires that all taxes for general purposes be
approved by a simple majority of the popular vote, and that taxes for special
purposes must be approved by a two-thirds majority vote. Proposition 218 also
limits the authority of local governments to impose property-related
assessments, fees and charges. It requires that such assessments be limited to
the special benefit conferred and prohibits their use for general governmental
services. The Proposition enables voters to use their initiative powers to
reduce or repeal previously-authorized taxes, assessments, fees and charges.
Effect of other State Laws on Bond Obligations. Some of the tax-exempt
securities that the Trust can invest in may be obligations payable solely from
the revenues of a specific institution or secured by specific properties. These
are subject to provisions of California law that could adversely affect the
holders of such obligations. For example, the revenues of California health care
institutions may be adversely affected by State laws, and California law limits
the remedies of a creditor secured by a mortgage or deed of trust on real
property. Debt obligations payable solely from revenues of health care
institutions may also be insured by the State but no guarantee exists that
adequate reserve funds will be appropriated by the State legislature for such
purpose.
The Effect of General Economic Conditions in the State. The California
economy has been recovering from a general economic recession of a few years
ago. In 1997, the rate of growth in new jobs has been generally high compared to
the rest of the country. The unemployment rate, while relatively higher than the
national average, fell to an average of 5.9% in 1998, compared to over 10%
during the recessionary period. Many of the new jobs were created in industries
such as computer services, software design, motion pictures and high technology
manufacturing. Business services, export trade and other manufacturing also
experienced growth. Recent economic reports indicate that, while the rate of
economic growth in California is expected to moderate over the next year, the
increases in employment and income may exceed those of the nation as a whole.
The unsettled financial situation occurring in certain Asian economies, and its
spillover effects elsewhere, may continue to adversely affect the State's
export-related industries and, therefore, the State's rate of economic growth.
On June 29, 1999, the Governor of California signed the 1999-2000 Budget
Act. The Budget Act estimated General Trust revenues and transfers of $63.0
billion, and contained expenditures totaling $63.7 billion. The Budget Act also
contained expenditures of $16.1 billion from special funds and $1.5 billion from
bond funds. The Administration estimated a budget reserve balance at June 30,
2000, of approximately $881 million. Not included in this amount was an
additional $300 million which (after the Governor's vetoes) was "set aside" to
provide funds for employee salary increases (to be negotiated in bargaining with
employee unions), and for litigation reserves. The Budget Act anticipates normal
cash flow borrowing during the fiscal year. Continued State economic expansion
and large revenue increases enabled the Governor and State legislature to
provide increases in spending programs in the 1999-2000 budget. These included
large increases in education and health and human services funding.
In recent past years the state has experienced reductions in the overall
credit ratings assigned to its General Obligation bonds by several major rating
agencies. In July 1994, the ratings of those bonds were downgraded from Aa to A1
by Moody's, from A+ to A by Standard & Poor's and from AA to A by Fitch, the
international rating agency. At the time, the rating agencies all cited
uncertainty about the State's ability to balance its budget by 1996. In 1996,
noting improvements in the economy in California and the state budget, both
Fitch and Standard & Poor's raised their ratings of the State's General
Obligation bonds from A to A+, in 1997 Fitch raised its rating to AA-, in 1998
Moody's raised its rating to Aa3, and in 1999 Standard & Poor's raised its
rating to AA-.
Special Financial Problems of Local Governments. Some local governments in
California have experienced notable financial difficulties. On December 6, 1994,
Orange County, California, became the largest municipality in the United States
ever to have filed for protection under federal bankruptcy laws. The filing
stemmed from losses of about $1.7 billion in the County's investment pool due to
investments in high-risk derivative securities. In September 1995 the state
legislature approved legislation that permitted Orange County to use for
bankruptcy recovery $820 million in sales taxes over 20 years that were
previously earmarked for highways, transit and development. In June 1996 the
County completed an $880 million bond offering secured by real property owned by
the County. On June 12, 1996, the County emerged from bankruptcy. On January 7,
1997, Orange County returned to the bond market with a $136 million bond issue.
In December 1997, Moody's raised its ratings on $325 million of Orange County
pension obligation bonds to Baa3 from Ba. In February 1998, Fitch assigned
outstanding Orange County pension obligation bonds a BBB rating. In September
1999, Moody's assigned the County an issuer (implied general obligation) rating
of Aa3 and, among other things, upgraded the ratings on the County's pension
obligation bonds to A1.
Los Angeles County, the nation's most populous county, has also
experienced financial difficulties. Between 1992 and 1995, the County's
long-term bonds were downgraded three times. This occurred as a result of a
number of factors, including severe operating deficits for the county's health
care system. In addition, the County was affected by a long-term loss of revenue
caused by state property tax shift initiatives in 1993 through 1995. The
County's improving financial condition has been reflected in improved general
obligation bond ratings. In June 1999, the Los Angeles County Board of
Supervisors approved a budget of approximately $15 billion for 1999-2000, up
from the $13.6 billion approved for the previous fiscal year. The County's
financial condition will continue to be affected by the large number of County
residents who are dependent on government services and by a structural deficit
in its health department.
Investment Restrictions
|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Trust has adopted to govern its investments that can be
changed only by the vote of a "majority" of the Trust's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is defined as
the vote of the holders of the lesser of:
|_| 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the outstanding shares
are present or represented by proxy, or |_| more than 50% of the outstanding
shares.
The Trust's investment objective is a fundamental policy. Other policies
described in the Prospectus or this Statement of Additional Information are
"fundamental" only if they are identified as such. The Trust's Board of Trustees
can change non-fundamental policies without shareholder approval. However,
significant changes to investment policies will be described in supplements or
updates to the Prospectus or this Statement of Additional Information, as
appropriate. The Trust's most significant investment policies are described in
the Prospectus.
|X| Does the Trust Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Trust.
|_| The Trust cannot make loans, except that the Trust, may purchase debt
securities described in "Investment Objective and Policies," and other
securities substantially similar thereto, and repurchase agreements; and the
Trust may lend its portfolio securities as described in its investment policy
stated above;
|_| 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;
|_| 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 Municipal Bonds or Notes secured by interests in real estate;
|_| The Trust cannot make short sales of securities or purchase securities
on margin, except for short-term credits necessary for the clearance of
purchases and sales of portfolio securities;
|_| The Trust cannot invest in or hold securities of any issuer if those
officers and Trustees of the Trust or the Manager individually owning 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;
|_| The Trust cannot invest in securities of other investment companies
except as they may be acquired as part of a merger, consolidation or acquisition
of assets; or
|_| 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.
At a meeting held on August 22, 2000, the Board of Trustees recommended:
(i) the elimination of the Fund's fundamental investment policy with respect to
investing in unseasoned issuers; and (ii) the amendment of the Fund's
fundamental investment policy with respect to (a) investing in debt securities
having a maturity in excess of one year from the date of purchase and (b)
concentration of investments to prohibit the purchase of securities of companies
in any one industry if 25% or more of its total assets would consist of
securities of companies in that industry. The current and proposed language, if
applicable, is set forth below. These changes are expected to be approved by
shareholders on or about _____, 2000. If the changes are not approved by
shareholders, the Manager will supplement this Statement of Additional
Information to reflect that the changes were not approved.
A. Investing in Securities of Issuers in Operation Less than Three Years.
----------------------------------------------------------------------
Current
----------------------------------------------------------------------
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.
----------------------------------------------------------------------
B. Investing in Debt Securities Having a Maturity Greater than One Year.
---------------------------------------------------------------------
Current Proposed
---------------------------------------------------------------------
As a fundamental policy, the As a fundamental policy, the Trust may not
invest in any debt Trust may not invest in any debt instrument having a maturity
in instrument having a maturity in excess of one year from the date excess of
the time period of the investment. provided for in Rule 2a-7, or any other
applicable rule. The Trust cannot enter into a The Trust cannot enter into a
repurchase agreement or purchase repurchase agreement or purchase a security
subject to a call if a security subject to a call if the scheduled repurchase or
the scheduled repurchase or redemption date is greater than redemption date is
greater than one year. the time period provided for in Rule 2a-7, or any other
applicable rule. The Trust cannot invest in any The Trust cannot invest in any
debt instrument having a maturity debt instrument having a in excess of one year
from the maturity in excess of 397 days date of purchase, unless from the date
of purchase, purchased subject to a demand unless purchased subject to a feature
which may not exceed one demand feature which may not year and requires payment
on not exceed 397 days and requires more than 30 days' notice. payment on not
more than 30 days' notice in excess of the time period provided for in Rule
2a-7, or any other applicable rule.
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C. The Trust's Concentration Policy.
---------------------------------------------------------------------
Current Proposed
---------------------------------------------------------------------
---------------------------------------------------------------------
The Trust cannot invest more than The Trust cannot invest 25% or 25% of its
total assets in any more of its total assets in any one industry; however, for
the one industry; however, for the purposes of this restriction, purposes of
this restriction, municipal securities and U.S. municipal securities and U.S.
government obligations are not government obligations are not considered to be
part of any considered to be part of any single industry. single industry.
---------------------------------------------------------------------
For purposes of the investment restrictions listed above, 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. Conduit
securities are deemed to be issued by the person ultimately responsible for
payments of interest and principal on the security.
In applying the restrictions 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. 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, non-diversified management
investment company organized as a Massachusetts business trust in 1989, with an
unlimited number of authorized shares of beneficial interest.
The Trust is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The Trustees
meet periodically throughout the year to oversee the Trust's activities, review
its performance, and review the actions of the Manager. Although the Trust will
not normally hold annual meetings of its shareholders, it may hold shareholder
meetings from time to time on important matters. Shareholders of the Trust may
have the right to call a meeting to remove a Trustee or to take other action
described in the Declaration of Trust.
|X| Classes of Shares. The Trust has a single class of shares of stock.
While that class has no designation, it is deemed to be the equivalent of Class
A for purposes of the shareholder account policies that apply to Class A shares
of the Oppenheimer funds. Shares of the Trust are freely transferable. Each
share has one vote at shareholder meetings, with fractional shares voting
proportionally on matters submitted to a vote of shareholders. There are no
preemptive or conversion rights and shares participate equally in the assets of
the Trust upon liquidation.
|X| Meetings of Shareholders. As a Massachusetts business trust, the Trust
is not required to hold, and does not plan to hold, regular annual meetings of
shareholders. The Trust will hold meetings when required to do so by the
Investment Company Act or other applicable law. It will also do so when a
shareholder meeting is called by the Trustees or upon proper request of the
shareholders.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of the Trust, to remove a Trustee. The
Trustees will call a meeting of shareholders to vote on the removal of a Trustee
upon the written request of the record holders of 10% of the outstanding shares
of the Trust. If the Trustees receive a request from at least 10 shareholders
stating that they wish to communicate with other shareholders to request a
meeting to remove a Trustee, the Trustees will then either make the shareholder
lists of the Trust available to the applicants or mail their communication to
all other shareholders at the applicants' expense. The shareholders making the
request must have been shareholders for at least six months and must hold shares
of the Trust valued at $25,000 or more or constituting at least 1% of the
outstanding shares of the Trust, whichever is less. The Trustees may also take
other action as permitted by the Investment Company Act.
|_| Shareholder and Trustee Liability. The Declaration of Trust contains
an express disclaimer of shareholder or Trustee liability for the Trust's
obligations. It also provides for indemnification and reimbursement of expenses
out of the Trust's property for any shareholder held personally liable for its
obligations. The Declaration of Trust also states that upon request, the Trust
shall assume the defense of any claim made against a shareholder for any act or
obligation of the Trust and shall satisfy any judgment on that claim.
Massachusetts law permits a shareholder of a business trust (such as the Trust)
to be held personally liable as a "partner" under certain circumstances.
However, the risk that a Trust shareholder will incur financial loss from being
held liable as a "partner" of the Trust is limited to the relatively remote
circumstances in which the Trust would be unable to meet its obligations.
The Trust's contractual arrangements state that any person doing business
with the Trust (and each shareholder of the Trust) agrees under the Declaration
of Trust to look solely to the assets of the Trust for satisfaction of any claim
or demand that may arise out of any dealings with the Trust. Additionally, the
Trustees shall have no personal liability to any such person, to the extent
permitted by law.
Trustees and Officers of the Trust. The Trust's Trustees and officers and
their principal occupations and business affiliations during the past five years
are listed below. Trustees denoted with an asterisk (*) below are deemed to be
"interested persons" of the Trust under the Investment Company Act. All of the
Trustees are also trustees, directors or managing general partners of the
following Denver-based Oppenheimer funds1:
Oppenheimer Capital Income Fund Oppenheimer Senior Floating
Rate Fund
Oppenheimer Cash Reserves Oppenheimer Strategic Income
Fund
Oppenheimer Champion Income Fund Oppenheimer Total Return
Fund, Inc.
Oppenheimer High Yield Fund Oppenheimer Variable Account
Funds
Oppenheimer International Bond Panorama Series Fund, Inc.
Fund
Oppenheimer Integrity Funds Centennial America Fund, L.P.
Oppenheimer Limited-Term Centennial California Tax
Government Fund Exempt Trust
Oppenheimer Main Street Funds, Centennial Government Trust
Inc.
Oppenheimer Main Street Small Centennial Money Market Trust
Cap Fund
Oppenheimer Municipal Fund Centennial New York Tax
Exempt Trust
Oppenheimer Real Asset Fund Centennial Tax Exempt Trust
Robert G. Avis*, Trustee, Age: 68
One North Jefferson Ave., St. Louis, Missouri 63103
Chairman, President and Chief Executive Officer of A.G. Edwards Capital, Inc.
(general partnership of private equity funds), Director of A.G. Edwards &
Sons, Inc. (a broker-dealer) and Director of A.G. Edwards Trust Companies
(trust companies), formerly, Vice Chairman of A.G. Edwards & Sons, Inc. and
A.G. Edwards, Inc. (its parent holding company) and Chairman of A.G.E. Asset
Management (an investment advisor).
George C. Bowen, Trustee, Age: 63
9224 Bauer Court, Lone Tree, Colorado 80124
Formerly (until April 1999) Mr. Bowen held the following positions: Senior
Vice President (since September 1987) and Treasurer (since March 1985) of the
Manager; Vice President (since June 1983) and Treasurer (since March 1985) of
the Distributor; Vice President (since October 1989) and Treasurer (since
April 1986) of HarbourView Asset Management Corporation; Senior Vice
President (since February 1992), Treasurer (since July 1991) Assistant
Secretary and a director (since December 1991) of Centennial Asset Management
Corporation; President, Treasurer and a director of Centennial Capital
Corporation (since June 1989); Vice President and Treasurer (since August
1978) and Secretary (since April 1981) of Shareholder Services, Inc.; Vice
President, Treasurer and Secretary of Shareholder Financial Services, Inc.
(since November 1989); Assistant Treasurer of Oppenheimer Acquisition Corp.
(since March 1998); Treasurer of Oppenheimer Partnership Holdings, Inc.
(since November 1989); Vice President and Treasurer of Oppenheimer Real Asset
Management, Inc. (since July 1996); Chief Executive Officer, Treasurer;
Treasurer of OppenheimerFunds International Ltd. and Oppenheimer Millennium
Funds plc (since October 1997).
Jon S. Fossel, Trustee, Age: 57
P.O. Box 44, Mead Street, Waccabuc, New York 10597
Formerly Chairman and a director of the Manager, President and a director of
Oppenheimer Acquisition Corp., the Manager's parent holding company, and
Shareholder Services, Inc. and Shareholder Financial Services, Inc., transfer
agent subsidiaries of the Manager.
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).
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, Treasurer, 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.
Remuneration of Trustees. The officers of the Trust and certain Trustees of the
Trust (Ms. Macaskill and Mr. Swain) who are affiliated with the Manager receive
no salary or fee from the Trust. The remaining Trustees of the Trust received
the compensation shown below. The compensation from the Trust was paid during
its fiscal year ended June 30, 2000. The compensation from all of the
Denver-based Oppenheimer funds includes the Trust and is compensation received
as a trustee, director, managing general partner or member of a committee of the
Board during the calendar year 1998.
------------------------------------------------------------------
Aggregate Total Compensation
Trustee's Name Compensation from all Denver-Based
and Other Positions from Trust Oppenheimer Funds1
------------------------------------------------------------------
------------------------------------------------------------------
Robert G. Avis $259 $67,998
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William A. Baker2 $261 $69,998
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Jon S. Fossel $256 $67,496
Review Committee Member
-----------------------------------------
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Sam Freedman $279 $73,998
Review Committee Member
-----------------------------------------
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Raymond J. Kalinowski $279 $73,998
Audit Committee Member
-----------------------------------------
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C. Howard Kast $292 $76,998
Audit and Review
Committee Chairman
------------------------------------------------------------------
-----------------------------------------
Robert M. Kirchner $258 $67,998
Audit Committee Member
-----------------------------------------
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Ned M. Steel2 $258 $67,998
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1. For the 1999 calendar year.
2. Effective July 1, 2000, Messrs. Baker and Steel resigned as Trustees of
the Trust.
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 ________, 2000 the only person who owned of
record or was known by the Trust to own beneficially 5% or more of the Trust's
outstanding retail shares was A.G. Edwards & Sons, Inc. ("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 accounts of its customers none of whom individually owned more than 5%
of the outstanding shares.
The Manager. The Manager, Centennial Asset Management Corporation, is
wholly-owned by OppenheimerFunds, Inc., which is a wholly-owned subsidiary of
Oppenheimer Acquisition Corp., a holding company controlled by Massachusetts
Mutual Life Insurance Company.
The portfolio manager of the Trust is principally responsible for the
day-to-day management of the Trust's investment portfolio. Other members of the
Manager's fixed-income portfolio department, particularly security analysts,
traders and other portfolio managers, have broad experience with fixed-income
securities. They provide the Trust's portfolio managers with research and
support in managing the Trust's investments.
|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Trust under an investment advisory
agreement between the Manager and the Trust. The Manager selects securities for
the Trust's portfolio and handles its day-to-day business. The agreement
requires the Manager, at its expense, to provide the Trust with adequate office
space, facilities and equipment. It also requires the Manager to provide and
supervise the activities of all administrative and clerical personnel required
to provide effective administration for the Trust. Those responsibilities
include the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and composition of
proxy materials and registration statements for continuous public sale of shares
of the Trust.
Expenses not expressly assumed by the Manager under the investment
advisory agreement are paid by the Trust. The investment advisory agreement
lists examples of expenses paid by the Trust. The major categories relate to
interest, taxes, fees to unaffiliated Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain printing
and registration costs and non-recurring expenses, including litigation costs.
The management fees paid by the Trust to the Manager are calculated at the rates
described in the Prospectus.
----------------------------------------------------------------------
Fiscal Year Management Fee Paid to Centennial Asset Management
ending 6/30 Corporation
----------------------------------------------------------------------
----------------------------------------------------------------------
1998 $801,264
----------------------------------------------------------------------
----------------------------------------------------------------------
1999 $841,379
----------------------------------------------------------------------
----------------------------------------------------------------------
2000
----------------------------------------------------------------------
The Manager has undertaken that the total expenses of the Trust, in any
fiscal year of the Trust, exclusive of taxes, interest, brokerage commissions
(if any) and non-recurring expenses, including litigation, shall not exceed
0.80% of the average annual net assets of the Trust. 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 vary the amount of
expenses assumed or eliminate the assumption of expenses altogether. For the
fiscal years ended June 30, 1998, June 30, 1999, and June 30, 2000 the
management fees payable by the Trust would have been $801,264, $824,512 and
_________, respectively without the Manager's voluntary expense assumption.
Those amounts do not reflect the effect of the expense assumptions of $2,862,
$16,867 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 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 broker/dealers are used for portfolio transactions, transactions
may be directed to broker/dealers for their execution and research services. The
research services provided by a particular broker may be useful only to one or
more of the advisory accounts of the Manager and its affiliates. Investment
research received for the commissions of those other accounts may be useful both
to the Trust and one or more of such other accounts. Investment research
services may be supplied to the Manager by a third party at the instance of a
broker through which trades are placed. It may include information and analyses
on particular companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio evaluations,
information systems, computer hardware and similar products and services. If a
research service also assists the Manager in a non-research capacity (such as
bookkeeping or other administrative functions), then only the percentage or
component that provides assistance to the Manager in the investment
decision-making process may be paid in commission dollars.
The research services provided by brokers broaden the scope and supplement
the research activities of the Manager. That research provides additional views
and comparisons for consideration, and helps the Manager obtain market
information for the valuation of securities held in the Trust's portfolio or
being considered for purchase.
Subject to applicable rules covering the Manager's activities in this
area, sales of shares of the Trust and/or the other investment companies managed
by the Manager or distributed by the Distributor may also be considered as a
factor in the direction of transactions to dealers. That must be done in
conformity with the price, execution and other considerations and practices
discussed above. Those other investment companies may also give similar
consideration relating to the sale of the Trust's shares. No portfolio
transactions will be handled by any securities dealer affiliated with the
Manager.
The Trust may experience high portfolio turnover that may increase the
Trust's transaction costs. However, since brokerage commissions, if any, are
small, high turnover does not have an appreciable adverse effect upon the income
of the Trust.
Service Plan
The Trust has adopted a Service Plan for the shares. The plan has been approved
by a vote of the Board of Trustees, including a majority of the Independent
Trustees2, cast in person at a meeting called for the purpose of voting on that
plan.
Under the plan, the Manager and the Distributor may make payments to
affiliates and, in their sole discretion, from time to time, may use their own
resources (at no direct cost to the Trust) to make payments to brokers, dealers
or other financial institutions for distribution and administrative services
they perform. The Manager may use its profits from the advisory fee it receives
from the Trust. In their sole discretion, the Distributor and the Manager may
increase or decrease the amount of payments they make from their own resources
to plan recipients.
Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Trust's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose of
voting on continuing the plan. A plan may be terminated at any time by the vote
of a majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the outstanding shares
of the Trust.
The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the amount of
payments to be made under a plan must be approved by shareholders of the class
affected by the amendment. The approval must be by a "majority" (as defined in
the Investment Company Act) of the shares.
While the plan is in effect, the Treasurer of the Trust shall provide
separate written reports on the plan to the Board of Trustees at least quarterly
for its review. The Reports shall detail the amount of all payments made under
the plan and the purpose for which the payments were made. Those reports are
subject to the review and approval of the Independent Trustees.
The plan states that while it is in effect, the selection and nomination
of those Trustees of the Trust who are not "interested persons" of the Trust is
committed to the discretion of the Independent Trustees. This does not prevent
the involvement of others in the selection and nomination process as long as the
final decision as to selection or nomination is approved by a majority of the
Independent Trustees.
Under the plan, no payment will be made to any recipient in any quarter in
which the aggregate net asset value of all Trust shares held by the recipient
for itself and its customers does not exceed a minimum amount, if any, that may
be set from time to time by a majority of the Independent Trustees. The Board of
Trustees has set no minimum amount of assets to qualify for payments under the
plan.
|X| Service Plan Fees. Under the service plan, the Distributor currently
uses the fees it receives from the Trust to pay brokers, dealers and other
financial institutions (they are referred to as "recipients") for personal
services and account maintenance services they provide for their customers who
hold shares. The services include, among others, answering customer inquiries
about the Trust, assisting in establishing and maintaining accounts in the
Trust, making the Trust's investment plans available and providing other
services at the request of the Trust or the Distributor. The service plan
permits reimbursements to the Distributor at a rate of up to 0.20% of average
annual net assets of the shares. While the plan permits the Board to authorize
payments to the Distributor to reimburse itself for services under the plan, the
Board has not yet done so. The Distributor makes payments to plan recipients
quarterly at an annual rate not to exceed 0.20% of the average annual net assets
consisting of shares held in the accounts of the recipients or their customers.
For the fiscal year ended June 30, 2000 payments under the plan totaled
$________, all of which was paid by the Distributor to recipients. That included
$___ paid to an affiliate of the Distributor's parent company. For the fiscal
year ended June 30, 2000, the Manager paid, in the aggregate, $______ in fees
out of its own resources for distribution assistance. Any unreimbursed expenses
the Distributor incurs with respect to the shares in any fiscal year cannot be
recovered in subsequent years. The Distributor may not use payments received
under the plan to pay any of its interest expenses, carrying charges, or other
financial costs, or allocation of overhead.
Performance of the Trust
Explanation of Performance Terminology. The Trust uses a variety of terms to
illustrate its performance. These terms include "yield," "compounded effective
yield, " "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 1.800.525.9310.
The Trust's illustrations of its performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those rules
describe the types of performance data that may be used and how it is to be
calculated. If the Trust shows total returns in addition to its yields, the
returns must be for the 1-, 5- and 10-year periods ending as of the most recent
calendar quarter prior to the publication of the advertisement (or its
submission for publication).
Use of standardized performance calculations enables an investor to
compare the Trust's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using the
Trust's performance information as a basis for comparisons with other
investments:
|_| Yields and total returns measure the performance of a hypothetical
account in the Trust over various periods and do not show the performance of
each shareholder's account. Your account's performance will vary from the model
performance data if your dividends are received in cash, or you buy or sell
shares during the period, or you bought your shares at a different time than the
shares used in the model. |_| An investment in the Trust is not insured by the
FDIC or any other government agency. |_| The Trust's yield is not fixed or
guaranteed and will fluctuate. |_| Yields and total returns for any given past
period represent historical performance information and are not, and should not
be considered, a prediction of future yields or returns.
|_| Yields. The Trust's current yield is calculated for a seven-day
period of time as follows. First, a base period return is calculated for the
seven-day period by determining the net change in the value of a hypothetical
pre-existing account having one share at the beginning of the seven-day period.
The change includes dividends declared on the original share and dividends
declared on any shares purchased with dividends on that share, but such
dividends are adjusted to exclude any realized or unrealized capital gains or
losses affecting the dividends declared. Next, the base period return is
multiplied by 365/7 to obtain the current yield to the nearest hundredth of one
percent.
The compounded effective yield for a seven-day period is calculated by (1)
adding 1 to the base period return (obtained as described above), (2)
raising the sum to a power equal to 365 divided by 7, and (3) subtracting
1 from the result.
The yield as calculated above may vary for accounts less than
approximately $100 in value due to the effect of rounding off each daily
dividend to the nearest full cent. The calculation of yield under either
procedure described above does not take into consideration any realized or
unrealized gains or losses on the Trust's portfolio securities which may affect
dividends. Therefore, the return on dividends declared during a period may not
be the same on an annualized basis as the yield for that period.
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, 2000 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:
1/n
ERV
--- - 1 = Average Annual Total Return
P
|_| 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:
ERV-P
----- = Total Return
P
----------------------------------------------------------------------
Yield Compounded Average Annual Total Returns (at
(7 days ended Effective 6/30/00)
6/30/00) Yield
(7 days
ended
6/30/00)
----------------------------------------------------------------------
----------------------------------------------------------------------
1-Year 5 Years 10 Years
----------------------------------------------------------------------
----------------------------------------------------------------------
----% ----% ----% ----% ----%
----------------------------------------------------------------------
|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.
Those ratings or rankings of investor/shareholder services by third parties may
compare the services provided to those of other mutual fund families selected by
the rating or ranking services. They may be based on the opinions of the rating
or ranking service itself, based on its research or judgment, or based on
surveys of investors, brokers, shareholders or others.
A B O U T Y O U R A C C O U N T
How to Buy Shares
Determination of Net Asset Value Per Share. The net asset value per share of the
Trust is determined twice each day that the New York Stock Exchange ("Exchange")
is open, at 12:00 Noon and at 4:00 P.M, on each day that the Exchange is open,
by dividing the value of the Trust's net assets by the total number of shares
outstanding. All references to time in this Statement of Additional Information
mean New York time. The Exchange's most recent annual announcement (which is
subject to change) states that it will close on New Year's Day, Martin Luther
King Jr. Day, Washington's Birthday, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. It may also close on other
days.
The Trust's Board of Trustees has adopted the amortized cost method to
value the Trust's portfolio securities. Under the amortized cost method, a
security is valued initially at its cost and its valuation assumes a constant
amortization of any premium or accretion of any discount, regardless of the
impact of fluctuating interest rates on the market value of the security. This
method does not take into consideration any unrealized capital gains or losses
on securities. While this method provides certainty in valuing securities, in
certain periods the value of a security determined by amortized cost may be
higher or lower than the price the Trust would receive if it sold the security.
The Trust's Board of Trustees has established procedures reasonably
designed to stabilize the Trust's net asset value at $1.00 per share. Those
procedures include a review of the valuations of the Trust's portfolio holdings
by the Board of Trustees, at intervals it deems appropriate, to determine
whether the Trust's net asset value calculated by using available market
quotations deviates from $1.00 per share based on amortized cost.
The Board of Trustees will examine the extent of any deviation between the
Trust's net asset value based upon available market quotations and amortized
cost. If the Trust's net asset value were to deviate from $1.00 by more than
0.5%, Rule 2a-7 requires the Board of Trustees to consider what action, if any,
should be taken. If they find that the extent of the deviation may cause a
material dilution or other unfair effects on shareholders, the Board of Trustees
will take whatever steps it considers appropriate to eliminate or reduce the
dilution, including, among others, withholding or reducing dividends, paying
dividends from capital or capital gains, selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten the average maturity
of the portfolio, or calculating net asset value per share by using available
market quotations.
During periods of declining interest rates, the daily yield on shares of
the Trust may tend to be lower (and net investment income and dividends higher)
than those of a fund holding the identical investments as the Trust but which
used a method of portfolio valuation based on market prices or estimates of
market prices. During periods of rising interest rates, the daily yield of the
Trust would tend to be higher and its aggregate value lower than that of an
identical portfolio using market price valuation.
How to Sell Shares
The information below supplements the terms and conditions for redeeming shares
set forth in the Prospectus.
Checkwriting. When a check is presented to the Bank for clearance, the Bank will
ask the Trust to redeem a sufficient number of full and fractional shares in the
shareholder's account to cover the amount of the check. This enables the
shareholder to continue receiving dividends on those shares until the check is
presented to the Trust. Checks may not be presented for payment at the offices
of the Bank or the Trust's Custodian. This limitation does not affect the use of
checks for the payment of bills or to obtain cash at other banks. The Trust
reserves the right to amend, suspend or discontinue offering checkwriting
privileges at any time without prior notice.
In choosing to take advantage of the Checkwriting privilege, by signing
the Account Application or by completing a Checkwriting card, each individual
who signs:
(1) for individual accounts, represents that they are the registered
owner(s) of the shares of the Trust in that account;
(2) for accounts for corporations, partnerships, trusts and other entities,
represents that they are an officer, general partner, trustee or other
fiduciary or agent, as applicable, duly authorized to act on behalf of
the registered owner(s);
(3) authorizes the Trust, its Transfer Agent and any bank through which the
Trust's drafts (checks) are payable to pay all checks drawn on the Trust
account of such person(s) and to redeem a sufficient amount of shares
from that account to cover payment of each check;
(4) specifically acknowledges that if they choose to permit checks to be
honored if there is a single signature on checks drawn against joint
accounts, or accounts for corporations, partnerships, trusts or other
entities, the signature of any one signatory on a check will be
sufficient to authorize payment of that check and redemption from the
account, even if that account is registered in the names of more than
one person or more than one authorized signature appears on the
Checkwriting card or the Application, as applicable;
(5) understands that the Checkwriting privilege may be terminated or amended
at any time by the Trust and/or the Trust's bank; and
(6) acknowledges and agrees that neither the Trust nor its bank shall incur
any liability for that amendment or termination of checkwriting
privileges or for redeeming shares to pay checks reasonably believed by
them to be genuine, or for returning or not paying checks that have not
been accepted for any reason.
Sending Redemption Proceeds by Federal Funds Wire. The Federal Funds wire of
redemptions proceeds may be delayed if the Trust's custodian bank is not open
for business on a day when the Trust would normally authorize the wire to be
made, which is usually the Trust's next regular business day following the
redemption. In those circumstances, the wire will not be transmitted until the
next bank business day on which the Trust is open for business. No distributions
will be paid on the proceeds of redeemed shares awaiting transfer by Federal
Funds wire
How to Exchange Shares
As stated in the Prospectus, direct shareholders can exchange shares of the
Trust for Class A shares of any of the following eligible funds:
Oppenheimer Main Street Growth &
Oppenheimer Bond Fund Income Fund
Oppenheimer Capital Appreciation Oppenheimer Main Street Small Cap Fund Fund
Oppenheimer Capital Preservation Oppenheimer MidCap Fund Oppenheimer California
Municipal Oppenheimer Multiple Strategies Fund Fund Oppenheimer Champion Income
Fund Oppenheimer Municipal Bond Fund Oppenheimer Convertible Securities Fund
Oppenheimer New York Municipal Fund
Oppenheimer New Jersey Municipal
Oppenheimer Developing Markets Fund Fund
Oppenheimer Pennsylvania Municipal
Oppenheimer Discovery Fund Fund
Oppenheimer Emerging Technologies Oppenheimer Quest Balanced Value
Fund Fund
Oppenheimer Quest Capital Value
Oppenheimer Enterprise Fund Fund, Inc.
Oppenheimer Quest Global Value
Oppenheimer Capital Income Fund Fund, Inc.
Oppenheimer Quest Opportunity
Oppenheimer Europe Fund Value Fund
Oppenheimer Quest Small Cap Value
Oppenheimer Florida Municipal Fund Fund
Oppenheimer Global Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Global Growth & Income
Fund Oppenheimer Real Asset Fund
Oppenheimer Gold & Special
Minerals Fund Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund,
Oppenheimer Growth Fund Inc.
Oppenheimer High Yield Fund Oppenheimer Trinity Core Fund
Oppenheimer Intermediate Municipal
Fund Oppenheimer Trinity Growth Fund
Oppenheimer International Bond Fund Oppenheimer Trinity Value Fund
Oppenheimer International Growth
Fund Oppenheimer U.S. Government Trust
Oppenheimer International Small
Company Fund Oppenheimer World Bond Fund
Limited-Term New York Municipal
Oppenheimer Large Cap Growth Fund Fund
Oppenheimer Limited-Term
Government Fund Rochester Fund Municipals
and the following money market
funds:
Centennial New York Tax Exempt
Centennial America Fund, L. P. Trust
Centennial California Tax Exempt
Trust Centennial Tax Exempt Trust
Centennial Government Trust Oppenheimer Cash Reserves
Oppenheimer Money Market Fund,
Centennial Money Market Trust Inc.
Shares of the Trust purchased without a sales charge may be exchanged for
shares of an eligible fund offered with a sales charge upon payment of the sales
charge. Shares of the Trust acquired by reinvestment of dividends or
distributions from the Trust or any of the other eligible funds (other than
Oppenheimer Cash Reserves) or from any unit investment trust for which
reinvestment arrangements have been made with the Distributor may be exchanged
at net asset value for shares of any of the eligible funds.
|_| Limits on Multiple Exchange Orders. The Trust reserves the right to
reject telephone or written exchange requests submitted in bulk by anyone on
behalf of more than one account. The Trust may accept requests for exchanges of
up to 50 accounts per day from representatives of authorized dealers that
qualify for this privilege.
|_| Telephone Exchange Requests. When exchanging shares by telephone, a
direct shareholder must have an existing account in the fund to which the
exchange is to be made. Otherwise, the investor must obtain a prospectus of that
fund before the exchange request may be submitted. If all telephone lines are
busy (which might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
|_| Processing Exchange Requests. Shares to be exchanged are redeemed on
the regular business day the Transfer Agent receives an exchange request in
proper form (the "Redemption Date"). Normally, shares of the fund to be acquired
are purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The Trust
reserves the right, in its discretion, to refuse any exchange request that may
disadvantage it (for example, if the receipt of multiple exchange requests from
a dealer might require the disposition of portfolio securities at a time or at a
price that might be disadvantageous to the Trust).
In connection with any exchange request, the number of shares exchanged
may be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered by a share
certificate that is not tendered with the request. In those cases, only the
shares available for exchange without restriction will be exchanged.
The different eligible funds available for exchange have different
investment objectives, policies and risks. A shareholder should assure that the
fund selected is appropriate for his or her investment and should be aware of
the tax consequences of an exchange. For federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. The Trust, the Distributor, the Sub-Distributor,
and the Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other investment
transaction.
The Trust may amend, suspend or terminate the exchange privilege at any
time. Although, the Trust may impose these changes at any time, it will provide
you with notice of those changes whenever it is required to do so by applicable
law. It may be required to provide 60 days notice prior to materially amending
or terminating the exchange privilege. That 60-day notice is not required in
extraordinary circumstances.
Dividends and Taxes
Tax Status of the Trust's Dividends and Distributions. The 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 California
corporate income and franchise taxes. It will also be qualified under California
law to pay exempt interest dividends that will be exempt from California
personal income tax. That exemption applies to the extent that the Trust's
distributions are attributable to interest on California municipal securities
and qualifying obligations of the United States government, if at least 50% of
the Trust's assets are invested in such obligations at the close of each quarter
in its tax year. Distributions from the Trust attributable to income from
sources other than California municipal securities and U.S. government
obligations will generally be subject to California 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 income in
determining California corporate franchise tax or income 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 California
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.
Dividend Reinvestment in Another Trust. Direct shareholders of the Trust may
elect to reinvest all dividends and/or capital gains distributions in Class A
shares of any eligible fund listed above. To elect this option, the shareholder
must notify the Transfer Agent in writing and must have an existing account in
the fund selected for reinvestment. Otherwise, the shareholder first must obtain
a prospectus for that fund and an application from the Distributor to establish
an account. The investment will be made at the close of business on the payable
date of the dividend or distribution.
Additional Information About the Trust
The Distributor. The Trust's shares are sold through dealers, brokers and other
financial institutions that have a sales agreement with the Sub-Distributor. The
Distributor and the Sub-Distributor also distribute shares of the other funds
managed by the Manager or an affiliate.
The Transfer Agent. Shareholder Services, Inc. the Trust's Transfer Agent,
is responsible for maintaining the Trust's shareholder registry and
shareholder accounting records, and for paying dividends and distributions to
shareholders of the Trust. It also handles shareholder servicing and
administrative functions. It is paid on a "at-cost" basis.
The Custodian. Citibank, N.A. is the Custodian of the Trust's assets. The
Custodian's responsibilities include safeguarding and controlling the Trust's
portfolio securities and handling the delivery of such securities to and from
the Trust. It will be the practice of the Trust to deal with the Custodian in a
manner uninfluenced by any banking relationship the Custodian may have with the
Manager and its affiliates. The Trust's cash balances with the Custodian in
excess of $100,000 are not protected by federal deposit insurance. Those
uninsured balances at times may be substantial.
Independent Auditors. Deloitte & Touche LLP are the independent auditors of the
Trust. They audit the Trust's financial statements and perform other related
audit services. They also act as auditors for the Manager and OFI and for
certain other funds advised by the Manager and its affiliates.
<PAGE>
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.
-------------------------------------------------------------------------------
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.
Standard & Poor's Ratings Services
-------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------
Fitch, the international rating agency, 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.
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, the international rating agency
-------------------------------------------------------------------------------
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+".
-------------------------------------------------------------------------------
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>
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
Appendix C
-------------------------------------------------------------------------------
TAX EQUIVALENT YIELD TABLES
-------------------------------------------------------------------------------
The equivalent yield tables below compare tax-free income with taxable income
under 2000 federal individual income tax rates, and 1998 California state
individual income tax rates. "Combined Taxable Income" refers to the net amount
subject to federal and California income taxes 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, and that state tax payments are currently deductible for federal
tax purposes and that the investor is not subject to federal or state
alternative minimum tax. The income tax brackets are subject to indexing in
future years to reflect changes in the Consumer Price Index. The brackets do not
reflect the phase out of itemized deductions and personal exemptions at higher
income levels, resulting in higher effective tax rates (and tax equivalent
yields). For the years beginning after January 1, 1996, the top marginal
California personal tax rate was reduced to 9.30% and the top combined marginal
tax rate was 45.22%. The 2000 California rates are not yet available.
Combined Taxable Income
Centennial California Tax-Exempt Trust
Yield of:
Joint Return Effective Tax Bracket 2.0% 2.5% 3.0% 3.5% 4.0% 4.5%
But Cali-
Over Not Over Federalfornia Combined Is Approximately Equivalent to
a Taxable Yield of:
$ 24,322 $ 38,386 15.00% 4.00% 18.40% 2.45% 3.06% 3.68% 4.29%
4.90% 5.51%
$ 38,386 $ 43,050 15.00% 6.00% 20.10% 2.50% 3.13% 3.75% 4.38%
5.01% 5.63%
$ 43,050 $ 53,288 28.00% 6.00% 32.32% 2.96% 3.69% 4.43% 5.17%
5.91% 6.65%
$ 53,288 $ 67,346 28.00% 8.00% 33.76% 3.02% 3.77% 4.53% 5.28%
6.04% 6.79%
$ 67,346 $104,050 28.00% 9.30% 34.70% 3.06% 3.83% 4.59% 5.36%
6.13% 6.89%
$104,050 $158,550 31.00% 9.30% 37.42% 3.20% 3.99% 4.79% 5.59%
6.39% 7.19%
$158,550 $283,150 36.00% 9.30% 41.95% 3.45% 4.31% 5.17% 6.03%
6.89% 7.75%
$283,150 39.60% 9.30% 45.22%3.65% 4.56% 5.48% 6.39% 7.30%
8.21%
Single Return:
But
Over Not Over
$ 19,193 $ 25,750 15.00% 6.00% 20.10% 2.50% 3.13% 3.75% 4.38%
5.01% 5.63%
$ 25,750 $ 26,644 28.00% 6.00% 32.32% 2.96% 3.69% 4.43% 5.17%
5.91% 6.65%
$ 26,644 $ 33,673 28.00% 8.00% 33.76% 3.02% 3.77% 4.53% 5.28%
6.04% 6.79%
$ 33,673 $ 62,450 28.00% 9.30% 34.70% 3.06% 3.83% 4.59% 5.36%
6.13% 6.89%
$ 62,450 $130,250 31.00% 9.30% 37.42% 3.20% 3.99% 4.79% 5.59%
6.39% 7.19%
$130,250 $283,150 36.00% 9.30% 41.95% 3.45% 4.31% 5.17% 6.03%
6.89% 7.75%
$283,150 39.60% 9.30% 45.22%3.65% 4.56% 5.48% 6.39% 7.30%
8.21%
<PAGE>
-------------------------------------------------------------------------------
Centennial California 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
1.800.525.9310
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
PX0180.001.1100
<PAGE>
CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
FORM N-1A
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) Declaration of Trust dated August 7, 1989: Previously filed with
Registrant's Initial Registration Statement (8/11/89), and refiled with
Registrant's Post-Effective Amendment No. 6 (10/27/94), 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. 3 (10/22/91), and refiled with Registrant's
Post-Effective Amendment No. 6 (10/27/94), pursuant to Item 102 of Regulation
S-T, and incorporated herein by reference.
(c) Specimen Share Certificate: Previously filed with Registrant's
Post-Effective Amendment No. 11 (8/27/99).
(d) Investment Advisory Agreement dated October 22, 1990: Previously filed with
Registrant's Post-Effective Amendment No. 2 (10/29/90), refiled with
Registrant's Post-Effective Amendment No. 6 (10/27/94), 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. 5 (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. 5
(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), refiled with Registrant's Post-Effective Amendment
No. 6 (10/27/94), pursuant to Item 102 of Regulation S-T, 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 June 1, 1990: Previously filed with Registrant's
Post-Effective Amendment No. 3 (10/22/91), refiled with Registrant's
Post-Effective Amendment No. 6 (10/27/94), pursuant to Item 102 of Regulation
S-T and incorporated herein by reference.
(h) Not applicable.
(i) Opinion and Consent of Counsel dated February 20, 1990: Previously filed
with Registrant's Pre-Effective Amendment No. 2 (2/22/90), refiled with
Registrant's Post-Effective Amendment No. 6 (10/27/94), pursuant to Item 102 of
Regulation S-T and incorporated herein by reference.
(j) Independent Auditors' Consent: Not applicable.
(k) Not applicable.
(l) Investment letter from Centennial Asset Management Corporation to Registrant
dated May 8, 1990: Previously filed with Registrant's Pre-Effective Amendment
No. 3 (5/17/90), and refiled with Registrant's Post-Effective Amendment No. 6,
(10/27/94) 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. 5, (10/28/93), and incorporated
herein by reference.
(n) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 as updated
through July 24, 1999: Filed by with Pre-Effective Amendment No. 1 to the
Registration Statement of Oppenheimer Senior Floating Rate Fund (Reg. No.
333-82579), (8/31/99), and incorporated herein by reference.
(o) 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. 25 (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
(p) Amended and Restated Code of Ethics of the Oppenheimer Funds dated March 1,
2000 under Rule 17j-1 of the Investment Company Act of 1940: Previously filed
with the initial Registration Statement of Oppenheimer Emerging Technologies
Fund (Reg. No. 333-32108), March 10, 2000, 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 E. 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.
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 Capital Preservation Fund Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund Oppenheimer Emerging Technologies 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
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 Small Cap Fund Oppenheimer
Main Street Funds, Inc. Oppenheimer Municipal Fund Oppenheimer Real Asset Fund
Oppenheimer Senior Floating Rate 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 Corp., 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 E. Wolf(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 25th day of August, 2000.
CENTENNIAL CALIFORNIA 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 25, 2000
---------------------------- Board of Trustees
James C. Swain Principal Executive
Officer and Trustee
/s/ George C. Bowen* Trustee August 25, 2000
-----------------------------
George C. Bowen
/s/ Bridget A. Macaskill* President and August 25, 2000
---------------------------- Trustee
Bridget A. Macaskill
/s/ Robert G. Avis* Trustee August 25, 2000
----------------------------
Robert G. Avis
/s/ Jon S. Fossel Trustee August 25, 2000
----------------------------
Jon S. Fossel
/s/ Sam Freedman* Trustee August 25, 2000
----------------------------
Sam Freedman
/s/ Raymond J. Kalinowski* Trustee August 25, 2000
----------------------------
Raymond J. Kalinowski
s/ C. Howard Kast* Trustee August 25, 2000
----------------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee August 25, 2000
----------------------------
Robert M. Kirchner
/s/ Brian W. Wixted* Treasurer August 25, 2000
----------------------------
Brian W. Wixted
*By: /s/ Robert G. Zack
--------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
CENTENNIAL CALIFORNIA TAX EXEMPT TRUST
EXHIBIT INDEX
Exhibit No. Description
None
n1a\180\180ptc_00(a)
