N-30D 1 rs0160_6470vef.txt RS0160_6470VEF Dear Shareholder: We are pleased to present you with this semiannual report for Centennial Tax Exempt Trust. For the six-month reporting period that ended December 31, 2002, the Trust provided a 0.80% compounded annual yield. Without the effects of compounding, the equivalent yield was 0.79%. For investors in the 36% federal tax bracket, this is equivalent to a taxable yield of 1.25% with compounding and 1.23% without compounding. As of December 31, 2002, the seven-day annualized yields, with and without compounding, were 0.78% and 0.78%, respectively. 1 The U.S. economy continued to improve during the past six months. Much of the economic growth continued to be courtesy of consumers, whose spending remained surprisingly strong in the face of considerable economic uncertainty. Not all of the economic news, however, was good. Corporate earnings continued to lag analysts' expectations, manufacturing spending remained depressed, unemployment returned to levels not seen since the spring and consumer confidence generally declined. Responding to these warning signs, the Federal Reserve Board ("the Fed") further lowered the federal funds interest rate to 1.25%, its lowest level since 1961. With the cut in interest rates came a corresponding decline in yields of short-term fixed-income securities, such as those found in the Trust. Yet many investors were willing to accept these low yields rather than invest in the stock market, which was very volatile and went down more than up during the period. In this environment, fixed-income investments--especially high-quality bonds with relatively short maturities--performed well. Tax-free municipal securities enjoyed especially strong performance; in fact the amount of supply during the 4th quarter pushed yields high enough (and prices down) where some tax-exempt yields equaled those of certain comparable taxable yields. We sought to take advantage of this aberration. Our overall approach to managing the Trust remained relatively consistent throughout the period. We continued to seek to identify attractive money market debt backed by issuers with strong credit. Though many states and municipalities were facing budget shortfalls, we opted to invest only in securities whose issuers were, in our opinion, in sound financial shape. This approach was part of our ongoing effort to maintain a stable $1 net asset value for shareholders. (While we always strive to maintain a $1 share price, there is, of course, no guarantee that this objective will be achieved.) Another strategy we followed was to monitor the movements of interest rates and attempt to capture higher yields for the Trust by investing accordingly. As we discussed in our last report to shareholders, we continued to invest a significant portion of Trust assets in securities providing fixed interest payments. Using this strategy, we were able to lock in higher prevailing yields for longer--a decision that, in hindsight, proved sound after the Fed lowered interest rates further in November. 1. Compounded yields assume reinvestments of dividends. The Trust's investment strategy, allocations, and focus can change over time. Another approach we continued to favor for the Trust was to invest in commercial paper--short-term corporate debt that matures in 270 days or less. We found commercial paper attractive because it offers portfolio managers more flexibility than can be found with other types of investments. When appropriate, we favored enhanced commercial paper, whose income payments are guaranteed by a bank or other third party. In light of the challenging economic environment faced by issuers, we found this guarantee especially welcoming. In addition, we also invested in a handful of put bonds--bonds that provide their owners with an option to redeem the bonds at an agreed-upon price before maturity--and, when available, prerefunded securities. Prerefunded securities, which generally are in high demand and thus difficult to obtain, are backed by the full faith and credit of the federal government. Looking ahead, we expect few significant changes to market conditions in the near future. Accordingly, we do not currently plan to alter our Trust management approach during the coming months. To position the Trust to weather future financial challenges, we expect to continue to emphasize bond issuers with strong credit and focus on high-quality tax-free money market securities. During the early part of next year, we believe that the Trust may benefit from its relatively high weighting in fixed-rate securities. As we add new debt investments to the Trust, we will continue to scrutinize issuers' credit quality, helping to maximize yield while seeking to maintain a stable net asset value for our shareholders. Sincerely, /S/ James C. Swain /S/ John V. Murphy James C. Swain John V. Murphy Chairman of the Board President Centennial Tax Exempt Trust January 23, 2003 In reviewing performance, please remember that past performance cannot guarantee future results. Yields will fluctuate. 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. 2 Financial Statements Pages 4-16 3 Statement of Investments December 31, 2002 / Unaudited Centennial Tax Exempt Trust
Principal Value Amount See Note 1 ---------------------------------------------------------------------------------------------------------------------- Short-Term Tax-Exempt Obligations--99.8% Alabama--1.5% ABN AMRO Munitops Certificates, Trust 2002-21 (Birmingham, AL Waterworks & Sewer Board RB), 1.65%, 9/3/03 ................. $ 10,000,000 $ 10,000,000 ABN AMRO Munitops Certificates, Trust 2001-16 (Hoover, AL BOE Capital Outlay TAN), 1.68% 1 ................................ 4,950,000 4,950,000 Demopolis, AL IDV Board RB, Mesa Farms Project, 1.70% 1 ........................ 6,800,000 6,800,000 Sylacauga, AL IDV Board RB, Harrells Fertilizer, Inc., 1.70% 1 ................. 3,800,000 3,800,000 --------------- 25,550,000 --------------- Alaska--0.8% North Slope Borough, AK GOB, Series B, FSA Insured, 1.60% 1 .................... 13,400,000 13,400,000 --------------- Arizona--1.3% Phoenix, AZ IDAU MH RRB, Paradise Lakes Apartment. Project, Series 1995, 1.60% 1 ........................................................ 22,500,000 22,500,000 --------------- California--2.6% CA Department of Water & Power Supply RB, Series C7, FSA Insured, 1.80%, 2/13/03 ...................................... 10,000,000 10,000,000 CA Department of Water & Power Supply RB, Series C9, 1.80%, 3/13/03 ................................................... 20,000,000 20,000,000 CA M-S-R PPA RRB, San Juan Project, Sub. Lien, Series E, MBIA Insured, 1.45% 1 ............................................. 800,000 800,000 Fremont, CA MH RB, Treetops Apts., Series A, 1.55% 1 ........................... 1,000,000 1,000,000 Huntington Park, CA RA MH RB, Casa Rita Apts., Series A, 1.52% 1 ............... 1,100,000 1,100,000 Los Angeles Cnty., CA MTAU Sales Tax RRB, Second Sr., Series A, MBIA Insured, 1.50% 1 ............................................. 3,500,000 3,500,000 Orange Cnty., CA Apartment Development RRB, Villas Aliento, Series E, 1.40% 1 ........................................................... 2,500,000 2,500,000 Orange Cnty., CA IDAU RB, Control Air Conditioning Project-A, 1.50% 1 .......... 2,400,000 2,400,000 Orange Cnty., CA Special FAU Teeter Plan RB, Series D, AMBAC Insured, 1.45% 1 ...................................................... 850,000 850,000 Societe Generale, NY Branch Municipal Securities Trust Receipts, Series 1996 SG61 (Los Angeles, CA Airport RB), 1.58% 1 ...................... 3,000,000 3,000,000 Southern CA PPAU RRB, Palo Verde Project, Series B, AMBAC Insured, 1.35% 1 ............................................ 200,000 200,000 --------------- 45,350,000 ---------------
4 Statement of Investments Unaudited / Continued Centennial Tax Exempt Trust
Principal Value Amount See Note 1 ---------------------------------------------------------------------------------------------------------------------- Colorado--5.5% Castlewood Ranch, CO Metro District Limited Tax GOB, 1.55%, 12/1/03 2 .......... $ 3,250,000 $ 3,250,000 Central Platte Valley Metro District , CO GOB, Series B, 1.55%, 12/1/03 2 ..... 3,000,000 3,000,000 CO General Fund TAN & RAN, Series 2002A, 3%, 6/27/03 ........................... 52,400,000 52,771,773 CO General Fund TAN & RAN, Series 2002B, 2.50%, 6/27/03 ........................ 19,900,000 20,020,153 Denver West Metro District, CO GOUN, Series A, 1.38% 1 ......................... 6,125,000 6,125,000 Stapleton Business Center Metro District, CO RB, 1.28% 1 ...................... 7,550,000 7,550,000 Superior Metro District No. 1, CO Water & Sewer BAN, 1.28% 1 ................... 2,000,000 2,000,000 Willow Trace Metro District, CO GOLB, Series A, 1.55%, 12/1/03 2 ............... 2,295,000 2,295,000 --------------- 97,011,926 --------------- Florida--3.6% Collier Cnty., FL IDAU RB, Gulf Coast American Blind, Series A, 1.70% 1 ........ 2,940,000 2,940,000 Eagle Tax-Exempt Trust-Series 96C0908-Class A (Dade Cnty., FL WSS RB), 1.61% 1 ............................................ 9,900,000 9,900,000 Eagle Tax-Exempt Trust-Series 96C0910-Class A (FL TUAU RB, Series 1995A), 1.61% 1 ......................................... 14,850,000 14,850,000 Eagle Tax-Exempt Trust-Series 96C0911-Class A (Hillsborough Cnty., FL IDAU PC COP, Tampa Electric Co. Project), 1.61% 1 ........................ 17,795,000 17,795,000 Eagle Tax-Exempt Trust-Series 97C0901-Class A (Hillsborough Cnty., FL IDAU PC COP, Tampa Electric Co. Project), 1.61% 1 ........................ 17,795,000 17,795,000 --------------- 63,280,000 --------------- Georgia--6.6% Burke Cnty., GA PC RB, Series 98-A, 1.30%, 1/17/03 ............................. 12,000,000 12,000,000 Burke Cnty., GA PC RB, Series 98-B: 1.15%, 2/26/03 .............................................................. 33,000,000 33,000,000 1.45%, 1/29/03 .............................................................. 16,000,000 16,000,000 1.50%, 2/3/03 ............................................................... 29,600,000 29,600,000 Eagle Tax-Exempt Trust-Series 96C1004-Class A (GA GOB, Series 1995B), 1.61% 1 ............................................. 11,880,000 11,880,000 Merrill Lynch Puttable Floats/Rite Trust, Series PT-586 (GA MEAU Power RB), 1.58% 1 ................................... 12,995,000 12,995,000 --------------- 115,475,000 --------------- Idaho--2.9% Custer Cnty., ID PC RB, Amoco Project-Standard Oil of Indiana, 1.40%, 4/1/03 2 ................................................. 20,375,000 20,375,000 ID TAN, 3%, 6/30/03 ............................................................ 30,000,000 30,199,736 --------------- 50,574,736 ---------------
5 Statement of Investments Unaudited / Continued Centennial Tax Exempt Trust
Principal Value Amount See Note 1 ---------------------------------------------------------------------------------------------------------------------- Illinois--12.7% ABN AMRO Munitops Certificates, Trust 2001-34, Single Asset Series (Chicago, IL GOB), 1.68% 1 .............................. $ 10,975,000 $ 10,975,000 ABN AMRO Munitops Certificates, Trust 1998-3, (Chicago, IL GOUN), 1.68% 1,3 ............................................... 8,735,000 8,735,000 ABN AMRO Munitops Certificates, Trust 2002-4 (Chicago, IL BOE GOUN), 1.68% 1 ............................................. 9,225,000 9,225,000 Eagle Tax-Exempt Trust-Series 981303-Class A (Chicago, IL RB, Lakefront Millennium Parking Facility), 1.61% 1 ............ 22,495,000 22,495,000 IL EDLFA RB, Pooled Finance Project, Series 95: 1.40%, 1/21/03 .............................................................. 20,000,000 20,000,000 1.40%, 1/23/03 .............................................................. 11,840,000 11,840,000 1.45%, 1/29/03 .............................................................. 37,000,000 37,000,000 1.50%, 2/3/03 ............................................................... 14,000,000 14,000,000 IL RAN: 2.50%, 5/15/03 .............................................................. 12,500,000 12,550,200 3%, 6/15/03 ................................................................. 75,000,000 75,512,787 --------------- 222,332,987 --------------- Indiana--1.9% Dyer, IN HCF RRB, Regency Place, Series A-1, 1.77% 1 ........................... 2,875,000 2,875,000 Eagle Tax-Exempt Trust-Series 981401-Class A (IN MPA PPS RB, Series B), 1.61% 1 .......................................... 13,600,000 13,600,000 Fort Wayne, IN HCF RRB, Health Quest, Series X-A, 1.77% 1 ...................... 2,215,000 2,215,000 Indianapolis, IN HCF RRB, Health Quest, Series A, 1.77% 1 ...................... 2,880,000 2,880,000 Kokomo, IN ED RB, Village Community Partners IV Project, 1.69% 1 ............... 2,640,000 2,640,000 Lawrence/Fort Harrison, IN Reuse Authority Tax Increment RB, Harrison Military Base, 1.60% 1 ............................................. 3,065,000 3,065,000 Merrillville, IN HCF RRB, Southlake, Series A-1, 1.77% 1 ....................... 3,040,000 3,040,000 South Bend, IN HCF RRB, Fountainview, Series A-1, 1.77% 1 ...................... 2,740,000 2,740,000 --------------- 33,055,000 --------------- Iowa--0.3% IA Cash Anticipation Program GOB, Iowa School Corps., Series B, 2.25%, 1/30/03 .................................................... 6,000,000 6,003,613 --------------- Louisiana--4.4% ABN AMRO Munitops Certificates, Trust 2002-17 (LA Gas & Fuels Tax Nts.), 1.65%, 8/21/03 2,3 ............................... 15,000,000 15,000,000 Natchitoches Parish, LA RRB, TrusJoist Corp. Project, 1.65% 1 .................. 10,000,000 10,000,000
6 Statement of Investments Unaudited / Continued Centennial Tax Exempt Trust
Principal Value Amount See Note 1 ---------------------------------------------------------------------------------------------------------------------- Louisiana Continued New Orleans, LA IDV Board MH RB, Orleans LLC Project, Series 3700, 1.78% 1 ........................................................ $ 29,000,000 $ 29,000,000 St. James Parish, LA PC RRB, Texaco Project, Series A, 1.10%, 3/11/03 2 .................................................. 22,530,000 22,530,000 --------------- 76,530,000 --------------- Maryland--6.6% Anne Arundel Cnty., MD GO BAN, Series 97A, 1.40%, 2/13/03 ...................... 25,000,000 25,000,000 Baltimore Cnty., MD BAN, Series 02, 1.35%, 3/7/03 .............................. 40,000,000 40,000,000 Baltimore Cnty., MD BAN, Series 95, 1.20%, 6/2/03 .............................. 10,200,000 10,200,000 Montgomery Cnty., MD BAN, Series 95: 1.15%, 2/26/03 .............................................................. 23,200,000 23,200,000 1.65%, 2/19/03 .............................................................. 17,600,000 17,600,000 --------------- 116,000,000 --------------- Michigan--3.7% MI GOB, Series 01-A, 1.40%, 8/26/03 ............................................ 20,510,000 20,510,000 MI Job DAU RB, East Lansing Residence Associates Project, 1.30% 1 .............. 1,900,000 1,900,000 MI Municipal Bond Authority RB, Series C-1, 2.25%, 8/22/03 ..................... 35,000,000 35,187,192 Morgan Stanley & Co. Income Trust Floater Certificates, Series 2000-282x (St. Clair Cnty., MI ED RRB), 1.65%, 8/7/03 2 .............. 8,000,000 8,000,000 --------------- 65,597,192 --------------- Minnesota--0.9% Eagle Tax-Exempt Trust-Series 20002301-Class A (MN GOB), 1.61% 1 ............... 16,010,000 16,010,000 --------------- Missouri--0.8% Boatmens St. Louis, MO Grantor Trust No. 1 COP, Series 1996A, 1.70% 1 ......... 14,675,000 14,675,000 --------------- Nevada--2.8% ABN AMRO Munitops Certificates, Single Asset Trust Certificates, Trust 2001-24 (Washoe Cnty., NV GOLB), 1.68% 1 .............................. 16,090,000 16,090,000 Clark Cnty., NV Highway RN, 1.45%, 1/29/03 ..................................... 13,000,000 13,000,000 Societe Generale, NY Branch Municipal Securities Trust Receipts, Series 1997 SG114 (NV GOB), 1.58% 1 ......................................... 20,350,000 20,350,000 --------------- 49,440,000 ---------------
7 Statement of Investments Unaudited / Continued Centennial Tax Exempt Trust
Principal Value Amount See Note 1 ---------------------------------------------------------------------------------------------------------------------- New Mexico--3.4% NM TAN & RAN, 3%, 6/30/03 ...................................................... $ 60,000,000 $ 60,433,091 --------------- New York--4.5% Hempstead, NY IDA RRB, Trigen-Nassau Energy, 1.60% 1 ........................... 1,000,000 1,000,000 Morgan Stanley & Co. Income Trust Floater Certificates, Series 200-267 (NYS TWY RB, Highway & Bridge Trust Fund), 1.55% 1 ........... 2,225,000 2,225,000 NYC GOB, Subseries A-6, FSA Insured, 1.70% 1 ................................... 2,100,000 2,100,000 NYC GOB, Subseries A-8, 1.50% 1 ................................................ 3,500,000 3,500,000 NYC GOB, Subseries C-4, 1.50% 1 ................................................ 15,000,000 15,000,000 NYC HDC MH Rent RB, Montery Project, Series A, 1.55% 1 ......................... 700,000 700,000 NYC RAN, 2.50%, 4/11/03 ........................................................ 40,000,000 40,097,872 NYS DA RB, Cornell University, Series A, 1.45% 1 ............................... 2,000,000 2,000,000 NYS HFA MH RB, East 39th Street Housing, Series A, 1.60% 1 ..................... 3,500,000 3,500,000 NYS MAG RB, Municipal Securities Trust Receipts-CMC1, 1.60% 1 .................. 5,915,000 5,915,000 Societe Generale, NY Branch Municipal Securities Trust Receipts, Series 1996 SG41 (NYS TBTAU RB), 1.52% 1 .................................... 1,000,000 1,000,000 Societe Generale, NY Branch Municipal Securities Trust Receipts, Series 1997 SGB26 (NYC MWFAU WSS RB), 1.55% 1 ............................... 2,500,000 2,500,000 --------------- 79,537,872 --------------- Ohio--0.4% Gallia Cnty., OH IDV Mtg. RRB, Jackson Pike Assn., 1.55%, 6/15/03 2 ............ 2,720,000 2,720,000 Scioto Cnty., OH HCF RB, Hill View Retirement Center, 1.50%, 6/1/03 2 ............................................................. 3,765,000 3,765,000 --------------- 6,485,000 --------------- Pennsylvania--5.6% Delaware Cnty., PA Industrial RB, Series 88-A, FGIC Insured, 1.20%, 3/3/03 ..... 2,600,000 2,600,000 Delaware Cnty., PA Industrial RB, Series 88-B, FGIC Insured, 1.10%, 2/19/03 .... 28,600,000 28,600,000 Delaware Cnty., PA Industrial RB, Series 88-C, FGIC Insured, 1.20%, 3/3/03 ..... 10,100,000 10,100,000 Eagle Tax-Exempt Trust-Series 946802-Class A ( PA GOUN), 1.61% 1 ............... 17,800,000 17,800,000 Merrill Lynch Puttable Floats/Rite Trust, Series PL-10, Class A (PA MBIA Capital Corp. Grantor Lease Back RB), 1.67% 1 ...................... 14,020,000 14,020,000 Philadelphia, PA TAN & RAN, Series A, 3%, 6/30/03 .............................. 25,000,000 25,177,338 --------------- 98,297,338 --------------- South Carolina--0.4% ABN AMRO Munitops Certificates, Trust-1998-7 (SC POAU GOB), 1.71% 1 ............ 7,325,000 7,325,000 --------------- 8
Statement of Investments Unaudited / Continued Centennial Tax Exempt Trust
Principal Value Amount See Note 1 ---------------------------------------------------------------------------------------------------------------------- Texas--17.4% ABN AMRO Munitops Certificates, Trust 2001-26 (Keller, TX ISD GOUN), 1.68% 1 .............................................. $ 3,000,000 $ 3,000,000 Austin, TX Travis & Williamson Cntys. Utility System RB, 1.35%, 2/13/03 ........ 54,335,000 54,335,000 Gulf Coast, TX IDAU Marine Terminal RB, Amoco Oil Project, 1.44%, 6/1/03 2 ............................................................. 4,000,000 4,000,000 Hockley Cnty., TX IDV Corp. PC RB, Amoco Project, 1.60%, 5/1/03 2 .............. 13,940,000 13,940,000 Houston, TX GOB, Series A: 1.15%, 2/26/03 .............................................................. 25,000,000 25,000,000 1.15%, 2/27/03 .............................................................. 27,300,000 27,300,000 San Antonio, TX Electric & Gas RB, Series A: 1.45%, 1/29/03 .............................................................. 31,000,000 31,000,000 1.50%, 2/3/03 ............................................................... 20,500,000 20,500,000 Societe Generale, NY Branch Municipal Securities Trust Receipts, Series 1996 SG70 (TX TUAU RB, Dallas Northtollway), 1.58% 1,2 ............... 15,325,000 15,325,000 Societe Generale, NY Branch Municipal Securities Trust Receipts, Series 1997 SG120 (Houston, TX WSS RB), 1.58% 1 ............................. 37,600,000 37,600,000 Societe Generale, NY Branch Municipal Securities Trust Receipts, Series 1997 SG96 (Harris Cnty., TX Criminal Justice Center RB), 1.58% 1 ..... 7,475,000 7,475,000 TX TAN & RAN, 2.75%, 8/29/03 ................................................... 64,500,000 65,086,386 --------------- 304,561,386 --------------- Washington--2.4% ABN AMRO Munitops Certificates, Trust 2001-1, (King Cnty., WA GOLB), 1.68% 1 .............................................. 12,770,000 12,770,000 ABN AMRO Munitops Certificates, Trust 2002-12 (Seattle, WA Light & Power RRB), 1.50%, 3/26/03 2 ........................... 9,755,000 9,755,000 Everett City, WA Public Facilities District RN, 1.45%, 1/30/03 ................. 12,000,000 12,000,000 Everett City, WA Public Facilities District RN, Series A, 1.45%, 1/30/03 .................................................... 7,000,000 7,000,000 --------------- 41,525,000 --------------- Wisconsin--0.2% West Allis, WI RB, State Fair Park Exposition Center, 1.60% 1 .................. 3,500,000 3,500,000 --------------- Wyoming--1.9% Lincoln Cnty., WY PC RRB, Amoco Project-Standard Oil Ltd., 1.40%, 4/1/03 2 ............................................................. 9,250,000 9,250,000 Sweetwater Cnty., WY PC RB, Pacificorp, Series 88-A, 1.40%, 1/17/03 ............ 24,800,000 24,800,000 --------------- 34,050,000 ---------------
9 Statement of Investments Unaudited / Continued Centennial Tax Exempt Trust
Principal Value Amount See Note 1 ---------------------------------------------------------------------------------------------------------------------- District of Columbia--4.7% Washington D.C. Metro AA Passenger Facilities RB, Series 99-A: 1.45%, 1/30/03 .............................................................. $ 1,000,000 $ 1,000,000 1.50%, 1/30/03 .............................................................. 5,500,000 5,500,000 1.50%, 1/30/03 .............................................................. 25,000,000 25,000,000 1.80%, 1/28/03 2 ............................................................ 22,600,000 22,600,000 Washington D.C. RB, National Academy of Science, Series 99-B: 1.45%, 1/30/03 .............................................................. 3,000,000 3,000,000 1.45%, 1/30/03 .............................................................. 9,000,000 9,000,000 1.75%, 1/28/03 .............................................................. 11,000,000 11,000,000 1.75%, 1/28/03 .............................................................. 5,000,000 5,000,000 ---------------- 82,100,000 ---------------- Total Investments, at Value (Cost $1,750,600,141) .............................. 99.8% 1,750,600,141 ---------------------------------- Other Assets Net of Liabilities ................................................ 0.2 4,348,912 ---------------------------------- Net Assets ..................................................................... 100.0% $ 1,754,949,053 ==================================
10 Statement of Investments Unaudited / Continued Centennial Tax Exempt Trust Footnotes to Statement of Investments To simplify the listings of securities, abbreviations are used per the table below: AA--Airport Authority BAN--Bond Anticipation Nts. BOE--Board of Education COP--Certificates of Participation DA--Dormitory Authority DAU--Development Authority ED--Economic Development EDLFA--Educational Facilities Authority FAU--Finance Authority GO--General Obligation GOB--General Obligation Bonds GOLB--General Obligation Ltd. Bonds GOUN--General Obligation Unlimited Nts. HCF--Health Care Facilities HDC--Housing Development Corp. HFA--Housing Finance Agency IDA--Industrial Development Agency IDAU--Industrial Development Authority IDV--Industrial Development ISD--Independent School District MAG--Mtg. Agency MEAU--Municipal Electric Authority MH--Multifamily Housing MPA--Municipal Power Agency MTAU--Metropolitan Transportation Authority MWFAU--Municipal Water Finance Authority NYC--New York City NYS--New York State PC--Pollution Control POAU--Port Authority PPA--Public Power Agency PPAU--Public Power Authority PPS--Public Power System RA--Redevelopment Agency RAN--Revenue Anticipation Nts. RB--Revenue Bonds RN--Revenue Notes RRB--Revenue Refunding Bonds TAN--Tax Anticipation Nts. TBTAU--Triborough Bridge & Tunnel Authority TUAU--Turnpike Authority TWY--Thruway/Tollway Authority/Agency WSS--Water & Sewer System 1. Floating or variable rate obligation maturing in more than one year. The interest rate, which is based on specific, or an index of, market interest rates, is subject to change periodically and is the effective rate on December 31, 2002. This instrument has a demand feature which allows, on up to 30 days' notice, the recovery of principal at any time, or at specified intervals not exceeding one year. 2. Put obligation redeemable at full principal value on the date reported. 3. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $23,735,000 or 1.35% of the Trust's net assets as of December 31, 2002. See accompanying Notes to Financial Statements. 11 Statement of Assets and Liabilities December 31, 2002 / Unaudited Centennial Tax Exempt Trust
-------------------------------------------------------------------------------------------------------- ASSETS Investments, at value (cost $1,750,600,141)--see accompanying statement ........... $ 1,750,600,141 Cash .............................................................................. 3,804,569 Receivables and other assets: Shares of beneficial interest sold ................................................ 26,257,830 Interest .......................................................................... 9,215,797 Other ............................................................................. 52,899 ---------------- Total assets ...................................................................... 1,789,931,236 ---------------- LIABILITIES Payables and other liabilities: Shares of beneficial interest redeemed ............................................ 19,529,535 Investments purchased ............................................................. 15,000,616 Service plan fees ................................................................. 126,967 Shareholder reports ............................................................... 64,331 Transfer and shareholder servicing agent fees ..................................... 30,215 Trustees' compensation ............................................................ 956 Other ............................................................................. 229,563 ---------------- Total liabilities ................................................................. 34,982,183 ---------------- NET ASSETS ........................................................................ $ 1,754,949,053 ================ COMPOSITION OF NET ASSETS Paid-in capital ................................................................... $ 1,755,046,107 Accumulated net realized loss on investment transactions .......................... (97,054) ---------------- NET ASSETS--applicable to 1,755,075,742 shares of beneficial interest outstanding . $ 1,754,949,053 ================ NET ASSET VALUE, REDEMPTION PRICE PER SHARE AND OFFERING PRICE PER SHARE ...................................................... $1.00
See accompanying Notes to Financial Statements. 12 Statement of Operations For the Six Months Ended December 31, 2002 / Unaudited Centennial Tax Exempt Trust
----------------------------------------------------------------------------------------- INVESTMENT INCOME Interest $13,713,780 ------------ EXPENSES Management fees 3,934,222 Service plan fees 1,854,568 Transfer and shareholder servicing agent fees 261,694 Custodian fees and expenses 171,810 Shareholder reports 16,548 Trustees' compensation 7,005 Other 84,079 ------------ Total expenses 6,329,926 Less reduction to custodian expenses (18,139) ------------ NET EXPENSES 6,311,787 ------------ NET INVESTMENT INCOME 7,401,993 ------------ NET REALIZED LOSS ON INVESTMENTS (42,875) ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 7,359,118 ============
Statements of Changes in Net Assets
Six Months Ended December 31, 2002 Year Ended (Unaudited) June 30, 2002 --------------------------------------------------------------------------------------------------- OPERATIONS Net investment income ...................................... $ 7,401,993 $ 22,138,659 Net realized gain (loss) ................................... (42,875) 277,353 ------------------------------------- Net increase in net assets resulting from operations ....... 7,359,118 22,416,012 ------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS ............................................ (7,401,993) (22,138,659 ------------------------------------- BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets resulting from beneficial interest transactions ......................... (68,509,036) 1,488,840 ------------------------------------- NET ASSETS Total increase (decrease) .................................. (68,551,911) 1,766,193 Beginning of period ........................................ 1,823,500,964 1,821,734,771 ------------------------------------- End of period .............................................. $1,754,949,053 $1,823,500,964 =====================================
See accompanying Notes to Financial Statements. 13 Financial Highlights Centennial Tax Exempt Trust
Six Months Year Ended Ended December 31, 2002 June 30, (Unaudited) 2002 2001 2000 1999 1998 -------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA Net asset value, beginning of period .................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------------------------------------------------------------- Income from investment operations--net investment income and net realized gain ............... -- 1 .01 .03 .03 .03 .03 Dividends and/or distributions to shareholders .......... -- 1 (.01) (.03) (.03) (.03) (.03) -------------------------------------------------------------- Net asset value, end of period .......................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 ============================================================== TOTAL RETURN 2 .......................................... 0.40% 1.17% 3.26% 3.01% 2.61% 3.12% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) ................. $1,755 $1,824 $1,822 $1,692 $1,749 $1,829 Average net assets (in millions) ........................ $1,854 $1,904 $1,779 $1,737 $1,896 $1,832 Ratios to average net assets: 3 Net investment income ................................... 0.79% 1.16% 3.21% 2.94% 2.58% 3.07% Expenses ................................................ 0.68% 0.69% 0.70% 0.72% 0.69% 0.69% 4 Expenses, net of reduction to custodian expense ......... 0.68% 5 0.69% 0.69% 0.72% 0.69% 0.69%
1. Less than $0.005. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns reflect changes in net investment income only. Total returns are not annualized for periods less than one full year. 3. Annualized for periods of less than one full year. 4. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. 5. Less than 0.01%. See accompanying Notes to Financial Statements. 14 Notes to Financial Statements Unaudited Centennial Tax Exempt Trust -------------------------------------------------------------------------------- 1. Significant Accounting Policies Centennial Tax Exempt Trust (the Trust) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust's investment objective is to seek the maximum short-term interest income exempt from federal income taxes that is consistent with low capital risk and the maintenance of liquidity. The Trust's investment advisor is Centennial Asset Management Corporation (the Manager), a subsidiary of OppenheimerFunds, Inc. (OFI). The following is a summary of significant accounting policies consistently followed by the Trust. -------------------------------------------------------------------------------- Securities Valuation. Portfolio securities are valued on the basis of amortized cost, which approximates market value. -------------------------------------------------------------------------------- Federal Taxes. The Trust intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders. Therefore, no federal income or excise tax provision is required. As of December 31, 2002, the Trust had available for federal income tax purposes an estimated unused capital loss carryforward of $97,054. This estimated capital loss carryforward represents carryforward as of the end of the last fiscal year, increased for losses deferred under tax accounting rules to the current fiscal year and increased or decreased by capital losses or gains realized in the first six months of the current fiscal year. As of June 30, 2002, the Trust had available for federal income tax purposes an unused capital loss carryforward as follows: Expiring ---------------------- 2008 $54,179 -------------------------------------------------------------------------------- Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. -------------------------------------------------------------------------------- Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. -------------------------------------------------------------------------------- Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 15 Notes to Financial Statements Unaudited / Continued Centennial Tax Exempt Trust -------------------------------------------------------------------------------- 2. Shares of Beneficial Interest The Trust has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
Six Months Ended December 31, 2002 Year Ended June 30, 2002 Shares Amount Shares Amount ---------------------------------------------------------------------------------------------------------------- Sold ............................. 2,385,231,932 $ 2,385,231,932 4,987,504,366 $ 4,987,504,366 Dividends and/or distributions reinvested ....... 7,717,199 7,717,199 22,420,085 22,420,085 Redeemed ......................... (2,461,458,167) (2,461,458,167) (5,008,435,611) (5,008,435,611) ----------------------------------------------------------------------------- Net increase (decrease) .......... (68,509,036) $ (68,509,036) 1,488,840 $ 1,488,840 =============================================================================
-------------------------------------------------------------------------------- 3. Fees and Other Transactions with Affiliates Management Fees. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Trust which provides for a fee of 0.50% of the first $250 million of the Trust's net assets; 0.475% of the next $250 million; 0.45% of the next $250 million; 0.425% of the next $250 million; 0.40% of the next $250 million; 0.375% of the next $250 million; 0.35% of the next $500 million; and 0.325% of net assets in excess of $2 billion. Under the agreement, when the value of the Trust's net assets is less than $1.5 billion, the annual fee payable to the Manager shall be reduced by $100,000 based on average net assets computed daily and paid monthly at the annual rates. However, the annual fee cannot be less than $0. -------------------------------------------------------------------------------- Transfer Agent Fees. Shareholder Services, Inc. (SSI) acts as the transfer and shareholder servicing agent for the Trust and for other registered investment companies. The Trust pays SSI a $14.75 per account fee. -------------------------------------------------------------------------------- Service Plan (12b-1) Fees. 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 up to 20% of the average annual net assets of the Trust. During the six months ended December 31, 2002, the Trust paid $4,555 to a broker/dealer affiliated with the Manager as reimbursement for distribution-related expenses. 16 This page intentionally left blank. This page intentionally left blank. This page intentionally left blank. Centennial Tax Exempt Trust Officers and Trustees James C. Swain, Trustee and Chairman of the Board John V. Murphy, President William L. Armstrong, Trustee Robert G. Avis, Trustee George C. Bowen, Trustee Edward L. Cameron, Trustee Jon S. Fossel, Trustee Sam Freedman, Trustee Richard F. Grabish, Trustee Beverly Hamilton, Trustee Robert J. Malone, Trustee F. William Marshall, Jr., Trustee Michael J. Carbuto, Vice President Robert G. Zack, Vice President and Secretary Brian W. Wixted, Treasurer Investment Advisor and Distributor Centennial Asset Management Corporation Transfer and Shareholder Servicing Agent Shareholder Services, Inc. Independent Auditors Deloitte & Touche LLP Legal Counsel to the Fund Myer, Swanson, Adams & Wolf, P.C. Legal Counsel to the Independent Trustees Mayer Brown Rowe & Maw For more complete information about Centennial Tax Exempt Trust, please refer to the Prospectus. To obtain a copy, call your financial advisor, or contact Centennial Asset Management Corp. at 1.800.525.9310. Please read the prospectus carefully before you invest any money. The financial statements included herein have been taken from the records of the Trust without examination of those records by the independent auditors. RS0160.001.1202 [LOGO] Printed on recycled paper 2002 Semiannual Report and Management Commentaries Centennial Tax Exempt Trust December 31, 2002